wealth

America’s Greediest: The 2011 Top Ten Edition

Sam Pizzigati — Sun, 11 Dec 2011 20:42:12 -0500

One puts on football pageants. Another makes millions on a virtual farm. From Too Much, the Institute for Policy Studies inequality weekly, we present the year's ten most avaricious. All ten remind us just how much needs to change, economically and politically, in 2012 and beyond.

The greediest among us in 2011 probably haven’t been any greedier, as a gang, than any greedy of the recent past. They just seem that way.

Why so? We have a whole new frame of reference. This fall’s sudden — and exhilarating — rise of the Occupy movement has helped us remember what we, as a society, had sadly forgotten: that decent, smart societies never let the few grab away rewards that ought to be shared among the many.

Who grabbed most greedily in 2011? We have no statistical yardstick to help us make that call. You don’t, after all, have to make a million to rate as an all-star greedster. You do have to be ruthless, self-absorbed, and grossly insensitive.

That description, we’ll admit, fits far more folks than our ten dis-honorees below. Maybe next year, we can hope, we’ll have a harder time filling out our top ten.

10/ Paul Hoolahan: Skimming the Sugar

Greed has never been a stranger to professional sports. But this year’s most avaricious sports character works for a nonprofit. Meet Paul Hoolahan, the chief exec at the Sugar Bowl, one of four annual college football postseason games that rotate hosting the national collegiate championship.

The Sugar Bowl enjoys tax-exempt status and regularly touts its contributions to good causes. But Hoolahan’s favorite good cause may be his own. He took home just under $600,000 in 2009, the latest year with figures available, almost quadruple his $160,500 paycheck for the same job 13 years earlier.

Hoolahan and his two top aides are skimming off $1 of every $10 the Sugar Bowl generates, a Washington Post analysis recently noted. At the same time, adds thet Arizona Republic, the Sugar Bowl and its three “Bowl Championship Series” partners are donating to charity only 20 cents from every $10 in revenue.

The Sugar Bowl disputes those figures. Hoolahan’s aides say their bowl never bothers to report many donations “as charitable giving.”

This past September, one of those unreported “donations” came to light. The Sugar Bowl had spent, a Hoolahan flack had to acknowledge, at least $3,000 on political contributions to the governor of Louisiana, a nonprofit tax law no-no.

9/ Michael Duke: Shifting the Goalposts

How do CEOs end up making so much? Ask Michael Duke, the chief exec at retail colossus Wal-Mart. Duke takes home his millions — $18.7 million in his company’s latest fiscal year alone — the old-fashioned way. He squeezes workers.

But sometimes squeezing just can’t get the job done. No big deal for Michael Duke. He just moves the goal posts that determine his “pay for performance.”

Duke moved into Wal-Mart’s CEO suite in 2009. Since then, he has ended “premium pay” for hours worked on Sundays, eliminated profit-sharing, sheared health care benefits, and cut staffing so low, Retailing Today reports, that customers sometimes can’t find shopping carts because the store where they’re shopping has no employees available to collect carts from the parking lot.

This sort of chronic understaffing may help explain why Wal-Mart’s “same-store sales” — the business “metric” that compares a retail chain’s sales at the same group of stores from one quarter to the next — started tumbling soon after Duke took over as CEO and didn’t stop sinking until this past fall.

This same-store nosedive should have cost CEO Duke big time at pay time, since same-store sales, explains a New York Times analysis, accounted for 30 percent of the factors that Wal-Mart used to calculate Duke’s bonus.

But lo and behold, all of a sudden this past spring, Wal-Mart’s board of directors compensation committee eliminated same-store sales from Duke’s bonus calculations. The immediate result: Duke would receive $16 million in “performance” pay — despite Wal-Mart’s stunning same-store sales tailspin.

Duke’s total $18.7 million paycheck for the year would represent 750 times the annual pay of a Wal-Mart worker making $12 an hour, working 40 hours a week.

Some 75 percent of Wal-Mart workers make less than $12 an hour, notes a new report on Wal-Mart’s business model, and few Wal-Mart workers get 40 hours.

8/ Robert Iger: Impersonating Uncle Walt

Imagine if you could live in “the happiest place on earth.” Even better, imagine you ran it! Then you’d be Robert Iger, the CEO of the Disney entertainment empire.

Iger became Disney’s numero uno back in 2005, and this year has been one of his best. In January, Disney announced that Iger’s latest annual compensation topped $28 million, a neat 35 percent increase over the year before.

In October, Iger picked up a new pay deal that extends his CEO contract into 2015 and adds on a cushy final year as Disney “executive chairman” — at $2.5 million — to help him make the transition into fantasyland retirement.

Not enough to make you happy? How about this: This fall Iger became the newest member of the Apple computer board of directors. He’ll get a six-figure tip for the gig, plus a free copy of any new Apple product he wants. Happy, happy, happy.

Unfortunately, some housekeepers who work at the hotels in Disneyland have been raining on Bob Iger’s Disney parade. They went almost four years without a contract because they refused to accept Disney demands they feared would force them to pay hundreds of dollars a year extra for health care.

These spoilsport housekeepers testified earlier this year at a community forum that made poor Bob Iger seem the reincarnation of Uncle Scrooge McDuck. The original Walt Disney, the hotel workers union pointed out, made 108 times what his housekeepers were making in 1966. Iger now makes 781 times as much.

