Screwed: The Undeclared War Against the Middle Class - And What We Can Do about It

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By the bestselling author and XM and Sirius Satellite radio host heard on more than eighty radio stations coast to coast seven days a week Reveals how the middle class, nurtured as the backbone of democracy by our Founding Fathers, is being undermined by so-called conservatives Shows how we can reverse the erosion of the middle class and restore the egalitarian vision of the Founders Expanded edition with a new chapter on immigration and a new afterword by Greg Palast The American middle class is on its deathbed. Ordinary folks who put in a solid day's work can no longer afford to buy a house, send their kids to college, or even get sick. If you're not a CEO, you're probably screwed. America wasn't meant to be like this. Air America Radio host Thom Hartmann shows that our Founding Fathers worked hard to ensure that a small group of wealthy people would never dominate this country--they'd had enough of aristocracy. They put policies in place to ensure a thriving middle class. When the middle class took a hit, beginning in the post-Civil War Gilded Age and culminating in the Great Depression, democracy-loving leaders like Theodore and Franklin Roosevelt, Harry Truman, and Dwight Eisenhower revitalized it through initiatives like antitrust regulations, fair labor laws, the minimum wage, Social Security, and Medicare. So what happened? In the last twenty-five years, we've witnessed an undeclared war against the middle class. The so-called conservatives waging this war are only interested in conserving--and steadily increasing--their own wealth and power. Hartmann shows how, under the guise of "freeing" the market, they've systematically dismantled the programs set up by Republicans and Democrats to protect the middle class and have installed policies that favor the superrich and corporations. But it's not too late to return to the America our Founders envisioned. Hartmann outlines a series of commonsense proposals that will ensure that our public institutions are not turned into private fiefdoms and that people's basic needs--education, health care, a living wage--are met in a way that allows the middle class to expand, not shrink. America will be stronger with a growing, prospering middle class--rule by the rich will only make it weaker. Democracy requires a fair playing field, and it will survive only if We the People stand up, speak out, and reclaim our democratic birthright.

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CONTENTS

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Chapter 1 There Is No “Free” Market

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Look at history and you will find that the middle class was the creation of liberal democracies. George Washington and Thomas Jefferson did not fight a bloody war to create a country only for wealthy property holders. (See chapter 4 to fully understand how wrong is the corrosive myth of the “rich Founders.”) Our Founders believed that every Bob Cratchit willing to work for his living should be able to earn enough to own his house and support himself and his family. That’s what it means to be middle class—and part of why Jefferson put “life, liberty and the pursuit of happiness” into the Declaration of Independence.

The Founders also knew that the middle class doesn’t just materialize out of thin air. That’s why, in the preamble to the Constitution, they wrote that one purpose of government was to “promote the general welfare.”

Two centuries later, when the middle class was in danger of disappearing during the Great Depression, Franklin D. Roosevelt almost single-handedly created a new middle class through his New Deal policies. Roosevelt’s success demonstrates that government can and must “promote the general welfare” because only government can create the conditions that make a middle class possible. And FDR was able to do it only because an overwhelming majority of Americans voted for it in a relatively free and open democracy.

 

Chapter 2 How We the People Create the Middle Class

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On October 19, 2003, the New York Times ran an article about Levi Strauss, the maker of all-American denim jeans.1 After January 2004, Levi’s jeans stopped being made in America. No more American Levi’s. That’s like saying America doesn’t make apple pie anymore.

Does outsourcing Levi’s matter? It matters to Mrs. Flores, who was profiled in the Times article. Mrs. Flores worked for Levi’s for twenty-four years and was a member of her local union. She was making $18 per hour, got four weeks’ paid vacation, and had full family medical and dental benefits for a payment of just $24 per week. Mrs. Flores was in the middle class.

But Mrs. Flores knows she won’t be middle class for long if conservatives get their way. “Where am I going to get a job like this?” she asked in the article. After NAFTA and the World Trade Organization (WTO)—the conservative “free” trade policies—took effect in 1994–1995, this country lost 785,000 apparel jobs.

What’s happening to people like Mrs. Flores—to the middle class—is not an unforeseen consequence of “free” trade. The policies the cons advocate have historically led nations to become societies in which one is either aristocratic or impoverished. Follow the cons’ economics, and very rich people will become so rich and powerful they will create dynastic empires (like the Bushes) while huge numbers of formerly middle-class people become destitute—and there’s little in between.

