For Pete's Sake, Not Ours

	December 3, 2012
THIS WEEK
America’s top 1 percent, new IRS data show, paid only 23 percent of their incomes in federal income tax in 2010, down from 24 percent the year before — and 28 percent back in 2001. This top 1 percent, meanwhile, grabbed 19 percent of the nation’s income in 2010, up from 17 percent in 2001. In other words, our top 1 percenters have jumped their income share since our new century started and — at the same time — watched their tax bills plummet. Congress could get us off the “fiscal cliff” simply by reversing these twin trends. America’s top CEOs have a different idea. The same top execs that have been cutting worker pensions — while they stash millions into their own retirement accounts — are now pushing Congress to cut back on Social Security and Medicare benefits, as a new Institute for Policy Studies report chillingly details. In Too Much this week, we have more on these outrageously cynical CEOs — and the aging billionaire egging them on. Also this week: some holiday gift ideas that can help our new century's second decade not repeat the first.
GREED AT A GLANCE
Lottery fever swept the United States last week as the jackpot for Powerball spiraled all the way up to an all-time record $587.5 million. Two winning tickets will now split the record pot. The winners' future? Not so bright, says financial adviser Don McNay, a top lottery researcher. The vast majority of lottery winners, McNay noted last week, end up broke within five years. The money “just causes them to lose their sense of values.” Average Americans don’t have to worry much about that loss. The odds against winning a lottery jackpot? Three times greater than getting killed by a falling coconut, calculates statistician Skip Garibaldi. But the jackpot odds do look rosier on Wall Street. The nation’s top 25 hedge fund managers last year hit jackpots that averaged $576 million . . . Hugh Grant, the CEO of chemical giant Monsanto, entered 2012 with a pay deal that promised him a maximum bonus about $4 million if he hit his “performance” targets. Grant hit his targets, and that tickled the Monsanto board of directors. A lot. The directors handed Grant a $5 million bonus for the year, a sum that brought his total fiscal 2012 pay to $14.4 million, required filings have just revealed. Over in India’s Maharashtra state, local farmers seem to be somewhat less tickled with Grant and Monsanto. They stand to lose $3.6 billion from the failure of the corporation's “cost-inflated and ineffective seeds.” India’s National Crime Records Bureau is now expecting 5,000 farmer suicides by year’s end . . . American fans of the hit TV drama Downton Abbey can’t wait for the show’s third season to begin next month. Some fans — the awesomely affluent ones — apparently can’t wait to live the aristocratic lifestyle the show dramatizes. Over the last two years, the Daily Mail reports, “demand for British butlers has more than doubled.” The Bespoke Bureau, a London agency that trains high-end domestic staff, has so far this year placed 430 butlers, four times the 2010 placement total. And the Guild of British Butlers, another butler prep school, now has no openings for new students through the end of 2013. What makes butlers so appealing? Explains the Bespoke Bureau's Sara Vestin Rahamani: “We train people up to understand how to give their employers exactly what they want.”	Quote of the Week “Think about the arrogance of these guys on Wall Street who were bailed out by the middle class of this country when their greed and recklessness nearly destroyed the financial system, and now they come to Capitol Hill to lecture Congress and the American people about the need to cut programs for working families. This is what class warfare is all about.” U.S. senator Bernie Sanders (I-Vermont), November 28, 2012
PETULANT PLUTOCRAT OF THE WEEK
America’s bankers have a problem that's bugging them bad: all those lingering lawsuits that blame the big banks for the massive frauds that inflated the housing bubble. Among the plaintiffs: MBIA, the bond insurer that lost $2.2 billion after mortgage-backed securities turned out to rest on frauds committed and concealed by Countrywide Financial, now a Bank of America subsidiary. MBIA lawyers sat Bank of America CEO Brian Moynihan down for a deposition last May. The deposition went public last week — and reveals a CEO with nothing but contempt for his accusers. Moynihan invokes one “I don’t recall” after another, then deadpans, “I have a good memory.” Moynihan pulled in $8.1 million in 2011, the same year his Bank of America announced 30,000 layoffs.
