Poverty Rises as Wall Street Billionaires Whine
by Les Leopold
September 17, 2010 09:01 AM
The ranks of the working-age poor in the United
States climbed to the highest level since the
1960s as the recession threw millions of people
out of work last year, leaving one in seven
Americans in poverty. The overall poverty rate
climbed to 14.3 per cent, or 43.6 million people,
the Census Bureau said yesterday in its annual
report on the economic well-being of US
While 43.6 million Americans live in poverty, the
richest men of finance sure are getting pissy. First
Steve Schwartzman, head of the Blackrock private equity
company, compares the Obama administration's effort to
close billionaires' tax loopholes to "the Nazi invasion
of Poland." Then hedge fund mogul David Loeb announces
that he's abandoning the Democrats because they're
violating "this country's core founding principles" --
including "non-punitive taxation, Constitutionally-
guaranteed protections against persecution of the
minority, and an inexorable right of self-
determination." Instead of showing their outrage about
the spread of poverty in the richest nation on Earth,
the super-rich want us to pity them?
Why are Wall Street's billionaires so whiny? Is it
really possible to make $900,000 an hour (not a typo --
that's what the top ten hedge fund managers take in),
and still feel aggrieved about the way government is
treating you? After you've been bailed out by the
federal government to the tune of $10 trillion (also
not a typo) in loans, asset swaps, liquidity and other
guarantees, can you really still feel like an oppressed
You'd think the Wall Street moguls would be thankful.
Not just thankful -- down on their knees kissing the
ground taxpayers walk on and hollering hallelujah at
the top of their lungs! These guys profited from
puffing up the housing bubble, then got bailed out when
the going got tough. (Please see The Looting of America
for all the gory details.) Without taxpayer largess,
these hedge fund honchos would be flat broke. Instead,
they're back to hauling in obscene profits.
These billionaires don't even have to worry about
serious financial reforms. The paltry legislation that
squeaked through Congress did nothing to end too big
and too interconnected to fail. In fact, the biggest
firms got even bigger as they gobbled up troubled
banks, with the generous support of the federal
government. No bank or hedge fund was broken up. Nobody
was forced to pay a financial transaction tax. None of
the big boys had a cap placed on their astronomical
wealth. No one's paying reparations for wrecking the US
economy. The big bankers are still free to create and
trade the very derivatives that catapulted us into this
global crisis. You'd think the billionaires would be
praying on the altar of government and erecting statues
on Capital Hill in honor of St. Bailout.
Instead, standing before us are these troubled souls,
haunted by visions of persecution. Why?
The world changed. Before the bubble burst, these
people walked on water. Their billions proved that they
were the best and the brightest -- not just captains of
the financial universe, but global elites who had
earned a place in history. They donated serious money
to worthy causes -- and political campaigns. No one
wanted to mess with them.
But then came the crash. And the things changed for the
big guys -- not so much financially as spiritually.
Plebeians, including me, are asking pointed questions
and sometimes even being heard, both on the Internet
and in the mainstream media. For the first time in a
generation, the public wants to know more about these
emperors and their new clothes. For instance:
* What do these guys actually do that earns them such
* Is what they do productive and useful for society?
Is there any connection between what they earn and
what they produce for society?
* Did they help cause the crash?
* Did these billionaires benefit from the bailouts?
If so, how much?
* Are they exacerbating the current unemployment and
poverty crisis with their shenanigans?
* Why shouldn't we eliminate their tax loopholes
(like carried interest)?
* Should their sky-high incomes be taxed at the same
levels as during the Eisenhower years?
* Can we create the millions of jobs we need if the
billionaires continue to skim off so much of our
* Should we curb their wealth and political
How dare we ask such questions! How dare we consider
targeting them for special taxes? How dare we even
think about redistributing THEIR incomes... even if at
the moment much of their money comes directly from our
bailouts and tax breaks?
