Obama Tax Deal Further Concentrates Wealth & Power
Stop the Death Spiral to Plutocracy
In 2010, an essential moral test of a public policy choice is: Does it further concentrate wealth and power in the hands of a few?
Or does it disperse concentrated wealth and power –and strengthen possibilities for a democratic society with greater equality, improved health and well-being, shared prosperity and ecological sustainability?
Does it move us toward Plutocracy or Peace and Plenty?
Supreme Court Justice Louis Brandeis said, “We can have democracy or concentrated wealth. But we cannot have both.”
By the Brandeis Test, President Obama’s “Tax Deal” fails. By extending the Bush tax cuts for the wealthy and instituting a significantly weakened estate tax, more wealth will flow into the hands of the richest one percent –and within that to richest one-tenth of one percent.
Most of us are aware of President Obama’s willingness to trade away his campaign promise to let the tax cuts for high income households expire. This will cost $60 billion next year and an estimated $700 billion if it is permanently extended.
But Obama also backed away from his position on the federal estate tax, which was to freeze it at 2009 levels (wealth exempted to $3.5 million, 45 percent rate). He now supports the Kyl-Lincoln amendment which would raise the exemption to $5 million ($10 million for a couple) and drop the rate to 35 percent). The cost difference between these two measures is at least $100 billion over ten years.
For the last generation, this richest one percent, with some admirable exceptions, has been using its considerable wealth and clout to push for public policy changes that have further concentrated wealth.
We are now in what I could characterize as “Death Spiral To Plutocracy.” As wealth concentrates, a hyper-organized segment of this wealth-holder class uses its wealth, privilege and power to change the rules of the economy to further concentrate wealth and privilege.
The logical progression of these policies is a society governed by wealth, a modern high-tech version of the Gilded Age of 1900.
For thirty years, liberal Presidents and Democratic Congress members have cut deals with a growing a bi-partisan (mostly Republican Party) Pro-Plutocracy faction. We’ve won victories for working families –family leave, increased minimum wage, expanded health care, middle class tax cuts –but the price has always been very expensive tax cuts for the wealthy and corporations. Under Clinton and Bush II, you couldn’t get anything faintly progressive done without a big bone to the wealthy or corporate class –another capital gains tax cut or corporate loophole.
Such compromises have been central to the Obama political strategy: To get a stimulus package to save the economy, Congress allocates a third of $780 billion for tax breaks to corporations (and still didn’t get one GOP vote).
To get broader health care coverage for the uninsured, lawmakers surrender the “public option” that would have forced competition and cut into the power and profits of the health industry cartel.
To get a Consumer Financial Protection Bureau included in the June 2010 financial reform bill, lawmakers allow Wall Street to keep its risky casino operation in place –laying the groundwork for future bubbles, meltdowns and bailouts.
This is a very costly strategy. It diverts trillions of dollars from the Treasury that could be used for long overdue investments in infrastructure, education, energy independence –things that could truly boost the real economy. But worse, it sets up future political battles where the very wealthy and powerful corporations continue to have most of the ammo. In the post “Citizens United” campaign finance environment, this is premeditated surrender.
There are only a few ways to intervene to prevent the “Death Spiral to Plutocracy” –and reverse course. They all require an engaged citizenry to clearly say: “We want an economy that serves everyone, not just the wealthy.”
The first intervention is through progressive income, wealth and estate taxes. We urgently need to reinstitute a progressive estate tax. Instead of cutting a deal to institute the Republican estate tax proposal that greatly weakens the law, Congress should press for the Responsible Estate Tax Act which would chip away at concentrated wealth.
The second is through robust campaign finance reform that closes the nexus between wealth and political power. Anything that puts a speed bump between wealth and political influence helps slow the Death Spiral.
The third is to mobilize the silent faction of the wealthy elites that actually see their stake in the common good. Not everyone in the wealth-holding class are actively lobbying to protect their power and privilege. We need a progressive counter-weight to organized defenders of power and privilege. The Wealth for the Common Good network is an inspiring start –with several thousand business leaders and wealthy individuals advocating for policies to broaden prosperity and opportunity. They can counter the deep mythology around wealth creation and deservedness that often justify tax cuts for the wealthy and support the positions of engaged citizens.
Senator Bernard Sanders is proposing a filibuster against the tax cuts –and he plans to read hundreds of documents about the dangers of extreme inequality in the U.S. Let’s all take a similar stand in our own lives –and urge our elected officials to do the same.