by Walter Williams, UW emeritus professor of public affairs
However grim John Edwards’ chances may be in the race for the presidency, his message must be heard. As president or as a latter day Al Gore, Edwards must not stop shouting, “Corporate greed and political calculation have taken over our government and sold out the middle class.”
Edwards faces a Washington establishment that fears real change to the status quo. A Washington Post reporter wrote before the Iowa caucus that, “Edwards continued to veer closer into alarmist territory, warning of ‘the destruction of the middle class’ and 'the iron-fisted grip that corporations have on American democracy.'”
Is Edwards’ message alarmist? No, he’s on the mark. In our analysis of George W. Bush’s economic policies, The Politics of Bad Ideas, political scientist Bryan Jones and I found that the middle class is in dire straits, that a tiny super-rich elite reap most of the income gains, and corporate America controls the Washington government.
THE MIDDLE CLASS. Census data on income in 2006 (the latest available) showed that real median family income for working-aged households fell $1,336 from the 2001 level. The decline in 2001-2005 is by far the longest string of yearly decreases in the real median family income of working-aged families in the postwar era. Commerce Department data indicate that between 2001 and 2007, a smaller share of gains in income went to workers and a larger share to corporate profits than in any postwar economic recovery.
On average, the entire middle class experienced limited income gains and kept up its living standard by zero saving and massive borrowing. The middle class is hurting.
THE SUPER-RICH. The Urban-Brookings Tax Policy Center estimated that in 2006, the 0.3 percent of families (3 in a thousand) receiving a yearly income of at least $1 million on average got $118,000 from George W. Bush’s tax cuts. That’s nearly 160 times more in tax benefits than the middle fifth of families that averaged $740 in benefits.
The New York Times’ David Cay Johnson wrote that 28 percent of the investment tax cut savings went to just 11,433 of the 134 million taxpayers, those who made $10 million or more [that year], saving them almost $1.9 million each….The nearly 90 percent of Americans who make less than $100,000 a year saved $318 on average.
GOVERNMENT CONTROL. The immense disparities just discussed that enriched the relatively small number of families with at least a million dollars in yearly income at the expense of the rest of the American population came about solely because of the Bush tax cuts. Such largesse from the Bush tax cuts that funneled benefits to a super-rich elite is a perfect example of control over the government by the rich and powerful.
An excellent case in point is the House of Representatives’ effort to offset the cost of fixing the Alternative Minimum Tax (AMT), so that it would not hit an added 25 million mainly middle- class households in 2007.
The House chose to offset the lost revenue from the AMT fix by removing certain tax advantages for investment fund advisors and hedge fund managers, some of whom earn over $1 billion a year.
Washington Post reporter Jeffery Birnbaum described what happened: ”Dozens of lobbyists were hired to pressure lawmakers, and campaign donations were stepped up, especially from Wall Street executives.” Their 2007 campaign contributions in nine months exceeded the total for the previous two years. Hiring registered lobbyists cost $8 million in the first half of 2007, over twice as much as all of 2006.
Wall Street wealth won. Members of Congress were bought. A handful of super-rich people, who are big campaign contributors, escaped a hefty tax increase. The cost of the AMT fix was paid for by borrowing so future generations will bear the costs.
No wonder the number of Washington lobbyists has increased threefold since 1996 to 36,000. That’s over 60 lobbyists per Congress member.
The greater prosperity and economic equality of the early postwar era that made the American Dream realistic to a broad middle class has vanished. John Edward’s notion of two nations has come to pass. Plutocracy—government by the wealthy—is the order of the day in 21st century Washington.
Others including the author have warned of the dangers of plutocratic governance. So too have people in the case global warming, without much impact until Al Gore brought his credibility to the cause.
It is a daunting a task to awaken the American people to corporations’ iron-fisted grip on democracy and the likely destruction of the middle class. John Edwards’ credibility and anger plus his honed-toughness as a trial lawyer make him the ideal choice, whether he is president or not, to stay in the bully pulpit and sound the warning.