Stealing Our Livelihood,
Hiding the Loot,
Taxes: Would Robbers Cheat?,
Breaking and Entering
excerpted from the book
Robbing Us Blind
The Return of the Bush Gang
and the Mugging of America
by Steve Brouwer
Common Courage Press, 2004,
If we look back to the beginning of the 20th century, around the
time the Internal Revenue Service began keeping reliable income
statistics, it is clear | that a huge share of American income
~ was controlled by the very rich, the top 1% of the population,
and the upper middle class, the 9% below them. The trend reached
its height during the runaway stock market boom of 1925-1929 when
the top one-tenth raked in 47%-50% of all income. This happened
in part because Andrew Mellon, the Republican Secretary of the
Treasury throughout the 1920s, had succeeded in slashing the taxes
of the upper class in 1926. This unleashed rampant financial speculation
on the part of the rich. In 1928, just before the stock market
crash of 1929, the top one tenth of Americans grabbed exactly
half of the income, with the top one per cent gobbling up almost
a quarter, or 24%, all by themselves. This left just 50% of all
income for the large majority of Americans, the bottom nine tenths
who did not benefit from the financial boom.
Although the Great Depression and the
stricter regimen of the New Deal dampened the spirits of the rich
throughout the 1930s, no one threw those "robber barons"
in jail. But they did have to relinquish some of their power.
Taxes were raised dramatically on the wealthiest citizens and
the government provided work for masses of unemployed people through
a variety of public programs. Most important, the U.S. Iabor movement
for the first time in history was allowed to operate and organize
freely after the Wagner Act was passed in 1935; it set up the
National Labor Relations Board to protect workers' democratic
rights and allowed the newly formed CIO to organize millions of
factory workers and miners in industrial unions. Still, it took
almost a decade for these measures, followed by the massive increases
in industrial production required for World War 11, to really
shift the economic playing field so it benefited the great majority
of Americans. By the 1940s, economic outcomes were much more favorable
for working people, whether they were wage earners, small proprietors,
or salaried employees.
For a remarkably long time, for over four decades from 1942 to
1985, the income share of the top 10% of American households was
corralled within the range of 32-34%, while working people brought
home a much bigger chunk of the bacon, 66-68%, than they had ever
enjoyed before. Their high point, 68% of all personal income,
was reached in the early 1950s. It was no accident that this occurred
precisely when the percentage of union members among all employed
people reached the level of 35-38%, which was an all-time high
in the U.S. At the same time in some European countries, the rate
of unionization rose as high as 60% to 90%, and included most
white collar as well as blue collar workers.
... toward the end of the 20th century ... the levels of taxation
on the very wealthy had fallen so sharply that the worst sorts
of speculation and corporate gambling were encouraged. The Bush
Gang and their fellow travelers including many conservative Democrats)
had managed to accomplish the same things that Calvin Coolidge
and Andrew Mellon had engineered back in the Twenties.
By 1996-2000, the very wealthy and the
upper middle class, the top 10% of the American population, were
again collecting well over 40% of all personal income, finally
reaching a level of 44% to 48% in 1999-2000.
The stock market, though supposedly "democratized,"
is still primarily serving the immediate needs of the very rich.
Mainstream press accounts have thoroughly exaggerated the amount
of stock ownership among average Americans. It is true that more
than 52% of Americans owned stock in some form in 2001, either
through direct ownership or indirect means, such as mutual funds,
retirement accounts, 401(k)s, and defined contribution pensions.
On the other hand, their amounts of ownership were pitifully small.
In 1998, the average stock holdings of people on the bottom rungs
of economic ladder, the lowest 40%, were just $1,700 (only about
6% of this near-majority of Americans owned any stocks or mutual
funds at all). The average stock holdings of someone in the middle
20% only amounted to $9,200; but the amount of stock held by the
richest 1% was extraordinarily high, an average of $2,525,200,
according to economist Edward N. Wolff. These very rich citizens
held 48% of all publicly traded corporate stock ...
Business leaders of the 1970s ... were upset by their mediocre
returns on investment and wanted to increase corporate profitability...
Upon taking office in 1981, the Reagan/Bush administration immediately
designated working people-in particular, unionized citizens-as
the enemy. As a demonstration of their resolve, they first attacked
PATCO, the air controllers' union and forced all employees to
resign; then they packed the National Labor Relations Board with
anti-labor members. Unions, in their view, were a major cause
of their mediocre profits. These businessmen and friends of big
business tended to ignore the overriding international reality,
that profits had fallen because capitalist industry worldwide
had built up a tremendous overcapacity of production, thus competition
between countries and corporations was driving down profit rates.
This has been the classic example of capitalist crisis ever since
Karl Marx identified it 150 years ago. Obviously, our captains
of industry seldom read Marx or the able critics of capitalism
who have followed in his wake up until the present day.
