ataxingmatter

The Hill reports on "supercommittee"

Alexander Bolton reports that "With Supercommittee Deadlocked, leaders Reid and Boehner meet", The Hill (Nov. 15, 2011).  Reid (Dem) and Boehner (GOP) met Tuesday, but aides told The Hill that "They're not about to dive in" to the negotiations.  But as the committee seems to be at an impasse close to the 11/23 deadline, the leaders must be discussing what is likely to be the next step.  The arrangements for the group (in case no bipartisan deal could be reached) called for across-the-board cuts that impose reasonable cuts on Defense but limited cuts for social safety net/earned benefit programs (medicare limited to 2% cuts to insurance companies and health care providers/Social Security and Medicaid exempt).

The GOP members, of course, are casting it as a Dem problem. For example, Hensarling (a very far right member of the group, from Texas) blamed the Dems for not accepting the Toomey proposal for a piddling $300 billion in new tax revenue.  With Supercommittee Deadlocked, leaders Reid and Boehner meet. 

The across-the-board cuts would cut Defense by $500 billion.  Various GOP members of Congress have said they want to change the deal to avoid the cuts to the military.  Tea Party favorite and radical right-winger Jim DeMint has essentially admitted that he never intended to stick with the sequester deal, saying that the GOP has "until next election to fix this thing."  GOP stalwarts want the US to maintain its exorbitant spending as "the world's only military superpower" even while being willing to cut health care and pensions to the vulnerable and even while the country's infrastructure--essential for business--crumbles in ruins.  McCain and Graham urged the Senate to reject the sequester of military funds, fearful it would "set off a swift decline of the United States as the world's leading military power." Dems gain upper hand in deficit talks, The Hill (Nov. 16, 2011).  This attitude seems to believe that defense spending, no matter what the cost to the country, is okay, while spending on poor people is a waste and raising taxes on the rich is an impossibility.  Apparently GOP McKeon considered that possibility, but then later backtracked.  Certainly, Grover Norquist has been making sure the pressure is on from the corporate masters of our pseudo-democracy--the Hill notes Norquist's statement Monday that both Senate and House GOP leaders had "assured him they would not raise taxes to reduce the deficit."  Id.

So we have elected representatives in Congress who willfully ignore the will of the majority of people in favor of higher taxes and higher taxes on the rich and corporations in particular; ignore the facts that show that higher taxes on the rich and a more equal economy are better for everybody; and ignore the fact that their own policies (preemptive war and tax cuts during deficits from 2001-2008 under Bush) represent the substantial reason for long-term deficits--all in order to continue to support extraordinarily disproportionate spending on the military rather than on public infrastructure, education and health and in order to be able to continue to use the self-created "debt crisis" to push for further impoverization of America's middle class.  What a backwards value system that represents can't be expressed in a public blog.

But at least Reid has said that method of reneging on the agreement won't be allowed to happen: "Democrats aren't going to take an unfair, unrealistic load directed toward domestic discretionary spending and take it away from the military."    See Id.; see also Reid: Dems will oppose efforts to spare Defense from automatic cuts, The Hil (Nov. 14, 2011).

As one of the commenters on The Hill notes (quoting an NPR program), the supercommittee is set up to force one of two bad choices--reducing the social safety net or cutbacks during economic recession.  What we should be doing is increasing taxes now on the rich and on corporations, and then allowing the Bush tax cuts to expire at the end of next year--in their entirety.  We should make judicious spending cuts in wasteful programs--and the military certainly should be a target of some of those cuts.  And we should make judicious spending increases in infrastructure, research and educational support programs to add stimulus to keep the economy going.

Case in point--the New York Times story today about a small town in Kentucky that decided to increase taxes to pay for infrastructure improvements that are putting the two back on the map.

GOP two-step approach problematic

Discussion continued apace yesterday about the "supercommittee" and the idea of agreeing to agree someday on some revenue increases while going ahead with cuts.

This approach is a terrible one since it gives the obstructionist GOP members just another setting in which to refuse to go ahead with tax increases and to "negotiate" yet again over just what counts as a revenue increase.  Like the gimmicks that became so overused in the 2001, 2003, 2004 Bush tax bills, this "deal" is just another gimmick for the radical right to get its way--cuts to Social Security and Medicare, cuts to all programs intended to help the vulnerable, no cuts to military programs, and no tax increases--especially not for the rich.

