By Farron Cousins
November 18th, 2012 8:00am
The news is buzzing about talk of America falling off the “fiscal cliff,” as Republicans refuse to abandon their goals of giving the top 1% of Americans everything they’ve ever wanted. And if you’ve been paying attention, you know that the top 1% are doing just fine on their own, and Mike Papantonio recently spoke with author Les Leopold about how well the wealthy are doing compared to the rest of the country. The following is a transcript of that interview:
Papantonio: Les Leopold will let me talk a lot about the need to ease the so-called “tax burden on job creators”. (Laughs) We’ve heard it so many times. That was going to help the top one percent of America’s wealthiest share their money with all of us. How many times we’ve heard that? How many times do we have to listen to that ridiculous statement?
Les Leopold, is the Executive Director of the Labor Institute and Public Health Institute in New York. He’s author of “The Looting of America” and he is just an all-around smart guy. Les, great article here on the “5 Obscene Reasons Why Richest Americans grow Richer as the Middle-Class Declines” just well done.
Leopold: Thank you very much, Mike.
Papantonio: I think you just laid it out. Give me … let’s go down the reasons as quickly as we can. Begin with number one.
Leopold: The first one is there’s just been a colossal amount of tax cuts already for the super-rich. I mean it’s hard to imagine giving them any more tax cuts. The biggest one, not only that they rate on ordinary income come down from 91% in the ’50s all the way down to 35% now, but they don’t even pay attention to that. Their big tax cut is that most of their money is capital gains and it only gets taxed as 15%. For them the capital gains tax deduction is literally like winning the lottery every year. (Laughter) Imagine that every tax day you win the lottery. That’s what the wealthiest Americans have been experiencing for the last decade and more.
Papantonio: In other words other people are paying 35%, they’re doing it ever all through capital gains and they’re saying, “Fifteen percent’s what I pay.” Even Mitt Romney says, “No, I can do better than that! (Laughs) I’m going to pay 12-15%.”
Leopold: That’s for the two years he showed us. (Laughter)
Papantonio: Yes, and we don’t know about the other 10, god knows! Okay, so that’s reason number one. Reason number two would be what?
Leopold: Financial deregulation. When we … during the Great Depression, everybody realized that Wall Street was the problem. We put our foot on their neck. We basically made it very difficult to cheat on Wall Street. As a result, the average wage on Wall Street was about the same as the average wage given your education and experienced as anywhere else in the economy. There was no special advantage of working on Wall Street. About 30 years ago, 20 years ago and then every year since, we’ve been taking regulations off of Wall Street. The richer they got the more they pressed to get more regulations taken off them. That means now that their incomes are two, three, four, five times higher than incomes in the rest of the economy and that whole enterprise … not only is it incredibly unproductive and not only is it absolutely dangerous to our economy, but again it feeds money up to the super-rich. That’s the second reason.
Papantonio: First of all, they don’t make anything. (Laughter) I mean I looked at how you broke things down on the 400 richest Americans. If you look at their money, 24% of it is from investment and only 3.8% is from manufacturing. In other words they don’t make anything. All they do is move money around in toxic trash, synthetic CDO swaps and so it’s …
Leopold: They used to … the interesting thing is that’s not the way it was when the first Forbes Rich List came out in 1982, it was the other way around. Fifteen and a half percent of the wealthiest wealth came from manufacturing, which was good for the economy, and only nine percent came from investment. They’ve turned the whole economy upside down.
Papantonio: All right, so the big tax cuts, financial deregulations where they don’t make anything but toxic trash. Go to number three, what would it be for why we’ve had this obscene amount of money go to America’s richest Americans?
Leopold: Union busting. You can say whatever you want about unions. You cannot like them, etc. The one uncontestable fact about unions is when you have a large number of unions, not only do union-wages go up, but all the wages go up. As a result of those wages going up we had a fair distribution of income and the gaps between super-rich and the rest of us were not as obscene. In the last generation the unionization’s been going down not just because people don’t want to be in unions, quite the contrary. What’s happened is that the laws have changed, the regulations have changed. This whole idea of lockouts, that was unheard of a generation ago. Now everybody and their uncle, you got to lockout the damn referees because you can’t squish them enough.
Papantonio: (Laughs) Okay, so let’s go to four. Now this is … four I was so interested in this reason, because it just hits it. Look, Wall Street crashed and the super-rich got richer. That’s what’s so interesting. The super-rich got richer with the Wall Street, to some degree. Then you had middle-class, what did it do to the middle-class?
Leopold: It decimated the middle-class. There was an enormous jump, 20-30% of the wealth of the middle-class crashed since the crash, because so much of our own wealth is tied up in home values, etc. The super-rich, their investments in fact were bailed out over the last two years, since the crash. The richest of the rich have seen their net worth … their net wealth go up 200 billion dollars.
The reason that’s happened is we bailed out Wall Street, most of the bail out money, for every one dollar that went to main street … lthey went to GM or Chrysler or something like that, 10 dollars went to Wall Street in a lot of different forms, straight cash, loans at no interest rates, hidden loans we’re only just finding out about, trillions of dollars. That propped up the stock market, propped up where the wealthy people have their money. The bailouts in fact made the rich even richer.
Papantonio: Okay, how about … there’s some obvious things, corporate money and politics. It changed the game. It made it … it denudered completely the middle-class. (Laughs) I mean they’re no longer even significant. I mean it’s just not even significant anymore now that you’ve got Citizens United. Explain how that works.
