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June 17, 2013 |
| THIS WEEK | |
| A CNN network reporter has been asking the online public to pick the topics he ought to be covering the rest of the year. The top pick, as of the end of last week: “America’s widening gap between the rich and poor.”CNN’s John Sutter says he “never expected” inequality to strike so many people as “the most pressing issue of our time.” People today, Sutter now sees, want to know a great deal more about the economic gaps that divide us.But where can someone start to get that more? Inequality.Org, our Too Muchonline companion, has just unveiled an ideal starting point, the most up-to-date guide yet to understanding why America has become so unequal, more unequal than any other major developed nation.
This new guide, Growing Apart by historian Colin Gordon, taps the latest research on inequality — from all over the world — and links readers to a broad array of source material. One-stop shopping, so to speak, for stopping inequity. More on that inequity — and the struggle against it — in this week’s Too Much. |
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| GREED AT A GLANCE | |
U.S. Trust, the oldest and largest private wealth manager for America’s wealthy, has just completed an in-depth survey of the nation’s “high net worth families,” households that hold over $3 million in “investable assets.” The survey’s most fascinating finding: Only 43 percent of the 711 deep pockets U.S. Trust quizzed “consider themselves wealthy.” Still, says U.S. Trust, most all the high-net-worth set remains “optimistic” and “confident” about the future. You might be confident, too, if you held at least 275 times more financial wealth than the typical American family. New research from NYU economist Edward Wolff places America’s median financial wealth at just $10,890 . . . You can call Nick Hanauer a top 1 percenter. You can call him filthy rich. But don’t ever call Nick Hanauer, a Seattle-based venture capitalist, a “job creator.” Hanauer told a U.S. Senate subcommittee earlier this month that “rich business people like me” neither “create” jobs nor deserve tax breaks for creating them. So who does create jobs? Average people, Hanauer testified, with money in their pockets. Added the veteran entrepreneur: “Anyone who’s ever run a business knows that hiring more people is a capitalist’s course of last resort, something we do if and only if increasing customer demand requires it.” If “lower tax rates and more wealth for the wealthy” actually did create work, Hanauer’s testimony summed up, “then today we would be drowning in jobs.”No corporation works harder at making its annual shareholder meeting a made-for-media spectacle than Wal-Mart, and this year’s annual session, just held in Arkansas, had everything from in-person pop-ins by Tom Cruise and Kelly Clarkson to a giant puppet white elephant. All these people and props, naturally, sang Wal-Mart’s praises. But companies have to give shareholders at least some floor time at annual meetings, and activists made the most of the 15 minutes — out of four hours — Wal-Mart grudgingly opened up. Wal-Mart worker Janet Sparks contrasted the low wages workers like herself receive with CEO Michael Duke’s $20.7 million 2012 paycheck. Noted Sparks to audience cheers: “I don’t think that’s right.” Making the cheers even more significant: Wal-Mart execs pack their annual meeting audience with employees they consider loyalists. |
Quote of the Week
“Our economy is currently experiencing a ‘members only’ recovery. Ninety-nine percenters needn’t apply.” |
| PETULANT PLUTOCRAT OF THE WEEK | |
 IRAs, 401(k)s, and other similar vehicles shelter income from taxes. The original rationale: help average Americans save for retirement. But the nation’s wealthy are now exploiting these tax-sheltered accounts to dodge billions in taxes, the reason why the White House now wants to limit the nest-eggs that savers can shelter to $3.4 million. Putnam Investments CEO Robert Reynolds is leading the charge to kill that limit. His bizarre case for no cap: “Right now elderly poverty is at an all-time high.” That’s “nonsense” as an argument, noteseconomist Dean Baker, on two counts. Elderly poverty isn’t sitting near any all-time high, and the elderly who do live in poverty aren’t worrying about brushing “up against the $3.4 million tax-exempt limit” the White House has proposed. |
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| IMAGES OF INEQUALITY | |
 First the rich had yachts, then yachts that carried little submarines. Now the rich can have it all: a yacht that doubles as a sub. The new Migaloo, as designed by the Austrian yacht studio Motion Code: Blue, will stretch longer than a football field, dive below 300 meters, and, one report notes, “satisfy the ever raising demands from super-rich yacht owners who want to stand out from the crowd.” |
Web Gem
Move Your Money/ A campaign that encourages individuals and institutions to divest from the nation’s largest Wall Street banks and shift their assets to local financial institutions. |
