“American Society’s Real Moochers; CEOs”: It’s Not The Working Poor Who Deserve Public Scorn For Dependence On Government Handouts
Holiday bells are silent in the homes of America’s struggling working poor, even with gasoline prices at their lowest levels in years. These are people derided as moochers because their starvation wages force them to accept food stamps to feed their children.
On the other side of town, inside gated communities where guards demand photo ID even from Santa, CEOs’ Christmas plums are super-sugared with record-breaking corporate profits.
These are people somehow not derided as moochers, even though their million-dollar pay packages are propped up by tax breaks.
The parable of Charles Dickens’ A Christmas Carol springs to mind as Wall Street banks and law firms hand out six- and seven-figure year-end bonuses while Wal-Mart and fast food workers protest wages so low that their holiday meals are food pantry dregs. It is CEOs, not the working poor, who deserve public scorn for their dependence on government handouts.
The Institute for Policy Studies issued a report last month that details the mooching of the nation’s top corporations and CEOs. It’s called “Fleecing Uncle Sam.” The findings are pretty galling.
Of America’s 100 top-paid CEOs, 29 worked schemes that enabled them to collect more in compensation than their corporations paid in income taxes. The average pay for these 29: $32 million. For one year. And corporations mangle tax the code to deduct that too.
Though their corporations reported combined pre-tax profits of $24 billion, they wrangled $238 million in tax refunds out of the federal government. That’s refunds — the government gave money to highly profitable corporations.
That’s an effective tax rate of negative 1 percent.
That means middle class taxpayers helped cover the cost of million-dollar pay packages for CEOs. Middle class taxpayers, whose median family income is $51,324 and whose federal income taxes are withdrawn directly from their checks before they see a cent of pay, support CEOs who pull down $32 million a year.
That qualifies CEOs as first-class fleecers!
Their corporations pay nothing for essential government services that middle class taxpayers provide. That includes patent protection, the Commerce Department’s sanctions against foreign trade rule violations and federal court dispute resolution.
Some corporations haven’t developed schemes enabling them to tax the federal government. Instead, they pay, but not at that 35 percent rate they’re always whining about. Between 2008 and 2012, the average large corporation, according to Fleecing Uncle Sam, paid just 19.4 percent. Individuals earning $50,000 a year pay 25 percent. Clearly, corporations are not paying a fair share at 19 percent.
There’s this wacky theory that if governments excuse corporations from paying their share, then they’ll expand and create jobs. It’s wacky because it’s fiction. Highly profitable corporations aren’t expanding and creating jobs; they’re buying back their own stock.
A study by University of Massachusetts professor William Lazonick, president of the Academic-Industry Research Network, showed that between 2003 and 2012, S&P 500 corporations used 54 percent of their earnings – $2.4 trillion – to buy their own stock.
This isn’t creating jobs. This isn’t investing in a corporation’s future. This is adding to CEO wealth. It works like this: Stock buybacks push up stock prices. Forty-two percent of compensation for S&P 500 CEOs comes from stock options. Thus, as Lazonick points out, stock increases equal CEO pay raises.
Corporations don’t expand just because untaxed profits are sitting around anyway. They expand to meet demand. And corporate practices have deflated demand.
Part of the problem is that CEOs and top executives are taking an increasing portion while doling out less to workers. As the New York Times reported in January, wages have fallen to a record low as a share of gross domestic product, dropping to 43.5 percent last year. It was 50 percent in 1975. The decline means less demand.
But there’s more. Just last week, The New York Times noted two other trends that contribute to weak demand. One is wage theft. The U.S. Department of Labor found that more than 300,000 workers in New York and California are victims of minimum wage violations each month, costing them between $20 million and $29 million each week. If corporations didn’t cheat them out of those earnings, their spending would generate greater demand.
