Government = Protection Racket for the 1 Percent

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JP Morgan Chase & Co. Chief Executive Officer Jamie Dimon and Goldman Sachs Chief Executive Officer Lloyd Blankfein leave the White House in Washington following a meeting between chief executives and President Barack Obama. March 2009. (AP Photo/Evan Vucci)
JP Morgan Chase & Co. Chief Executive Officer Jamie Dimon, left, and Goldman Sachs Chief Executive Officer Lloyd Blankfein leave the White House in Washington in 2009 following a meeting between chief executives and President Barack Obama. (AP Photo/Evan Vucci)

The evidence of income inequality just keeps mounting. According to “Working for the Few,” a recent briefing paper from Oxfam, “In the US, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.”

PewOur now infamous one percent own more than 35 percent of the nation’s wealth. Meanwhile, the bottom 40 percent of the country is in debt. Just this past Tuesday, the 15th of April — Tax Day — the AFL-CIO reported that last year the chief executive officers of 350 top American corporations were paid 331 times more money than the average US worker. Those executives made an average of $11.7 million dollars compared to the average worker who earned $35,239 dollars.

As that analysis circulated on Tax Day, the economic analyst Robert Reich reminded us that in addition to getting the largest percent of total national income in nearly a century, many in the one percent are paying a lower federal tax rate than a lot of people in the middle class. You may remember that an obliging Congress, of both parties, allows high rollers of finance the privilege of “carried interest,” a tax rate below that of their secretaries and clerks.

And at state and local levels, while the poorest fifth of Americans pay an average tax rate of over 11 percent, the richest one percent of the country pay — are you ready for this? — half that rate. Now, neither Nature nor Nature’s God drew up our tax codes; that’s the work of legislators — politicians — and it’s one way they have, as Chief Justice John Roberts might put it, of expressing gratitude to their donors: “Oh, Mr. Adelson, we so appreciate your generosity that we cut your estate taxes so you can give $8 billion as a tax-free payment to your heirs, even though down the road the public will have to put up $2.8 billion to compensate for the loss in tax revenue.”

All of which makes truly repugnant the argument, heard so often from courtiers of the rich, that inequality doesn’t matter. Of course it matters. Inequality is what has turned Washington into a protection racket for the one percent. It buys all those goodies from government: Tax breaks. Tax havens (which allow corporations and the rich to park their money in a no-tax zone). Loopholes. Favors like carried interest. And so on. As Paul Krugman writes in his New York Review of Books essay on Thomas Piketty’s Capital in the Twenty-First Century, “We now know both that the United States has a much more unequal distribution of income than other advanced countries and that much of this difference in outcomes can be attributed directly to government action.”

Recently, researchers at Connecticut’s Trinity College ploughed through the data and concluded that the US Senate is responsive to the policy preferences of the rich, ignoring the poor. And now there’s that big study coming out in the fall from scholars at Princeton and Northwestern universities, based on data collected between 1981 and 2002. Their conclusion: “America’s claims to being a democratic society are seriously threatened… The preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy.” Instead, policy tends “to tilt towards the wishes of corporations and business and professional associations.”

Last month, Matea Gold of The Washington Post reported on a pair of political science graduate students who released a study confirming that money does equal access in Washington. Joshua Kalla and David Broockman drafted two form letters asking 191 members of Congress for a meeting to discuss a certain piece of legislation. One email said “active political donors” would be present; the second email said only that a group of “local constituents” would be at the meeting.

One guess as to which emails got the most response. Yes, more than five times as many legislators or their chiefs of staff offered to set up meetings with active donors than with local constituents. Why is it not corruption when the selling of access to our public officials upends the very core of representative government? When money talks and you have none, how can you believe in democracy?

Sad, that it’s come to this. The drift toward oligarchy that Thomas Piketty describes in his formidable new book on capital has become a mad dash. It will overrun us, unless we stop it.

Bill Moyers is the managing editor of Moyers & Company and
Michael Winship is the Emmy Award-winning senior writer of Moyers & Company and, and a senior writing fellow at the policy and advocacy group Demos.
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  • Anonymous

    Not unlike how the mob used to “protect” businesses, until they decided to take a more adversarial relationship when their “needs” weren’t being met.

  • Victoria Love

    Who DIDN’T see this, is what I want to know? I’ve watched my country become a plutocratic, corporatist state – isn’t that Fascism? – over the last 30 years. ““We now know both that the United States has a much more unequal distribution of income than other advanced countries and that much of this difference in outcomes can be attributed directly to government action.” We NOW know? MUCH of this difference in outcomes? Jesus, Mary and Joseph.


