Greater New York City Area- On Wednesday, Aug. 3, seniors and community members will hold “Knit-Ins” at bank branches throughout New York City and Long Island with the theme “Save Medicare– Make Big Banks Pay their Share.” The seniors will visit banks with knitting circles to create blankets that say “Save Medicare,” which they will later hand-deliver to members of Congress during the August recess. The Knit-Ins are a reaction to politicians who have been using the debt ceiling crisis to push disastrous cuts to Medicare, while ignoring the soaring profits and low tax rates of the country’s largest financial institutions. Area seniors are raising the question of why politicians are not looking to increase revenue from hugely profitable banks in order to save Medicare, Medicaid, Social Security, education and other vital social programs.
“Medicare is absolutely essential for my health, I have diabetes and need medications and constant treatment,” said Vickie Owens, a 69-year-old retired health professional and senior rights activist from the Bronx. “We bailed out the big banks, got them on their feet, and now they just want to throw us taxpayers and senior citizens to the dogs.”
More than 47 million Americans rely on Medicare to provide healthcare and a modicum of financial security. The biggest funding source for Medicare, 43 percent, comes from general federal revenue, with the rest made up from payroll taxes and beneficiary premiums. Despite claims by some politicians, Medicare is in many ways an efficient program for delivering healthcare to seniors and people with disabilities, and spending per beneficiary has risen much more slowly than private health insurance plans. In New York, cuts to Medicare would not only hurt seniors, but would also be disastrous for teaching hospitals, forcing them to shed thousands of jobs and shutter vital services.
“There used to be a grander vision for America and for New York: if you worked hard and played by the rules, you would have dignity and security in your old age,” said Maria Alvarez of the New York Senior Action Council. “And there was a social contract, in which corporations and the rich did their part to make sure everyone had a certain standard of living. But now politicians, big banks and corporate CEOs are trying to destroy the American Dream. Working people and seniors are being asked to make all the sacrifices, while the wealth gets more and more concentrated at the very top. There is a widespread and growing sense that this is the wrong direction for our city and our nation.”
Big Banks: Soaring Profits and CEO Pay, Low Taxes
Big banks were largely responsible for crashing the economy in 2008 through reckless speculation and fraudulent lending practices, causing the worst downturn since the Great Depression. Taxpayers came to the rescue with over
$700 billion in bailout funds, and now big banks and their CEOs are once again making astronomical profits. The largest six banks have been making $199 million PER DAY in profits, resulting in an $18 billion profit for just the first quarter of 2011. But these banks have been paying an average effective tax rate of only 11percent for 2009 and 2010, less than half the legally mandated rate of 35 percent. This has resulted in $13 billion in lost revenue, some of which could be used to protect Medicare.
In addition to their own tax avoidance, banks have been choking loans to small businesses and laying off bank employees, thereby strangling economic growth which would also lead to greater federal tax revenue:
JPMorgan Chase has made $34.7 billion in profit, and the CEO received compensation of $57.9 million, since 2008. But during 2008-2009, lending by the bank to small businesses through the Small Business Administration’s 7A program fell 70 percent, and it has laid off 14,000 employees since the bailout.
Bank of America has made almost $8 billion in profit since 2008, when it received over a $230 billion taxpayer bailout, and has paid CEO compensation of $54 million. But because none of their profits were subject to U.S. taxes, B of A was actually credited a $666 million tax refund for 2010 and a $3.6 billion refund in 2009. B of A has 371 tax-sheltered subsidiaries, 204 of which are in the Cayman Islands. Since 2004, B of A has cut more than 34,000 jobs and plans to eliminate up to 35,000 more over the next 3 years.
Wells Fargo made a profit of $12 billion in 2009 and was credited a $4 billion tax refund, and then made a $12 billion profit in 2010 and paid only a 7.5percent federal tax rate. Since 2008, the CEO’s total compensation has been over $47 million. Over the long term, Wells Fargo has made over $110 billion in pre-tax earnings since 2001, but paid an average of just 15.6 percent in federal taxes.
Citigroup made a profit of $10.6 billion in 2010, but was credited a tax refund of $249 million. Citigroup’s CEO has received $38.4 million in compensation since 2008.
As the population ages, meeting their healthcare needs has become one of the most important issues facing our nation. Seniors vow to increase actions such as the big bank Knit-Ins in coming months in order to assert that budget deficits should be resolved through a balanced approach, including raising revenue by making hugely profitable financial institutions pay their fair share.