Thursday, November 3, 2011

Trickle-Down Economics: The Cruel 30-Year Hoax


America's upper class, middle class, and lower class: Each class may be further subdivided into smaller classes (e.g. occupational). The most basic class distinction is between the powerful and the powerless. Social classes with a great deal of power are usually viewed as "the elites" aka "the one-percenters".

Theorists had once noted a tendency toward an enlarged middle class in modern Western societies, particularly in relation to the necessity of an educated work force in technological economies.

Now "globalization" (with multi-national corporations) has seen the shift of low-level laborers to developing nations and the Third World.

But developed nations (such as America) have thereby become less directly active in primary industry (e.g. basic manufacturing, agriculture, forestry, mining, etc.) and are now increasingly involved with "virtual" goods and services.

America's middle-class peaked in 1979. As of 2010 50% of all American workers earned less than $27,000 a year when the poverty line for a family of four was $22,314. Of the total work force 16% are unemployed and earned ZERO dollars last year (of those, 50% collected unemployment benefits at some time). The top 1% earns $1 million or more a year.

How many small business owners do you know that earn a personal salary of $1 million a year? Not how many people do you know who GROSS $1 million a year in business sales, or who have a NET WORTH of $1 million, or who might own a million-dollar house...but who actually earns, through either a salary or wages, or through dividends, annuities, or stocks, $1 million a year? Chances are very good that you don't, only 1% of the earners in this country does.

When Occupy Wall Street protests the top 1%, we should think of the CEOs at Bank of America or General Electric, not the owners of a local auto-body shop or a mom-and-pop video store.

But if you DO earn one million dollars a year in personal income, you are part of the 1%. If not, you might have been at the Oakland General Strike that shut down the port of Oakland yesterday (a first since 1946).

And trust me, the CEOs of Wells Fargo, Boeing or Exxon-Mobil were NOT participating in the Oakland strike, because THEY are the top 1% (and therefore, have nothing to protest about.)

In late September of 2008, just two weeks after the Dow Jones had its largest single day loss in the history of the stock market (down 777 points), and as our country was in the middle of an economic melt down, a bald man with a goatee had asked a state senator named Barack Obama, while he was still campaigning for President, if he believed in the American Dream.

Obama had thoughtfully and elegantly answered the man, by explaining the disparity in income inequality and the unfair tax code we currently had that favored the wealthiest among us (the top 1%). Then Obama said, "I think when you spread the wealth around, it’s good for everybody."

The Republicans had jumped at that one sentence, inferring that it proved Obama was a Socialist, and indicated that Obama had only wanted to take all the hard-working rich people's money and spread it around equally to all the lazy poor people. (Typical Republican and Fox News fear mongering.)

And that was when Joe the Plumber was born and he instantly became a hero for the conservative moment.

Obama finished up by saying to him, "I’m still going be working hard on your behalf, because small businesses are what creates jobs in this country and I want to encourage it.”

Then early last year, when asked about John McCain (the one who had vaulted him into national prominence), Joe the Plumber said, "I don't owe him shit. He really screwed my life up, is how I look at it. McCain was trying to use me. I happened to be the face of middle Americans. It was a ploy."

Now late into 2011 Joe the Plumber is saying, "Americans deserve all kinds of people representing them, not just an elite, ruling class." (Did he mean the top 1%?)

The unlicensed plumber, with just a high school education, is now running for a seat in Congress (as a Republican in Ohio's 9th U.S. House district, no less).

He once owed back taxes, so Joe the Plumber might fit in very well with the Washington elite, especially if he himself becomes a part of "the ruling class". (I wonder if he and John McCain are friends again.)

The government-paid salary for members of Congress is $174,000 a year (plus all the perks), without regards to their level of education, skill, training, or experience. If they were only paid this salary, that alone would not make a member of Congress a part of the 1%. But because half of Congress are millionaires, many ARE in the top 1%, because many of them also came from wealthy families to begin with.

But only 1% of the entire U.S. population are millionaires, so 99% of all Americans are not being represented by their economic equal in Congress - - only the top 1% and large corporations are. And it's been this way for a very, very, long time.

So how could most politicians feel any genuine empathy for the poor or working-class, more so than say, an uber-wealthy CEO and/or an evil psychopath?

Typically, one has to raise a lot of money to win an election under our current election system, and many politicians use millions of dollars of their own personal money to get themselves elected (although, not all will win their elections).