Those housekeepers just don’t understand. Uncle Walt could always whip out a pencil and draw Mickey Mouse when he wanted to feel happy. Robert Iger can only count his money.

Iger may now have to be content with a teeny bit less. Disney officials and hotel workers finally agreed on a new contract the first week in December.

7/ Doug Oberhelman: Threatening an Exit

Lawmakers in Illinois, early in 2011, modestly raised their state’s corporate income tax rate to help fill a gaping state budget shortfall. That modest hike soon had the CEO at the Peoria-based Caterpillar strongly “suggesting” that his Fortune 500 firm might have to exit the state.

Mused Caterpillar chief exec Doug Oberhelman: “I have to do what’s right for Caterpillar.”

And maybe himself, too. In 2009, a year that saw only three U.S. corporations lay off more workers than Caterpillar, Oberhelman took home just under $3 million. His last year’s paycheck: $10.4 million.

Caterpillar workers, meanwhile, have a new six-year contract that, one news report notes, includes no wage raises and a big boost in health care premiums.

Caterpillar seems to exploit tax loopholes as systematically as employees. From 2004 to 2009, the company paid in Illinois income tax only 1.04 percent of its $30.4 billion in earnings.

6/ William Weldon: Seeing No Evil

Contact lenses. Hip implants. Over-the-counter children’s medicines. You name it, Johnson & Johnson — the world’s second-largest health care products company — has recalled it over the past three years.

That’s one reason J&J sales have failed to increase the past two years — for the first time since the Great Depression. Jobs at J&J have fallen, too. The company has announced nearly 10,000 layoffs since 2004, the Institute for Policy Studies reports, despite $49.6 billion in profits the last three years alone.

Could any of this profiteering, job cutting, and chronic recalling be related? Absolutely not, says Johnson & Johnson CEO William Weldon. He declared last year that J&J had no “systemic problem.”

That may be right. Johnson & Johnson’s prime problem may be Weldon’s personal greed. In 2007, the CEO “restructured” the company and slashed J&J’s corporate quality control operation by 35 percent. The next two years, a hiring freeze made replacing newly vacant quality positions almost impossible.

These moves were soon paying big dividends — for Weldon. He took home $25.6 million in 2009. Then came the flood of recalls and assorted other scandals from kickbacks to illegal drug marketing. The Johnson & Johnson board response? The company dropped Weldon’s annual pay — to $23.2 million.

This past summer, a special J&J board member investigative panel cleared Weldon and his management buddies of any blame for the company’s recall disasters. Explained the panel: “Senior management never issued any directives to the effect that quality should be sacrificed for production.”

Weldon, notes an Associated Press analysis, also serves as chairman of the Johnson & Johnson board and, as such, has nominated a host of J&J board members to their current positions.

5/ Lloyd Blankfein: Stiffing the Sisters

Back two years ago, Wall Street’s most powerful banker — Goldman Sachs chief Lloyd Blankfein — impishly told a British journalist he was “doing God’s work.”

God apparently pays well. In 2007, on the eve of the financial meltdown banks like Goldman did so much to fire up, Blankfein collected a $68 million bonus, the largest in Wall Street history. The year before, his bonus hit $54 million.

In other words, Blankfein has done more than his share to help make New York one of the world’s most unequal cities. In 2011, Blankfein had a chance to hit the restart button. He didn’t.

In April, a Goldman Sachs required filing revealed that Blankfein, after going two years without taking a cash bonus, had gobbled up $5.4 million in bonus cash for the bank’s latest fiscal year. And plenty more in stock awards and salary. His total pay for the year: $19 million, about double his total pay the year before.

In May, at the Goldman Sachs annual meeting, Blankfein faced a shareholder resolution — brought by four groups of nuns — that would have initiated an investigation into whether executive pay at the firm rated as “excessive.”

Blankfein didn’t seem to think that investigation would be a good idea. At the time, he held a stash of Goldman shares worth $527.6 million. Blankfein and his allies would go on to have the nuns’ resolution crushed in shareholder voting.

4/ Alan Mulally: Shrinking to Riches

Alan Mulally took the Ford Motor CEO reins in 2006. Over his first three years, Ford lost $30 billion. Over his last two, Ford has gained back $9.3 billion, and that gain has become cause for corporate celebration — and a windfall for Mulally.

In March Ford handed the chief exec $56.5 million in stock and then, a month later, announced that Mulally last year pulled down an additional $26.5 million in annual pay. That amounted to 910 times the pay of entry-level Ford workers. They had been making, ever since a 2007 concessions pact, just $14 an hour.

United Auto Workers president Bob King calling Mulally’s spring-time take-home bonanza “morally wrong.”

Added another UAW leader representing Ford’s Canadian workers: “It’s unconscionable that a CEO gets paid this much money as a result, quite frankly, of shrinking a company into profit.”

3/ Larry Ellison: Loving that Real Estate

How much more incentive to “perform” does Larry Ellison, the top exec at business software giant Oracle, need? Apparently, $77.6 million. That’s how much Ellison collected for the Oracle fiscal year that ended this past May 31.

