American Oligarchy

 America, land of the wealthy elite

By Bernie Sanders

Not everybody is hurting. While the working class suffer, the wealthiest people are not only doing extremely well, they are using their wealth and political power to protect and expand their very privileged status at the expense of everyone else.

The American people are hurting. As a result of the greed, recklessness and illegal behavior on Wall Street, millions of Americans have lost their jobs, homes, life savings and their ability to get a higher education. Today, some 22 percent of our children live in poverty, and millions more have become dependent on food stamps for their food.

While the Great Wall Street Recession has devastated the working class, the truth is that they have been experiencing a decline for decades. During the Bush years alone, from 2000-2008, median family income dropped by nearly $2,200 and millions lost their health insurance.

Today, because of stagnating wages and higher costs for basic necessities, the average two-wage-earner family has less disposable income than a one-wage-earner family did a generation ago.

The average American today is underpaid, overworked and stressed out as to what the future will bring for his or her children. For many, the American dream has become a nightmare.

Not everybody is hurting. While the working class suffer, the wealthiest people are not only doing extremely well, they are using their wealth and political power to protect and expand their very privileged status at the expense of everyone else.

America has become an oligarchy in which a handful of wealthy and powerful families rule its institutions.

This upper-crust of extremely wealthy families are hell-bent on destroying the democratic vision of a strong working class.

In its place they are determined to create an oligarchy in which a small number of families control the economic and political life of our country.

The 400 richest families in America, who saw their wealth increase by some $400 billion during the Bush years, have now accumulated $1.27 trillion in wealth. Four hundred families!

During the last 15 years, while these enormously rich people became much richer their effective tax rates were slashed almost in half.

While the highest paid 400 Americans had an average income of $345 million in 2007, as a result of Bush tax policy they now pay an effective tax rate of 16.6 percent, the lowest on record.

Last year, the top 25 hedge fund managers made a combined $25 billion but because of tax policy their lobbyists helped write, they pay a lower effective tax rate than many teachers, nurses, and police officers.

As a result of tax havens in the Cayman Islands, Bermuda and elsewhere, the wealthy and large corporations are evading some $100 billion a year in U.S. taxes. Warren Buffett, one of the richest people on earth, has often commented that he pays a lower effective tax rate than his secretary.

But it's not just wealthy individuals who grotesquely manipulate the system for their benefit. It's the multi-national corporations they own and control.

In 2009, Exxon Mobil, the most profitable corporation in history made $19 billion in profits and not only paid no federal income tax -- they actually received a $156 million refund from the government.

In 2005, one out of every four large corporations in the United States paid no federal income taxes while earning $1.1 trillion in revenue.

But, perhaps the most outrageous tax break given to multi-millionaires and billionaires happened this January when the estate tax, established in 1916, was repealed for one year as a result of President Bush's 2001 tax legislation. This tax applies only to the wealthiest three-tenths of 1 percent of our population.

The wealthy are are happy with huge tax breaks on their income and massive corporate tax loopholes.

They like trade laws enabling them to outsource the jobs of millions of American workers to low-wage countries and not content with tax havens around the world.

Now the final straw. The ruling elite and their lobbyists are working feverishly to either eliminate the estate tax or substantially lower it.

If they are successful at wiping out the estate tax, as they came close to doing in 2006 with every Republican but two voting to do, it would increase the national debt by over $1 trillion during a 10-year period.

At a time when we already have a $13 trillion debt, enormous unmet needs and the highest level of wealth inequality in the industrialized world, it is simply obscene to provide more tax breaks to multi-millionaires and billionaires.

That is why I have introduced the Responsible Estate Tax Act. This legislation would raise $318 billion over the next decade by establishing a graduated inheritance tax on estates over $3.5 million retroactive to this year.

This bill ensures that the wealthiest 0.3 percent of Americans pays their fair share of estate taxes, while making sure that 99.7 percent of Americans never have to pay a dime when they lose a loved one.

It also makes certain that the overwhelming majority of family farmers and small businesses never have to pay an estate tax.

This legislation must be passed because, with a $13 trillion national debt and huge unmet needs, we cannot afford more tax breaks for millionaire and billionaire families.

Soft Left Sides With Wallstreet Rich

During a recession, soft left sides with big money

By blackandred

Liberals support fiscal austerity during the recession because they no longer care about economic performance, much less the interests of workers and the poor, but instead identify their interests with those of Wall Street and the upper middle class.

At the recently concluded G-20 meetings in Toronto, Canada the leaders of the major economies issued a communiqué pledging to cut their budget deficits in half over the next three years.

Instead of draconian fiscal austerity, what is needed is a massive, globally coordinated, fiscal stimulus to pull the economy out of the worst global recession in over eighty years.

In Greece, when PASOK was in opposition it called for pro-growth policies favoring middle income sectors. Now, as Prime Minister, Papandreou is presiding over policies even more draconian than those of the previous right wing government he and PASOK criticized. How does one explain this madness?

One possibility is that many in the economics profession have contracted amnesia and forgotten the most important economics lesson learned during the twentieth century.

Governments must spend more when the economy is depressed and save only after the economy has recovered -- and that center left, along with right wing politicians, have now made the mistake of embracing the advice from misguided establishment economists to do just the opposite.

Two Nobel Prize winning economists, Joseph Stiglitz and Paul Krugman, who have not forgotten Keynes’ lesson believe this is exactly what has happened, and there is evidence to support their hypothesis.

