David Cay Johnston believes that the facts speak for themselves: the government has helped rig the economy to favor corporations and the super-rich. Johnston has his bonafides: he is a Pulitzer Prize-winning former New York Times financial reporter and has a several blockbuster books under his belt exposing an economy tiltet toward the super wealthy. His latest expose is “The Fine Print: How Big Companies Use Plain English to Rob You Blind” To get a copy, just click here. Make a minimum donation and support progressive writers and Truthout.
Mark Karlin: This post-dates your new book, “Fine Print,” but I can’t help but asking your quick take analysis of the Romney 47 percent statement, which appeared not just personally revealing, but so misleading and factually challenged.
Cay Johnston: Romney conflated totally unrelated facts, an example of the remarkably shallow thinking that explains why his campaign is going so badly.
First, the 47 percent figure is bogus. In 2010, the last year for which we have the official IRS data, 41 percent of people who filed a tax return paid no federal income tax. In 2009 it was 42 percent. The 47 percent figure comes from adding to the tax return data another 10 million plus households who are so poor they are not even required to file an income tax return.
Now that is a lot higher than the 25 percent rate of a decade ago.
Why the change? First, there is the downturn in the economy. Wages in 2010 were back at the level of 1999 in real terms. Every 34th person with a job in 2008 went all of 2009 and 2010 with no work – none. And over those two years another three million people came of working age. No work, no pay, no income tax. Less work, less pay, greater chance of being below the thresholds for paying income taxes, which began in 1913 on what were called “surplus” incomes, meaning amounts above the basic cost of living.
Second, the Republicans sponsored a $1,000 per child tax credit that means a married couple with two children does not pay income taxes until they make about $44,000. More than 60 percent of Americans report less than $44,000 of income.
And, by the way, 1,470 people made more than $1 million in 2009 and paid no income tax, while 954 million-dollar-plus earners paid none in 2010. One serious estimate puts the figure for 2012 at 7,000 untaxed million-dollar plus earners.
What Romney muddled was that nearly all of the people who did not pay federal income tax were working at low wages, many with children, or were retired after a lifetime of working. Then there are college students, who we expect to pay significant income taxes in the future.
And among those not paying taxes are people who are totally disabled, from soldiers maimed in the Middle East wars to my 60 year old brother, a ditch digger and manual laborer whose decades of work made it possible for people to get to work when a fallen tree blocked the road or debris clogged a culvert during a rainstorm until his body was so busted up he cannot even stand up straight.
Mark Karlin: A few years back, BuzzFlash had you out to speak in Chicago about your book “Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich—and Cheat Everybody Else.” Then you followed up with “Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill).” Now, this September, you released “The Fine Print: How Big Companies Use Plain English to Rob You Blind.” How do the three books complement each other in showing an economic system rigged in favor of corporations and the wealthiest in US society?
Cay Johnston: “Perfectly Legal” showed how the super-rich – from the $250 million Romney class of wealth to people who literally make 20 times that much in a year – game the tax system, in some cases legally paying nothing in federal income taxes.
“Free Lunch” revealed subsidies that go to all sorts of corporations, some of which derive all of their profits from taxpayers. The government, by the way, does not collect data on either rich nontaxpayers or most of the giveaways to corporations.
The Fine Print is about how big companies rig the rules of commerce to escape the rigors of competitive markets, artificially inflate prices, provide poor quality services compared to other modern countries and literally put lives at risk for profit by seeking weak regulations or exemptions from safety rules.
This is not stuff you can find by doing a Google search. It is original reporting and analysis that took me four years of digging and then finding people whose encounters with these practices give life what would otherwise by dry material.
Get Robert Cay Johnston’s “The Fine Print: How Big Companies Use Plain English to Rob You Blind” with a minimum contribution to Truthout. Click here.
Mark Karlin: In your author’s note to “Fine Print,” you ask “How have all of us consumers ended up paying to many extra charges on electric, phone and other bills?” That’s something everybody asks when they get their monthly statements. What’s the answer?
Cay Johnston: Monopoly utilities figured out that if they added many moving parts to your electric, phone and other bills they could raise this line item and then that one and later another and it made it easier to jack up prices. One electric utility has a bill with 26 separate charges. If there were just two – a flat fee for connecting to the grid and a variable fee for how much juice you used – it would be easy to spot price increases. Instead they get lost in the clutter.
Mark Karlin: Personally, I laugh when I get credit card “fine print” notices that comes in light weight paper, in typeface so small that you need a microscope to read them. What’s hidden in those credit card legal notices of terms?
Cay Johnston: You give up your right to sue in the event things go badly. Your credit card company can make you pay half the cost of a private arbitration and it can force you to attend arbitration hearings far from where you live. Typically they also retain the right to cut your credit line without notice for any reason. However, this is one area where things have gotten a bit better with an end to practices such as two-cycle billing that made you keep paying interest for a month after you paid your debt in full or raising interest rates after you ran up charges.
Mark Karlin: One of your examples of the outrageous ripping off of ordinary working stiffs is how corporations in some states are allowed to keep state income taxes on behalf of their workers (Chapter 22). That’s a nice financial heist. How does that happen?
