The Lesson We Need to Teach Our Nation’s Rich
We will not let your wealth come at the expense of our children’s future.
How much more unequal has the United States become in the Trump years? We don’t exactly know. We have some juicy anecdotal data — billionaires, for instance, have increased their net worth by $600 billion or so just since mid-March — but broader national stats won’t be available until well into 2021.
The more pressing question right now: Would Joe Biden’s election this November change the trajectory of inequality in America? Would the rich stop getting richer?
Absolutely, Donald Trump proclaimed earlier this week in a tweet aimed at America’s affluent, the 10 percent of American adults who own 84 percent of the nation’s stock.
“If you want your 401k’s and stocks . . . to disintegrate and disappear,” the president warned Monday, “vote for the Radical Left Do Nothing Democrats and Corrupt Joe Biden.”
But Wall Streeters themselves don’t seem so far to find Biden cause for panic. A Biden victory, one top JPMorgan Chase analyst is telling his clients, could even mean a “slightly positive” outcome for shareholders. Americans with big dollars to invest, notes CNN Business, are expecting a President Biden to “moderate” whatever rich people-unfriendly sentiments he might have expressed on the campaign trail.
Progressive activists, meanwhile, are crossing their fingers, ever on the lookout for signs that a Biden presidency might actually challenge — on some level — the nation’s continuing concentration of wealth and power. And this search for hopeful signs now has activists pouring over the just-released reports from the “unity” task forces that Biden and his chief primary rival, Senator Bernie Sanders, set up this past May to haggle out consensus policies in six key issue areas.
Each eight-member task force went about its work with two co-chairs, one a Biden choice, the other a Sanders pick. Both Biden and Sanders chose highly regarded policy heavyweights for the chair slots and the rest of the task force line-ups as well, names as familiar as former Secretary of State John Kerry and Green New Deal champion Alexandria Ocasio-Cortez.
The line-up of the task force devoted to economic issues — the panel most directly linked to income and wealth distribution — gave progressives reason to quietly cheer right from the start.
Sanders chose as his Economy task force co-chair Sara Nelson, the flight attendants union president who may become the next president of the AFL-CIO. He filled out his picks with two progressive economist superstars, Stephanie Kelton and Darrick Hamilton.
The Biden picks tilted in an egalitarian direction as well, with the co-chair slot going to Representative Karen Bass from California, the current chair of the Congressional Black Caucus and a Congressional Progressive Caucus member. Biden’s five picks also included Jared Bernstein, a widely visible advocate for equity since his days at the Economic Policy Institute, and Lee Saunders, the president of one of the nation’s top public employee unions.
And what has this all-star Biden-Sanders economic team now produced? Will its recommendations have America’s plutocrats smiling or shuddering? Do these recommendations figure to raise the hopes of progressive activists — or dash them?
Let’s start with the big picture the report paints. Those who sit at America’s economic summit will not find this picture flattering.
“The economy is not working for the American people,” the report opens.
Our “fundamentally flawed” economy, the Economy task force continues, has left worker incomes “stagnant for decades” while “the rich have been capturing a larger and larger share of the economic pie, with incomes for the top 1 percent growing five times faster than those of the bottom 90 percent.”
Stir in “a persistent, pernicious racial wealth gap that holds millions of Americans back” and we have a situation that demands “a new social and economic contract” that “promotes shared prosperity” instead of benefitting “only big corporations and the wealthiest few.”
Can’t get much more on progressive point than that.
But wait, we have more red meat here that will perk up even plant-based progressives. We need, the report insists, “to ensure that federal dollars support keeping workers on payroll, not enriching CEOs or shareholders.” No tax dollars for pandemic relief should go “used to pay out dividends, fund stock buybacks or give raises to executives.”
And wealthy people, the report warns, will have to get used to paying more in taxes. The report’s “guiding” tax agenda principle: America’s wealthiest “can shoulder more of the tax burden.”
These sweeping, no-nonsense pledges will no doubt leave our nation’s Trump-friendliest wealthy feeling even more of a need to fume. But the more dispassionate among our deep pockets will want to see the fine print, the policy specifics, before they start fearing a Biden presidency as the second coming of Franklin Roosevelt’s New Deal. And what will these more sober plutocrats find in the fine print?
Some eyebrow-raisers, particularly for kingpins in the financial sector. The Biden-Sanders economics task force report combines rhetorical blasts at the privatization of public services with specific proposals to start transforming services now only privately delivered into public goods.
Why should we leave credit reporting, the report asks, to private agencies? We need, the Economy task force goes on, to create “a non-discriminatory credit reporting alternative” to currently existing private outfits and require that all federal home and other lending programs use this new public service.
