Sandy Weill, the former CEO at Citigroup, owns two apartments at 15 Central Park West, the most pricey address in Manhattan. In 2007, he paid $43.7 million for his first, a ten-room spread complete with a oval-shaped master bedroom that offers picture-perfect views of the sun rising over Central Park's expanses.
Weill now has this plush pad up for sale — at $88 million. He could well clear, say realtors, over $40 million. But Weill is taking great pains to point out that any profits he makes on the sale “will go to what we can give away to try to help make the world a better place.”
Weill clearly expects us all to applaud. But would we applaud a druglord who started bankrolling good causes back in his 'hood? Weill’s Citi empire, to be sure, has never pushed drugs. Only toxic securities. Last week, Citi agreed to pay $20 million to settle claims that this pushing had bankrupted five credit unions. Last month, to settle a totally separate fraud case, Citi agreed to pay $285 million.
Sandy Weill has plenty of high-flying company. America’s deepest pockets have, almost without exception, survived in grand style the Great Recession that their behavior so recklessly triggered. In this week’s Too Much, a geographical look at just how well they’re thriving. Together.
|GREED AT A GLANCE|
|declaredthat the Occupy “crowd” has a “fairly limited” understanding “of what makes our country work.” AIG's Steve Miller went on to claim that the AIG bailout “protected” taxpayers. In reality, as one financial watchdog notes, that bailout — $69.8 billion in tax dollars and another $97.8 billion in Fed Reserve loans — still has taxpayers $49.4 billion in the red. The AIG bailout deal also leaves taxpayers way back in line if the firm goes bankrupt . . . The Occupy Wall Street camp in Manhattan has come down. But the Occupy movement shows no sign of disappearing, in part because top 1 percent arrogance shows no sign of abating. Last week, the chairman of bailed-out insurance giant AIG |
More math that helps explain top 1 percent America: Sales at Walgreen, America’s largest drugstore chain, rose 7 percent in fiscal 2011. But profits for the year rose 30 percent, and compensation for Walgreen CEO Gregory Wasson jumped even higher — by 36 percent, the company reported last week. Wasson walked off with $10.9 million. Meanwhile, Chicago Business revealed earlier this month that Walgreen’s merchandising division has just eliminated an entire tier of middle management positions. A downsized “category specialist” now replaces associate and assistant managers. The drugstore giant is also axing a number of “category manager” positions, but won’t say exactly how many . . .You don’t have to feast off prescription drug mark-ups to get rich in America today. You can run the trade association that shills for CEOs who do the marking up. Tom Donahue, the chief exec at the U.S. Chamber of Commerce, pulled in $4.7 million last year. Not bad for someone who loudly labels public worker paychecks “over-bloated.” Donahue’s specialty at the Chamber: raising big-money donations for an organization the purports to represent small business. In 2010, new figures show, 88 percent of the Chamber’s dues-payers coughed up $100,000 or more, a rather stiff check for the average America ma-and-pa . . .
An estimated 47 percent of the lawmakers in Congress, says a new Center for Responsive Politics count, now rate as millionaires. This tally actually low-balls the congressional millionaire cohort — since the Center's calculations don't take into account either primary residences or artwork and other personal valuables. How do lawmakers pile up the big dough? Some — like Spencer Bachus, the Alabama Republican who chairs the House Financial Services panel — put the inside info their legislative status provides them to lucrative use. In 2008, news reports last week related, Bachus made a series of Wall Street bets that the economy would tank — after a closed-door briefing gave him advance notice that Wall Street was melting. Bachus ended up nearly doubling his money. Why no “insider trading” case against Bachus? Insider trading laws don’t cover members of Congress . . .
