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debunking the myths about government ... - CWA Local 1180

In the Public

Interest

Debunking the Myths about Government,

Government Workers, and Unions


IN THE PUBLIC INTEREST

Debunking the Myths about Government,

Government Workers, and Unions

Gregory Mantsios, Joseph S. Murphy Institute for Worker Education and Labor Studies,

School of Professional Studies, City University of New York

Illustrations: Mike Konopacki

Research: David Dembo

Editing: Laura McClure

Research and Production Assistance: Beatriz Gil

Design: Roher/Sprague Partners

Thanks to Steve Shalom, Paula Finn, and Cate Poe.

Special thanks to: Arthur Cheliotes and the Communications Workers of America Local 1180

for requesting and funding this research.

A Project of the CityWorks Foundation

The views expressed in this booklet are not necessarily those of CityWorks, the Murphy Institute, SPS, or CUNY

__________________________________________________________________________________

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These are hard times, no doubt about it. People are out

of work, prices are soaring, public services are down, wages are

stagnant, and families are losing their homes. 1

The Great Recession

Prices

Wages

Housing

Jobs

cost of feeding a family of

four has risen from $598 in

1994 to $949/month in 2010

- an increase of 59%

average weekly wages

(adjusted for inflation)

are 8% less than they

were in 1970

the number of foreclosures

increased from 885,000 in

2005 to 2.8 million in 2010

17% of Americans are

out of work (nearly 10%

by official count)

compared to 7.0% in 2000

In the midst of all this, there is a concerted effort on the part of the Radical Right to convince the American

public that overpaid government workers are to blame for the nation’s economic problems. Attacking public

sector workers conveniently focuses attention on the two things the Radical Right hates most: government and

unions. Ranting about the evils of government and unions isn’t new. What’s different now is that the country is in

terrible economic straits, people want an explanation, and some politicians and media personalities have gained

considerable traction by repeating the same myths and hoping they will stick.

“If you tell the same story five times, it’s true.” – Ronald Reagan’s White House spokesperson, Larry Speakes, only half jokingly

commenting on his boss’ habit of endlessly retelling an inspirational WW II story that the press eventually discovered was a

movie fiction. 2

But it’s not just the Radical Right and talk show hosts who are promulgating these myths; it’s the mainstream

media as well.

“Public Sector Workers are the New Privileged Elite Class” – M. Zuckerman, editor-in-chief, US News and World Report, owner of

the NY Daily News, and one of the wealthiest people in the United States. 3

Demonizing government and unions and making progressive public officials and public sector workers into

villains has serious consequences: it divides well-meaning people and promotes hatred based on misinformation,

distortions, and outright falsehoods.

Not only that, these myths divert public attention from some of the real problems in our nation: a financial sector

that has wreaked havoc on our economy; tax cuts for the wealthy that have increased our national debt at the

worst possible time; vast concentrations of wealth and power alongside economic hardship and insecurity; and

the ability of the “monied class” to pervert the democratic process, dominate the mass media, and shape public

opinion in ways that hurt the vast majority of Americans.

1


Rad•i•cal Right (ra-di-kəl\ rīt\) n. 1. Politicians,

media personalities, groups, and individuals

who promote an ultra-conservative and

libertarian agenda focused on individualism

and a market economy that is unrestricted by

government regulations. 2. Anti-government:

seeks to abolish taxes (including those that affect

corporations and the wealthy) and eliminate

regulation of business and finance (including

those regulations that protect consumers,

workers, and the environment). 3. Anti-union:

seeks to eliminate workers’ rights, including the

right to collective bargaining. 4. Closely tied

to and well funded by right wing foundations,

think tanks, and the wealthy corporate elite. 4

Those who promulgate these myths – whether or not they are part of the concerted well-financed campaign to

demonize public sector workers – are hurting workers and serving the interests of the wealthy and corporate elite.

David and Charles Koch (pronounced “coke”) are lifelong libertarians who have given more than $100 million dollars

to right-wing causes. The Koch’s holding company operates oil refineries in six states and owns Brawny towels, Dixie

Cups, Georgia-Pacific Lumber, Stainmaster carpet, and Lycra among other products: it is ranked, by Forbes magazine,

as the second largest private company in the U.S. The combined wealth of the two brothers is estimated to be over $35

billion and is exceeded only by that of Bill Gates and Warren Buffet. The Kochs believe in drastically lower personal and

corporate taxes, minimal social services for the needy, and much less oversight of industry – especially environmental

regulation. These views dovetail with the brothers’ corporate interests. One study named Koch Industries one of the

top ten air polluters in the country. The Koch brothers have underwritten a huge network of foundations, political front

groups, and think tanks (including the Cato Institute which has more than 100 full-time employees). 5

This pamphlet is about seven myths perpetuated by the Radical Right. It describes the myths, outlines why the

myths are wrongheaded, and offers some alternative explanations and remedies.

f

f

f

f

f

f

f

Myth #1: Government Workers Have It Too Good

Myth #2: Government Is Too Big

Myth #3: Public Sector Unions Are Too Powerful

Myth #4: Public Pensions Are Too Generous

Myth #5: Government Is Too Focused on the Poor

Myth #6: Government Imposes Too Many Regulations

Myth #7: Liberal Tax and Spend Policies Have Created Deficits and Debts That Are Too Big

2 In the Public Interest


MYTH #1: GOVERNMENT WORKERS HAVE IT TOO GOOD

Public sector workers have much higher salaries than other workers – plus gold-plated benefits

and perks. The average worker is forced to pay taxes to support a level of compensation they

themselves can only dream of. Public sector workers are lazy, rude and unproductive. And

they’re on permanent vacation.

REALITY:

ff

The Radical Right and the media are fond of highlighting government abuses. Some

of these abuses are very real. But they also exaggerate reality and misrepresent the

facts to make all government workers look like villains.

During one of the worst snowstorms in New York City’s history, the New York Post displayed a photo of a sanitation

worker asleep in his plow-equipped sanitation truck. “These garbage men really stink,” said the Post. The worker in the

photo, Barry Delisle, had been working for 16 hours straight when his truck broke down and his supervisor ordered him

to stay with it until it could be towed. 6

ff

The work of government employees –

police, firefighters, teachers, train

track workers – is important, often

stressful, and sometimes dangerous.

The salaries of public sector workers

are well earned.

ff

Public sector salaries are not lavish.

The Radical Right likes to compare

private and public sector wage figures

without considering important factors

that are relevant to salaries – like age,

years of experience, and the level of

education required for the job

(government workers are twice as

likely to have a college degree). One

important study shows that when

those factors are considered, public

sector workers earn 11% less than comparable workers in the private sector. Even when health and

retirement benefits are included, public sector workers earn less than their private sector counterparts

with comparable educational levels. 7

Public and Private Sector Wages

Wage Earnings

Total Compensation

$69,108 $71,109

$49,072

$55,132

Workers in Public Sector

Comparable Workers in Private Sector

3


f Public sector workers – like their private sector counterparts – have increased their productivity

significantly over the years. But neither group has been compensated for increased productivity. 8 If

workers wages kept up with productivity, they would be making a lot more money. 9

$1,400

$1,200

$1,000

$800

$600

$400

$200

$-

Real Wages vs Productivity Enhanced Wages

1947

1952

$746

1957

1962

1967

1972

1977

1982

1987

1992

1997

2002

$1,171

$612

2007

What wages would

look like if they kept

up with productivity

Real wages

f In fact, wages in the public sector, like those in the private sector, have been stagnant. Lately, public

sector unions and their members have been taking a beating. Last year, 51% of cities across the country

froze or reduced pay, while 25% laid off workers, 24% reduced health benefits, and 22% revised union

contracts to reduce pay and benefits. 10

f Public sector workers have families that depend upon them for financial support. And they and their

families are part of communities that thrive when people are working.

Cutting the public sector will

exacerbate the economic crisis!

The Vicious Cycle

Smaller

budgets

Cutting jobs

& salaries

Lower

revenues

More need

for social

services

Less

consumption

f Laying off workers or cutting back on their compensation not only puts workers in jeopardy, it affects

the economic and social wellbeing of their communities.

4 In the Public Interest


ff

In effect, the Radical Right wants to turn good jobs into bad jobs – jobs without decent pay, benefits,

security, or pensions. Anti-union efforts have already succeeded in doing this in the private sector.

