TODAY'S TOPICS: Wealth Disparity, Health Care Costs, Banks/Bailouts, Colbert, Holland, Greenwald, Obama

Every week new data comes out that perfectly illustrates why the Occupy Movement continues to grow, and why so many people are sacrificing so much, just to make their voices heard. We must realize that we are the proverbial frog in the slowly heating water…and have been for quite sometime (same goes for climate change). The fact is there has been an unstoppable, steady trend, since 1980, of more and more wealth, influence and power going to the top, and less and less trickling down to the rest of us. At some point, and clearly we’re seeing it in some ways right now (i.e. Occupy), things are going to implode. There’s only so much economic injustice that can be tolerated, even in a country with as many apathetic and misinformed citizens as ours.

So today I’m going to offer up a bunch of this new data…from wealth disparity to health care to the bank bailouts...for you to both consider, and also perhaps keep on hand so you can use it in future discussions with others.

Latest Banana Republic Facts

Let's begin then with the issue of our time: wealth disparity. Before I go down the long list of mind boggling factoids let's begin with the big picture: the average income of the bottom 90 percent of Americas is $33,666. This is in contrast to the top 1 percent of households sitting on an average net worth of almost $14 million, according to a study by the Economic Policy Institute. 

And chew on this: between 1949 and 1979, those at the top 1 percent took in 10 percent of our pretax income. In Reagan's final year in office, they grabbed 15.5 percent of the nation's income. By the time George W. Bush was elected, they were taking in 21.5 percent. And in 2007, the year before the crash, they were pulling in 23.5 percent of our pretax income, leaving the other 99 percent to share just 76.5 percent of the fruits of America's economic output. 

In other words, the top 1 percent of American households are paying about half the rate that they had to pay in 1980 (REMEMBER this fact when people say we're being "overtaxed"these days). But while the top 1 percent has doubled its share of income over the last 30 years, the top tenth of the top 1 percent have made a real killing. In 1980, they took in 3.4 percent of the nation's income. By 2007, the year before the crash, they were grabbing over 12 percent. Their average incomes, adjusted for inflation to 2008 dollars, had risen from $1.4 million to $7.4 million during the same period.

In 2007 (the most recent SCF) the cumulative wealth of the Forbes 400 was $1.54 trillion or roughly the same amount of wealth held by the entire bottom fifty percent of American families. This is a stunning statistic to be sure.

These numbers are just the beginning…but the trend line is all too clear…and shows NO SIGNS of changing course…and this is why we face the crisis we do, and this is why I keep saying, and now we’re seeing, that we’re headed towards some serious collapse/conflict…

So, let me run through more of this data…because we are rocketing towards becoming a legitimate Banana Republic, and quasi feudal state. Here’s some California specific info:

• The gap between California's upper- and lower-income families-which has been larger than in the rest of the nation for decades-grew twice as wide as it was in 1980.
• California's major corporations have rung up hundreds of billions of dollars in profits in recent years, but have paid only a few percentage points of those profits in income taxes here and in other states, according to a new nationwide study by several liberal organizations.
• Nationwide, 265 firms (of the Fortune 500) had a combined $1.33 trillion in profits during the three-year period but on average, paid just 3 percent of those earnings in state corporate income taxes.
• The 33 California corporations' tax bills ranged from minus-1.5 percent (McKesson Corp.) to 8 percent (Apple). The California corporation with the largest profits during the period, Wells Fargo Bank at $49.7 billion, paid $344 million or 0.7 percent in state taxes. Second-place Intel Corp., with $23.3 billion in profits paid no state income taxes, the study found.(SacBee)

