The Other War

July 26 2004
Counterbias.com
Marc Krug


The war in Iraq is not the only one America is fighting. The other war concerns the non-violent, yet undeniably virulent, struggle in which those already rich are becoming even richer-often at the expense of those who are not even remotely prosperous.

This class war has led to the further aggrandizement of wealth in the hands of those who need it least-the richest five percent. For without spilling any blood, firing any weapons, or manning any barricades, the richest five percent of Americans have improved their wealth and increased their power since 2000, while many of the remaining population has seen theirs dwindle.

Over 200 years ago, Thomas Jefferson stated, "Experience declares that man is the only animal which devours his own kind; I can think of no milder term to apply to the general prey of the rich on the poor." Currently, one of the wealthiest men in America, Warren Buffet, puts it this way: "If there's a class war going on, my class is winning." Unfortunately, he's right.

The losers are the 95 percent of Americans who live on less than $200,000 a year-namely, those not among the top five percent. Most strongly affected are those in the lower 40 percent of the population who have witnessed the programs from which they once benefited being either substantially curtailed or abandoned entirely. They are the ones enduring the greatest hardship.

Bush created this economic hardship by producing mountainous debt-transforming a surplus to a deficit in record time-thus leaving little or no money for what would have benefited most Americans. Step one in creating this deficit consisted of tax cuts-40 percent of whose benefits went to the richest one percent; 90 percent went to the richest 5 percent. Step two consisted in financing the pre-emptive war in Iraq, from which no one seems to have benefited, except defense contractors like Halliburton. Step three consisted in corporate welfare given out to the rich, such as subsidies to farmers whose annual income averages $250,000, and tax cuts to corporations whose annual income averages in the millions.

But for the chosen few, the already wealthy, these hardships passed them by, leaving them entirely unscathed. In fact, they became even wealthier.

Although no one has been quite the champion of the wealthy that Bush has, a good part of this redistribution of wealth began with Reagan. For it was in 1980 that this ever-widening disparity between the rich and the middle class actually began.

Reagan started his tenure in office by cutting the maximum tax rate from 70 percent to 28 percent. Reagan also began what was referred to as trickle-down economics, in which all of us were supposed to gain by first making the rich a little bit richer. Although it did little for the poor, this plan worked quite nicely for the rich; in the next 20 years, income for the wealthiest one percent rose nearly 70times as much as did the income for the poorest 20 percent.

Unfortunately, Bush is making the same tax cutting, trickle-down mistakes. And, in the process, he is creating a crippling deficit-although it still does not yet equal in size the one created by Reagan and Bush Senior. Unfortunately, both Bush Junior and Reagan handled the deficit's deprivations in the same way: they both cut programs that helped the poor and the politically disconnected.

In part because of Reagan's actions, 1980 witnessed the beginning of a marked disparity between the rich and the middle class, between the rates at which income grew for different segments of the American population. In 1980, something new and slightly sinister started and, with it, there ended the dream for most Americans of doing better than their parents - although no one knew it at the time.

But this wasn't always the case. Before 1980, particularly during the period between 1947 and 1979, incomes of all five quintiles, or groups of 20 percent of the American population-from the very poor to the very rich-marched upwards in near lockstep. They all went up nearly the same. With very little disparity between them, the income for each quintile rose an average of 100 percent.

Actually, income for the lowest quintile rose the most - 116 percent - while income for the richest 5 percent rose the least - 86 percent. This would definitely change: between 1980 and 2000, income for the lowest quintile rose 3 percent; for the richest 5 percent, income rose 201 percent.

There was also far more mobility between 1947-79; the class into which you were born was not always the one in which you remained. The opposite is true today - people tend to stay in the quintile they were born in - unless you want to count downward mobility. Currently, members of the middle quintile are far more likely to move down to the bottom quintile than they are to the top.

But unlike 1947-79, between 1980 and 2000 a far less attractive picture of American society emerged. In those 20 years, real wages remained largely stagnant - with the exception of the last five years under Clinton, when they went up three to four percent annually. During the Bush administration, wages have stayed similarly stagnant - although for the first two years they declined. So, it would seem that income increases of 100 percent over 20-plus years for all groups of Americans have become just another historical remnant.

