By David DeGraw / AlterNet / February 17, 2010
The United States already had the highest inequality of wealth in the industrialized world prior to the financial crisis — and it’s gotten even worse since.
As a record amount of US citizens are struggling to get by, many of the largest corporations are experiencing record-breaking profits, and CEO’s are receiving record-breaking bonuses. How could this be happening, how did we get to this point?
The Economic Elite have escalated their attack on US workers over the past few years, however, this attack began to build intensity in the 1970s. In 1970, CEOs made $25 for every $1 the average worker made. Due to technological advancements, production and profit levels exploded from 1970 – 2000. With the lion’s share of increased profits going to the CEO’s, this pay ratio dramatically rose to $90 for CEOs to $1 for the average worker.
As ridiculous as that seems, an in-depth study in 2004 on the explosion of CEO pay revealed that, including stock options and other benefits, CEO pay is more accurately $500 to $1.
Paul Buchheit, from DePaul University, revealed, “From 1980 to 2006 the richest 1% of America tripled their after-tax percentage of our nation’s total income, while the bottom 90% have seen their share drop over 20%.” Robert Freeman added, “Between 2002 and 2006, it was even worse: an astounding three-quarters of all the economy’s growth was captured by the top 1%.”
For the remainder of this article, go here.
{ 49 comments… read them below or add one }
and you wonder why there’s no money for public education, parks, police etc?
Must be nice knowing you are more well off than 99% of the rest of the country. Raise their taxes!
And yet the chattering class is out there protesting against health care reform, advancing the Republican notion that the rich must not be taxed and demonizing our president who was handed one hell of a mess. And have you seen the latest in the New York Times–8 states are trying out a new program whereby 11 and 12th grades of high school may no longer be necessary for those who pass a test. There goes public education. http://www.nytimes.com/2010/02/18/education/18educ.html?hp
They call it “capitalism.” Which is why I am still some kind of socialist……….
very true, this is the result of ‘capitalism’, i dont know if the blogger here realizes that if he really wanted equal distribution of wealth, that’s known as communism
joe t – Me thinks there’s alot of closet socialists around here. In the Land of the Free, “socialist” is still a dirty word.
i’d settle for the “socialism” of the 1950s when the rich paid a fair share of taxes.
OK, I’ve seen corporate excess in real life. I work/live in a corporate environment. What does Mr. DeGraw propose as a solution? Obviously the “Stimulus/Bailout” plan isn’t working… “I’m not a smart man”…
It’s not the wealthy who are to blame, look in the mirror and you’ll see the party responsible for your dilemma. You can chose your own course of action.
Go smoke dope on the seawall and lament.
Get back to work and sweep the floor.
Go live in Cuba or Venezula and partake in the handouts.
Educate yourself, enter a profession and not a job, take risks, work tirelessly, and pay it forward.
Cuba has a better health care system that the good ol’ US of A.
Your obviously listening to propoganda from Michael Moore which lacks any credible research and a position he even has backed away from now that he’s sold some movie tickets on the subject.
“When I pressed Moore, he backed away from the claims his movie makes about Cuba. “Let’s stick to Canada and Britain,” he said, “because I think these are legitimate arguments that are made against the film and against the so-called idea of socialized medicine. And I think you should challenge me on these things, and I’ll give you my answer.”
I have mixed feelings about this.
I guess I am far less concerned about what the Bill Gates’ of the world are making than I am about how the Joe Shmoes’ are doing.
I am not all that certain it is a zero-sum game – if the worst-off of us still have adequate nutrition, shelter, education, and medical care, wealth disparity is not so important to me. Jay Leno can have as many sweet rides as he wants as long as Boston James gets to eat and see a doctor when he needs to.
What marks the difference between a civilized and an uncivilized society to me is not so much some artificial metric like wealth disparity, but more that no person has to sleep on the street, go hungry, remain ignorant, or live with untreated illness unless they CHOOSE to.
We’re not there yet (some of the Scandinavian countries seem to be.)
But our technology makes it possible, even trivial, to get there, if we are willing to look at things realistically.
Our thinking hasn’t quite caught up to our technical prowess, sadly.
There is a direct collation between the greed of capitalists and Wall Street high rollers on the one hand and the recession that working America is suffering on the other.