Leopold: It’s always been the case. Basically, in the last generation it’s been the case that corporations have been outspending everybody else by enormous amounts. I mean people talk about the special interest like labor. I figured it out. For every one dollar that labor spends on elections and lobbying, corporations spend 14. They’re outspending labor 14 to one.
You could imagine what’s going on in Congress. I mean you want to get re-elected, you got to have your hand out and you’re not going to bite the hand that feeds you. ‘ve got tax lobbying written, being rewritten towards corporation. You got all these special subsides and breaks going their way. It’s very very hard to stop. When you add up all those reasons together, those five reasons, you have basically, “Welcome to winning the lottery each and every tax day.” While we dread tax days, these guys go in there going, “Yahoo!” (Laughing)
Papantonio: You made more money, okay. You know there’s this point that keeps coming up, it’s surfacing more and more. As the middle-class allowed it to happen, they were led around by their nose, by Republicans on cultural issues. This has happened to them. They’ve lost their homes. They’ve lost their pension programs. They’ve lost their income-generating ability. They’ve lost their jobs in some situations. You stand back, and you say, “Okay, you voted for that. I mean this is what you did.”
Leopold: “Here’s the problem.”
Papantonio: “You brought this on yourself and I’m supposed to feel sorry for you?” You got it. I mean you know, soccer mom driving around the SUV. Dad used to work in the plant. They think they have something in common with people like Mitt Romney or George Bush. They go out and vote Republican because they think that these are their people. Now all of a sudden they say, “God, look what’s happened to me!” We’re supposed to say, “Yes, we told you it was going to happen and now it’s happened.” We feel sorry for them or what?
Leopold: What you say is very real, but there’s something else that’s true as well which is this. Every piece of tax policy, every piece of financial deregulation also went through the Democratic Party. Not all of Democratic Party, but enough of it to support these enormous tax cuts for the rich and incredible financial deregulation on Wall Street. It wasn’t till the crash that the Democrat folks…
Papantonio: Yes, Bill Clinton invented some of this. Am I right or wrong with the nafta and cafta. He’s the one, if you remember, was the great marriage with Wall Street.
Leopold: I think what’s happened is middle-class voters are confused because they don’t have a choice. They don’t feel like they have a choice, so they’re going more on instinctual guesses on who might best serve their interest. It’s very hard to tell sometimes. It looks like the Democrats are selling out middle-class interests as much as the Republicans. I think this is changing a little bit now. I think the crash gave the Democrats a little bit more religion. I do think that the chances of changing some of this are probably a lot better under Obama than they would be under Ryan Romney. Ryan’s really … Ryan’s the force there. He’s the one…
Papantonio: Yes, he’s speaking the exact same language.
Leopold: He’s got the odds. The thing that I think needs to be made clear is Romney may not have any principles, but Ryan believes in the iron brand philosophy of dog-eat-dog. You know, “You get on top, you stay on top and screw everybody else.” That 47% statement by Romney which he’s now disavowing (Laughter) was absolutely spoken from the heart. That’s what these guys believe, “If you’re not rich you’re trash.”
Papantonio: To be rich, the richest 400 Americans, I’m trying to remember these numbers, it’s startling numbers. It seems like the combined wealth … the 400 Americans have the combined wealth of about 25,000,000 middle-class Americans. (Laughter) Is that it?
Leopold: Right, 400 equals 25 million. I was trying to say this is the new math. You know, here’s another one…
Papantonio: That’s a startling number, 400 Americans have as much combined wealth as 25 million middle-class incomes.
Leopold: Right, and the average of those top 400 … it would take an average middle-class family over 82,000 years (Laughing) to earn as much as the average of the top 400. You know it’s just gotten ridiculous. What gets me is, okay you have these 400 people, the richest of the rich all over the world. They don’t need a penny more, yet they got 200 million dollars more.
That’s enough to send every kid in this country to a public college and university or a two-years-school or graduate school or medical school, every single one of them could go tuition-free. No more student loans, no more debts. These super-wealthy people wouldn’t even notice it. It would be … these 400 people they got 200 million dollars extra in the last two years. They didn’t need it. They wouldn’t notice it was missing. It wouldn’t impact the economy at all. It could send every single kid in the school to college, to a public college or university or community college, free.
Papantonio: Yes, try to tell them to cope, “Where does that?” (Laughter) Another number I remember from what you … This is by the way a great book! I mean the great book that you wrote of course is timeless. It’s talking about how America is just being looted, but also this article “5 Obscene Reasons Why Richest Americans grow Richer as the Middle-Class Declines” you point out in there that, (laughs) “The average wealthy member of The Forbes 400 List is 60,000 times as rich the average middle-class family?”
Leopold: I believe you. I think you hit the number “63,000 times” if you can count. (Laughs)
Papantonio: Geez! Look, again there are people out there that say, “I hate to see it happen.” There are people out there that say, “Okay, you allowed it to happen and now you seem to want to perpetuate it. We’re going see this election whether they want to perpetuate it. If they do, I think it’s just … I don’t think there’s anything to say then.” You see this happening in places. You saw it happen in Spain before the Revolution. You saw it happen to Italy, South America, almost every couple of decades because of that inequity, that social and economic inequity that just drives people over the edge.
Farron Cousins is the executive editor of The Trial Lawyer Magazine, a contributing writer at DeSmogBlog.com, and the producer of Ring of Fire.
