WE, the People, call Jacob Hacker and Paul Pierson to testify on ”How Washington Made the Rich Richer – And Turned Its Back on the Middle Class.”
Hacker & Pierson: “Winner-take-all has become the defining feature of American economic life..our current crisis is merely the latest in a long struggle..[between].. American democracy and American capitalism..a 30-year war..Strep by step and debate by debate, America’s public officials have rewritten the rules of American politics and the American economy in ways that..benefited the few at the expense of the many..a transformation that has fundamentally changed what government does, and whom it does it for.” [***Stop – reread this again. Bombshell!!! Read the rest of Hacker & Pierson’s testimony here, then their book – and THINK – this tells YOU why 1980-202x America is different from the 1947-73 middle class STATISTICAL golden age - it was deliberately done – by the top 1% 7 their GREED]
Hacker & Pierson: Ground breaking research by economists Thomas Piketty and Emanuel Saez revealed three essential clues: #1: hyperconcentration of income. ”According to Piketty & Saez’s revealing evidence regarding pre-tax income, we have gone from Broadland to Richistan – from a world in which most of the nation’s income gains accrue to the bottom 90% of households [the pattern of the economic expansion of the 1960s] to one in which more than half go to the richest 1% [the pattern of the last economic expansion from 2002 to 2007]. #2: sustained hyperconcentration. ”The rising share of the national income captured by the richest Americans is a long-term trend beginning around 1980. It is a trend..that is not obviously related to the business cycle or the shifting partisan occupancy of the White House. #3: limited benefits for the nonrich. ”..the economy stopped working for middle and working class Americans..even for the most highly skilled individuals just below the very top rungs of the income ladder.” and ‘..American households are working many more hours today [2010] than they were in the late 1970s.” [STOP!!! – “..the economy stopped working for middle and working class Americans..” DELIBERATELY – top 1%. GREED – statistics, NOT opinions!!!!! ]
Hacker & Pierson: ”Starting in the 1970s..people in charge of designing and implementing the tax code increasingly favored those at the very top..and continued well after the intellectual case had crumbled for..supply-side theories that had justified [Reagan’s] big tax cuts. It resulted from a bidding war in which Democrats as well as Republicans took part, and involved cuts in estate and corporate taxes as well as income taxes. The one big regularity was an impressive focus on directing benefits not just to the well-to-do but..the superrich.”
Hacker & Pierson: ”Given public concerns about tax breaks for the wealthy, politicians have..opted for more subtle means of achieving similar ends. One is slashing back enforcement of tax law..Roughly one out of every six dollars owed in taxes goes unpaid..hundreds of billions a year..tax evasion by the rich is ..[most of it].. Another way public officials havew cut taxes of upper-income filers without passing new laws is by leaving in place loopholes through which rich Americans and their accountants shovel lightly taxed cash..”
Hacker & Pierson: ”Beyond the stunning shifts in taxation..there were three main areas where government authority gave a huge impetus to the winner-take-all economy: government’s treatment of unions, the regulation of executive pay, and..policing of financial markets.” Business blocked a 1978 labor reform bill with a Senate filibuster; the Reagan administration was openly hostile to labor. ”Around 1980..executive compensation started shooting up, and the pace ..[accelerated]..in the 1990s.” American politicians greatly aided this, “..in sharp contrast to the experience abroad ..[in both pay and power].. ”Between 1975 and 2007, wages and salaries in ..[finance]..roughly doubled as a share of the national earnings”..and.. “No industry has a comparable talent for privatizing gains and socializing losses.”..regulatory restrictions on banking had been reduced below their pre-New Deal levels by the late 1990s.”
Hacker & Pierson: ”By the end of the 1978 campaign, more than 60% of corporate contributions had gone to Republicans..A new era of campaign finance was born: Not only were corporate contributions growing ever bigger, Democrats had to work harder for them. More and more, to receive business largesse, they had to do more than hold power, they had to wield it in ways that business liked.” [!!!!!!!!!!! Come on people – what is this saying?????????]
Hacker & Pierson: the 1978 tax bill cut capital gains tax from 48% to 28% – a Democrat Congress, a Democrat president.
This “signaled a dramatic shift in governance in Washington.”
”By historical standards, the 1981 “Economic Recovery and Tax Act” was an astonishing acceleration of the 1978 formula of big tax cuts for business and the affluent.”
“ERTA was Ronald Reagan’s greatest legislative achievement, a fundamental rewriting of the nation’s tax laws in favor of winner-take-all outcomes. But in a deeper sense it was the nature of the conflict that had changed the most. Both parties were now locked in a determined struggle to show who could shower more benefits on those at the top.”
Hacker & Pierson: ”Behind the declining responsiveness of Washington to those outside the winner’s circle is a complex tale of battered unions, distracted public interest groups, politically ascendant evangelicals, unmoored voters, and a compromised, and increasingly endangered, new media.”
