by Mike Whitney
Vladimir Putin has decided how Russia is going to pay for
He's going to tax the
It's a remedy that most
Americans would support if they were given the choice, but they
Instead, Congress passed
a $2 trillion stimulus package for which the American taxpayer will
be held entirely responsible.
Even worse, the new legislation
contains a $500 billion allocation (another corporate giveaway) that
the Federal Reserve will use as a capital base for borrowing $4.5
That massive sum of money
will be used to buy toxic bonds in the corporate bond market.
Just as Mortgage-Backed
Securities (MBS) were used to fleece millions of investors out of
their hard-earned savings in the run-up to the
Crisis, so too, "toxic" corporate bonds were the weapon of choice
that was used to pilfer trillions of dollars from investors in the
run-up to today's crisis. (Same scam, different instrument...)
The virus (coronavirus) was merely the
proximate cause that tipped the sector into meltdown.
The problem had been
festering for years and everyone in the financial community
the BIS and the IMF) knew that it was only a
matter of time before the market would blow sky-high. Which it did...
What every American needs to know is that our crooked
bought-and-paid-for Congress just passed a bill that transfers the
credit risk for $4.5 trillion of corporate sludge onto the National
A bailout of this
magnitude could impact the nation's credit rating (Fitch has already
issued a warning), send interest rates to the moon, dampen economic
activity for years to come, and pave the way for a long and painful
The much ballyhooed
$1,200 checks for unemployed workers are merely a tactical diversion
that's being used to conceal the giant rip-off that is taking place
right under our noses.
In contrast, Putin has settled on a more rational and compassionate
He's going to launch a relief program that actually focuses on
the people who need it the most.
Then, he's going to cover
the costs by taxing the people who are most capable of shouldering
His intention is not to "soak the rich" or to
He simply wants to find the most equitable way
to share the costs for this completely unexpected crisis.
In short, Putin was
presented with two very bad options:
Let the Russian
people huddle in their homes ("shelter in place") until the
food runs out and the bills pile up to the ceiling.
Or tap into a
temporary source of revenue that will help the country get
through the hard times.
He wisely chose the
latter option not because he's a fiery leftist who hates the
"free market", but because he realizes that in a time of national crisis,
the people who are more able to pay, should pay.
It's a question of
And who are the people who will benefit from Putin's plan? Well, he
named them in a speech he delivered to the nation just last week.
Here's a clip:
"We also need to take
additional steps, primarily to ensure the social protection of
our people, their incomes and jobs, as well as support for small
and medium-sized businesses, which employ millions of people…
First, all social protection benefits that our citizens are
entitled to, should be renewed automatically over the next six
months… if a family is entitled to subsidized housing and
utility payments, they will not need to regularly confirm their
per capita income to continue receiving this state support… all
payments to war veterans and home-front workers timed to the
75th anniversary of the Great Victory, 75,000 and 50,000 rubles,
respectively, should be made before the May holidays…
Second, it is essential to support families with
Third, we need to support those on sick leave and
people who have lost their jobs."
(Putin's Address to the
No big payouts to
failing corporations, no welfare checks for Wall Street, and no tax
breaks for fatcat bankers and their crooked friends.
Just money for
the people who desperately need it:
Families with children,
veterans, home-front workers, the sick, the unemployed, and the
Simple and fair...
The strategy is aimed at everyone who is impacted by the virus, not
just the people who filed taxes last year like the
Trump Plan, but
anyone who needs public assistance.
At the same time, financial
support will be provided for small and medium-sized businesses,
incomes will be protected, jobs will be guaranteed. and mortgage
payments will be suspended.
It's not a perfect plan, but it's fairly
comprehensive and targets the people that are most vulnerable. It
also underscores the primary responsibility of government during
times of crisis, that is,
to ensure the health, safety and security
of its people....
That is Job 1.
The Putin plan also provides support for medical personnel, doctors,
nurses, emergency staff, hospital employees, health care workers and
"We have mobilized all the capabilities and resources for deploying
a system of timely prevention and treatment.
I would like to
specially address doctors, paramedics, nurses, staff at hospitals,
outpatient clinics, rural paramedic centers, ambulance services, and
researchers: you are at the forefront of dealing with this
My heartfelt gratitude to you for your dedicated
Will Putin and his advisors make mistakes in containing the virus
and ending the contagion as swiftly as possible?
Probably... but it certainly looks like they've got their priorities
Putin seems to understand that the health and welfare of the
Russian people has to be put before the stock market, finance
capital or the voracious corporate kingpins.
In contrast, Trump
put more people at risk of infection by sending them back
to work after Easter. That's just not the way responsible leaders
behave, not if they really care about the health of their people.
Here's more from Putin:
"There are two more measures I would like to suggest.
interest and dividend income that flows from Russia and is
transferred abroad into offshore jurisdictions must be taxed
I suggest that those
expatriating their income as dividends to foreign accounts
should pay a 15 percent tax on these dividends…
Second, many countries levy income tax on interest earned by
individuals from their bank deposits and investments in securities,
while Russia does not tax this income at all.
I propose that people
with over 1 million rubles in bank deposits and debt securities pay
a 13 percent tax on this income…
I propose using the budget revenue
from these two measures to fund initiatives to support families with
children and help people who are unemployed or on sick leave."
What does it mean?
It means that Putin is closing tax havens and tax loopholes so he
can get the money he needs to pay for the epidemic.
It means he's
taking on the wealthiest and most powerful people in Russia so he
can provide relief for the people who are stuck in their homes
trying to survive.
It means he's risking his own political future in
order to do the right thing.
"People of Russia, we need the state, society and the people to work
We have to be mindful that we bear personal
responsibility for our close ones, for those who live near us, and
who need our help and support…
It is our sense of solidarity that
underpins the resilience of our society, as well as an unwavering
commitment to mutual assistance and the effectiveness of the
response we come up with to overcome the challenge we are facing."
Shared sacrifice, solidarity and brotherly love.
That's what he's
talking about, isn't it?
The threads that bind a disparate group of
people into a sovereign nation.
In America, we make,
the working poor pay for the excesses of the
crooked rich, while in Russia, the wealthy are asked to make
sacrifices for the sake of the country...
Which approach do you think