House calls live. Heart surgeon David Greuner has put together a team of 15 physicians that take their skills straight to the rich and famous. The private visits can come in handy at embarrassing moments. Last summer, for instance, an accomplished polo player in the Hamptons tore his shoulder and wanted to keep the injury hush-hush. A piece of cake for the Greuner team, whose visits can run up to $5,000, no insurance accepted. Maria Caprio, one satisfied Greuner team patient, had a doctor come by her Upper East Side Manhattan apartment to inject a local anesthetic. Enthused Caprio afterwards to a New York Post reporter: “When I have a severe migraine, the last thing I want to do is sit in an ER.”
|INEQUALITY BY THE NUMBERS|
America's Affluent and the New Bunker Down
Just 40 years ago, most Americans rubbed elbows with neighbors from a fairly wide cross-section of income levels. But today's rich, Census data show, are keeping everyone else at arm's length — and more.
How many neighborhoods have you ever seen with oodles of rich residents — and poor schools? Or, vice versa, how many neighborhoods do you know with lots of poor people and richly appointed schools?
Silly questions. We all know the answers. Kids in affluent neighborhoods don’t go to schools with leaky roofs, tattered textbooks, and uncertified teachers. Kids in poor neighborhoods do.
And what goes for schools, of course, goes for every other public service as well — from parks and libraries to road repair and garbage pick-up. You’re going to be much better off, as a person of modest means, if some of your neighbors have more substantial means.
Back in 1970, the vast majority of Americans lived in neighborhoods that did mix people of substantial and modest means. No more. In fact, says a new study just released by the Russell Sage Foundation and Brown University, the share of Americans living amid intense income segregation has more than doubled.
America’s rich haven’t just become richer, show the study data from Stanford University sociologists Sean Reardon and Kendra Bischoff. They’ve become far more likely to live among their own kind. The same for the poor.
Reardon and Bischoff have gone through Census data from all the U.S. metro areas with populations over 500,000. They define as “affluent” those neighborhoods where most families have incomes that run at least 50 percent over the typical family income of the entire metro area. Poor neighborhoods have most families making less than two-thirds the metro median income.
In 2007, in the nation’s most typical metro areas, neighborhoods that rated as affluent in the Stanford research schema had over half their families making over $112,500. Poor neighborhoods had over half their families making under $50,000.
Nearly one out of three families in America’s large metropolitan areas, the Stanford analysts found, spent 2007 in either a severely segregated rich or a severely segregated poor neighborhood.
In 1970, by contrast, only one in seven American families lived in neighborhoods that rated as segregated rich or poor.
In that same year, 65 percent of Americans lived in neighborhoods where over half the resident families rated as middle income. By 2007, that share of Americans living in middle-class neighborhoods had dropped to 44 percent.
The isolation of America’s rich, the authors of this new income segregation study note, is actually getting more intense than the isolation of the poor. And that isolation, they point out, deeply matters.
“The increasing concentration of income and wealth in a small number of neighborhoods,” the two authors note, “results in greater disadvantages for the remaining neighborhoods where low- and middle-income families live.”
New Jersey hosts some of the nation’s most income-segregated areas, and this segregation, Newark Star-Ledger commentator Tom Moran observed last week, is taking an ever heavier toll on our political psyche.
Growing income segregation, explains Moran, “means people of different means don't rub elbows as much, their kids don't play together as much, the parents don't chat over the back yard fence.”
In this segregated environment, people know less and less about people not like themselves. They more easily embrace stereotypes. Politicians from neighborhoods where rich people only interact with other rich people will gravitate more glibly to mean-spirited austerity budget cutbacks.
These pols don’t see the threats austerity poses to the well-being of real people with real needs. They see instead the “lazy” poor.
This phenomenon has been swirling around the U.S. political scene ever since modern American inequality first began skyrocketing in the 1980s. In 1991, Robert Reich, soon to become the U.S. secretary of labor, gave the phenomenon a label: the “secession of the successful.”
America's top earners, Reich would note, “feel increasingly justified in paying only what is necessary to insure that everyone in their community is sufficiently well educated and has access to the public services they need to succeed.”
The nation’s “stark political challenge in the decades ahead,” Reich added back in 1991, will be trying to reaffirm that we remain “a society whose members have abiding obligations to one another.”
We are, the new Stanford data tell us, most definitely losing that challenge.
The Top 1 Percent and a Generous Uncle Sam
Subsidies of the Rich and Famous. A report by Tom Coburn, M.D., U.S. senator, Oklahoma, November 2011.