By the early 1990s, the corporate anti-union campaign was supplemented
by the overwhelming popularity of "downsizing" among
corporate executives, who started laying off their employees like
crazy, often dumping as many white collar employees as blue collar.
The lay-offs and increased pressure on remaining workers were
two of the factors that helped push profit rates up by the mid-1990s.
The median wage for American men was $11.62 in 1995, exactly $2.04
below the male median wage in 1979, when its value was $13.66
(figures adjusted for inflation in 1995 dollars).
Economist Mark Weisbrot of the Center for Economic and Policy
The real median hourly wage in 1973 was
$12.45 - measured in 2000 dollars. In 2000, it was about $12.90.
Considering that the U.S. economy grew by 72 percent on a per-capita
basis during that period, somebody got shafted.
In 1980, the CEOs of the Fortune 500 companies earned 42 times
as much as the average American worker; by 1999, they earned 531
times as much. How was this possible?
It happened because the CEOs, with the
help of senior managers working under them and the backing of
elite conservative political supporters, were able to break or
bypass the bargaining power of workers' unions and then harness
all the desperate labor power of the unorganized. The CEOs did
their job, according to the dominant ideology among the owners
of capital, which was to maximize profits and stock value while
minimizing labor costs.
Paying for labor ... was not popular among America's corporate
leaders and owners. Or to put it another way, they realized that
not paying for labor was the most direct path to profits. This
tactic has been a favorite of the owners of property ever since
the great empires of antiquity imposed slave labor upon their
subjects and the people they conquered. Feudal arrangements were
hardly better, for the noble owners of productive property, the
land, were always tempted to see just how little food and other
necessities were required to sustain their working peasants. And
in the primitive stages of capitalism, when globalization of trade
by the Europeans opened up vast new opportunities to exploit labor,
slavery was reintroduced as a method of extracting the highest
return on investment. In the extreme, some plantation owners,
for instance the English on their sugar islands in the Caribbean,
found it "economical" to simply work their slaves to
death, then acquire new ones.
Slave owners occasionally made a calculation
that was remarkably similar to the one that was so popular with
American CEOs operating in the supposedly "advanced"
mode of late 20th century capitalism. Plantation overseers, especially
those who were hired to produce very fast profits by absentee
owners, decided it was more "efficient" to work people
so hard that they were simply discarded, dead or alive. No one
cared about the long-term health of the working people, the condition
of the land, or the economic enterprise because those in charge-both
plantation managers and owners-wanted to get their money quickly
and get out.
This is not to say that contemporary American
capitalists have determined that working people will be whipped
and beaten until they keel over and die at their typewriters or
cash registers. But clearly they did notice that American workers,
being among the best-paid people in the world, could labor more
hours and survive on less money than we did before. In the eyes
of the corporate class of the late 20th century, the wages, salaries,
and incomes of the large majority of Americans were downwardly
flexible, and could bend and yield so that capital could be well
served. Paying capital, at the highest rate possible, was in great
favor because first, it is the primary job of capitalists to cultivate
their capital. Secondly, as they experimented with limiting wage
growth, restricting labor organizations, and subjecting workers
to more stress, pollution, and injuries in the work place, there
was not enough outrage expressed on the part of the general public
and the forces of organized labor had become too weak to muster
resistance all on their own. With relatively small expenditures
of money, most conservative members of the owning class supported
this reactionary change in our political economy. They found it
easy to bankroll anti-labor campaigns within corporations and
pro-wealth campaigns on the political circuit.
Ronald Reagan, 1981, on signing the law deregulatilng the savings
and loan industry
"I think we hit the jackpot with
"What want to see above all is that
this remains a country where someone can always get rich."
... the richest 1% of the population, families with average fortunes
of about $12 million as of 2002
... Below them, another 9% of the population
is not doing badly, since they hold 38% of all stock in their
hands and about as much of all financial assets. In the eyes of
everyone but the top 1%, this 9% seems quite rich because the
assets of the families in this group average about $1.1 million
(ranging, in very rough terms, when all their assets, houses and
possessions are included, from less than $600,000 to more than
... The average wealth of the top 1 %
was over $10 million per family in 1998, climbed to over $14 million
in 2001, and settled back to around $12 million in 2002.
... the poorest 90% of the population,
only own about 14% of corporate stock and 20% of all financial
Ivan Boesky in a 1985 UC Berkeley commencement speech
"Greed is all right, by the way.
I want you to know that. I think greed is healthy. You can be
greedy and still feel good about yourself.
