RhodZ copy

Talk delivered at Emerson Unitarian Universalist Church

Sunday, July 17, 2016

By Rhod Zimmerman


We are witnessing dangerous times where the wealth of nations, especially the United States, is being gobbled up by a few individuals at the expense of everyone else. According to Robert Reich, Former Labor Secretary, the top 1% of Americans now take home over 20% of the total American income. They now have 40% of the nation’s wealth. The lower 80% own a mere 7% of the nations wealth. Because of their political power, the top tax rate for the rich, which was 70%, now is 35%. Total tax revenues are now lower than 15% of the total national income, the lowest in 60 years, causing school closures, delays in programs to maintain critical infrastructure, and underfunding of other critical public services. The American middle class has shrunk from 61% of the population in 1971 to 50% in 2015. Countries without a robust middle class do not tend to do well. Compared to the rest of the world, the U.S. middle class ranks 27th in individual wealth.



In the decade from 1992 to 2002 (mostly during the time while George W Bush was president), the U.S. 400 highest incomes more than doubled while the rest showed small increases at best. But since the cost of living in that period rose over 28%, most Americans had to find ways to cut expenses.


There seems to be no limit to some people’s hunger for more wealth, more power. To support their goals, those same individuals have bought up much of the media (TV, radio, newspapers, also known as “The Fourth Estate”) that was supposed to be the watchdog of the common man and woman. It can be argued that armed with control of the media, the powerful have successfully compartmentalized and branded segments of the population and managed to make divisiveness the new world order, thereby deflecting attention from themselves. They also can control what news stories to air and what stories to bury.


In 1936, President Franklin Delano Roosevelt warned us about powerful people and corporations this way: “They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by (an) organized mob.” *


One important measure of a country’s financial health is the ratio of Chief Executive Officers, CEO’s, to worker salaries. At this writing, both Disney and J. C. Penney’s CEO’s are paid over $53 million annually (that is $26,500 an hour based on a standard 40 hour workweek). Verizon, whose CEO is paid a comfortable $20 million a year is trying to outsource jobs, reduce wages, and cut health benefits of Verizon employees.


American CEO’s as a group were making 30 times what one of their typical workers were making in 1978. American CEO’s in 2013 were making 296 times what their typical workers were paid.****


Far too many corporations are ruthless in their treatment of employees, like Walmart refusing employees time for bathroom breaks and paying them so little, many cannot afford lunch. Walmart workers cost taxpayers $6.2 billion according to a Forbes report that details how Walmart Workers have to and are urged by company executives to use food stamps, Medicaid, and subsidized housing to augment their low pay.***** McDonald’s and Walmart workers have been forced to be “welfare queens” while their executives earn millions and the company buys expensive aircraft and similar “benefits”.


Other countries have addressed the CEO vs average worker salary by putting caps on the ratio. Switzerland is trying for a ratio of 12 which sounds a bit too low and may be negotiated, while Japan has had a ratio of 30/1 for some time. Israel has set a limit to CEO of their financial Institutions to 35 times the lowest earner.** The current average ratio is 171. Companies who pay over the cap can no longer claim the excess as an expense. Our congress is being urged to pass a CEO cap at 50 times the average worker. Stay tuned.


It seems natural most of the very wealthy and corporate executives are opposed to raising the minimum wage. They have been preaching how businesses would suffer and how the areas that raise the minimum wage would suffer. If we are going to deal in facts, let’s look at areas who have already raised the minimum wage – Seattle for example. Between January and December of 2014, while Seatac’s business owners (and their customers) were absorbing the effect of giving raises to minimum wage employees, unemployment and prices did not increase as feared. It turns out that you CAN increase the minimum wage and increase overall employment at the same time. In general, states that have raised the minimum wage are outperforming states that have not.******


Another myth that wealthy Americans try to sell is that they pay their fair share of income tax. While that may have been true at one time, the concept of “trickle-down” economics introduced by President Reagan has not worked as promised. The idea is that with a lower tax burden and increased investment, business can produce (or supply) more, increasing employment and worker pay. In practice, the program has radically reduced the tax rate for the wealthy and introduced so many loopholes that the tax program has shifted most of the tax burden onto middle and low-income Americans. Leading up to the 2012 presidential election, Mitt Romney repeatedly stated that 48% of Americans pay no income tax. That statement deliberately ignores the significant other taxes the 48% does pay – like payroll taxes. Apparently in Mitt’s world payroll taxes do not count as income taxes. So who are the Americans who pay no income tax? The bottom fifth of American households paid an average of 12.3% in Federal and State taxes for 2011. When all Federal, State and local taxes are included, the lowest one-fifth of American households paid about 16% of their income in taxes according to the non-profit, non-partisan Institute of Taxation and Economic Policy***.