PROGRESS AND PROMISE
Starting next April, execs at enterprises that get at least 30 percent of their annual revenue from taxpayers in New York State will not be able to spend any of those tax dollars on executive pay that runs over $199,000 a year — if newly proposed state regulations go into effect, as expected. This new cap may crimp some lifestyles. One central New York health care operation, Excellus BlueCross BlueShield, had 69 execs last year who took home over $200,000, including $5.2 million for CEO David Klein. The new pay cap does come with loopholes. Enterprises would still be able compensate execs over $200,000 so long as they don't use tax dollars for that pay. Still, any policy that leverages the public purse against executive excess opens the door to bolder future limits.	Take Action on Inequality Spread the word about Fast Food Forward, the new effort to help workers organize an industry where CEOs typically average $25,000 a day, over double what most fast food workers take home in a year.
inequality by the numbers
	Stat of the Week The four top heirs to the fortune of Wal-Mart founder Sam Walton have crashed the $100 billion barrier. Christy, Jim, Rob, and Alice Walton ended last week with a combined fortune of $110.6 billion. In Bangladesh, 112 workers at Wal-Mart supplier Tazreen Fashions ended last week dead, the victims of a factory fire. Garment workers in Bangladesh make as little as 21 cents an hour.
IN FOCUS
A Billionaire Obsesses, Our Politics Regresses How much can a billion dollars buy? The undivided attention of America's entire political and chattering classes. Case in point: our ongoing national fixation on debt and deficit. Down through the millennia, single individuals have changed the course of history, some through their intellect, some through their courage, and still others through the depth and breadth of their vision. But you don’t have to have smarts or courage or vision to change history. You just need a ton of money, the sort of fortune that the 86-year-old Peter Peterson has amassed over his years wheeling and dealing on Wall Street. Peterson has been obsessing for years over federal budget deficits. Now his obsession has shoved the nation to a “fiscal cliff” that might well end up raising the age that Medicare kicks in and chopping billions out of all sorts of other programs near and dear to the hearts of America’s working families. These cutbacks make no sense. The current federal budget deficit directly reflects the bursting of the housing bubble five years ago and the resulting Great Recession. Put people back to work and end that recession, progressive economists note, and that deficit would quickly start shrinking. These progressive economists, unfortunately, don’t have hundreds of millions of spare dollars to make their case to the American public. Pete Peterson does. Five years ago, Peterson sold the bulk of his stake in the Blackstone private equity firm he co-founded 22 years earlier. That sale, in just one day of trading, added $1.8 billion to Peterson's already ample personal fortune. A year later, with a $1 billion outlay from that fortune, Peterson established the Peter G. Peterson Foundation to target “undeniable, unsustainable, and untouchable” threats to America's fiscal future and began a massive lobbying blitz for a “bipartisan” solution to federal debt and deficit. Peterson's foundation almost immediately began dispensing millions from its imposing stash of cash, funding everything from a classroom curriculum to a film documentary and a “fiscal wake-up tour.” Other millions, a National Journal analysis points out, went to think tanks across the political spectrum. Three years ago, Peterson dollars helped fund the high-profile national Simpson-Bowles Commission, a “bipartisan” maneuver to pitch cutbacks in social spending as an essential ingredient in any “responsible” approach to deficit reduction. That commission would prove unable to reach a budget-fixing consensus. No problem. Peterson dollars were soon funding a new public relations campaign that enabled the commission co-chairs, former GOP senator Alan Simpson and former Clinton chief of staff Erskine Bowles, to barnstorm the nation. This campaign, in turn, eventually morphed into “Fix the Debt,” a more tightly organized effort to resurrect the “core principles” that Pete Peterson holds near and dear. Among them: the need for “pro-growth tax reform” that “broadens the base, lowers rates, raises revenues, and reduces the deficit.” Translation: Let’s shift tax burdens off the rich and onto average Americans. Fix the Debt has overshadowed the various other Peterson-funded lobbying efforts, mainly because the new group’s “fiscal leadership council” includes a who’s who of America’s corporate and banking superstars, everyone from