Beginning with the election of Ronald Reagan a new more intense class war was launched against the American people. Along with the election of Reagan in 1980, a very conservative Democratic/Republican congress was also elected in reaction to the incompetent economic policies of the Carter administration regarding the growing inflation crisis. The strategy Demopublicans pursued was rather simple-minded but very effective. Reagan-Bush began printing and selling massive numbers of Federal Treasury bonds and other Federal Government revenue building instruments. To entice investors, these Demopublicans paid high interests rates (over 9%) to anyone who had the money to buy. Cash rich Gulf State Arab princes working through British banks, and Japanese, German, and American transnational corporations began buying up these high yielding bonds. Between 1776 and 1980 the United States government incurred a debt of 1 trillion dollars. By 1988 Reagan-Bush elevated the debt to 2.8 trillion dollars. By 1992 the debt reached 4.2 trillion dollars with annual interest reaching 300 billion dollars.
Absorbing this flood of foreign capital into the economy could create a variety of obvious problems such as inflation. Besides keeping Carter's interest rates high to avoid inflation, Reagan-Bush, with the cooperation of their newly elected reactionary legislative branch did two new things: First, they deregulated the banks and savings and loans allowing them to loan money on a variety of risky ventures. Second, they loosen up the availability of credit cards. As a result of the deregulation of all financial institutions, the West Coast and New England economies experienced a heady speculation fueled real estate market. Meanwhile the banks and S&L's were allowed to operate on reduced amounts of reserve capital and little regulation or oversight. To protect these banks and S&L's from their risk taking, deposit insurance was raised from $40, 000 to $100,000. Reagan-Bush and the Demopublicans told these "venture capitalists" that if they fail, the middle and working classes would bail them out through tax hikes.
When the S&Ls finally collapsed the bail-out initially cost middle and lower income taxpayers 500 billion dollars. Bank failures are now occurring and if established patterns continue, the bail-out will begin after the November 2002 elections! The locking up of huge amounts of capital in treasury bonds and the easy availability of credit cards absorbed much of the new borrowed capital flowing into the economy and deferred its payback to the future. These credit cards allowed folks to spend more money then they had and encouraged them to buy more things including foreign manufactured commodities.
To pay the principle and interest on this huge debt without burdening the upper-class power base of Reagan-Bush Demopublican coalition, the Demopublican congressional Ways and Means Committee rewrote the tax laws. The Ways and Means Committee reduced multiple tax brackets to three brackets and thereby lower taxes on the rich from a theoretical 72% (without using loopholes embedded into the tax laws) to 28% and raising taxes on most everyone else from 15% to 28%. Moreover, this committee closed a variety of middle income loopholes while preserving upper-class loopholes such as writing off the interest on two homes, lowering the capital gains tax, and accelerating capital goods depreciation from 5 years to 3 years. In a mean-spirited afterthought the Reagan/Bush team even forced waitress and waiters for the first time to pay income taxes on their tips. To add insult to injury, the tips wait people were expected to earn was set at 15% whether customers paid that much or not!
During the 1980's and after general bank deregulation, there was a proliferation of small banks and savings and loans. Every small town or village now had a new bank or S&L on main street. The "Banking Reform Act" sponsored by the politically dead and conveniently retiring Jake Garn, Republican Senator from Utah, and Fernand St. Germain, Democrat ex-congressman from Rhode Island (and now Washington's top banking industry lobbyist) was set into law to not only protect "venture capitalist" but to gathering up loose capital in the economy and transfer this money to the upper class. Banking across state lines, via electronic teller machines, was permitted for the first time since the heydays of the 1920's. Banks and now S&L's loaned money to anyone for any reason and charged high interest rates mandated by the Demopublican controlled Federal Reserve Bank. To facilitate the looting of the middle class, Demopublicans in state governments all over the United States did away with "New Deal" usury laws allowing banks and big corporations to charge whatever interest rate the "market" would bear. High interest bank credit cards thus found their way into the hands of everyone including young children and even dogs!. Quietly, the Demopublicans believed high interest credit cards would keep inflation down by absorbing excess capital and also help defer the cost of bad third world loans made in the 1970's. Meanwhile, the Garn/St. Germain banking reform act made no attempt to reform the bankruptcy laws of the United States. Anyone with any compelling reason could write off their debt and transfer it to the American taxpayer. Internal U.S. debt reached more than two trillion dollars by 1986!