Over the past 30 years, many private employers have cut pay and stopped offering health care, pensions

and other benefits. Now the Radical Right is turning its attention to the public sector, closing off more

opportunities for people to enter and stay in the middle class.

ff

Cutting back on public sector employment affects everyone, but impacts on some more than on others.

Government jobs have been an important avenue for upward mobility for women. And while the

vast majority of public sector workers are white, a disproportionate number are African American.

Increasingly, public sector jobs have become a source of employment for Latinos as well. Public

employment has been a path to the middle class and has brought a level of economic stability to these

communities. Veterans, too, have benefited from public employment (according to the Bureau of Labor

Statistics, 13% of all employed veterans work for state and local government). Cutbacks hurt these

constituencies more than others.

ff

Well funded, orchestrated attacks on public sector workers encourage workers to blame each other for

our problems. These attacks amount to “blaming the victim.”

f f The real and obscene differences in compensation are those between workers and corporate

executives – especially when considering such perks as bonuses, stock options, and golden parachutes.

Compensation for the

CEOs of the 500 largest

companies averaged $8

million last year.

5


f The real culprits are the financiers and corporate elite who got us into this mess and continue to make

handsome profits.

Compensation for the top 25 hedge fund and private equity fund managers averages $1.01 billion a year – that is more

than 30,496 times as much as a typical U.S. worker earns. 11

A BETTER PLAN

f Increasing revenues (by taxing corporations and the very wealthy), expanding public works, and

creating new jobs with better wages and benefits for public and private sector workers will build

stronger communities and create a firm foundation for economic growth.

6 In the Public Interest


MYTH #2: GOVERNMENT IS TOO BIG

Government is one big, bloated bureaucracy with too many workers. Besides, much of what

government does could be done better and more efficiently by private companies. We need

to cut government services.

REALITY:

ff

Government provides services that are essential. Public sector workers teach our

children, pave our roadways, repair our bridges, collect our garbage, staff our

libraries, patrol our streets, and put out fires. That doesn’t mean that government

always gets it right or that efficiency couldn’t improve. But the work that public

employees do to keep us safe, healthy, and educated is important to our daily lives

and all too often is taken for granted.

ff

There is no evidence that turning government work over to private companies – “contracting out” – saves

money. When overruns, contract monitoring, contract administration, and other direct and hidden costs are

considered, contracting out can be very expensive. One estimate puts the added cost at 25%. 12

A government audit in Wisconsin revealed that 60% of the engineering work outsourced by the Department of

Transportation could have been done at a lower cost by state workers.

ff

And there are plenty of examples of contracting out leading to greater inefficiencies, declines in services,

corruption, and/or increases in user fees. And because of legal fees, getting out of privatization

agreements can be costly as well.

In February 2009, the City of Chicago signed a 75 year concession agreement with a private company to operate its 36,000

parking meters. Along with many problems related to malfunctioning meters, rates increased significantly – frustrating

both residents and local merchants. In some areas of the city, rates increased in the first months to 28 quarters ($7) for

2 hours of parking time. And parking charges were extended from 6 to 7 days a week.

ff

Besides, private companies cherry pick the goods and services that can turn a profit – and leave the rest

for the government to handle. You won’t find, for example, companies taking on mail service to rural

areas or healthcare services for the poor. Privatizing forces taxpayers to pick up the tab for expensive but

necessary services the private sector doesn’t want to provide, while private companies walk off with the

profits from the easy jobs.

ff

Education, public safety, legal protection, a clean environment – all are essential to a healthy democracy.

It’s dangerous to rely on private companies to meet these needs. While public agencies are subject to

close scrutiny and oversight and must meet clearly defined standards (in wages, safety, ethics), private

companies are much less accountable. While the public sector’s goal is to meet the public need, the chief

goal of any private company is to make the biggest profit possible.

Pay to Spray: Gene and Paulette Cranick live in Obion County, Tennessee. Faced with a budget deficit, Obion County

decided to save money by abolishing its fire department and contracting fire protection to a nearby city. That meant that

Obion residents had to pay a fee if they wanted fire protection. The Cranicks paid in the past but simply forgot about the

$75 fee last year. When their home caught fire, firefighters showed up – but only to make sure the flames didn’t reach

the property of a fee paying neighbor. The Cranicks offered to pay, on the spot, whatever it took to put out the fire, but

firefighters were instructed to refuse. The Cranick home was completely destroyed, along with three dogs and a cat

trapped inside. 13

7


f The United States spends less on government services than almost any other developed nation in the

world – less than Japan, Canada, Britain, France or Germany. 14

The amount the U.S. spends on social programs is even less than

these numbers indicate because we spend so much more on our

military than any other country. Nearly one-half of all military

spending in the world is by the U.S.

Government Spending by Percentage of GDP

41.5% 41.6%

43.6%

47.7%

52.1%

55.5% 56.2%

US Japan Canada Germany UK France Sweden

f It’s not that government is too big; it’s that the influence of the wealthy on government is too large.

f And as the cost of running for public office increases, so does the influence of the “monied” class. It now

costs on average, $1.4 million in campaign funds to win a seat in the House of Representatives and $7

million to win a seat in the US Senate. 15

f Running for office usually requires some very wealthy donors. But sometimes the very wealthy pick up

the costs of winning an election themselves.

Over the course of three elections, Michael Bloomberg spent more than $261 million of his own money to become

mayor of New York City. He spent $102 million in his last election alone – more than $172 per vote.

Well over one-half of U.S. senators reported a minimum net worth of over $1 million in 2009. The average wealth

of U.S. senators is $12.6 million. 16

8 In the Public Interest


ff

High priced lobbyists also insure that the interests of the wealthy are well represented in the halls of

government.

ff

To shine light on the connection between money and public policy, one useful website, MAPLight.

org, tracks the money politicians receive related to each vote they cast. In one case concerning

telecommunication companies, Congressional representatives who changed their position to support

the telecoms received twice as much in political contributions from the telecoms as those that did not. In

another case related to regulating the financial industry, those voting against financial reform received

41 percent more in contributions from big banks than those voting for regulation. 17

We can have democracy in this country, or we can have great wealth concentrated in

the hands of a few, but we can’t have both – Supreme Court Justice Louis Brandeis

The Greeks had a word for it.

“Oligarchy” – control by a few.

ff

One result of the “money talks” culture: Congress passed tax cuts

for the wealthy in the midst of one of the worst economic crises the

nation has ever seen. Another result: a huge spike in the concentration

of wealth in the hands of a few and record levels of economic and social

inequality.

A BETTER PLAN

Working people and the organizations that represent them can – and often do – check the power of money by

organizing at the ballot box and in the streets. Government is contested terrain. Our goal should be to take back

our government – not weaken it.

9


MYTH #3: PUBLIC SECTOR UNIONS ARE TOO POWERFUL

Public sector unions are the problem. Through political contributions, these unions control

federal, state, and local governments and set their agendas. Corrupt union bosses wield

enormous power and force politicians to toe their line. Unions are bankrupting our government.

REALITY:

f Workers join unions because they want a better life. Like everyone else, they want

dignity, fair pay, benefits, and a voice in the workplace. Workers achieve these goals

more effectively by joining together than by acting individually.

f Union leaders are elected by their members. Some are great leaders, some are not. Some are strong and

forceful, others not so much. And sometimes there is corruption in the labor movement. The Radical

Right likes to characterize all union leaders as union “bosses,” but most are hard working people who

make significant sacrifices and devote their lives to fighting for social justice. As long as elections are fair

– and the overwhelming majority are – then union leaders are the democratically elected representatives

of working people.

f There is no evidence that unions are bankrupting government. For instance, in Texas, where

unionization rates are low, the government is facing a catastrophic deficit. In New York, where

unionization rates are high, the deficit is lower. 18

The unionization rate is more than

three times as high in New York as

it is in Texas, but the budget shortfall

in New York is one half of what it is

in Texas.

How big is the budget

deficit

Shortfall is what

percentage of the budget

What percentage of the

public sector is unionized

Texas

New York

$13.4 billion $10.0 billion

31.5% 18.7%

21% 72.9%

f

Texas has followed the Radical Right prescription of tax cuts, deregulation, and resistance to unions as a

path to economic prosperity and a balanced budget – a strategy that has clearly failed.

f Unions do make a difference. Neither union nor non-unionized workers make nearly enough money,

but those in unions clearly do better. 19

The Union Advantage: Weekly Earnings 2010

Non-Union workers: $717/week

Union worker: $911/week – a 27% advantage for the unionized worker

f Higher union wages are good for all workers. Unions keep wage levels up for everyone. When public

sector unions succeed in defending decent wages and benefits for their members, they set a benchmark

and help maintain wage and benefit standards for all workers.