Cay Johnston: The state gives the companies a tax credit equal to the state income taxes owed by workers. The workers are treated as having paid their taxes and are not told that they are actually paying taxes to their employer, a perfect scam that is also perfectly legal. More than 2,700 companies – basically every big brand name you know – gets these deals in 19 states and unless people speak up I expect they will soon be in most states, potentially 44 of them.
Mark Karlin: You write at the end of Chapter 2 that “Citizens United is to the expansion of corporate power what the big bang was to the beginning of its existence – it is the whole universe.” Can you expand on that?
Cay Johnston: When the Constitution was adopted America had six corporations – six. By the end of 1799 America had a little more than 200. Today we have almost six million corporations, but just 8,800 of them own 90 percent of all corporate assets.
When our nation began, corporations were tightly controlled. They were allowed to exist for a single purpose and typically for no more than 20 years. Each corporation had to prove it provided a societal benefit — and hiring workers did not count because that was a necessity, not a purpose.
Giving corporations political rights was never even imagined by the Framers and Chief Justice Rehnquist, a serious conservative, warned against doing so. Yet the radical justices Roberts, Justices Scalia and Thomas, who claim they apply the original intent of the Framers in deciding cases, were in the majority which gave corporations political rights in Citizens United.
Given their resources – those 8,800 companies own $70 trillion of assets, twenty times the annual federal budget – their wealth gives them unlimited and overwhelming power to shape politics to their liking.
Mark Karlin: What are “profits upkeep commissions”?
Cay Johnston: Oh how I wish I had thought up that phrase, which Dennis Wyatt, the editor of the Manteca Bulletin, invented to describe the anti-consumer bias of the California Public Utilities Commission. State utility commissions are supposed to balance the interests of customers and utility investors by being “just and reasonable” to both, but The Fine Print documents a costly pro-utility tilt in the past few decades.
Mark Karlin: Can you tell us about the case of Bob Manning in your chapter “Please Die Soon.” What does his story reveal about all our vulnerabilities?
Cay Johnston: Bob Manning, paralyzed from the neck down in a fall at work, and I met when he was fighting to get paid his workers compensation benefits in 1997. He fell in 1962, some 35 years earlier.
Like many people hurt on the job, his employer and its workers compensation insurance carrier cheated him and in his case ignored more than 30 orders to pay. They claimed his wife had a legal duty to care for him so they did not have to pay for nurses.
Worse, the insurer refused to pay his millions of dollars in hospital bills, which the taxpayers then paid through Medicare. In other words, the insurer profited and you paid its expenses.
After a Warren Buffett insurance company was paid to take over Manning’s care it sent a nurse to see how it could save money. The nurse asked him to die. Seriously. She pointed to his bedroom wall and asked “why don’t you have a DNR?” meaning an order to refuse medical treatment the next time he had an emergency condition, an order known as Do Not Resuscitate.
New York State insurance regulators, by the way, pronounced the original insurer sound and said they had no record of any failure to pay claims, despite my 1997 front page story in The New York Times.
Mark Karlin: How important a role have the courts played in granting corporate supremacy?
Cay Johnston: Our federal judiciary is in the thrall of corporatism, encouraged by the fact-free teachings of Milton Friedman, who in a famous 1970 New York Times Magazine article declared that a corporation’s only social responsibility was to make profits. That is now a dogma embedded in every financial news report and our political rhetoric even though it is not at all what the law says. Why would we listen to an economist talk about the law, especially when economists often begin with the premise that they are examining an ideal situation, not the real world?
One example of the pro-corporation bias of the Supreme Court are its orders forcing consumers to submit to arbitration on a case-by-case basis without class actions is a gross distortion of the 1925 Federal Arbitration Act, whose purpose was to allow companies in disputes across state lines to resolve them privately. That law had nothing to do with consumers, but who points out that Roberts, Scalia and Thomas are “activist judges” who just make up law without regard to the Constitution?
Mark Karlin: Most of us feel helpless as consumers. Resolving any financial plundering of our pockets seems like something that will take hours of phone calls, letters, perhaps litigation. In the end, most of us just figure it’s easier to pay the piper. We submit. In your last chapter, you offer some action steps to fight back. Can we reverse being robbed blind by corporations, who operate with the protection of the courts and various levels of government?
David Cay Johnston: We can solve any problem. If you do not believe that then you reject the whole premise of our Constitution with its six noble purposes laid out in the Preamble – creating a union, establishing justice, insuring domestic tranquility, providing a defence against enemies, promoting the general Welfare (that capital letter is in the original) and securing liberty for ourselves and our posterity.
Not a word in there about getting rich, the narrow and hollow “American Dream,” at least according to many of our politicians and pundits. Making money is a by-product of getting the rules on human behavior and promoting the human spirit right, not a purpose.
We ended slavery, restored the voting rights of women (which existed in Colonial New Jersey), passed child labor laws and just four decades ago environmental protections.
We can return corporations to their proper place, as our servants rather than economic masters. It will not be easy; nothing important ever is. But we can take back our democracy from the artificial persons known as corporations so we natural persons decide our fate. If we want America to endure we must, for a country whose purpose is to make money will not last, while one focused on the six noble purposes in our Constitution may endure, and improve, forever.
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