Republicans on the right are already arguing for applying "dynamic analysis" which tends, in their versions, to be rosy scenarios of increased growth due to tax cuts:  this is a cop-out way to claim revenue increases that won't materialize while making actual cuts to much needed social programs.  They are also arguing for dramatic changes in the way the earned benefits programs work--such as means-testing for recipients--as first steps in working towards outright elimination of those programs.  You get comments like those of Jim Jordan (Republican of Ohio) who wrote in an op-ed in USA Today that taxes "should not punish success to satisfy some false definition of balance."  See Rubin,  Debt Accord May be Two-Step Process, Hensarling Says, Bloomberg (Nov. 14, 2011).

Meanwhile, Jim Jordan (Republican of Ohio) said in a USA Today piece that taxes should not be raised because they "should not punish success to satisfy some false definition of balance."  Id. 

This is a wrongheaded view of taxes.  The radical right uses language about taxes "punishing success" because they see defending the rich from  taxation as their mission.  The rich are defined as "successful"--even if the wealth is merely built on top of inherited wealth and position, and even if the rich did nothing at all to earn the wealth.  Taxes do not punish success.  Taxes are the way that we cooperate together to fund important government programs that serve all of us.  Even when they act as transfer programs that transfer resources to the poor and elderly, they are serving all of us by making our society work better. 

Mazur as Treasury Policy Official

Mark Mazur, a long-term government economist, has been selected by President Obama as Assistant Secretary for Tax Policy, a position that has not had a Senate-confirmed appointee since Obama took office.  Michael Mundaca, who filled the post on an interim basis, left in May to join Ernst & Young.  See Richard Rubin, Obama Nominates Mark Mazur as Top Treasury Tax Policy Official, Bloomberg (Nov. 14, 2011).

Mazur is an economist by training who was a tax analyst with General Motors before his career in government.  He was the director of the IRS division of research and analysis from 2001 to 2009, when he was  appointed deputy assistant secretary for tax analysis.

 

 

Super-Congress wants to have its cake and eat it too

So the Democrats and Republicans on the so-called "Super-Committee" that is supposed to find $1.2 trillion in budget reductions/increased revenues within a week now thinks it has a solution--let the regular tax committees (Finance and Ways & Means) come up with the tax revenues, while the Super-Committee will go on and specify the spending cuts.  See Deficit Panel Seeks to Defer Details on Raising Taxes, New York Times (Nov. 14, 2011).

The proposal doesn't sound like anything that the Dems on the panel should accept.  For a piddling reduction in some of the deductions available to the most affluent individuals, the GOP is willing to lower the rate on those individuals to 28%!  Just more enriching the rich.  The Dems shouldn't agree to that.  Especially since Grover Norquist thinks that any such agreement would be undone immediately, while any stupid agreement the Dems make to "reforming" (i.e., cutting benefits from) the earned benefits programs will be allowed to take place.

Grover G. Norquist, the president of Americans for Tax Reform, whose antitax pledge has been signed by most Republicans in Congress, said in an interview, “I am not losing any sleep” over the Republicans’ latest proposal. Mr. Norquist said he was confident that, “at the end of the day, the Republican House will not pass a tax increase.”

“As a face-saving measure,” Mr. Norquist said, the deficit reduction panel “could give lots of instructions to the tax-writing committees.” In complying with those instructions, he said, the House and the Senate could pass very different bills.  Id.

It is hard to see why any cuts to the earned benefits programs should be made. Social Security, Medicare and Medicaid are more important now than ever because of the weak economy.  We are a rich country and we can afford these programs.Tax 100% of compensation for Social Security.   And treat all profits interests as compensation income when allocations are received, so that partnerships treat persons as partners only when they have a capital investment in the partnership business.

Let the military be cut at least $750 billion.  And raise the rest through taxes--especially through a progressive estate tax and through eliminating the character preference for capital gains income. 

This country is tired of being held hostage by far-right radicals  who don't understand that the government acts for the people and who don't give a damn for anybody that isn't in the top 20% of the income and wealth distribution.  We are tired of the radical right's anarchistic actions to prevent the government from borrowing money to carry out important programs.  We are tired of the radical right's stupidity about the economy and its reliance on ideological beliefs in "trickle down" programs to justify tax cuts no matter what situation the country is in.  We are tired of the radical right's refusal to acknowledge the facts about the failures of the four-decade experiment with reaganomics, during which time the large multinational corporations have been allowed to function like quasi-sovereigns.  We are tired of seeing tax policies that support consolidation of corporate empires and movement of business overseas, while Americans lose jobs and watch their wages decline.

