Budget Blog

Too Big to Fail, Too Big to Exist Act:

Summary

The “Too Big to Fail, Too Big to Exist Act” is designed to break up large financial institutions whose failure would put the American economy at risk of enormous job losses, business failures, bankruptcies and homeowner foreclosures. “Too Big To Fail” institutions are defined as any entity whose failure, due to its size, exposure to counterparties, liquidity position, interdependencies, role in critical markets, or other characteristics or factors, would have a catastrophic effect on the stability of either the financial system or the United States economy without substantial Government assistance. The expression “Too Big to Fail” grew out of the 2008 financial crisis, considered the worst financial crisis since the Great Depression, and resulted in Congress approved a $700 billion bailout and the Federal Reserve propping up some institutions with $16 trillion in near zero-interest loans.

The bill would:

• Would require within one year of enactment the breakup of at least eight financial intuitions that are currently so large and globally connected that they highlighted by the Financial Stability Board. Those current eight are: JP Morgan Chase, Citigroup, Goldman Sachs, Bank of America, Morgan Stanley, Bank of New York Mellon and State Street.

• Create a “Too Big to Fail List” based on the stability board list and compiled by banking regulators made up of key federal and state agencies. That list would be comprised of banks and bank holding companies who pose a threat to the financial system.

• Direct that the Treasury Secretary, within a year of enactment, break up the institutions on the list.

• Prohibit any institutions on the “Too Big to Fail list” from accessing Federal Reserve discount facilities and from using insured deposits for speculative activities, derivatives, or hedging. That means those banks would have strict limits placed on their banking activities once they go on that list.

Supporters include:

• Independent Community Bankers of America

• Public Citizen

• U.S. PIRG

• Americans for Financial Reform

Apr 30 2015

Sanders review of Republican Budget Conference Agreement Shows It Takes America in the Wrong Direction

Devastating cuts to health care, job creation, college affordability among the goals of GOP plan

The Republican Budget Conference Report:

more tax breaks for millionaires;

more pain for the middle class

The Republican budget conference report moves this country in exactly the wrong direction. At a time of massive wealth and income inequality, it gives huge tax breaks to millionaires and billionaires, while making devastating cuts to education, Medicare, affordable housing, prescription drug coverage, and many other vital investments for the elderly, the children, the sick, and the poor.

The Republican budget would eliminate health insurance for at least 27 million Americans by repealing the Affordable Care Act and making draconian cuts to Medicaid.

This budget is truly the Robin Hood principle in reverse: It takes from the most vulnerable and gives to the wealthiest families and largest corporations in America. 

The Republican budget would eliminate the estate tax for 5,400 families who inherit over $10 million, while increasing taxes on 13 million working families with 25 million children. Meanwhile, it uses an accounting gimmick to increase defense spending by $38 billion, which could pave the way for another costly war.‎

Further, at a time when senior poverty is going up, the Republican budget calls for ending Medicare as we know it by turning it into a voucher program. At a time when millions of disabled people are trying to survive on less than $14,000 a year, the Republican budget would pave the way for a massive cut to Social Security Disability Insurance.‎

Instead of creating jobs, the Republican budget eliminates jobs. Instead of making education more affordable, it will make it harder for millions of young Americans and their families to afford the cost of a college education. Instead of helping to eliminate hunger in America, it will add to the financial problems of low-income Americans and create more hunger.

For all of these reasons, the Republican budget must be defeated.‎ Included below is a summary of the conference report.

The Republican budget would repeal the Affordable Care Act, which would:

  • Immediately eliminate health insurance coverage for 16.4 million Americans and reduce the ranks of the insured by 23 million within one year.
  • Deny over 2.3 million young adults the right to stay on their parents’ health insurance plan until the age of 26.
  • Deprive up to 130 million Americans with pre-existing conditions the right to purchase affordable health insurance if they lose their jobs or otherwise lose their health insurance.
  • Increase prescription drug prices for than 9.4 million seniors and persons with disabilities who are on Medicare Part D by re-opening the donut hole.‎
  • Deprive every woman in this country with equal protection that prevents insurance companies from charging extra simply because they are women.

 The Republican budget would eviscerate Medicaid and cut more from Medicare than any budget resolution or conference report in at least a decade. Specifically, the Republican budget:

  • Cuts Medicare by more than $431 billion over the next decade – a deeper cut than any plan in the last decade.‎
  • Calls for ending Medicare as we know it by turning it into a voucher that would increase out-of-pocket costs for millions of seniors and those with disabilities.
  • Cuts Medicaid by at least $400 billion which would eliminate health insurance for at least 11 million Americans, and jeopardize nursing home care for some of the most vulnerable Americans in this country.