MEANWHILE 

• A new Rutgers University study out last week documents that just 7 percent of those Americans “who lost jobs after the financial crisis have returned to or exceeded their previous financial position.” Two million construction workers have lost jobs since the housing collapse began. The industry has hired back only 47,000.That housing collapse keeps collapsing. Over a quarter of American mortgages, 28 percent, have now sunk “underwater,” up from 23 percent last year.
• The Forbes list revealed that six Waltons—all children (one daughter-in-law) of Sam or James “Bud” Walton the founders of Wal-Mart—combined worth was $69.7 billion in 2007—which equated to the total wealth of the entire bottom thirty percent! 93 million Americans, collectively, have the same amount of money as six members of the Walton family.
• The top 1 percent of Americans own 40 percent of our country’s wealth while the bottom 80 percent owns only 7 percent.
• The richest 1 percent earned $1 out of every $4 in 2007. Thirty years earlier the richest only made one out of every $11.
• The top 1 percent is taking in more of the nation’s income than at any time since the 1920s.
• The average income in the top .01 percent is now $27 MILLION.
• A typical CEO used to earn 30 times more than his or her workers now earns 110 times more.
• Millionaires are making more money and paying fewer taxes – their taxes declined from about 31 percent in 1995 to about 22 percent in 2009.
• One in four millionaires pays a lower tax rate than 10 MILLION middle-class Americans.
• Tax rates for the richest 400 Americans were sliced in half as their income quadrupled. Now they’re paying just 16.6 percent.
• Nearly 1,500 millionaires paid NO income taxes in 2009.

The Flip Side and the Face of Economic Injustice

• Fourteen million Americans are unemployed.
• Nearly one in two young adults are not employed. This is the lowest rate since the end of World War II.
• Corporations are sitting on $2 trillion in cash—more cash than at any time in nearly a half century—instead of hiring more employees.
• While the richest 1 percent saw their incomes triple between 1974 and 2007, most Americans’ incomes didn’t grow at all.
• The bottom 90 percent are responsible for paying 73 percent of all credit card and mortgage debt.
• College tuition and fees increased 274.7 percent from 1990 to 2009. That’s faster than any other goods or services besides cigarettes. Why is this so important? Because according to Gallup, educational attainment is “the greatest difference between the wealthiest 1 percent of Americans and everyone else. The Gallup analysis reveals that 72 percent of the wealthiest Americans have a college degree, compared with 31 percent of those in the lower 99 percentiles. Furthermore, nearly half of those in the wealthiest group have postgraduate education, versus 16 percent of all others.” (It's likely that those in the upper reaches of the "99 percent also tend to be educated, but Gallup doesn't break this down further.)
• Almost one in four American children are growing up in poverty.

Health Care Crisis: The Elephant in the Room

We hear a lot about what are the causes of our deficit...but what we don’t hear enough of in recent years, and sadly, this is in part due to Obama’s (or should I say Dole’s plan?) health care plan being signed into law (so the issue is largely off the table in our political dialogue now), is the fact that there is no bigger driver of deficits, and personal bankruptcies, than our corrupt, privatized health care system. 

And now, as expected, the new data is in…and just as with the wealth disparity info, it points to a coming DISASTER…that is not being addressed:

• From 2003 to 2010, the combined average amount that California families and their employers paid for health coverage shot up 52 percent, reaching $13,819 annually, according to a recently released study by the Commonwealth Fund. Meanwhile, family income rose a mere 4 percent. Single people didn't fare any better.
• While wages stagnated, the amount paid by the average working family for its share of health premiums jumped 68 percent, from $2,282 annually in 2003 to $3,845 in 2010.
• It more than doubled for single people, rising to $1,048 in 2010. And, inadequate funding of Medicaid and Medicare, combined with record numbers of uninsured people because of the faltering economy, caused hospitals and doctors to shift costs to those with private insurance. Some estimates say the shift adds $1,792 annually to the premium of each insured California family.

In other words, health care costs continue to skyrocket as wages remain stagnant…where does this end? Obviously, there is one solution to this: a single payer, Medicare for All, health care system…instead, we didn’t even get a public option.

As Paul Krugman explained the disconnect between public v. private health insurance:

Medicare actually does a better job of controlling costs than private insurers -- not remotely good enough, but better...If Medicare costs had risen as fast as private insurance premiums, it would cost around 40 percent more than it does. If private insurers had done as well as Medicare at controlling costs, insurance would be a lot cheaper.

Banks, the Fed, and Bailouts

I know I’ve got a lot of data today…I’ll get to more of my thoughts next post…but this again, when combined with the health care cost numbers and wealth disparity figures, points to our dying paradigm in the starkest of terms. Consider this: The Fed provided banks the equivalent of over $25,000 per American.

Sam Pizzigati has more: “All the TARP dollars came with modest strings on executive pay. To end run the strings, big banks rushed to pay back their TARP bailout and then loudly proclaimed themselves healthy and stable enough to resume business as usual.