GOP wants to repeal Dodd-Frank: instead they should listen to Nassim Taleb

Nassim Taleb, the author of the book on long-tail events, suggests in a Nov. 6, 2011 op-ed in the New York Times that "it is only a matter of time before private risktaking leads to another giant bailout like the ones the United States was forced to provide in 2008." 

That's pretty strong language, and should be cause for worry among those GOP debaters who have been in a pissing contest over how much legislation they can suggest for repeal, like Dodd-Frank, health care reform, and environmental protection.  Instead of defending big banks, the GOP should start thinking about how to break them up.  Instead of suggesting that we need to repeal Dodd-Frank and end regulation of banks, Taleb says we do need  regulation but can't depend on it alone: "Supervision, regulation, and other forms of monitoring are necessary, but insufficient."

And instead of defending risk-taking bankers as innovators and entrepreneurs, Congress should be considering measures to undo the incentives for risk taking.  Taleb says--End Bonuses for Bankers.

[I]t's time for a fundamental reform:  Any person who works for a company that, regardless of its current financial health, would require a taxpayer-financed bailout if it failed, should not get a bonus, ever.  In fact, all pay at systemically important financial institutions--big banks, but also some insurance companies and even huge hedge funds--should be strictly regulated.

***

Bonuses are particularly dangerous because they invite bankers to game the system by hiding the risks of rare and hard-to-predict but consequential blow-ups, which I have called 'black swan' events. 

Seems like sound advice.  Bonuses encourage risktaking, and risktaking encourages breakdowns of TBTF banks.  Breakdowns lead to taxpayer bailouts.  To break the chain, deny the bonuses.

The asymmetric nature of the bonus (an incentive for success without a corresponding disincentive for failure) causes hidden risks to accmumlate in the financial system and become a catalyst for disaster.  This violates the fundamental rules of capitalism:  Adam Smith himself was wary of the effect of limiting liability, a bedrock principle of the modern corporation.

Here Taleb touches on a factor in the expanding risk of our economy--and the expanding immunity of the manager class from the risk they cause.  Corporations provide limited liability to their owners.  And innovations over the last few decades have expanded limited liability to almost all investors even in pass-through entities that pay no entity-level tax, through the limited liability company and the limited liability partnerships. That is one of the reasons I have argued for Congress to enact legislation to restrain the availability of tax-free mergers and reorganizations.  The combination of easily attained limited liability plus easily attained consolidation of entities has been a factor in the growth of the corporatist state.

Taleb has a good point about the incidence of bonuses in the US market system as well.

We trust military and homeland secrutiy personnel with our lives, yet we don't give them lavish bonuses.  They get promotions and the honor of a job well done if they succeed, and the severe disincentive of shame if they fail.  For bankers, it is the opposite: a bonus if they make short-term profits and a bailout if they go bust.

 Eliminating bonuses would make banking boring again, like it was before the repeal of the Glass-Steagall Act.  Boring, in this case, is good.  Congress should consider what kind of legislation could be designed to make bonuses in banking less likely, through tax disincentives or other means.

The GOP Debate Economic Debacle

So I finally found myself in front of the TV for one of the GOP debates.  It was difficult to watch.  Each candidate attempting to outdo the next in offering up the same worn-out, trickle-down reaganomic ideas of tax cuts, deregulation, privatization and militarization as the only solution for overcoming economic stagnation.  They particularly want to deregulate Big Oil, Big Banks, and let polluters have a hay-day, all in the name of providing businesses "certainty" and "getting the government out of businesses".  They especially want lower taxes on the rich.  And they want to take the entitlement out of the earned benefit programs that ordinary Americans depend upon, calling it "shared sacrifice" from the poor and middle class.  In other words, they are touting austerity economics for everybody except the elite plutocrats.

As Thomas Edsall says in his Nov. 6, 2011 New York times op-ed on The Politics of Austerity, the GOP "has reverted to the penny-pinching of an earlier era, the green eyeshade Grand Old Party of Herbert Hoover and Robert Taft, advocating a 'root canal' approach to governance."  Edsall notes that the GOP is "racializ[ing] policy making, calling for deep cuts in programs for the poor" and at the same time conducting an "assault on public employees." 

