David Stockman, Pres. Reagan’s budget director, “In 1985, the top five percent wealthiest households had a net worth of trillion, but since then the top 5% have gaining more wealth than the whole human race had created prior to 1980.”
If you remember anything at all about David Stockman, it’s probably his being “taken to the woodshed” by Pres. Ronald Reagan when he was Reagan’s budget director. That was back in late 1981 when he gave a long interview to William Greider for the Atlantic magazine. In a piece titled “The Education of David Stockman,” the young former congressman from Michigan acknowledged that Reagan’s tax cut was “a Trojan horse” to cut the top tax rates for the rich.
“The supply-side formula was the only way to get a tax policy that was really ‘trickle down’,” Stockman admitted to Greider. “None of us really understands what’s going on with all these numbers.”
The result of Reagan’s tax cuts, without accompanying cuts in government spending, were rapidly rising deficits. The deficit created by those tax cuts got so large so fast in the early 1980′s that Reagan himself reversed course and supported budget legislation restoring some of the tax rates.
“Trickle-down economics” is a pejorative terms that refer to the theory that providing tax cuts to the wealthy and tax benefits to conglomerate corporations will provide incentive to corporations and the wealth to great jobs for the rest of the society and thus indirectly benefit the broad population.
Lesley Stahl comments on her interview with David Stockman.
The “trickle-down” term is attributed to humorist Will Rogers, who said during the Great Depression of the 1930′s that “money was all appropriated to the top in hopes that it would trickle down to the needy.”
Stockman is back with essentially the same message as he delivered in that 1981 Atlantic magazine interview.
On a CBS 60 Minutes interview of David Stockman by Leslie Stahl in October 2010 Stockman said that Americans need to pay more taxes:
STAHL: Well, you’ve come out and said that all the Bush tax cuts should be eliminated. Not just on the rich, but on the middle class as well. Explain why.
STOCKMAN: Well, we just can’t afford them. We couldn’t afford them when they were adopted in 2001 and 2003 [by Pres. Bush and the Republican dominated Congress.] Since then, we’ve had two giant unfinanced wars [in Iraq and Afghanistan], a huge bailout of Wall Street, a trillion-dollar stimulus program, and we have now created so much national debt, and such large permanent deficits that we’re going to have to do some very difficult and painful things to close the gap, or we’re going to destroy the economy, and render the federal government insolvent. As hard as that is to believe, we’re edging in that direction.
STOCKMAN: We’ve demonized taxes. All right. We’ve created almost the idea they’re a metaphysical evil. …There should be a one-time 15 percent surtax on the wealthy that he estimates would cut the national debt in half.
STOCKMAN: In 1985, the top five percent of the households, wealthiest five percent, had net worth of trillion, which is a lot. Today, after serial bubble after serial bubble, the top five percent have net worth of trillion. The top five percent have gained more wealth than the whole human race had created prior to 1980.”
See video of the full 60 Minutes segment at the bottom of this article.
Rendering the federal government insolvent is, in fact, the stated goal of hardline conservatives who want to eliminate elected government and turn society over to private corporate control. “Starving the beast” is a fiscal-political strategy adopted by American conservatives in the 1970′s to create or increase existing budget deficits via tax cuts to force future cuts and eventual privatization of Medicare, Social Security, Public Education and every other public service. [see Forbes]
Paul Krugman, columnist for The New York Times: For readers who don’t know what I’m talking about: Ever since Ronald Reagan, the GOP has been run by people who want a much smaller government.
In the famous words of the activist Grover Norquist, conservatives want to get the government “down to the size where we can drown it in the bathtub.” But there has always been a political problem with this agenda. Voters may say that they oppose big government, but the programs that actually dominate federal spending — Medicare, Medicaid and Social Security — are very popular. So how can the public be persuaded to accept large spending cuts?
The conservative answer, which evolved in the late 1970s, would be dubbed “starving the beast” during the Reagan years. The idea — propounded by many members of the conservative intelligentsia, from Alan Greenspan to Irving Kristol — was basically that sympathetic politicians should engage in a game of bait-and-switch. Rather than proposing unpopular spending cuts, Republicans would push through popular tax cuts, with the deliberate intention of worsening the government’s fiscal position. Spending cuts could then be sold as a necessity rather than a choice, the only way to eliminate an unsustainable budget deficit.
And the deficit came… See full articles in this blog, “ Starving the Government Beast,” and “Billionaire Koch Bros. ‘Want To Destroy Social Security.”
From Thurman’s Notebook
According to the U.S. census, last year our national population hit 308,745,538. One percent of that number works out to roughly 3.1 million people, slightly more than the population of Arkansas or Mississippi, about five or six times the population of Wyoming, or one-third of the population of my state, North Carolina. Try to keep that number in mind as you read the following statistics.
Today the richest 1% of American citizens have a greater combined net worth than 90 percent of our population put together. That means that something on the order of 3 million people in this country control more resources than almost 300 million of us put together, and that’s not just “earned” income. It also includes stocks, bonds, land and other property holdings, etc.. Money represents the power to control resources, and control of that much of our nation’s wealth in the hands of such a small group of citizens is dangerously antithetical to the preservation of our stated democratic ideals.