The other trend is insecure income. Millions of Americans are unsure week to week how much money will be coming into their households. This occurs for many reasons, but among the most prominent is the refusal of employers to provide workers with steady weekly hours and practices like sending workers home when retail or restaurant traffic is light. A survey by the Federal Reserve suggests the problem of unreliable income may have worsened as Wall Street has strengthened. Families that can’t pay their bills reduce demand.
Instead of giving workers raises and steady hours, corporations have rewarded only those at the top. The Fleecing Uncle Sam study found that companies that paid their CEOs more than they paid in federal income taxes gave those CEOs fat raises. The average pay of these CEOs rose from $16.7 million in 2010 to $32 million in 2013.
They’ve got trillions for CEOs and stock buy-backs, but nothing for workers or the federal government. This isn’t an accident. It’s not some invisible hand of the market. It’s CEOs freeloading.
No ghosts are going to show up to convert these Scrooges into humans. Instead, the first step in that process is recognizing that the moochers are the CEOs, not the hapless food stamp recipients who desperately want steady, full-time, decently-paid work. The second step is to demand that corporations pay their fair share of taxes and provide steady, full-time, decently-paid work.
By: Leo Gerard, President of the United Steelworkers International Union; In These Times, January 1, 2015
“Uh Oh”: With GDP Growing Strongly, Republicans’ Economic Dilemma Gets More Complicated
We got the latest quarterly economic growth numbers today, and they’re pretty striking:
The U.S. economy grew at its fastest rate in more than a decade between the months of July and October, helped by a surge in consumer spending, according to government data released Tuesday morning.
The Commerce Department said gross domestic product growth hit an annualized rate of 5 percent in the third quarter, revised upward from the previous estimate of 3.9 percent. Not since 2003 has the economy expanded so quickly.
The third quarter performance, coupled with 4.6 percent growth in the second quarter, amounts to the best sign since the Great Recession that the U.S. recovery has hit its stride.
The simple way to look at the political implications of these numbers is to say that it’s good for Democrats, since there’s a Democrat in the White House. And though it’s extremely unlikely for growth to stay over 5 percent for any length of time — it’s been 30 years since we had more than two consecutive quarters at that level — if both growth and job creation remain strong for the next two years, it’ll be somewhere between difficult and impossible for a Republican to win the White House in 2016, since the state of the economy swamps every other issue in presidential campaigns.
That’s the simple way to look at it, and it’s not wrong. But there’s another layer to the state of the country’s economy that could make things more complicated for both parties. It has to do with the difference between the two numbers that get the most attention — job creation and GDP growth — and the rest of how Americans experience their economic and working lives.
If you listen to the way President Obama talks about the economy these days, you’ll notice that he always says both that things are going well and that “we have more work to do.” It’s a way to assure people that he understands that they don’t feel secure and that many may not have gotten back to where they were before the Great Recession. On the other side, for a long time Republicans would say, “Where are the jobs, Mr. President?” But they can’t say that anymore, nor can they complain about growth being weak.
The economic debate of 2016 will start in about a year from now. While there could certainly be a downturn between now and then, let’s assume for the moment that the momentum continues. How could Republicans make a case that although growth and job creation are strong, all is still not well? Even if that’s what Americans feel, it would be a difficult case for Republicans to make, because those top-line figures are what they generally point to when they discuss the economy. What else can they build their case on? They aren’t going to talk about the stock market or corporate profits, not only because those have both performed spectacularly during the Obama presidency, but because they know that ordinary people don’t much care.
And they aren’t going to talk about the things that really make people worried. The most important fact of the American economy in the past few decades may be its failure to produce rising wages, but that’s not something Republicans are particularly concerned with. Their economic focus is usually on business owners — the taxes they pay, the regulations they have to abide by, and so on. Even if you believe that helping those owners is the best way to help the people who work for them, you’re going to have a hard time finding Republicans who want to talk about something like wage stagnation.
