Hijacking the Economy
Washington is as mute about calling out Wall St. for its massive fraud and extortion of the U.S. Treasury as many are vocal about demands that the low and middle income pay for the bailouts and tax breaks granted to wealthy elites. The 2010 Supreme Court decision Citizens United v. FEC was yet another gift to those who crashed the economy without accountability. Contributing to a 40-year upward transfer of wealth, corporatists have practiced union-busting and mortgage fraud, while targeting wages, pensions and health care of the working class. Employers have realized all the gains of worker productivity for the past three decades, as wages have remained flat.
Writes college teacher Paul Buchheit, author of American Wars: Illusions and Realities, the wealthiest individuals and corporations have become masters of tax avoidance, to the tune of $3 trillion dollars of deflected taxes annually, through subsidies, exclusions, special deductions, exemptions, credits, regressive taxation, capital gains, underpayments, offshore tax havens and loopholes. He notes that, despite doubling corporate profits in less than ten years, federal taxes paid by corporations dropped to an average of 10% since the 2008 recession, from a previous average of 22.5% – a shortfall of $250 billion a year.
Having extorted trillions of dollars from taxpayers and created a permanent bailout state built on a foundation of lies, Wall St. banks have exacerbated inequality and greed that spurs increased risk-taking, reports Matt Taibi. The promise of relief for mortgage holders as a qualification for bank bailouts quickly fell by the wayside. Instead, bailout funds were used to subsidize and consolidate even more power in financial institutions through mergers, making them “way-too-big-to-fail,” while government spokespersons like Timothy Geithner made the implicit promise that banks would always be bailed out, no matter how corrupt their behavior. Taibi writes, “America’s six largest banks – Bank of America, JP Morgan Chase, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley – now have a combined 14,420 subsidiaries, making them so big as to be effectively beyond regulation.”
Bankster high rollers play the economy like crazed gamblers indemnified by endless taxpayer bailouts, while promoting dire deficit narratives for the purpose of raiding programs serving the low and middle income. Each manufactured crisis, from the debt ceiling to the fiscal cliff, has become an occasion for the wealthy to hold the 99% hostage, to extort more money in the form of tax subsidies and tax breaks that balloon corporate profits and bonuses, while propelling the working class in a race to the bottom.
Every deficit-reduction proposal from Simpson-Bowles to that of the Fix-the-Debt CEOs has carried the intent of lowering taxes for corporations and the wealthy, while shifting the burden of deficit reduction onto working lower and middle-class families. There has been no real effort to create living-wage jobs that would, in fact, reduce the deficit. Platitudes about bigger tax breaks for so-called “job creators” are further excuse to hijack the economy for the few.
Dating at least from Ronald Reagan’s administration, inducing deficits has been a Republican strategy for redistribution of wealth upward. Reagan’s budget director David Stockman has acknowledged that Reagan federal budget deficits were an intentional strategy to cut domestic spending, and ultimately to pressure Congress to cut New Deal programs. Wealth transfer under Reagan took the form of an inflated defense budget and cuts to domestic programs, as well as increasing regressive payroll taxes for the working poor and middle class while slashing the top income tax rate from 70% to 28%.
Wisconsin Gov. Scott Walker also transferred wealth upward, creating a deficit with large tax breaks for businesses and the wealthy, then subsequently demanding pay and benefit cuts for public employees.
Multimillionaire CEOs who have often underfunded or provided no pensions for employees are agitating for cuts to Social Security and Medicare benefits in service of deficit reduction – though Social Security is separately funded and contributes nothing to the deficit. Medicare and Social Security are “earned benefit insurance” programs in which working people are invested. Both can be improved without cutting benefits or increasing recipient costs. As Robert Reich observes, Medicare-for-All, with the potential to save more than $400 billion annually, is the solution for, not the source of, inflationary health care costs. Instead of doing what’s best for the people, taxpayers are forced to subsidize commercial for-profit insurance companies to the tune of hundreds of billions of dollars annually. Medicare Part D subsidizes the pharmaceutical industry with hundreds of billions of dollars by prohibiting Medicare from negotiating bulk drug rates, like the VA does.
A 2012 report from the Institute for Policy Studies cites 54 CEOs with combined pension assets of more than $649 in their companies respective executive retirement plans. Many of the CEOs are active with “Fix the Debt,” which has raised more than $60 million, in addition to generous funding by Peter G. Peterson’s foundation, to lobby for austerity for the masses and corporate tax breaks for wealthy elite. The report, A Pension Deficit Disorder: The Massive CEO Retirement Funds and Underfunded Worker Pensions at Firms Pushing Social Security Cuts, reveals that less than 60 percent of 71 public companies offer employee pension plans, and of 41 companies that do, 39 of them have underfunded their workers’ pension plans by a total of more than $100 billion.
