Selig Cartwright, Goldman Sachs Washroom Attendant, Explains How To Do Away With Taxes??
(The scene is a washroom in the headquarters of Goldman Sachs. Mr. B., a company executive, comes out of his private Stall #8 after an extended visit, carrying a bunch of papers. He encounters Selig, the washroom attendant, who asks…)
Writing a novel, Mr. B.?
If only, Selig. Doing my taxes. Or starting them anyway. They are so, so, so…
Crazy? Irritating? Unfair?
All that, Selig. No time now to complain about them, though. Gotta run. Places to go. People to see. Derivatives to churn out.
You know, Mr. B., maybe we don’t really need taxes. I have an idea that might let us abolish them altogether.
Abolish taxes? Really?
Yes, sir. The other day I was speaking with one of the company’s bond traders…
Always an educational experience, Selig. Continue, please.
Well, sir, he mentioned how the Fed is buying $45 billion a month in long-term Treasury bonds.
That’s right, Selig.
And that comes out to $540 billion a year.
I don’t have my calculator with me, but that sounds right. Carry on.
Then on the radio, Mr. B., I heard that the CBO, the Congressional Budget Office, this fiscal year was projecting the national government’s deficit would be $845 billion. Which means that this year one part of the government, The Fed, would be buying 64 percent of the debt issued by another part of the government, the Treasury, with both using the same collateral — the full faith and credit of the United States.
You see a problem here, Selig?
Of course not, sir. Who could possibly think such a thing? It got me thinking, though. If The Fed is already borrowing 64 percent of new debt issued by The Treasury to fund the deficit, why not borrow it all? Then there wouldn’t be all those arguments in Washington about how deficits are endangering the economy because there would always be a willing buyer for this debt.
Not a bad idea, Selig. But what has this got to do with taxes?
Well, Mr. B., if one part of government spending — the part funded by deficits — was all funded by The Fed’s buying bonds from the Treasury, why not have The Treasury issue bonds to cover the part of government spending now paid for with taxes? Then we could do away with income taxes altogether.
Great Reagan’s ghost! You’re right, Selig! Then all the extra spending possible because Americans would no longer be paying taxes would generate the biggest boom since sub-prime mortgage lending. I’m seeing Dow 50,000 here. But wait. Wouldn’t this notion play havoc with the country’s credit rating?
It probably would, Mr. B. In fact it might give the United States a credit rating a notch or two lower than the Bank of Cyprus. But so what? Low credit ratings may scare off private lenders, or make them demand higher interest on their loans. But when S&P lowered the credit rating of the U.S. from triple-A to AA+, borrowing of this country’s debt actually increased and at lower rates, too, because the main buyer is The Fed, and it doesn’t care about the country’s credit rating, doesn’t demand higher interest rates either, because in essence it is lending to itself.
I’m feeling a little dizzy here, Selig. No more deficit worries. No more income taxes. Surely this would have to catch up with the government somewhere down the road.
Not necessarily, sir. You know my wife reads her Bible regularly.
I do know that, Selig. I hope your good woman is well and she still prays for me.
She is well, sir, and she prays for you nightly. Fervently. As if our economic survival depended on your good will.
A prudent woman as well as a religious one. Good combination. But why do you mention her now, Selig?
Because when I told her my idea, she referred me to Leviticus in the Bible where it speaks about debt forgiveness every few years, and declaring a Jubilee celebration when one occurs.
So, Selig? So?
So, sir, every few years government leaders and Fed policy makers could go on a retreat together, and come back declaring a Jubilee on all outstanding government debt held by the Federal Reserve. Then the worrisome debt built up by deficits would disappear, income taxes would never have to come around again, and we could start the whole borrow-from-ouselves-to-pay-for-everything cycle all over again. And because this would be sanctioned by God, and no one in Washington would dare admit being a non-believer, there would be no objections.
Selig, I’ll admit I am impressed. Very impressed. I thought all the cleaning chemicals you’ve been inhaling in order to keep this washroom sparkling had probably damaged your brain. Now I see they have actually enhanced its operation. I’m even thinking we hold meetings of the company’s Ethic Committee down here in the future, have them do some washroom inhales, better to ensure we’re compliant with all government regulations.
I’ll work on the seating arrangements, sir.
Do that. Ha ha ha ha. Forgive me for tittering, Selig. But won’t people be surprised when they hear that this country’s new economic policies were devised by a man whose main job is unplugging toilets at Goldman Sachs?
Actually, Mr. B., I don’t think many people would find that surprising in the least.
(Michael Silverstein’s new comic novel, Murder At Bernstein’s, about a financial news billionaire who wants to get elected Mayor of Philadelphia, is now available on Amazon.)