Now, lets examine Mitt Romney’s taxes. By deliberately holding back a large valid deduction on his income taxes in 2012, the year Mitt Romney ran for president, he was able to demonstrate he paid a whopping 14% of his income in income taxes. The estimate is that when he lumped in those missing deductions later on, that 14% would be closer to 12%. But if the lowest one-fifth of American households paid about 16% of their income in taxes, who is it who’s is not paying their fair share of taxes? The media didn’t question Romney’s assertion, and if they corrected Mr. Romney, I missed it. What do you think Donald Trump pays in taxes? You probably don’t want to know, and doubtfully will ever know.


Another myth the powerful try to sell is aimed to convince voters that Social Security is a government giveaway, despite the fact that the program was developed simply to serve retiring Americans. Given a choice, most Americans would rather have control over their own retirement rather than have the government take control, but at least Social Security forces us all to save for retirement. There is a growing dissatisfaction with the program because the cost to workers has increased dramatically, partly due to poor investment decisions for the fund, partly because of inflation, partly due to the impact of “baby boomers” and partly due to the expansion of Social Security to fund programs having no direct connection to retirement of the people contributing to the program. So, if there is a giveaway attached to Social Security as some charge, it has little to do with its intended purpose. That purpose for contributors to draw from the program to help fund their retirement. Eliminating the cap on Social Security contributions would insure the program would be well funded for the foreseeable future. You probably won’t hear that explanation from the media either.


The well-publicized Aliso Canyon natural gas leak is now California’s single largest source of planet-warming pollution and it was no isolated accident. It was the result of too little regulatory oversight of Southern California Gas and other oil and gas excavators. That falls squarely on California governor Jerry Brown, whose administration is responsible for well safety. In 2011, Brown fired two of his top regulators who raised grave concerns about the oil and gas industry’s underground injection activities. The state has also known for years that aging natural gas infrastructure was a disaster waiting to happen. But the governor’s administration failed even to require safety plans and other measures that would have helped prevent the Aliso disaster.


Most of us who voted for Brown (including me) felt that he would be the best choice to insure California would always put public safety ahead of corporate profits. This faith has clearly and sadly been brought into question. The Governor has helped make California an outstanding state, but Brown’s antipathy to regulation of all kinds, including health and safety, is now well documented.  The public first started paying attention in February of 2015 when it learned that Brown’s oil and gas regulator turned a blind eye to frackers injecting toxic wastewater into federally protected drinking water aquifers in Kern Country. The resulting contamination, like the Aliso leak, was a direct result of a Brown Administration culture of penalizing regulators who crack down on health and safety in the oil and gas industry. Brown has quietly approved a great deal of fracking in California. And Brown is not alone. The Democratic party platform does not include a ban on fracking, despite a growing opposition to the practice.


Fracking has been demonstrated to cause earthquakes. Since Oklahoma has started to allow massive fracking, earthquakes in Oklahoma over a magnitude of 3.0 rose from 2 in 2008 to 20 in 2009, according to the United States Geological Survey. Last year (2015), there were 890 earthquakes in Oklahoma over magnitude 3.0. In 2009, no quake of the 20 recorded that year measured 4.0 or greater. Last year, 30 did. In 2011, an earthquake of 5.7 was recorded. The Oklahoma republican governor and several republican state senators are urging a moratorium on fracking effective immediately.


