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Thanks to Occupy, Senate Looks at Inequality
I had the opportunity to testify on inequality before the Senate Budget Committee last week. No one seems to recall the last time the committee devoted a whole hearing to this issue. So you can add this to the signs of the Occupy movement's impact on our political discourse.
The Occupy Movement launched on September 17th, and got to the Senate Budget Committee last week. (Photo by David Shankbone)
Here's a link to my written testimony. My oral statement is below.
On the Democratic witness side, I was joined by two excellent economists: Jared Bernstein, who served as Vice President Biden's economic adviser and is now with the Center on Budget and Policy Priorities, and Heather Boushey from the Center for American Progress. Jared gave an incisive summary of recent inequality and mobility trends, while Heather focused on some of the most disturbing impacts of extreme wealth concentration on health care, education, and other key middle class indicators.
The Committee's Ranking Member, Senator Jeff Sessions, and Republican witnesses tried to raise doubts about the inequality data, questioning whether things were really as bad as they look. I didn't envy them the task of being an inequality denier in the face of overwhelming evidence to the contrary.
Oral Testimony of Sarah Anderson Before the Senate Budget Committee, Feb. 9, 2012
Thank you very much for this opportunity. I believe inequality is the pressing issue of our time, and I applaud the committee for giving it this level of attention.
Let me begin by emphasizing the good news, which is that our nation has tackled this problem before. A century ago, we had extremely high levels of inequality comparable to those we are seeing today. But over several decades, policymakers managed to use fair taxation and effective social programs to build the world's strongest middle class. And there is much we can learn from that experience.
At the Institute for Policy Studies, we have particular expertise in one key driver of inequality that has not yet been mentioned -- and that is executive compensation.
For nearly 20 years, we've tracked the upward spiral in CEO pay. My written testimony includes several indicators. Let me just mention that the ratio between CEO and worker pay has risen from 42-to-1 in 1980 to 325-to-1 in 2010 and average S&P 500 CEO pay is about $11 million.
Beyond contributing to inequality, excessive compensation is a problem because the chance of hitting such massive jackpots gives executives incentives to behave in ways that may bump up short-term profits and their own paychecks, while undermining our nation's long-term economic health.
In our annual Executive Excess reports, we've looked at corporate behaviours such as tax dodging, mass layoffs, reckless financial activities, and offshoring jobs. All of these appear to boost CEO pay. But they have dealt one body blow after another to the American middle class.
Policymakers should also be concerned about executive pay because extreme inequality within firms is simply bad for business. It is now well-documented that when companies have massive gaps between their top and bottom earners it hurts employee morale and productivity and increase turnover rates.
Congress has taken some recent steps to rein in executive pay and I'd like to highlight two:
The first is the provision in the Dodd-Frank financial reform legislation that requires all U.S. corporations to report their CEO-worker pay ratios, which could encourage corporate boards to narrow these gaps. Unfortunately, there's been intense backlash from lobby groups representing CEOs, and the SEC has delayed this important transparency measure.
The second executive pay reform I'd like to highlight is a little-known provision in the TARP bailout bill that capped the tax deductibility of executive compensation at bailout firms at $500,000. A similar provision was included in the health care reform legislation for insurance companies. If such deductibility caps were extended to all U.S. corporations it would fix a loophole that encourages excessive pay. As it is now, the more they pay their CEO, the more they can deduct from their taxes.
Beyond the issue of executive pay, we clearly need a broader agenda to reverse extreme inequality. If you look back at the previous era, it's clear that one of their most important tools was progressive taxation.
In my written testimony, I have three charts that look back over the past century, showing that the decades of the highest top marginal tax rates were also the decades of the lowest levels of inequality and the highest GDP growth rates.
I end with seven tax reforms that could get us back to healthier levels of inequality. I'd like to highlight one that deserves more attention. This is the idea of placing a small levy on trades of stocks, derivatives, and other financial instruments. Such a financial transactions tax could both generate substantial revenue and discourage the short-term speculation that has driven up financial sector pay while contributing little to the real economy.
In conclusion, I want to acknowledge that reversing extreme inequality will be a long-term challenge. But we have transformed a highly divided nation into a more stable and equitable society before. And we can certainly do it again. Thank you.
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Show AllGood luck with that! With over half of the Supreme Court, over half of the Senate, and over half of the House and our President being millionaires, we are no longer living in a democracy. We are being governed by a full-fledged plutocracy. And plutocracies are not especially interested in maintaining a democracy!!!!!
The second paragraph of Sarah's oral testimony started on the right track acknowledging previous success in reeling in US wealth inequality.
