Who are the Real Wealth Redistributors and Socialists?*

 

Guess who’s really been redistributing the wealth and acting like socialists?  The Republicans, that’s who,

 

As for wealth redistribution, what we have seen is a redistribution upward in recent years.  The facts are as follows.

 

The richest 1% of Americans received about $491 billion in tax breaks between 2001 and 2008. (China holds $493 billion in U.S. debt!) According to the IRS, these taxpayers reported an average of $214 million their federal income tax returns in 2005,

more than double what they made in 2002.  In 2005 they paid 18% of their income in taxes, down from 30% in 1995.  Note that these figures leave out total wealth and lifetime earnings of this class of people.

 

Speaking of total wealth, according to the Federal Reserve Board the net worth of the “Forbes 400” (top 1%) went from “only” $470 billion in 1995 to $1.25 Trillion in 2006!  The richest 1% now has 34% of all private wealth,

more than 90% of Americans put together.  The top 1% own about 37% of the value of corporate stock, and the next 9% has 42%; the rest of us have just 21%.

 

CEO’s have been making out well too.  While in 1995 the average CEO made about 180 times the average worker, in 2005 this ratio was 411 times.

 

During the period between 1947 and 1979 we had a real redistribution of wealth.  Specifically, each fifth of the total households saw their incomes going up at an average of about 100%, while the top 1% saw their incomes go up by a more modest 86%. 

This was a period where a “rising tide lifts all boats.”  However, starting with the Reagan administration, everything got turned around and this “rising tide lifted all yachts.”  From 1979 to 2005 the top 1% saw their after tax income go up by 176%. 

The top 10% of the income earners saw their incomes rise by 87%.  However, the middle class – about 80% of the population – experienced a rise of an average of less than 20%. One study found that between 1977 and 1994 the share of

after-tax income of the top 1 percent of all families increased by 72 percent, compared to a decrease of 16 percent by the bottom 20 percent of all families. During the 1980s, tax cuts resulted in an estimated $1 trillion going to the very rich.

 

One of the most common measures of income inequality among nations is known as the Gini Coefficient.  The higher the score (ranging from 0.00 to 1.00) the greater the inequality.  In 1970 the score for the United states was .353; in 2008 it is .450. 

This puts us higher than any other industrialized democracy. (By the way, these numbers come from two reliable sources: United Nations Development Programme; the CIA’s The World Factbook.)

 

Adjusted for inflation, 40 years ago the minimum wage was $10 per hour adjusted for inflation, compared to the $6.55 per hour to take effect soon.  Another way of putting this is that in 1979 the average worker was paid about $15.78 in 2005 dollars;

in 2005 this amount was $16.11.

 

A sum up so far: during two Republican administrations (Reagan-Bush and Bush), both wealth and income have been redistributed upward in unprecedented proportions.  Isn’t this what socialism is supposed to be about?

 

Back in the 1980s the famous author and social critic Gore Vidal charged that "The US government prefers that public money go not to the people but to big business. The result is a unique society in which we have free enterprise for the poor and socialism for the rich." 

This certainly applies during the current economic crisis as several huge corporations are being “bailed out” by taxpayers ($85 billion going to AIG alone).  This is what is also commonly referred to as “corporate welfare.”  It is a truism that for the entire history of America the government has shifted loads of money from taxpayers to corporations.  Back in 1996 the Boston Globe observed that "After World War II, the nation's tax bill was roughly split between corporations and individuals. But after years of changes in the federal tax code and international economy, the corporate share of taxes has declined to a fourth the amount individuals pay, according to the US Office of Management and Budget."  Recently the Cato Institute noted that there are more than 100 “corporate subsidy programs in the federal budget today, with annual expenditures of roughly $75 billion. Terminating those programs could save taxpayers more than $400 billion over the next five years.”  Cato also noted that among the corporations that receive tax dollars include Boeing, Xerox, IBM, Motorola, Dow Chemical, General Electric, among others. 

Even Wal-Mart, not exactly a “socialist” institution, receives tax dollars.  One report noted that Wal-Mart “has benefited from more than $1 billion in economic development subsidies from state and local governments across the United States’ in the form of”tax breaks, free land, cash grants and other forms of public assistance."  The total amount of money going from taxpayers to corporations each year is estimated to be around $150 billion.

Back in 1998 Time Magazine reported that: “Over the past six years, Congress appropriated $5 billion to run the Export-Import Bank of the United States, which subsidizes companies that sell goods abroad. James A. Harmon, president and chairman, puts it this way: ‘American workers...have higher-quality, better-paying jobs, thanks to Eximbank's financing.’ But the numbers at the bank's five biggest beneficiaries--AT&T, Bechtel, Boeing, General Electric and McDonnell Douglas (now a part of Boeing)--tell another story. At these companies, which have accounted for about 40% of all loans, grants and long-term guarantees in this decade, overall employment has fallen 38%, as more than a third of a million jobs have disappeared.”

Perhaps the most interesting point made by the conservative Cato Institute was when they noted that those who support corporate welfare “often justify them as remedying some sort of market failure” (emphasis added). 

Ah yes, the “free market” that both Republicans and Democrats have supported over the years in almost equal numbers!  As opposed to that dreaded “socialism.”  As in “bailout” of “failed markets” during the past month.  

* Interested readers who might want to study this further should do a Google search with such words as “inequality,” “corporate welfare” and “socialism for the rich.”  Also go to http://www.demos.org/inequality/