D e s e r t E x p o s u r e
December 2011
Occupational Therapy
Are we finally mad at the real culprits in the financial meltdown?
As protests inspired by the Occupy Wall Street movement spread to Tucson, Albuquerque, Las Cruces and even Silver City, commentators have opined about the "occupiers'" absence of an organizational hierarchy or clear demands. Some have scoffed at protesters' sometimes scruffy appearance and inchoate agenda, which can range from anger at Wall Street far afield to concerns over animal cruelty and chemicals in our food supply. Isolated incidents of violence have tarnished the movement.
But when it comes to the Occupy movement's core complaint about America's rising plutocracy at the expense of the 99% of the rest of the nation, what really comes to mind is: What took you so long?
The nation's financial system, after all, imploded back in 2008. That crisis was brought on (as those who now decry "big government" have already forgotten) by deregulation dating back to 2000, when leaders from both parties overturned restrictions and lessons learned from the last massive financial meltdown, in 1929. By enabling transactions such as "credit swaps," Uncle Sam let once-staid insurance companies and investment houses run risks that would make Vegas casinos blanch. The nation's financial powers-that-be also inflated a housing bubble by gimmicks like subprime mortgages, lending to people who had little prospect of being able to keep up their payments if the bubble ever stopped inflating.
Then taxpayers bailed out the bankers — because, despite what the reckless ideologues (like our own Rep. Steve Pearce) who voted against the bailouts would have you believe, in their instant rewrite of history, to do otherwise would have triggered a global depression. It's true, however, that the bailouts had far too few strings attached. Partly as a result, ordinary folks have continued to suffer even as the financial sector has gone right back to huge bonuses while hoarding the money that was supposed to spark economic recovery.
No wonder groups like the Tea Party got mad. But by focusing their ire on the bailouts and the federal deficit, those protests missed the real miscreants. They've confused an imperfect cure with the underlying disease.
The plutocrats of the financial sector and polluters like the Koch brothers have cannily helped misdirect this understandable anger, away from themselves and toward a demonized big government. As Nobel Prize-winning economist Paul Krugman recently put it, "Bankers showed their gratitude by turning on the people who had saved them, throwing their support — and the wealth they still possessed thanks to the bailouts — behind politicians who promised to keep their taxes low and dismantle the mild regulations erected in the aftermath of the crisis."
To cite just one example of the topsy-turvy priorities in Washington: Republicans in the Senate, along with two senators identified with the Democrats, recently blocked a bill that would have created jobs by rebuilding the nation's roads and bridges. The $60 billion cost for these infrastructure improvements would not have added a dime to the deficit, but would have been paid for by a 0.7% surtax on people making more than $1 million a year, affecting only 345,000 wealthy taxpayers. It's simply common sense, and a policy long followed by Republicans and Democrats alike, to boost employment in down economic times by investing in America's infrastructure. But a large faction in Washington puts the interests of millionaires ahead of those of ordinary Americans, no matter what the cost to the country.
You'll hear, of course, that the rich already pay plenty in taxes. And what about people who pay no federal income taxes at all? (That's largely an effect of the Earned Income Tax Credit, a highly efficient way of aiding the working poor that was enacted under the Ford administration and expanded by President Reagan. People who owe no net income taxes as a result nonetheless do pay other taxes, such as payroll taxes.)
One reason so many people pay no net income tax is that so much of the nation's income has shifted to the rich — more precisely, to the richest of the rich. And if rich households now pay a greater percentage of the US tax bill, it's because (to paraphrase bank robber Willie Sutton), that's where the money is. Even so, Americans' current tax burden is at its lowest since 1950, and the share of income paid in taxes by the very richest has dropped from 30% to 18%.
According to a recent report by the nonpartisan Congressional Budget Office, the bottom 80% of US households by income now earn less than half of total income. Virtually all the shift of income away from lower- and middle-income Americans has gone to the highest-earning 1%. When the Occupy protesters rant about what's become of "the 99%," they're right.
Indeed, Krugman notes that saying the bulk of the upward shift of America's wealth has gone to the richest 1% may be setting the cutoff too low. It's actually more like "the 99.9%" who have suffered income stagnation and economic uncertainty while the top 0.1% have prospered. An earlier report found that two-thirds of income gains have gone to the richest one-thousandth of Americans, whose incomes soared 400% from 1979 to 2005.
The defenders of America's new oligarchy will argue that this is as it should be, because these rich folks are "job creators." Far from being heroic entrepreneurs, however, the wealthiest Americans are mostly overpaid corporate executives who've balanced their firms' bottom lines by cutting jobs or shipping them overseas.
There's nothing wrong with getting rich — that's the American dream. But there's a difference between a Steve Jobs or a Bill Gates, who built empires from scratch while enriching plenty of others along the way, and, say, Transocean Ltd. CEO Stephen L. Newman, who earned $6.6 million in salary, bonuses and other compensation in 2010. That's almost $1 million more than the prior year, and he's getting a 22% raise for 2011. Transocean, you'll recall, built and staffed the Deepwater Horizon oil rig that exploded in April 2010, killing 11 people and gushing crude oil into the Gulf of Mexico for 86 days. Imagine if Newman's company had enjoyed a good year!
Is it "class warfare" to complain about such outrages? Don't kid yourselves: Class warfare has been going on for a long time now, and Wall Street is winning. At least Occupy Wall Street, for all its fuzziness and eccentricities, is finally fighting back.
David A. Fryxell is editor and publisher of Desert Exposure.