The Pot Calling The Kettle Dependent: The Government’s Role In The Wealth Of The Wealthy
It’s almost like some Hank Williams Jr.-driven refrain from the Monday Football intro … “Are you ready for some class warfare?” Just like that, Mitt Romney’s comments about the government dependent 47 percent of this country that will vote for President Obama opens the door (once again) to a real debate and discussion about wealth, income disparity, poverty and the government’s role in the lives of the citizenry.
Let’s be clear, there are enough people who actually believe Romney’s comments to make this a real debate; there are more than enough true believers in his underlying assumption that can give him a victory in spite of his … how did he put it … oh yes, inelegant words.
So the premise and the notion is that there is a large segment of society that is just along for a free ride; that they contribute nothing other than votes for Democratic candidates who will, in turn, open the spigot of taxpayer dollars on their lazy, unemployed and irresponsible behalf. Not a verbatim analysis, but overall it captures the main thrust of the Romney argument.
Yet, his argument ignores a whole group of government dependents; it glosses over an entire history of government intervention on behalf of corporations and the wealthy. A clearer perspective is obviously needed if we are to deconstruct what is and isn’t considered government dependence.
It is not considered government dependence when lobbyists from the largest corporations influence elected and appointed federal officials. In November of 2011, Citizens for Tax Justice and an affiliate issued “Corporate Taxpayers and Corporate Tax Dodgers 2008-10″. This analysis showed that 30 big-name companies paid a federal income tax rate of minus 6.7 percent on $160 billion of profit from 2008 through 2010 compared to a going corporate tax rate of 35 percent.
Essentially making many of them part of the arbitrary 47 percent Romney spoke of that pay no income taxes. All but one of those 30 companies reported lobbying expenses in Washington.
Another report, by Public Campaign, showed that 29 of those companies spent nearly half a billion dollars over those three years lobbying in Washington for laws and rules that favor their interests. Only Atmos Energy, the 30th company, reported no lobbying.
Public Campaign replaced Atmos with Federal Express, which paid a pittance in taxes — $37 million, or less than 1 percent of the $4.2 billion in profit it reported in 2008-2010.
Private equity firms and taxes
There are actually companies that spent more in lobbying the government, once again, than they paid in income tax —- while at the same time laying off thousands of workers. So, subsidies and tax breaks that the ordinary citizen couldn’t dream of obtaining doesn’t even get an honorable mention in the discussion regarding “hand-outs.” If this lobbying of elected officials isn’t government dependence, then what is?
It is not considered government dependence when private equity firms’ largest source of capital is government pension funds. It is a sad irony (or hypocrisy, depending on how you look at it) that has made the public sector employee and the government worker the focal point of so much consternation by those in the GOP and yet the greatest single contributor of capital to the industry that their presidential candidate hails from.
Preqin, a commercial database that tracks investment in private equity, states that approximately 30 percent of capital in U.S. private equity funds was contributed by governmental pension funds. Nevertheless, it isn’t only capital that flows from the U.S. government that fuels and feeds PE firms, it is also sovereign wealth funds from other governments such as Abu Dhabi Investment Authority, the Australian Future Fund and Singapore’s Temasek. Sovereign wealth funds comprise about 10 percent of all PE firms’ capital.
There you have it ladies and gentleman, private equity firms depend directly on government funds (U.S. and foreign) for $4 out of every $10 it makes and yet, that isn’t the whole story. They also receive a considerable amount of their business from public university endowments. Although they (endowments) aren’t typically run by elected officials or by those appointed by elected officials in the same manner that government pension funds are, it is still capital derived from public institutions.
What … no yelps of welfare and dependence? No declarations of malcontents making a living on the taxpayer’s dime? What we are consistently told is that we don’t get how this all works; we don’t understand how the wheels of commerce and finance turn.
A condescending assertion to be sure, but to that I say this: One doesn’t have to be highly knowledgeable about how an automobile works to know when it isn’t working. And although they depend on government directly or indirectly for over 40 percent of their income, they escape the stigma of dependency.
Wealthy individuals dependent on the government
Historically, this has been the modus operandi of how the narrative has been framed in American society. For example, the slaves who worked from sun-up to sun-down performing long and backbreaking labor were lazy, while those sitting on the porch drinking mint juleps were deemed industrious.
The great fortunes of the first modern millionaires depended on the generosity of governments. In the British colonies of North America, certain men obtained millions of acres of land, not by their own hard work, but by government grants. The British Crown gave one semi-feudal proprietor control of all of the land of Maryland. Captain John Evans of New York got an area of close to half a million acres simply because he was a friend of Gov. Fletcher —- who granted three-fourths of the land of New York to about 30 people.
The first Congress also adopted the economic program of Alexander Hamilton, which provided money for bankers setting up a national bank, subsidies to manufacturers in the form of tariffs, and a government guarantee for bondholders. To pay for all those subsidies to the rich, it began to exact taxes from poor farmers. When farmers in western Pennsylvania rebelled against this in 1794 (Whiskey Rebellion), the army was sent to enforce the laws.
Time and time again history shows us the upside-down perspective that justifies the unjust ways that many have obtained their wealth and prominence and the demonizing of those barely making a living.
The first transcontinental railroad was not built by the free market, but by government land and money. The great mythological story of the American railroads is a classic love story between big business and government welfare. The Central Pacific, starting on the West Coast, got 9 million acres of free land and $24 million in loans (after spending $200,000 in Washington for bribes). The Union Pacific, starting in Nebraska and going west, got l2 million acres of free land and $27 million in government loans.
The late Howard Zinn said it best in his book “Declarations of Independence”:
“What did those who built the railroads get? What did the government do for the 20,000 workers-war veterans and Irish immigrants-who laid five miles of track a day and died by the hundreds in the heat and the cold? Did it give their families a bit of land as payment for their sacrifice? Did it give loans to the 10,000 Chinese and 3,000 Irish, who worked on the Central Pacific for $l or $2 a day? No, because that would be welfare, a departure from the principle of laissez-faire.”
Dependent on a government that is dependent on others
We are now experiencing the latest edition of the government dependence double-standard, being voiced quite “elegantly” by Mitt Romney. An ethos that states that about half of the nation is a bunch of lazy government dependents who refuse to take responsibility for their lives and, insidiously, makes invisible all the threads that connects public funds to private fortunes.
A great deal of the 47 percent that Romney so disdainfully speaks of has been decimated by policies that he advocates. Private equity firm practices that drains the resources of a company and leaves its workers unemployed; a concentrated and orchestrated effort that has kept the minimum wage at an unlivable wage.
And yet there’s still more: there is the continual outsourcing of jobs by American companies and even though the economy is slowly creating new jobs, the stock markets are rebounding, the average worker productivity is increasing (those lazy so-and-so’s) and corporate profits are taking flight, workers’ salaries and wages are generally stagnant amid high unemployment.
The aforementioned realities are either advocated by the GOP ticket or they seem to be completely indifferent to them. As a matter of fact, their answer to these concerns is to go back to, with even greater ferocity, the practices and policies that led us to this economic devastation. In other words, their strategies threaten to put more people at risk at being dependent upon assistance.
And it seems, like the name of the Harry Potter arch-villan, the government dependence of the wealthy, big finance and big business can’t be spoken.
No, the government dependents that Romney castigates are not playing the victim, but make no mistake about it, they have been victimized. It is a brazen and heartless perspective that denigrates people for a dependency and poverty that your stated policies help to create. It is akin to shooting someone in the leg and then criticizing them for their limp.
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