10 In the Public Interest


ff

Public sector unions do have a degree of political power – and that’s good. Union power leads to better

jobs, higher wages, a safer workplace, a bigger middle class and a stronger economy. Unions’ political

power comes directly from the members through their small, but pooled, political contributions and

through their direct involvement in the democratic and electoral process. It also comes from

communities that rely on – and fight for – public services.

ff

Collective bargaining in the public sector is good for workers and for government. Not only do

workers win decent wages through collective bargaining, they win fair and consistent work rules and

are protected from job discrimination and unsafe working conditions. Collective bargaining also

insulates employees from politics and patronage, reducing government corruption.

ff

When public sector unions fight to protect their members’ jobs, they are also fighting to protect our

communities and vital public services. Unions are the first – and often the last – line of defense for public

education, health care, Medicare, public safety, and other important social needs.

ff

At the same time, public sector unions aren’t as strong as the Radical Right makes them out to be: they

have fewer bargaining rights than private sector workers. And most don’t have the right to strike.

ff

Right wing and employer attacks on unions over the past 30 years have severely weakened unions –

especially in the private sector. 20

Percentage of the workforce belonging to unions 1980 2010

Total 23% 13%

In the private sector 21% 7%

f f Employment in state and local government has fallen by 400,000 since mid-2008. And, in the first year

of the Obama administration, government employment has declined by more than 300,000 – that is,

300,000 fewer teachers, police officers, firefighters, school bus drivers, etc. 21 Radical Right politicians

want more public employee heads on the chopping block and they’d like to eliminate public sector

unions altogether.

11


f It’s not that unions are too powerful; it’s that Corporate America is too powerful. Our nation’s economy

is dominated by huge conglomerates with revenues larger than many countries. Yet these corporations

exist solely to maximize the profits of the shareholders – and to concentrate wealth and power in the

hands of the few who run them. What’s more, most of the companies we consider to be “American” are

really global enterprises. They move jobs around the world in search of the lowest wages, shift revenues

offshore to avoid paying taxes, and care little about the lives and communities of U.S. workers. They

squeeze out family businesses, distort our economic priorities, and wreak havoc on our economy with

financial speculation.

General Electric employs over 287,000 workers – the majority of them in other countries. 22

f These companies can shape public policy to serve their interests. With their enormous campaign

contributions to candidates from both major parties and their extensive lobbying, they call the

shots on most policy issues.

f Big corporations also have a strangle hold on the major media. They shape how we view the world, what

we crave (that is, buy), and who we blame for our social and economic ills. Ownership and control of the

media is increasingly concentrated in the

hands of a few mega corporations that

control most of the TV networks, cable

channels, movie studios, newspapers,

magazines, and publishing houses. 23

Rupert Murdoch’s empire includes Fox

Broadcasting, the Wall Street Journal, NY

Post and hundreds of other newspapers,

cable channels, TV stations, book imprints

and a movie studio. His net worth was

$5.2 billion in 2010 and he was ranked

by Forbes Magazine as the 13th most

powerful person in the world – well above

most heads of state. His media empire

reaches a total audience of 4.7 billion

people (3/4 of the world’s population). 24

f Workers and unions are up against powerful adversaries that have enormous resources (including the

media) at their disposal. That’s why attacks on unions have been so effective.

A BETTER PLAN

Strengthen unions to raise the standards for all workers and provide a counterweight to the interests of

corporations and the wealthy. A democratic society needs stronger – not weaker – unions.

12 In the Public Interest


MYTH 4: PUBLIC PENSIONS ARE TOO GENEROUS

Pension plans are draining the public coffers and sending our federal, state, and municipal

governments into a budgetary tailspin. Working people end up paying taxes to support retirement

benefits they only wish they could have. Public employees are retiring in luxury.

REALITY:

f Most public sector workers have modest incomes and modest pensions. On average,

state and municipal workers earn less than $45,000 per year and when they retire receive

a pension of approximately $19,000 per year. 25 The average annual benefit for all public

retirees (including federal employees) is $22,780. 26 This hardly affords them a life of

luxury.

f Some reforms clearly need to be made – for example, closing loopholes that allow some

workers to “spike” their final salaries in order to get higher retirement benefits. The Radical Right,

however, is using extreme cases to generalize about all public sector workers and arguing for drastic

cuts in workers’ pensions and in all areas of government spending. These cuts would have a devastating

impact on workers and communities.

f Everyone should have enough to live on at the end of a long work life – whether through adequate Social

Security benefits or through a pension. The American Dream promises a decent retirement for those

who work hard and play by the rules.

f Pensions not only provide economic security for workers in their later years, they are engines of

economic growth, curtail poverty, and help maintain the economic stability of seniors and the

communities they live in. 27

f Since many public workers aren’t covered by Social Security, government isn’t contributing 6.25% of

their pay into the Social Security fund as private employers would. For these workers, their pension is

the only source of retirement income. 28

f Taxpayers only pay 14% of public workers’ retirement costs. Most pension money comes from workers’

own contributions to the plan and returns on investment. 29

Public Contribution to

Public Sector Pensions

14%

Portion

contributed

by tax

dollars

86%

13


f Pension expenses amount to only 3.8% of all non-capital spending by state and local governments. 30

State & Local Government Spending (non-capital)

96%

4%

Cost of

Pension Plans

f

Public workers still rely mostly on pension plans (called “defined benefit plans”) that pool investments, are

managed by professionals, and spread risks widely over many years. Most private sector plans have either

been eliminated, diluted, or changed to 401(k) plans that require participants to make their own investment

decisions and bear the risk of bad investments. These 401(k) plans put all the risk and more of the cost onto

the backs of individual workers. And they carry fees that can decimate long term returns. Retirees can and do

outlive their 401(k) assets. Only one-in-five private sector workers are still covered by “defined benefit plans”

– and only one-in-eight non-unionized workers have this kind of plan. 31

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Percent of Workers

in Defined Benefit Pension Plans

81%

67%

union

48%

13%

non-union

1984 2010

f

Now there’s a push to shift public sector pension plans to 401(k)s – or to eliminate them altogether.

f Pension funds in both the private and public sectors often leave workers in poor financial straits. So does

Social Security, with the average retiree receiving only $1,178 a month. 32

f The Radical Right is whipping up resentment among private sector workers by exaggerating government

workers’ wages and benefits and by encouraging what Wharton Economics Professor Olivia Mitchell

calls “pension envy.” This campaign is fostering tensions between workers, between neighbors, and

between parents and teachers. The end result is a “race to the bottom” that leaves all workers with little

income or security.

Polls show that Americans are scared about their retirement. In a recent Gallup poll of people ages 44 to 75, more than

90% said they are facing a retirement crisis – and 61% said they fear depleting their assets more than they fear dying.

Unfortunately they have good reason to be scared. 33

14 In the Public Interest


f Until the 2008 market crash, most public pensions were well funded.

But the deep financial downturn of 2008 and 2009 – spurred by Wall Street’s

recklessness – caused significant losses for pension funds. 34

f Most state and local governments have lost between 10% and 20% of their

revenues during the past 2 or 3 years. Many of these governments missed

payments they were required to make under their collective bargaining

agreements. (Under these agreements, workers gave up part of their salary

increases in exchange for promised pension contributions.) Rather than

paying into the pension funds as they were supposed to, some of these

governments used the money to give tax breaks to special interests. Now

they are complaining about having to pay the pension money back and

using budget deficits as an excuse to cut pensions permanently. 35

In New York City, the cost of supporting pension plans increased significantly in the last

few years, mostly because the city reduced its pension contributions during the stock

market boom and now has to make up for the decline in pension assets from the market

crash and corporate scandals. 36

f The Radical Right often exaggerates the problems facing public pension funds to build the case for

eliminating them altogether. But most of these funds are not at imminent risk of default and have

years to recover the value they lost during the recession. 37

f Controversy over pension funds also diverts attention from the bonuses and golden parachutes given to the

CEOs and Wall Street executives who caused the economic meltdown and budget crisis in the first place.