The problem, of course, is that these prescriptions for the economy are the wrong medicine.  They are even more detrimental versions of the policies pursued by Bush that left us with a decade of stagnation and decline for the middle class and unwarranted lopsidedness in the way the rewards of the marketplace are distributed, with everything going to the very top.  The deregulation that the GOP wants ensures that companies need not think about the harm they do to communities in the short term or long term.  The tax cuts that the GOP favors ensure that the rich stay rich and that the country can't afford the programs that ushered in the golden age of the post war years, like almost universal education under the GI Bill, a newly confident elderly population under social Security and Medicare, a decently protected poor population with Medicaid and Unemployment Compensation, an improving environment through the Clean Air, Clean Water and other environmental laws and regulations.

If those who debated in Michigan on Wednesday night had their way on deregulation, American cities would revert to the smog-filled skies that now cover China and American waterways would again risk the flames of that river in Ohio.  And none of that would create jobs, certainly not compared to the jobs that could be created by infrastructure development and green energy programs.

And if those debaters have their way on tax cuts and cuts in earned benefit programs--like Herman Cain's ridiculous 9-9-9 tax plan that would let the rich get off scot free while shifting the burden to the poor--the austerity program would grind our economy to a halt.  As Edsall noted:

In many respsects, austerity feeds on itself.  If the country needs to invewst in education and rebuilding infrastructure to regain competitiveness, as many economists of varying ideological stripes argue, those initatives are in large part precluded in a political environment that places top priority on deficit and debt reduction.  Retrenchment, in effect, becomes a noose, choking off prospects for growth.

Comments on Inequality, Leverage, and Crises--Kumhof & Ranciere Nov 2010 IMF working paper

[guest post by Clifford D. Clark]

Michael Kumhof's and Romain Ranciere's November 2010 paper relates income inequality to national economic crises, particularly those experienced as the Great Depression and the Great Recession.  They conclude that increases in income inequality --comparing the top 5% of households to the bottom 95%--in the years leading up to the two crises exerted a determining influence on the economy.

First, income inequality grew in similar ways in the years before the depression and the recent deep recession. From 1920 to 1928 the share of national income received by the top 5 percent of households increased from 24% to 34 % and from 1985 to 2007 the share of the top 5% increased from 22% to 34 %. Between 1920 and 1932 and between 1983 and 2007 the ratio of household debt to GDP nearly doubled, although the ratio was higher in 2007 than in 1932. The authors find a link between the two phenomena:  income inequality increased at a greater ratethan consumption expenditures in the years before the two crises. The public was spending at rates greater than increases in their income.

Second, in the years before the recent downturn the growth in household debt  was due almost entirely to the bottom 95%. Real hourly wages of the top 10% of households increased by an accumulated 70% between 1967 and 2003, while the median households decreased by 5% and wages at the bottom 10% decreased by about 25%. A similar pattern, but with greater widening, is shown in annual earnings (less capital gains). Yet the change in inequality of consumer expenditures (for non-durable items of the kind tied closely to income) was considerably less. Can one infer that smaller changes in consumption are due to upward mobility? Their answer to the question is “income mobility has been stable or slightly worsening since the 1950s.” Id. at 7.  Further, they find that households  “at the bottom of the distribution of income and wealth are more indebted than households at the top.” Id. at 7. That represents a clear switch:  whereas in 1983 the top wealth group was more indebted than the bottom 95%, by 2007 the reverse was true. By then the bottom 95% had debts equal to 140 % of income, nearly twice that of the top 5%. They conclude that almost all of the change in the debt to income ratio in aggregate was due to the bottom 95%.

Third, an increase in debt requires and increased need for financial intermediation:  accordingly, the size of the financial sector between 1980 and 2007 increased considerably. Measured by the ratio of private credit of deposit banks and other financial institutions to GDP, that quantity increased from 90% in 1981 to 210% in 2007. By Philippon calculations the magnitude of the financial sector in GDP almost doubled to 8% of GDP during that period--that is, there was nearly the same rate of increase as experienced in the years before the Great Depression.  There are also further indicators of risk such as defaults and income to debt ratios.

 Their conclusion is succinctly stated.