The last twelve years can be characterized as the wealthy looting the American economy and, through their control of the American government via the Demopublican coalition, forcing the middle and working classes to pay for the damage. As Federal government monies dried up the Demopublicans shifted taxation to the states reviving ousted President Nixon's "New Federalism" policies from the 1970's. The states began to raise regressive taxes such as the sales tax, fees on services, auto registration, college tuition, and regressing the progressive state income tax. At the same time Demopublican controlled state governments began shifting taxation to local governments knowing that the local governments were for the most part controlled by local special interests such as chambers of commerce and other local business organizations. This strata of people would never raise progressive taxes on property, big or small, or on income. They will, however, raise regressive taxes such as sales taxes, park fees, water rates, garbage pick-up fees, increase building permit fees, increase hotel/motel bed-taxes, and put into place legal lotteries (also called voluntary tax or desperation tax ). Meanwhile Republicans gleefully torture the truth with such phrasing as “Voluntary Taxes,” and “Death Taxes,” and “Flat Taxes” when what they really mean is “stick it to the middle and working class tax” while at the same time they reduced all around services The pay back burden on the middle and working classes became so heavy and coupled with the widespread unraveling of Reagan's "social safety net," social conflict of the kind the economist John Maynard Keynes hoped to avoid loomed evermore largely on the horizon.
In a capitalist society money is power. Democracy is the empowerment of the people yet the budgetary behavior of the federal government flys in the face of democracy. Instead the Federal Government empowers the wealthy elite. This is not democracy in the sense of the traditional New England Town Halls, but a benign form of dictatorship, an elite Athenian form of democracy whose goal is to prevent the rabble from gaining any power by waging a stealthy protracted class war. Don't expect things to get any better in the future.
Sunday, June 24, 2001
Wednesday, June 20, 2001
Upper Class Welfare
While watching CSPAN the other day, a women from Palmdale, California called in and cheerfully announced that the American people and particularly American workers are better off when the Republicans are in power in Washington D.C. According to Palmdale Patty, calling from her trailer park, Republicans cut welfare programs thereby freeing up huge sums of money. These monies are then returned to the American workers in the form reduced taxes. Three cheers for Republicans in power?
As an AM radio “Dittohead,” poor Palmdale Patty is parroting Republican Party propaganda perpetuating their perverse prevarications. Meanwhile behind the gated compounds of the rich and famous, Brentwood Buffy and her hubby, Skippy, toast each other with outstretched pinky fingers and laughingly exclaim, “Isn’t class warfare wonderful!”
Poor ignorant Palmdale Patty has to pay an extra $250 per year to feed her family because the Federal Government gives agribusiness $18 billion per year in profit subsidies.
Poor ignorant Palmdale Patty is clueless about Federal Government profit subsidies to the timber industry. Louisiana Pacific, Weyerhauser, and their buddies get checks from the tax payer to the tune of $427 million per year (guess who pays for those thousands of miles of timber roads in the National Forests and, to boot, gives away the trees?).
Poor Palmdale Patty thinks the rich pay their fair share of Social Security taxes. She doesn’t know the more money you make the less Social Security taxes you have to pay. If you make $50,000 per year, you pay 8% of your income in Social Security taxes. If you make $500,000 per year, you pay 1% of your income in Social Security taxes. The rich stiff middle and working class tax payer in the form of a regressive Social Security tax inequities a whopping $53 billion per year. The total cost to Social Security since the Reagan/Bush “reform” is about $800 billion. It was Reagan/Bush and the demopublicans who created the so-called Social Security crisis. Lets ask poor Palmdale Patty if she wants to add Ronnie to Mount Rushmore now.