If the figures above didn’t bother you plenty, perhaps this next bit. Right now, (one hundredth of one percent of our population) 31,000 people in the United States take home an average of more than million in annual income, while the bottom 90% of us average just over ,000. For a bit more perspective on just how small 1/100th of one percent of our population is, follow this link and look up some census statistics on a region of the country that you’re familiar with.
Half of all Americans (104 million people) collectively own only 2.5% of all the wealth in the United States today. That means the other 50% controls 97.5% of it, mostly in the form of profit seeking corporate ventures. Even my fifth-grader knows that that much money and resources in so few hands is a dangerous concentration of power.
Last year the average corporate American chief executive officer was compensated at a rate 343 times greater than the average American worker. Employee compensation relative to gross domestic product in the United States is now the lowest it’s been in over 50 years. We produce more goods and services with fewer workers today than ever before, but we’re paid less in actual purchasing power than our grandparents and great-grandparents earned for similar work half a century ago.
When Ronald Reagan took office in 1980, the top 1% of income earners in the United States brought in 10% of all income. Twenty-eight years later, in 2008, that figure had more than doubled to 21% of all annual earned income while middle class wages remained virtually stagnant and purchasing power eroded significantly over the same period. So much for trickle down economics!
During roughly the same time span the average household income of the richest 1% of Americans nearly quadrupled, from 6,600 to .3 million per year. In fact, from 2001 to 2007, two thirds (66%) of all income growth in the United States went disproportionately to the richest 3 million households (there’s that pesky 1% again) of our population.
Today, about half of all American workers earn less tan 0 per week while the richest 1% average about fifty times that much, ,000 per week. To keep things in perspective, that’s as much as that same 50% of all American workers earn in a year! And things aren’t getting any better. The number of Americans who regularly rely on food pantries and soup kitchens has increased by 46% since 2006.
The official U.S. poverty rate now ranks third highest among all developed nations tracked by the Organization for Economic Cooperation and Development, and any American working man or woman knows that the “official” poverty rate in this country is a terrible joke, so the real numbers are far worse.
These statistics are criminal, especially viewed in the context of the current wave of cuts to our social safety nets, all the while preserving historically low tax rates on massive the incomes of the super rich. Yet somehow we continue to sit idly by, waiting for someone or something to show us the way out of this labyrinth of unconscionable austerity.
Just one year after the financial crisis of 2008, the top hedge fund managers in the United States collectively earned something like billion, an average of billion a piece! It is now common knowledge to anyone paying attention that investment bankers and Wall Street speculators – hedge fund managers being but one subspecies of these criminals -were responsible for that financial disaster. Millions of jobs were destroyed and uncountable harm done to millions of working class American families, yet know no one has been charged with these crimes to date. Why? Because the perpetrators own the government, including the judicial system, out right. There should have been and should still be daily riots in the streets over this wave or organized white-collar crime, but not us, the famously idle Americans, we made barely a peep. Stick a fork in us, cause we’re just about done.
It’s pretty obvious that our so-called democracy is badly broken, perhaps beyond repair. When it costs more to run for Congress than most people can dream of earning in a lifetime, those who stand for election cannot begin to understand, much less represent the will of the working people of this nation. There are no paupers in Congress by design, and more than fifty percent of the leeches that get there are millionaires long before they arrive to serve their terms.
We need a new form of governance in a bad, bad way. We live in a finite world of finite resources. Endless growth and profit taking is not now, nor ever has been sustainable. Don’t believe me, then just take a look at any world history book with the trees it took to make it. Every empire the world has ever produced has failed under the weight of its own greed and the largesse of its ruling class.
The rich and powerful among us must not be allowed to continue reaping the lion’s share of the wealth produced by the rest. We cannot balance our budgets on the backs of our children, our elderly, and the working class who make it all possible while those at the top of the American pyramid scheme commit financial, environmental, and social crimes against humanity with impunity.
Neither Republicans nor Democrats represent the interests of us common folk. Most of them wouldn’t last a week working beside us, and they sure as hell don’t work for us. They work for that tiny fraction, the 1% at the top who control the wealth and hold the power, but it doesn’t have to be that way. We can fix this thing if enough of us wake up in time, but we gotta do it soon.
Stop voting for the lesser of evils, because to vote for either is to accept and endorse that evil. Withhold your consent. Don’t vote for either party’s candidates, even if it means you do not vote at all. An election with less than 10 percent turnout cannot ever be deemed legitimate. And never, ever accept the status quo, because today the status quo is a recipe for certain disaster, if not in our life time in that of our children.
Utopia may never be possible, and no single ideology holds all the answers, but to continue down the same path humanity has travelled over the cliff so many times before is simply insane. We’ve got to try something different or we shall simply cease to be.
We will never be without the poor among us, just as there will always be a few who are wealthier than the rest. So long as those who prosper most are made to contribute according to their means; return a proportional share of their profits to support the society which enables their prosperity, we’ll be able to solve our problems and resolve our differences. Unfortunately, that’s not the world we are living in today.
“In war, the strong make slaves of the weak, in peace the rich makes slaves of the poor.” — Oscar Wilde
CBS 60 Minutes
Deficits: Taxing The Rich
October 31, 2010 5:15 PM
David Stockman, Ronald Reagan’s budget director who once preached tax cuts, is now in favor of putting a one-time surtax on the rich. Lesley Stahl reports.