Specifically speaking, between 1980 and 2000, the bottom quintile moved up a miniscule three percent, while the middle quintile ascended by a meager 17 percent - an increase that amounts to less than one percent per year. The richest quintile, on the other hand, moved up 53 percent, while the top five percent moved up 81 percent. To heap insult upon injury, the richest one percent saw its fortunes grow by 201 percent. So the richer you were, the richer you became.

Since 2000, the income of most quintiles has not risen at all-actually, the bottom two quintiles saw their real income drop. On the other hand, the fortunes of the richest five percent and one percent, respectively, have gone up prodigiously.

We are now not so much the richest country anymore - many European and Scandinavian countries have higher standards of living - as we are the country with the richest rich people. Perhaps one reason is that in 1980, the average American CEO was paid about 50 times what the average worker was paid then; now that CEO is paid about 400 times what the average worker earns today. What makes this calculation so easy to do is that since 1980, real wages for the average worker have remained relatively unchanged.

But what no one seemed prepared for was the "kindness" to the rich of George Bush. Nor could anyone have predicted what harm he would do to the average working person - an entity he knows only at a distance, never having been one himself.

In effect, the class war is one between multi-millionaire Bush - whose Cabinet consists exclusively of millionaires and whose Vice President is far richer than he - and those of us who work for a living: who pound the pavement looking for a job, who experience indignities and abuse from our bosses, who suffer physical injury and often chronic pain, yet return to work day after day.

These are all things George Bush has never had to do; his last name and the power it brought him have made doing them unnecessary. But his lack of real work experience is not sufficient justification for the harm he has caused. Franklin Delano Roosevelt never did any of those things either, but the working person rarely had a better champion than he.

But Bush was far luckier than Roosevelt: the economy Bush inherited from Clinton was substantially better than the one Roosevelt inherited from Hoover. In fact, Bush inherited one of the strongest economies in history: it had expanded for nine straight years and unemployment stood at a 30-year low of 3.9 percent. In January 2001, when Bush assumed office, the fiscal surplus was a staggering $127 billion. That was all to change.

Unfortunately, it changed for the worst: by 2003, personal bankruptcies reached an all-time high of $1.6 million. By that same year, household debt stood at a record $8.9 trillion, which would perhaps explain why credit card defaults rose more than 55 percent since Bush took office. Also within that same time span, home mortgage foreclosures went up some 45 percent.

Hundreds of thousands of manufacturing jobs had long since been exported abroad to cheaper labor markets. Millions lost their jobs altogether - but if they were lucky, they at least replaced them with part-time jobs that had no benefits. Thus, they left the ranks of the unemployed for those of the under-employed.

According to a recent CNN poll, more people are now living from paycheck to paycheck - just one step away from poverty - than at any other time since these statistics were kept. Unfortunately, very few, if any, of these individuals can improve their financial status by working overtime - Bush has made sure that gambit will no longer work. Even worse for most people, that massive surplus he inherited has since been transformed into a crippling deficit.

For many people, more important than the deficits is that Bush's administration will be the first since Herbert Hoover's in which there will be a net loss of jobs. Keep in mind that it was during Hoover's administration that the Great Depression began. Admittedly,  there has been some job creation lately, but what's never mentioned is that much of the growth has been in government jobs and in lower-level service jobs, which pay, on average, 13 percent less than those they replaced. Many of the high-wage manufacturing jobs have since been exported overseas, where labor is considerably cheaper.

To counter this trend, Bush has come up with a very interesting strategy. He wants jobs such as flipping burgers at your local McDonald's to be re-classified as manufacturing jobs.

But coming up with deceptive strategies to obscure the reality of job losses and creating the conditions under which those jobs were lost-as in giving tax breaks to companies exporting jobs-does not represent the sum total of how Bush has harmed the working class. His efforts to diminish the role, if not threaten the very existence, of labor unions has frightened many, since it is these stalwart institutions that got workers their health insurance-something which 43 million Americans now lack. Unions also got them their right to collectively bargain for better, safer, healthier conditions in the workplace. And to bargain for higher wages,  better pensions, greater job security, and a host of other benefits.

