2010-11-03 02:15:58 UTC
Robert Reich: The perfect storm
October 24, 2010|By Robert Reich
It's a perfect storm. And I'm not talking about the dangers facing
Democrats. I'm talking about the dangers facing our democracy.
First, income in America is now more concentrated in fewer hands than it has
been in 80 years. Almost a quarter of total income generated in the United
States is going to the top 1 percent of Americans.
The top one-tenth of 1 percent of Americans now earn as much as the bottom
120 million of us.
Who are these people? With the exception of a few entrepreneurs like Bill
Gates, they're top executives of big corporations and Wall Street,
hedge-fund managers and private equity managers. They include the Koch
brothers, whose wealth increased by billions last year and who are funding
Tea Party candidates across the nation.
Which gets us to the second part of the perfect storm. A relative few
Americans are buying our democracy as never before. And they're doing it
completely in secret.
Hundreds of millions of dollars are pouring into advertisements for and
against candidates - without a trace of where the dollars are coming from.
They're laundered through a handful of groups. Fred Malek, whom you might
remember as deputy director of Richard Nixon's notorious Committee to
Reelect the President (dubbed "Creep" in the Watergate scandal), is running
one of them. Republican operative Karl Rove runs another. The U.S. Chamber
of Commerce is a third.
The Supreme Court's decision in Citizens United vs. the Federal Election
Commission made it possible. The Federal Election Commission says only 32
percent of groups paying for election ads are disclosing the names of their
donors. By comparison, in the 2006 midterm, 97 percent disclosed; in 2008,
almost half disclosed.
We're back to the late 19th century, when the lackeys of robber barons
literally deposited sacks of cash on the desks of friendly legislators. The
public never knew who was bribing whom.
Just before it recessed, the House passed a bill that would require that the
names of all such donors be publicly disclosed. But the bill couldn't get
through the Senate. Every Republican voted against it. (To see how far the
GOP has come, nearly 10 years ago campaign disclosure was supported by 48 of
54 Republican senators.)
Here's the third part of the perfect storm. Most Americans are in trouble.
Their jobs, incomes, savings and even homes are on the line. They need a
government that's working for them, not for the privileged and the powerful.
Yet their state and local taxes are rising. And their services are being
cut. Teachers and firefighters are being laid off. The roads and bridges
they count on are crumbling, pipelines are leaking, schools are dilapidated,
and public libraries are being shut.
There's no jobs bill to speak of. No WPA to hire those who can't find jobs
in the private sector. Unemployment insurance doesn't reach half of the
Washington says nothing can be done. There's no money left.
No money? The marginal income tax rate on the very rich is the lowest it has
been in more than 80 years. Under President Dwight Eisenhower (whom no one
would have accused of being a radical) it was 91 percent. Now it's 36
percent. Congress is even fighting over whether to end the temporary Bush
tax cut for the rich and return them to the Clinton top tax of 39 percent.
Much of the income of the highest earners is treated as capital gains,
anyway - subject to a 15 percent tax. The typical hedge-fund and
private-equity manager paid only 17 percent last year. Their earnings were
not exactly modest. The top 15 hedge-fund managers earned an average of $1
Congress won't even return to the estate tax in place during the Clinton
administration, which applied only to those in the top 2 percent of incomes.
It won't limit the tax deductions of the very rich, which include interest
payments on multimillion-dollar mortgages. (Yet Wall Street refuses to allow
homeowners who can't meet mortgage payments to include their primary
residence in personal bankruptcy.)
There's plenty of money to help stranded Americans, just not the political
will to raise it. And at the rate secret money is flooding our political
system, there will be even less political will in the future.
The perfect storm: an unprecedented concentration of income and wealth at
the top; a record amount of secret money flooding our democracy; and a
public becoming increasingly angry and cynical about a government that's
raising its taxes, reducing its services and unable to get it back to work.
We're losing our democracy to a different system. It's called plutocracy.
© 2010 Robert Reich
Robert Reich, former U.S. secretary of labor, is professor of public policy
at the University of California at Berkeley and the author of the new book
"Aftershock: The Next Economy and America's Future." He blogs at
(C) San Francisco Chronicle 2010