Unfortunately, Sarah attributes that success only to "fair taxation and effective social programs", completely ignoring the most crtical element of early 20th century inequality reforms...REGULATIONS THAT RESULTED IN STRUCTURAL CHANGES THAT MADE FRAUD AND OTHER CORPORATE PROFIT CENTERS ILLEGAL !!!!!
Had anti-trust legislation, banking regulations and other structural reforms not been implemented, all of the taxation and social program efforts would have failed post haste. In today's deregulated, decriminalized, corporation controlled world, tax reform and social programs will not achieve equality until regulations controlling corporations are restored.
This testimony appears to be no different than everyday Dim/GOP tag team political theatre.
You (and she) left out the role labor unions have had in creating the middle class, which leveled off, to some extent, the income inequalities - until the unions were destroyed by the Republicans and were allowed to be destroyed by the Democrats.
Beyond that, people often leave out the role that radical and militant organizations played within the Labor movement.
Without the New Deal there could have been no "middle class." Without organized Labor there could have been no New Deal. Without radical, militant and powerful organizations within the working class there could have been no organized Labor.
Many are deceived into thinking that we can turn this formula on its head, and skip all of the necessary preliminaries and prerequisites and go directly to supporting or restoring the "middle class," that we can somehow "choose" a restoration of the middle class, and perhaps vote it back into existence. Many politicians will tell you that this can happen, and that they are the ones to support in that cause. This all seems safe and practical and reasonable to people, and eases their fears about directly confronting those in power.
This then starts people down the path that will eventually lead to "lesser of two evils," to corruption and debasement of the Democratic party should it get in power, to the purging and persecution of radicals, to the neutering of organized Labor, and to the betrayal of the working class. At that point, we are back where we started.
Nearly 10% of US voters voted for socialist or communist presidential candidates during the 1930s, thereby giving the unions leverage to push for the New Deal on the grounds that tossing a few crumbs to the workers would contain the "commie threat".
Corporations and the politicians they owned figured the New Deal would diminish workers' interest in socialism, which turned out to be true. As soon as the "commie threat" disappeared during the 1970s, corporations and the politicians they owned started dismantling the New Deal, until, by 2000 there were no more far left candidates to vote for and not much of the New Deal surviving.
Until enough US voters start supporting socialist and communist candidates, we will watch the 1% continue to enrich their fortunes at our expense.
Where are the socialist and communist candidates?
http://www.stewartalexanderforpresident2012.org/
Socialists participate in the electoral process to present socialist alternatives. The Socialist Party does not divorce electoral politics from other strategies for basic change. While a minority, we fight for progressive changes compatible with a socialist future. When a majority we will rapidly introduce those changes, which constitute socialism, with priority to the elimination of the power of big business through public ownership and workers' control. We advocate electoral action independent of the capitalist-controlled two-party system.
By fielding Socialist candidates in elections at all levels of office, Socialists educate the public about socialism, agitate for radical reforms and socialist solutions, and promote the politically independent organization of working people in direct opposition to the twin capitalist parties.
http://vote-socialist.org/
Vote Socialist Equality in 2012
The last great breakdown of the capitalist system led to suffering, death and destruction on a horrifying scale. Mass unemployment, poverty, fascism and war brought mankind to the very brink of ruin. When the crisis finally came to an end, the ruling class—terrified by the specter of working-class militancy and revolutionary struggles all over the world—claimed that lessons had been learned, capitalism would be reformed, and the nightmare of the past would never be repeated.
But once again the capitalist system is in desperate crisis. In the United States, millions are out of work and have lost their homes. Tens of millions have had their wages cut and their access to essential social services reduced. Young people are being deprived of the right to a decent education as schools are shut and teachers laid off, and those who make it to college are saddled with massive debts and no jobs. Millions of older workers have lost their pensions and been forced to work into their seventies and even into their eighties because their savings were wiped out. Thousands of small and medium-sized businesses are being forced to close their doors because the large banks refuse to lend.
Against the backdrop of economic crisis, the ruling elite in the United States, greedy for profits and power, grows ever more reckless in its use of military power. After more than a decade that has seen one war after another, the stage is being set for a catastrophic Third World War.
This descent into disaster must be stopped.
