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B
O O K R E V I E W
TAKE THE RICH OFF WELFARE
by Mark Zepezauer
REVIEW BY
TRACY MCLELLAN
The heart of this book, a 2004 update
originally published in 1996, is in its opening pages, where Zepezauer
presents the formulas upon which his rich analysis devolves. His method
of presenting complicated quantitative and proportional economic
equations exposes a leviathan of graft and corruption, and makes plain
its meaning: the rich clobbering anyone who's not. He documents growing
economic disparities that haven't been as severe since 1929, and puts
lie to welfare recipients, compared to "wealthfare" recipients, being
societal parasites.
A critical ingredient in Zepezauer's method is comparing income and
Social Security ("payroll") taxes for rich and poor, and the concomitant
government services they enjoy. The rich pay a smaller percentage of
their income in taxes than do the poor. Capital gains taxes have shrunk
drastically in the last half-century. Dividend and investment income is
not taxed, and many very wealthy corporations pay no taxes, at all.
Adding injury to injury corporations are disproportionately the
beneficiary of what Zepezauer says are the five basic types of
wealthfare: tax breaks, subsidies, firesales, cost overruns, and lax
enforcement of white collar crime.
Regressive taxes, those that disproportionately hit the poorest, have
seen the sharpest increases over the last quarter-century, notes
Zepezauer. The wealthy, who have seen sharp increases in income in that
time, pay a vastly smaller percentage of their income in taxes than do
those of poorer and more moderate means. In the 1950s, corporations paid
half of federal revenues. Today they pay just 7.4%. The lost revenue has
to be made up by higher taxes for the poor and middle-class, or through
cuts in services.
Social Security is supposedly in crisis, even though it has perennially
run a large surplus.That surplus is supposed to be kept in trust to pay
future beneficiaries. Social Security was originally a set-aside
program, but was incorporated into the "unified budget" under Lyndon
Johnson. It has thus become just another income tax to be sucked up in
wasteful military spending or corporate welfare and fraud, believes
Zepezauer. The Social Security Trust Fund is owed $1 trillion and
interest. The payroll tax has seen sharp increases especially beginning
with Reagan. At the same time it is capped on incomes over $87,000.
Thusly Bill Gates, as wealthy as the 100 million poorest Americans, pays
the same Social Security tax as as a bus driver making $87,000. If this
cap alone were removed, Social Security revenues would increase about
$80 billion annually.
According to Zepezauer's extensive documentation, 'wealthfare' rose from
$448 billion a year in 1996 to $815 billion in 2003, an 82% increase. In
the same period welfare rose from $130 billion to $193 billion, a 41%
increase. Only vastly higher costs for Medicaid figured for any increase
at all. Zepezauer's presentation is simple, straightforward, compelling
and easy to understand.
Wealthfare enjoyed by big business, writes Zepezauer, includes tax
avoidance by transnationals, lower taxes on capital gains, accelerated
depreciation, insurance loopholes, business meals and entertainment, tax
free municipal bonds, and export subsidies. Other corporate goodies
include the savings and loan bailout, agribusiness subsidies, media
handouts, nuclear subsidies, aviation subsidies, mining subsidies, oil
and gas tax breaks, timber subsidies, and others. Among other
particularly egregious developments is a $100,000 "accelerated
depreciation" for the largest of the gas-guzzling SUVs.
Military waste and fraud is in its own category, and accounts for about
a quarter of the wealthfare, says Zepezauer. The Pentagon budget
increased $70 billion annually over the two years to 2003, to $393
billion. Supplemental spending on the wars in Iraq and Afghanistan added
costs of several hundred billions more. The Pentagon loses outright
billions of dollars that it often rectifies by simply making accounting
write-offs. Overpaying military contractors through cost overruns and
ridiculous prices - a $2,043 nut and a $2,548 pair of duckbill pliers to
name a tiny fraction of outrageous examples - costs scores of billions a
year. Weapons contractors are convicted of felonies with regularity.
B-2 bombers, originally estimated to cost $550 million each ended up
costing $2.2 billion, literally worth more than their weight in gold.
Three unnecessary Seawolf subs were built at $2.4 billion apiece. That
project was eventually abandoned to build 30 of the equally redundant
Virginia class of submarines, writes Zepezauer, at a cost of $73
billion. Dick Cheney, Caspar Weinberger, George Schultz, William Perry,
James Baker, and Frank Carlucci are just a smattering of officials who
have swung through the revolving door between high government positions
and the military contractors with whom they do business.
"In 1994," writes Zepezauer, "the murderous government of Indonesia got
over $125 million in Export-Import loans to buy equipment from Hughes
Aircraft. Ex-Im [also] insured a $3 million loan to General Electric to
build a factory in Mexico that cost 1,500 jobs in Indiana. The Chinese
government used an $18 million loan to modernize a steel plant - even
though that company was accused of illegally dumping steel onto US
markets below cost." The government provides $7 billion a year in grants
to foreign governments, which often come back to US arms manufacturers
in the form of sales.
Middle to lower-middle incomes - the vast majority - bear the brunt of
this unfair system because they are neither qualified for the benefits
of the poorest such as Medicaid and food stamps, nor are their incomes
large enough to take advantage of the corporate welfare of the rich. The
already rich elite on the other hand reap criminal, in some cases,
literally, windfalls. Other tactics are technically legal, such as what
Zepezauer refers to as "the Bermuda Shuffle" in which corporations
incorporate in a place like the Cayman Islands or Bermuda by opening a
mail drop while still enjoying the superior infrastructure of the United
States (where they do the bulk of their business).
Take the Rich Off Welfare is, among other things, an examination
of vast waste, fraud and corruption in the Pentagon and its budget, a
precondition for this type of study. I was disappointed at Zepezauer's
tacit acceptance of the underlying premise of the necessity of a strong
military. He doesn't fully deconstruct the fact that military spending
has by the very nature of its size engendered massive corruption for
generations; and even when put to the uses for which it was intended,
bred war crimes of historically unprecedented proportions. Nor does he
examine that the increasingly deadly firepower of modern weaponry has
made it too apocalyptic to use. Martin Luther King's words are more apt
today than they were then: our choice today is nonviolence or
nonexistence.
It is obvious only organized popular resistance and will could counter
the trends over the last half-century documented by Zepezauer. The
individual would be crushed by the nature and magnitude of the rank
corruption rampant in their society. Lamentably largely uninformed, the
vast victimized majority is thusly unable to promulgate, much less
institute, genuine democratic reforms that would be to their advantage
and thus, by definition, just. As long as that's true, the status quo of
corporate hegemony will continue to dominate us with its nihilistic
values to the economic advantage of the very few and disadvantage of the
many. This doesn't happen chaotically of its own accord. Those who
manipulate this exploitive and cruel system know precisely what they're
doing, to whom, and for whom they're doing it. |
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