Keynes was only able to successfully challenge the wisdom of traditional, balanced budget orthodoxy which requires governments to cut spending when recessions reduce their tax revenues with a powerful assist from practical experience during the Great Depression.

Even when conservative economists like Milton Friedman and right wing politicians like Richard Nixon were quoted saying “We are all Keynesians now” during the late 1960s and early 1970s, many economists and politicians remained uncomfortable with Keynesianism and were already hard at work organizing an economics counter revolution.

Over the ensuing decades establishment economists labored mightily to write Keynes out of their macroeconomic theories, models, and text books, and conservative politicians happily reverted to their pre-Keynesian, balanced budget orthodoxy.

These conservative politicians and their advisers focused on balanced-budgets and zero inflation in order to accomplish their real agenda -- decreasing the bargaining power of working people.

There was never any great mystery about why right wing political parties pushed an agenda designed to increase unemployment rates, weaken unions, and raise the cost to workers of being unemployed by cutting the social wage.

But now center left political parties are embracing the same economic policies and consorting with anti-Keynesian macro-economists, leaving the likes of Krugman and Stiglitz to wring their hands on the sidelines.

Is this simply an intellectual mistake on their part? What if we drop the assumption that the purpose of today’s economic policies is to rescue us from the Great Recession

We should put in its place the hypothesis that center left political parties are now aimed at benefiting higher income groups rather than promoting the interests of their former political constituencies.

After all, for decades prior to the financial crisis of 2008 and the onset of the Great Recession neo-liberal economic policies were championed by center left as well as right wing governments.

Not only Margaret Thatcher and Ronald Reagan, but Tony Blair and Bill Clinton also claimed that neo-liberal policies would improve economic performance by removing unnecessary and counterproductive shackles on corporate creativity.

Privatization, deregulation, tax cuts for corporations and the wealthy, capital liberalization, and trade liberalization did not increase global growth rates or reduce poverty as advertised.

But these policies did greatly enhance corporate power, disempower workers, consumers, and citizens, and produce the greatest redistribution of income and wealth from poor to rich the world has ever seen.

It is now apparent that these neo-liberal policies which laid the groundwork for the present crisis were never about improving economic performance, but merely about redistributing power, income, and wealth.

So why should we now believe that the same center left political parties, following the advice of the same economic advisors, actually believe, or care if lavishing generous bailouts on banks without conditions while imposing fiscal austerity on workers and ordinary citizens will pull the global economy out of recession?

There is a more simple explanation for the behavior of today’s center left politicians, which is becoming more credible by the day.

Fiscal austerity and stalling financial reform in response to the worst financial crisis and deepest recession in eighty years is not about improving economic performance as its proponents claim.

These policies are simply about continuing to shift income and wealth from the poor to the rich, and from the manufacturing sector to finance, insurance, and real estate (known as FIRE) which have become increasingly ascendant in the US and Europe -- despite the fact that these policies will worsen the economic slump and make another financial crisis likely.

The claim that fiscal austerity during recession is “good economics” when it is actually “bad economics” is merely a “cover story” for public consumption.

As for why center left political parties and politicians now support this disastrous policy, the simple answer is these parties no longer care about economic performance.

They care much less about the interests of workers and the poor, but instead identify their interests with those of Wall Street and the upper middle class who appear to be the focus group for the Obama Administration and Nancy Pelosi.

Democratic Party politicians used to promise to press for policies to help workers, minorities, and the poor. They usually failed to do so, but that was their campaign rhetoric nonetheless.

But for many election cycles in the United States Democratic Party candidates have been promising instead to champion the interests of what they call middle-class Americans.

If center left politicians no longer make a secret of pretending they are concerned about unemployed workers and the poor, why should we be surprised when they adopt policies detrimental to their interests?

Voters in the UK already sent Gordon Brown and the Labor Party packing. Will other center left politicians and their parties -- Zapatero and the Socialist Party in Spain, Papandreou and PASOK in Greece, and Obama and the Democrats in the US -- who agree to impose fiscal austerity also be punished at the polls by voters who know we did not create the crisis and are furious at governments who subject us to counterproductive austerity?

When center left politicians echo false hopes that the economy is recovering promoted by right wing think tanks and the corporate owned media who shout “green shoots” whenever the prices of bank stocks or an index of consumer confidence stabilize momentarily.

They do this while unemployment and home foreclosure rates hold steady or worsen. One can only hope they badly miscalculate their own political self-interest.

But it is apparent that more and more center left politicians are quite willing to gamble that they can bamboozle a guileless public into thinking that fiscal austerity is necessary and wise and avoid voters’ wrath.

It is also increasingly apparent that center left political parties are more afraid of angering Wall Street and upper middle class funders by opposing policies that continue to redistribute income and wealth their way than they are of angering ordinary people who have traditionally voted center left because the right wing alternative is even worse.

However, people know when either they or some relative or friend has lost their job or home. And they will eventually turn on those who persist in telling them that the economy is recovering when they know it is not.

The question is where voters will turn when they abandon traditional center left parties who have abandoned them.

What is needed are social movements and new political parties who answer to and are led by those whose interests are being trampled on, who fight for policies which actually do generate high employment and greater economic equality, and who say no to counterproductive fiscal austerity, trickle down economic nonsense, and corporate sponsored globalization.

We need to build movements and parties which will take power back from multinational corporations and Wall Street, and launch the kind of Green New Deal needed to address the economic and ecological crises which otherwise will continue to worsen by the day.

6 Million Americans Are on Food Stamps

Mass poverty is growing

A sobering read.