Goldman Sachs CEO Lloyd Blankfein to Microsoft chief Steve Ballmer. These Fix the Debt CEOs have been jetting in and out of Washington, pushing their case with lawmakers and White House officials. They're hoping for better luck with officialdom than they've had so far with the American people. Average Americans have largely tuned out Fix the Debt. One sign of the times: The Fix the Debt online petition backing the nostrums of Simpson-Bowles “as a starting point for a plan to reduce the federal debt” had just 300,000 signatures as of last week. The original Fix the Debt petition goal: 10 million signatures. No matter. Even without generating anything close to a public groundswell, Peterson’s agenda remains alive and well on Capitol Hill. Peterson, of course, doesn’t personally deserve all the credit. His basic budget agenda — keep federal spending down — has always resonated powerfully with America’s most affluent. The main reason: The less the federal government is investing in programs that help working families, the lower the pressure for raising taxes on America’s rich to help finance that investing. America’s rich and powerful can't seem to get enough of the Fix the Debt “fiscal responsibility” message. Business groups, reports the New York Times, are now paying Alan Simpson and Erskine Bowles $40,000 a pop — each — for speechifying at their conferences and confabs. Will Peterson and friends emerge the winners when the “fiscal cliff” dust finally settles? In a sense, these deep pockets already have prevailed. Congress could — and should — be debating how best to put America back to work. Lawmakers are instead debating how much to cut the federal help for average Americans that our rich don’t want to pay the taxes to support. The rich have, in effect, framed our political debate. In plutocracies, they always do. A century ago, Americans understood that reality. Their response? They made plutocracy itself their target. Someday soon, we’ll need to follow suit.	New Wisdom on Wealth Josh Bivens, Inequality is not just about taxes and education, Working Economics, November 27, 2012. Pundits, write on the blackboard 100 times: Inequality is not rising mainly because our changing economy rewards the highly educated. Kevin Drum, Why the Super Rich Have Turned So Bitterly Against Obama, Mother Jones, November 28, 2012. Deconstructing the "punishing success" rant. Paul Solman, Did Marvin Miller's Free Agency Spike CEO Pay? PBS, November 28, 2012. The legendary baseball union leader who passed away last week demolishes the claim that CEOs owe their windfalls to the same market forces that set baseball salaries. Chrystia Freeland, Income Inequality Sheds Its Taboo Status, New York Times, November 29, 2012. An optimistic take on a sea change in mainstream public policy thinking. David Swanson, We Used to Make the Rich Poorer and the Poor Richer, FireDogLake, November 30, 2012. A veteran activist explains how — and why.
new and notable
A Gift-Pack of Insights on Our Great Divide Sam Pizzigati, The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970. Seven Stories Press, 384 pages, 2012. Chuck Collins, 99 To 1: How Wealth Inequality Is Wrecking the World and What We Can Do About It, Berrett-Koehler Publishers, 150 pages, 2012. The past year has brought a bumper crop of great new books on inequality — and the struggle against it. Past issues of Too Much have showcased a wide assortment of these outstanding new titles, and a host of Too Much readers have by now read a good many of them. But most Americans have not yet partaken of this good reading to be had. What new books can best introduce a broader public to the information — and inspiration — this new inequality literature offers? The just-published The Rich Don’t Always Win and the still fresh 99 to 1, published this past spring, offer two eminently accessible places to start. These two titles neatly complement each other. The Rich Don’t Always Win tells the fascinating story of how Americans, starting a century ago, overcame all logical odds and shrunk the richest rich in world history down to democratic size. That rich, over recent decades, has made a stunning comeback. 99 to 1 explains why and lays out a compelling action plan for turning that comeback around. Both books aim for the general reader. Both come from publishers committed to advancing social justice. Both together offer an inexpensive bundle of insights for young and old, rich, poor, and middle alike. Both these books also have brief videos available where the authors introduce the grand themes that run through what they’ve written. You can view the two, The Rich Don’t Always Win and 99 to 1, in just a few minutes. To order online, check this publisher’s discount for The Rich Don’t Always Win and this 99 to 1 online ordering option.