From mid-March through November 2020, the 651 billionaires in the USA got richer by $1 trillion, half of which went to just 15 individuals. This amount could send the entire population of 330 million $3,000 relief checks.
This breathtaking fact shows that bad times for working people are great times for the very rich. Yet they are major recipients of stimulus funds — on top of decades of earlier giveaways. Despite the direst economic conditions since the Great Depression, the rich party on, while Republicans and Democrats spike the punch. Everyone else is told to fend for themselves.
“Relief” for whom? In a year-end drama, Congress finally passed and Trump signed an aid package that is bundled with funding the federal government through the spring. No one read the 5,593-page behemoth endorsed by both chambers with overwhelming majorities. The grand compromise touted by both parties gives pathetic crumbs to working people, but generous bonuses to the wealthy which, in the words of Senate Majority Leader Mitch McConnell, are “non-controversial.”
A little gem buried deep in the bill is a provision that loans under the Payroll Protection Program (PPP), a major part of the original CARES Act passed in March (see A Robin Hood program for working-class survival), would be forgiven, tax free, if businesses “guaranteed” they would keep their employees on the payroll. But it goes further to make the expenditures from those free “loans” tax deductible. This $200 billion scam, according to the Brookings Institute, overwhelmingly favors the top 1 percent.
“CARES” Act … for the rich. The cratering of the U.S. economy in March of last year caused by Covid-19 shutdowns led Congress to quickly pass the Coronavirus Aid, Relief and Economic Security (CARES) Act. The price tag was huge, a total of $2 trillion. You would think that with all that money, there must be a lot for working people, right?
While the act did provide one-time relief checks and supplemental unemployment funds, the biggest single portion, some $450 billion, went to industry bailouts. The bill called on businesses to preserve jobs “to the greatest extent practicable,” but had literally no accountability or oversight of public money given to private industry.
Aviation companies received $25 billion in bailouts from CARES, but in October furloughed 29,000 workers. They may receive $20 billion more in future stimulus packages. They can be counted on to do what they did with 96% of their available cash over the last 10 years; spend it on stock buybacks that simply drive up the price and enrich shareholders.
In every part of the CARES Act, the wealthy used their power and resources to squeeze out smaller institutions (such as universities and hospitals) and small businesses, particularly those serving communities of color. Half of the $350 billion share supposedly set aside for small businesses went to just 600 mainly larger businesses, including national restaurant, hotel and retail chains. To add insult to injury, the bill required the dispersal of loans through major banks, which made an $18 billion windfall in processing fees.
History repeats itself. Is the chicanery around this year’s Covid “stimulus” bills a new development, or heat of the moment effort to deal with desperate circumstances? No. It is baked into the system. It’s part of the DNA of capitalism.
It was just 12 years ago that Congress passed the 2008 Troubled Assets Relief Program (TARP), a $700 billion prop to the country’s largest banks, insurance companies, and auto manufacturers. Though almost all the money was eventually paid back, in the interim, the federal government took on options to buy stock of the companies at preset prices. It put up $40 billion for American International Group (AIG), whose market value was a fraction of that. General Motors bragged that it paid back its TARP loan out of a taxpayer funded escrow account, reimbursing government largesse with another federal gift!
This is part of a pattern. In 2001, after the attacks on the World Trade Center, the airline industry received an $18.6 billion bailout. The savings and loan industry received $293 billion in 1989 (almost $600 billion in today’s dollars). Banks, railroads, automotive and aerospace companies received billions in the 1970s and 1980s. In all cases, the federal government was quick to help the largest corporations. It was capitalism on the way up and socialism — for big business — on the way down.
At times, the wealthy have paid more, primarily to fund wars that expanded their markets. The top individual tax rate was raised to 77% to fund U.S. entrance into WWI. It was lowered during the “Roaring 20s” but raised again to 94% to fund WWII and its debt laden aftermath.
The top tax rate remained at 70% for over 30 years but was eventually cut in half. In any case, the superrich and corporations have not actually been paying these rates, using a labyrinth of deductions, offshoring of funds and other financial mechanisms that their battalions of attorneys exploit. Workers pay a far higher percentage of their income in taxes than the ultrarich do.
A recent study by scholars in England demonstrated that the benefit of tax cuts to the wealthy over the last 50 years in 18 industrialized countries, went to … (here’s a shocker) the wealthy. So much for the tired claim that such benefits “trickle down” to everyone else.
The rich have been given ongoing and special stimulus for decades, at the expense of working people, who have seen public services cut to the bone to pay for it. The bottom line? The pandemic and the financial crisis are just alibis to give a bigger boost to the oligarchs and to prop up their wretched economic system, while everyone else suffers and pays the bill.