Official: Rich Declare War on the Middle Class
Published on Sunday, November 14,
2010 by CommonDreams.org
For the past thirty years the rich have been waging war on the
middle class. It's been astonishingly effective, partly because it
has been undeclared. But even that pretense is now being abandoned.
The President's National Deficit Commission has effectively declared
that the rich will now go after what is left of working and middle
class wealth and will take whatever steps are necessary to seize it.
If allowed to succeed, their plan will reduce Americans to a state
Ronald Reagan began the war on the middle class with his
"supply-side" economics. Its very purpose, according to David
Stockman, Reagan's Budget Director, was to transfer wealth and
income upwards. It cut the marginal tax rate on the highest income
earners from 75% to 35% while dramatically expanding spending for
war. The results were two-fold: massive federal debt and an
astonishing rise in the share of income and wealth going to those
who were already the wealthiest people in the world.
The national debt quadrupled between 1980 and 1992. George W. Bush
would repeat Reagan's policies and double it again between 2000 and
2008. Meanwhile, the share of national income going to the top 1%
more than doubled, from 9% to 24%. The share going to the top
one-tenth of 1% of income earners more than tripled. We now have the
most unequal distribution of income in the developing world and the
inequality is growing rapidly.
Shifts of this magnitude over such short periods of time have never
been seen in American history. With the rich getting much, much
richer, it means that everybody else is getting poorer. And in fact,
real wages for median workers are lower today than they were in
1973. Indeed, while the inflation-adjusted income of the bottom
fifth of workers fell by $6,900 between 1979 and 2007, the top 1%
saw its annual income increase by $741,000!
To try to keep up with living standards Americans resorted to debt.
They increased their personal debt-to-income ratio from 62% in 1980
to 130% in 2008. When housing prices fell 35% nationwide in the
recent collapse, it left Americans with a smaller share of equity in
their homes, 48%, than at any time since the Great Depression. The
share they have lost has been taken by the banks.
In other words, all of the income and wealth gains for middle
Americans from the "golden years" between 1945 and 1975 have now
been wiped out. Or more accurately, have now been transferred to the
very rich. The top 1% holds 34% of the nation's wealth while the
bottom 50% holds just 2.5%. The bottom 40% owns absolutely nothing.
These effects and numbers can be numbing, even dizzying. But it's
important to understand that they have not been the result of random
events or impersonal market forces. Rather, they have followed as
the intended consequences of the relentless application of a wide
array of government and industry policies.
The massive run-up in debt is one such policy. The wealthy are net
lenders. This means that massive public and private debt transfers
interest income to them from the rest of the economy. Another method
for effecting massive wealth transfer: Beginning in 1981 the Reagan
administration effectively stopped enforcing anti-trust laws,
allowing monopolies to gouge everyone who had to buy their products.
The government actually provided tax subsidies so that corporations
could eliminate jobs in the industrial heartland and ship them to
Mexico and later, China, India, and other low-wage countries,
reducing wages and pitting American workers against each other for
those jobs remaining.
The bank deregulation that began in the early 1980s reached its apex
with the repeal of the Depression-era Glass-Steagall Act in the late
nineties. This set up the "casino capitalism" of the next decade
that would spawn massive criminality and mortgage fraud by the
nation's leading banks - none of which has been prosecuted. The
result was the greatest economic collapse since the Great
But even as more than five million homeowners have lost their homes,
the wealthy had their losses covered by the Bush and later Obama
administrations. Bloomberg news estimates that the transfer to the
banks through the financial bailout comes to some $13 trillion
We could go on and on and on with the roster of ways the wealthy
have used the government to transfer national wealth to themselves.
Environmental and health laws that are not enforced. Deals with the
pharmaceutical industry so they don't have to compete with foreign
manufacturers. Health care "reform" that forces tens of millions of
Americans to buy questionable insurance products, even as insurers
continue to kick legitimate claimants off their rolls. Give-aways of
the telecommunication spectrum worth hundreds of billions of dollars
to media monopolies that ladle out state propaganda as if were news
and never, ever challenge official narratives.
In these and a thousand other ways, the rich have conspired with the
government they largely control to shift more and still more of the
nation's wealth away from the working and middle classes, to
themselves. It amounts to the most insidious class warfare and the
most rapacious looting of public and private resources in the
history of the world.
The result is vast impoverishment, demoralization, and the
destruction of the American middle class. One out of eight Americans
are on food stamps. One out of five people are in official poverty.
One out of four children are raised in poverty. Twenty five million
people cannot find enough work, while their skills atrophy and their
families and communities are destroyed. These are not figures
describing a banana republic, a disaster-stricken region, or a third
world country. They describe the United States of America after
three decades of plunder by the rich. And now they want to go in for
Not satisfied with the staggering wealth they have already siphoned
away, the ultra-rich are now using Barack Obama's National Deficit
Commission to propose even more brazen plunder. And the looting is
no longer taking place behind closed doors or under the cover of
arcane public policies.