    I suspect the United States has devolved into a plutocratic oligarchy where the rule of law is owned, controlled and administered to protect the malfeasance of the wealthy ruling class. Everybody else is a $erf… toiling to survive a $ystem designed to suppress them.

  • allen

    Something can be done about this but the movement will have to start with municipalities. Read about Government Sanctioned Racketeering.

  • Edward98

    I do believe that.

  • Pete Joachim

    It does seem that this evolution was inevitable. Human nature being what it is – once you get yours – humans, for the most part, do everything they can to protect it, increase it and hold on to it – at any cost – and apparently including democracy. Human history has foretold this story many times over, in many different ways. And once we lose connection with the real horrific results of our egocentric actions, it becomes so easy to push aside any latent guilt (we strive to live in our gold-plated boxes of comfort, both physically and mentally). And in our very big world, it becomes so easy to wash away the sight of pain -just change the channel or link or close the welcome gates to your little Mcbode. It takes a bigger person (group), with a bigger and longer perspective than his own life, his own ego, to be both ambitious and humble at the same time. To work hard and be successful with the virtuous goal of making life better for others.

    Those who fear the slightest movement towards any type of socialistic or “community first” policies are simply allowing corporate / 1% owned “communism” to prosper. Instead of answering to our elected representatives, we, through our representatives, answer to and work for, the Corporate MAN / 1%.

  • Jack Boardman

    This comes as no great surprise…

  • t socrates

    Good Work, Moyers & Winship!

  • Stan Lewis

    WE must put an end to this. Lets show them in 2014, that we are fed up and will not take it anymore. Name them, vote against them and kick them out of the Congress. Be they Republicans or Democrats.

  • Bruce Miller

    See “Who stole the American Dream”by Hedrick Smith also “The party’s over” by Mike Lofgren. We need a movement like civil rights, environmental, Occupy to move the “message” to the front burner. MSM is no help because their “message” has already been bought by the 1%. Mr. Smith calls this a modern political crusade by average Americans. Not Tea Party, who’s representatives are are millionaires. The sixty tea party representatives in House are averaged net worth of $1.8 million. But the grass roots efforts can be copied, Smith states. Thank you for solid research and alternative media.

  • Anonymous

    My Uncle Connor got Mercedes-Benz SLS AMG
    use this link F­i­s­c­a­l­P­o­s­t­.­ℂ­o­m

  • Ian

    I wonder if “socialism” is still as hated and vilified a concept in the USA as it was in the 50’s? I’m not talking about the Stalinist variety of communism but a true socialist philosophy of the wealthiest being expected to do at least as much (and hopefully more) than the poorest sections of society rather than being allowed to do LESS. I’ve told Americans that I’m a socialist and been called a “dirty commie” for my troubles.No matter how much I explained my position regarding social obligations it always came back to giving lazy people stuff for free paid for by the hardworkers.
    So,congratulations USA on managing to create a system where any criticism of the status quo by a foreigner (I’m British) is seen as an attack on them personally and their country as a whole.
    I’m not trying to say that the UK is perfect,far from it,and I’d like to see some change here too but at least we can accept justifiable criticism AND see that our system needs reforming too.

  • TheLump

    I’m from the U.S. and been called quite nasty names for saying similar things. Unfortunately, the vitriol at any criticism is not confined to someone from outside the U.S.

  • TheLump

    Sounds about right. Look up “affluenza”.

  • Doug

    Yea, they have poisoned the word socialist. All it is is a slightly different economic system, yet people equate it with authoritarianism. I think there are people that like the fact that we are some of the least educated people in the industrialized world.

  • useless eater

    We had Occupy. The “anti-terrorism” arm of the corporate government – spied on, arrested, infiltrated, raided, brutalized, and finally shut them down.

  • Anonymous

    Don’t we badly need to enact a financial transactions tax? What could be the possible harm? Whether such a tax is politically possible is the real question of course.

  • Jim

    Check the ORIGINAL Constitution of the United States that says that some people are only 3/5 of a person or that the State Legislatures elect the Senators or that the Electoral “College” get to elect the Preznits. In 2000, the Electoral College put the guy who lost the our vote in the White House. It’s only gotten more subtle over time but the rich guys are still pulling the strings. In 1948 the Ivy Leaguers set up the CIA to make the rest of the world do what they wanted.

  • Redduke

    The “occupy” movement was a bunch of losers who shut themselves down once people saw the news showing their disgusting and illegal behavior, class envy and lazy feaux intellectualism of a bunch of leaches that want nothing more than to hate the position they put themselves in.