The program of the Socialist Equality Party provides the working class with the way forward. Phyllis Scherrer and I are basing our campaign on certain core principles.
http://wsws.org/articles/2012/feb2012/whit-f13.shtml
yes, and beyond that, we are not mentioning the terrible price the environs we inhabit paid, and are paying, for our developing of our 'middle class', an achievement only possible due to chemical and industrial devastation of the air, water and dirt comprising our local mountains and rivers, meadows and lakes, shorelines and oceans...
a fate that has since relocated to Asia, primarily, but is still within the boundaries of this unique planet...
the American middle class that developed during and after World War II is largely to blame for the killing of this world...
this is not something we should try to do again...
to your last sentence, TA...we, unfortunately, can not go back to where we started, as the planet is no longer what it once was...
we can only go from here...
Good point. I should have said that we are back to where we started politically, but of course in the meantime conditions continue to deteriorate and the planet continues to be ravaged.
There is no standing still, or "treading water," and all of the pleas for moderation and patience and working within the system are predicated on the assumption that there is some safe middle of the road course. We go forward with full determination, or we continue to be smashed and driven backward.
A good report, but
how is this different from someone telling an insatiably hungry tiger that they would be better off if they were vegetarian?
One of the things that stand out to me is that someone from Biden's office was part of this, as if the warmongering corporatist Biden really gives a rat's ass.
My guess is that, since this included a performance by a member of Biden's office, this is posturing for re-election and THAT is very likely why these people were given access to the corporate owned committee and why
"No one seems to recall the last time the committee devoted a whole hearing to this issue."
Is this another attempt by the democrats to sabotage the Occupy movement?
I have no reason to not think so.
You should actually consider reading a few things by Jared Bernstein before blathering on in ignorance.
"Greg R"
I'm sure you will continue "blathering on" in you ever so special stupidity.
Who is paying Jared Bernstein?
"reallycurious"
You don't get a cookie because we can be more specific.
Try the extremely wealthy democrats' organization called "Democracy Alliance."
These are people who (like the ardent Clintonian hypocrites that they are) take a small portion of their enormous wealth to make sure that we can vote for Criminals who start wars, gut the Constitution, sabotage efforts to deal with Global Warming, reward the corrupt bankers, turn the public schools into corporate money makers, and various other special democrat projects because they would hate it if we voted for the republicans who would do the same thing.
However, Your answer is obviously valid.
OWS is about eliminating corporate control of government whereas Sarah's oral commentary is about continuing the shell game that assures corporations stay on top. No need to discuss Bernstein or Boushey since Sarah's testimony clearly defines the partisan box she is trapped in.
If Sarah had really looked at successful wealth inequality reforms of the past century, she would not be dwelling on CEO compensation regulations, transaction taxes and other cosmetic touches that have never succeeded and will never succeed in reducing inequality. FDR's New Deal included regulations that criminalized corporate profit centers like fraud, thereby assuring that corporate profits would be limited thereby limiting CEO compensation. It worked for 50 years until decriminalization (often called deregulation) opened the additional profit centers for corporations, enabling them to give CEOs more compensation.
"raydelcamino"
Thank you. A very good clarification.
Jared Bernstein is a senior fellow with the Milken Institute.
"A nonprofit, nonpartisan think tank, the Milken Institute believes in the power of capital markets to solve urgent social and economic challenges and improve lives."
Many of us do not agree that social problems can be solved through "the power of capital markets." We think that the power of capital markets is itself the problem.
There is nothing surprising about the fact that many intellectuals are now hard at work - and being paid handsomely and enjoying much status from that work - trying to save Capitalism, or at least restore its image, and trying to head off any potential uprising by working class people.
However, let's not make what the man has to say and what he is doing something that it is not. He is no friend to the working class.
Sarah's comments are indeed consistent with the capitalism PR mission.
Bernstein is a democrat apologist .... he was on Democracy Now a few weeks ago ballyhooing Obama's new found "populist" tone the day after the state of the union speech. He even said that Obama and his cadre of wall street advisors will now be paying more attention to issues like enconomic inequality .... "thanks to occupy wall street."
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I'd expect to hear crap like that on NPR or Thom Hartmann or Rachel Maddow .... But on DN? I was hugely disappointed in that. But Ralph Nader was on in the next segment ... so that kind of ameliorated the whole feeling of disgust that I was nearly overcome with.
I remember that day and I had the very same reaction!
Since I have been unemployed for quite some time, I began to notice that Amy parrots the "official" federal stats each month without offering any additional analysis. Right now, the numbers are going down, but thousands and thousands of citizens, each week, have come to the end of their benefits -- the 99 weeks are up! (Isn't there a hint of irony in that number -- 99?) Congress didn't extend the benefits. No one, and not even Amy, mentions this fact. Since the economic crash in 2007/2008, John Williams at www.shadowstats.com shows the REAL unemployment numbers to be between 22% and 23%. And, almost every month, Paul Craig Roberts takes apart the unemployment numbers and exposes the official numbers as fraudulent. He agrees with John Williams.