The commission proposes to cut the federal government's budget
deficit by $4 trillion over the next decade. But 75% of the
"savings" will come from gutting programs that help stabilize the
middle class and their communities. None of it comes from policies
that would harm the rich.
For example, the commission proposes cutting the tax deduction for
mortgage payments. Not only will this render housing much less
affordable for millions of prospective home buyers, it will reduce
housing prices, perhaps substantially, for without the tax
write-off, buyers will be able to afford much less house. This will
decimate the sole source of wealth of tens of millions of Americans.
It is housing wealth that undergirds retirement security for the
middle class. Or, at least it did until one out of four homeowners
went underwater on their mortgage in the recent bank-triggered
collapse. Then, even as the Commission plans to decimate home prices
and owner equity, it proposes cutting back benefits to Social
It would lower Social Security cost-of living adjustments while
raising the minimum retirement age. And this is being proposed at
the very moment that the bank-owned Federal Reserve Board is
beginning to print hundreds of billions of dollars to bail out the
banks from what's left of their toxic assets still held from the
The ensuing inflation is going to destroy the value of retirement
incomes at exactly the moment that 77 million baby boomers head off
into retirement. It was exactly this process of money printing and
bankrupting of retirees that destroyed the German middle class in
the early 1920s, giving rise to Adolph Hitler.
The Commission's proposals would increase co-pays and deductibles
for Medicare, making it unaffordable to millions. It proposes taxing
as income the health insurance benefits millions receive from their
employers. The Child Tax Credit would be eliminated as would 10% of
all federal government jobs. This, at a time when more than 20% of
the workforce is already underemployed and there are five workers
trying for every available job.
We should be crystal clear: these policies amount to a mortal
assault on what remains of middle class solvency and the democracy
that a vibrant middle class makes possible.
this point, many readers will want to start arguing about how
horrible capitalism is and about how wonderful socialism and
communism are. But capitalism is not the problem and as we have seen
countless times over the past several decades, government ownership
of business is not the solution to anything.
What we have in the world today is not capitalism. Rather, it is
monopoly capitalism that more closely resembles "feudalism" than
anything else. The elite are "monopoly men" who use their
unbelievable wealth and power to dominate the rest of us. In fact,
it was John D. Rockefeller who once said that "competition is sin".
But even as it girds up for this assault, the Commission barely
touches the ultra-rich on whose boards they serve and who have
gained so much over the past 30 years. And it cannot go without
being said that it was these same professional predators who
actually wrecked the economy, pitching it into its greatest collapse
since the Great Depression.
The Commission's proposals would actually lower the maximum tax on
the highest income earners, from 35% to 24%. The nominal tax rate on
corporate income would fall as well, from 35% to 26%. There is
nothing proposed to raise taxes after so many decades of steadily
amassed wealth. No financial transactions tax (as the IMF
recommends) to stanch the kind of tsunami of speculative buying and
selling that brought down the economy. Such a tax would raise over
$700 billion over the next decade.
Of course, there will be no claw-backs of the trillions of dollars
transferred to the rich under the phony duress of "saving the
system" during the height of the financial crisis. No proposal that
the cap on earnings subject to Social Security withholding should be
removed. [Why shouldn't the top 1% superrich pay into the social
security account that funds the rest of us? ~CR] That provision
alone would raise more than half a trillion dollars over the next
In fact, it is in comparison with other give-aways to the rich that
the take-aways from the middle class by the Commission can be seen
as so one sided and venal. Remember, they propose to save $4
trillion over 10 years.
But the war in Iraq, which we now know was entirely premised on
lies, will cost more than $5 trillion, according to Nobel economist
Joseph Stiglitz. It has proven a huge boon to the rich weapons
makers, bankers, logistics companies and oil companies that Bush
used to coddle as his "base."
As mentioned above, Bloomberg news estimates that the financial
bailout cost some $13 trillion, all of it going to the very richest
people on the planet. There is not a syllable in the Commission's
report proposing getting any of that back to help reduce the
Or consider the notorious Bush tax cuts of 2001 and 2003 where fully
40% went to the top 1% of income earners. Obama once promised to
overturn them but, as is his typically cowardly pattern, is now
folding. The Center on Budget and Policy Priorities has estimated
that they will cost the government more than $18 trillion over their
lifetime-four times what the Deficit Commission claims it will
achieve in savings. But God forbid we should ask for even a penny of
that back to help battle the deficit.
In other words, there are many, many substantial and just ways that
the savings the Commission proposes to create could be secured via
small contributions from those who have gamed the system and gained
the most over the past three decades. But that is not the
Commission's plan. And it is in that omission that its true intent
There is no more time for stealth, no more need for subtlety.