Meanwhile, at that same moment, these “healthy” banks were taking advantage of the secret Fed loans to register billions in new profits — with no executive pay strings attached. 

Some context for these numbers: The $107 billion in Fed loans that one bank alone, Morgan Stanley, pocketed in September 2008 would have been enough, notes Bloomberg, “to pay off one-tenth of the country’s delinquent mortgages.

So what ought to be done? For starters, former New York governor Eliot Spitzer urged last week, Congress ought to require banks to use the profits they made investing their almost interest-free money from the Fed “to write down the value of mortgages of those who are underwater.” No one at a company that would require a taxpayer-financed bailout if it failed, says Taleb, should “get a bonus, ever.” 

SNIP

Resisting illegal foreclosures is a good first step. It brings attention to Wall Street's criminality, venality, and plain old inhumanity toward the people they call their "customers" - but treat like serfs. 

It does something else important: It counteracts the brainwashing, driven by Wall Street and dutifully echoed by the media, which has demonized the victims of bank misbehavior….What about the millions of people who have suffered because of the banks' predatory mortgage lending but aren't behind in payments or in the foreclosure process? We need to re-open the debate about the fairness of forcing any underwater homeowners to pay underwater principal on homes that their banks knew, or should have known, were going to decrease in value. After all, the same conglomeration of banks and corporate media that demonize homeowners as "greedy" and "irresponsible" spent most of the last twenty years convincing people that real estate was a sure-fire investment. 

Banks made an extraordinary amount of money off the bubble they created. The total mortgage amount outstanding in this country went from $6.2 trillion in 2002 to $11.9 trillion in 2009, a meteoric rise. And while banks feed off the Federal Reserve's unusually low rates, they've renegotiating very few home loans. 

Consumers also owe nearly three quarter of a trillion dollars in credit card debt, much of it being paid at unconscionable rates of 12 percent to 29 percent - while their banks enjoy rates from 0 percent to 3 percent, thanks to the government institutions created by those same consumers. 

VIDEO SECTION

Bernie Sanders speech on the Senate floor announcing his constitutional amendment to overturn citizens united and make it clear corporations aren’t people:

http://www.youtube.com/watch?feature=player_embedded&v=G9qZZVqSQdo

You can watch him discuss it with Wolf Blitzer (epitome of the corporate media knuckle draggers):

http://videocafe.crooksandliars.com/heather/bernie-sanders-saving-american-democracy

FROM C&L: Stephen Colbert couldn't quite figure out at first whether current GOP frontrunner Newt Gingrich was supposed to be the hero or the villain of an episode of a James Bond movie ...CLASSIC!

http://videocafe.crooksandliars.com/heather/stephen-colbert-gives-tip-his-hat-villain

Tom Tomorrow…always clever:

http://www.truth-out.org/sites/default/files/cartoon120711.jpg

The Senate passes a defense appropriations bill that allows the government to detain an American citizen indefinitely without a trial.

http://www.thedailyshow.com/watch/wed-december-7-2011/arrested-development?xrs=synd_facebook

ARTICLE SECTION

The Absurd Zombie Lie About the Economy Right-Wingers Desperately Cling To -- And Why It's Totally Wrong, By Joshua Holland

A FEW CLIPS:

The entire subprime mortgage market was worth only $1.4 trillion in the fall of 2007, and that includes loans that were up-to-date. As former Goldman Sachs trader Nomi Prins noted in her book, It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street, the federal government could have bought up every single residential mortgage in the country – good, bad and in between – and it would have cost a trillion less than the bailouts.

Short of that, notes Prins, if the crisis were really about people buying McMansions that they couldn't afford, “we could have solved it much more cheaply in a couple of days in late 2008, by simply providing borrowers with additional capital to reduce their loan principals. It would have cost about 3 percent of what the entire bailout wound up costing, with comparatively similar risk.” 

What brought down the global economy was as much as $140 trillion worth of financial gimmickery built on top of the mortgage industry. It was the alphabet soup of the credit meltdown – the CDOs, default swaps and other derivitaves that made less than a trillion dollars of foreclosed loans into an economic weapon of mass destruction that would cost the American economy alone $14 trillion in lost wealth.