That piece of change added less than two-tenths of 1 percent to Ellison’s $39.5 billion personal fortune, the world’s fifth largest.

Why does Oracle, at this point, bother ladling still more loot on Ellison? His continuing rewards, says the Oracle board compensation committee, rest on a “subjective evaluation of Mr. Ellison's performance, the unique contributions he makes to Oracle as its founder and various other factors.”

Among those “various other factors” may be the annual upkeep of the at least 15 personal residences Ellison owns. That upkeep may be getting to the billionaire. Or maybe just boredom. This past fall Ellison put up for sale a 6.9-acre home and horse farm combo he owns in Northern California.

Ellison is asking $19 million for the property. He paid $23 million for it in 2005. But the $4 million haircut he’s now facing won’t be a big deal. The loss amounts to around one-hundredth of 1 percent of his fortune.

2/ Don Blankenship: Prepping for a Comeback

This past May, West Virginia state investigators found Massey Energy directly to blame for the 2010 blast that left 29 miners dead at the company’s Upper Big Branch coal mine. Massey CEO Don Blankenship’s management team, probers charged, had nurtured a “culture bent on production at the expense of safety.”

Earlier this month, federal regulators agreed. They found “systematic, intentional, and aggressive efforts” to flout basic safety regulations. Under Blankenship, Massey managers kept two sets of books, one accurate for internal use and another fake for regulators.

Says the top federal mine safety official: “Every time Massey sent miners into the UBB Mine, Massey put those miners’ lives at risk.”

That risk taking paid off handsomely for Blankenship. He pocketed $38.2 million from 2007 through 2009, after $34 million in 2005, and retired this past December with a $5.7 million pension, $12 million in severance, another $27.2 million in deferred pay, and a lush consulting agreement.

What about the families of the lost miners? Federal prosecutors have just reached a settlement with Alpha Natural Resources — the company that bought out Massey this past June — that will provide $1.5 million to each family.

Blankenship could still face criminal charges. But we'll more likely see him back in the mine business. The mega millionaire retiree has signed Kentucky state incorporation papers that identify him as the president of a new company that calls itself the McCoy Coal Group Inc. Who says Blankenship has no heart? “McCoy” turns out to be his mom’s family name.

1/ Mark Pincus: Reaping What He Sows in FarmVille

Mark Pincus, the venture capitalist who runs the Zynga online gaming goliath, wants it all. Money and power. Pincus appeared, early in 2011, on track to get them both.

The 45-year-old Pincus had spent the previous four years building up Zynga — and an awesome buzz on Wall Street. Analysts were predicting that Zynga’s initial public stock offering might be the biggest IPO blockbuster since Google.

Some analysts even floated a $20 billion figure for Zynga’s total corporate net value. The Pincus personal net worth? Forbes put that at $2 billion.

This past March, in a preview of the IPO bonanza to come, Pincus would sell off a chunk of his Zynga shares and clear a neat $110 million.

This lucrative sale in no way loosened the Pincus lock-grip over Zynga. The Harvard MBA had structured the company’s stock to make him the only owner of Zynga’s “Class C shares,” stock that has 70 times more voting power than Zynga’s regular shares. Elsewhere in the high-tech industry, special shares typically carry only ten times the voting power of regular shares.

But then this fall things started unraveling.

High tech start-ups typically attract talent by offering shares of stock in their new concern, and Pincus had done just that with Zynga. But Pincus had apparently concluded, with the big IPO pending, that he had given away too many shares.

In early November, the Wall Street Journal revealed that Zynga management had demanded that various employees “give back” their stock “or face termination.”

Pincus, in response to the Journal story, sent out what amounted to a non-denial denial. But follow-up news reports would soon reinforce the image of Zynga as more shark tank than romper room of inspired gamers.

The New York Times would describe a “messy and ruthless” Zynga workplace chock-full of “loud outbursts from Mr. Pincus, threats from senior leaders, and moments when colleagues broke down into tears.”

This coverage would come on top of news that the Securities and Exchange Commission, the federal watchdog over Wall Street, had told Zynga to stop using certain “non-traditional accounting measures” that could mislead investors.

Industry insiders were also starting to question Pincus’ supposed strategic business genius. The online future of gaming, analysts pointed out, rests in the mobile market. Other companies in that market were eating Zynga’s lunch.

And those other companies wanted nothing to do with Pincus. Several, including the maker of Angry Birds, rejected Zynga’s offers to buy them up, fearing that “Pincus' hard-driving personality and iron-fisted control” was going to make keeping talent a constant uphill battle.

Early in December, amid the torrent of negative news, Pincus and Zynga signaled that the company would be asking no more than $10 per share in its upcoming IPO. That put the company’s total value at about $7 billion, only a little more than a third the estimated value that had floated around earlier in the year.

Pincus, our greediest American of 2011, still insists he’s only creating a “meritocracy” at Zynga. The question he can’t answer: What has he — or anyone, for that matter — ever done to merit a billion dollars?

Sam Pizzigati edits Too Much, the online weekly on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Read the current issue or sign up at Inequality.Org to receive Too Much in your email inbox.

