The Real Class Warfare: Protecting the Super-Rich


The Real Class Warfare: Protecting the Super-Rich | Miguel De La Torre, Economic Disparity, Class Warfare

Deregulation and massive tax cuts to the richest Americans were responsible for the transfer of wealth from the poorest Americans to the richest, De La Torre writes.
Class warfare is a term used by politicians and political pundits whenever the public (rich or poor) questions the disparity of wealth in this nation.

To raise concerns about the ever-growing economic gap is to risk being accused of fomenting social unrest or, worse, of being a socialist.

When billionaire Warren Buffet pondered in a recent New York Times column why he pays a lower tax rate than his secretary, Fox News pundit Eric Bolling called him a socialist.

As much as we may wish to avoid the term "class warfare," the truth remains that a class warfare is being waged by politicians protecting the super rich – and they are winning.

This war began in 1980 when President Ronald Reagan, followed by President George H.W. Bush, occupied the White House.

Deregulation and massive tax cuts to the richest Americans were responsible for the transfer of wealth from the poorest Americans to the richest.

During the 1980s, the top 10 percent increased their family income by 16 percent and the top 5 percent increased theirs by 23 percent. The top 1 percent increased their income by 50 percent.

Meanwhile, the bottom 80 percent all lost money. The bottom 10 percent lost 15 percent of their income, from $4,113 to $3,504.

When President Bill Clinton was elected, the national deficit was at $300 billion. While he ended his term with a surplus (the first in decades), he still participated in the transfer of wealth, specifically in his "ending welfare as we know it."

More important was his administration's role in deregulating the banking industry, a charge led by his treasury secretary, Larry Summers, and Sen. Phil Gramm (R-Texas) in the form of the 1999 Gramm-Leach-Bliley Act. The safeguards put in place to prevent another 1930s Depression were basically gutted.

Not surprisingly, nine years later, our nation begins and continues to experience the Great Recession. Aggravating the situation was a greater transfer of wealth known as the Bush tax cuts of 2001.

In spite of the budget surplus inherited, President George W. Bush's $1.3 trillion tax cut to the richest Americans grew the deficit by $400 billion a year. Also aggravating the situation are the two seemingly never-ending wars Bush started.

By the end of Bush's term, more than half of the tax cuts solely benefited the richest 5 percent of Americans while the middle-class received about 7 percent of the benefits.

According to the Congressional Budget Office, eliminating the Bush tax cuts for the wealthiest 2 percent of Americans would immediately increase revenues by about $690 billion over the next 10 years, plus $140 billion in debt services needed to maintain the tax cuts. That's an $830 billion savings.

You don't need a degree in economics to realize that the greatest contributor to the present deficit and the transfer of wealth from the poorest to the richest Americans continues to be Bush's tax cuts.

Bush promised in 2001 that if his tax cuts were enacted "[It would] create new jobs … generate new wealth … and … open new opportunities."

The 2008 Great Recession proved it didn't.

When Obama took office during the worst economic crisis since the Great Depression, he signed an $800 billion spending increase to stimulate the economy.

The growth in spending needed to starve off the Great Recession and a drop in revenue due to the Bush tax cuts exploded the deficit.

Obama promised hope and change. He was accused of being a socialist. I wish he were!

Maybe then the inequality trajectory started in the 1980s might have been dwarfed. But instead of change, Obama proved that as the new "emperor" his main task is to protect the "empire's" benefactors.

In naming the major culprits of deregulation to the nation's top economic posts (Summers, Geithner and Bernanke – the last reappointed), Obama proved it doesn't matter if Republicans or Democrats lead the country, as long as Wall Street continues to call the shots. Not much changed.

The capitalism (or better yet, neo-liberalism) that developed since the 1980s has become a great threat to entrepreneurship as resources are concentrated in fewer hands.

Notice how many mom-and-pop shops close once Wal-Mart moves into a neighborhood. Corporate mergers and acquisitions due to deregulation are more effectively destroying capitalism than any socialist could ever accomplish.

The capitalism/neo-liberalism that developed since the 1980s has become a great threat to our democracy. One person-one vote is being replaced with one dollar-one vote.

Recent Supreme Court decisions equating multinational corporations with citizens and massive political contributions (bribes?) with free speech are creating a new Golden Rule: The one with the gold makes the rules.

And finally, the capitalism/neo-liberalism that developed since the 1980s is contrary to Christianity. Adam Smith's basic thesis in "Wealth of Nations" is that individuals should pursue self-interests. If everyone does this, all society benefits.

But for those who are Christians, the Gospels teach us that we must put the needs and interests of others before ourselves.

Hence, an internal contradiction and an irreconcilable difference exist between capitalism and Christianity. How can I put my own self-interest first while putting the interest of others first? Such a divided house cannot stand.

Rather than shunning the socialist label, it might be time to fight back in this 30-year-old class warfare that has been brought to our doorstep.

The failure of capitalism/neo-liberalism might mean it is time to explore other alternatives. Maybe a democratic-type socialism that encourages entrepreneurship?

I can't speak for other Christians, but as for me and my house, serving the Lord demands a compassion in our economic structures that moves away from what Pope John Paul II called "savage capitalism."

No doubt, some will simplistically start calling me a "socialist." Fine, I'll wear the label as a badge of honor.

Miguel A. De La Torre is professor of social ethics at Iliff School of Theology in Denver.

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Tags: Class Warfare, Economic Disparity, Miguel De La Torre