Merrill Lynch recorded a $7.8 billion loss in 2007, BUT CEO E. Stanley O’Neal retired that year with security

and retirement benefits valued at $162 million

Citigroup reported a loss of $9.8 billion in the fourth quarter of 2007 alone, BUT Citigroup’s Chair and CEO

Charles Prince retired with a package of shares and options that totaled $40 million

A BETTER PLAN

Improve pensions for all workers and restore defined benefit plans as the standard for pensions. Rather than

cutting Social Security, improve it so that all retirees can have a decent standard of living.

15


MYTH #5: GOVERNMENT IS TOO FOCUSED ON THE POOR

The government provides services mainly for the poor, which is after all only a small percentage

of all Americans. Our tax dollars are going to help everyone but ourselves. The poor are already

getting more than they should.

REALITY:

ff

Protecting the poor and poor communities is important – and most industrialized

democracies do a better job of it than does the United States. They recognize that

providing a safety net is not only the right thing to do, but ensures a stable civil society.

Partly because we do so little to help people get back on their feet, poverty in America is

both significant and persistent.

Approximately 14% of the American population – that is, nearly 1 out of every 7 people in this country – live below

the official poverty line (calculated at $10,956 for an individual and $21,954 for a family of four). 38 And an increasing

percentage of individuals living in poverty work full-time. One out of every five children in the U.S. lives in poverty. An

estimated 3.5 million people – of whom nearly 14 million are children – experience homelessness in any given year. 39

ff

Only 15 cents of every federal tax dollar goes to helping low income families. Most of our tax dollars go

to the military, Social Security, and Medicare (which is mostly for seniors). 40

Where do our federal tax dollars go

11% Other

Govt

Functions

20% Military

9% Health,

Education,

Veteran's

Benefits

26% Social

Security

15%

Programs

for Low

Income

Families

7% Net

Interest

Payments

on Debt

12%

Medicare

ff

Cuts in public services will disproportionately affect the most vulnerable – the poor, the elderly, the

disabled. Women and people of color – who are more likely to be poor – are hit the hardest.

Chances of Being Poor in America 41

White White Hispanic Hispanic Black Black

Male/Female Female

Head of family

Male/Female Female

Head of family

Male/Female Female

Head of family

1 in 12 1 in 5 1 in 5 1 in 3 1 in 4 1 in 3

While chances of being poor in America are much greater if you are black or Hispanic, this segment of the

population makes up only one half of the total population living in poverty. So, all races and ethnicities are hurt

when social programs are cut. 42

16 In the Public Interest


ff

One way or another, we all depend on services we get from federal, state, and local government: public

schools and colleges; police and fire protection; mass transportation; roads, highways and bridges;

garbage collection; libraries and parks; health research; national defense and security – not to mention

safe food, safe water, and safe buildings.

ff

And when the bottom falls out for middle class families, government support provides a critical safety net.

By official counts, 1 out of every 10 Americans is unemployed: nearly twice that amount by unofficial counts. 43

ff

At the same time, many of the services the middle class depends on are being defunded. Some services

have been eliminated, others are being provided at increased costs. From 1980 to 2010, funding for

higher education, for example, has declined as a proportion of the federal budget by 45%: it’s no wonder

that college tuition has increased so dramatically. During that same period, funding for research and

general education as a proportion of the federal budget decreased by 50%. 44

ff

It’s not the poor who are getting too much attention from public officials, rather it’s the wealthy and

corporate benefactors who finance their political campaigns who do best at the public trough.

Princeton political scientist Larry Bartels studied the voting behavior of U.S. senators and found that

senators from both political parties were far more responsive to the opinions of wealthy constituents

in their districts than to constituents of modest income. Voting turnout, contact with staff, political

knowledge, and partisanship had little effect. Constituents with low income had no – or negative – impact

on senators’ voting behavior. 45

A BETTER PLAN

Government should preserve equal opportunity for all. It should be a “great equalizer” that prevents extreme

concentrations of wealth, power, and privilege.

17


MYTH #6: GOVERNMENT IMPOSES TOO MANY REGULATIONS

The government interferes too much in the economy and is strangling private enterprise.

Excessive governmental regulation inhibits competition, stifles innovation, impedes start-ups,

and kills jobs. There are too many controls on industry and business.

REALITY:

ff

Everyone wants to eliminate outdated or useless rules – and simplify overly complex

ones. That’s precisely why the call to deregulate is so popular with the Radical Right and

why they can easily score points by ridiculing one or two truly absurd regulations. But

rallying people to support a major rollback of government regulations is dangerous.

ff

Many industry regulations and regulatory agencies were created during the New Deal to

prevent a repeat of the Great Depression. The Reagan administration set off a tidal wave of deregulation

aimed at “reducing the role of government” and abolishing any rules that might “impede the market.”

The tidal wave continued under both Republican and Democratic administrations, helped along by huge

campaign contributions from corporations and the wealthy.

The percentage of the economy that is regulated dropped from nearly 12% in 1975, to less than 3% in 2006. 46

ff

One industry that was deregulated was the banking industry.

November 12, 1999

“Today what we are doing is modernizing the financial services industry, tearing down those antiquated laws and

granting banks significant new authority” – President Clinton, upon signing the Financial Services Modernization Act,

deregulating the banking industry.

January 18, 2011

[That deregulation] “led to a lack of proper oversight and transparency that nearly led to the collapse of the financial

markets and a full scale depression” – President Barack Obama. 47

ff

Proponents of deregulation argue that it encourages competition. Initially, it often does. But that usually

means a downward spiral for workers and their communities. Deregulated companies compete by

laying off workers, reducing wages, taking shortcuts on safety, and eliminating less profitable services.

As companies go out of business – or are bought out or merged – the field narrows and a few large

companies come to dominate the industry. Free now from government restriction, these goliaths often

find it profitable to collude with their competitors. They raise prices, add fees, and further reduce

services to less profitable markets. The airline industry is a case study of this destructive spiral.

ff

While scrapping rules that protect consumers has yielded huge profits for companies, it has had a

devastating impact on working people and the economy. Financial deregulation led to a reckless

gambling spree on Wall Street that has cost millions of people their savings and their homes. An

estimated 25% of homeowners today are “underwater” – that is, they owe more money on their

mortgages than their houses are actually worth. More than six million families have lost their homes to

foreclosure since 2007 and an equal number of families are at risk of foreclosure. 48

18 In the Public Interest


f Once banking rules were gutted, investment bankers were free to

sell their complex financial products, which later became known as

“toxic assets.” The spread of these bad debts across the globe helped

plunge nations into a financial meltdown. The cost to taxpayers in the

U.S. was nearly a half trillion dollars. As one analyst put it, “Goldman

Sachs, the investment house, sold poison to unwitting customers –

financial [products] deliberately designed to fail. Sure enough, they

failed, but they also helped poison the entire system.” 49

But as Republican Congressman Spencer Bachus – the new chair of the House Financial Services Committee sees it – “In

Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there

to serve the banks.” 50

f The “Greed is Good” culture of Wall Street serves a handful of people who make a lot of money – not by

producing useful goods or providing important services, but by collecting huge fees for manipulating

money in ways that endanger the economy.

f The Radical Right touts “the magic

of the free market,” a market economy that

supposedly thrives because it is unfettered

by government interference. By interference,

they mean regulations that protect

consumers, workers, and communities. But

most (though not all) proponents of the

“free market” were strikingly silent when it

came to protecting huge corporations – like

Citibank, AIG, and JP Morgan Chase –

from market losses during the financial

crisis they helped to create.

f The Radical Right insists that deregulation

will increase competition and create jobs.

But “sweeping deregulation unleashed Wall

Street greed that ended up being the biggest

job killer since the Great Depression.” 51

A BETTER PLAN

Re-establish and strengthen government regulations that protect consumers, workers, and the environment

from profit hungry corporations.

19


MYTH #7: LIBERAL TAX AND SPEND POLICIES HAVE CREATED

DEFICITS AND DEBTS THAT ARE TOO BIG

Our taxes are too high and our government is spending too much money. Taxes are simply

strangling our economy. And our government is nearly bankrupt. Thanks to liberal politicians

and their ever-expanding social programs our nation is in big trouble.