If 100 of us come to a pizza party and one person takes 50% of the slices for himself, while another 25 people share one piece, are we not concerned about the disparity of the American dream? The problem with wealth disparity is that it is a predictor of who will go to college, who will be homeless, who will have access to healthcare and ultimately how much violence (mental and physical) there is in a society.
But worst of all, the #1 victim of wealth disparity is democracy – and there is nothing artificial about this. Pull out a Monopoly game board and recognize that the rules of the game are written to assure that someone will monopolize the wealth of the society, while the rest of us are bankrupted and cast out of the game. The Supreme Court just changed the rules of US Monopoly stating that once you gain a powerful corporate status you can buy the politicians and lawmakers and change the RULES (Federal laws) of the game to benefit the powerful and marginalize the majority of working people. True, we need not care how many cars Leno has, but we do care how many media outlets or politicians he owns. Leno is small potatoes, he is not wealthy by the standards of the US ruling class. The US system is not really a democracy, but rather a plutocracy; rule of the rich, by the rich and for the rich.
Why are we not outraged? What the corporate media will not tell us is that monopoly capitalism is legalized theft; take from the poor and give to the wealthy. Billion dollar companies like AIG, EXXON, Microsoft, Bank of America and Blackwater, etc. do not contribute to the betterment of the type of society I aspire to live in. The role of the corporate thieves is to extract billions of dollars of hard earned money from the working class and pay it out in multimillion dollar corporate bonuses to the head bandits. Should it not concern us that our grandmothers pays more for gasoline and insurance and bank fees just to support the portfolios of super wealthy and their political candidates?
If one person shows up to my home and takes 50% of the pie, I will organize the rest of the assembled to make him give it back or throw his ass out for good. I feel no different about America; give it back or we will throw your ass out of the game.
The statement that… “if the worst-off of us still have adequate nutrition, shelter, education, and medical care wealth disparity is not so important…” is a good place to start to look at what we are facing. To begin with 10-15% of America, “the worst-off of us”, do NOT have even basic nutrition, shelter, education, and medical care. Come down town on any night and see the growing number of totally dispossessed. Secondly, 30-50% of America is loosing access to affordable education (40% tuition increase in one year at the UC system for example), and 45 million citizens with no health insurance, tens of millions unemployed, household incomes are falling, and million of families have lost their homes to foreclosures — all due to “free market” speculation and corporate misdeeds. Lastly, we must care about ALL the consequences of social inequity. Take a look at the big picture and realize just screwed up our economic and political system are. PLEASE, visit United for a Fair Economy at http://www.FairEconomy.org and realize that ” concentrated wealth and power has negative effects on society”.
PLEASE, Get involved.
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Martin
Chris, thanks for the great comment! You sum up a lot of important ideas very eloquently. And one line is particularly sweet: “Leno can have as many sweet rides as he wants as long as Boston James gets to eat and see a doctor when he needs to.”
Or you can get a job and buy your own pizza instead of showing up at a party and expecting a hand out! Did you bring a side dish or just expect to forage on the fruits of thers? If you want to focus your energies in a positive manner do so on job growth creation and expanding the economy by making the U.S. globally competitive, incentivizing innovation, and situations where people are being denied opportuntites to improve their lot in life to generate wealth of their own. There is no sympathy for those capable, but resistant, to look to themselves first rather than the pocket books of others.
Respectfully,
Your capitalist friend in OB
I love the capitalist mantra, “or you can get a job (losers)” You miss the whole freakin’ point. We HAVE jobs. We DID bring a side dish, but all we could afford to bring was iceberg lettuce because the wages we’re being paid for our hard work are so low. The CEO brought the pizza, sprinkled their half with gold flakes, ate all that, then gave the other half to government lobbyists and we got munch on a little bit of the crust before being unceremoniously laid off from our JOBS because the CEO was too busy eating golden pizza and raising their own salary to effectively run a company. Get a job….up yours Cat.
Jon,
No need to get all worked up, I can imagine how upsetting it is when you think of it as someone else making 500 times more then you. Chill and just think of it as your decision to take a stand and show the man by chosing to make 500 times less.
Peace.
Correction, technically that’s 1/500th of the mans salary, but you still showed him.
Don’t feed the trolls!
But that was a pretty good description of the problem.
“If you want to focus your energies in a positive manner do so on job growth creation and expanding the economy by making the U.S. globally competitive, incentivizing innovation, and situations where people are being denied opportuntites to improve their lot in life to generate wealth of their own.”
