By Bryan Jones, UW professor of political science

Back again is that successful Seattle company, Washington Mutual.  I noted here not long ago that WaMu paid its executives bonuses even though they lost almost two-thirds of the company's value (assessed by its stock price) during the year.  Today a Wall Street Journal article reports that the company has devised a new strategy for giving its executives bonuses that holds them harmless for losses involving the bad mortgage loans they authorized. 

Socialism for the rich, free enterprise for the poor....

by Walter Williams, UW emeritus professor of public affairs

John Edwards has stopped his presidential run but he still has a critical contribution to make in the campaign and beyond. Like a latter-day Al Gore, he should continue his message that none of the major candidates have addressed.

Only Edwards has cried out, “Corporate greed and political calculation have taken over our government and sold out the middle class.” Only he has warned of “the iron-fisted grip that corporations have on American democracy.”

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.”

Is Edwards’ message “alarmist“? Definitely not. 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) shows that real median family income for working-age households fell $1,336, or 2.4 percent, from 2001, when that income level was $56,062.

The decline from 2001 to 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 from 2001 to 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 (three in a thousand) receiving a yearly income of at least $1 million got, on the average, $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 in a year, saving them almost $1.9 million each. By comparison, the nearly 90 percent of Americans who make less than $100,000 a year saved $318 on average.

GOVERNMENT CONTROL. These immense disparities 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.”

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 now applies. Plutocracy—government by the wealthy—is the order of the day in 21^st century Washington.

Others, including this author, have warned of the dangers of plutocratic governance. So too have people in the case global warming -- without much impact until Al Gore took center stage.

It is as 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 to stay in the bully pulpit.

By Bryan Jones, UW professor of political science

A few days ago, Washington Mutual, the nation’s largest savings and loan, announced bonuses for its top executives. During the year, the management team had managed to lose almost $2 billion and engineered a stock price drop that cost shareholders two-thirds of the value of the company. The bonuses were substantially less than the year before, but bonuses are bonuses—supposedly pay for exceptional work.

This happens all the time. There is a safety net for the paid managers of America’s companies—they benefit no matter how poorly they perform. Conservative economists are fond of saying that if you reward bad behavior, you’ll get more of it. So in effect, today’s crony capitalism in America is building in the guarantee that we will get more poor-quality capitalism.

I am really not sure why the issue of gross inequality has not come to the fore in the presidential campaign. All the Republican candidates save Huckabee think things are hunky-dory. Obama wants to avoid such talk because he fears making anyone mad, especially the independents and Republicans he courts. Hillary raises money from them. Only Edwards, who has found little traction, is courageous enough to talk about the class warfare that the rich have mounted against the rest of us.