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21 January 2008

Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (And Stick You with the Bill), by David Cay Johnston

From Democracy Now!

More here, and a previous book on the same broad topic here. The video for the 2004 episode is tough to get to -- last segement -- so feel free to read the transcript.

If those Americans who don't get this would stop hating, say, Muslims, blacks, and immigrants, the rich would be in serious trouble.

Here's his archive from the New York Times.

Some key quotes from the two segments....

2004 Segment:

Most Americans, no matter how much they make, assume that people who make more pay a larger share in income taxes. That is a progressive tax system. We don’t have that. If you made $60,000 last year, you paid a larger share of your income in income taxes and social security taxes to the government than people who made more than 10 million a year. That top group’s average income by the way, was $25.6 million. If you made $400,000, that’s a lot of money, but if you made $400,000, you paid a larger share of your income just in income taxes than people who made more than $10 million. That is people who made in a week what you worked for all year. We are shifting the burden of taxes steadily off the richest people in America and onto people who work. The very top taxpayers, the 400 highest income taxpayers in America, their taxes have gone from 30 cents on the dollar, which doesn’t strike me as an onerous burden, in 1993, down to 22 cents on the dollar at the end of the Clinton administration and now under the bush administration, they’re down to 17.5 cents on the dollar. Everybody else in America during those year, their taxes went up from 13 cents on the dollar overall to 15.
2008 segment:

AMY GOODMAN: I wanted to ask you about Barack Obama’s comments, David Cay Johnston, who praised—

DAVID CAY JOHNSTON: Well, one thing, Amy, I don’t do, Amy, I don’t talk about the presidential campaign, because—

AMY GOODMAN: Oh, you don’t have to—you don’t have to talk about them—


AMY GOODMAN: —but just the substance of what he had to say, which was very interesting, as he talked about former President Ronald Reagan. He was in an interview with the Reno Gazette-Journal, appearing to express admiration for what he called Reagan’s “clarity” and “optimism” and overcoming “excesses” of the ’60s and ’70s. This is what he said.

    SEN. BARACK OBAMA: I think Ronald Reagan changed the trajectory of America in a way that, you know, Richard Nixon did not and in a way that Bill Clinton did not. He put us on a fundamentally different path, because the country was ready for it. I think they felt like, you know, with all the excesses of the ’60s and ’70s and, you know, government had grown and grown, but there wasn’t much sense of accountability in terms of how it was operating. And I think people just tapped in—he tapped into what people were already feeling, which was we want clarity, we want optimism, we want, you know, a return to that sense of dynamism and, you know, entrepreneurship that had been missing.

AMY GOODMAN: In response, rival candidate John Edwards said Reagan “did extraordinary damage to the middle class and working people, created a tax structure that favored the very wealthiest Americans and caused the middle class and working people to struggle every single day.” He said, “I can promise you [this: I will] never use Ronald Reagan as an example for change.” So, David Cay Johnston, without getting into presidential politics, you write extensively about Ronald Reagan in this book.

DAVID CAY JOHNSTON: Yes. Well, Ronald Reagan, whether you love Ronald Reagan or you hate Ronald Reagan, was a great leader. He did, in fact, dramatically change the country.

Between 1945 and the election of Ronald Reagan, we had a government that was focused on creating and nurturing the middle class. When I was a young man, I was able to go to college only because it was free. It didn’t matter that I didn’t have any money—my dad was a 100 percent disabled veteran, and I went to work when I was ten years old and full time since I was thirteen—because it was free.

Today, the cost of a college education, a state college education, is about $10,000 a year. The average income of the bottom half of taxpayers—that’s not families, that’s taxpayers—is about $15,000. Think you can go to college if two-thirds of your income would have to go to college? I don’t think so.

Well, Mr.—what Mr. Reagan did in 1980 was he asked a question that had a very powerful effect. He said, “Are you better off than you were four years ago?” And Americans said no, they weren’t. And they elected him to office, and they set in motion a major change in government policy, a change that I think has been perverted. I do not believe Reagan intended all of the things that have been done since he started this happening.

But I’m asking the question in Free Lunch: Are you better off than you were in 1980? And on the surface, America is much better off. The country is more than twice as wealthy in real terms as it was in 1980. Per person, adjusted for inflation, the economy now puts out $1.70 for every dollar that it put out in 1980. Those are absolutely tremendous economic numbers.

So how come we’re not all really well-off? Why is it one-in-seven families has filed bankruptcy in the last twenty-five years? Why is it people are so mired in debt that television ads are just full of debt relief and take on more debt ads, sometimes at 99 percent interest? Why is it that so many people don’t have health insurance and so many people no longer have a retirement plan?

And by the way, the average income of the bottom 90 percent of Americans, what I call the vast majority, is smaller today than it was in 1980. And since the year 2000, when we really got serious about this tax cut business, the average income of Americans every year—2001, ’02, ’03, ’04, ’05—has been smaller than it was in 2000. There have been some gains in 2004 and ’05, but they haven’t gotten up to equal 2000. And of those gains in the year 2000—it’s either ’05 over ’04 or ’04 over ’03—half went to people who make over a million dollars a year. What’s happened is—

AMY GOODMAN: Didn’t that wealth transfer massively begin—I mean, accelerate with Reagan?

DAVID CAY JOHNSTON: Oh, yes. No, that’s—I’m sorry, that’s exactly my point, Amy, is that what happened is that we put in place all sorts of new programs, many of which were never written about in the news media, that got no attention whatsoever. We created healthcare billionaires while making healthcare unavailable to one-in-seven Americans. And we did this with government money. We allowed people to buy public assets for, in some cases, a fraction of a penny on the dollar and then poured government money into them.

And, you know, our national myth that Ronald Reagan ran for office on was that there were all these welfare queen Cadillacs—welfare queens driving Cadillacs out there. I think there was, in fact, one scam artist who went to prison. But what’s really going on is welfare at the top, and way beyond what’s been reported in the news media as corporate welfare. We have built into the scaffolding of the new economy rules that funnel money to the top.

And that this has happened really shouldn’t surprise us, because under our campaign finance system, which has gotten worse and worse and worse with campaign finance reform that hasn’t worked, politicians running for high office spend a great deal of their time talking not to you and me and school teachers and police officers and firefighters and factory workers, but to rich people and their paid representatives. And they hear about their concerns and what they say they need to make things fair.
Krugman on Obama, Reagan, and truth in history (and journalism).

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