The New Forbes 400 — and Their $1.5 Trillion

Sam Pizzigati — Mon, 26 Sep 2011 20:11:05 -0400

How swell a year have America’s 400 richest enjoyed over the past 12 months? This good: Google billionaires Sergey Brin and Larry Page each saw their personal fortunes jump by $1.7 billion over the year — and each has slipped five slots in the just-published latest edition of the Forbes 400.

Forbes has been publishing an annual list of America's 400 richest ever since 1982. Wealth in America, interestingly, began hyper concentrating at about the same year. So Forbes, in effect, has been providing a valuable public service. Thanks to Forbes, we’ve all been able to track just how phenomenally wealthy America’s mega wealthy have become.

Forbes, year in and year out, does a wonderfully thorough job of gauging the individual fortunes of America’s most fortunate. For this year’s list, the magazine interviewed 97 billionaires — and many more knowledgeable observers whose ranks even included ex-spouses. Public records helped fill out this latest Forbes portrait.

The basic numbers from all this research: As of the end of last month, August 26 to be exact, America’s top 400 held a combined $1.53 trillion in personal wealth, a total 12 percent up from last year — and not that far off the top 400 all-time high, $1.57 trillion, set in 2007, the year before the Great Recession hit.

These massive numbers impress. But we need some historical perspective to really appreciate their magnitude. Try this: Back in 1982, an American of means needed at least $75 million to enter the ranks of the Forbes 400. The entry threshold for the current 2011 list: $1.05 billion.

In other words, every deep pocket on this year’s Forbes 400 list ranks as a billionaire. That first 1982 list sported only 13 billionaires.

Now these comparisons, to be sure, don’t take inflation into account. What happens when we adjust for inflation? The incredible concentration of America’s wealth still shines through just as clearly.

The single richest American on the 1982 list, shipping and oil magnate Daniel Ludwig, held a personal fortune of $2 billion, the equivalent of $4.7 billion today. On the 2011 Forbes 400 list, a $4.7 billion fortune rates only a 66th place tie.

The $230.8 million average Forbes 400 fortune in 1982 — an inflation-adjusted $540.4 million today — wouldn't even be enough to make this year's top 400. In fact, $540.4 million today only gets a deep pocket halfway to top 400 status.

One more sobering statistical observation: Between 1982 and 2011, the total combined fortunes on the Forbes 400 list have soared — after taking inflation into account — an eye-popping 612 percent.

To add a little levity to this year’s top 400 coverage, Forbes is running a sidebar on “When Really Rich People Do Really Stupid Things,” a series of chuckles at rich people’s expense gathered from the records of the Chartis insurance company. Can you believe that one mega rich dunce set his Porsche on fire trying to dry a rear-seat floor mat with a leaf blower?

But the ultimate joke, the Economic Policy Institute’s Larry Mishel noted earlier this month, may be on us.

Between 1983 and 2009, Mishel reports, America’s richest 5 percent grabbed 82 percent of all the nation’s gains in wealth. The nation’s bottom 60 percent of households “actually had less wealth in 2009 than in 1983.”

Americans, in short, have tolerated a massive redistribution of America’s wealth, from middle and bottom to top. In the process, we have tanked — for millions of Americans — the American dream. That surely qualifies, by any benchmark, as a “really stupid thing.”

The Global Debt? Give the Big Boys the Bill

Sam Pizzigati — Sat, 25 Jun 2011 15:10:31 -0400

The world's ultra rich, those 103,000 deep pockets with at least $30 million to invest, could afford to pay off the entire national debt of the world's biggest deadbeat nations without having to sacrifice a single Rolls or Bentley.

Sober central bankers the world over — and their political pals — have been hyperventilating the last few months about the debts of the world’s most notorious deadbeat nations.

Over in Old Europe, we have Greece with a standing debt of some $485 billion. Over here in the New World, meanwhile, the United States owes some $9.4 trillion to the outside investing public.

“Crushing” debts like these, the debt hawks squawk, have only one remedy. The average people of deadbeat nations must swallow hard and accept austerity. They must shut down their libraries and overcrowd their classrooms — and start selling off their public assets as well. Anybody want to buy the Parthenon?

Amid all this debt hysteria, we might want to slow down a bit, unless we relish the possibility of having Donald Trump ending up the owner of the Acropolis. We need a little perspective, the sort we can get from the 15th annual World Wealth Report, a joint effort from Merrill Lynch Global Wealth Management and Capgemini, a Paris-based corporate and financial consultancy.

This latest World Wealth Report, released just last week, calculates — among other fascinating numbers — the total investible wealth of everyone in the world who now has at least $30 million available to invest.

Remember, we’re not talking total wealth here, only investible assets. The Capgemini-Merrill Lynch tallies don’t include the residences wealthy people call home, their diamonds, their luxury cars and yachts, or any other personal luxury goods and collectibles that sit in wealthy households.

The world now hosts, reckon Capgemini and Merrill Lynch, 103,000 individuals with $30 million or more sloshing in their investment accounts. Together, these “ultra-high net worth individuals” hold $15 trillion in investible wealth.

Cogitate on that total a moment. If the world’s ultra-high net worth folks had a hankering, they could totally pay off the Greek and U.S. debts, and still have almost $50 million each, on average, left to invest, on top of their mansions, Bentleys, and jewels. And the Greeks would get to keep the Acropolis!