You speak in broad strokes here about job growth, expanding our economy and making us competitive which are all issues economists and certain of our law-makers have been working on for years. But when we live in a society and culture that celebrates self-reliance as being morally superior to everything else then trying to get us up to speed as a nation and competing on a global market is difficult when something as important to our economy as health care reform gets demonized by the very people who would benefit from it most.
Let me give you an example, if for instance, we had a national plan like Medicare, that you could buy into at any time, small businesses would be free from having to insure their employees. This would free-up small businesses from a huge expense and make them more competitive, give them the chance to grow and generate wealth. More of us, knowing that our health care is in place and not dependent on the next job, could act as entrepreneurs and help build our economy. People like us (my husband has Multiple Sclerosis) could go out and take jobs that do not revolve around getting certain benefits to pay for his medications–which are hugely expensive.
But we are fighting a large corporate oligarchy, and by extension the very same public servants we vote into office to help us achieve the American dream, since the corporations put way more money in their campaign coffers than we ever could. Then our public servants vote against the policies that would help the small business owner, the average citizen and vote to help the large corporation with tax cuts or helping to move jobs overseas where sometimes $1.50 a day is still a living wage.
So nice little analogies about buying your own pizza are one thing, but helping our fellow citizens, and ourselves, by acting in a civic-minded fashion and getting out there to put pressure on our law-makers is really what we should all be doing.
Now that’s a beautiful post right there. Terry Tenette two thumbs up!
Margaret,
One particularly bright spot in San Diego to look at is the development of the biotech cluster over the past 10 years. It is an excellent example of local self help by government, private investment, industry, and academia to create both high paying and skilled technical jobs in the community. Venture capital of this sort is responsible for employing 29% of the workforce on a regular basis and 64% of all new job creation. So it’s not like there aren’t vehicles out there to promote job creation. It is truly is a matter of putting our energy into charting a path, clearing obstacles for innovation, and encouraging investment in these growth sectors. The initiative to make CA the innovator and supplier of alternative energy systems is another such worthy goal.
Unfortunately this is contrasted by the face that CA is a terrible place to do business, particularly manufacturing, and it goes far beyond a single payer problem. Competition is the key to lowering price an improving service so rather than use the government to create 1 competitor, an oligopoly, why not allow individuals and businesses to purchase health care programs across state lines effectively creating a multitude of competitors.
Because Cat, the insurance industry does not want competition and will do anything to stop it, including using tactics such as lies (Death Panels) and heavy campaign contributions (Joe Lieberman, Max Baucus, Tom Coburn, Blanche Lincoln) to our policy makers. And a single payer government program would be competition for private insurance. Their lobbying arm, AHIP, has been fighting that one tooth and nail.
Allowing insurance to be purchased across state lines would mean that the laws would have to be changed so that there is a single regulating body, as it is now, each state’s laws govern the insurance industry in that state. McCarran Ferguson would have to be repealed, something the insurance industry is lobbying against as well, as they would then lose their immunity to federal anti-trust laws, a huge loophole they enjoy very much as it keeps them from having to pay out claims because the ERISA laws are stacked in their favor.
Or if they were allowed to sell across state lines, they might all headquarter in the state with the least laws governing health insurance, yep, rape is a pre-existing condition in Oklahoma! So Cat, the conservative sound bites on insurance are just that, sound bites with little information backing them up that they will do good for the people–in fact, it’s quite the opposite.
You want competition, open up an opposing single payer system and let the private insurers compete with that. Maybe things like pre-existing conditions (such as rape and domestic violence and my husband’s MS) lifetime caps and rescission would go by way of the dinosaur which is really where the private health insurers belong.
Now you’re pandering to those who support fear mongering on the subject and loading and argument with conjecture. Here’s the simple reason to proceed with caution, allowing insurance to be sold across state lines is not insurmountable from a legal standpoint and is a very good opportunity to deliver the highest quality care that is consumer driven and at the lowest cost to individuals or businesses. It is also a solution that can be undone if it doesn’t deliver the results relative to goals that should be legislated with the change. Expanding Medicare is a slippery slope that is irreversible. A simple fact is that consumer driven models of insurance have reduced medical costs to individuals and businesses, improved the quality of service, and encourage the important preventative care that is the real solution in improving our overall personal health. Insurance companies have reluctantly adopted these plans to remain competitive with the innovative providers that initially introduced the model. I believe that is an example of a direct contradiction to yur statement that insurance providers will not respond to the competitive market drivers.