The looting of the savings and loan industry [1980s] caused the
failure of an entire wing of the banking industry. The S&Ls
were originally created for the legally designated purpose of
serving community homeowners. They promptly shifted gears as soon
as they were deregulated in 1981, and began investing heavily
in risky real estate development schemes instead. Their subsequent
collapse left American taxpayers with a staggering bill to pay
off, $500 billion when interest was included. The commercial real
estate collapse in America's big cities and suburbs was set up
by similar circumstances-a combination of deregulation, a stampede
of legally questionable limited partnerships, changes in accelerated
depreciation rules, and the manipulation of other tax laws. The
losses of the large commercial banks were estimated to be even
greater than the S&Ls, at $1 trillion and up. In this case,
because the whole economy was at risk, corporate giants like Citibank
were rescued through huge injections of capital from the Federal
Reserve banks and very rich foreign investors.
In the 1980s, there was a warning sign
about the nature of the Bush clan that should have been heeded.
The family was showing a pronounced tendency to involve themselves
in the wave of piracy that was endangering the financial health
of the whole nation. While our current president was one case
in point, and his Uncle Jonathan was banned from selling brokerage
securities, the example of Neil Bush, brother of George W, was
the most blatant. Neil probably had as many failed business ventures
as George W, but some were more spectacular, especially the Silverado
Savings and Loan in Colorado, which lost more than $1 billion
when p it collapsed in the late 1980s.
From the figures above the reader can
appreciate the fact that the fines assessed against Neil and his
ganglet were far less than the real criminal damage to the economy
and the taxpayers' pocketbooks. Moreover, Neil and his buddies
did not really pay the damages, for the entire $49.5 million was
paid off by liability insurance on their S&L and a special
"legal defense fund" the Silverado directors had wisely
created even before the institution collapsed and they were investigated.
The cost of this one white-collar crime was far greater than all
the armed bank robberies committed in the United State in 1987.
Neil Bush had found a way to pass on millions
in unsecured loans to his friends, but did not seem to profit
much himself from this criminal escapade. Undeterred, he promptly
went out and signed up for a loan from the Small Business Administration,
and received $2.35 million to finance his next endeavor, Apex
Energy. That business flopped and he never repaid the loan.
Neil Bush's transgressions were but light
snowflakes atop the tip of a giant corporate iceberg of crime,
most of which stayed hidden from sight. The large majority of
savings and loan irregularities were not properly investigated
or prosecuted, even though the Federal Home Loan Bank Board found
evidence of fraud and other criminal activity by managers and
directors at 75% of the failing S&Ls. When the Office of Thrift
Supervision was investigating Neil Bush's tricks in 1990 and decided
not to prosecute, this undoubtedly had something to do with his
father, George H.W., being president of the United States. The
Bush family could have rightly claimed that their son was not
getting preferential treatment because almost all the criminals
working the same territory, the savings and loan racket, were
The first Bush administration let them
all walk free! This gets to the essence of the Bush Gang's criminal
influence over the past twenty years. More important than their
own personal transgressions has been their propensity to let anything
go. They deregulated and then looked the other way because these
were their friends at work. The decade of the 1980s had produced
theft, fraud, and undisciplined gambling with America's vast wealth.
Business values had deteriorated to the point, said Business Week
in a famous cover story, that America had become a "Casino
Adam Smith, in The Wealth of Nations, 1776
... as Henry Home (Lord Kames) has written,
a goal of taxation should be to 'remedy inequality of riches as
much as possible, by relieving the poor and burdening the rich.'
When the Bush Gang moved into Washington in the 1980s they initiated
another massive tax giveaway for themselves and their friends.
Maximum tax rates on the richest individuals were lowered from
70% to 50% to 28%, so they were able to keep a bigger share of
their rapidly growing pre-tax income.
Effective taxation on high incomes has
always been lower than the official top rates because of the special
tax categories and tax shelters granted to the rich. Therefore
even when the Democrats increased the top marginal income tax
to 39.6% in 1993, it produced a much more modest increase, from
22% to 27%, in the amount of taxes actually collected from the
wealthiest Americans in 1996. When Bush Gang II returned to Washington
in 2001 they immediately took up the task of individual tax reduction
again, once again favoring themselves and other wealthy Americans
by lowering their effective tax rate to 25% for 2001, with further
reductions to 23% slated a few years down the line. They were
simply resuming the program that was instituted during the reign
of the Reagan/Bush administrations: in those 12 years the Bush
Gang had engineered a staggering reversal of the American tradition
of progressive taxation.
Worker's payroll taxes, the main source
of federal revenues from low and middle income Americans, have
increased dramatically, bringing in over 34.9% federal revenues
in 2001 as opposed to just 6.9% in the 1950s. These revenues compensated
for the drastic drop in corporate income taxes from 26.5% in the
1960s to 7.6% of federal revenue in 2001. In fact, it was the
middle and working classes that were suffering higher taxation
with very little representation, brought to them courtesy of Alan
Greenspan, who was chairman of the Republican Council of Economic
Advisors in 1983. That group successfully pushed for raising the
rate of FICA withholding taxes (Social Security and Medicare)
by about 20% between 1980 and 1990.3 In 1987 Greenspan was chosen
to be chairman of the Federal Reserve Board, a post he was still
holding sixteen years later under Bush II.
