Waging Class War in Comfort

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

In a typical corporate board of directors meeting, what do CEOs see when they look out across their richly lacquered boardroom tables? They see . . . lots of other CEOs.

That’s no accident. CEOs today purposely pack their corporate boards with their pals, who often turn out to be current or former chiefs at other corporations. Everybody who’s anybody just feels more comfortable that way

The most powerful corporate executive in 1950s America, GM’s Charlie Wilson, served as U.S. secretary of defense — and paid three-quarters of his income in taxes.

President-elect Donald Trump, a big-time business chief himself, certainly seems to want to feel comfortable, too. No other President-elect has ever packed his cabinet with more business bigwigs.

For secretary of state, Trump has tapped Exxon Mobil chief executive Rex Tillerson. At Treasury, he’s installing former Goldman Sachs executive Steven Mnuchin. Trump’s pick for commerce, billionaire Wilbur Ross, runs his own investment firm and sits on five other corporate boards.

For transportation secretary, the President-elect has chosen Elaine Chao, the scion of a shipping magnate fortune who pulled down over $1 million last year sitting on four corporate boards. Trump’s choice for labor secretary, fast-foods CEO Andrew Puzder, has made his own fortune keeping wages low at the Hardee’s and Carl’s Jr. chains.

Betsy DeVos, the Trump education secretary-designate, has never stepped foot in a public school as a student, educator, or parent. But she does hail from the billionaire family that runs the money-making machine that goes by the name of Amway.

At the Small Business Administration, Trump is situating Linda McMahon, the billionaire who helps runs a sports entertainment empire. And the chair of Trump’s National Economic Council will be Gary Cohn, the president of Goldman Sachs.

Trump has named a variety of other tycoons to official advisory bodies. Among these new advisors: Uber CEO Travis Kalanick, Tesla CEO Elon Musk, and PepsiCo CEO Indra Nooyi.

Donald Trump, to be sure, won’t go down in history as the first President to ever plop business chiefs in the federal government’s loftiest positions. Previous presidential business picks have even generated some intense controversy.

In 1953, for instance, President Dwight Eisenhower put forward as his secretary of defense the president of America’s most powerful company, Charlie Wilson of General Motors.

That January, Wilson went before the Senate Armed Services Committee for his confirmation hearings. Some senators wondered whether the GM top dog would be able to put the interests of the United States before the interests of General Motors.

Wilson’s purported answer — “What’s good for General Motors is good for America” — soon became a staple of American political folklore. But Wilson didn’t actually put his sentiments exactly that way. His actual answer, the hearing transcripts show, smacked of less arrogance.

Wilson told his Senate inquisitors that he didn’t think he would face a conflict of interest between his corporate and government service because, he explained, “for years I thought what was good for our country was good for General Motors, and vice versa.”

“Our contribution to the nation” at GM, Wilson added, “is quite considerable.”

And Wilson did have a point. In postwar America, big companies like GM did make a contribution to the nation. They didn’t just extract wealth. They did some serious sharing. Years of labor militancy had convinced business leaders like Wilson that corporations had to bargain reasonably with their workers.

In 1950, Wilson’s General Motors and the United Auto Workers had signed a landmark contract that came to be known as the “Treaty of Detroit,” and the basics of that treaty — productivity-based wage hikes above and beyond inflation, significant pension and other fringe benefits — would soon spread throughout America’s unionized heavy industries.

And Charlie Wilson shared personally, too, via the steeply progressive tax rates then in effect. In 1950, Wilson earned $586,100 from his GM compensation and personal investments. He paid 73 percent of that — $430,350 — in income taxes.

Just ponder those numbers for a moment. In the middle of the 20th century, the top exec at the top corporation in the United States had an after-tax income of $155,750, the equivalent, after taking inflation into account, of a mere $1.56 million today.

Last year, America’s top 200 corporate chiefs averaged $19.3 million. They took home more than $1.56 million every month.

Now we don’t know exactly how much our contemporary corporate chiefs are paying in federal taxes. We do know, from an IRS report released earlier this year, that Americans in their income neighborhood — the top 0.01 percent — paid federal income taxes at a 26 percent effective rate in 2013.

Charlie Wilson paid taxes at nearly triple that rate 66 years ago.

For corporate chiefs, America has changed a good bit since Charlie’s time. And now Donald Trump and the business kingpins he has populating his inner circle want to change it a good bit more. The latest tax plan that Trump has advanced would on average, the Tax Policy Center calculates, slice the tax bill of America’s top 0.1 percent households by over $1 million each in 2017.

Trump and his pals aren’t signing treaties. They’re waging class war.

***

This was reposted from OurFuture.

Sam Pizzigati edits Too Much, the online weekly on excess and inequality. He is an associate fellow at the Institute for Policy Studies in Washington, D.C. Last year, he played an active role on the team that generated The Nation magazine special issue on extreme inequality. That issue recently won the 2009 Hillman Prize for magazine journalism. Pizzigati’s latest book, Greed and Good: Understanding and Overcoming the Inequality that Limits Our Lives (Apex Press, 2004), won an “outstanding title” of the year ranking from the American Library Association’s Choice book review journal.

Posted In: Allied Approaches, From Campaign for America's Future

Union Matters

Failing Bridges Hold Public Hostage

From the USW

From tumbledown bridges to decrepit roads and failing water systems, crumbling infrastructure undermines America’s safety and prosperity. In coming weeks, Union Matters will delve into this neglect and the urgent need for a rebuilding campaign that creates jobs, fuels economic growth and revitalizes communities.

The Seattle Department of Transportation (SDOT) gave the public just a few hours’ notice before closing a major bridge in March, citing significant safety concerns.

The West Seattle Bridge functioned as an essential component of  the city’s local and regional transportation network, carrying 125,000 travelers a day while serving Seattle’s critical maritime and freight industries. Closing it was a huge blow to the city and its citizens. 

Yet neither Seattle’s struggle with bridge maintenance nor the inconvenience now facing the city’s motorists is unusual. Decades of neglect left bridges across the country crumbling or near collapse, requiring a massive investment to keep traffic flowing safely.

When they opened it in 1984, officials predicted the West Seattle Bridge would last 75 years.

But in 2013, cracks started appearing in the center span’s box girders, the main horizontal support beams below the roadway. These cracks spread 2 feet in a little more than two weeks, prompting the bridge’s closure.

And it’s still at risk of falling.  

The city set up an emergency alert system so those in the “fall zone” could be quickly evacuated if the bridge deteriorates to the point of collapse.

More than one-third of U.S. bridges similarly need repair work or replacement, a reminder of America’s urgent need to invest in long-ignored infrastructure.

Fixing or replacing America’s bridges wouldn’t just keep Americans moving. It would also provide millions of family-supporting jobs for steel and cement workers, while also boosting the building trades and other industries.

With bridges across the country close to failure and millions unemployed, America needs a major infrastructure campaign now more than ever.

 

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There is Dignity in All Work

There is Dignity in All Work