Corporate-Occupied Government: A 'Redistribution Machine' for the Wealthy

'Redistributing Up': New Reuters series explores expanding US inequality
by Jacob Chamberlain
http://www.commondreams.org/headline/2012/12/18-2

The income inequality gap has vastly expanded over the past 20 years thanks largely in part to federal policies, which have decreased large chunks of revenue through unprecedented tax cuts for the wealthy and redistributed what's left of that revenue away from public services and federally managed infrastructure programs to private contracts with multibillion dollar corporations—particularly defense contractors, weapons manufacturers, and security technology firms.

This, according to a new series by Reuters, called The Unequal State of America.

In the first article of the series (http://www.reuters.com/subjects/income-inequality/washington), published Tuesday, Reuters traces the ways in which the federal government has acted as a wealth redistribution machine, not towards those in need, but upwards towards the already wealthy. According to the report, an analysis of decennial Census data, the federal government has "emerged as one of the most potent factors driving income inequality in the United States - especially in the nation's capital."

The report cites public policy decisions, government 'outsourcing' of projects to private firms, weakened unions, a shift in labor demand from low-skill jobs to high-skill professions and, most broadly, sweeping tax cuts, particularly during the Bush administration, that largely benefit top income earners and the corporations, lobbying firms, and law firms they work for.

"A cadre of Washington professionals advanced their careers by pushing through personal income-tax cuts during the administration of President George W. Bush that redistributed nearly 2 trillion dollars nationally over the past decade, mostly to high earners," the report states.

As a result of these policies, Reuters reports:

Inequality has increased in 49 of 50 states since 1989.

The poverty rate increased in 43 states, most sharply in Nevada, ravaged by the housing bust, and in Indiana, which saw a rise in low-paying jobs.

Twenty-eight states saw all three metrics of socioeconomic well-being worsen. There, inequality and poverty rose and median income fell.

In all 50 states, the richest 20 percent of households made far greater income gains than any other quintile - up 12 percent nationally.

Income for the median household - in the very middle - fell in 28 states, with Michigan and Connecticut leading the way.

The five largest increases in inequality all were in New England: Connecticut first, followed by Massachusetts, New Hampshire, Rhode Island and Vermont. The decline in manufacturing jobs hit New England's poor and middle hard, while the highly educated benefited from expansion in the biotech and finance industries.

The only state that didn't see a rise in inequality: Mississippi, which had an insignificant dip. The Magnolia State was one of the few to post a drop in poverty and a rise in income, but it still ranks worst in the nation on both counts.

http://www.reuters.com/subjects/income-inequality

Washington's Austerity Plan Threatens the 50 Mil Poor Americans

Our nurses see dire need every day in the ER, but the growing gulf of inequality in the US has made such deprivation ubiquitous
by Rose Ann DeMoro

With a compromise on social security now unmasked (http://www.nypost.com/p/news/national/democrats_caving_on_soc_sec_vcTGBl...) – costing the elderly an estimated 6.2-7.7%, according to business writer Doug Henwood (http://lbo-news.com/) – America becomes more and more a place of poverty (http://www.guardian.co.uk/society/poverty). Warnings that austerity begets poverty will go ignored, but the nation's deteriorating condition cannot so easily be overlooked.

No surprise, in this milieu of victimizing the most marginal, that one anniversary has received far too little attention. This year, 2012, marked the 50th anniversary of a ground breaking book, The Other America, by Michael Harrington, a searing examination of rampant poverty in the richest nation on earth. A prominent review of Harrington's work in the New Yorker magazine (http://www.newyorker.com/archive/1963/01/19/1963_01_19_082_TNY_CARDS_000...), reportedly brought to the attention of then President John F Kennedy, ultimately helped influence the Great Society reforms later launched by his successor Lyndon B Johnson.

But half a century later, we seem to be back to square one in this country.

For the past two years, the nation's largest nurses' organization, National Nurses United, has promoted a program (http://www.guardian.co.uk/commentisfree/2012/dec/19/www.nationalnursesun...) to spur revitalization of our economy to assist families in financial peril. Our campaign was largely spurred by an alarming spike in patients presenting in hospital emergency rooms and clinics across the country who are forced to choose between paying medical bills, their rent or mortgage or feeding their families.