Linda McMahon, the former CEO of World Wrestling Entertainment spent $50 million of her own personal wealth on her U.S. Senate campaign (Connecticut) but lost to Richard Blumenthal, who himself spent $2 million of his own money. There are so many examples -- just like this -- that I can't even begin to list them here. (I will try to learn how Joe the Plumber is going to finance his congressional campaign.)

We've always wondered why some people would (and could afford to), spend all their personal wealth for the benefit of doing a service to their country, and representing THE PEOPLE'S interests in government. (Or do they?) And why so many of them go on to work for large corporations after their terms in office expire, such as Senator Phil Gramm when he went to work for UBS Bank.

But yet they (the top 1%, and/or their political representatives) claim that they can't afford to pay a "millionaire surtax" because they're "job creators". What about using all that money that the Koch bothers spent on trying to rig elections and make tax policies favorable for themselves? Couldn't they have used some of that money to pay a surtax? Or what about that $2 trillion corporations have in off-short banks accounts? That could help pay for some infrastructure.

This is what we (the 99%) generally earn as a "median" wage.

From Wiki Some High School High school graduate Some college Associate's degree






Bachelor's degree

Bachelor's degree or higher

Master's degree

Doctorate degree

Professional degree






According to the Bureau of Labor Statistics, the average median wage for teachers is $55,990, firefighters is $47,730, and police is $52,810 (excluding over-time). Physicists earn $112,020 and for nuclear technicians it's $67,330. Joe the Plumbers median wages were $50,360 a year.

And the vast majority of small business owners (especially the ones who actually hire employees) don't have personal incomes over $1 million a year in personal earnings (See: Millionaire Tax Plan Hurts Job Creators - DEBUNKED!). This is what Obama had patiently tried to explain to Joe the Plumber, in so little time, three years ago in October of 2008.

Then we have people like Ed Haldeman. As Freddie Mac’s CEO he received a base salary of $900,000 last year, yet took home an additional $2.3 million in bonus pay. Records show other Fannie Mae and Freddie Mac executives got similar Wall Street-style compensation packages. Fannie Mae's CEO Michael Williams, for example, got $2.37 million in performance bonuses.

The CEOs and executive directors of the largest corporations (the top 1%) each received, on average, $11.4 million in total compensation last year, and they were also taxed at a lower tax rate than all those other occupations I listed above, including small business owners (who are ALSO part of the 99%).

This is because the majority of income for bankers, CEOs, and hedge-fund managers is not derived from a normally taxed income (such as base salaries or hourly wages), but from capital gains earned from company-issued stocks (such as in stock options, deferments, and bonuses). These "executive compensation packages" are supposedly based on "performance" (but we've all learned that even the worst performing companies give away huge sums of money to their executive officers.)

Rather than "performance", I would say their pay is based more on how much they can squeeze out of us, either legally or illegally. Corporations have no consciences or souls; but most human beings do, although not all CEOs...some actually are psychopaths.

The CEOs have it made, because the board of directors of banks and corporations determine their own salaries, based on a collective agreement based on whatever measure they wish to use (percentage of profits, money saved on outsourcing jobs or automation, etc.). Small time day-traders in the stock market using one of those on-line services have nothing to say about corporate salaries (or even corporate governance for that matter).

Their biggest argument that the CEOs use for making the decisions that they make (regarding outsourcing, etc.) is because "they have an obligation to the shareholders" (but not to those small time day-traders I just mentioned).

The CEOs and board of directors ARE sometimes the largest shareholders, as many times as they are also investors (shareholders) in other large corporations. Goldman Sachs for instance, owns huge blocks of stocks in many major corporations. The 10 major banks in the U.S. actually hold 77% of all U.S. assets in this way.

So in essence, the CEO of one corporation just works for the CEO (and the BIG shareholders) of another, or for a bank. All the money is circulating among the top 1% --- the "trickle-down" theory has been a big myth all along

This is what Obama had tried to explain to Joe the Plumber three years ago. Now we're hearing more about it these days.

A good and common example of trickle-down economics: If the CEO of your company is doing well, you should also do well, right? Wrong. The CEO can send your job to China for much cheaper wages and do much better for himself. How much better would you then be doing? That same CEO (through his or her Human Resource department) might also fight you every step of the way in an appeals process to deny you unemployment benefits. They might also accuse you of "willful misconduct" (their favorite, just behind "theft". An unauthorized break can be construed as theft, because you're stealing their time.)

That CEO could also be paying lobbyists to kill your Social Security, Medicare, Medicaid, and food stamp benefits (besides just begging for government hand-outs such as corporate subsidies and tax breaks). Employers of large corporations have absolutely no loyalty at all for their employees, despite whatever type of PR or HR spin they try to put out (i.g. "team players", "part of the family", etc.). It's all B.S.