SNIP

Its successful campaign against regulations on derivatives in the mid-1990s was only one battle in a long campaign to deregulate investment banking that dated back to the 1960s, when lobbyists reportedly bragged that the effort was putting their kids through college. Their primary target was the Glass-Steagall Act, a depression-era law that created a firewall between investment banking and the commercial banks that hold deposits and make loans. Their first victory came in 1986, when, under intense lobbying from Wall Street, the Federal Reserve reinterpreted a key section of the act, deciding that commercial banks could make up to 5 percent of their gross revenues from investment banking. After the board heard arguments from Citicorp, J.P. Morgan and Bankers Trust, it loosened the restrictions further – in 1989, the limit was raised to 10 percent of revenues; in 1996, they hiked it up to 25 percent.

According to a report by PBS Frontline, “in the 1997-98 election cycle, the finance, insurance, and real estate industries (known as the FIRE sector), spends more than $200 million on lobbying and makes more than $150 million in political donations. Campaign contributions are targeted to members of congressional banking committees and other committees with direct jurisdiction over financial services legislation.”

In 1999, after 12 unsuccessful attempts, Glass-Steagall, which would have made the crash of 2007-2009 impossible, was finally repealed. And it was only then that the explosion in shaky mortgage-backed securities began. “Subprime” loans made up 5 percent of the total the year before repeal, but skyrocketed to 30 percent of all mortgages at the time of the crash.

SNIP

But, contrary to the conservative spin, University of Michigan law professor Michael Barr told a congressional committee that although there was in fact quite a bit of irresponsible lending in low-income communities in the late 1990s and the early 2000s, “More than half of subprime loans were made by independent mortgage companies not subject to comprehensive federal supervision; another 30 percent of such originations were made by affiliates of banks or thrifts, which are not subject to routine examination or supervision, and the remaining 20 percent were made by banks and thrifts [subject to CRA standards].” Barr concluded, “The worst and most widespread abuses occurred in the institutions with the least federal oversight."

The reality is that no bank has ever been “forced to comply with government mandates about mortgage lending” – it's a bald-faced lie. There are no “government mandates,” and there never were. In order to qualify for government-backed deposit insurance—a benefit that banks aren’t forced to accept but enjoy having—the Community Reinvestment Act – and similar measures designed to prevent discrimination in lending (to qualified individuals) – only encourage banks to lend in all of the areas where they do business. And Section 802 (b) of the Act stresses that all loans must be “consistent with safe and sound operations”—it’s the opposite of requiring that lenders write risky mortgages.

http://www.alternet.org/teaparty/153217/the_absurd_zombie_lie_about_the_economy_right-wingers_desperately_cling_to_--_and_why_it%27s_totally_wrong/

Obama: I can’t comment on Wall Street prosecutions, By Glenn Greenwald

A FEW CLIPS:

So the White House, and the President himself, publicly harangued the DOJ for months not to prosecute Bush officials (once the damage was done and controversy erupted over the White House’s constant pressure on the “independent” DOJ, Obama cursorily acknowledged that it was a decision for the DOJ to make). Beyond that, the White House applied constant, intense political pressure on the Attorney General not to proceed with plans to try the 9/11 defendants in a civilian court. 

In April of this year, President Obama, while charges were pending, publicly decreed Bradley Manning guilty even though it is his direct military subordinates who will be judging Manning’s case, possibly jeopardizing that prosecution on the ground of undue command influence. And it was recently revealed that Obama officials are pressuring the New York State Attorney General to sign onto a full-scale settlement agreement with banks rather than continue to investigate Wall Street’s mortgage fraud. Even in this interview with Kroft, Obama observed from what he called “40,000 feet” that “some of the most damaging behavior on Wall Street, in some cases, some of the least ethical behavior on Wall Street, wasn’t illegal.” 

Does this sound like a President who actually believes that it’s improper for him to “comment on the decisions about particular prosecutions” to ensure “there’s no political influence on decisions made by professional prosecutors”? Or does this sound like a President who applies exactly that kind of political pressure on the DOJ when it suits him, and is now cynically invoking this excuse to avoid having to take responsibility for the virtually full-scale immunity given to the financial-crisis-causing Wall Street criminals under his watch?

http://politics.salon.com/writer/glenn_greenwald/