Goldman Sachs CEO Lloyd Blankfein in November told CBS news that we need to “lower people’s expectations” because “we cannot afford ‘entitlements’.” Blankfein and 10 Goldman Sachs multimillionaire executives have not lowered their expectations — at the end of 2012 they were granted $65 million in stock bonuses a month early, so they could avoid tax increases at the first of the year. Blankfein and two other executives reportedly each received $8.4 million apiece in Goldman stock.
Corporate media have frequently sought out “Fix the Debt” CEOs for “expert” economic commentary. David Cote of Honeywell told Scott Pelley of CBS News that the “big nut” of deficit reduction is Medicare and Medicaid, that they are going to “crush” the system. Even as Meet the Press’ David Gregory opined that “CEOs are really upset with the White House,” and solicited Cote’s opinion about how the president could “rebuild an alliance with corporations,” Cote reiterated that “entitlements” are the “ticking time bomb that’s going to kill us.”
Cote himself is reported to hold retirement assets of more than $78 million, with anticipated monthly retirement payments of $428,092, even though Honeywell’s employee pension plan is underfunded by $2.8 billion. Twelve of the CEOs cited in the IPS report can each anticipate a monthly retirement check of $110,000 for life, compared to the average monthly Social Security payment of $1,230 at the beginning of 2012.
“Fiscal Cliff” Bill: More Deficit-Inducing Gravy for Wealthy Elite
In addition to making permanent many of the Bush tax cuts for the wealthiest, the “fiscal cliff bill” – the American Taxpayer Relief Act of 2012 – granted additional billions in tax relief for corporate elite, including $1.6 billion to Goldman Sachs for tax-free financing of its new Manhattan headquarters, thus inflating the deficit about which Washington purports to care.
Three senators who have played key roles in federal health care financing inserted into the fiscal cliff bill a last-minute sweetheart deal for Amgen, the world’s largest biotechnology company. With 74 Washington lobbyists, Amgen lobbied aggressively for the measure to delay for two years Medicare cost-cutting controls that would place price restraints on kidney dialysis drugs, including Sensipar, made by Amgen. Sensipar had previously been granted a 2-year reprieve from a more cost-effective Medicare payment system. The fiscal cliff bill exclusion added an additional two years, saving Amgen up to $500 million more, to be picked up by Medicare.
Two of the three senators facilitating the eleventh-hour deal head up the Senate Finance Committee for their respective parties – Senator Max Baucus (D-Mt) and Senator Orrin Hatch (R-Ut). Senate Minority Leader Sen. Mitch McConnell also actively promoted the Amgen provision. In addition to receiving substantial political contributions from Amgen employees and its PAC, all three senators have current or former staff members who have worked or currently work for Amgen. Though the company is not mentioned by name in the bill, Amgen’s CEO tipped off investment analysts of the anticipated windfall. Only weeks before the deal, Amgen had paid criminal and civil penalties of $762 million for illegally marketing an anti-anemia drug – two-thirds of that penalty will now be refunded by taxpayers.
Ironically, primary “relief” of the so-called “American Taxpayer Relief Act of 2012” was directed at the exceedingly wealthy. Right-wing think tank language hailing “job creators” and “pro-growth tax code” is actually code for ever greater tax breaks for the 1%. Ending the “regulatory assault” on business is short-hand for permitting unfettered criminal profiteering, while the 99% are named entitlement “takers” – the source of “runaway spending.” Simultaneously, corporate elite assume the right to continuous financial bailouts.
Media Megaphone for Washington & Wall St. Elite
A symbiotic relationship exists between Wall Streeters and corporate media, who echo demands of the elite that Medicare, Medicaid, Social Security and other social programs be cut. Wealthy broadcasters fail to relate to low and middle income folks any better than the lions of high finance.
NBC correspondent Tom Brokaw on Meet the Press December 30 asserted that “middle class” should be redefined to include incomes of $250,000, because, $250,000 “doesn’t make you rich in large urban/suburban areas,” when putting 2 kids through college at $60,000 and possibly caring for a dependent parent. Nevertheless, middle class is generally defined as incomes of $30,000 to $120,000 – below the radar of many Washington insiders. Brokaw echoed D.C. political wisdom that the president needs to give up Medicare and Social Security benefits for “deficit reduction” – perpetuating the right-wing lie that Social Security contributes to the deficit, or that it is going broke.
Brokaw repeated the false contention that people are living longer, necessitating raising the age of Social Security eligibility to 69, and ultimately 70. Nevertheless, research demonstrates that only the affluent are living longer, with “large and growing” disparities in life expectancy that parallel the growing income inequality over the past two decades.
In terms of Sen. Alan Simpson’s allusion to budget “minnows and whales,” economist Robert A. Johnson rates Social Security as a minnow, and money in politics as the “Moby Dick of the American budget problem“, the source of enormous military pork and unresolved financial corruption.
Corruption and the stranglehold of corporate self-interest dominates Washington, serving unabashed greed. Acting as citizen lobbyists, the people must demand an end to crony capitalism and accountability from those who seek to lead. A start would be passage of a constitutional amendment rejecting the notions that corporations are people with human rights and the right to unlimited campaign spending, and that money is speech.