Cat, what consumer driven models are you talking about? Where, what companies? Have you not seen the impending 39.6% rate hike proposed by Anthem? That consumer driven model?
“allowing insurance to be sold across state lines is not insurmountable from a legal standpoint.” Are you at all aware of the millions of lobbying dollars spent by the insurance industry to prevent this? To prevent competition? They don’t want it, they don’t want McCarran Ferguson repealed.
You want to have a cogent argument, then you are going to have to present facts. I would say that you have little understanding of how insurance works, as do most people who make your same arguments.
As for Medicare, don’t even go there with the “slippery slope” business. I took care of my mother the last 8 months of her life, an 80-year old woman with congenital heart failure and a small, fixed income. I thanked god everyday for her Medicare. What would a woman in her position have done without it–die on the streets? Open up the risk pool, have young and old pay into it and we can offset costs and compete with private insurance. Best to you–and stay healthy.
Margaret,
Here is what a consumer driven plan looks like, the preferred approach is the HRA plan.
http://www.uhc.com/employers/health_plans/group_coverage/consumer_driven_health_plans.htm
I am not an insurance expert but as an executive I have implemented this plan in several companies and can tell you that it delivers positive results for both the employee and employer. Employees have access to the preventative care they need while being incentivized to act as consumers and shop their medical needs from drugs through all other levels of care and services which in turn lowers cost.
The truly scary part about healthcare is the disregard that people have for preventative care and their general overall health. The only viable long term solution to reducing our medical costs is to focus on the nation’s overall health. With the developments being made by pharmaceutical companies in personalized designer drug systems, such as gene therapy, we can be assured that the money spent on disease will only continue to increase as more treatment options become available, while the real culprit is in addressing self inflicted diseases such as obesity, hyper tension, poor nutrition, drug and alcohol abuse, etc.
Funny how we have tried to create disincentives such as cigarette and alcohol taxes but have put little focus on incentives. While we can’t legislate an attitude of good health we can support employers with programs that do so, in addition to schools, and community services. One employee benefit I am familiar with was for the company to pay your gym membership if you went 6 times a month. Mrs. O is correct in her attack on childhood obesity and hopefully, children will be able to educate their parents.
I am glad Medicare was there for your Mom it did what it was intended to do and I would not advocate reducing its scope in anyway but I’m not sure it needs to become the countries default insurance provider as it fails to address the systemic problems or encourage one to take charge of their own personal health.
FYI – There is actually quite a bit of research being don by the San Diego biotech firms on your husbands disease, hopefully they have a break through soon. Good health to you both.
According to an IRS report: In a single year, between 2006 and 2007, the income of the top 400 taxpayers rose by 31 percent — from an average of $263.3 million to an average of $344.8 million per year. Meanwhile, their effective income tax rate fell to 16.62 percent, down more than half a percentage point from 17.17 percent in 2006. That rate is lower than the typical effective income tax rate paid by Americans with incomes in the low six figures, which is what each taxpayer in the top group earned in the first three hours of 2007.
This data comes from the latest edition of an annual IRS study of the top 400 taxpayers, which was first made public during the Clinton presidency. When Bush became president, unsurprisingly, he curtailed public access to the top 400 report for eight years. The Obama administration has made the report available this year, but such embarrassing statistics will no doubt be buried again as soon as the Republicans return to power.
The semantical arguments continue while the rich get richer, and the people that actually create the wealth get less. What a surprise! And so it is now, and so it always has been, and so it will be until they have had enough and create a true revolution.
i workeD 40 yrs. aT aN aLmosT minimuM waGe joB..
i kneW otherS who worked harder aNd maDe 6 figureS/yR.
i aLso haD severaL ‘frienDs’ die penniLess ..
i haVe neVer wanTed moRe thaN GOD gaVe mE aNd i haVe neVeR begrudgeD anY oNe whO maDe moRe thaN i waS abLe tO ==hoNesTLy..
i beLieVe thE LoVe yoU geT iS equaL tO thE LoVe yoU GiVe…
aNd i belieVe GOD iS A / THE GREAT EQUALIZER!