I used to write to Amy Goodman each month to remind her that when Noam Chomsky is on her show, he always tells the audience that the unemployment numbers are already near/at Depression level numbers. Amy never quotes Noam. And, as far as I know Amy has never interviewed John Williams at shadowstats.
And then there's Libya. YIKES!
Why do commentators, such as Goodman, stay within safe parameters? Hold back?
I say it is fear. On some level people perceive where the line is drawn for "going too far" and know the consequences of "going too far." Unfortunately, that line is drawn just short of telling the full truth.
If Sarah had discussed true reform rather than parroting DNC talking points I would consider her action more than just political theatre.
Sarah thinking that a "transcaction tax will get us back to healthier levels of inequality" without first stopping corporations from determining where that tax money ends up is beyond laughable.
"...healthier levels of inequality..."
That is an interesting phrase, isn't it?
"Healthier" for whom?
Too much inequality is potentially unhealthy for those in power, because that could lead to mass organizing and action and them being overthrown.
Confirms who Sarah is gunning for, doesn't it ?
There is a popular and pervasive notion among liberal and progressive intellectuals that it is possible to work within the system to reform the system. There is no way to do that without becoming dependent upon a paycheck from people whose goals are contrary to social and political reform. You cannot go in two opposite directions at the same time. Sooner or later, people must do the bidding of those who are paying the bills. That leads to the most convoluted rationalizations and justifications imaginable as liberal and progressive commentators try to reconcile this conflict. Those convoluted rationalizations and justifications permeate the political discussion among liberals and progressives, and that is the source of the tremendous amount of confusion and controversy we see, as well as the cause of much of the frustration and angst and sense of helplessness in liberal and progressive circles.
We saw a stark example of this during the Gulf catastrophe. The Sierra Club and other organizations were strangely silent and did not criticize BP. They were all "partners" in BP's "Green initiative" program and receiving massive amounts of money from that corporation. How can we believe that the two things are not related?
It is not possible to be for the environment and then "partner" with the corporations at the same time. It is not possible to be on both the side of management and on the side of Labor. It is not possible to be on the side of the tenants and the homeless, and also on the side of the landlords. It is not possible to support democracy and promote the partisan electoral process.
Your point is well-taken, however, in a media SYSTEM as controlled as that of the corporately-owned and equally managed MSM, it's possible that you didn't "hear" from The Sierra Club because they were shut out/closed off like some of the film crews prevented from going offshore to document what was going on. I'm sure Green Peace was anything but mute on this eco-tragedy. Sometimes in making a case, you throw everything into the spin cycle of your "washing machine."
You make a good point about the media shutting out many voices.
Greenpeace was an exception, yes.
""Wall Street owns the country. It is no longer a government of the people, by the people, and for the people, but a government of Wall Street, by Wall Street, and for Wall Street. Our laws are the output of a system which clothes rascals in robes and honesty in rags, the politicians said we suffered from over production. Overproduction, when 10,000 little children starve to death every year in the u.s. and over 100,000 shop girls in New York are forced to sell their virtue for bread.
There are thirty men in the U.S. whose aggregate wealth is over one and one-half billion dollars. There are half a million looking for work. We want money, land and transportation. We want the abolition of the National Banks, and we want the power to make loans direct from the government. We want the accursed foreclosure system wiped out. We will not pay our debts to the loan-shark comanies until the Government pays its debts to us.
The people are at bay, let the bloodhounds of money who have dogged us thus far beware.""
Mary Ellen Lease told this to an enthusiastic crowd in 1890. That was when $1.5 billion was worth something.
Where are we today?
Source: Howard Zinn's 'The People's history of the United States' p. 188
Good reference. And Zinn also has an entire chapter "The Bipartisan Consensus" That most "progressives" either ignore or claim ignorance.
It's a struggle but bit by bit I am going to read the whole book. It is so discouraging to read what real history is and what has already done before and the many whom just ignore what has already been done all down in the past centuries. Sad as it is, it still opens my eyes to what it means to NOT educate people, especially the young ones in school, about what this country was built upon since the psychopath columbus landed. Everything happening today has been done many times over in the past and it usually takes a really big protestation to change it and having to fight the M$M just as long to get information out is going to not make it easy at all.
This passes as informed discourse? This is why I don't give money to CD.
An insult to informed readers and I aint the only one, just look at the other comments. .
"So you can add this to the signs of the Occupy movement's impact on our political discourse."
