America is becoming a plutocracy More and more wealth
in fewer and fewer hands, secret campaign donations:
It's a perfect storm

By Robert Reich

This originally appeared on Robert Reich's blog

http://robertreich.org/

It's a perfect storm. And I'm not talking about the
Democrats. I'm talking about our system of democratic
capitalism.

First, income in America is now more concentrated in
fewer hands than it's been in 80 years. Almost a
quarter of total income generated in the United States
is going to the top 1 percent of Americans.

The top one-tenth of 1 percent of Americans now earn as
much as the bottom 120 million of us.

Who are these people? With the exception of a few
entrepreneurs like Bill Gates, they're top executives
of big corporations and Wall Street, hedge-fund
managers, and private equity managers. They include the
Koch brothers, whose wealth increased by billions last
year and who are now funding Tea Party candidates
across the nation.

Which gets us to the second part of the perfect storm.
A relatively few Americans are buying our democracy as
never before. And they're doing it completely in
secret.

Hundreds of millions of dollars are pouring into
advertisements for and against candidates -- without a
trace of where the dollars are coming from. They're
laundered through a handful of groups. Fred Maleck,
whom you may remember as deputy director of Richard
Nixon's notorious Committee to Reelect the President
(dubbed Creep in the Watergate scandal), is running one
of them. Republican operative Karl Rove runs another.
The U.S. Chamber of Commerce, a third.

The Supreme Court's Citizens United vs. the Federal
Election Commission made it possible. The Federal
Election Commission says only 32 percent of groups
paying for election ads are disclosing the names of
their donors. By comparison, in the 2006 midterm, 97
percent disclosed; in 2008, almost half disclosed.

We're back to the late 19th century when the lackeys of
robber barons literally deposited sacks of cash on the
desks of friendly legislators. The public never knew
who was bribing whom.

Just before it recessed the House passed a bill that
would require that the names of all such donors be
publicly disclosed. But it couldn't get through the
Senate. Every Republican voted against it. (To see how
far the GOP has come, nearly 10 years ago campaign
disclosure was supported by 48 of 54 Republican
senators.)

Here's the third part of the perfect storm. Most
Americans are in trouble. Their jobs, incomes, savings
and even homes are on the line. They need a government
that's working for them, not for the privileged and the
powerful.

Yet their state and local taxes are rising. And their
services are being cut. Teachers and firefighters are
being laid off. The roads and bridges they count on are
crumbling, pipelines are leaking, schools are
dilapidated, and public libraries are being shut.

There's no jobs bill to speak of. No WPA to hire those
who can't find jobs in the private sector. Unemployment
insurance doesn't reach half of the unemployed.

Washington says nothing can be done. There's no money
left.

No money? The marginal income tax rate on the very rich
is the lowest it's been in more than 80 years. Under
President Dwight Eisenhower (who no one would have
accused of being a radical) it was 91 percent. Now it's
36 percent. Congress is even fighting over whether to
end the temporary Bush tax cut for the rich and return
them to the Clinton top tax of 39 percent.

Much of the income of the highest earners is treated as
capital gains, anyway -- subject to a 15 percent tax.
The typical hedge-fund and private-equity manager paid
only 17 percent last year. Their earnings were not
exactly modest. The top 15 hedge-fund managers earned
an average of $1 billion.

Congress won't even return to the estate tax in place
during the Clinton administration -- which applied only
to those in the top 2 percent of incomes.

It won't limit the tax deductions of the very rich,
which include interest payments on multi-million dollar
mortgages. (Yet Wall Street refuses to allow homeowners
who can't meet mortgage payments to include their
primary residence in personal bankruptcy.)

There's plenty of money to help stranded Americans,
just not the political will to raise it. And at the
rate secret money is flooding our political system,
even less political will in the future.

The perfect storm: An unprecedented concentration of
income and wealth at the top; a record amount of secret
money flooding our democracy; and a public becoming
increasingly angry and cynical about a government
that's raising its taxes, reducing its services, and
unable to get it back to work.

We're losing democratic capitalism to plutocratic
capitalism.

* Robert Reich, a professor of public policy at the
University of California at Berkeley, was secretary of
labor during the Clinton administration. He is also a
blogger and the author of "Aftershock: The Next Economy
and America's Future." More Robert Reich

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