Class Warfare and the Social Contract

Friday's Washington Post article by Sally Kohn dives into the history of our current bout of "class warfare".  It has always existed but she maintains this come-to-fruition edition began in 1971.

The class war began in 1971. That year, soon-to-be Supreme Court justice Lewis F. Powell Jr. wrote a confidential memorandum to a friend at the U.S. Chamber of Commerce about the “Attack of the American Free Enterprise System.” In the mid-20th century — from the New Dealto Social Security to environmental and civil rights laws — the government had cut into corporate profits while creating middle-class prosperity. Falsely believing that capitalism was under attack, Powell wrote: “It must be recognized that businessmen have not been trained or equipped to conduct guerrilla warfare with those who propagandize against the system.” His proposal, from which the modern conservative movement grew, was to equip business elites for that battle with aggressive policies to make Americans believe that what’s good for wealthy chief executives is good for them, too.

She goes on to cite statistics detailing the growth of the income gap, corporate profit and executive pay.  It's succinct and worth the read.  According to the article, it is all according to plan.

Paul Krugman writes about the "social contract" applying to everyone but the lucky few in his New York Times Thursday op-ed:

To be fair, there is argument about the extent to which government policy was responsible for the spectacular disparity in income growth. What we know for sure, however, is that policy has consistently tilted to the advantage of the wealthy as opposed to the middle class.

Some of the most important aspects of that tilt involved such things as the sustained attack on organized labor and financial deregulation, which created huge fortunes even as it paved the way for economic disaster. For today, however, let’s focus just on taxes.

The budget office’s numbers show that the federal tax burden has fallen for all income classes, which itself runs counter to the rhetoric you hear from the usual suspects. But that burden has fallen much more, as a percentage of income, for the wealthy. Partly this reflects big cuts in top income tax rates, but, beyond that, there has been a major shift of taxation away from wealth and toward work: tax rates on corporate profits, capital gains and dividends have all fallen, while the payroll tax — the main tax paid by most workers — has gone up.

Krugman goes on to quote Elizabeth Warren saying "There is nobody in this country who got rich on his own.  Nobody."   

That was so good I had to find the video.

I still believe President Obama made a HUGE mistake not making her head of the Consumer Protection Financial Bureau she helped create.   That said, perhaps it is kismet.  She's now running for the former U.S. Senate seat held for decades by the late, liberal Ted Kennedy, now occupied by Republican Scott Brown.   Perhaps the balance of power will shift...again.