Political theatre for an election year. Nothing more.
http://www.youtube.com/watch?v=s10MyrfoYrA
FYI: It's a good idea to qualify a link you post by giving a brief description of what it is. This way, people will be able to make an informed decision to whether or not they want to view it. Otherwise, it appears to be spam.
"Thanks Occupy Wall Street!"
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Just a few weeks ago, a day after Obama's Big Important Speech, Jared Bernstein was on Democracy Now (of all places) with this same theme.
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He said Obama gave a "strong address" that would help to build the momentum of the "unquestionable" economic recovery that he claimed is currently underway. He gave OWS "a ton of credit" for the the "populist" tone that Obama struck during his Big Important Speech.
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Bernstein finished the interview by saying that thanks to OWS Obama's wall street advisors will be "listening more closely to these kinds of (economic) issues than they’ve ever been,"
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So we don't need to worry anymore .. Obama and his wall street advisors are listening to Occupy Wall Street! And now, according to this article, a whole entire senate budget committee (compromised of millionaires) is listening to OWS too!!!
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The democrat agenda to co-opt OWS and render it impotent ... like it has done to so many other movements (see: Labor Unions) ... is well underway. It's more than a bit ironic that the d-crat ensnared labor unions are one of the many tools being used to co-opt OWS, too....
Have you noticed the involvement of Marianne Williamson in the Occupy Movement? If not, it's really worth a look....you can find her on YouTube.
We don't want Washing-town's involvement in the people's emancipation from Washing-town. We don't want the US Congruss' involvement in The People's Enterprise. That is a congruss with a lower approval rating than death itself.
We know what changes have to occur among elites before elites can join the people in stewarding the society. And we're not waiting around for that.
We don't need further sabotage of the people's hopes, by elites who relentlessly sabotaged the people's hopes over many years. We don't need sugar-daddy to change from dispensing poison to dispensing less poisonous poison.
We're finished with that approach. it didn't work.
The US Congruss is not to be addressed. Its fate is to deplete. its influence to be downsized. Its relevance is to be remitted.
Out of the press, elites! Make room in the headlines for The People's Enterprise.
Just one small problem. Under our Constitution, only Congress has the power to authorize federal expenditures and allocate federal monies. So, while I'm not sure what it would mean to "remit" the relevance of Congress (wtf?), or "deplete" its fate (double wtf?) that institution will remain, for better or for worse, pretty damn relevant to the future of this country for the rest of our lives (at least until such time as we scrap or amend the Constitution).
Maybe we can change the composition of that corrupt body politic. But I guess that would be too practical.
For richer or poorer - the happiest nations are the ones with the greatest equality.
The State always robs the Nation
The sole purpose of a State is to institutionalize the processes by which the Nation is reproduced. Capitalism operates on the assumption that property in land and resources can be converted into surplus wealth by competent management. What tends to happen which defeats both the State and impoverishes the nation, is that the State begins to believe it is the Nation and lays claim to an excessive amount of the surplus, eventually choking the Nation out of existence.
Since the State is nothing more than a corporate invention of the Nation it is easy for Bureaucracies to attach sub-corporate entities which by design and by intention, rival the natural community and divert the flow of Capital into bodies of shareholders. The State enjoys this process because of the symbiotic relationship with the business world that allows governments to function without the right degree of responsibility to the community.
Capitalist Corporations are nothing more than little States which seek to operate within their respective Political spheres of influence in order to substitute another agenda for the original goals of the community which were supposed to help reproduce the Nation State. The Corporations use their sheltered position to produce a surplus of value and that results in corresponding deficiencies of value within the Nation. Banks enable this process by controlling the flow of Capital according to the interests of the Corporate sector.
This political model distorts public equity by creating rights to resources which never become available to the general public. The public then becomes a 'market' instead of a natural community of souls. The Market is not able to reproduce itself indefinitely and must diminish as profits are withdrawn from the economy and paid to shareholders and Corporate Executives. Furthermore, any Corporate culture produces an ever increasing dichotomy of inequity of those whose wealth increases automatically and those who can never ever gain any part of the gross wealth available in the society.
For a culture to reproduce it must provide ways and means to sustain the general population.
The Capitalist model is always fundamentally in a state of conflict with the nation, and for these reasons, the State has to be enforced by Police and Armies, who then become infatuated with their power over individuals.
Furthermore, when the rich and the affluent accumulate large sums of money it directly devalues money in the hands of the poor. These huge salaries and payoffs divert too much of the wealth of the country which should properly remain current in the community.
Money is merely a calculating device.