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Jack Rasmus, The War at Home:  The Corporate Offensive from Ronald Reagan to George W. Bush,

Kyklos Productions, San Ramon, CA 2006.
Rasmus@kyklos.com, www.kyklosproductions.com

“The Trillion Dollar Income Shift,” Part 1, Z Magazine, Feb. 2007, pp 48-51.
“The Trillion Dollar Income Shift,” Part 2, Z Magazine, Apr. 2007, pp 44-49.www.zcommunications.org/zmag/viewArticle/15635
www.zcommunications.org/zspace/jackrasmus

Reviewed  by Betsy Bowman,
Research Associate, Center for Global Justice, San Miguel de Allende, Guanajuato, Mexico, Feb. 20, 2008, Snowbird Symposium 2008.

Jack Rasmus’ new book The War at Home:  The Corporate Offensive from Ronald Reagan to George W. Bush is essential reading for all of us wanting to understand why it seems that in spite of their being a lot of money around, we don’t have an adequate retirement.  Why does it seem that even though we’ve been working more and harder over the past 30 years we’re not getting ahead? (By the way, USians work 10 weeks more per year more than Europeans.)  Remember the early 1960s when we were told that with computers, in the future, we would work less?  Why does it seem that you have to be rich to have a middle-class standard of living? What happened?

Robert Reich, in an op-ed piece in the Feb. 13, 2008, NYTimes put it very succintly:  “Most of what’s been earned in America … [over the last 30 years] has gone to the richest 5 percent.”  Another way of putting this statistic is:  “America’s median hourly wage is barely higher than it was 35 years ago, adjusted for inflation.” Essentially the American worker (that’s all of us except the top CEO’s and super rich) have had a pay freeze over the last 30 years.  I recently asked a friend of mine, another one of the 80,000 or so un/underemployed PhDs in the US like myself how much he earned per university course that he taught as an adjunct.  His answer was $3,200.  In 1976 I made $2,400 per course as a teaching assistant.  Looks like a pay freeze to me.

Jack Rasmus spells out the tax cuts, legislative, trade and corporate policy changes that have been passed since 1980 that have culminated in what he calls: “The Trillion Dollar Income Shift” from the bottom 80% to the top 1%. 

Let’s start with the big picture:

Distribution of US income:
In 1929, the top 1% got 22.51% of income in the US.  In1978, after about 35 years of gains by the working class and trade union movement, the top 1% got “only” 9.06% of US income.  By 2005, after 25 to 30 years of fight-back by the rich and super-rich, the top 1% again got 22.5% of US income. 

The huge increases in income/wealth have gone not so much to the top 10% or  but to the top 1% and the corporations.  And of the top 1%, the top 0.1% and the top 0.01% have gotten disproportionately even more.  As Bush said, “there are the haves and the have-mores.  The have-mores are my base.”

The top 1% holds about 35% of all assets and wealth of the country – about $17 trillion.  They own 51% of all stocks; 70% of all bonds, and own homes worth more than $3 millioin and have a net worth (which excludes their primary residence) of $6 million. 
How many households are in the top 1%?  
There are about 114 million households in the US, about 90 million working class.   
The top 1%, the rich, make up 1.4 million  households.
The top 0.1%, the super-rich, make up 140,000 households. 
The top 0.01%, the mega-rich, make up 14,000 households. 

Since 2001 when Bush took office,  the number of millionaires rose from 6 to 7.5 million.  One hundred new billionaires have also been created since then. 

In contrast, 100 million workers earn less today than in 1980.  Males earn about 33% more than women.  37 million workers now live befow the official poverty level.    

Corporate profits have ballooned, as Rasmus explains, “having risen double digits every quarter in the last 3 ½ years alone [or since Bush took office]  and 21.3% in 2005.”  After tax profits are now equal to 8.5% of us GDP – more than a trillion dollars – the highest percent since 1945.  A report from Goldman Sachs stated:  “The most important contribution to the higher profit margins over the past five years has been a decline in Labor’s share of national income.”  US GDP is roughly $13 trillion.