“The key mechanism, reflected in a rapid growth in the size of the financial sector, is the recycling of part of the additional income gained by high income households back to the rest of the population by way of loans, thereby allowing the latter to sustain consumption levels, at least for a while. But without the prospect of a recovery in the incomes of poor and middle income households over a reasonable time horizon, the inevitable result is that loans keep growing, and therefore so does leverage and the probability of a major crisis that, in the real world, typically also has severe implications for the real economy.” Id. at 22.

Infrastructure gamesmanship puts wealthy ahead of jobs, good bridges, and country

For those who are paying attention to the House and Senate these days, it seems like a frustrating exercise.  Mostly it is one of watching the "do-nothing" Republicans find excuses for never requiring millionaires and billionaires to pay their fair share of taxes while making up excuses for not doing anything of the varied real approaches to stimulating the economy in ways that will create jobs for ordinary Americans.

Take the vote on the infrastructure bills.  The Senate leadership asked the Senate to vote for funding $60 billion of much needed infrastructure projects (just a tip of the iceberg of everything that is needed to bring this country's infrastructure into nonembarassment).  The GOP refused, because it was funded by a de minimis tax on millionaires. 

There's no end to things that can be said about this further evidence of the craven state of the GOP in the US today.  Political advantage for the wealthy class is to be given primary importance, no matter what happens to the vast majority of Americans and the country we all love.  Jim Maule has it right, in The Tax and Spending Stalemate: Can It Destroy the Nation?, MauledAgain (Nov. 7, 2011).

When partisan loyalties mean more than the nation’s well-being, when money means more to wealthy “world citizens” than does the long-term physical security of the nation, and when protection of millionaires who fund campaign treasure chests means more than the lives and safety of the rest of America, the literal physical survival of the nation is imperiled. ...

[A]s long as this absurd tax and spending stalemate continues, where decisions are not made on the merits of the issue but on the partisan attachments of supposedly public servants, the nation and its infrastructure, the nation and the health of its citizens, the nation and its economy, will continue to stagnate, deteriorate, and crumble. The question now is how close we are to the point of no return.

Nader Argues for a Financial Transactions Tax

Ralpe Nader provided an op-ed on the question of a financial transaction tax, "Time for a Tax on Speculation," Wall St. Journal, A17 (Nov. 2, 2011).  He ties the need for the tax as a curb to speculation to the growing concern among ordinary Americans about corporate power and Wall Street excesses.

A financial transactions tax would impose a small charge on the value of stock, bond and derivatives transactions--probably somewhere around 0.25% to 0.5% (the latter is the figure pushed by Nader and groups like National Nurses United). Such a tax would raise a considerable amount of money and at the same time serve another important function--curbing speculative and high-frequency trading.

[This tax] has the potential to curb risky speculative trading that contributes little real economic value.  The Capital Institute's John Fullerton has stated that a financial speculation tax could have a significant impact on the high-frequency trading and other 'quant' trading strategies that now comprise an astonishing 70% of vastly bloated equity-trading volume.  Over the past few decades, trading volume has grown exponentially.  In 1995, the total shares of stock traded on the Nasdaq and the NYSE, not including derivates and other options, was 188 billion.  By the peak of the financial crisis, in 2008, this annual number had skyrocketed to three trillion.

*** Sen. Harkin, Rep. DeFazio and others in the past few years have proposed protecting ordinary investors from the direct effects of the tax by providing exemptions for mutual funds, retirement funds and for the first $100,000 in trades made annually by an individual.

The right's smoke and mirrors scam about Social Security--it ain't broke (unless China is too)

We've noted in these postings the growing inequality between rich and the rest of us in America, and that is the appropriate backdrop against which to investigate further the right's smoke-and-mirrors scams about tax policy and earned benefits.  Let me remind you with Kevin Drum's Mother Jones article on The Price of Plutocracy: "For all practical purposes, every year about $700 billion in income is being sucked directly out of the hands of the poor and the middle class and shoveled into the hands of the rich." (That sentence is illustrated with a great chart, with data drawn from Joseph Hacker of Yale and Paul Pierson of Berkeley, the authors of Winner-Take-All Politics, a book I highly recommend.)