REALITY:

ff

A number of factors have contributed to the nation’s debt and the budget deficit.

ff

The collapse of the financial and housing markets which sparked a recession and

caused a loss of jobs and tax revenues

ff

The costly wars in Iraq and Afghanistan

ff

The rising cost of the goods and services

that the government purchases and provides

ff

Tax breaks for the wealthy which have

reduced government revenues 52

ff

No one wants to saddle future generations with

unmanageable debt. And no one wants to pay

more taxes than they have to – especially in this

tough economy. But while the Radical Right is

quick to denounce the federal debt and trumpet

fiscal responsibility, they are happy to add to the

nation’s debt by providing tax breaks for the

wealthy and tax loopholes for corporations.

ff

The Radical Right argues that cutting taxes for

the rich means they will spend more of their

money – increasing consumption and improving

the economy. While middle and lower income

families may spend their tax savings on goods

and services they need, there is little evidence

that the rich will spend the extra money in ways

that will boost the economy. The Radical Right

also argues that cutting taxes for corporations

means they will make more money and hire

more people. But Corporate America is just as likely to invest savings abroad and create jobs elsewhere.

Radical Right tax policies are outright gifts to the wealthy and to Corporate America that reduce public

revenues and exacerbate the financial crisis.

vv

Cost of tax cuts to the rich: over $60 billion in 2011

vv

Cost of subsidies to businesses: $365 billion per year 53

vv

Cost of federal tax loopholes in 2010: $1.05 trillion 54 – that’s more money than the Federal

government collects from all individual income tax returns ($900 billion) 55

20 In the Public Interest


2010 estimates

Cost of tax loopholes to

federal government

Revenues to be collected by the

federal government from all

personal income taxes

$1.05 trillion $900 billion

Returning the top 400 income earners to the 1955 tax rate would generate an additional $35.9 billion a year – from

these 400 individuals alone!!! 56

ff

But the financial crisis provides the Radical Right with what one conservative columnist called a “golden

opportunity” 57 – a chance to undermine unions and defund social programs. In New Jersey, for example,

Governor Chris Christie vilified public sector workers – teachers especially – and used the budget deficit

as an excuse to both cut programs and to stop paying money the state owes to the employee pension

fund. These strategies are having a devastating impact on middle and lower income workers, their

families, and their communities.

In Arizona, 1 million low income residents lost access to Medicaid services, and the state stopped paying for organ

transplants; Washington State cut benefits to 41,000 physically and mentally incapacitated individuals, leaving them

just $258 per month. Hawaii shortened the school year by 17 days. Newark laid off 13% of its police. 58 Oregon eliminated

in-home care services for residents with Alzheimer’s disease; Georgia increased college tuition by $500 per semester;

Colorado cut public school spending by $400 per student. 59 And states are still facing staggering deficits.

ff

It’s not simply that government debt and deficits are too big, it’s that the revenues that come into

government coffers from corporations and the wealthy are too small. There are plenty of services that

government should be providing, but simply can’t because the most privileged in society just aren’t

paying their fair share.

A BETTER PLAN

Increase revenues by returning to a more progressive tax structure – like the one we had before the Radical Right

began to dismantle it.

21


The Real Deal

The rich are very rich and still getting richer –

and they’re not paying their fair share

ff

Over the past 30 years, family income for people in the middle income bracket increased only modestly

and the income of the poorest fifth of the population actually declined. At the same time, income for the

richest 5% of our population increased an astounding 73%. 60

80.0%

70.0%

Change in Real Family Income

by Quintile and by Top 5 Percent, 1979-2009

+72.7%

60.0%

50.0%

+49.0%

40.0%

30.0%

20.0%

10.0%

+3.7%

+11.2%

+22.7%

0.0%

-10.0%

-20.0%

-7.4%

Bottom 20% Next 20% Middle 20% Next 20% Top 20% Top 5 %

In 2010, hedge fund manager John Paulson netted $5 billion – which amounts to $2.4 million an hour. 61

ff

And the share of the nation’s total income declined for each segment of the population except those in

the top fifth of all income earners. 62

8.0%

Change in the Share of Total Income 1970 - - 2009

+7.00%

6.0%

+5.10%

% Change

4.0%

2.0%

0.0%

-2.0%

-4.0%

-0.60%

-2.30%

-2.80%

-1.30%

Lowest fifth Second fifth Third fifth Fourth fifth Highest fifth Top 5% of

earners

22 In the Public Interest


ff

While annual income is highly concentrated in the hands of a few, total wealth is even more

concentrated. The wealthiest 1% of the American population holds 36% of the total national wealth.

That is over one-third of all the consumer durables (such as houses, cars, and stereos) and financial

assets (such as stocks, bonds, property, and savings accounts). The richest 20% of Americans hold just

over 87% of the total household wealth in the country. 63 That leaves, eighty percent of the American

population with less than 13% of the nation’s wealth. 64

SHARE OF TOTAL WEALTH: U.S.

Everyone

Else

Everyone

Else

Everyone

Else

Wealthiest 1%

of Population

Wealthiest 10%

of Population

Wealthiest 20%

of Population

There are nearly 400 billionaires in the U.S. today. More than three dozen of them are worth

more than $10 billion each. It would take the typical American (earning $49,568 and spending

absolutely nothing at all) a total of 20,174 years (or approximately 298 lifetimes) to earn just

$1 billion. 65

ff

Taxes on the rich have decreased dramatically over the past 50 years. All through

the 1950s, including the Eisenhower term, the top income tax rate was 91%. It

stayed at or above 70% until 1980.The Reagan era tax cuts provided the wealthy

with a huge windfall, as did the Bush tax cuts of 2001 and 2003, which have been

extended under the Obama administration. The estate tax for the wealthy declined

dramatically too – from 77% in 1960 to 35% today. 66

23


Year

Personal Income Tax Rate for

Highest Tax Bracket

1960 91% 77%

1980 70% 70%

2000 40% 55%

Today 35% 35%

Estate Tax Rate for

Highest Tax Bracket

ff

Cuts in income and estate taxes have been coupled with reductions in the capital gains taxes (reduced

from 22.5% in 1990 to 14.2% in 2010). This has been a great boon to America’s superrich, since many of

them claim much of their income as capital gains. By calling their income capital gains, they’re taxed at

only 15%, instead of the 35% rate they would have had to pay on “earned income.” Estate taxes too, have

been greatly reduced – another boon to the wealthy.

ff

While taxes have been reduced for everyone over the past decade, those cuts have benefited the wealthy

much more than anyone else. The total value of tax reductions from 2001 to 2010 was nearly $2 trillion.

The top 5% of all earners received 40% of that money.

How much money did the tax cuts put in your pocket

Average federal tax reduction from the 2001- 2006 tax cuts by income group of taxpayer in 2010.

Top 1% $97,440

Top 20% $11,286

Middle 20% $1,149

Lowest 20% $74

f f And when taxes are cut, fees for public services often go up to make up for the shortfall in revenues.

That means higher college tuitions, higher transit fares, increased tolls, and a host of other expenses

(taxes really) that fall most heavily on those who can least afford them.

24 In the Public Interest


ff

The recent extension of the Bush tax cuts resulted in lost revenues of $98 billion a year from the cut to

the top 5% of income earners alone. 67

ff

How much do the rich pay in taxes to our state and local governments As a share of their income, the

rich pay less than half of what the lowest income Americans pay.

Average state and local taxes paid as share of family income 68

Income Group Lowest 20% Top 1%

Sales and excise 7% less than 1%

Property taxes 4% 1%

State/local less than 1% 4%

Total 11% 6%

Total after federal offset 69 11% 5%

Companies are making enormous profits but not

paying their fair share

ff

Corporate profits have increased from $327 billion (in 2010 dollars) in 1960 to $1.3 trillion today. 70

ff

The money received by government from corporate income taxes today is less than a third of what it

used to be in the 1960s. 71

Where Does The Government Get Its Money 72

1960 2005 2010

Sales and excise taxes 13% 4% 3%

Social Insurance/retirement 16% 38% 41%

Corporate income taxes 23% 11% 7%

Individual income taxes 44% 44% 43%

Other 4% 4% 6%

ff

The federal tax rate on corporate profit is supposed to be 35%, but big companies pay high priced tax

lawyers to develop elaborate (and sometimes, not so elaborate) tax avoidance schemes. One study of 250

profitable companies over a two-year period found that more than a quarter of those companies avoided

federal and state taxes (costing taxpayers $217 billion), and a third escaped federal taxes altogether –

even as they were reporting billions of dollars in profits. 73

The Carnival Corporation wouldn’t have much of a business without help from various branches of government. The U.S.