The folks over at Capgemini and Merrill Lynch would never, of course, want to suggest for even a moment that the world’s “ultra-highs” — about 40 percent of whom, incidentally, live in the United States — either ought to have this hankering or be taxed into it. They’ve put together this World Wealth Report to impress the wealthy into becoming their clients, not to scare them.

But the rest of us remain free to suggest whatever we want — after we thank Capgemini and Merrill for providing all this wonderfully suggestive inspiration.

Budget Battle: Who Is Our Country FOR?

Dave Johnson — Thu, 07 Apr 2011 01:09:14 -0400

Who is our country for? Is this a country for We, the People, where all of us are banded together to protect and empower each other, together? Or is this a country where a powerful few reap all the benefits, and the rest of us are little more than "the help?" That is what the coming budget/deficit/debt/shutdown battles are about.

In the past several decades our country and economy has been thrown out of balance in ways that hurt most of us but greatly benefit a powerful few. Communities are being bankrupted, forced to lay off police, firefighters, teachers, nurses and other essential people who work to protect and help us. More and more working people are hurting, falling ever further behind, losing or barely clinging to their jobs and homes and businesses and health. At the same time big-company CEOs who cheat, bankrupt their company, ship jobs overseas and fire white collar workers by the thousands are not held accountable -- instead they are rewarded with big bonuses.

And in the larger picture the country is falling behind, the economy is losing its competitive edge, the infrastructure that supports our businesses is crumbling and our public structures like the court system and schools are deteriorating. And in the face of this decline our public confidence, trust, civility and other measures of civic health are falling.

The measure of any serious budget deficit reduction program should be to look at these imbalances and address them. That is the role of We, the People government. But instead, the new Republican budget accelerates the imbalances -- on purpose. It cuts or eliminates the programs that assist people, helping us maintain or rise to a middle-class existence.

Decades of Stealth Attack

Most of us probably thought this country was a "We, the People" democracy where we are all in this together, looking out for each other. But for decades corporate conservatives have been engaged in a stealth attack on the middle class, taking all of the gains of our joint investment in a prosperous economy just for themselves.

The effects of the stealth attack on the middle class have been creeping up on us, and are now widely felt. Incomes have been stagnant for some time, as costs rise. Predatory industries increasingly prey on the public and small business. At the same time a powerful and wealthy few have benefited from these changes so much that today, just 400 people have more wealth than half of our population of 300 million people combined!

One measure of the price of maintaining a middle-class existence is the "toil index." The index of toil measures the work hours it takes for a family to live in an average home where children have access to an average school. In the past few decades the work hours required to maintain a middle-class existence has gone up 62.4%.

So in 1950 the "toil index" was 42.5 hours. That dropped to 41.5 by 1970. But then it started to rise -- a lot. By 2000 it was 67.4 hours, an increase of 62.4%! Yet this was at a time when the country as a whole got ever wealthier. And since 2000 it has obviously gotten much worse.

Now The Attack Is In The Open

Now the attack on the middle class is out in the open. The new Republican budget plan takes away any pretense of our government working for We, the People, and transforms it completely to a government of, by and for the top 1%. Programs to maintain the middle class are cut or eliminated. Help for the jobless is cut back. Government workers are eliminated. Medicare is privatized. Social Security is phased out.

But in this budget taxes for the wealthy few and big corporations are cut, big oil companies continue to raid the treasury, the arms industry prospers and other multinational giants continue to receive subsidies and advantages over smaller, less-powerful competitors.

This budget is clear in its purpose: to create a one-dollar-one-vote plutocracy for the wealthy few, while gutting our one-person-one-vote democratic system.

How We Got Here

Let's look at the effect of the recent decades of this stealth attack on our We, the People government and economy.

Top tax rates for the rich have been dropping and dropping, resulting in big budget deficits that add up to big debt:

The Republican budget doesn't fix this at all. It makes it worse. It cuts tax cuts for the rich even more, and guts the things We, the People do for each other.

The next chart shows how corporate taxes have declined, the one after that shows who owns those corporations:

So at the same time as income taxes for the wealthiest dropped the tax share from the corporations -- mostly owned by the wealthiest few -- also declined dramatically. On top of that cuts in taxes on capital gains and dividends pushed even more of the gains to the top. The Republican budget plan makes this worse.

As top tax rates have been dropping working people's payroll taxes have been rising. This is the money we set aside in the Social Security Trust Fund for our retirement. (Chart from Urban Institute)

The Republican budget not only doesn't address this, it raids this money we have set aside for retirement by cutting our retirement benefits!

Because of cuts in taxes for the rich and the corporations they own, inequality has been increasing dramatically. The Economic Policy Institute shows that, "The share of income going to the majority of households has dropped considerably since the 1970s.. Share of household income held by bottom 99.5%, 1913-2008:"

The share of income that 99.5% of us get has fallen from 93.7% to 83.1%. The top half percent get all the rest. The Republican budget plan doesn't fix this at all. It makes it worse.

Here is a chart of the increasing concentration of income at the top:

The Republican budget plan doesn't fix this at all. It makes it worse.