And the arguments Republicans always make against Democratic proposals aimed directly at workers, like increasing the minimum wage or expanding health coverage, are that the proposals will cost jobs and hinder growth. So they can’t turn around and say, “OK, so growth and job creation may look good, but the real problem is what people earn and how they’re treated on the job.” That’s just not in the Republican DNA.
If there’s an accompanying problem for Democrats, it’s that voters could look at the Obama years and say that yes, it’s now a lot easier to find a job, but the jobs don’t pay what they should or offer the same security and dignity they used to. The American economy is a much crueler place than it once was, and two terms of a Democratic administration haven’t done enough to reverse that evolution.
That could be a genuinely biting critique. But fortunately for Hillary Clinton (or whoever the 2016 Democratic nominee is), Republicans are the last ones who are going to make it.
By: Paul Waldman, Contributing Editor, The American Prospect; The Plum Line, The Washington Post, December 23, 2014
“Who Gets Overtime Pay”: The Next Policy To Help The Middle Class That Republicans Will Oppose
Lately, Democrats have been searching for new ways to appeal to working class and middle class voters on economic issues. They know their basic economic perspective is popular, but they worry that the few specific policies they advocate, like increasing the minimum wage, don’t touch enough people’s lives. They also worry about being seen as advocates for the poor but not the middle class. So they’re looking for ideas.
But there’s one policy change already in the pipeline that looks as though it could be the next big Democratic economic push. It’s got everything: the potential to affect millions, guaranteed opposition from business groups, and the specter of another executive action from President Obama. That last point means that the change can be made as soon as the administration wants, and that Republicans will be apoplectic when it happens.
It’s about who gets overtime pay, which has all but disappeared from American workers’ paychecks. But maybe not for long.
A little background: Under the Fair Labor Standards Act, workers are supposed to be paid overtime (time and a half) if they work more than 40 hours a week. That doesn’t apply to executives and managers, or workers whose salaries exceed a certain threshold. The threshold is what’s at issue; it has only been raised once since 1975. The current threshold is $455 a week, or $23,660 a year — under the poverty level for a family of four. If you make more than that, you’re ineligible for overtime pay. Today only around one in ten American workers is eligible for overtime pay, compared to 65 percent of workers who were covered in 1975.
So what some are proposing is to raise the threshold back to something like what it used to be. Raising it to what it was in 1975, adjusted for inflation, would mean a level of $984 a week, or $51,168 per year, which is close to the median family income. According to the Economic Policy Institute, at that level over six million Americans would become eligible for overtime pay. Raise it a bit higher and you could cover millions more.
This March, President Obama instructed the Labor Department to reexamine the rules and propose a revision, and the department’s decision should be coming some time soon. And an organized campaign to promote it looks to be developing. Today in The Hill there’s an op-ed arguing for changing the overtime rules by Nick Hanauer, a liberal billionaire venture capitalist who could become an important figure in the economic arguments we have over the next few years. Unlike many other major political funders like the Koch brothers, Hanauer doesn’t just give other people money — he’s putting himself out as an advocate.
Many people first heard of Hanauer a few months ago when he wrote an open letter addressed to “my fellow filthy rich,” challenging the notion that the wealthy got where they are because of their unusual virtue and telling them that they had to start working to combat inequality in America). It looks like Hanauer wants to be a player in this debate, and he has the money to make an impact.
So don’t be surprised if a lot of elected Democrats suddenly start talking about overtime rules. This issue is more than an arcane piece of labor law. It gets to the heart of the insecurity and dissatisfaction Americans feel with their economic lives and prospects. It’s been repeated to the point of cliché that Americans feel like they’re working harder but not getting ahead. The lack of overtime is one key reason why. It’s one thing to work 50 or 60 hours a week and know that it means you’ll have extra money in your pocket. But if your boss tells you to come in on Saturday to finish up those TPS reports and you get nothing from it, it’s hard not to feel powerless and exploited.
For Democrats looking for specific policy moves that will demonstrate their desire to help middle-class Americans, the overtime pay issue looks like an excellent candidate, not only because it would mean more money for regular people but also because it would push the dynamics of power, compensation, and dignity a little bit back in the direction of workers.