 

Chapter 3 The Rise of the Corporatocracy

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Walking through a park on a sunny summer day in Portland, Oregon, I stumbled across a stunning example of what has happened to the middle class in the cons’ America.

Thirty or more people were sitting on blankets and lawn chairs under a big oak tree in a semicircle around a middle-aged, suit-wearing woman with a flip chart. Those in the circle wore mostly casual clothes, and the average age seemed to be midforties, although there were a few as young as midtwenties and a few who looked to be in their sixties. Two men in the group—both in their fifties, by appearance—had gone to the trouble of dressing in business suits, although they looked painfully uncomfortable sitting on their lawn chairs in the open park.

As I walked by, I heard the woman extolling the virtues of “cheerfulness" and rhetorically asking her students, “Would you want to hire you?”

Welcome to the world of those who have fallen out of America’s white-collar middle class and are tapping their IRAs, 401(k)s, and overextended credit cards to pay for workshops like this one to figure out how they can get decent-paying jobs to replace the ones they’ve lost.

 

Chapter 4 The Myth of the Greedy Founders

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At what point does great wealth in the hands of only a few actually harm democracy, threatening to turn a democratic republic into a feudal oligarchy?

It’s a debate we haven’t had freely and openly in this nation for nearly a century, but it’s a question that’s vital to the survival of democracy in America.

In a letter to Joseph Milligan on April 6, 1816, Thomas Jefferson explicitly suggested that if individuals became so rich that their wealth could influence or challenge government, their wealth should be decreased upon their death. He wrote, “If the overgrown wealth of an individual be deemed dangerous to the State, the best corrective is the law of equal inheritance to all in equal degree.”

In this he was making the same argument that the Framers of Pennsylvania tried to make when writing the Constitution in 1776. As Kevin Phillips notes in his masterpiece Wealth and Democracy: A Political History of the American Rich, a Sixteenth Article to the Pennsylvania Bill of Rights (that was only “narrowly defeated”) declared: “An enormous proportion of property vested in a few individuals is dangerous to the rights, and destructive of the common happiness of mankind, and, therefore, every free state hath a right by its laws to discourage the possession of such property.”1

 

Chapter 5 Thomas Paine against the Freeloaders

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Most Americans these days don’t remember why (or when) we instituted a progressive income tax or why taxes even matter in society beyond the obvious issue of paying the cost of government functions like police and fire departments. They don’t realize that the Founders of our republic had a visceral and intense concern about multigenerational accumulated wealth and the ability of great wealth to corrupt democracy itself.

Americans today know that none of the supposedly “rich” founders left great fortunes. The foundations that bear the names of people who lived in the late-nineteenth and twentieth centuries are the likes of the Rockefeller Foundation and the Ford Foundation. There is no Jefferson Foundation or Madison Foundation. Americans know this—but they don’t know why.

Most Americans also don’t realize that a middle class is created and maintained by direct intervention in the marketplace by a democratic government, including laws protecting labor, defining minimum wage, and taxing great wealth.

 

Chapter 6 Taxation without Representation

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This is not the first time Americans have been screwed.

The American colonists were screwed, too. By the 1700s the colonists living in America should have been well off. Once they had chased away or killed the Native Americans (also screwed), they had plenty of land. Trade was booming. Small businesses were springing up in cities all over the East Coast. A young kid like Benjamin Franklin, coming from modest means, could be apprenticed to a tradesman and hope to easily stay in the middle class.

But by the 1750s, folks realized that something was terribly wrong. The harder they worked, the less money they had. Instead of living in a democracy, they found that their country was run by King George II, and he saw it as a great cash cow—for himself and his wealthy cronies.

King George set the rules of business in America. He levied sales taxes (called “excise laws”) on almost every product Americans consumed. To make matters worse, he added import taxes (“duties”) on the items Americans brought in from overseas.

 

Chapter 7 James Madison versus the Business of War

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On a 2002 visit to Argentina, I found myself in a pleasant, middle-class home, sitting across the table from a woman who had been tortured and electro-shocked by the police for protesting, exactly twenty years earlier, the war between Great Britain and Argentina over the Falkland Islands. I never would have guessed. She was soft-spoken, middle-aged, middle-class, and fashionably dressed. But she was one of “the disappeared"—and among the lucky ones who were released.