How It Happened

The "Reagan Revolution" cut taxes, deregulated business, opened our borders to let in goods from "thugocracies" that exploit workers, dramatically increased military spending and cut back on the things we (government) do for each other. It cut back on investment in our people, our infrastructure, education, public structures like our courts, our labor protections, our consumer protections, and attacked the independence of the ways we receive objective information. Things have gotten steadily worse in the years since.

Last year's post Reagan Revolution Home To Roost -- In Charts shows the impact on us of these changes over time, concluding,

Sometimes it can be so obvious where a problem comes from, but very hard to change it. The anti-government, pro-corporate-rule Reagan Revolution screwed a lot of things up for regular people and for the country. Some of this disaster we saw happening at the time and some of it has taken 30 years to become clear. But for all the damage done these "conservative" policies greatly enriched a few entrenched interests, who use their wealth and power to keep things the way they are. And the rest of us, hit so hard by the changes, don't have the resources to fight the wealth and power.

Look at the influence of these entrenched interests on our current deficits, for example. Obviously conservative policies of tax cuts and military spending increases caused the massive deficits. But entrenched interests use their wealth and power to keep us from making needed changes. The facts are here, plain as the noses on our faces. The ability to fight it eludes us. Will we step up and do something to reverse the disaster caused by the Reagan Revolution or not?

The Republican budget plan doesn't fix this at all. It makes it worse. Much, much worse.

More Charts

In the meantime, lobbying to influence our government against the things that help We, the People has gone through the roof.

(Chart source Sunlight Foundation.)

The Republican budget doesn't fix this at all.

They lobby because it pays off. It pays off because the lobbying buys them special favors, breaks, subsidies and policies that favor them over their competitors and the rest of us. This happens because we let them get away with it. Of course when powerful interests can use money to bend the rules they will bend the rules in their own favor -- and will start by bending the rules in ways that let them bend the rules even more.

Of course this is what they have been doing. Here is what is happening in the case of some specific industries:

Lobbying for "defense' has increased:

And the result show how this has paid off: (note, chart includes defense-related spending.)

We spend more on military than all other countries combined. The Republican budget doesn't fix this at all.

Imbalances

So these are just some of the imbalances that government should be addressing. But it isn't. The Republican budget doesn't fix this at all. It just makes all of these problems and imbalances worse. And this is because of that ability of the wealthy and powerful to pay to get the rules bent in their favor. We need to instead change the system to hold politicians and CEO’s accountable, making sure the rich are not abusing the system.

Tax Tricks

Dave Johnson — Thu, 15 Apr 2010 11:51:11 -0400

How many ways can people be tricked about taxes? Here are a few tricks I have come across.

* The rich already pay most of the taxes. You hear variations of this, most recently the news that 47% of Americans don't owe any federal income tax. But the fact is that the rich take in most of the income and literally own almost everything. You probably heard about 25 hedge fund managers getting $25 billion income last year? They get a special deal and don't pay income tax rates on that money. But regular people still pay Social Security, state and local and sales taxes on their income. In fact, working people pay a higher overall tax rate than the super-rich, even if federal income taxes are not part of that.

One more thing—really, don't get me started—most income at the top comes from "capital gains" from things like stocks and property, but capital gains are taxed at a much lower rate than income that comes from from actually working.

* A flat tax would work out better for the middle class. The new Tea Party Contract From America has as item 4: "Enact fundamental tax reform; Adopt a simple and fair single-rate tax system by scrapping the internal revenue code and replacing it with one that is no longer than 4,543 words -- the length of the original Constitution. (64.90 percent)."

Think about this. Since the rich pay most of the taxes, guess what happens to their taxes—and yours—if we move to a single tax rate for everyone. Clue: Their taxes go way down and everyone else's go way up.

* Raising taxes on the rich is unlikely to cut the deficit. You often hear stories like this -- that there just isn't enough money at the top to pay off the debt, so why bother? First, even if it doesn't completely close the budget gap, it sure would make a dent. Next, think about those 25 hedge fund managers who brought in $25 billion last year but don't even pay income taxes. That's a place to start right there, and it's just 25 people. Then think about the $140 billion Wall Street bonus pool that was paid out last year—a recession and bailout year. That all went to just a few more people. There's lots of money at the top.

* Taxes "take money out of the economy," or otherwise hurt economic growth. Where do they think the money goes? Taxing the rich might take money out of the economy of the Cayman Islands, but when used to fund investment in our economic future (roads, schools, R&D, etc.), it actually grows the economy.

Please let us know about some tax tricks you have heard, in the comments.

And finally -- Take a look at CAF's Taxes: Myths And Realities.

For the World's Wealthy, A Setback Most Slight

Sam Pizzigati — Sun, 28 Jun 2009 14:20:58 -0400

The global economic collapse, says the first in-depth survey of grand fortune since last September, has left the world's wealth just as intensely concentrated as ever.

Thirteen years ago, two firms that manage the wealth of the world’s wealthy — New York’s Merrill Lynch and the Paris-based Capgemini — began publishing an annual scorecard that tracks just how many wealthy people inhabit our globe and just how many trillions these wealthy have at their ready, available to invest.

Year after year, the two firms tracked these trillions piling ever higher and higher. At 2007's close, their World Wealth Report last year pronounced, our globe’s “high net worth individuals” held a combined $40.7 trillion — and that total didn’t include the value of the primary homes where these “HNWIs” lived or the art they hung on their walls or the jewelry they hid away in their safes.