Republicans will argue that raising the threshold infringes on the prerogatives of business owners, and that Obama is a tyrant for using the regulatory process to make the change. But I’m guessing Democrats would be happy to have that debate, so they can show that they’re trying to help the middle class. And at the end of the debate, the administration can issue the rules, and there’s nothing Republicans will be able to do to stop it.
By: Paul Waldman, Contributing Editor, The American Prospect; The Plum Line, The Washington Post, December 18, 2014
“The Haves And The Have-It-Alls”: The Pain Of Inequality Among Yacht Buyers
In this season of mass commercialism, let’s pause to consider the plight of simple millionaires.
Why? Because we now share a common cause: Inequality. You don’t hear much about it, but millionaires are suffering a wealth gap, too, and it’s having a depressing impact on both their level of consumption and their psychological well-being. While it’s true that millionaires certainly are still quite rich — indeed, they’re counted as full members of the 1 percent club. But that generalization overlooks the painful and personally grating fact that mere millionaires today are ranked as “lesser 1 percenters.” They don’t dwell in the same zip codes as the uber-rich few, who comprise the uppermost 100th of the 1 percenters, with wealth starting in the hundreds of millions of dollars and spiraling up into multiple billions.
No doubt you’ll be saddened to learn that this divide between The Haves and The Have-it-Alls is widening. Astonishingly, plain old millionaires are being abandoned by retailers that are now catering to the most lux of the luxury market. For example, have you checked out what is happening in the yacht market recently? Sales of your 100- to 150-footers are down by as much as 50 percent from 2008, and that is just one indicator of the hidden suffering being endured by the merely rich.
In the same time period, however, yacht sales of your 300-footers, with price tags above $200 million, are at all-time highs. As noted by Robert Frank, a New York Times wealth columnist (yes, such a rarefied beat does exist), “For decades, a rising tide lifted all yachts. Now it is mainly lifting megayachts.”
“Whether the product is yachts, diamonds, art, wine, or even handbags,” says the Times‘ chronicler of American wealth, “the strongest growth and biggest profits are now coming from billionaires and nine-figure millionaires, rather than from mere millionaires.” What this reflects is not the widely acknowledged wealth divide between the 1 percenters and the rest of us, but a stunning concentration of America’s total wealth in the vaults of the ever-richer 0.01 percenters.
They are the elitest of the elites, an extravagant moneyed aristocracy, sitting so high above our society that they largely go unseen. This exclusive club includes only a tiny fraction of American families, with each holding fortunes of more than $110 million. The riches of these privileged ones keep snowballing — their outsized share of our national wealth has doubled since 2002, and their holdings are expanding twice as fast as other 1 percenters.
Their growing control of wealth is distorting high-end consumerism, including not just yachts, but private jets as well. Sales of your common millionaire-sized jets are down by two-thirds since the 2008 Wall Street crash. So jet makers have shifted to the billionaire buyers, including some who are spending eye-popping levels of lucre to possess such pretties as their very own Boeing 777-300 — which normally carries 400 passengers, rather than one gabillionaire.
Imagine how this makes people with only a few million dollars feel. This extreme, obscene concentration of wealth is creating an intolerable inequality that will implode our economy and explode America’s essential, uniting sense of egalitarianism. It’s important to remember that money is like manure — it does no good unless you spread it all around.
In the spirit of holiday harmony and good will toward all, I say it’s time for you working stiffs (and even those of you who’ve been badly stiffed and still can’t find work in this jobless economic recovery) to extend your hands in a gesture of solidarity with America’s millionaires. Let’s reach out to comfort our downcast brothers and sisters. Tell them, “We’re all in this inequality fight together,” and invite them to come to the next rally in your area to raise America’s minimum wage above the poverty level.
By: Jim Hightower, The National Memo, December 10, 2014
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