Robert Reich

Former Secretary of Labor; Professor at Berkeley; Author, 'Aftershock: The Next Economy and America's Future'

Posted: October 18, 2010 08:36 PM

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The Perfect Storm That Threatens American Democracy

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Read More: 2010 Elections , Campaign Finance , Citizens United , Democracy , Income Inequality , Inequality ,Jobs , Robert Reich , Unemployment , Politics News

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It's a perfect storm. And I'm not talking about the impending dangers facing Democrats. I'm talking about the dangers facing our democracy.

First, income in America is now more concentrated in fewer hands than it's been in 80 years. Almost a quarter of total income generated in the United States is going to the top 1 percent of Americans.

The top one-tenth of one percent of Americans now earn as much as the bottom 120 million of us.

Who are these people? With the exception of a few entrepreneurs like Bill Gates, they're top executives of big corporations and Wall Street, hedge fund managers, and private equity managers. They include the Koch brothers, whose wealth increased by billions last year, and who are now funding tea party candidates across the nation.

Which gets us to the second part of the perfect storm. A relatively few Americans are buying our democracy as never before. And they're doing it completely in secret.

Hundreds of millions of dollars are pouring into advertisements for and against candidates -- without a trace of where the dollars are coming from. They're laundered through a handful of groups. Fred Maleck, whom you may remember as deputy director of Richard Nixon's notorious Committee to Reelect the President (dubbed Creep in the Watergate scandal), is running one of them. Republican operative Karl Rove runs another. The U.S. Chamber of Commerce, a third.

The Supreme Court's Citizens United vs. the Federal Election Commission made it possible. The Federal Election Commission says only 32 percent of groups paying for election ads are disclosing the names of their donors. By comparison, in the 2006 midterm, 97 percent disclosed; in 2008, almost half disclosed.

We're back to the late 19th century when the lackeys of robber barons literally deposited sacks of cash on the desks of friendly legislators. The public never knew who was bribing whom.

Just before it recessed the House passed a bill that would require that the names of all such donors be publicly disclosed. But it couldn't get through the Senate. Every Republican voted against it. (To see how far the GOP has come, nearly ten years ago campaign disclosure was supported by 48 of 54 Republican senators.)

Here's the third part of the perfect storm. Most Americans are in trouble. Their jobs, incomes, savings, and even homes are on the line. They need a government that's working for them, not for the privileged and the powerful.

Yet their state and local taxes are rising. And their services are being cut. Teachers and firefighters are being laid off. The roads and bridges they count on are crumbling, pipelines are leaking, schools are dilapidated, and public libraries are being shut.

There's no jobs bill to speak of. No WPA to hire those who can't find jobs in the private sector. Unemployment insurance doesn't reach half of the unemployed.

Washington says nothing can be done. There's no money left.

No money? The marginal income tax rate on the very rich is the lowest it's been in more than 80 years. Under President Dwight Eisenhower (who no one would have accused of being a radical) it was 91 percent. Now it's 36 percent. Congress is even fighting over whether to end the temporary Bush tax cut for the rich and return them to the Clinton top tax of 39 percent.

Much of the income of the highest earners is treated as capital gains, anyway -- subject to a 15 percent tax. The typical hedge-fund and private-equity manager paid only 17 percent last year. Their earnings were not exactly modest. The top 15 hedge-fund managers earned an average of $1 billion.

Congress won't even return to the estate tax in place during the Clinton administration - which applied only to those in the top 2 percent of incomes.

It won't limit the tax deductions of the very rich, which include interest payments on multimillion dollar mortgages. (Yet Wall Street refuses to allow homeowners who can't meet mortgage payments to include their primary residence in personal bankruptcy.)

There's plenty of money to help stranded Americans, just not the political will to raise it. And at the rate secret money is flooding our political system, even less political will in the future.

The perfect storm: An unprecedented concentration of income and wealth at the top; a record amount of secret money flooding our democracy; and a public becoming increasingly angry and cynical about a government that's raising its taxes, reducing its services, and unable to get it back to work.

We're losing our democracy to a different system. It's called plutocracy.

Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.

Queen Meg for Governor - Never!

The Meg Whitman ads I have seen are not the Meg Whitman I know.

When Whitman was CEO of eBay I attended Las Vegas eBay Live, an annual convention for thousands of eBayers. The convention traditionally closed with a pep speech by CEO Whitman about what eBay had done for Sellers in the past and would be doing in the future.

Since eBays attitude toward Sellers could, at best, be described as imperial.....raising fees, no telephone calls from Sellers, questions read and answered by computers that NEVER resolved an issue, arbitrary suspensions, Millions of dollars frozen or payments arbitrarily delayed by PayPal, and all sorts of rules and regulations for Sellers that accomplished nothing but to make their lives less profitable and more difficult......you can imagine the kinds of questions Whitman had to field. What I witnessed was an almost open revolt cut short when Whitman walked off the stage early. Apparently, this had become a growing tradition in the last several years. Sellers were very very unhappy with Meg.

So, what was Whitmans solution to this show of dissatisfaction? A committee to hear and resolve the Seller issues? An attempt to explain why recent changes in eBay policy were necessary? Changes in company policy? Anything, at all, to resolve Seller issues? Anything, at all, like the caring concerned Meg of the TV ads?

Nope. Whitman stopped the Conventions. After all eBay was the only game in town. Who cares what Sellers think? Where are they going to go? No convention equals no questions equals no Seller dissatisfaction. Out ear, out of mind....

For more about the real Meg, Google the recent Craigs List lawsuit where Whitman tried to sneak in the back door of Craigs List, by buying shares of stock from a disgruntled owner, and take over Craigslist. When she was unable to bully her minority stake into control of the company, eBay stole the operating secrets, by agreeing not to compete with Craigslist and then, within weeks, starting her own version of CraigsList...Kijiji. Surely we all remember Kijiji?

And of course there was her greatest financial coup..... buying Skype for $3 Billion, spending almost a billion dollars integrating it into eBay and then selling it for for $2 Billion.....Do the math. Of course, in doing this, she so alienated and ignored the wisdom of the brain behind Skype, that he resigned his lucrative new job and started Tesla Motors

This is Queen Meg, the real Queen Meg. The person behind all those caring, listening, warm and fuzzy ads. How could anybody think she will treat the citizens of California any better than she did eBay Sellers. After all, where are the citizens going to go? Nevada?

Read more: http://fresnobeehive.com/opinion/2010/05/whitmans_new_ad_lumps_poizner.html#ixzz0oCUBdFZ7