Coast Guard keeps the seas safe for Carnival’s cruise ships. Customs officers make it possible for Carnival cruises to travel

to other countries. State and local governments have built roads and bridges leading up to the ports where Carnival’s

ships dock. But Carnival’s biggest government benefit of all may be the price it pays for many of these services. Over the

last 5 years, the company has paid total corporate taxes – federal, state, local and foreign – equal to only 1.1% of its

cumulative $11.3 billion in profits. Thanks to an obscure loophole in the tax code, Carnival can legally avoid most taxes. 74

25


ff

Companies use their wealth and influence to insure legislation and tax policies

that are in their favor.

A few years ago, the energy industry coughed up $50 million for political spending to

influence pending legislation. When the energy bill was signed into law, it contained

more than $50 billion in tax breaks and subsidies for oil, coal, and gas industries, while

doing little to reduce U.S. dependence on fossil fuel. 75

ff

Some economists argue that a fixation on tax avoidance is detrimental to

companies themselves because they make decisions based on tax breaks

rather than on what is the most efficient investment of their resources.

Airlines buy more planes than they need, energy companies drill more wells

than they need to – all because there are tax advantages in doing so. That’s not

exactly a model of capitalist efficiency.

Aswath Damodaran, New York University professor of finance, warns, “Companies should be making investments based

on their commercial potential, not for tax reasons”. 76

ff

Companies use a host of tricks to avoid paying their fair share – including transferring profits to offshore tax

havens. Whatever the method, when Corporate America pays less in taxes, the rest of us pay more.

26 In the Public Interest


GE is considered one of the best tax avoiders in the world. 77 During the mid-1980s to mid ‘90s the company paid roughly

30% of its profits to taxes. Last year, despite $10.3 billion in pretax income, GE paid absolutely nothing to Uncle Sam. 78

Nothing, Nada, Zilch. The company’s CEO, Jeffrey Immelt, was recently appointed to head President Obama’s Council on

Jobs and Competitiveness, which is expected to suggest changes to the corporate tax code.

Corporate Welfare is busting our budget

ff

The U.S. treasury is also being depleted by tax incentives and bailouts – outright gifts really – the

government provides to corporations that are supposedly aimed at creating or saving jobs.

“The City of Philadelphia ponied up $307 million worth of incentives to persuade Kvaerner ASA, a Norwegian global

construction company, to reopen a section of Philadelphia’s moribund shipyard. That created 950 jobs that paid around

$50,000 a year – not bad, until you calculate the cost to taxpayers: $323,000 per job.” 79

ff

Tax breaks are often provided by communities

desperate for economic development. But

such sweeteners are often major boondoggles.

27


Between 2004 and 2006, the sporting goods

chain Cabela’s collected more in subsidies from

the town of Hamburg, PA ($292.7 million)

than it made in profits ($223.4 million). That

amounts to approximately $8,000 for every

man, woman, and child in town. 80

ff

Tax breaks for big companies like Walmart, Lowes,

and Target give them an enormous advantage over

local family businesses that don’t get these kinds of

breaks. The result: small local companies go out of

business.

ff

It’s estimated that corporate boondoggles cost U.S.

taxpayers more than $50 billion a year. 81 That’s $50

billion that is not going to schools and hospitals, or for fire and police protection.

ff

And while some government bailouts of companies actually save jobs and protect the middle class,

others like the recent financial bailout did little to alleviate the real problems and in many ways made

matters worse. Multi-million dollar bonuses are back and the big banks have emerged bigger and more

concentrated than ever.

28 In the Public Interest


Class War

Recent attacks on workers, unions, and government, are only the latest salvo in a one-sided class war being

waged by the Radical Right (and their corporate sponsors) on poor, working, and middle class communities.

Deliberate, concerted and well financed efforts over the course of the past 30 years have weakened unions,

dismantled the nation’s progressive tax system, and undermined public oversight and regulation of industry.

All of these efforts have led to an unprecedented concentration of wealth in the hands of a

few. And deregulation has led to a financial crisis that has had

disastrous results on the U.S. and the global economy. A

recent Congressional inquiry into the financial crisis

concluded not only that the crisis was avoidable, but

that it was caused by widespread failures in government

regulation, intense corporate lobbying for deregulation

on the part of industry, corporate mismanagement and

ineptitude, heedless risk taking (by Wall Street), and

greed and criminal activity by the “captains of finance.” 82

Driven by greed and wrong-headed ideology, these efforts

have caused the suffering of millions.

A Fair Deal

Unions and other progressive groups have lots of ideas about how things could be different and better. These

ideas are not very popular with corporations and the wealthy, but they will generate more tax revenues and put

people back to work delivering the goods and services people need and want. How

ff

Return to the Eisenhower or Nixon-era tax rates for the very rich (70-90%)

ff

Raise corporate taxes and close corporate loopholes

ff

Tax financial transactions. That is, levy a tax on the purchase of stocks and more exotic financial

products like credit default swaps, options, and futures. 83

England, Japan, and a host of other countries have a financial transaction tax. While critics say that such a tax would

reduce the amount of financial trading, many economists think reducing the amount of short-term speculation that

destabilizes the economy is a good thing. 84 Based on current trading volumes, economists estimate that a financial

transaction tax would raise $353 billion a year. 85 We pay 6 to 8% sales tax on necessities every day, but there is zero sales

tax on daily purchases of billions in stocks and bonds. 86

We need a Fair Deal – that is, a set of government programs that would create, rather than eliminate, decent

well-paying jobs. A Fair Deal will put people back to work repairing our roads and bridges, expanding mass

transit, and caring for our children, the sick and the elderly. A Fair Deal will ensure decent wages and benefits for

everyone and protect every worker’s rights to organize. It will rebuild our communities by providing improved

public services and expanded public works. And like the New Deal of the 1930s and 40s, it will protect our

economy, our environment, and our communities by providing real limits on what corporations can and cannot

do.

29


YOU CHOOSE

Let GE Get Away with Murder

OR

AND

Let the Rich Get Away with Murder

OR

AND

30 In the Public Interest

Collect taxes from GE (value: $3.6 billion)

Build 590 new elementary schools (cost: $3.6 billion)

Restore taxes on those making more than $200,000 per year to pre-Bush tax rates (value: $34 billion)

Double the federal allocation for cancer research ($5 billion),

+ Double the federal budget for Veteran education, training and rehabilitation ($8 billion),

+ Double international development and humanitarian aid ($19 billion)

Let Wall Street Get Away with Murder

OR Tax financial speculation (Value: $353 billion)

AND Double the federal budget for early childhood education ($11 billion),

+ Double the federal budget for elementary education,

+ Double the federal budget for high school education (combined $73 billion),

+ Double the federal budget for higher education ($20 billion),

+ Double the federal budget for job training for unemployed and new workers ($4 billion)

+ Double the federal budget for PELL grants to insure access to higher education ($17 billion)

+ Double the entire federal budget for Urban Development ($48 billion)

+ Double the federal budget for energy conservation ($5 billion)

+ Double the federal budget for disaster relief ($11 billion)

+ Double the federal budget for the Food and Drug Administration and cut user fees in half ($3 billion)

+ Double the federal budget for the Centers for Disease Control and Prevention ($7 billion)

+ Double the federal budget for health research ($31 billion)

+ Double the federal budget for housing for the elderly and the disabled ($2 billion)

+ Double the federal budget for community development ($10 billion)

+ Double the federal budget for rural development ($1 billion)

+ Double the federal budget for both community based anti-crime initiatives and the investigation

and prosecution of violence against women (combined: $4 billion)

+ Double the federal budget for housing assistance ($59 billion)

+ Allocate $3 billion (three times the current rate) for Highway Safety to reduce fatalities

and injuries on public roads

+ Allocate $23 billion to improve the quality and reduce the cost of public mass transportation

Let Corporate America Get Away with Murder

OR End Corporate Subsidies (value: $365 billion) 87

AND Double the federal budget for the investigation and prosecution of financial fraud ($1 billion)

+ Double the federal budget for the support of small businesses ($1 billion)

+ Double the federal budget for consumer and occupational health and safety ($4 billion)

+ Double the federal allocation for environment protection ($10 billion)

+ Double the federal budget for tenant based assistance ($18 billion)