Peace OuT †
Ouch Obada! Lay off the shift key and the jesus juice man! My eyeballs hurt.
Ouch Obada!
you are saying that the poor and starving are in that situation because that is what God wants and it is all He wants to give?!
You are saying that the billions in bonuses for CEOs are God’s gifts, right?!
Thus the thief, the Czar, the pimps, the Pharaohs, the conquistadors, the drug dealers, the dictators are all rewarded by wealth by your God. What a cruel god indeed that God would allow 1 billion people on Earth to go hungry. Let’s look for a more benevolent God who would say a revolutionary something like … “The rich man has as much hope of going to heaven as a camel has of going through the eye of a needle”. Seems like there is little ambiguity about which side this God would be on.
“From 1980 to 2006 the richest 1% of America tripled their after-tax percentage of our nation’s total income, while the bottom 90% have seen their share drop over 20%.”
Hmmmmm! What happened right around 1980 that could have caused this? Oh that’s right Reagan came into office and what was one of his first executive actions? He cut the top marginal tax rate from 74% to 27%. There’s your culprit right there. Roll back the Reagan tax cuts and we would be well on the way to changing what has happened since then.
IMPLEMENT A FLAT TAX!
A flat tax treats everyone equally, eliminates the loopholes, and would eliminate 90% of the beuracracy called the IRS.
We could simplify the tax code and still keep taxes progressive, that is, the more you make the more you should have to pay. But that still doesn’t explain away the Reagan and Bush tax cuts for the wealthy of this nation.
Taxes keep the country running, Cat. They pay the military, the roads, the postal system, education, Medicare and Social Security and taxing the middle class over and above the wealthy makes no sense. A flat tax is not the whole answer.
Margaret, you are stating a contradiction. A flat tax treats everyone equally. A progressive tax is an unjustifiable and unequal assessment based on increasing net income. Don’t we all pay the same sales tax when we go to the store? Maybe somone buys more goods than another, should they pay a higher tax rate? I don’t think so. Just because someone earns a larger income it does not justify those that don’t from laying claim to it. You are correct, taxes keep the country running and everyone should pay their fair share rather than the disproportionate convoluted system we have today.
I could see a flat tax working, as those that make more are obviously going to consume more and thus pay a larger share. The big benefit would be that all consumption would be taxed, thus eliminating loopholes for artificially reducing income in order to avoid paying tax on the money coming in – this is where progressive tax rates fail, as the rich can afford the lawyers and accountants to weasel out of paying their fair share, while the poor don’t have the same advantage. If a person of modest means is taxed at 25% on all her income and a rich person has an effective tax rate of 50% but hides half the money she makes, isn’t that pretty much a wash?
The way to make a flat tax progressive is to tax different goods and services differently – there should be no tax on basic necessities like food and household supplies, which everyone uses. Tax would be moderate on moderately priced luxuries, like cars that sticker under, say, $30,000. But wouldn’t it be fair to tax true luxury items like yachts and jewelry at a more imposing rate?
Cat,
During WW-2, FDR implemented a 90% tax rate that kicked in when someone earned what would be the the equivalent in todays dollars of 2 million per year. This had the effect of putting money into the pockets of the middle class, the people that would be the most likely to spend it. This also has a dampening effect on the boom and bust cycles that we have seen when the top marginal tax rate is below 50%. The recent boom and bust being a perfect example of this.
Hey Steve, Ian, Shane and Cat: thanks for the spirited discussion, guys. I think we’ve all said our piece and now it’s time to get back to our lives.
A flat tax is one of the most unfair taxes imaginable. Where is your sense of fair play? Why should the poor pay the same as the rich? A flat tax, which is what we have with sale taxes that keep going up, is quite un-American.
Sorry Frank but your comment falls in the WTF? category. So what you are saying is that it’s more fair in baseball for players with a batting average of less than .200 to get 4 strikes and those over .300 should only get 2, everyone else in the middle class can stay with 3. Except pitchers, they should be required to receive intentional walks because they are typically terrible batters.
WTF?? you are comparing apples and bananas. Let me go get our blogger with the banana suit.
Unfortunately life is not a game, unlike base ball which has fair rules that everyone has to abide by.
We have a class system in this country, as this article shows (although the article itself is very long and all the linked words are a weird color on my monitor and difficult to see).
Can we Cat310 at least agree on that (the class system not the weird colors)?