 The Republican budget would pave the way for Social Security cuts that would deprive the disabled and elderly of benefits they have worked to earn over their lifetimes. The Republican budget:

  • Puts nearly 11 million disabled Americans and their families at risk of a 19 percent benefit cut to Social Security Disability Insurance by preventing a routine accounting practice known as reallocation.
  • Does not include an amendment that received 51 votes in the Senate which would have prevented benefit cuts, an increase in the retirement age, or the privatization of Social Security.

 The Republican budget cuts about $270 billion from education and job training investments over the next decade. Specifically, the Republican budget: 

  • Slashes Pell Grant funding by more than a third by eliminating mandatory funding for Pell Grants, cutting the program by nearly $90 billion over 10 years – and cutting discretionary Pell funding by $30 billion more. This would make college less affordable for many of the more than 8 million students receiving aid and tens of millions more over the next decade.
  • Switches to Fair Value accounting – making student loans appear vastly more expensive to the federal government than they are – which could increase college costs by more than 15 percent for struggling students.
  • Eliminates an in-school interest subsidy for need-based student loans, increasing student loan debt by nearly $4,000 for an estimated 30 million students.
  • Eliminates Head Start services for 400,000 children over the next decade by cutting the program by more than $4 billion.
  • Cuts for Title I education funding and Individuals with Disabilities Education Act funding by $7 billion. 

When it comes to tax policy, the Republican budget ‎provides huge tax breaks to millionaires, billionaires, and the most profitable corporations in this country, while increasing taxes on millions of working families. Specifically, the Republican budget: 

  • Provides a $269 billion tax break for the wealthiest 0.2 percent of Americans over the next decade by abolishing the estate tax – providing an average tax break of $3 million to multi-millionaires and billionaires.
  • Calls for lowering the top corporate tax rate, at a time when corporate profits are at an all-time high and the effective corporate tax rate is just 12.6 percent.‎
  • Calls for lowering the top individual tax rate at a time when the top one percent already earn more income than the bottom 50 percent.
  • Does nothing to eliminate the carried interest loophole at a time when Wall Street billionaires pay a lower effective tax rate than truck drivers or nurses.‎
  • Does nothing to eliminate over $40 billion in tax breaks and subsidies for oil and gas companies, even as the five biggest oil companies alone made more than $1 trillion in profits over the last decade.
  • Calls for the adoption of a territorial tax system that would reward companies for shifting profits to offshore tax havens in order to avoid paying U.S. income taxes – even as corporations are already avoiding $100 billion a year in taxes by shifting their profits to the Cayman Islands and other offshore tax havens. 

Meanwhile, when it comes to the taxes that struggling working families pay, the Republican budget: 

  • Raises taxes by an average of $900 on 13 million families with 25 million children – who have an average household income of just $22,600. This increase stems from the Republican budget’s plan to allow tax credits for working families to expire, despite the fact that 73 senators voted to maintain the expanded credits.
  • Paves the way for a tax hike of $1,100 for 12 million families and students paying for college by allowing the American Opportunity Tax Credit to expire. 

Republicans are using a budget gimmick to increase defense spending, even as they gut domestic programs. The Republican budget: 

  • Increases OCO funding by $38 billion, which could pave the way for another unpaid for war.
  • Removes a budget point of order that would constrain Republicans’ ability to add more war funding than was requested by our generals and commanders in the field.
  • Pays for the increase in defense spending by cutting non-defense programs by $544 billion over 10 years – a total that includes Republicans’ elimination of “program integrity” funding, which roots out fraud, waste, and abuse and more than pays for itself. 
If the Republican budget’s cuts spending are applied proportionately, in an average year the Republican budget: 
  • Eliminates housing assistance for 450,000 families due to a 14 percent cut to the Section 8 rental assistance program.
  • Cuts 14 percent from housing programs for the elderly and for persons with disabilities.
  • Eliminates heating assistance (LIHEAP) for up to 823,000 families.
  • Eliminates nutrition assistance for 1.2 million women, infants, and children who rely on the WIC program.
  • Cuts mandatory transportation funding by 40 percent – $217 billion over the next decade.
  • Cuts funding for the National Institutes of Health by $8 billion over the next decade, which would cut funding for Alzheimer’s, cancer, and other critical medical research. 

The Republican budget also: 

  • Leads to the loss of at least 2.3 million jobs and a 1.9 percent reduction in GDP in 2017.
  • Eliminates Democratic budget amendments that would allow Americans to earn paid sick leave, save the Postal Service, and would ensure all legally married same-sex spouses have equal access to the Social Security and veterans benefits they have earned.
  • Paves the way for a fast-track vote to repeal the Affordable Care Act though the reconciliation process.
  • Repeals the rule that prevents reconciliation legislation from increasing the deficit, allowing Republicans to fast track tax cuts for the wealthy and large corporations just like they did under President George W. Bush.
  • Rigs the rules to make it easier to pass tax cuts for the rich through the use of “dynamic scoring.”