To the top 1%, you're just another cog in the wheel -- just one of many among the masses -- a part of the 99%. Unlike with race or national origin, the wealthy has been segregated from the rest of us by "class" since the very beginning.

The R.M.S. Titanic shows us the huge class difference and social structure of England (and also in America) that had pre-dated 1912. During the sinking of the Titanic, the lower class were kept out of sight of the upper class -- they were down in the lower decks in tiny cabins and kept locked away from being saved, as the upper class had taken precedence -- as they were believed to have had a higher importance than the lives of those in the lower classes. (Maybe because they too were also considered to be "job creators".)

There really has been no middle-class at all for the last 30 years, when you really think about it. It's been a cruel hoax perpetuated on the 99% to keep us in place, so we wouldn't make waves. There are those who earn between $20,000 and $100,000 a year (the lower class, the 99%), and those who earn between $1 million and $1 billion a year (the upper class, the 1%). That's it.

If you earned between $250,000 and $500,000 a year, you might be truly middle-class (as compared to the abject poor and the uber-rich). But Obama's not even asking to tax these people, only those earning (in personal income, not gross business income) over $1 million a year.

Glenn Beck calls this form of taxation on the uber-rich "socialism", because he's also a multi-millionaire; and he also compares socialism to mass murderers such as Stalin and Mao. Again, typical Republican and Fox News fear mongering. If anything, it was the top 1% who drove once-middle-class Americans into the arms of socialism.

As it is now, the 99% is taxed at a higher rate as a percentage of their TOTAL PERSONAL ANNUAL INCOME, than millionaires and billionaires are taxed. That isn't the poor waging a class war on the rich, nor is it Socialism, that's just a mathematical fact. And the 1% knows this. And they've known this all along.

But it's always been a good distraction for the uber-wealthy to pit Democrats and against Republicans, or the gainfully employed against the poor and jobless. But it's always been a war waged by the rich against the poor.

Ask yourself this: Why are the uber-wealthy so secretive about divulging their tax records to the general public? Are they afraid we'll steal their money somehow? Or are they so afraid that we might dare ask for a more fair wage? Your boss never tells you how much THEY earn, but they know exactly what's in your W-4 form. Do most of the 1% have something to hide? Or are they just too ashamed and too embarrassed of their greed to tell us? Or probably it's both.

I sometimes wonder what the entire global economy would be like if everybody were paid the same wage based on their education, skill, training, or experience, rather than what corporation they worked for (how cheap the CEOs are) or what country they lived in. Multi-national corporate conglomerates with a hundred subsidiaries could still earn fair profits.

With some luck, maybe Joe the Plumber will beat the odds and get himself elected...but I hope not. First, because he's a Republican. Second, because he might take all the credit for his success, then rub it in our faces and blame us if we're unemployed... like the rest of the top 1% lamely does.

And how has that trickle-down theory been working out for you over the last 30 years? Did a rising tide lift all those boats, or did a great many of them sink? How's your little dingy doing? And no, it's not us (the 99%) who have yacht envy, it's they (the top 1%) who do.

The Cruel 30-Year Hoax

Hold Them Accountable For Trickle-Down Economics That Never Trickled Down

* A speech writer for JFK is first known to have coined the phrase "a rising tide lifts all boats", but it is often attributed to Ronald Reagan.

1 comment:

  1. Today Senate Republicans succeeded in filibustering President Obama's $60 billion infrastructure proposal 51-49.

    Every Republican opposed the president, as did Democrat Ben Nelson of Nebraska and former Democrat Joe Lieberman, I-Conn., who still aligns with the party.

    The GOP plan would have extended existing highway and transit spending programs, BUT ONLY if it was paid with $40 billion in cuts to other domestic programs. (such food stamps and Medicaid)

    Democrats have sought to pay for Obama's jobs measures with a surcharge on people whose personal income exceeds $1 million, but is was opposed by Republicans, who FALSELY CLAIM it would hit small business owners and therefore threaten job growth. (It would have been a tiny 0.7 percent surcharge on personal annual incomes over $1 million.)

    People such as Karl Rove (with his SuperPAC) could also be considered a "small business owner", but he doesn't actually hire employees.

    The GOP liked the idea of a $4,800 tax credit for hiring an unemployed veteran (especially if they were only paying them minimum wage).

    The GOP also like the idea to repeal a law requiring federal, state and many local governments to withhold 3 percent of their payments to tax-dodging government contractors until their taxes are paid.