The crisis nurses saw was not an aberration. By 2011, with the recent recession showing scant signs of abating, official US poverty figures had soared to nearly 50 million Americans. Some in the political arena tend to pigeonhole poverty by race, but this calamity crosses all lines of gender, geography, age, and ethnicity (http://www.huffingtonpost.com/2012/11/14/american-poverty-2012_n_2130544...).

Last year, almost one in four children lived in a family that regularly had difficulty affording sufficient food, according to the US department of agriculture. On the other end of life, 8.3 million people over 60 in 2010 faced the threat of hunger (http://www.mowaa.org/about-senior-hunger), up 78% from a decade earlier – yet another reason to oppose the proposed fiscal cliff cuts (http://www.guardian.co.uk/world/fiscal-cliff) in social security or Medicare.

Hunger and malnutrition, as nurses will attest, lead to a broad array of health problems, ranging from reduced immunity to disease or even organ failure. For children, poor nutrition can severely stunt cognitive development and growth. For adults and seniors, the consequences can include more chronic illnesses and shorter life spans.

Over 20 million Americans live in extreme poverty (http://www.worldhunger.org/articles/Learn/us_hunger_facts.htm) – with cash incomes as low as $10,000 a year for a family of four. Is it any wonder that the US has the third highest poverty rate out of 30 leading industrial nations?

The problem is exacerbated by decades of economic and political policies that have resulted in a massive shift of national wealth from working people to the corporate boardrooms and the yacht owners. One result: real wage growth for workers has stagnated for 30 years; median household income has steadily fallen since the Wall Street produced economic crash of 2008. Much of the limited job growth since then has been in the lowest wage sectors, primarily food service and retail.

Sadly, the issue remained almost as invisible on the 2012 campaign trail as it was when Harrington shocked the nation in 1962. But it is not a surprise to nurses who, every day, see the faces of poverty and the suffering of families left behind – even as corporate profits once again soar and the parties and good times are back on Wall Street.

With all the enormous wealth in our nation, we really can do something about poverty – as well as the overall economic morass that continues to plague not just the unemployed, or those working two or three jobs, and flipping hamburgers in Main Street towns and cities from coast to coast.

Nurses have a solution. Everyone deserves a good job at living wages, guaranteed healthcare for all based on patient need, not on ability to pay, and equal access to quality education. And now, with cuts to social security on the table, and despite the push by some politicians in Washington and many state capitals to enact more austerity programs on already hard-hit communities, there is a simple way to keep anti-poverty programs in place and pay for them.

A modest tax Wall Street on speculation, embodied in HR 6411, authored by Representative Keith Ellison (http://www.govtrack.us/congress/bills/112/hr6411), could generate up to $350bn every year, an amount that could save over 1.7m homes from foreclosure, or finance 9m new jobs at current average wage levels. Or it could fund the food plans of 24m families of four for a year, or lift all 3.8m female-headed households out of poverty for nearly a decade.

Increasingly, the "Other America" is becoming all of us. It is up to all of us to end this disgrace.

© 2012 Guardian News and Media Limited
http://www.guardian.co.uk/commentisfree/2012/dec/19/fiscal-cliff-cuts-au...

Rose Ann DeMoro is executive director of the 185,000-member National Nurses United, the nation’s largest union and professional association of nurses, and a national vice president of the AFL-CIO. Follow Rose Ann DeMoro on Twitter: www.twitter.com/NationalNurses

US More Unequal Than All Peers Except Chile, Mexico, & Turkey

(Reuters) - Some rich countries are more unequal than others - and the United States more so than most.

America has a higher degree of income inequality than almost any other developed country. Only three of the 34 members of the Organization for Economic Cooperation and Development rank higher - Chile, Mexico and Turkey.

So why is the U.S. so much more unequal than its peers? The U.S. Congressional Research Service cited several potential reasons in a report earlier this year.

One is that most other rich countries spend a bigger share of their national output on social programs, which tend to lessen income inequality. In Germany, public social spending accounted for 27.8 percent of gross domestic product in 2009, compared with 19.2 percent in the United States, according to the OECD.

A second factor is tax systems. A 2012 study by economists at the OECD found that, in general, the more a country spends on social programs, and the more progressive its tax-and-transfer system is, the more it can reduce income inequality. The U.S. is less effective at reducing inequality through taxes and benefits than the OECD average; German policies have cut inequality more than the average.