“The war covered up the dark side of the government and the corruption of the politicians of the time,” another woman in a Buenos Aires restaurant told me. “It was a good way of putting the attention of the people somewhere else, like when you’re with a little child, and you want to distract him, and you say, ’Come here and have some sweets.’ And we bought that immediately. There was dancing in the streets. ’We’re going to win a war—oh boy, oh boy!’ We went with flags to the streets, singing the national songs to celebrate the possibility of winning this war.”

 

Chapter 8 FDR and the Economic Royalists

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We have a name for government of, by, and for corporations. It’s called fascism.

Benito Mussolini, one of the best-known fascists of the twentieth century, claimed to have invented the word. It was actually Italian philosopher Giovanni Gentile who wrote the entry in the Encyclopedia Italiana that said: “Fascism should more appropriately be called corporatism because it is a merger of state and corporate power.” Mussolini, however, affixed his name to the entry and claimed credit for it.

In 1938 Mussolini realized his vision of fascism when he dissolved Parliament and replaced it with the Camera dei Fasci e delle Corporazioni—the Chamber of the Fascist Corporations. Corporations were still privately owned, but now instead of having to sneak their money to folks like Tom DeLay and covertly write legislation, they were openly in charge of the government.

Franklin Roosevelt’s administration was quite aware of the nature of the fascist government. In early 1944 the New York Times asked Vice President Henry Wallace (in Wallace’s words) “to write a piece answering the following questions: What is a fascist? How many fascists have we? How dangerous are they?”

 

Chapter 9 Too Important for the Private Sector

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Some aspects of government are just too important to hand over to the private sector.

Among these are the government’s role in protecting life and liberty. Even the cons will say that the government has a role in defending citizens. But they just can’t seem to help themselves. Since Ronald Reagan, the cons have been busy privatizing the most basic features of our government, including the military, the prisons, and our electoral system itself.

The cons ascribe to a religion of privatization. “Anything government can do, we can do better,” they say. Even though corporations have to skim money off the top to pay dividends to their shareholders, pay their CEOs’ huge salaries, and pay for the corporate jets, fancy headquarters, golden bathroom fixtures, and advertising and marketing, somehow the cons think corporations can do things more efficiently than a government that has to pay only civil servants. It defies logic, but they keep repeating this fundamental article of faith-based economics.

 

Chapter 10 Knowledge Is Power

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One of the primary elements of a true, functioning, representative democratic republic, like we aim for here in the United States, is that its citizens be well informed.

When Thomas Jefferson wrote a letter to his friend J. Correa de Serra on January 28, 1786, and said, “Our liberty depends upon the freedom of the press and that cannot be limited without being lost,” he was assuming that Americans knew how to read their daily newspapers.

Not anymore. A 2005 study by the National Center for Education Statistics revealed that about 5 percent of the adults in the United States are not literate in English, meaning 11 million people lack the skills to handle many everyday tasks. Some 30 million adults, or 14 percent of the population, have “below basic” skills in prose. Their ability is so limited that they may not be able to make sense of a simple pamphlet, for example. Another 95 million adults, or 44 percent of the population, have intermediate prose skills, meaning they can do only moderately challenging activities. An example would be consulting a reference book to determine which foods contain a certain vitamin.1

 

Chapter 11 Medicine for Health, Not for Profit

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Andy Stephenson was an activist, a vigilant worker on behalf of clean voting in America. He worked tirelessly to help uncover details of electronic voting fraud in the 2000, 2002, and 2004 elections. He devoted years of his life to making America a more democratic nation.

But in 2005 his friends had to pass the hat to help pay for surgery to save him from pancreatic cancer. The surgery cost about $50,000, but the hospital wanted $25,000 upfront, and Andy was uninsured.

We are the only developed democracy in the world where such a spectacle could take place.

Dickens wrote about such horrors in Victorian England—Bob Cratchit’s son, Tiny Tim, in need of medical care that was unavailable without a wealthy patron like Ebenezer Scrooge—but the United Kingdom has since awakened and become civilized.

Even the tyrants of communist China provide health care to their people, a bitter irony for the unemployed American factory workers they’ve displaced and for the poorly insured Wal-Mart workers who sell their goods.