  • Redduke

    Couldn’t get past the first false paragraph. Each and every citizen owes a debt of $193,000. Thanks to big government Progressive Republicans and Democrats ( and a couple Independents, too)

  • JonThomas

    Let’s ignore the simplistic disinformation that characterizes your comment, your abusive comment below gives plenty of insight into your character.

    Instead let’s just ask… “Progressive Republicans”? Huh? Examples and definition please. I’m curious as to what this particular spin means.

  • Bruce Miller

    Don’t give up! Of course this happen during anti-war movement. FBI organized SDS (students for democratic society) to spy on us college freshman, etc. However, because they were arrested, infiltrated, brutalized media attention was shifted. EPA, ABOLISHING DRAFT, ETC. Sorry I didn’t reply earlier.

  • Anonymous

    Sorry about your memory. Bush’s off-the-books illegal wars and years of giveaway tax cuts and loopholes – for the poor widdle put-upon 1% – are what nearly killed this country. We’re still paying interest on that krap! Meanwhile, the 1% are all smiles. They’ve perfected the system so they don’t pay a dime!. The rich are followed around by a posse of gullible fools who believe the rich, like Koch, actually care about them. They don’t care! Divide and conquer! It’s all about them. And it’s all for them, thanks to a bought-and-paid for 3-branches of government. Game-set-match.

  • Anonymous

    We need to stop talking about the 1% and change that to the .1%. The “Point One Percent.” Else no change will ever take place. T

    We will accomplish nothing of substance by pointing fingers at the billionaires, much less the millionaires (though indeed, the gap between them and us is huge), and get a clue: it’s the trillionaires who are running the show and devastating the earth as well as the rest of humanity.

    They are happy as clams to have us get all bent out of shape about the bottom tiers of the 1%. At that level, it’s STILL just a matter of divide and conquer.

    It’s not Wall Street. It’s the Fed.

  • Anonymous

    > eyeroll < (I know – it was sarcasm)

  • DannyVee

    Not to mention the fattest and physically weakest.

  • wiseoldsnail

    not to worry … we’re not shut down, only underground

  • obbop

    The elites of the world control the masses everywhere. And the masses are indoctrinated to accept their fate and to never pose a serious threat to those ruling overlords.

    And the class war continues with nary a glimmer of hope for meaningful change visible anywhere.

  • Anonymous

    Nothing new here. Just shows how corporate media has hoodwinked the public for decades! Was is upsetting is we all have felt what I call incremental income destruction since Ronnie Reagan changed the rules.

  • Defining Quality

    More proof – we need to TAX ALL Net Worth and income above $10,000,000 @ 100%!
    What are we afraid of – stopping ALL Corruption of Government!!!!!!!!!!!!

  • upintheclouds

    How does the fact that the country is in debt in any way contradict the article here? What claim is made in the article which is proved false by the existence of debt? What, otherwise, is false in the article? I’m honestly struggling to understand your point, here.

  • Melwoolf

    I’m an American having lived in Europe for forty years – have seen the sad decline of U.S. values and concern for our fellow man from afar and visits. No one gives a “s—” about anybody else – partly because every American is running scared – working at two, three jobs that don’t pay and trying to cope with health issues. The wealthy are so far beyond reach and just think about themselves and hoarding everything for themselves: greed is horrible but they believe it is good. Prosperity religion anyone?
    Very sadly, I recognise that the U.S. has to change BIG TIME but the idea that our politicians care is a joke. Elizabeth Warren might – just might change some things but a European style social democracy is a lovely dream simply because Americans refuse (can’t?) to think. They are brainwashed by many ways and means: Fox News, ranting radio and indifferent and poor TV news. Oh, and no newspapers except on the East and West Coast.
    I am soooooooo happy to be growing older in the UK – though as you mentioned the UK has its own problems to face.

  • Ian

    Is any of this actually a surprise though? What did we expect when the Yuppies of the 1980’s got rich on the creed of “greed is good”? Now they’re the ones in charge of the world and their kids are now in their 20’s and 30’s and have been raised on that credo….they may even be worse than their parents because they’ve grown up rich,privelidged and out of contact with what life is like for the rest of the world.

  • Anonymous

    The puppet on the Right best represents my views, the puppet on the Left best represents my views hey tje same guy is holding both puppets!

    – Bill Hicks

  • Mike Wicks

    The 1% includes politicians, executives, musicians, actors, athletes, journalist, etc. they are overpaid!

  • Chucklou

    Capitalism needs socialism to survive. Without socialism capitalism will strangle on its own excesses. We are seeing some of the gasps for breath already. The sad part is those gasps are coming from the bottom.