Australia spends less than the OECD average on social programs - but has been more effective than average in reducing inequality. Economists say this may be because Australia targets its programs more squarely at low-income families.

A third potential reason is the way earnings are divided. Michael Forster of the OECD suggests inequality in English-speaking countries may be higher because Anglophone corporate executives have more options of places to work than do, say, German speakers, and so they can demand higher pay.

Attitudes toward the poor may make a difference, some researchers say. A 2008 OECD study found that respondents in the United States and Korea were far more likely to say poor people were poor because they are lazy than did respondents in Nordic and Continental European countries.

That speaks to a common belief among Americans that anyone who works hard enough can become rich. As John Steinbeck once wrote, in America, "the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires."

Recent studies, however, have shown that Americans are now less likely to move into a class above their parents than are people in other rich countries.

(Reporting by Kristina Cooke; Edited by Michael Williams)
Copyright 2012 Reuters
http://www.reuters.com/article/2012/12/20/us-equality-indiana-oecd-idUSB...

Fool Us Again: 30 Years of Bait and Switch Budget Politics

Republican Blackmail, Press Malfeasance, and Democratic Complicity Are Rewarding the Rich and Cheating the Rest of Us
by John Atcheson

Once again we go to the cliff. Once again Republicans are threatening brinksmanship. Once again, Democrats are practicing preemptive capitulation. Once again, the media is missing the real story.

You’re going to be hearing a lot from Republicans about the horrors of debt and deficits in the next couple of weeks. The last time they cranked up their fear machine prior to a vote on the debt ceiling, it caused a downgrading of the US credit rating and cost us some $90 billion. You know, crashing the economy in order to save it.

Let’s be clear: Republicans don’t give a damn about debt and deficits.

In fact, the bulk of our current and projected deficit is a direct result of Republican policies (http://www.cbpp.org/cms/index.cfm?fa=view&id=3873). And Republicans watched in silence as Reagan tripled the deficit and Bush doubled it (http://www.perrspectives.com/blog/archives/001617.htm#three). Both Cheney and Reagan claimed deficits don’t matter, and again, conservatives nodded in agreement.

So what’s going on?

Republicans are trying to accomplish through the back door that which they could never accomplish directly: gutting social security; Medicare; Medicaid; Pell grants; unemployment insurance; and regulatory programs covering the environment, labor, worker safety, food and drug safety, the financial sector and anything else which might get in the way of giant giveaways to oligarchs, plutocrats and fat cats.

But there’s a problem. These programs all enjoy broad public support. In fact, when Gingrich tried to start a real debate about cutting them under his Contract for America, he got his head handed to him. Same with Bush in 2005 when he said he was going to use his “political capital” to reform Social Security.

So what’s a good gubmint’-hating, industry-loving conservative to do?

Well, it’s no secret that for the last 30 years they’ve embarked on a systematic campaign to make Americans think government is an incompetent and destructive force, to starve it of resources and spend it into mega-deficits, and make people believe that the private sector will provide all good things by pure serendipity.

The theory was, when deficits were large enough, people would have no choice but to support cuts to these popular programs.

Now, thanks to Republican tax cuts, unfunded wars, and unfunded drug benefits (designed primarily to enrich big Pharma), government debt is growing. It’s not an immediate crisis. In fact, at a time when we can borrow for next to nothing, and we’re in the middle of a stagnant economy, we need government to spend more, not less. Other countries which have followed the austerity prescription are experiencing double dip recessions, and the even the austerity crazed IMF is rethinking the idea of imposing budget cuts on stagnant economies.

The problem for Republican is that the policies designed to enable them to cut New Deal programs and shred regulations, created a massive recession, making it inconvenient to recommend more of the same as a prescription for fixing the problem they created.

So you’d think that the inside the beltway chattering class and the press would stop hawking this Republican fear bomb and reveal it for what it is – a destructive back door strategy for getting their way on entitlements that could bring on a bona-fide Depression. And you’d think the media would start investigating why they want to eviscerate government in general and entitlements in particular (hint, both the Romney and Ryan budgets used the cuts to fund giant giveaways to the uber rich and corporations).

