Dear Mr. President,
Friday you reiterated a theme you have been advancing for some time now – that Americans must make a “shared sacrifice” to address the budget deficit. Specifically, last week a potential “grand bargain” was announced which would have cut domestic spending, including Social Security and Medicare, in the range of $4 trillion and increased revenue by about $1 trillion through closing tax loopholes for corporations and the wealthy, and perhaps allowing tax cuts for the highest earners to expire.
Given that you spent most of your childhood as an only child, (I believe you were ten when your sister Maya was born, and thereafter she and your mother lived with you for only about five years), perhaps you don’t understand the meaning of “share.” Allow me to explain. Sharing generally denotes a degree of equity. This means that the item in question is divided into equal portions, taking into account the relevant conditions of those about to share something. Your “grand bargain” calls for working families, the elderly, the disabled, and the poor to contribute approximately four-fifths of the sacrifice while the wealthy and corporate elite contribute one-fifth.
This is not remotely what is meant by “sharing,” or even a “bargain,” at least not for the vast majority of us. The inequity is especially glaring when you consider the historical context. Fully one-third of the nation’s income growth from 1979-2004 went to the top 1% of earners. Put another way, between 1979 and 2009, the top 1% of earners received an income increase in real terms of 72.7%, while those in the bottom quintile experienced a decrease of 7.4%.
Another measure of income inequality, the CEO to worker pay ratio, has also increased dramatically over the last few decades. In 1980 CEOs were paid, on average, 42 times the wages of blue collar workers. By 2010, that ratio had increased to 343:1. Using the Gini coefficient, a mathematical ratio for comparing income inequality across countries, researchers rank the U.S. 95th out of 134 countries – meaning that only 39 have greater income inequality than we do. Among industrialized countries, we have the highest income inequality. In fact, the United States now has greater income inequality than Pakistan and the Ivory Coast!
Meanwhile, corporate “profit margins have reached levels not seen in decades.” By the end of 2010, corporate profits had soared to an all-time high, amounting to $1.68 trillion in the fourth quarter. What is driving outsized-profits, especially during a recession? According to the latest “Eye on the Market” bulletin from JP Morgan, there are “many moving parts” but “reductions in wages and benefits explain the majority of the net improvement in margins.” EOM further reports that “US labor compensation is now at a 50-year low relative to both company sales and US GDP.”
In other words, corporate profits, as well as fat increases in CEO compensation have been achieved on the backs of American workers – with CEOs who cut the most jobs receiving the greatest benefits. “In 2009, the CEOs who slashed their payrolls the deepest took home 42 percent more compensation than the year’s chief executive pay average for S&P 500 companies.”
Adding further insult to injury, many of the corporations that grow ever more wealthy at our expense pay less in taxes than the average American, if they pay any at all. For example, General Electric, which reported a U.S. profit of $5.1 billion in 2010 paid no tax; instead, GE claimed a benefit of $3.2 billion. The effective income tax rate for the average American was higher over the last several years than the effective rate for Exxon Mobil, the corporation ranked the most profitable by Fortune 500 for the last eight years in a row.
Then there are the bank bailouts, which we, the lowly taxpayers are on the hook for, while the banksters greedily rake in billions of dollars in bonuses for tanking the economy. Going into that fiasco would require an additional letter, but let me leave you with one little factoid: Nine “too big to fail” banks received a total of $175 billion in taxpayer bailouts in 2008 and paid out $32.6 billion in bonuses that same year! Is that the kind of “shared sacrifice” you have in mind for us now?
It should be clear to you by now, Mr. President, that we, the bottom 99%, have done our “share;” we have been “sacrificing” for quite some time now; decades, in fact. And we’ll be damned if we’re going to give up Social Security and Medicare. As you said yourself, Social Security does not contribute to the deficit. By law, Social Security cannot, and has never, paid out more than it takes in. Even with no changes to the program, it is fully funded for next quarter century, after which it can pay out 75% of benefits. The Social Security Trust Fund currently has a surplus of $2.5 trillion. This is largely thanks to the Carter administration, which “put Social Security in the black for the foreseeable future by establishing a schedule for future Social Security payroll tax increases.”
The problem, as you well know, is that our hard-earned contributions have been systematically raided since the Reagan administration. Although the Social Security Trust Fund currently runs a surplus, “what is in the fund is Treasury IOUs for the spent revenues.” The problem is not that Social Security is “unsustainable” or in any kind of fiscal trouble. It’s that the borrower of our Social Security funds, the federal government, is insolvent. In other words, you don’t want to pay us what we are owed; the money we paid in all our working lives, that was borrowed from us without our consent. The “shared sacrifice” you are promoting requires us to sacrifice while the wealthy confiscate an ever greater share of the pie – including our tiny slice!
It is embarrassing and disgusting to see you begging the Republicans to let up just a little bit on the class warfare that has been perpetrated by the rich against the rest of us for the last few decades, pleading for crumbs, like allowing a few tax loopholes to be closed.
It is infuriating that you refuse to use your rhetorical gifts for the benefit of the majority of citizens. It is monstrous that you instead use them to convince the gullible that you are fair-minded, to camouflage your promotion of the interests of your corporate paymasters and wealthy elites. How dare you call yourself a Democrat? You shame the history of a political party that, despite its faults, allowed workers a voice in the terms and conditions of their employment and created programs to provide a small income and health care for the elderly, the disabled, and the poor.
Fewer and fewer Americans are falling for your fine, but manipulative words. More people than just the progressives you deride as the “professional left” are waking up and growing angry. You need to choose now who you will serve: The American people or corporate and financial interests. If you stand against us, we WILL fight you. Further transfers of wealth from the bottom 99% to the top 1%, and the erosion (and eventual elimination) of what is left of our social safety nets, will go down in history not as a “grand bargain” but as a pact with the devil.
Katherine M. Acosta
Crossposted at The Smirking Chimp