Western capitalist economies are declining at a pace that is
frightening their elite stewards and compelling such desperate,
slovenly measures as the wholesale printing of money to postpone the
inevitable. While Obama sings lullabies of "hope" and "change" to
tranquillize the suckers out front, the rich are backing the truck
up to the vault in the back, no longer even deigning to disguise the
heist. And of course, why should they? They have the additional
diversion of the moronic Tea Party vigilantes ("Keep the government
out of my Medicare"), ever ready to cut other people's throats to
cure their own nosebleeds.
The Commission's proposal is the most naked, undisguised declaration
of class warfare possible. Its agenda is not to reduce the deficit
but rather to reduce what is left of the American middle class and
American workers, to a condition of servitude, of feudal peonage.
Their poverty will make them docile and subservient. This will make
possible the final looting of America by those whose sociopathic
greed has brought it so low already. The battle over this proposal
is the last bulwark against the devastation and final destruction of
America. It must be fought and won or our freedom and security ceded
forever. There is no other choice.
Robert Freeman writes on economics, history and education. His
earlier pieces, "The Five Circles of Economic Hell," and “The U.S.
is Facing a Weimar Moment,” were also published on CommonDreams. He
can reached at email@example.com.
--------- Here’s another article from Robert Freeman, written a
Published on Sunday, November 7, 2010 by CommonDreams.org
Was Used, And Is Now Used Up
Barack Obama was used. Of course, he knew he was being used when
he made the deal. But what he didn't know was how quickly he would
be used up. Now he has to face two years of humiliation knowing that
he betrayed the people and the country he claimed to champion - and
knowing that everyone else knows it as well - but also knowing that
he's gotten what's coming to him.
Obama made a deal to get the job in the first place. The deal was
that he would carry on with Bush's bailout of the banks, with Bush's
two wars, with Bush's suppression of civil liberties, that he
wouldn't prosecute or even investigate any of the enormous fraud
that had brought down the country, or the lies that had railroaded
it into war.
Even before he took office, he began fulfilling his end of the
bargain. He appointed Larry Summers head of the National Economic
Council. It was Summers, more than any other person, who was
responsible for dismantling the Glass-Steagall regulations that had
acted as a firebreak against banks looting the country since the
Great Depression. Summers had made millions consulting for hedge
funds before taking the office.
Obama appointed Timothy Geithner Secretary of the Treasury.
Geithner had been head of the New York Federal Reserve Bank, another
central actor in the hear-no-evil-see-no-evil-speak-no-evil
dereliction that passed for financial oversight in the Bush
administration. He had been a major architect under Bush of the
financial bailout that passed trillions of dollars to his former
banking cohorts on the pretext of saving the system.
Obama re-appointed Ben Bernanke chairman of the Federal Reserve
Board. Before becoming Fed Chair, Bernanke had been Bush's Chairman
of the Council of Economic Advisers. Together with Geithner,
Bernanke is the person most responsible for the collapse, the one
person who could have slowed the asset bubble while it was still
possible. He had been at the helm of the Fed since February 2006 and
a member of its board for years before that.
Obama re-appointed Robert Gates, Bush's Secretary of Defense,
signaling that there would be profitable continuity with Bush's
wars, gulags, and other military expressions of empire. And then, of
course, he quickly tripled the number of U.S. forces in Afghanistan
even without a coherent strategy or even statement of goals.
He put together a "stimulus package" of $787 billion when
reputable economists were screaming that the collapse in demand from
the Great Recession was at least four times that amount. Then, in an
attempt to appease the Republicans, he made one third of it business
tax cuts, despite the notorious ineffectiveness of such policies in
generating jobs. When states cut back their payrolls and spending in
the slump, it effectively neutralized the impact of Obama's program.
Yet he never seriously attempted to get more.
He proposed no jobs program to employ the seven million people
who had lost their jobs. No infrastructure program to repair the
failing roads, bridges, tunnels, water and sewerage systems of the
country. His anti-foreclosure program was a joke. Some three million
homes will go into foreclosure this year alone while one in four
mortgages are under water. The share of equity that middle class
Americans own in their homes is now lower than it was before World
And now the conspicuous, embarrassing truth is that he's not
needed any more except as a tilt-up dummy sustaining the illusion of
democracy. And you can see why. The rich owners of the country who
put him into office in the certainty that he would be a smooth liar,
able to sell the masses on the empty opiates of "hope" and "change"
- they certainly don't need him any more. Do the rundown.
The owners of the banks don't need him. They got their buddies,
Obama's appointees Geithner and Bernanke, to buy their trillions of
dollars of toxic sludge with taxpayer money, saving them from
imminent bankruptcy. They've got the Fed loaning them money at zero
percent interest so they can loan it back to the government at three
percent and to payday borrowers at hundreds of percent. It is
literally a free, no-risk license to print money.