Hacker & Pierson: “..ideological polarization turns out to be mostly an elite affair. Most Americans..are just not that far apart..Polarization primarily reflects not the growing polarization of voters, but the declining responsiveness of American politicians to the electoral middle.”
”..partisan polarization has been very one-sided: Republicans have moved substantially to the right, while Democrats have moved modestly to the left..”
Hacker & Pierson: TV, modern polling, political consultants “fundamentally altered the nature of running for office: who was favored and who was not, how candidates spent their time and crafted their message, and how campaigns themselves were organized. Their most measurable effect..was to substantially increase the role of money in politics..from the mid-1970s to the mid-1980s, average real expenditures by incumbents in the House roughly tripled..money became a prerequisite for electoral viability. Since it also served as a signal of viability, large war chests could be used to attract new contributions and deter possible rivals..permanent, relentless fund-raising became a fixture of American politics..” [Time Out!!! – WHO do YOU think THIS favors??????? – it isn’t YOU!!!!!!!!!]
Hacker & Pierson: ”..radical rebranding of entitlements from..traditional meaning of earned benefits to one reflecting a something-for-nothing mentality..In this new language, both welfare and Social Security were “entitlements” and Washington needed to replace ‘the politics of entitlement with a new politics of reciprocal responsibility.”
[THINK!!! – which Party & “side” consistently talks about “personal responsibility”???? as in you’re guilty}
Hacker & Pierson: ”..the modern GOP..became astonishingly radical..saw high-end tax cuts as the solution to any problem..over more than two decades, both the geographical and organizational bases of the party shifted in ways that reinforced its commitment to an extreme economic platform..many Republicans revealed a thinly veiled desire to do more than combat LBJ’s ‘War on Poverty’. Their ambitions included repeal of huge swaths of not only the New Deal but the Progressive Era: no Social Security, no effective minimum wage, no progressive taxation, no support for employer-provided health care, almost no financial regulation. They sought ..to reestablish the policies of the Gilded Age to mirror the emerging Gilded Age economy.” [Reread this very carefully, very carefully – because this is GOP intent to undo the rules, norms, laws of what makes America a modern “democracy.” ]
Hacker & Pierson: “The intensified connection of business to the GOP was reinforced by a second organizational development: the emergence of a cadre of activists devoted to making tax cuts the durable, unquestioned foundation of Republican doctrine..they now focused on the recruitment and support of public officials devoted to the cause..Two groups were at the heart of this effort: Grover Norquist’s “Americans for Tax Reform” and Stephen Moore’s “Club for Growth”..the objectives of these two groups were avowedly radical. Norquist described his goal as a 50% reduction in government as a share of GDP..Stephen Moore was a strong advocate of a flat tax – eliminating all progressivity from the tax code – an idea that was beyond the pale in the 1980s..”
Hacker & Pierson: ”The 2001 tax cuts..included a ‘time bomb’..that would make the Alternative Minimum Tax much worse, more than doubling the number of Americans who were expected to be hit with it by 2007..the bill reduced the normal income tax rates for high-income taxpayers but did not alter the AMT to reflect this…By expanding the reach of the AMT, Republicans could use the money..to ‘finance’ more tax cuts..and claim..the AMT was an unanticipated problem beyond their control.”
”Essentially, the GOP held upper-middle-class American’s feet to the fire to finance tax cuts for the super-wealthy and to crank up pressure for yet more tax cuts.” [GOP screwed YOU to help the top 1% – again}
Hacker & Pierson: ”The contrast between the aftermaths of 1981 and 2001 could not be more telling. Republicans in congress..eagerly embraced the Reagan tax cuts, but many were willing to change course once large deficits appeared. Twenty years later a ballooning deficit had nothing like the same effect – Republicans were more committed than ever to holding the line on taxes. As red ink began to flow, they continued to work energetically to push the revenue line lower.”
Hacker & Pierson: G.W. Bush, Chris Cox, Harvey Pitt enabled corporate violations. ”Enron’s collapse was the most spectacular..but the story, again and again, was the same..executives looted their companies..Companies were brought to ruin, employees lost their jobs, and workers saw their pensions disappear..The evidence that lax rules too often left foxes guarding the henhouse was overwhelming.”
Hacker & Pierson: ”What we now take for granted as a feature of the ‘system’ – that 60 senators representing just a tenth of the U.S. population can potentially stop legislation from becoming law – is..quite new..Only since the early 1990s has there been something approaching a de facto “rule of sixty.”..Norms that had frowned on the use of the filibuster began to erode….You didn’t just block reform with a filibuster; you bloodied your opponent. Tying Washington up in knots made the majority look ineffectual and fueled popular disdain for politics..hugely beneficial to the minority.”
Note; a future posting likely will expand on Hacker 7 Pierson’s “American Amnesia”. “How the War on Government led us to Forget What Made America Prosper” ]
With Justice For All 