So those Californians feeling their state government is watching out for their best interest (in a state with the well documented San Andreas fault) might want to question why our governor seems so much in the hands of energy companies. According to scientists, the land around the San Andreas fault near Los Angeles, San Diego and Orange Counties is moving and they fear a significant jolt will trigger a massive earthquake. There is also the fear that water tainted from fracking has found its way into fruits and vegetables grown in California. Fracking companies have refused to reveal the chemicals used in the process, but it is known that arsenic is one ingredient. France, Wales, Scotland, United Kingdom and several U.S. states including New York and Hawaii have banned Fracking. Check the internet, folks – I seriously doubt the media has done enough to expose the facts relating earthquakes and fracking.


On a positive note – on July 15, 2015, Representative Elijah Cummings and Senator Tammy Baldwin introduced H.R. 3065, “The Financial Services Conflict of Interest Act” which is commonsense legislation to stop the “revolving door” between Wall Street and Washington. The act would also ban “golden parachute” bonuses for executives taking government positions, and make it harder to switch between working for a big bank and regulating Wall Street. The bill has the support of Senators Elizabeth Warren and Bernie Sanders, but sadly is opposed by Hillary Clinton.


Concerns about changes in the Fourth Estate have given rise to “The Fifth Estate,” which is mostly associated with bloggers, independent journalists, and non-mainstream media outlets. And the rise of the internet has given said Fifth Estate the ability for mainstream Americans to communicate with each other over the Internet without the bias of a controlled media. Maybe there is cause for hope after all.


Okay, we have a right to be mad, but what can we do to reverse the trend of the wealthy becoming wealthier while the middle class is being destroyed and more and more people are falling below the poverty line? Clearly we need to pass a tax code that is not dictated by the wealthy. We also need to stop the ability for wealthy folks and corporations to buy members of Congress by funding their election and re-election campaigns or by promising high paying jobs when they retire from their government jobs. That whole system is the definition of “a conflict of interest”.


Violence and hatred have never improved the lives of people. It is alarming to many that people on news programs are able to openly advocate killing people in government they do not agree with – even the president of the United States – without penalty. We all saw the terrible events that occurred in Dallas last week. Too many view killing as a solution to our problems. The real danger is the drift toward a mob mentality. We have witnessed much progress toward mob mentality with the 2016 presidential campaign and too much media support of radical viewpoints. Maybe all of us should wean ourselves off network TV news and take more advantage of PBS, BBC and internet news, still questioning the accuracy of what they give us.


Bottom line? If we are ever going to change things, we cannot simply sit on the sidelines and hope others do the job. As Unitarian Universalists we need to work toward ending the divisiveness that separates us and find common grounds we share even when we have differences in other areas. We need to organize, discuss, set objectives, and work together to make changes happen.


We need to ask ourselves: who are you mad at, are you mad at the right people, and just how mad are you?


So may it be among us.


* Franklin Delano Roosevelt, 1936 speech.


** http://www.timesofisrael.com/knesset-ups-tax-penalties-for-extravagant-bank-ceo-pay/


*** The Institute on Taxation and Economic Policy (ITEP) is a non-profit, non-partisan research organization that works on federal, state, and local tax policy issues. ITEP’s mission is to ensure that elected officials, the media, and the general public have access to accurate, timely, and straightforward information that allows them to understand the effects of current and proposed tax policies. ITEP’s work focuses particularly on issues of tax fairness and sustainability. ITEP works directly with lawmakers, non-governmental organizations, the public, and the media to achieve these goals.


**** Economic Policy Institute, November 2015


***** http://www.forbes.com/sites/clareoconnor/2014/04/15/report-walmart-workers-cost-taxpayers-6-2-billion-in-public-assistance/#7e0bc0c67cd8


****** https://mic.com/articles/92983/here-s-what-is-happening-to-the-states-that-increased-minimum-wage-this-year#.UPSu6JlxC


“How the other half lives” http://www.nytimes.com/2016/04/27/opinion/campaign-stops/how-the-other-fifth-lives.html?WT.mc_id=2016-KWP-MOBILE-AUD_DEV&WT.mc_ev=click&ad-keywords=MOBILEFULLPAGE&kwp_0=147384&_r=1


Other Recommended Reading:

The Jackals at Jekyll, Richard Sizemore

The Creature from Jekyll Island, G. Edward Griffin