The same bankers, the ones who caused the Great Collapse, got
Obama to create the fiction of financial reform that left them
bigger than they were before the collapse and with their exotic
derivatives - Warren Buffet's "financial weapons of mass
destruction" - untouched. They are making the largest profits in
their history and paying themselves the biggest bonuses on record.
What do they need Obama for any more?
The insurance companies don't need him. They got him to create
the fiction of health care reform by requiring 32 million Americans
to buy their intentionally defective products and getting middle
class chumps to pay for it. Their stock prices doubled as soon as
the reform bill was enacted, a pretty clear sign of what the smart
money boys knew about the deal.
They got Obama to abandon his campaign promise of enacting a
public option that would have actually brought down the cost of
health care. So we still have a system that costs twice what any
other industrial nation's system costs and which delivers inferior
results. It is still on track to bankrupt the country by consuming
one out of every six (soon to be one out of five) dollars spent in
the economy. What do they need Obama for any more?
[Big Pharma doesn’t’ need Obama. He has continued
the policy of government subsidy of the Big Pharma backbone of a
medical-industrial complex which has made drug-per-symptom medicine
into a backwards standard which values a pound of treatment more
than an ounce of prevention. Under Obama, his Food and Drug
Administration of these disease care standards have
increasingly sabotaged holistic preventive health care with not only
government-subsidized drug-pushing under Medicare and Medicaid, but
also, Obama’s has now opened the door for his FDA to regulate small
food businesses, local growers and farmers markets to death. ~C.R.]
The weapons makers don't need him. Since Eisenhower, they've been
the king makers in American politics. They've gotten a continuation
of the never-ending wars they have always been able to engineer. In
fact Bush's Secretary of Defense Gates, now Obama's, commented
recently that the U.S. was never going to leave Afghanistan. It's
clear who's running that show. What do they need Obama for any more?
The oil and gas companies don't need him. They got the collapse
of climate change legislation that they wanted at Copenhagen. Even
as their products hurtle the earth toward inescapable calamity, they
are left with effectively no restrictions on their poisonous
products. What do they need Obama for any more?
Not having the guts to raise taxes on the rich who now corner a
larger share of the nation's income than at any time since 1929,
Obama has appointed a commission to recommend changes to Social
Security. He loaded it with people who, even before it started, made
it clear they would recommend gutting the most successful public
program of the past 80 years. If past is prelude, they will likely
try to turn it over to the renowned stewardship of the finance
industry and the stock market, just as Bush had tried to do. It's
like when only Nixon could go to China, or when only Clinton could
end welfare as we know it.
From the minute he took office, he has carried out his designated
role of pacifying a rightly restive populace about their economic
security while shifting ever more of the nation's wealth to those
who are already the most wealthy; of continuing the country's
program to impose its empire on other nations by force; of
dismantling historic constitutional protections of the people
against intrusive and abusive government; of subordinating the
people to their new corporate masters.
For a guy who's billed as a "Great Communicator" he has utterly
failed to articulate any narrative whatsoever of national
transformation or renewal, of rescuing the nation from the
precipitous downward spiral begun under Bush, his predecessor. He
couldn't even manage to pin ownership of the failed economy on Bush,
even though the Great Recession started in December 2007, more than
a year before Obama took office.
And finally, with legislative gridlock the only certainty for the
next two years, the Federal Reserve has taken control of the
nation's economic policy. Its new policy of "quantitative
easing" (printing money) is not only despicable in its own
right, the recourse of scoundrels and national failures (think
Weimar Germany in the 1920s), it is completely undemocratic, carried
out in secret by the most notoriously elitist, private institution
in America. It is a capitulation to a self-anointed feudal-like
autocracy without modern equal, an undisguised admission that it is
the banks and their owners that run the country. And it is the
inescapable result of Obama's policies.
It's hard to feel sorry for Barack Obama. When all the politics,
posturing, posing and pontification are over, his party lost because
he betrayed his base and they could not stomach voting for his
people or his party again. He's proven himself a duplicitous
executive and a feckless "leader" who has "led" the Republicans to
their biggest pick-up in the House in decades. Now he has to live
with it. But the damage is incalculable. It will last for
generations. It will be an embarrassment to watch him try to pretend
to be effective the next two years, with everyone - himself included
- knowing that he is used up. But he is. Good riddance.
Robert Freeman writes on economics, history and education.
His earlier pieces, "The Five Circles of Economic Hell," and “The
U.S. is Facing a Weimar Moment,” were also published on CommonDreams.
He can reached at firstname.lastname@example.org.
GREAT HUMOR – HAVE A GOOD LAUGH
For a simply way to understand ‘Quantitative Easing’
that is now promised to relieve the economy,
and for brilliant humor debunking the “BS”
(prevailing Belief Systems about “QE”)
watch this YouTube video cartoon.