But of course you’d be wrong.

To hear the punditry tell it, debt is our number one problem, and drastic cuts are an absolute necessity. Hell, they’re even buying the notion that cutting Social Security will somehow address budget deficits. Social Security, as everyone except these “experts” seems to know, isn’t even funded on-budget. We pay for it with our contributions. And contrary to conservative myth-makers, it’s not in trouble. It is solvent for some 30 years -- far more than any private sector pension is. Trying to fix a deficit by cutting social security is like blaming the milkman because your mail is late. Stupid.

And of course, you’d think Obama would be ready to call the Republicans on their debt-ceiling brinksmanship. Particularly after campaigning and winning on the idea that government fiscal policy should be something other than a ponzi scheme for the rich. Particularly when polls overwhelmingly support taking a hard line on conservative blackmail.

Yes, you’d think Mr. Obama would mint the $1 trillion coin and make these ass-clowns and their destructive games irrelevant (http://www.reuters.com/article/2013/01/05/us-usa-fiscal-coin-idUSBRE9040...).

But again, you’d be wrong.

The Compromiser-in-Chief can’t seem to help himself. He seems programmed to play the Republican game; to take seriously, what amounts to utter nonsense.

http://www.commondreams.org/john-atcheson

John Atcheson is author of the novel, A Being Darkly Wise, an eco-thriller and Book One of a Trilogy centered on global warming. His writing has appeared in The New York Times, the Washington Post, the Baltimore Sun, the San Jose Mercury News and other major newspapers. Atcheson’s book reviews are featured on Climateprogess.org.

Corporate Gold on the Fiscal Cliff

by Bill Moyers and Michael Winship

In economist and New York Times columnist Paul Krugman’s book, End This Depression Now!, there’s a chapter titled “The Second Gilded Age” in which he describes the extraordinary rise in wealth and power of the very rich during this era of unregulated greed. Since Ronald Reagan’s election in 1980, the top one percent of Americans have seen their incomes increase by 275 percent. After accounting for inflation, the typical hourly wage for a worker has increased just $1.23.

Big Money, as Krugman writes in his book, buys Big Influence. And that’s why the financiers of Wall Street never truly experience regime change — their cash brings both political parties to heel. So it is that the policies that got us where we are today — in this big ditch of chronic financial depression — have done little for most, but have been very good to a few at the top.

But they’re not satisfied with having only most of it — they want it all. If Krugman were writing his book today, he could find plenty of evidence in the deal that supposedly kept us from going over the fiscal cliff. Behind closed doors, Congress larded it with corporate tax breaks worth tens of billions of dollars — everything from tax credits for NASCAR racing and the railroads to subsidies for Hollywood, rebates for the rum industry and loopholes for off-shore financing that could help giant multinationals like General Electric avoid billions of dollars in corporate income taxes.

Writing in the conservative Washington Examiner, columnist Tim Carney says many of these expensive giveaways were “spawned by a web of lobbyists, donors and staffers surrounding Democratic Sen. Max Baucus of Montana,” chairman of the Senate Finance Committee. As we know from the Obamacare fight, Baucus is a connoisseur of revolving door corruption. “Pick any one of the special-interest tax breaks extended by the cliff deal,” Carney wrote, “and you’re likely to find a former Baucus aide who lobbied for it on behalf of a large corporation or industry organization.” Even the pro-business Wall Street Journal was appalled. They called it a “Crony Capitalist Blowout.”

And so it was — and more. It was payback time for all those campaign donations. CEOs and lobbyists were tripping over themselves as they traipsed up and down Pennsylvania Avenue between Congress and the White House. You’ve no doubt heard about Fix the Debt, that group of business execs and retired politicians taking out TV ads and campaigning to slash the deficit. In The New York Times, Nick Confessore reported, “…close to half of the members of Fix the Debt’s board and steering committee have ties to companies that have engaged in lobbying on taxes and spending, often to preserve tax breaks and other special treatment.”

Get it? They’re privately protecting their interests as they publicly urge austerity on everyone else.