Last week, the good news ended. In 2008, Merrill Lynch and Capgemini informed the world Wednesday, the global population of high net worth individuals — people with at least $1 million in investable assets — fell by 14.9 percent. The combined wealth of these individuals sunk even further, dropping 19.5 percent.

The super rich, notes the 2009 edition of the annual World Wealth Report, did even worse. The ranks of “ultra” high net worth individuals — people worth at least $30 million — fell by just under 25 percent. These ultras, as a group, lost nearly 24 percent of their financial wealth.

The new Merrill Lynch/Capgemini world wealth scorecard dubs these declines “unprecedented,” and media reports have been echoing that message around the world. “Credit crunch takes toll on super-rich,” headlined one international business daily last week. “Rich list shrinks,” read another.

But these headlines — and the new World Wealth Report — miss the more fascinating story in the latest numbers on global fortunes. Last year’s meltdown of the global financial system certainly did put a dent on grand fortunes. Yet despite that meltdown, the worst economic collapse since the 1930s, the holders of the globe's grandest fortunes remain incredibly fortunate.

The world’s high net worth individuals turn out to have ended 2008 with $32.8 trillion in wealth, not much less than the $33.4 trillion they held at the end of 2005. In other words, 2008’s great meltdown cost the world’s wealthy the gains they registered in 2006 and 2007 — and nothing more.

These wealthy, especially those individuals who fall into the World Wealth Report “ultra” high net worth catgeory, continue to hold a stunningly disproportionate share of the world’s wealth.

About 80,000 individuals worldwide qualify as ultras. These super rich make up roughly 0.001 percent of the world’s population. They hold, even after the 2008 economic collapse, 10 percent of our planet’s entire wealth.

These wealthy, to be sure, did “scale back” some on their personal spending in 2008. In the United States, home to 28.7 percent of the world’s high net worth individuals, fine art auction sales totaled only $2.9 billion in 2009, “down $1 billion from 2007,” the new World Wealth Report relates, and U.S. sales of Lamborghini luxury cars dropped 21 percent last year.

But the amount of cash sloshing in wealthy pockets, meltdown notwithstanding, remains enormous. In December 2008, the new World Wealth Report observes, one historic diamond gaveled off in London for $24.3 million, “the highest price for any diamond or jewel ever sold at auction.”

The analysts at Merrill Lynch Global Wealth Management and Capgemini see more records ahead. They note that the last bump on the wealth accumulation road, the 2001 bursting of the tech bubble, proved only a temporary brake on the concentration of global wealth. Between 2002 and 2007, the value of the world’s high net worth individual fortunes soared a blistering 9 percent per year.

The World Wealth Report analysts aren't anticipating that the world’s global political leaders will do anything that might jeopardize a repeat of this uptick. Capgemini and Merrill Lynch, the report sums up, “expect the recovery in HNWI wealth to be similarly robust this time around.”

But these analysts, in their previous World Wealth Reports, failed to see last year’s global financial meltdown coming. If a global movement to more equally distribute the world’s wealth were on the way, they’d likely be among the last to see that coming, too.

Sam Pizzigati edits Too Much, the online weekly on excess and inequality.

Have You 'Hurd'? Greed Still Living Large

Sam Pizzigati — Mon, 26 Jan 2009 09:51:44 -0500

We all know about the greed and grasping at Wall Street's failed giants. But the greed at 'successful' companies elsewhere in America is getting a free pass.

President Barack Obama, in the opening moments of his eagerly awaited administration, last week reminded an entire world that “a nation cannot prosper long when it favors only the prosperous.” Years of “greed and irresponsibility on the part of some,” he would declare, have contributed mightily to our “badly weakened” economy.

President Obama never identified that “some” in his inaugural address. He named no names. Most of his listeners likely thought about the kingpins of Wall Street and high finance as the new President spoke. But the greed and grasping that have melted down the global economy extend well beyond Wall Street.

Indeed, right on Inauguration Day, a corporate giant across the continent from Wall Street was quietly filing some required papers that dramatize just how overwhelmingly our troubled economy continues to favor “only the prosperous.”

That filing revealed that Mark Hurd, the CEO of Hewlett-Packard, the world’s biggest computer company, had collected $42.5 million in 2008 compensation.

This lofty sum, Hewlett-Packard officialdom proclaimed, amounted to a fitting reward for the company’s “exceptional and sustained” performance ever since Hurd took the H-P reins in 2005. On Hurd's watch, annual revenues at the California-based Hewlett-Packard have bounded from $86 billion to $118 billion. In 2008, company profits jumped 15 percent.

Hewlett-Packard board members certainly do have reason to be pleased. But other stakeholders in H-P's “success” don't seem to feel like cheering.

Take, for instance, H-P workers. Shortly after joining Hewlett-Packard, with over $20 million in signing “inducements,” Hurd ended the company’s pension plan for younger employees and announced plans to slash away a tenth of the H-P workforce.

Hewlett-Packard is currently completing a second round of job massive cuts. In all, Hurd will soon have eliminated almost 40,000 jobs at H-P since his inaugural 2005 speech at the company’s Silicon Valley headquarters.