+ Double the federal budget for public housing ($7 billion)

+ Provide 10 million homeowners with sliding scale grants to purchase ($60,000) solar panels


(average grant $30,000) to reduce homeowners energy bills, offset global climate change,

and reduce the nation’s dependency on oil ($300 billion)

Continue the slide away from progressive taxation

OR Restore the 1955 effective (not the written) tax rate to those making more than $2 million

per year (value: $202 billion)

AND provide federal funding to the states to cover all budget shortfalls in the coming year ($112 billion) 88

+ increase federal grants to state and local governments by 15% ($98 billion)

Continue to ignore the tax code and provide jobs for high priced tax attorneys and tax accountants

OR

AND

Eliminate just half of all tax loopholes (Value: approximately $600 billion)

Create 7.4 million private and public sector jobs with union wages and benefits – that is,

enough jobs for everyone who is currently officially and unofficially unemployed

($558 billion) 89

31


Notes

1 Data on food prices from U.S. Department of Agriculture, Center for Nutrition Policy and Promotion,

“Cost of Food at Home,” available at http://www.cnpp.usda.gov/USDAFoodCost-Home.htm; data on wages

from U.S. Department of Labor, Bureau of Labor Statistics, “Employment, Hours, and Earnings from the

Current Employment Statistics Survey (National),” data extracted January 15, 2011, available at: http://www.bls.

gov/data/; data on housing foreclosures from RealtyTrac press releases, various years, available at: http://www.

realtytrac.com/content/press-release/; and unemployment and jobless data from U.S. Department of Labor,

Bureau of Labor Statistics, “Labor Force Statistics from the Current Population Survey,” data accessed January 15,

2011, available at: http://www.bls.gov/data/.

2 Rich, Frank. 2011. “Let Obama’s Reagan Revolution Begin,” New York Times, January 8, 2011.

3 Zuckerman, Mortimer. 2010. “Public Sector Workers Are the New Privileged Elite Class,” US News and

World Report, September 10, 2010.

4 This is not a dictionary definition and is meant to suggest only a certain level of uniformity within the far

right of the political spectrum.

5 Mayer, Jane. 2010. “Covert Operations,” The New Yorker, August 30, 2010.

6 Celona, Larry, Sally Goldenberg and Josh Margolin. 2010. “Sanitation Department’s Slow Snow Cleanup

Was a Budget Protest,” New York Post, December 30, 2010.

7 Keefe, Jeffrey. 2010. “Debunking the Myth of the Overcompensated Public Employee: The Evidence,” EPI

Briefing Paper #276, September 15, 2010, available at: http://epi.3cdn.net/8808ae41b085032c.

8 EPI analysis of Bureau of Economic Analysis and Bureau of Labor Statistics data, available at: http://www.

stateofworkingamerica.org/charts/view/201.

9 Based on US Bureau of Labor Statistics data. Calculations by Les Leopold, The Looting of America, White

River Junction, VT; Chelsea Green Publishing 2009: page 14.

10 Greenhouse, Steven. 2010. “Labor’s New Critics: Old Allies in Elected Office,” New York Times, June 28,

2010.

11 CEO compensation of the largest 500 corporations from Scott DeCarlo. 2010. “What the Boss Makes,”

Forbes, April 28, 2010; compensation of hedge fund managers from Taub, Stephen. 2010. “The Rich List,”

WWW.ABSOLUTERETURN-ALPHA.COM available at: http://www.absolutereturn-alpha.com, April 2010.

12 AFSCME, “Government for Sale: An Examination of the Contracting Out of State and Local Government

Services,” 8th edition. Cited in “Privatization Myths Debunked,” available at: http://www.inthepublicinterest.org/

node/457.

13 Cohen, Adam. 2010. “The Burning Question,” Time, November 1, 2010, p. 73.

14 U.S. Census Bureau. 2010. Statistical Abstract of the United States: 2011, available at: http://www.census.gov/

compendia/statab.2010.

15 “2010 Federal Election,” Campaign Finance Institute, available at http://www.cfinst.org/federal/

election2010.aspx, accessed March 22, 2011.

16 2009 figures from Center for Responsive Politics: http: //www.opensecrets.org/pfds/averages.php.

17 “House No-Voters on Financial Reform Take Cue from Banks,” MapLight.org July 2, 2010; and Owen

Poindextr, “Big Banks Lobby on Still-to-be-Written Rules of Financial Regulation,” MapLight.org, September

13, 2010. Also http://abclocal.go.com/kgo/storysection=news/politics&id=6393579.

18 Fiscal year 2012 projected budget shortfall as percent of fiscal year 2011 budget. Data on budgets from

McNichol, Elizabeth, et al., “States Continue to Feel Recession’s Impact,” Center on Budget and Policy Priorities,

March 9, 2011, available at: http://www.cbpp.org/cms/fa=view&id=711; data on union membership from

Unionstats, “Union Membership and Coverage Database from the CPS,” available at: http://www.unionstats.

com.

19 Union wage data from the Current Population Survey, available at hhtp://data.bls.gov/PDQ/Servelet/

SurveyOutputServlet.

20 Data for 1980 from Leo Troy and Neil Sheflin, U.S. Union Sourcebook, West Orange, NJ: IRDIS, 1985. Data

for 2010 from U.S. Bureau of Labor Statistics, “Union Affiliation Data from the Current Population Survey,”

available at: http://data.bls.gov/PDQ/Servlet/SurveyOutputServlet.

21 Krugman, Paul. 2010. “The Humbug Express,” New York Times, January 23, 2010.

22 Layne, Rachel. 2011. “GE Employment Fell 5.6 Percent in 2010; U.S. Little Changed,” Bloomberg News,

February 25, 2011.

23 Ben Bagdikian, The Media Monopoly, Sixth edition, Beacon Press, 2000 cited by the B-Fair Project available

at: http://www.b-fair.net/p=820.

24 “The World’s Billionaires,” Forbes, available at: http://www.forbes.com/wealth/powerful-people/gallery/

rupert-murdoch, accessed March 28, 2011.

25 AFSCME, “AFSCME Facts: The Truth About Public Sector Workers’ Pensions,” available at: http://

stopthelies.afscme.org/get-the-facts/document/AFSCME-FactSheet_Pensions.pdf.

26 Munnell, Alecia, cited in Elgin, Ben, et al., 2010. “The Political Rumble Over Public Pension Costs,”

Bloomberg Business Week, October 13, 2010.

27 AFSCME, “Three Myths About State and Local Government Pension Plans,” available at: http://www.

afscme.org/issues/12821.cfm.

28 “All federal employees hired on or after January 1, 1984 are mandatorily covered under Social Security –

the CSRS system is not an option for them. So there are still some Federal employees, those first hired prior to

January 1984, who are not participants in the Social Security system. All other Federal government employees

participate in Social Security like everyone else.” Social Security Administration History, available at: http://

www.ssa.gov/history/hfaq.html. According to the National Active and Retired Federal Employees Association,

over one million government employees are not eligible for social security. “NARFE Applauds Kerry for Bill to

Protect Federal Retirees from the 2011 Medicare Premium Increase,” November 5, 2010, available at: htt;://www.

narfe.org/departments/publicrelations/articles.cfmID=2263.

29 Reich, Robert. 2011. “The Shameful Attack on Public Employees,” January 6, 2011, available at: http://

robertreich.org/post/2615647030.

30 Munnell, Alecia, Jean-Pierre Aubry and Larua Quinby. 2010. “The Impact of Public Pensions on State and

Local Budgets,” October 2010, Center for Retirement Research at Boston College, available at: http://crr.bc.edu/

images/stories/Briefs/slp_13.pdf.

31 Bureau of Labor Statistics, “Employee Benefits in Medium and Large Private Establishments,”

1993 Table 204 Bulletin 2456: Bureau of Labor Statistics, “National Compensation Survey: Employee Benefits in

the U.S. March 2010,” Table 2 (private sector section).

32 Social Security data from the Social Security Administration..._snapshot/; “pension envy” from Johnson,

Dave. 2011. “Pension Envy,” OurFuture.Org, January 11, 2011, available at: http://institute.ourfuture.org/blogentry/2011010210/pension-envy.

33 Eisenbery, Ross. 2010. “The Wobbly Stool: Retirement (In)security in America,” Economic Policy Institute,

October 7, 2010, available at: www.epi.org/authors/bio/eisenbey_ross.