 

Chapter 12 The Truth about the Trust Fund

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What do you do when you want to screw only the working people of your nation with the largest tax increase in history and hand those trillions of dollars to your wealthy campaign contributors yet not have anybody realize you’ve done it? If you’re Ronald Reagan, you call in Alan Greenspan.

Through the Golden Age of the middle class—from 1940 to 1980—the top income tax rate for the superrich had been between 70 and 90 percent. Ronald Reagan wanted to cut that rate dramatically, to help out his political patrons. He did this with a massive tax cut in the summer of 1981.

The only problem was that when Reagan took his meat ax to our tax code, he produced mind-boggling budget deficits. Voodoo economics didn’t work out as planned, and even after borrowing so much that this year we’ll pay more than $100 billion just in interest on the money Reagan borrowed to make the economy look good in the 1980s, Reagan couldn’t come up with the revenues he needed to run the government.

Coincidentally, the actuaries at the Social Security Administration were beginning to worry about the Baby Boomer generation, who would begin retiring in big numbers in fifty years or so. They were a “rabbit going through a python” bulge that would require a few trillion more dollars than Social Security could easily collect during the same twenty-year period of their retirement. We needed, the actuaries said, to tax more heavily those very persons who would eventually retire; so instead of using current workers’ money to pay for the Boomer’s Social Security payments in 2020, the Boomers themselves would prepay for their own retirement.

 

Chapter 13 Setting the Rules of the Game

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One of the most pernicious claims the corporatocracy makes is that business flourishes best in a perfectly “free” market. And when business flourishes, they say, all of society does better. It’s the old trickle-down philosophy that inevitably produces a nation of peons.

Always get suspicious when you see the words free market. Let’s go back to the story of Mrs. Flores, whom you met in chapter 2—the woman who lost her job at Levi Strauss when that venerable American company closed all of its factories here in the USA and moved them overseas.

Cons argue that “productivity” is responsible for the loss of American jobs. They love to quote nineteenth-century economist David Ricardo (1772–1823) as saying in his 1817 work On Wages, “Labour, like all other things which are purchased and sold, and which may be increased or diminished in quantity, has its natural and its market price.”

Thus, they say, it’s natural that American wages should have been in a free fall ever since Bill Clinton signed NAFTA and GATT: America’s roughly 100 million workers now have to compete “on a level playing field” with 5 billion impoverished people around the world. Offshoring is simply the normal extension, they say, of Ricardo’s classic view of economics.

 

Chapter 14 The Illegal Employer Problem

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Working Americans have always known how to create a middle class. It’s a simple equation: more workers, lower wages; fewer workers, higher wages.

Today wages are low in America because there are too many workers. Facilitating a rapid increase in the workforce by encouraging companies to hire noncitizens is one of the three most potent tools conservatives since Ronald Reagan have used to convert the American middle class into the American working poor. (The other two are ending tariffs [chapter 13] and destroying government protections for unions [chapter 15]).

Do the math. According to the Bureau of Labor Statistics (BLS), there are more than 7 million unemployed Americans right now. Another 1.3 million Americans are no longer counted because they’ve become “long-term” or “discouraged” unemployed workers (the BLS calls them “marginally attached”). And although various groups have different ways of measuring, most agree that at least another 5 million to 10 million Americans are either working part-time when they want to work full-time or are “under-employed,” doing jobs below their level of training, education, or experience. That’s between 8 million and 20 million unemployed and underemployed Americans, many unable to find above-poverty-level work.

 

Chapter 15 Leveling the Playing Field

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You can’t be middle class if you earn the minimum wage in America today.

The American dream and the American reality have collided. In America we have always said that if you work hard and play by the rules, you can take care of yourself and your family. But the minimum wage is just $5.15 per hour. With a forty-hour work-week, that comes to a gross income of $9,888 per year. Nobody can support a family, own a home, buy health insurance, or retire decently on $9,888 per year!

What’s more, 30 million Americans—one in four U.S. workers—make less than $9 per hour, or just $17,280 a year. That’s not a living wage either.

The U.S. Census Bureau’s statistics for 2004 show the official poverty rate at 12.7 percent of the population, which put the number of people officially living in poverty in the United States at 37 million. For a family of four, the poverty threshold was listed as $19,307.1 If the head of that family of four were a single mother working full-time for the government-mandated minimum wage, she couldn’t even rise above the government’s own definition of poverty.

 



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