Even so, the "compassionate conservative" is not a fan of unions. In December of 2002, he induced the Labor Department to issue new union reporting requirements, which would entail that unions itemize every expense over $2,000 spent on organizing and strike services, lobbying and other related political activities.

Meeting this requirement has cost unions millions. Furthermore, should they fail to meet these requirements, unions would be subject to substantial civil penalties.

Unions seem to be very much on Bush's mind. Most of us can remember when our "pro-security" President stalled passage of the Homeland Security Bill - whose primary purpose was the establishment of an agency bearing the same name - until it was written into law that the Agency's 180,000 new employees would not have Civil Service status and the rights that go with it, specifically the right to collectively bargain. Bush also saw to it that workers in the Transportation Security Authority, which oversees the hundreds of baggage screeners at airports all across the U.S., were similarly excluded from Civil Service status and denied the right to join a union.

Another means by which Bush might do an end run around unions can be found in his plan to transfer 850,000 Civil Service jobs to non-union private employees. The states have adopted this concept  by also taking the jobs previously held by unionized state employees and giving them to non-union private employees.

But the states have their own problems. With a war to pay for and a massive amount of debt to service, the federal government is not giving them the funds they used to. As a result, many states have cut numerous programs that aided the poor and others. Actually, some states are now on the verge of bankruptcy.

Unions do not, however, represent the entire span of intuitions that Bush doesn't seem to support. He seems to no longer support the veterans whose bravery he so recently praised and whose valor he so publicly lauded.  At the same time Bush was declaring "Mission Accomplished," his FY 2004 Budget was circulating through Congress. Unbeknownst to most, that budget contained substantial cuts in veterans' benefits - including pensions, hospitalization, health insurance, and drug co-payments.

Additionally, the war these soldiers had fought in was blamed repeatedly by Bush for the deficit, although the fact remains that the deficit began before the war did. And what created most of the deficit were the tax cuts, not the war.

Tax cuts, which primarily benefited the rich, represent Bush's panacea for whatever ails America. Should the problem be economic despair, Bush cuts taxes. Should the problem be loss of manufacturing jobs, Bush cuts taxes. Should the problems be war, famine, pestilence, or death, Bush continues to cut taxes.

And should the problems be an excess of crab grass, the heartbreak of psoriasis, or America's propensity for eating French fries, Bush cuts taxes some more. Actually, Bush became the first President to cut taxes during wartime, something his fellow Republican, John McCain, deemed "irresponsible."

Despite the cavernous absence of any cogent evidence that tax cuts create jobs or stimulate the economy in any significant way - other than by benefiting the rich - Bush has responded to any and all situations by cutting them with an avidity and single-mindedness that would have made Pavlov's dogs proud.

Unfortunately, the immense and ever-growing deficit created by these tax breaks gives Bush the excuse - and to some extent, the need-to cut programs that benefit working America, particularly those who now populate the ever-increasing ranks of the working poor. Among the programs cut are 38 in the educational area alone: including resources for dropout prevention, opportunities for gifted children, and funds for guidance counselors. The President who vowed to leave no child behind is leaving countless behind.

It's also likely that Bush's proposal for the federal government's housing voucher program could cut assistance for some 250,000 low-income families, in addition to many disabled and elderly individuals. Also on the chopping block are job-training programs, as well as healthcare programs.

One effect of such misplaced priorities is  something truly frightening: more children are growing up in poverty in America than in any other Industrial country. Another effect is a seemingly endless, charnel-abundant war whose immense cost burdens nearly all Americans and handicaps nearly every program that might help them.

With so many needs that should be filled, with so many people facing years of enforced penury, what we find instead of help for them is relief for the rich-cuts in taxes on the largest incomes, cuts in taxes on investment income, and cuts in taxes on multi-million dollar inheritances.

As Bill Moyers put it: "Let's face reality: if distributing tax breaks to the wealthy at the expense of the poor; if driving the country into deficits deliberately to starve social benefits; if requiring states to balance their budgets on the backs of the poor; if squeezing the wages of workers until the labor force resembles a nation of serfs - if this isn't class war, what is?"

It most certainly is class war. And let's face another reality: Warren Buffet was right. The rich have won it.