Corporate and upper class welfare in 1996 amounted to more than $440 billion per year, and that number has grown substantially in the last 5 years. Meanwhile, before that demopublican known as Bill Clinton cut welfare “as we know it” in 1996, the Federal Government spent a miserly $130 billion on the poor/working class and middle class subsidies. If only Palmdale Patty really knew what was going on.
Speaking before the National Press Club in Washington DC, Bill Moyer recently said, “My world view was really shaped by Theodore Roosevelt, who got it right about power in America. Roosevelt thought the central fact of his era was that economic power had become so centralized and dominant it could chew up democracy and spit it out. The power of corporations, he said, had to be balanced in the interest of the general public. Otherwise, America would undergo a class war, the rich would win it, and we wouldn't recognize our country anymore. Big money and big business, corporations and commerce, are again the undisputed overlords of politics and government. The White House, the Congress and, increasingly, the judiciary reflect their interests. We appear to have a government run by remote control from the US Chamber of Commerce, the National Association of Manufacturers and the American Petroleum Institute. To hell with everyone else.” Amen, Mr. Moyer!
June 2001
As an AM radio “Dittohead,” poor Palmdale Patty is parroting Republican Party propaganda perpetuating their perverse prevarications. Meanwhile behind the gated compounds of the rich and famous, Brentwood Buffy and her hubby, Skippy, toast each other with outstretched pinky fingers and laughingly exclaim, “Isn’t class warfare wonderful!”
Poor ignorant Palmdale Patty has to pay an extra $250 per year to feed her family because the Federal Government gives agribusiness $18 billion per year in profit subsidies.
Poor ignorant Palmdale Patty is clueless about Federal Government profit subsidies to the timber industry. Louisiana Pacific, Weyerhauser, and their buddies get checks from the tax payer to the tune of $427 million per year (guess who pays for those thousands of miles of timber roads in the National Forests and, to boot, gives away the trees?).
Poor Palmdale Patty thinks the rich pay their fair share of Social Security taxes. She doesn’t know the more money you make the less Social Security taxes you have to pay. If you make $50,000 per year, you pay 8% of your income in Social Security taxes. If you make $500,000 per year, you pay 1% of your income in Social Security taxes. The rich stiff middle and working class tax payer in the form of a regressive Social Security tax inequities a whopping $53 billion per year. The total cost to Social Security since the Reagan/Bush “reform” is about $800 billion. It was Reagan/Bush and the demopublicans who created the so-called Social Security crisis. Lets ask poor Palmdale Patty if she wants to add Ronnie to Mount Rushmore now.
Corporate and upper class welfare in 1996 amounted to more than $440 billion per year, and that number has grown substantially in the last 5 years. Meanwhile, before that demopublican known as Bill Clinton cut welfare “as we know it” in 1996, the Federal Government spent a miserly $130 billion on the poor/working class and middle class subsidies. If only Palmdale Patty really knew what was going on.
Speaking before the National Press Club in Washington DC, Bill Moyer recently said, “My world view was really shaped by Theodore Roosevelt, who got it right about power in America. Roosevelt thought the central fact of his era was that economic power had become so centralized and dominant it could chew up democracy and spit it out. The power of corporations, he said, had to be balanced in the interest of the general public. Otherwise, America would undergo a class war, the rich would win it, and we wouldn't recognize our country anymore. Big money and big business, corporations and commerce, are again the undisputed overlords of politics and government. The White House, the Congress and, increasingly, the judiciary reflect their interests. We appear to have a government run by remote control from the US Chamber of Commerce, the National Association of Manufacturers and the American Petroleum Institute. To hell with everyone else.” Amen, Mr. Moyer!
June 2001
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