Lloyd Blankfein, CEO and chair of the global investment giant Goldman Sachs, is on Fix the Debt’s Fiscal Leadership Council. Here’s what he said when asked by CBS News’ Scott Pelley about how he would reduce the federal deficit: “You’re going to have to undoubtedly do something to lower people’s expectations — the entitlements and what people think that they’re going to get, because it’s not going to — they’re not going to get it… Social Security wasn’t devised to be a system that supported you for a 30-year retirement after a 25-year career… in general, entitlements have to be slowed down and contained.”

Yes, but Blankfein and Goldman Sachs make sure their entitlements aren’t touched! Here’s the story: After 9/11, Congress created tax-exempt Liberty Zone bonds to help small businesses rebuild near Ground Zero. Turns out Goldman’s friends in high places consider it a small business, too, although it made $5.6 billion in profits last year. As the fiscal cliff fiasco was playing out over New Year’s Eve, faster than the ball dropped in Times Square, a deal was struck that will extend the subsidies for Goldman’s fancy new headquarters in lower Manhattan. In their 43 stories of glass and steel, and a footprint two city blocks long, Goldman Sachs reigns supreme – thanks to a system rigged by and for the powerful rich.

And then, according to The Wall Street Journal, just before the fiscal cliff deal’s higher individual tax rates kicked in, Goldman handed “Lloyd Blankfein and his top lieutenants a total of $65 million in restricted stock” — bonuses awarded a month earlier than usual so they could all beat the coming tax hike from which they have been spared for more than ten lucrative years.

It won’t surprise you to learn that, “Corporations announced more special dividends last month than in any other December since at least 1955.” Doing everything they can to avoid helping pay off the debt their CEOs have been urging Congress to cut.

As for working people — tough luck. Because the fiscal cliff deal ends the cut in payroll taxes, the average worker this year will take home about a thousand dollars less.

http://www.billmoyers.com/

Journalist Bill Moyers is the host of the new show Moyers & Company, a weekly series of smart talk and new ideas aimed at helping viewers make sense of our tumultuous times through the insight of America’s strongest thinkers.. His previous shows on PBS included NOW with Bill Moyers and Bill Moyers Journal. Over the past three decades he has become an icon of American journalism and is the author of many books, including Bill Moyers Journal: The Conversation Continues, Moyers on Democracy, and Bill Moyers: On Faith & Reason. He was one of the organizers of the Peace Corps, a special assistant for Lyndon B. Johnson, a publisher of Newsday, senior correspondent for CBS News and a producer of many groundbreaking series on public television. He is the winner of more than 30 Emmys, nine Peabodys, three George Polk awards and is the author of three best-selling books.

Michael Winship, senior writing fellow at Demos and president of the Writers Guild of America-East, is senior writer for Bill Moyers' new weekend show Moyers & Company.

The Five-Step Process to Cheat the Middle Class Worker

by Paul Buchheit

It's so artfully done, and so diabolical, that one can picture secret seminars in subterranean Wall Street meeting rooms, guiding young business recruits in the proven process of taking an extra share of wealth from the middle class. Their presentation might unfold as follows:

1. Boost productivity while keeping worker wages flat.

The trend is unmistakable, and startling: productivity has continued unabated while wages have simply stopped growing. Improved technologies have reduced the need for workers while globalization has introduced the corporate world to cheap labor. In effect, the workers who built a productive America over a half-century stopped getting paid for their efforts.

Paul Krugman suggests (http://www.nytimes.com/2012/12/10/opinion/krugman-robots-and-robber-baro...) that a "sharp increase in monopoly power" is another reason for the disparity. As John D. Rockefeller said, "Competition is a sin." That certainly is the rule of thumb in banking and agriculture and health insurance and cell phones (http://truth-out.org/opinion/item/13810-corporate-america-a-whale-in-a-f...). Yet despite the fact that low-wage jobs are increasingly defining the American labor market (http://www.nelp.org/page/-/Job_Creation/LowWageRecovery2012.pdf?nocdn=1), apologists for our meager minimum wage claim an increase will worsen unemployment (http://www.bloomberg.com/news/2013-01-03/two-reasons-not-to-raise-the-mi...). So it remains at $7.25. A minimum wage linked to productivity would be $21.00 per hour (http://inequality.org/hard-times-reduce-inequality/).

