By Penny Smith
According to Robert Reich and a number of other economists, over the past several decades income inequality has significantly increased in the United States. Particularly stressed are people in the middle, who “play by the rules.” The standard of living that once required the labor of a single individual to support a family of four, now requires the work of two. And that work is done, not with the help of household staff, but in addition to the hours required to tend a house, children, and multiple schedules.
I want you to imagine an asymmetrical hourglass. On the top is a miniscule, slightly wide opening, which shrinks rapidly to a squeezed off-center mid-point. It then slowly opens to a very tall, ultimately very wide bottom. That’s our economy. We have a small percentage doing very, very well at top, a shrinking middle class, and an enlarging bottom 50-60 percent.
Two sections of that hourglass get help from our government, sometimes lots of it. The impoverished have access to a number of support programs: food stamps, housing vouchers, unemployment insurance, disability funding, public schools, Medicaid and sometimes Medicare. The elderly (and a few other people) are assisted by Social Security, although without resources like free housing those payments don’t necessarily yield a high quality life-style for many of its recipients.
The top earners, a very small section, also get government hand-outs. There are numerous tax breaks for corporations, which, in turn, pay enormous salaries to their top executives. These corporations get state or federal location and building tax abatements and sometimes direct subsidies. They participate in a tax code geared to their write-offs. For example, corporations, prior to the recent tax revision, were charged at the rate of 35%, but once they took their legal and numerous deductions, they paid, on average, only 13%. In the case of particularly crafty folks and/or organizations, they paid nothing. Some corporations even receive refunds.
Hedge fund managers, who mostly strike it rich at our expense, are taxed at a 15% rate on money that, were they simply working stiffs, would be taxed at 35%. If some corporations fail, because they are “too big” to do that, they had access to bailout money. When we fail, we simply lose what we have or declare bankruptcy, which has recently become much harder for small businesses and individuals to do. Capital gains are taxed at 15%. Who gets them? People who have stocks and bonds, items usually not in a poor person’s portfolio.
Homebuyers save on home mortgage deductions. That’s also a direct subsidy to the construction industry, since it encourages home ownership. However, the Center for Budget and Policy Priorities estimates that 77% of those benefits go to homeowners whose income exceeds $100,000 a year. By subsidizing mortgages, we also subsidize the accumulation of wealth through property ownership, something not available to individuals working minimum wage jobs that never yield an income sufficient to pull together a down payment.
And, because the wealthy are likely to live longer than the poor, working or not, they will, over their lifetime, garner more money in Social Security and Medicare benefits. Social Security contributions are tapped at $127,200. If you make more than that you don’t have to pay Social Security taxes on that part of your salary. Poor people don’t get tax breaks on 401(k’s), because they don’t have them. We indirectly pay to help wealthy people get deductions; they can take off the cost of their high-priced, multi-lawyer and accountant tax preparation. Poor people don’t itemize.
And there are a number of devious charitable organizations out there to which the clever, less ethically troubled rich can first establish and then fund. Take, for example, the Cancer Fund of America. Over five years it paid out $5 million to its founders and spent $80 million on fundraisers; it gave, during that same period, less than $1 million to cancer patients. Yep, if you’re particularly sly, you can invent a charitable foundation, run it with family members, pals or yourself, contribute money to it that you can deduct from your taxes, and use most of the money to pay that staff.
If you’re a businessman and do something shady, you usually have the cash to afford a lawyer and only pay a wink-wink I’m sorry fine. That’s not true for poor people or even many middle class folks. In 2016 Thomas Piketty, Emanuel Saez, and Gabriel Zucman, all economists, found that the top economic 10% in this country got as much in government help as the bottom 50%. The poorest 20% of American households get up to $3,000 each in annual tax entitlements; the richest 20% get at least $18,000. The richest 1% gets $120,000.
There is a subsidy for corporate jets. In 2014 fifty billionaires received farm subsidies, a program originally intended to help small family farmers – and you can bet their subsidies were a whole lot larger. The rich can claim a mortgage deduction on a second home. They can even designate their yacht that second house.
We subsidize the minimum wages of big companies. Many Wal-Mart employees, for instance, fail to earn a living wage. As a consequence we paid their employer indirectly and their workers directly in 2014, through our social programs, over $2 billion. I’m sure the figure is higher now. And, because Wal-Mart has lower prices than your average IGA store, those SNAP dollars go to Arkansas, rather than stay in a local community.
Yet it is the “undeserving poor” who raise the hackles on voters and not the equally
“undeserving rich.” When voters complain about the welfare system, they have Ronald Reagan’s Cadillac Welfare Queen in mind; they don’t have Donald Trump. Yet Trump has benefitted far more from the way our economic system was and will be arranged, under his revised tax code, than anyone living in America’s food desserts.
Rich people helped craft that narrative. Bottom line: More money flows to them from our tax dollars than flows to people who are hungry or lack adequate housing. That happens in spite of a moral imperative to have a safety net for the economically imperiled among us.
So, how did we come to despise the money going to help a poor child, an elderly citizen, or a displaced worker, but not the even higher amount going to the very wealthy? Or to their corporations, which then funnel profits to them? They did the marketing. They have the public relations specialists. They understand the value of propaganda. They own the lobbyists. There are as many Internet sites that try to debunk my point about Wal-Mart wages as validate it – which ones do you think are paid for by corporate-backed PACs and their trolls?
The greedy rich count on us taking a pass on news or essays that reach the same conclusions that I have. They count on poor people not voting and they actively make it more difficult for those who do cast ballots to go to the polls. They count on distractions, tweets, Friday night football games, March madness and binge-watching television. They count on our disorganization, our splintered causes, our tendency to ideological purity tests, and our lack of money. They count on now reaping the benefits of decades of constructing an intellectual infrastructure of think tanks, partisan media, PACs, Astroturf non-profits, and interest groups. Accurately, they also count on politicians paying attention to their donors.
What we should take from their success is that “the message matters.” We need to reclaim the narrative in at least two ways. The “Prosperity Gospel” works in favor of fat cats; the “Jesus Gospel” doesn’t. We need to adopt the language of Reverend William Barber. Helping the distressed is not a right-wing issue nor a left-wing issue, not a Republican issue nor a Democratic issue; it is a human issue. It is doing the right thing. We need to participate in the recently rejuvenated Poor People’s Campaign and help it’s success, because their road is our road, too.
Secondly, we need to inform the voting public about who really is gaining from welfare – and it’s not overwhelmingly the poor, the huddled masses, or people yearning to be free. It is what Ayn Rand and her libertarian acolytes called the Makers, who turn out to be the biggest Takers of all.