It's true that the billionaires live in a hermetically
sealed world. But that doesn't mean they don't notice
the riffraff nipping at their heels. And they don't
like it much. So they've gotten busy doing what
billionaires do best: using their money to shield
themselves. They're digging into their bottomless war
chests, tapping their vast connections and using their
considerable influence to shift the debate away from
them and towards the rest of us.
We borrowed too much, not them. We get too much health
care, not them. We retire too soon, not them. We need
to tighten our belts while they pull in another
$900,000 an hour. And if we want to cure poverty, we
need to get the government to leave Wall Street alone.
Sadly, their counter-offensive is starting to take
How can this happen? Many Americans want to relate to
billionaires. They believe that all of us are entitled
to make as much as we can, pretty much by any means
necessary. After all, maybe someday you or I will
strike it rich. And when we do, we sure don't want
government regulators or the taxman coming around!
Billionaires are symbols of American individual prowess
and virility. And if we try to hold them back or slow
them down, we're on the road to tyranny. Okay, the game
is rigged in their favor. Okay, they got bailed out
while the rest of us didn't -- especially the 29
million people who are jobless or forced into part-time
work. But what matters most is that in America, nothing
can interfere with individual money-making. That only a
few of us actually make it into the big-time isn't a
bad thing: It's what makes being rich so special. So
beware: If we enact even the mildest of measures to
rein in Wall Street billionaires, we're on the path to
becoming North Korea.
Unfortunately, if we don't adjust our attitudes, we can
expect continued high levels of unemployment and more
people pushed below the poverty line. It's not clear
that our economy will ever recover as long as the Wall
Street billionaires keep siphoning off so much of our
wealth. How can we create jobs for the many while the
few are walking off with $900,000 an hour with almost
no new jobs to show for it? In the old days, even
robber barons built industries that employed people --
steel, oil, railroads. Now the robber barons build
palaces out of fantasy finance. We can keep coddling
our financial billionaires and let our economy spiral
down, or we can make them pay their fair share so we
can create real jobs. These guys crashed the economy,
they killed billions of jobs, and now they're cashing
in on our bailout. They owe us. They owe the
unemployed. They owe the poor.
Dwight D. Eisenhower was no radical, but he accepted
the reality: If America was going to prosper -- and pay
for its costly Cold War -- the super-rich would have to
pony up. It was common knowledge that when the rich
grew too wealthy, they used their excess incomes to
speculate. In the 1950s, memories of the Great
Depression loomed large, and people knew that a skewed
distribution of income only fueled speculative booms
and disastrous busts. On Ike's watch, the effective
marginal tax rate for those earning over $3 million (in
today's dollars) was over 70 percent. The super-rich
paid. As a nation we respected that other important
American value: advancing the common good.
For the last thirty years we've been told that making
as much as you can is just another way of advancing the
common good. But the Great Recession erased that
equation: The Wall Streeters who made as much as they
could undermined the common good. It's time to balance
the scales. This isn't just redistribution of income in
pursuit of some egalitarian utopia. It's a way to use
public policy to reattach billionaires to the common
It's time to take Eisenhower's cue and redeploy the
excessive wealth Wall Street's high rollers have
accumulated. If we leave it in their hands, they'll
keep using it to construct speculative financial
casinos. Instead, we could use that money to build a
stronger, more prosperous nation. We could provide our
people with free higher education at all our public
colleges and universities -- just like we did for WWII
vets under the GI Bill of Rights (a program that
returned seven dollars in GDP for every dollar
invested). We could fund a green energy Manhattan
Project to wean us from fossil fuels. An added bonus:
If we siphon some of the money off Wall Street, some of
our brightest college graduates might even be attracted
not to high finance but to jobs in science, education
and healthcare, where we need them.
Of course, this pursuit of the common good won't be
easy for the billionaires (and those who indentify with
them.). But there's just no alternative for this
oppressed minority: They're going to have to learn to
live on less than $900,000 an hour.
Les Leopold is the author of The Looting of America:
How Wall Street's Game of Fantasy Finance destroyed our
Jobs, Pensions and Prosperity, and What We Can Do About
It Chelsea Green Publishing, June 2009.
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