by Randolph T. Holhut
American Reporter Correspondent
July 7, 2011
TRICKLE-DOWN ECONOMICS FAILS THE FED-UPON
BRADENTON -- American corporations have greater profits, more cash and pay less tax than ever before. Taking those taxes out of the American economic equation has devastated the middle class and its principal institution of progress: education.
At the same time, since the Supreme Court has recently ruled in Citizens United v. FEC that corporations can spend an unlimited amount of money - anonymously, if they wish - they have become more powerful than ever before, Stephen Colbert's Super PAC notwithstanding.
What this means, ultimately, is that there has been a transfer of power in our nation from the elected officials who once drove our path to destiny to corporations who hope to drive our population to their success.
Persistent unemployment has not been notably reduced by the wealth of corporations, whose profits and cash reserves are now at a historic, all-time high. Generally, while it was a little worse a year ago, the fact that corporations pay less taxes than at any time in the past half-century and are able to keep more money for their stockholders has not made anything better except for those stockholders. Unemployment and job creation have remained basically unchanged. Meanwhile, the gap between rich people - who are usually the stockholders in question - and poor people has grown dramatically larger.
Logically, there is just one conclusion: Taxing corporations at a far higher level will reduce the amount of money they have to spend in political campaigns, and thus reduce their control of Congress and the White House to whatever extent it exists; higher taxes will require them to hire more people to make up lost profits at the bottom line, since people produce their goods, and more goods are needed to bulk up the bottom line again; and more jobs will mean more spending by ordinary people, which in turn will lift the American economy out of its worst wreck since the Great Depression.
That simple logic defies rebuttal. What it does is inspire wild speculation on the part of corporations who would have to wiggle out of it by saying things like, "We can't innovate without the cash we save," when the truth is they don't innovate with the cash they save - real innovators, like Apple, are innovating through good times and bad; they will say, "The reason we can't hire is that high-quality math, science and engineering students are not coming out of colleges in this country in sufficient numbers."
While that is also untrue, except for the next generation of Chinese and Indian exchange students, it's a lie built on the bankruptcy of our educational system. That is supported by the property taxes of corporations and by the high number of senior citizens who are stockholders, who don't feel responsible for anyone else's kids, and welcome crippling budget cuts that reduce property taxes and shackle public schools.
Finally, corporations will say, "High unemployment points to the failure of workers to accept limits on pensions and wages," and they will say that while knowing American CEOs and executives are by far the highest-paid management teams in the world.
At least 80 percent of Americans find themselves in a profound democratic quandary. If they believe corporations, they must accept outsourcing and privatizing of private and public jobs to earn a small savings on income taxes (which they will spend to replace inadequate public services from education to health care to waste disposal).
If they believe, they need to accept much greater contributions to pension systems on the part of federal and state civil service workers, teachers, firemen and cops. That is not an idea that state and federal legislators accept; their pension and health benefits will remain untouched as those of the people they represent - large corporations in too many cases - continue to enjoy higher salaries, greater benefits and golden parachutes of incredible size.
The fact is that as the distortion of pay levels began to increase with the reduction of corporate taxes - remember, corporations were paying 70 percent of their profits in taxes during the Republican Administration of President Dwight D. Eisenhower, during a time of enormous prosperity that was also widely shared - and accelerated through the '80s and '90s to their current levels, everything else steadily eroded.
We suffered the loss of a fraudulently conceived war in Vietnam, and a decade later the beginning of a drug epidemic that has taken two generations of our children. That was followed by the bursting bubbles of the Internet, the costly rise of Islamic fundamentalism and then the massacre in real estate; many Americans have lost not only their children and their brightest hopes for their children's achievement, but now their homes, their savings and their jobs.
One answer, again, is to return to high taxation of corporations. Yet the reality this contains is the fact that unless we do so, we face the loss of significant freedoms, among them a level playing field for political discourse and debate that can restore common sense to Congress. Imagine if the Tea Party were not fostered and funded by the extremely conservative billionaire Koch brothers and their ilk; imagine it really did represent not the yearning of corporations for reduced taxes but the yearning of dispossessed Americans for a way of life that gave them a meaningful chance at prosperity, and their kids a shot at high achievements.
Imagine if the Tea Party fought not for a total lack of controls on campaign spending but for a level playing field dominated by people, not institutions; imagine if the Tea Party, rather than take on the burden of reducing corporate taxes and government spending, took on the battle to ensure corporations paid their fair share of the enormous taxpayer-funded infrastructure - all those bridges, highways, airports, firemen and police, for instance - and fought for a rise in wages that would reflect the reduction to 8:1 rather than an 800:1 ratio between average workers and their CEOs.
I once got a phone call from Michael Milken when he was in a halfway house between jail and a rerun to work; he earned $500 million a year as a stock broker and investment banker before he went to prison. I asked him to do his community service for our depressed neighborhood in Hollywood, but he had other plans (the decently-intended Michael Milken Foundation, I should add).
But corporate strategies always have plans other than the greatest benefit to the greatest number of Americans, even achieved through a capitalism heavily weighted toward their success. Theirs is the strategy that profits them most. If they pay lower taxes, hire less people, get their products made more cheaply abroad, reduce the safety regulations and the oversight, they make out handsomely.
The downside is that more American are cheated, fewer Americans work and prosper, fewer own homes, and fewer can afford to send their kids to college. Let's make up for that with the kind of taxation and government revenues that made the decade of the '50s the best we've ever had - and ever will have without them.
AR Correspondent Joe Shea lives and works as an unsalaried, independent newsman in Bradenton, Fla.