2. Build up a financial industry that has no maximum wage.

This is where the money is. In 2007, before the financial crisis, a Harvard survey revealed that almost half of the school's seniors aspired to careers in finance (http://www.huffingtonpost.com/2011/11/15/brain-drain-college-grads-wall-...). The industry's share of corporate profits grew from 16% in 1980 to an astonishing 45% in 2002 (http://www.pennlive.com/editorials/index.ssf/2012/10/were_on_a_dangerous...).

And there's no limit to the earning potential. Hedge fund manager John Paulson (http://books.google.com/books/about/Billionaires_Ball.html?id=I4_HY0QmTp0C) conspired with Goldman Sachs in 2007 to bundle sure-to-fail subprime mortgages in attractive packages, with just enough time for Paulson to collect other people's money to bet against his personally designed financial instruments. He made $3.7 billion, enough to pay the salaries of 100,000 new teachers.

3. Keep accumulating wealth created by the financial industry.

Experienced schemers have undoubtedly observed that over the past 100 years the stock market has grown three times faster than the GDP (http://www.forbes.com/2005/03/29/cz_0329oxan_equity.html). The richest quintile of Americans owns 93% of such non-home wealth (http://www.levyinstitute.org/pubs/wp_589.pdf).

In the last 25 years, only the richest 5% of Americans have increased their share (http://www.federalreserve.gov/pubs/feds/2009/200913/200913pap.pdf) of non-home wealth, by the impressive rate of almost 20 percent (http://www.levyinstitute.org/pubs/wp_589.pdf).

In just one year, the richest 20 Americans (http://www.forbes.com/forbes-400/) earned more from their investments than the entire U.S (http://en.wikipedia.org/wiki/2013_United_States_federal_budget) education budget.

4. Tax yourself as little as possible.

The easiest and least productive way to make money - holding on to investments - is also taxed at the lowest rate. In addition to the capital gains benefit, tax ploys like carried interest, performance-related pay, stock options, and deferred compensation allow hedge fund managers and CEOs to pay less than low-income Americans (http://ctj.org/ctjreports/2012/04/who_pays_taxes_in_america.php), and possibly even nothing at all (http://wweek.com/portland/article-17350-9_things_the_rich_dont_want_you_...).

The richest 400 taxpayers doubled their income in just seven years while cutting their tax rates nearly in half (http://www.perrspectives.com/blog/archives/001766.htm). U.S. corporations can match that, doubling their profits and cutting their taxes by more than half in under ten years (http://www.payupnow.org/CorpTaxByYear.xls). The 1.3 million individuals in the richest 1% cut their federal tax burden from 34% to 23% in just 25 years (http://taxfoundation.org/article/summary-latest-federal-individual-incom...).

5. Lend out your excess money to people who can no longer afford a middle-class lifestyle.

As stated by Thom Hartmann (http://www.alternet.org/news-amp-politics/theres-violent-world-war-going...), "The 'Takers' own vast wealth, and loan it out at interest to everybody from students to governments.." Overall, Americans are burdened with over $11 trillion in consumer debt, including mortgages, student loans, and credit card liabilities.

Wealth has largely disappeared for the middle- and lower-income classes. More than $7 trillion has been lost in the decline of home prices since 2006. Young college graduates have an average of $27,200 in student loans (http://www.huffingtonpost.com/2011/05/13/college-graduates-moving-home-d...), and the 21-35 age group has lost 68% of its median net worth since 1984 (http://www.pewsocialtrends.org/2011/11/07/the-rising-age-gap-in-economic...), leaving each of them about $4,000. Median net worth for single black and Hispanic women is a little over $100 (http://www.insightcced.org/uploads/CRWG/LiftingAsWeClimb-WomenWealth-Rep...).

So we're hanging on by the frazzled thread of debt that indentures us to the rich and makes it harder and harder to fight back against the theft of our middle-class wealth. As we struggle to support ourselves, the super-rich remain on the take, driving us ever closer to the status of most wealth-unequal country in the world (http://www.usagainstgreed.org/GiniWealthIncomeAll.xls).

http://www.UsAgainstGreed.org

Paul Buchheit is a college teacher, an active member of US Uncut Chicago, founder and developer of social justice and educational websites (UsAgainstGreed.org, PayUpNow.org, RappingHistory.org), and the editor and main author of "American Wars: Illusions and Realities" (Clarity Press). He can be reached at paul@UsAgainstGreed.org.

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