The national debate about deficits has been part of a relentless push by the right to reduce as much as possible the New Deal earned benefit programs of Social Security and Medicare. The right twists the facts to suit the arguments it wants to make.  Krugman hones in on this issue, noting Dean Baker's similar anger at the Washington Post's inconsistency in considering Social Security in a recent article by Post writer Lori Montgomery, who seems to be miming for the hard right, anti-New Deal crowd in Washington .  See Krugman, Social Security, Bait and Switch, a Continuing Series, New York Times (Oct. 30, 2011).

Social Security is a program that is part of the federal budget, but is by law supported by a dedicated source of revenue. This means that there are two ways to look at the program’s finances: in legal terms, or as part of the broader budget picture.

In legal terms, the program is funded not just by today’s payroll taxes, but by accumulated past surpluses — the trust fund. If there’s a year when payroll receipts fall short of benefits, but there are still trillions of dollars in the trust fund, what happens is, precisely, nothing — the program has the funds it needs to operate, without need for any Congressional action.

Alternatively, you can think about Social Security as just part of the federal budget. But in that case, it’s just part of the federal budget; it doesn’t have either surpluses or deficits, no more than the defense budget.

Both views are valid, depending on what questions you’re trying to answer.

What you can’t do is insist that the trust fund is meaningless, because SS is just part of the budget, then claim that some crisis arises when receipts fall short of payments, because SS is a standalone program.  Id. (emphasis added).

Further, the right refers to these programs as "entitlements", a term that is meant to dredge up resentments against those who have some rights to benefits from these programs.  The right uses "personal responsibility" and "entitlements" as though they refer to two non-intersecting worlds, whereas in fact the opposite is true.

Workers pay into Social Security to support current workers who paid into it in the past.  The trust fund was established, and amended with a good deal of actuarial research under Reagan in 1983, with the knowledge that the baby boom generation would be passing through and create a bulge of benefit needs and that US birth rates tended to be smaller now than they were a century ago.  In other words.  what is happening now in terms of the baby boomer population reaching retirement age and the decline in US birthrates was exactly the information on which the Social Security changes made in the 1980s were predicated.  Either we believe that these kinds of predictions are reasonable (in which case it is utterly silly to raise nightmare scenarioes about bankruptcy, because there is nothing of the sort) or we believe that it is impossible to predict for sure what will happen (in which case it is utterly silly to raise nightmare scenarios about Social Security bankruptcy, because GDP could grow just a little faster than predicted, easing all future problems, or boomer needs could grow just a little less than predicted, easing all future problems).  Either way, the crisis-bell ringing being done by the right as a way to attribute deficits to Social Security is a smoke and mirrors scam.

It is even more so since the Social Security trust fund is invested in US Treasuries and those Treasuries plus new tax funds coming in pay all the benefit costs.  Is the US going to default on Treasuries.  Well, if so, we have a bigger problem with Japan and China not liking that--not just the Social Security trust fund.  The hard right seems to think it is okay to play political games with US debt, but American citizens should be aware that this is what they are doing.

For a good overall exposition of these issues, see the article in  Salon by Gene Lyons, How the Rich Created the Social Security 'Crisis' (Nov. 3, 2011) (noting the "decades-long propaganda war against America’s most efficient, successful and popular social insurance program").

[T]his is the beneficiaries’ money, invested by the Social Security trustees in U.S. Treasury bonds drawn upon “the full faith and credit of the United States.” Far from being “meaningless IOUs” as right-wing cant has it, they represent the same legally binding promise between the U.S. government and its people that it makes with Wall Street banks and the Chinese government, which also hold Treasury Bonds.

A promise not very different, the Daily Howler’s Bob Somerby points out, from the one implicit in your bank statement or 401K (if you’re lucky enough to have one). Did you think the money was buried in earthen jars filled with gold bullion and precious stones?  Id. (emphasis added).

One might add that many of our multinational corporations that are currently lobbying heavily for yet another tax break in the form of a "repatriation holiday" for their offshored, untaxed profits actually have the substantial portion of those profits invested in those same U.S. Treasury notes.  So, as ataxingmatter has noted before, much of that money is already in the US and repatriation will generally not be of much benefit merely from bringing cash back to go through the US economy.  As the article notes, allowing repatriation would lead to corporations dumping about a trillion of US Treasuries on the market, and likely cause a rise in the interest rate the US government must pay to borrow.  Not a win-win situation.  IN fact, clearly a loss for the US government and the majority of US taxpayers, both in Treasury interest rates and in lost corporate tax revenues.