Yesterday, both Amy Goodman (Democray Now!) and Bill Moyers had David Cay Johnston on to talk about his new book, Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and StickYou with the Bill). This is a book about Reagan's real legacy--or one of them, anyway. (9/11, obviously, was another.) And while I would disagree with Obama's characterization that Reagan was really the prime mover involved, he was most definitely the front man, which is why it is impossible for many high-information activists to go quietly with the idea of sweeping it all under the rug.
From Democracy Now!:
DAVID CAY JOHNSTON: Well, I was struck, listening to the program from Kenya [previous segement], where they talked about the president and his power to give money to people, give land, and that's why many people identify with it. We have created in the United States, largely in the last thirty years, a whole series of programs-a few of them explicit, many of them deeply hidden-that take money from the pockets of the poor and the middle class and upper middle class and funnel it to the wealthiest people in America. And among the biggest recipients of these subsidies are the wealthiest family America, the Waltons; George Steinbrenner; Donald Trump; a whole host of healthcare billionaires. And these are policies that either have not been reported on or the news reporting on them generally has not informed people about what they really are.
JUAN GONZALEZ: Well, I was struck-you have numerous chapters in the book on the various aspects of this transfer, but I was especially struck by your material on the New York Yankees and Steinbrenner and Joyce Hogi, who you mention in the book, who I know well, and this whole issue of sports teams across America and how the public is subsidizing them. Could you elaborate on that part of it?
DAVID CAY JOHNSTON: Sure. George Steinbrenner is getting over $600 million for the new Yankee Stadium in New York. The New York Mets are getting over $600 million. In fact, the City of New York gave them money to lobby against the taxpayers to get more money. Rudy Giuliani gave $50 million to the two teams for that purpose.
That last part is the real killer--Guiliani gave the Yankees and the Mets $50 million of taxpayer money to lobby against the taxpayer's own public interest.
He also talked about how Bush got wealthy by picking taxpayers' pockets. It's a story I knew well back in 1999, and I foolishly thought it would bar him from winning the presidency. I could understand whyh the Texas press didn't make a big deal about it, but once the national press started taking a closer look at Texas, all that would change, I naively believed.
Of course, the national press still hasn't taken a closer look at Texas--or anything else, for that matter, that isn't nammed "Brittney." They just don't do closer looks any more. It's not their thing.
David Cay Johnston is the exception that proves the rule:
AMY GOODMAN: Speaking of sports teams, talk about President Bush and where you believe, really, ultimately, he got his wealth.
DAVID CAY JOHNSTON: Well, it isn't a function of belief, Amy. I've got the documents. President Bush, who will go down in history as the great tax cutter, owes almost all of his fortune to a tax increase that was funneled into his pocket. What happened is, an oil man named Eddie Chiles wanted to sell his money-losing Texas Rangers baseball team. They played in a little stadium, smaller than the one we have here in Rochester, New York, and of course couldn't make any money. So George Bush put together a group of very wealthy investors to buy the team. He put up himself $600,000 of borrowed money. The partners then gave him a 10 percent stake as the managing partner. That's a very common arrangement in business. Then they held a special election in January of the year in question to increase the sales tax in the town of Arlington, Texas, by one half-cent. That money was used to build a new baseball stadium. It's an incredibly nice baseball stadium.
Then the power of government to seize land by eminent domain-and I go back to what was talked about in Kenya, the leader there can give you land, he can presumably therefore also take it away-the government used its power of eminent domain to seize land from people, not for a public purpose-not for a military base, for a school, for a highway, for a sewer plant-but because it was coveted by President Bush and his friends, and they were unwilling to go into the market and buy it through market economics. So the government seized this land. People were paid far less than they were owed, and we know that because one family fought back, and a jury, after being out just a matter of minutes, awarded them about six times what they had been offered by the government of Arlington.
The value of this subsidy, according to Ray Hutchison, who is the husband of Senator Kay Bailey Hutchison, is a prominent Republican insider in Texas and is the leading authority on municipal bond finance in Texas, was $202.5 million. The profit that President Bush and his partners made when they sold the team was $164 million. What does that tell you? Every single penny of additional money President Bush got from that investment, his gain, came from the taxpayers. He did not add one cent to the value of that team through his skill as an MBA manager. This gets repeated all over the country.
And then when President Bush filed his tax return, he should have reported that the 10 percent share he had, the one that was given to him as compensation for being general manager, was wage income. And, of course, we tax wages at a higher rate than we do capital income, like capital gains. President Bush therefore shorted the government $3.4 million. Under our system, you sign your tax return subject to audit. If you're not audited and you don't pay the government the right amount, if it's too much, the government keeps it, if it's too little, you short the government, but nothing happens to you.