We can agree to disagree, respect each others opinions, and work together to improve the quality of life in our cummunity. It’s interesting the perspectives people bring because when I think of think of he “upper most class” I think of people like Bill Gates, Warren Buffet and many other self made successful individuals, not robber barons.
Warren Buffett is a truly unique guy – one of the few billionaires who is giving virtually all his money away, and who often calls out his fellow billionaires for their greed.
Buffett has often commented that the US tax system is too easy on wealthy Americans, noting that he pays a lower tax rate than his receptionist, thanks to Bush’s tax cuts. Buffett has also repeatedly defended the estate tax, saying that repealing the estate tax would be a big step toward re-establishing the aristocracy that our founding fathers worked so hard to get away from.
“Perfectly Legal” by David Cay Johnston and “What’s the Matter With Kansas?” by Thomas Frank – great starting points on what’s f’ed up with our current tax system and why the wealthy have been able to sell a good chunk of the middle class on keeping things in their current atrocious state. I’ll lend either to anyone who’s interested, wouldn’t mind swinging by to pick them up, and promises to either return them or pass them on to someone else.
Class warfare isn’t about rich vs. poor, it’s about middle class vs. poor. The people who are truly rich don’t really care one way or another, they have enough for themselves and that’s all that matters. Look at Barron Hilton – he’s ran the hotel chain his family built into the ground but he’s got enough money that he’ll never run out and his kids don’t even have to bother trying to make anything of themselves ever. And if (shudder) they have kids, same deal.
It’s the middle class – especially the upper end that grosses something in the low six figures – that this teabagger shiz appeals to. They busted their asses in school (and probably have a mountain of student debt to show for it if they’re second-generation upper middle class and mom and dad made too much for them to get student aid but not enough to pay their way through college), they bust their asses at work, and they pay the biggest share of taxes as a percentage of income because they’re in a high bracket but don’t have enough sophistication to finance complex investment vehicles or stash their funds offshore like the truly wealthy.
The mindset of the (marginally) rational teabagger goes something like this: I could be rich. I work hard enough and make enough money to actually get ahead in life. But all these entitlement programs for the poor and the illegal aliens (for some reason they all have this fascination with the idea of an immigrant as a non-contributing freeloader) are pushing my taxes just high enough that I can’t put any money away to start building the kind of reserves that distinguish the upper class from the highest end of the working class.
They’re able to convince themselves that since their hard work brought them success, people that haven’t found success simply aren’t trying hard enough. They find it easy to discount outlying factors that might have given them opportunities that other people, even though they might work just as hard, might not have had. Maybe growing up in a suburban neighborhood got them sent to better schools, or having two parents at home meant they got some attention instead of having to learn the more basic skills of fending for oneself instead of studying algebra. Maybe Dad had some pull at the firm and they got hired on as a management trainee instead of a file clerk and climbed the ladder faster because they started a few rungs higher. I’m not even going to touch the issue of race or a myriad of other possibilities.
How do you change this perception, and bring a sense of responsibility for your fellow man to these kinds of people? That’s the big question, and if I had an answer I’d be gearing up for my presidential run in 2020, when I’ll be old enough to sign up. I think part of the solution is shifting the nation’s burden of taxation from the middle class to the wealthy elite.
An abysmal failure in getting to this end is the reduced tax rate on capital gains. Rich people don’t make money by working, they make money by investing. And if their gains off those investments are taxed at a significantly lower rate than the sweat of the working man, they’ll continue to get ahead, the middle class will continue to fall behind, and they’ll continue to look down at the poor they’re being forced to support instead of the rich who are quietly declining to pay their fair share.
Another sticking point with a lot like Joe the Plumber/Cat the Troll is ‘handouts,’ as if this tax money is going primarily to the poor. I’ll post again in a few and address that…
Nicely said and thank you.
On another note, you remind me of The Stig–except with a black jacket.
Excellent post.
Government handouts – is anyone naive enough to believe they primarily benefit the lower class? Unfortunately, that’s apparent.
Welfare is the main demon in the eyes of the anti-entitlement crowd. But it’s a relatively minor cost compared to other ‘handout’ programs that benefit everyone, or even primarily the rich. I don’t have current exact figures in front of me and don’t feel like researching now, if anyone wants to argue numbers with me feel free to post yours up, or I might go looking for my own sources and some links to provide when it’s not so close to my bedtime.
