Yet Another Wall Street Billionaire Asks Working Americans to Sacrifice -- Why Do the Media Still Listen to These Guys?
Working America has sacrificed a great deal in the last 40 years: its share of the national income, its economic security and the dignity that comes with decent health and retirement benefits. Those at the top of the pile have sacrificed nothing – they're grabbing more income and paying less in taxes today than they did during the mid-century boom years. Yet, we are being asked by those very elites for “shared sacrifice.” The question is, how much “sacrifice” the little guy has to make before the big boys start sharing it.
It's clear to see how the toxic ideology of Ayn Rand has permeated our political culture, all the way up to America's well-heeled elites. Whereas the wealthy were once viewed with some scorn as the idle rich, children of privilege who know little about life in the real world, they now claim to have been imbued with innate, almost super-human intelligence and they offer their wealth to prove it. Those claims go largely unchallenged.
But if you look at the discourse proffered by these feral elites, it's clear that a wingnut with a lot of money is no more rational than the "get a brain, morans" guy of viral fame. Just this week, Jamie Dimon, CEO of JP Morgan Chase, called new banking regulations “un-American.” What did he mean? Who knows? It's a facile talking point.
Perhaps the best example was an anonymous shot at working people supposedly fired from the bowels of Wall St. last year. “We are Wall Street. It's our job to make money,” the broadly circulated email began.
Go ahead and continue to take us down, but you're only going to hurt yourselves. What's going to happen when we can't find jobs on the Street anymore? Guess what: We're going to take yours. We get up at 5am & work till 10pm or later. We're used to not getting up to pee when we have a position. We don't take an hour or more for a lunch break. We don't demand a union. We don't retire at 50 with a pension. We eat what we kill, and when the only thing left to eat is on your dinner plates, we'll eat that.
Do you really think that we are incapable of teaching third graders and doing landscaping? We're going to take your cushy jobs with tenure and 4 months off a year and whine just like you that we are so-o-o-o underpaid for building the youth of America.
Then there was University of Chicago law professor Todd Henderson, who enjoyed 15 minutes of online fame for a whiny rant (which has since been removed) about how tough it is to make ends meet on only $450,000 a year and how he would be forced into desperation if the Clinton-era tax rates on high earners were reinstated. We should all be so lucky to feel his pain.
This week, we were treated to the latest example of the genre, an op-ed by hedge fund tycoon Stephen Schwarzman – whom the New Yorker once dubbed “private equity's designated villain” -- titled, “An Olive Branch to Obama: I Will Share the Pain.”
In it, Schwarzman suggests the sluggish economy is not a result of a crash in demand that followed the loss of $14 trillion in household wealth caused by Wall St. gamblers, but by people saying mean things to folks like Stephen Schwarzman.
This problem began when the administration sought to attribute blame for the financial and economic crisis and alienated large segments of the business and banking community. They cast them as villains regardless of their culpability. Predictably, business reacted with fear and limited economic expansion, hiring and new lending.
Schwarzman believes he is competent to opine on these public policies because he runs a hedge fund. “The US economy resembles a business badly needing turnaround,” he wrotes. “Its growth is anaemic. Like many a faltering business, it has too much debt.”
It's a bizarre claim, both because we have a lower debt (as a share of our economy) today than we did in the booming post-war years, and because the government's debt-to-income ratio of 1:1 is significantly lower than that of many successful businesses.
Having framed the problem through a conservative ideological lens, his solution is easy: everyone simply needs to agree with Stephen Schwarzman that the deficit is killing the economy and that Social Security and Medicare need to be cut, and then everything will be fine. This, for Schwarzman, constitutes “shared sacrifice.”
“Shared sacrifice” sounds like cheap political rhetoric. But if we are to reform taxes and cut spending sufficiently to make a difference, virtually everyone will be affected. Broad-based tax reform will put everything on the table, from the rates we pay at every bracket to serious thinking about a flat tax regime with few or no deductions. Entitlement reform of Medicare, Medicaid and Social Security will affect the benefits we receive and the amounts we all have to contribute. There will probably not be a single American untouched by the spending cuts needed in the rest of the federal budget.
He says,“there will probably not be a single American untouched by the spending cuts needed in the rest of the federal budget,” and concludes with the belief “that most Americans will be willing to sacrifice for economic stability and a bright future for our children.”
He'd prefer to deal with some “short-term pain” in order to head off “another recession, social unrest, or worse.”
Salon's Alex Pareene deftly skewered the economic mumbo-jumbo Schwarzman serves up as political analysis, but one point bears further scrutiny: according to Forbes, Schwarzman enjoys a net worth of $4.7 billion. In what universe would the 50th richest American feel any pain whatsoever from any policy Washington might consider?
Or, to take that a step further: the vast majority of Americans who work for a living have already sacrificed so much while those at the top of the heap have clutched more and more of the nation's wealth that it's nothing short of perverse for them to call on the rest of us to "share" some sacrifice. When will they start sharing?
Consider this: in 1979, those in the top tenth of 1 percent – people like Stephen Schwarzman -- took in 1.11 percent of the nation's income; by 2008, they were grabbing 5 percent.
Between 1979 and 2006, those in the top 1 percent saw their income share increase by 130 percent, while their share of federal taxes went up by 84 percent – we paid the difference.
In the 1950s, corporations paid 39 percent of all the income taxes collected by the federal government, but by the time the 1990s rolled around, corporations were paying just 18.9 percent of federal income taxes – again, we paid the difference.
The bottom 90 percent – most of us – shared 65.8 percent of the pie in 1979, but by 2008, we were splitting up 51.8 percent.
In 1971, the top 100 CEOs in the country took home an average of $1.5 million dollars; by 2006, they were raking in an average of $54 million dollars (both figures adjusted for inflation to 2005 dollars).
In 1989, the number of workers with 401(k) plans—subject to the ups and downs of the stock market—exceeded those with fixed-benefit pensions for the first time. Even mega-corporations got into the act. In 1998, nine out of 10 Fortune 100 companies still offered employees a pension; that number had been cut in half by 2008.
The share of workers with employer-provided health insurance fell by 14 percent between 1979 and 2006, while insurers got stingier with their benefits.
As for “entitlement reform” – asking retirees to shoulder their share of the “sacrifice” – they already have. One in three American seniors is “economically insecure” – living on $22,000 or less per year -- according to the National Council on Aging.
It is this reality that makes Stephen Schwarzman's belief that “most Americans will be willing to sacrifice for economic stability and a bright future for our children, if the deal falls equitably on all shoulders” so offensive. It's not that the underlying principle is flawed – it's the idea that ordinary working Americans haven't already sacrificed so much to make class warriors like Schwarzman rich beyond most people's wildest dreams.