34 AFSCME, “The Truth About Public Service Workers’ Pensions,” available at: http://stopthelies.afscme.org.

35 Ibid.

36 Parrott, James. 2008. New York Daily News, June 11, 2008.

37 Problems facing pensions dubunked in Munnell, Alecia, Jean-Pierre Aubry and Laura Quinby, op.cit.;

golden parachutes which caused the problems in the first place described by the Center for American Progress.

2008. “The Golden Parachute: CEO Severance and the Housing Crisis by the Numbers,” February 27, 2008,

available at: http://www.americanprogress.org/issues/2008/02/mortgage_ceo_pay.html.

38 U.S. Census Bureau, “Income, Poverty and Health Insurance in the United States: 2009,” available at: http://

www.census.gov/hhes/www/poverty/data/incpovhlth/2009/tables.html, accessed January 23, 2011.

39 Ibid.

40 White House Office of Management and Budget historical tables, available at: http://www.whitehouse.gov/

omb/.

41 Derived from US Census Bureau, Current Population Survey, Tables POV01 and POV2 available at hhtp://

pubdb3.census.gov/macro/032008/pov/toc.htm.

42 Of the 43,569,000 people living in poverty in the United States in 2009, 9.4% were white, not of Hispanic

origin; 25.8% were Black; 12.5% were Asian and 25.3% were Hispanic.

43 Bureau of Labor Statistics, Table A-15. Alternative measures of labor underutilization, February

2010-February 2011, available at: http://bls.gov/news.release/empsit.t15.htm.

44 White House Office of Management and Budget, op. cit.

45 Bartels, Larry M.. “Economic Inequality and Political Representation,” August 2005, available at: http://

www.scribd.com/doc/36931202/Larry-Bartels-Economic-Inequality-and-Political-Representation.

46 Crandall, Robert W. 2007. “Extending Deregulation: Make the U.S. Economy More Efficient,”

Brookings Institute, p. 5, February 28, 2007.

47 Scheer, Robert. 2011. “Obama Pulls a Clinton on Deregulation,” The Nation, January 19, 2011.

48 Kaufman, Greg. 2009. “Yes, Regulators Can Stop Foreclosures,” The Nation, December 10, 2009.

49 Greider, William. 2010. “Breaking the Banks,” The Nation, April 22, 2010.

50 Puzzanghera, Jim. 2010. “Spencer Bachus, Incoming House Financial Chairman, Gets Heat for Saying

Regulators Shouldn’t ‘Serve’ Banks,” Los Angeles Times, December 15, 2010.

51 Scheer, Robert. Op. cit.

52 Chart from Kathy Ruffing and James Horney, “Critics Still Wrong on What’s Driving Deficits in Coming

Years,” Center on Budget and Policy Priorities, June 28, 2010, available at: http://www.cbpp.org/cms/index.

cfmfa=view&id=3036.

53 Statement of Robert S. McIntyre Regarding Business Tax Subsidies Administered by the

Internal Revenue Service, Citizens for Tax Justice, March 9, 2011, available at: http://www.ctj.org/pdf/

mcintyretestimony03092011.pdf.

54 Leonhardt, David. 2010. “5 Options for Congress to Cut Taxes,” New York Times, November 2, 2010.

55 White House Office of Management and Budget, Historical Budget Tables, available at: http://www.

whitehouse.gov/omb/budget/Historicals.

56 Institute for Policy Studies, “Reversing the Great Tax Shift,” available at http://www.commondreams.org.

57 Columnist James Pethokoukis quoted in Alterman, Eric, “The Coming Class War,” The Nation, January 6,

2011.

58 Lander, Brad. 2010. “Saving Our Cities with Fair Taxes,” The Nation, December 20, 2010.

59 Nicholas Johnson, et al., “An Update on State Budget Cuts: At Least 46 States Have Imposed Cuts That Hurt

Vulnerable Residents and the Economy,” Center on Budget and Policy Priorities, February 9, 2011.

60 U.S. Census Bureau, Historical Income Tables, available at: http://www.census.gov/hhes/www/income/

data/historical/families/index.html, accessed March 20, 2011.

61 Les Leopold, “Wall Street Robber Baron Nets $2.4 Million an Hour While 28 Million Need Jobs,”

Huffington Post, February 4, 2011, available at: http://www.huffingtonpost.com/les-leopold.

62 Derived from U.S. Bureau of the Census, Current Population Reports, available at http://www.census.gov/

hhes/www/income.

63 Allegretto, Sylvia A. 2011. “The State of Working America’s Wealth: 2011,” EPI Working Paper, March 23,

2011, available at: http://epi.3cdn.net/2a7ccb3e9e618f0bbc_3nm6idnax.pdf.

64 Ibid.

65 Mantsios, Gregory. 2010. “Class in America” in Race, Class, and Gender in the United States (New York, NY,

Worth, 2010), p. 179.

66 Tax rates from U.S. Internal Revenue Service, available at: http://www.irs.gov; data on tax cuts by income

group from Leiserson, Greg and Jeffery Rohaly. 2008. “Distribution of the 2001-2006 Tax Cuts: Updated

Projections, July 2008,” Tax Policy Center, July 2008.

67 Citizens for Tax Justice. 2009. “The Bush Tax Cuts Cost Two and a Half Times as much as the House Health

Care Proposal,” September 8, 2009.

68 Figures are for 2004 (non-elderly married couples) from Institute for Taxation and Economic Policy “Who

Pays: A distributional analysis of the tax system in all 50 states,” November 2009.

69 Factors in that state and local taxes offset federal taxes.

70 $1.3 trillion based on 2009. U.S. Bureau of Economic Analysis, Survey of Current Business.

71 Folbre, Nancy, James Heintz, and Jonathan Teller-Elsberg. 2006. Field Guide to the U.S. Economy: A

Compact and Irreverent Guide to Economic Life in America, New York, NY: The New Press, 2006, p. 83.

72 White House Office of Management and Budget, op. cit.

73 Robert S. McIntyre and T.D. Coo Nguyen, “State Corporate Income Taxes, 2001-2003,” Citizens for Tax

Justice and the Institute on Taxation and Economic Policy, 2005.

74 Leonhardt, David. 2011. “The Paradox of Corporate Taxes,” New York Times, February 1, 2011.

75 Folbre, Nancy, James Heintz, and Jonathan Teller-Elsberg. 2006. Op. cit. p. 87.

76 Leonhardt, David. 2011. “The Paradox of Corporate Taxes,” op. cit.

77 Leonhardt, David. 2011. “The Details on Corporate Taxes,” New York Times, February 2, 2011.

78 Helman, Christopher. 2010. “What the Top US Companies Pay in Taxes,” Forbes, April 1, 2010.

79 Murray, Bobbi. 2003. “Money for Nothing,” The Nation, August 14, 2003.

80 Johnston, David Cay. 2007. Free Lunch (London, Eng; Penguin, 2007).

81 Quoting Greg LeRoy author of No More Candy Store and founder of Good Jobs First in Murray, Bobbi.

2003. “Money for Nothing,” The Nation, August 14, 2003.

82 Chan, Sewell. 2011. “Financial Crisis was Avoidable,” New York Times, January 25, 2011.

83 Collins, Chuck. 2008. “A Fair Plan to Pay for Economic Recovery,” The Nation, September 19, 2008.

84 Nader, Ralph. 2011. “Financial Transaction Tax Might Fix Host of Ills,” in Bloomberg Business Week,

February 5, 2011.

85 Baker, Dean and Robert Polin in Nader, Ralph. 2011. Ibid.

86 Nader, Ralph. 2011. Op. cit.

87 In fiscal 2011, the Treasury Department’s official, but incomplete list of tax subsidies for corporations,

business owners and business investors comes to an estimated $365 billion – from testimony from Robert S.

McIntyre, Director, Citizens for Tax Justice, before the Senate Budget Committee, available at: http://www.ctj.

org/pdf/mcintyretestimony03092011.pdf.

88 The Center on Budget and Policy Priorities estimates that for the 44 states and the District of Columbia that

show budget shortfalls for 2012, the shortfall is $112 billion. McNichol, Elizabeth, et al., op. cit.

89 These numbers are estimates and in some cases may overstate projected revenues while in others will

understate projections. For example, these estimates do not consider the additional tax revenues that would be

generated by creating new jobs.

32 In the Public Interest

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