Bankruptcies and foreclosures are rising rapidly. Both consumer and national debt are at all-time highs. Meanwhile, productivity is producing record corporate profits which are skimmed off by the corporate executives while income stays flat for those who actually created that very productivity. (You can check out the actual numbers in numerous places.)
What this means is that America as we know it is in real danger of going the way of Third World countries were a few of the wealthy elite own everything and the rest of us become veritable serfs. The trend is unmistakable and inexorable. To reverse it will require radical action.
First: put a cap on compensation
Obscene levels of pay and perks for top executives have become the norm in corporate America, while the tax burden has been shifted to the middle-class and to future generations. We are well into a new era of feudalism where the wealth of the nation is continually being shifted toward the wealthiest. It is now time to let it be known that corporate CEOs and top executives are worth nowhere near what they receive in compensation. An absolute maximum of $5 million should be placed on the total compensation (including stock options, bonuses, private jets, etc.) that any corporate executive may skim off the profits of the corporations they control. In adition to the absolute cap should be a formula under which the highest-paid person in any corporation may receive no more than 100 times the compensation of the lowest paid employee of that corporation, but in no case should an employee be paid less than twice the income that signifies poverty level.
Second, enforce the anti monopoly laws.
Corporations improve their wealth and influence by taking over more and more of their competitors. When Ronald Reagan told the Justice Department to stop enforcing the Sherman antitrust Act ( monopoly) and the Wagner Act ( labor relations) the trend away from the widespread prosperity of the '40's, 50's, '60's and toward an ever more divided America was accelerated many times over.
Third: apply the same Social Security tax rate to all in come not just the first $97,500
Those who earn $97,500 or less per year now pay a combined tax rate of 15.3 percent of income ( the employer’s share is 7,65%) Those earning, or skimming, more than $97,500 pay a lower and lower rate as their incomes increase. For example, under $97,500 you pay 15.3 %. At $1 million that rate drops to just over one percent. At $10,000,000, it drops even further to just over one-tenth of one percent. So, the people who can most easily afford to pay the same rate as the working guys are getting by with paying a very small fraction of that rate. The wealthiest among us are already getting tons of tax breaks, subsidies, exemptions, and other government favors. They do not need the further advantage of a lower rate as their income multiplies.
Fourth: reinstate the usury laws.
People and corporations with money to lend are able to add to their wealth by charging high, sometimes obscene, interest rates to those who borrow. This additional tax falls mainly on the poor and middle-class, but also on small businesses and start-ups (which incidentally are far greater engines of employment, prosperity, and growth than the big multinationals). When the Federal Reserve allowed interest rates to climb over the 20% range at the beginning of the Reagan revolution, small businesses and other borrowers got shafted. The rich got richer, (precisely the goal of Reaganomics) and everyone else suffered, theReagan recession wiped out countless small to midsize businesses and the traditional one income family now needed multiple incomes to get by. Mom had to go to work because dad’s pay was not enough to support the family, This put a lot of new workers on the payrolls, mostly at coolie wages, and the increased number of employees enabled the Republican leadership to brag about creating jobs. But, after the Reagan-Bush recession started to become worrisome the Fed cut interest rates wayback. Then a funny thing happened: the boom of the '90s took off. The big lenders were not hurt, they still made a profit, just as much. Now, we have a situation where banks and credit card companies are charging double dip double-digit rates on ordinary balances of slamming people wish huge fees for overdrafts and late payments. Again, a tax that falls mainly on those struggling to get by, the working poor. This only further spreads the income gap.
The solution to this specific problem is to enforce an absolute cap on the interest rate that can be charged on any kind of loan or credit, with the rate applying as well to late charges and overdrafts. Banks and credit card companies will scream and mount an aggressive campaign of lobbying and bribes, plus deceptive and false advertising to fight against anything that controls the amount they can squeeze out of working folks.
The absolute maximum should be no more questions than 6% for the least creditworthy borowers. Lenders can compete with each other to get the business of the more creditworthy through more competitive interest rates. Enforcement should take place immediately with
the rewriting of any contracts or agreements that include a rate above the maximum usury.
Fifth: restore the bankruptcy laws that were in effect before Bush tried to gut them altogether.
The Bush bankruptcy-rule-tightening was purely and simply a payback to the finance industry that donated so much to GOP election campaigns.
Finally, or almost finally: require reciprocity in all foreign trade relations.
No other country should be allowed to gain massive trade surpluses with America. China, for example, sells billions to us, but buys very little from us. “Reciprocity” means that what China gets for its imports to the United States should be strictly limited to the amount the U.S. gets for its sales to China. In China's case, this would help slow down the loss of American jobs to cheap labor plants and reduce the amount China is able to devote to its massive military buildup. In effect, we are financing China's modernization. This is good for China and here should be some good as well for China's trading partners. But China’s growth should not be paid for by pushing American workers further down the economic ladder.
Radical action on these fronts will be difficult to achieve, but it must be accomplished in order to stop America's downward slide into a new form of feudalism, where a small cohort of the super-rich owns and controls the whole country and America's middle class become as serfs to the corporate “lords”.