“Building a great company isn't all about a CEO,” Hurd announced in that address. “It’s a team sport.”

Hewlett-Packard customers don’t have much reason to cheer Hurd either. H-P has been busy squeezing every bit of revenue possible out of the company’s cash cow, printer ink. The last ink price increase, in October, upped costs to consumers by 9 percent, well over double the year's inflation rate.

H-P overall product quality and service, meanwhile, are regularly leaving consumers infuriated. PCWorld magazine, after surveying 44,000 readers, earlier this month rated Hewlett-Packard dead-last — among 10 computer makers — on reliability and service for laptops, dead-last for printers, and next to dead-last for desktops.

How can Hewlett-Packard revenues and profits be increasing in the midst of so much consumer angst? Easy. To be “successful” in Corporate America today, a CEO doesn’t have to run a company that delivers quality at reasonable prices. Today’s most “successful” CEOs can take a far less demanding approach to “growing” their companies. They can simply gobble up other companies.

Comtemporary top execs acquire these other enterprises — usually by taking on huge quantities of corporate debt — and then claim the revenues of these other enterprises as their own. Instant success.

To pay off the subsequent debt, and keep their bottom lines sweet, these CEOs then lop off “redundant” workers in their newly merged operations. This merge-and-purge cycle, predictably enough, creates chaos in the workplace — and more frustration for consumers.

As Hewlett-Packard CEO, Hurd has wheeled and dealed his way to 31 mergers in just 46 months on the job. His biggest acquisition came last August when he bought up tech services giant Electronic Data Systems for over $13 billion.

Have CEOs like Mark Hurd, with all their wheeling and dealing, discovered the secret to an eternal “fountain of riches”? Or can they be stopped — before unemployment lines get still longer and consumer nerves get still more frayed?

At first glance, corporate honchos like Hurd seem home free. Congress and the new Obama administration are focusing most all their attention on companies now taking in bailout dollars. Hewlett-Packard isn’t asking for any bailout.

But that doesn’t mean that lawmakers and the White House have no leverage. Almost every major corporation in the United States, Hewlett-Packard included, is already benefiting handsomely from taxpayer dollars, either indirectly via special tax breaks or directly through government contracts and subsidies.

H-P’s new Electronic Data Systems subsidiary, to give just one example, took in $2.3 billion from federal contracts in 2007 alone.

By placing strings on these contracts, subsidies, and tax breaks, the federal government could start discouraging the outrageous rewards for top executives that create such powerful incentives for outrageous executive behavior.

In the last Congress, a number of lawmakers started moving in that direction. Their legislation, the Patriot Corporations Act, would have — if enacted — given a preference in federal contract bidding to companies that pay their top executives no more than 100 times the dollars that go to their lowest-paid employees.

Among this legislation’s co-sponsors: a senator by the name of Barack Obama.

Last year, for the record, H-P CEO Mark Hurd’s $42.5 million take-home equaled somewhere around 2,000 times the pay of Hewlett-Packard’s lowest-paid worker.

How much of that $42.5 million represents the “greed and irresponsibility” that President Obama denounced in his Inaugural Address? Hard to say. But the San Jose Mercury News last week did calculate how much Hewlett-Packard shelled out in 2008 for Hurd’s “business meals.” The food benefit came to about $181,000.

“Assuming three meals a day, every day of the year,” concluded the Mercury News, “that works out to about $165 per meal.”

Sam Pizzigati edits Too Much, the online weekly on excess and inequality.

Myopic Selfishness of the Wealthy Leads to Constricting Economy

Gordon Johnson — Wed, 03 Sep 2008 16:06:21 -0400

The economic stance in favor today is to give breaks to the wealthy under the expectation that if they have more money, they are more likely to be in a position to invest to make our means of production bigger and better. What the stance is missing is that corporations do lots of marketing studies to figure out how much of what to produce. Guess what the marketing studies look at? *How much the rest of us have to spend!!*

Well if the wealthy have all the money, what is the level of production the corporations will gear up for? Instead of a cornucopia of great goods and services for many, it leads to production of extravagances and luxury goods no regular person would or could waste their money on. In essence, it is economic slavery as the rest of us scurry to try and cover our life costs with ever-shrinking wages.

How much profit does that leave the corporations? They myopically think they make as much profit on the big ticket items for the few as they would have on medium ticket items for us all.

Put (or leave) the money in the average person's pocket and something quite different unfolds. We, having more money, can afford more and better things so we all in fact have a better standard of living. Our spending would confirm (realigned) corporate choices to invest in improved production and to hire more people for more medium ticket items, and as more people are hired there is even more money flowing through the system, leading to even more and better goods and services.

The ironic thing is that an increasingly larger flow of medium ticket goods and services will actually end up producing much larger profits for the corporations, and a more stable economy and society to boot: we would have lower unemployment and poverty, higher tax revenue so lower deficit or even a return to surplus (given away by our short-sighted, selfish Republican "friends"), fewer foreclosed houses, maybe even longer lasting marriages. And if our economy is blossoming instead of shriveling, what does that do to the stature of the US in the eyes of the rest of the world? Perhaps even the terrorists would have to acquiesce that the US is good to its people in ways they claim we have not been.

The last 16 years confirm this. What happened to the economy under Clinton? Under Bush?

QED