The $1 trillion income shift from the bottom 80% to the top 1% and the corporations.

One way that Rasmus comes up with the $1 trillion figure is from the US Dept. of Commerce which states that “wages and salaries as of April 2006 constituted only 45.3% of GDP, a decline from 50% in 2001 and 53.6% in 1970.”  Since, as per US government statistics, each percentage point equals about $132 billion, the 8.3% drop in labor’s share as of 2005 represented an annual shift in relative income of about $1.09 trillion or one trillion and 90 billion dollars per year.  And this figure is rising, and it occurs every year. 

This figure does not include a lot of other changes that have lowered our standard of living.  For example, this $1 trillion dollar annual shift in income does not include corporate savings by shifting the cost of health care to workers; nor does it include eliminating or diminishing retirement payments to workers and the roughly 100,000  private pension plans that have been scuttled; not does it include the transfer of Social Securitiy Trust Fund monies (deferred wages) to the general US budget artificially lowering the budget deficit and in effect constituting a double tax on workers since Social Security taxes are only levied on the first $90,000 of annual income.  This figure also does not include tax avoidance, non-reporting of income, nor monies siphoned off into off-shore tax havens.  This figure also does not include corporate-retained profits. 

Corporations are retaining record amounts of profits and are not paying them out as dividends nor wages, nor are they being reinvested nor used for operating expenses.  Retained profits represent about one-third of total pre-tax profits.  In 2004, total corporate profits before taxes was $1.16 trillion, $400 billion of which was retained.  In 2005, pretax profits were $1.35 trillion and about $460 billion was retained.  Today it’s about $500 billion.  That’s $400 to  $500 billion each year that could be paid out to workers as wages or to the US government as taxes without in any way affecting the amount of wealth that wealthy people have today.  In other words, the 90 million working class families could have $4,444 more income each year without diminishing the income of the mega rich by one penny.  Or we could have close to a balanced budget.  $400 billion each year would be a nice peace dividend.  $400 billion could also provide health care, food, housing and education for all the needy people on the planet.  Or it could provide one-third of the $1.2  trillion dollars per year needed for a single payer health care system.  The US spends $2.2 trillion a year, about 16-17% of GDP.  Insurance companies siphon off about $1 trillion of that $2.2 trillion a year.

Rasmus also looks at the policies  and practices of both corporations and government that, since 1980, have restructured the US economy. Among the most significant policies:

• Widespread deunionization
• Overhaul of jobs and job markets (from full time to part time, temporary & contract jobs; more than 44 million of the 137 million employed workforce in the US are part time.)
• Breakup of industry-wide collective bargaining agreements
• Realignment of the federal tax structure
• New free trade offensive
• Cost shifting of health care and pension plans from corporations to workers (100,000 traditional defined benefit pension plans were replaced with cheaper 401K plans)
• Government assisted compression of the minimum wge and overtime pay
• Annual diversion of social security fund surpluses to the US general budget to offset federal deficits
• Deregulation and privatization of entire industries

Under Reagan, there was a $752 billion tax cut, mostly for the well-off.
Under G.W. Bush, during his first term, more than $4 trillion in tax cuts were passed, 80% of which accrued to the wealthiest 20%.   Additionally, $1 trillion in corporate taxes were cut.

Under Reagan, 1980-88, the tax structure was changed; industries were deregulated;  and job market restructuring encouraged.  Under Bush Sr. 1988-92, policies promoting US corporations’ foreign investment, trade and neoliberal policies were emphasized.  Under Clinton, 1992-2000, so-called free trade was promoted; the shift of health care cost from corporatons to workers began; and social security payroll taxes were diverted to the US general budget.  Under G.W. Bush, tax cuts for the wealthy and for corporations were pushed while so-called free trade was expanded.  Income inequality grew fastest in the 2001-06 period.   

Let’s fight back.  Mail this short article to 20 friends and ask them to each mail it to 20 friends.

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