Senator Tom Coburn, a right-wing Republican from Oklahoma, may be the quirkiest lawmaker in Washington. He swept into Congress with the “Contract with America” crowd in 1994 and has spent most of his lawmaking years working to get the government small enough to drown in a bathtub.But the 63-year-old senator, who doesn’t plan to run for re-election, also doesn’t genuflect to the rich and powerful. He even keeps a DVD copy of the populist film classic, Mr. Smith Goes to Washington DVD, on his desk.
Last week, Coburn did something a bit more substantive to dramatize his political independence. He released a data-filled report that dissects the tens of billions in federal subsidies and tax breaks that flow every year to American taxpayers who make over $1 million a year.
“The income of the wealthiest one percent of Americans has risen dramatically over the last decade,” Coburn charges. “Yet the federal government lavishes these millionaires with billions of dollars in giveaways and tax breaks.”
In 2008, for instance, millionaires claimed over $7 billion in mortgage interest deduction tax breaks. Some of those deductions, amazingly, came for yachts. How’s that? Current law, Coburn explains, extends the mortgage interest deduction to second homes, and the wealthy can label a yacht a second home if they live on it at least two weeks a year.
Other items on Coburn’s subsidy list don’t evoke the same outrage factor. One example: Coburn includes on the list the Social Security checks that retired millionaires cash in — and he wouldn’t mind at all if these checks stopped flowing.
But many of Social Security’s most committed advocates would disagree. Social Security, they point out, has always been a universal program — everybody contributes, everybody benefits — and ending that universality, these advocates fear, would jeopardize the program’s broad public support.
Coburn skates on much firmer ice when he goes after bloated farm subsidy programs and tax deductions for entertainment expenses. Billions from programs and tax giveaways like these serve to make the rich richer — at average taxpayer expense — each and every year. Millionaires, Coburn colorfully complains, are using the nation’s social safety net as “a hammock.”
Coburn, to be sure, has never been a particular safety net fan in the first place. He worries that “government policies intended to mainstream wealth redistribution are undermining” values like “personal responsibility.”
But the Oklahoma senator leaves unmentioned, in these pages, the tax code giveaway to the rich that undermines what may be the most core mainstream value of all, the importance of hard work. The giveaway that betrays this value: the tax code's preferential treatment for speculative capital gains income.
Ending this preferential treatment — billionaire hedge fund managers pay taxes at just a 15 percent rate — would generate more income than the $30 billion annual cost of all the other subsidies on Coburn's list.
Still, let's give Coburn his due. Our plutocracy can't be happy when even right-wing defenders of the faith start talking about subsidies for millionaires.
Quote of the Week
“Some politicians may physically remove us from public spaces — our spaces — and, physically, they may succeed. But we are engaged in a battle over ideas. Our idea is that our political structures should serve us, the people — all of us, not just those who have amassed great wealth and power.”
Occupy Wall Streetstatement after the encampment's eviction from Zuccotti Park in New York's financial district, November 15, 2011
Stat of the Week
Members of Congress, Harvard law professor Lawrence Lessig notes, spend between 30 and 70 percent of their time raising money. Who are they talking to? A very narrow slice of the American voting public. Less than 1 percent of Americans contribute over $200 to a political campaign. In 2010, candidates for the U.S. Senate had to raise, on average, just under $9 million to win.
Daniel Marans, How Income Inequality Undermines Social Security's Finances, Campaign for America's Future, November 15, 2011. The more income concentrates at the top, the more income goes exempt from Social Security tax.
David Lynch, How Inequality Hurts the Economy, Bloomberg Businessweek, November 16, 2011. Why the gap between the rich and the rest slows recoveries.
Dave Zirin, NBA Players: Welcome to the 99 Percent, The Nation, November 16, 2011. Pro athletes from the ranks of the working poor take on “generational, aristocratic wealth.”
Mike Konczal, How Did Inequality in America Get So Bad? The Nation, November 17, 2011. A clear and concise rundown.
Chuck Collins, Taxing the Wealthy, Common Dreams, November 19, 2011. A great new TED lecture video on a new way to think about society and taxing wealth.