Even welfare isn’t anything close to the free ride the ignorant make it out to be. There have been some excellent articles posted here recently (Lane Tobias’ are coming to mind) illustrating how many eligible recipients are discouraged from taking part in the system. And reforms enacted during the (gasp) Democratic regime of the ’90s have made it even harder to get a little help and have ensured that help doesn’t last.
Let’s look at other handouts – how about Social Security and Medicare? Anyone of a certain age can take advantage of these, except people in my generation, because we’re likely to run out of money by passing it all out to you geezers in the crowd before I get old myself (all the more reason to smoke myself into an early grave). While it’s true that the poor rely on these benefits more heavily than the rich in that they have more meager pensions and investments to draw from (if they have any at all, and pensions are another thing going the way of the dodo and unlikely to be significant to anyone under 40 today), I don’t know of anything that precludes the middle or upper classes from taking advantage of this handout once they’re eligible.
How about farm subsidies? Something like 80% go to massive farms owned and controlled by corporations. When the teabaggers stir up outrage over farmers being paid to NOT plant crops, they’re really talking about big agribusiness, not Old McDonald the subsistence farmer who sells his crops at the local farmer’s market.
What about the bank bailouts? These are a hot topic lately, and one that hits close to home. Basically the government is giving the banks money there to shore up their books and protect against future losses on bad loans they’ve already written. The idea was to jump start lending, but after underwriting standards were so sloppy for so long (the criteria banks used to decide how likely you were to pay back the money you were borrowing), they’re tighter than a drum today and even people who are legitimately qualified to borrow are being turned away – that is, the few legit borrowers who are actually optimistic enough to want to borrow money to make any kind of investment in our country, given its current sorry state.
The bailouts are only the beginning – there’s also the federal funds rate, the interest that the Fed charges banks to borrow money. It’s been pretty much zero for a while now, meaning the banks could borrow money almost free and then lend it out to make 100% profit. But they’re not even doing that – they’re buying government bonds, where the government guarantees to pay them a fixed interest rate that’s considerably higher than the Fed rate. So basically the government is giving the banks free money, which they’re then loaning back to the government and collecting a tidy profit for doing so. Who wants to take a gamble on Joe Homeowner when lending your money back to the guy that lent it to you is a guaranteed profit?
One more on banks, since the handful of people who’ve read my old rants know this is my forte – FDIC-assisted bank takeovers. To sum up a much longer rant (available at http://obrag.org/?p=6293 and guaranteed to cure insomnia), when the government decides to close down a bank, the FDIC will find a buyer on the sly before announcing the imminent closure, and cut a deal. Most of these deals go something like this: the acquiring bank gets all the branch locations of the failed bank, all their customers, all their customers’ deposits, and all their good loans, for free. On the bad loans, the FDIC agrees to reimburse them for somewhere between 80-95% of any losses they suffer in the first few years after the takeover.
This in turn encourages the bank to flush out the losses as quickly as possible. And since the losses are basically all covered by someone else (you and me, because the insurance premiums banks pay the FDIC for coverage are passed on to us in the form of basement-level interest rates – checked what your savings account is paying lately?), there’s really no motivation not to lose money. For the last few years I ran an operation that disposed of these bad loans, and did it pretty efficiently – figures show that after paying my employees’ salaries and benefits and operation costs, the bank was losing about $700,000 a month less than they would have through traditional means. When my company eventually was taken over and handed to another, what did they do? They laid everyone off, because they saved money in employee costs and could bill the extra losses that we were preventing to the American taxpayer.
Now that’s a handout, and it’s not going to the poor, though a lot of my former staff and their families are now navigating the maze to collect the kind of benefits that the teabaggers love to hate on.
Thank you to our commenters for having a very interesting conversation here. Usually when we post these kind of think pieces (this came from an outside source) nobody comments. You folks have engaged in the kind of discussion that can make a blog special, even when we don’t agree with you. Keep it constructive folks, and keep it civil!
How much is enough, you can only drive 1 car at a time, sleep in 1 bed at a time, really how many big mansions do you need with empty bedrooms when there are people on the streets who are cold and hungry. Hey people, treat others the way you want to be treated.
Greed is a horrible thing to have. I believe it is killing this planet and its people.
Rev Robert Schuler
Peace and blessings.