And why should we leave all basic daily financial transactions to private banks that make fortunes off gotcha penalty fees? Cutting-edge progressive activists at the Roosevelt Institute-based Great Democracy Initiative have proposed giving every American the preferential financial treatment the Federal Reserve, America’s central bank, currently gives private banks. These private banks all have accounts with the Federal Reserve. All individual Americans ought to have personal accounts at the Fed, the Great Democracy Initiative argues, and be able to use these accounts to gain the same higher than normal interest rates and instantaneous access to their money that America’s private banks currently enjoy.
And how could individual Americans access these personal accounts? Their local post offices could be that access point. The U.S. Postal Service’s national network could become the core of a new public banking system.
The Biden-Sanders Economy task force buys into this expansive public banking vision.
“Everyone should have an affordable bank account,” notes the task force, adding that “the Federal Reserve can play that role,” with postal banking making “it possible for everyone to access physical banking locations.”
America’s banking giants would most certainly not welcome this competition. Nor would America’s corporate giants welcome the emphasis the task force report places on attacking corporate consolidation. The Economy unity task force wants federal regulators to review all Trump-era mergers and acquisitions “that have created highly concentrated markets” and in the future “consider breaking up corporations if they find they are using their market power to engage in anti-competitive activities.”
The task force pledges a direct crackdown on anti-worker activities as well. A Biden administration, the report announces, will “ensure federal dollars do not flow to employers who engage in union-busting activities, participate in wage theft, or violate labor law.”
Unfortunately, that ensuring will not do enough to address the underlying corporate pay incentives that encourage outrageous executive behaviors. Fortunately, we do have in the 2010 Dodd-Frank Act — legislation that the task force report repeatedly highlights — a vehicle for confronting those incentives. Dodd-Frank requires publicly traded corporations to annually disclose the ratio between their CEO and median worker compensation.
In 2018, these disclosures have revealed, 50 U.S. corporations paid their CEOs over 1,000 times what they paid their most typical workers. If we penalized corporations with wide CEO-worker pay gaps — by subjecting them to higher tax rates or denying them government contracts — we could reduce the incentive for exploitative corporate behaviors and encourage companies to raise worker wages.
Last fall, Senators Bernie Sanders and Elizabeth Warren joined with Representatives Barbara Lee and Rashida Tlaib to sponsor legislation that moves the economy down this consequences-for-pay-inequity path. In Oregon, the city of Portland already has a ratio-based business tax on the books, and this November San Francisco voters may put a similar levy — via referendum — in place.
The Economy task force report advances no step in this direction. Neither does the task force paper nudge a Biden administration down the path toward an annual “wealth tax,” another invigorating egalitarian idea that both Sanders and Warren pushed during the primaries.
On the other hand, the wording of the task force report doesn’t foreclose on the future option of a wealth tax or other cutting-edge egalitarian notions like placing consequences on excessively wide executive-worker corporate pay ratios. And we also ought to remember that FDR didn’t enter office with a thick folder full of the ideas we now appreciate as the New Deal’s most lasting legacies. The widely heralded “first 100 days” of the Roosevelt administration in 1933 didn’t bring in Social Security or high taxes on high incomes or the worker rights of the Wagner Act. These New Deal building blocks didn’t arrive until two years later, until mass mobilizations of workers and seniors had powerfully altered the nation’s political dynamics.
FDR didn’t resist that wave of mobilizations. He rode it. His people — his appointees — leveraged that popular pressure into progressive policy on one front after another.
And that brings us to today’s increasingly popular progressive maxim that “personnel is policy.”
“For decades, Democratic voters and activists have treated personnel as an afterthought, but corporate interests — often working alongside elected Democrats — haven’t,” public-interest veterans Jeff Hauser and David Segal observed earlier this year. “Even presidents whose campaigns have focused on taking on the powerful have found space for corporate insiders in their administration’s top roles.”
The results have been disastrous, years of wasted opportunities that let America’s inequalities fester and grow into the rage that Donald Trump has so demagogically manipulated.
In the end, a straight “policy” analysis of the Biden-Sanders Economy team’s final report only tells us so much about what a Biden administration might — and might not — accomplish once in office. People matter more, both the people who will push any Biden White House from the outside and the people inside that White House who get to feel that pushing.
If those Biden White House insiders resemble the cast of decent characters who assembled the Economy task force report, we have a decent shot at seeing some real progress against plutocracy over the course of the Biden years. If they don’t, we’re going to have to push as we’ve never pushed before.
Sam Pizzigati co-edits Inequality.org. His recent books include The Case for a Maximum Wage and The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970. Follow him at @Too_Much_Online.
by Sam Pizzigati
We will not let your wealth come at the expense of our children’s future.
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