Over the long run, federal taxes on working
families had doubled, going from 9% of their income in the 1950s
to 18%, or even 20% in the mid 1990s. Because of the large social
security increases, a small reduction in federal income taxes
on working families in the 1980s did not offset this overall trend.
There was a really big change, however, when it came to the income
taxes of the rich.
With guidance from the Bush Gang, Ronald
Reagan returned to that glorious decade of Coolidge and his youth,
when the rich ran rampant and their income tax rate was below
30%. In 1986 the top marginal rate dropped to 28%. The results,
compiled by the IRS a few years later, were striking:
Though these tax cuts for the rich were
very generous, the federal tax system remains mildly progressive
overall, in the sense that most rich people still pay a higher
percentage of their income than do the poor. But at the state
and local level, the rich won the taxation battle long ago. Many
regressive state taxes, like the sales tax, end up penalizing
the poor much more than the rich. The middle class, too, is taxed
at a much higher rate than the richest 1% of taxpayers. State
legislatures, even when they are not populated with anti-tax reactionaries,
are very wary of insulting multinational corporations or very
rich individuals by raising their taxes, since then they might
move to another state or another country. Although most states
have some form of income tax, many do not apply it too rigorously.
As might be expected, the Bush boys gravitated to two of the six
states that have no income tax at all, Texas and Florida. Jeb
Bush's Florida ranks number two in terms of having the most unfair
combination of state and local taxes in the nation.
One of the great successes of contemporary conservatives has been
to eliminate the distinction that even Andrew Mellon acknowledged
was an element of fairness, the one between the "earned"
income produced by one's labor and the "unearned" income
produced by one's capital. By eliminating this conceptual barrier
to all-out greed, the Bush forces have mounted a full scale attack
on wages and salaries even though they are the product of a person's
active work (even the bloated pay of the big CEOs is generally
connected to showing up at work every day). The income of investors,
however, is passive, the byproduct of wealth already amassed.
This passion for taxing work more heavily
than non work has allowed the very richest Americans to enjoy
lower tax rates than ordinary, run-of-the-mill rich folks.
There are four pillars of progressive taxation that really aggravate
the Bush Gang because they are direct or indirect taxes on capital:
the capital gains tax, the corporate income tax, the progressive
tax on all individual income because the highest incomes also
tend to have the highest shares of capital income, and the estate
tax that is levied at the death of very rich citizens. All of
these were imposed in the first half of the 20th century so that
there would be little chance for the wealthy owners of America's
corporations and financial institutions to divert money from one
kind of investment to another, thereby wiggling out from under
the long arm of the tax man. If the Bush administration can destroy
these restraints on capital, all remaining semblance of democracy
in America will collapse, leading to outright victory and permanent
domination by a committee of plutocrats.
Franklin Roosevelt in 1935.
"The transmission from generation
to generation of great fortunes by will, inheritance, or gift
is not consistent with the ideals and sentiments of the American
Theodore Roosevelt in his presidential message to Congress in
"The primary objective should be
to put a constantly increasing burden on the inheritance of those
swollen fortunes, which it is certainly of no benefit to this
country to perpetuate."
"... malefactors of great wealth,
the wealthy criminal class."
Congressman Hudson of Kansas spoke on behalf of the Income Tax
Act of 1884
This method [the income tax lays the burdens
on those possessing the ability to pay, and compels those who
reap the harvests...to give more of that harvest for the common
good. I know that many wealthy men are generous and charitable...On
the other hand, the majority of the very wealthy are haughty,
overbearing, autocratic, mean, and it is that class in particular
that the income tax is designed to reach.
Social Security has been our most reliable federal program for
two thirds of a century. Retirement checks arrive reliably and
are adjusted to keep up with inflation, while the government expense
of running the program is very low. Because of its commitment
to paying spouses who survive the original recipients, Social
Security also serves as our largest life insurance program, its
$12 trillion of insurance being worth more than all the policies
of all private insurance companies combined. Its administration
is incredibly efficient, costing less than 1% of total revenues
because the aim of the Social Security Administration is to distribute
the checks, not to turn a profit. This is far superior to the
private sector, which keeps 12% to 14% of its premiums as the
cost of doing business. Furthermore, Social Security is the most
successful poverty program of all time, having reduced the poverty
rate for people over 65 from 35.2% in 1959 to less than 10% forty
years later. Without Social Security fully half of all senior
citizens would fall below the poverty line.