Both interviews [GoodmanMoyers ] are excellent, packed with example after example to give the full flavor of how widespread the pattern is. The massive, intensely destructive subsidies of big box retailers is another subject he talks about in some detail, for example.
But he also talks about the big picture, as well. Amy asked him about Obama praising Reagan, and while I would disagree with Johnston characterizing Reagan as the agent of that change, as opposed to it's spokesmodel/frontman, the overall picture he paints is powerful, comprehensive, and deeply damning:
AMY GOODMAN: I wanted to ask you about Barack Obama's comments, David Cay Johnston, who praised-
DAVID CAY JOHNSTON: Well, one thing, Amy, I don't do, Amy, I don't talk about the presidential campaign, because-
AMY GOODMAN: Oh, you don't have to-you don't have to talk about them-
DAVID CAY JOHNSTON: OK.
AMY GOODMAN: -but just the substance of what he had to say, which was very interesting, as he talked about former President Ronald Reagan. He was in an interview with the Reno Gazette-Journal, appearing to express admiration for what he called Reagan's "clarity" and "optimism" and overcoming "excesses" of the '60s and '70s. This is what he said.
SEN. BARACK OBAMA: I think Ronald Reagan changed the trajectory of America in a way that, you know, Richard Nixon did not and in a way that Bill Clinton did not. He put us on a fundamentally different path, because the country was ready for it. I think they felt like, you know, with all the excesses of the '60s and '70s and, you know, government had grown and grown, but there wasn't much sense of accountability in terms of how it was operating. And I think people just tapped in-he tapped into what people were already feeling, which was we want clarity, we want optimism, we want, you know, a return to that sense of dynamism and, you know, entrepreneurship that had been missing.
AMY GOODMAN: In response, rival candidate John Edwards said Reagan "did extraordinary damage to the middle class and working people, created a tax structure that favored the very wealthiest Americans and caused the middle class and working people to struggle every single day." He said, "I can promise you [this: I will] never use Ronald Reagan as an example for change." So, David Cay Johnston, without getting into presidential politics, you write extensively about Ronald Reagan in this book.
DAVID CAY JOHNSTON: Yes. Well, Ronald Reagan, whether you love Ronald Reagan or you hate Ronald Reagan, was a great leader. He did, in fact, dramatically change the country.
Between 1945 and the election of Ronald Reagan, we had a government that was focused on creating and nurturing the middle class. When I was a young man, I was able to go to college only because it was free. It didn't matter that I didn't have any money-my dad was a 100 percent disabled veteran, and I went to work when I was ten years old and full time since I was thirteen-because it was free.
Today, the cost of a college education, a state college education, is about $10,000 a year. The average income of the bottom half of taxpayers-that's not families, that's taxpayers-is about $15,000. Think you can go to college if two-thirds of your income would have to go to college? I don't think so.
Well, Mr.-what Mr. Reagan did in 1980 was he asked a question that had a very powerful effect. He said, "Are you better off than you were four years ago?" And Americans said no, they weren't. And they elected him to office, and they set in motion a major change in government policy, a change that I think has been perverted. I do not believe Reagan intended all of the things that have been done since he started this happening.
But I'm asking the question in Free Lunch: Are you better off than you were in 1980? And on the surface, America is much better off. The country is more than twice as wealthy in real terms as it was in 1980. Per person, adjusted for inflation, the economy now puts out $1.70 for every dollar that it put out in 1980. Those are absolutely tremendous economic numbers.
So how come we're not all really well-off? Why is it one-in-seven families has filed bankruptcy in the last twenty-five years? Why is it people are so mired in debt that television ads are just full of debt relief and take on more debt ads, sometimes at 99 percent interest? Why is it that so many people don't have health insurance and so many people no longer have a retirement plan?
And by the way, the average income of the bottom 90 percent of Americans, what I call the vast majority, is smaller today than it was in 1980. And since the year 2000, when we really got serious about this tax cut business, the average income of Americans every year-2001, '02, '03, '04, '05-has been smaller than it was in 2000. There have been some gains in 2004 and '05, but they haven't gotten up to equal 2000. And of those gains in the year 2000-it's either '05 over '04 or '04 over '03-half went to people who make over a million dollars a year. What's happened is-
AMY GOODMAN: Didn't that wealth transfer massively begin-I mean, accelerate with Reagan?