| PROGRESS AND PROMISE | |
 Earlier this month, at London’s flagship Apple store, protestors packed the premises, sang Irish songs, and waved placards that read “Take a tax holiday in Ireland” — exactly what Apple execs are doing to avoid billions in taxes. This past December activists jammed UK Starbucks outlets, turning the shops into faux-day-care-centers to highlight the child services cuts corporate tax evasion is forcing. Credit both these protests to UK Uncut, a grassroots movement that’s inspiring similar efforts worldwide, including in the United States. One sign of the overall protest impact: Germany’s finance minister is now calling fora global minimum tax on multinational corporations. |
Take Action on InequalityFind out more — and spread the word — about Inequality for All, the engaging new egalitarian documentary that features former U.S. labor secretary Robert Reich and will hit the Los Angeles Film Festival this weekend. |
| INEQUALITY BY THE NUMBERS | |
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Stat of the Week America’s most typical income-earners, analysts at Sentier Research are now estimating, took home this past January 7.3 percent less, after inflation, than they earned in January 2000 — and 4.5 percent less than they earned in June 2009, the year the Great Recession officially ended. |
| IN FOCUS | |
| Where Uncle Sam Ought to Be SnoopingLet’s place private corporations with government contracts under surveillance — to make sure no one is getting rich off our tax dollars.Only 23 percent of Americans, says a new Reuters poll, consider former National Security Agency employee Edward Snowden a “traitor” for blowing the whistle on the federal government’s massive surveillance of the nation’s telecom system.
Many Americans, the poll data suggest, clearly do find the idea of government agents snooping through their phone calls and emails a good bit unnerving. But Americans have more on the surveillance front to worry about than overzealous government agents. Government personnel aren’t actually doing the snooping the 29-year-old Snowden revealed. NSA officials have contracted this snooping out — to private corporate contractors. These surveillance contracts, in turn, are making contractor executives exceedingly rich. And none have profited personally more than the power suits who run Booz Allen Hamilton and the private equity Carlyle Group. Whistle-blower Snowden did his snooping as a Booz Allen employee. Booz Allen, overall, has had tens of thousands of employees doing intelligence work for the federal government. Booz Allen alumni also populate the highest echelons of America’s intelligence apparatus — and vice versa. The Obama administration’s top intelligence official, James Clapper, just happens to be a former Booz Allen exec. The George W. Bush intelligence chief, John McConnell, now serves as the Booz Allen vice chair. All these revolving doors open up into enormously lucrative worlds. In their 2010 fiscal year, the top five Booz Allen execs together pocketed just under $20 million. They averaged 23 times what members of Congress take home. But the real windfalls are flowing to top execs at the Carlyle Group, Booz Allen’s parent company since 2008. In 2011, Carlyle’s top three power suits shared a combined payday over $400 million. More windfalls will be arriving soon. Carlyle paid $2.54 billion to buy up Booz Allen. Analysts are now expecting that Carlyle’s ultimate return on the acquisition will triple the private equity giant’s initial cash outlay. What do all these mega millions have to do with the massive surveillance that Edward Snowden has so dramatically exposed? Washington power players, from the President on down, are insisting that this surveillance has one and only one purpose: keeping Americans safe from terrorism. But who can put much faith in these earnest assurances when other motives — financial motives — so clearly seem at play? Corporate execs at firms like Booz Allen and the Carlyle Group are making fortunes doing “systematic snooping” for the government. These execs have a vested self-interest in pumping up demand for their snooping services — and they’re indeed, the Washington Post reported last week, pumping away. This past April, the Post notes, Booz Allen established a new 1,500-employee division “aimed at creating new products that clients (read: government agencies) don’t know they need yet.” This new division is developing “social media analytics” that can anticipate the latest “cyber threat.” In other words, this new unit will be figuring out how to get the federal government to pay up even more for investigating who we “like” on Facebook. In one sense, none of this should surprise us. Corporate executives — particularly in the defense industry — have been enriching themselves off government contracts for years. Post-9/11 political dynamics have only turbocharged that process. America now sports, as Pulitzer Prize-winning analyst David Rohde observed last week, a “secrecy industrial complex.” Do the Snowden revelations have the potential to upset Corporate America’s long-running government contracting gravy train? Maybe, but only if anger over the revelations translates into real changes that keep private corporate contractors from getting rich off tax dollars. Like this article? Sign up What might these changes entail? The Affordable Care Act enacted in 2010 — Obamacare — suggests one initial step. Under this new legislation, private health insurance companies can no longer deduct off their corporate income taxes any compensation over $500,000 that they pay their top executives. A more potent antidote to contracting windfalls would be simply denying government contracts to corporations that overcompensate their top execs, a course of action U.S. senator Hugo Black from Alabama, later a noted Supreme Court justice, proposed back in the early years of the Great Depression. How might this approach work today? The President of the United States makes about 25 times the compensation of the lowest-paid federal employee. We could apply that standard to federal contracting and deny our tax dollars to companies that pay their top execs over 25 times what any of their workers are making. Protecting privacy in a dangerous world will never be easy. But we’ll never have even a shot at protecting privacy until we take the profit out of violating it. Ending windfalls for contractors would be the logical place to start. |
New Wisdom on WealthMark Schmitt, George Packer’s U.S.A., American Prospect, June 11, 2013. The most insightful commentary yet on an important new book that tracks a generation of growing inequality. David Moberg, New Visions from the New Left, In These Times, June 12, 2013. A top labor journalist explores two long-haul approaches to building an alternative to a top-heavy America. Rev. Chuck Arnold, Working to fill the most important gaps, Lompoc Record, June 13, 2013. A minister contemplates our global distribution of wealth and happiness. Chris Dillow, Why real wages are falling,Stumbling and Mumbling, June 13, 2013. The current five-year drop in U.S. real wages has been the worst since 1921-26, the second largest since 1855. Why so severe? One explanation. Jacob Hacker, How to reinvigorate the centre-left? Predistribution,Guardian, June 13, 2013. Why redistribution alone will never be enough to ensure equity. Paul Krugman, Sympathy for the Luddites, New York Times, June 14, 2013. Why education can’t be the answer to rising inequality. Donnie Maclurcan and Jen Hinton, How on Earth: Flourishing in a Not-For-Profit World by 2050, Daly News, June 15, 2013. Imagining what might happen if all of us realized that an economic system that concentrates wealth will never be socially and ecologically sustainable.
Need a summer read? A new history of America’s first — and so far only — triumph over plutocracy. |
| NEW AND NOTABLE | |
The Pirates Attacking Our Social SecuritySarah Anderson, Scott Klinger, and Javier Rojo, Corporate Pirates of the Caribbean: Pro-Austerity CEOs look to Widen Tax Loophole, Institute for Policy Studies, June 12, 2013. Pirates plunder. Pirates don’t pay taxes on their plunder. And pirates love to frolic down Caribbean way.
That’s how pirates operated back in the day. And that’s how pirates operate today. Only back centuries ago pirates brandished gaudy cutlasses. Today’s pirates brandish gaudy cufflinks. Today’s pirates lead America’s biggest corporations, and these “corporate pirates,” details this new Institute for Policy Studies report, pocket more loot than Blackbeard and his buddies could have ever imagined. The CEOs of America’s biggest corporations, the IPS report shows, have been parking billions in overseas tax havens throughout the Caribbean. Now they’re “brazenly seeking to widen tax haven loopholes” with a full-court press on behalf of a tax “reform” they call a “territorial tax system.” This “reform” would permanently exempt the foreign earnings of U.S. corporations from U.S. federal income taxes — and give these firms even more of an incentive to play the accounting games that shift U.S. profits offshore. The 59 U.S. corporations that belong to “Fix the Debt,” the lobby group pushing for austerity cuts to Social Security, are already shifting plenty. At the end of 2012, the CEOs of these companies had $544 billion in profits sitting overseas, up 15 percent over the $473 billion offshore at the end of 2011. These profits currently don’t face any U.S. corporate income tax unless they’re brought back stateside. If America’s top CEOs get Congress to swallow a territorial tax system, Corporate Pirates of the Caribbean reveals, their corporations could win “as much as $173 billion in immediate tax windfalls.” |
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| ABOUT TOO MUCH | |
| Too Much, an online weekly publication of the Institute for Policy Studies | 1112 16th Street NW, Suite 600, Washington, DC 20036 | (202) 234-9382 | Editor: Sam Pizzigati. | E-mail: editor@toomuchonline.org | Unsubscribe. | |
