Many people mention the Federal Reserve Bank’s bank numbers about “idle cash” held by U.S. companies. The figure is staggering $1.7 trillion (and this does not include money owned by banks.) The companies don’t use the money to make more products because they don’t see the buyers out there so they keep it in CD’s, stocks and bonds.
Here’s a piece by Reuters writer David Cay Johnston that says the Fed is lowballing it and that the real number is much, much higher. He says the Fed only looks at the tax figures from the IRS about money held by companies from their U.S. business. However, Johnston says, if you look at the worldwide holdings the IRS figures for 2009 the number is over $5.1 trillion.
Now if you think that the Great Recession forced companies to plow through those reserves since ‘09 think again. Corporate profits rose in 2010 and 2011, a combined $1 trillion. Johnston says cash held by companies rose, so the amount of “idle cash” is more than $5.1 trillion.
Since the companies are hoarding the money the country needs to save the climate and put people to work, a reasonable thing to do would be for the U.S. government to go out and take what it needs through taxes. Communism??? No, as Johnston points out it’s already in the U.S. tax code! “A business holding more cash than its operations reasonably require can be hit with a 15 percent levy under Section 531 of the Internal Revenue Code”.
Unfortunately the law is rarely enforced and is at too low of a percent, but the principle is sound. Modify it so that the overstuffed companies will have to give up a trillion or two from their hoard. Then start a crash program to make renewable energy and other necessary items and hire millions of workers into businesses run democratically as co-ops.