DAVID CAY JOHNSTON: Oh, yes. No, that's-I'm sorry, that's exactly my point, Amy, is that what happened is that we put in place all sorts of new programs, many of which were never written about in the news media, that got no attention whatsoever. We created healthcare billionaires while making healthcare unavailable to one-in-seven Americans. And we did this with government money. We allowed people to buy public assets for, in some cases, a fraction of a penny on the dollar and then poured government money into them.
And, you know, our national myth that Ronald Reagan ran for office on was that there were all these welfare queen Cadillacs-welfare queens driving Cadillacs out there. I think there was, in fact, one scam artist who went to prison. But what's really going on is welfare at the top, and way beyond what's been reported in the news media as corporate welfare. We have built into the scaffolding of the new economy rules that funnel money to the top.
And that this has happened really shouldn't surprise us, because under our campaign finance system, which has gotten worse and worse and worse with campaign finance reform that hasn't worked, politicians running for high office spend a great deal of their time talking not to you and me and school teachers and police officers and firefighters and factory workers, but to rich people and their paid representatives. And they hear about their concerns and what they say they need to make things fair.
The problem, of course, is that the Versailles Dems are not just as compromised as the Republicans, which Johnston also talks about. This is from the end of the Moyers interview:
BILL MOYERS: You point out, by the way, that Bill Clinton as president gave the super rich a larger tax break than George Bush's tax cuts, right?
DAVID CAY JOHNSTON: Yeah, I love to trot this one out when somebody goes, "Oh, you're from the New York Times. You must be, you know, pro-Democrat or liberal or whatever." I'm the guy who broke the story and reported on the fact that Bill Clinton gave the super rich, the 400 highest income people in America a big tax cut. They were paying 30 cents out of each dollar of their income to the federal government when he came into the office. When he left, it was down to 22. Bush has lowered it to 17. Now, first of all, notice you're probably paying more than 17 cents. May well be paying more than 22. But Bush gave them an eight cent tax cut-- I'm sorry. Clinton gave an eight cent tax cut and Bush only gave them five cents.
BILL MOYERS: Let me read you this quote from one of your critics, Larry Kudlow of NATIONAL REVIEW online and CNBC. He wrote this a couple of years ago after in response to something you had reported in the New York Times about how Bush's tax cuts on dividends and capital gains had helped people with the highest incomes. Quote: "These entrepreneurs use their God-given talents within the Reagan-esque free market framework that deregulated, slashed tax rates, and provided the first strong dose of economic incentives since the 1920s. A rising economic tide over the last 20 years has lifted living standards, productivity, and employment throughout America. Everyone got richer with a full $39 trillion in new wealth created during this period. Fair?
DAVID CAY JOHNSTON: No. Not accurate either. First of all a rising tide lifts all boats unless you're in the dinghy tied to the dock. And then you get swamped. The poor America, and it's not like being poor in the third world, but the poor America are worse off. Most Americans have seen their incomes stagnate or decline slightly. People have fewer fringe benefits. They have less in retirement. They have an enormous amount of debt. For every additional dollar since 1980 the people have gotten in equity in their homes, they've taken on $2 of debt. That's not a prescription for getting well off.
Entrepreneurs? Entrepreneurs are people who are going to perform no matter what. And we had our greatest economic growth when we had much higher tax rates. You want entrepreneurs. You need entrepreneurs to have a good society. I don't have any problem with entrepreneurs. But we need to have a system that also fairly distributes-- and government rules affect the distribution of this; it is not in a vacuum-- the burdens of society and the benefits of society. And so when we have people who make billion dollar a year incomes and pay 15 percent taxes and janitors who pay the same tax rate and school teachers who pay a 25 percent tax rate, something's amiss.
BILL MOYERS: But did you notice what happened when the Democrats briefly toyed with the idea of removing that tax break from the hedge fund and private equity managers Congress thought very briefly about removing it. And then the industry held a big party for-- Harry Reid, Senate Democratic majority leader down in Las Vegas, and he came back from that big party and said, "I don't think we'll be taking that up anytime soon."
DAVID CAY JOHNSTON: The problem of the political donor class's outsized influence and its grip on Congress is bipartisan. There's one party in Washington. It's the party of money. It has different wings and factions. But Washington is the party of money. And the wealthiest people in America, the large corporations in America, are busy milking the government for everything they can get. And you are paying the price of their free lunch.
Now, if only John Edwards were doing as good a job in his forum as Johnston is in his, I would be an enthusiastic Edwards supporter. And Obama's failure to speak honestly about this legacy when he's given such a prominent place in the national spotlight is a huge strike against him, in my book. And Clinton? Well, what her husband did sort of says it all, now doesn't it?
Which is why the netroots really does have to maintain its independence. You can support whoever you chose, but do not sacrifice your indepedent judgement or your unqualified support to anyone.
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