A plutocracy is a society that is ruled by the wealthy. Is America a plutocracy – judge for yourself:
1) Regressive Taxes
A regressive tax policy increases the tax rate as the individual’s income decreases. IRS Tax brackets do seem to start out fair enough in which those making less than $9,000 pay zero in taxes and those making $400,000 or more pay 39.6% on a portion of their earnings. [1] Sounds good…until you factor in tax loopholes, many of which designed to benefit the wealthy, and the tax rates on the top decrease dramatically. With these loopholes, millionaires and billionaires can end up paying lower tax rates than the working class. Some of our ultra wealthy end up paying no taxes at all…the burden of operating our society, therefore, is often placed on the working class. [2]
2) Money Buys Political Influence
The Supreme Court ruling on Citizens United opened the flood gates for corporate spending in national elections. The divided court ruled that corporations can give unlimited amounts of money to political action committees (PACs). To do otherwise, the court ruled, would violate these corporations’ freedom of speech.
As a result, super PACs give millionaires and billionaires the perfect platform to launder money to their perspective candidates. Super PACs also provide a cloak of secrecy as they are not required to disclose information regarding their donors, no matter the size of the donation.
According to the Wall Street Journal, Super Pacs spent more than $567 million in the 2012 elections, nearly $149 million of which spent against President Obama. Restore Our Future, a PAC supporting former presidential candidate Mitt Romney, was the top spender according to the Journal, with over $142 million in expenditures.[3] According to the New York Times, Restore Our Future raised about $18 million in the second half of 2011, thanks to just 200 donors.[4]
Despite Romney-backed PACs spending twice as much than Obama-backed PACs, Obama won the election handedly. But what will happen in 2016? Another campaign donation case looms in the Supreme Court; this time, the Court will decide if limits to individual contributions should be lifted. Currently, individuals are limited to giving a total of $123,000 directly to political parties and candidates (they are not limited in giving to PACs, which are by law supposed to act independent of candidates but can and do support specific candidates).
Republican Senator Mitch McConnell doesn’t believe that this amount is high enough and is asking the Supreme Court to eliminate spending limits on the grounds they violate free speech. According to NPR, these spending limits impact approximately 1,700 donors nationwide. [5] Apparently, not many average Americans can afford such generosity.
3) Corporations = Individuals
“Corporations are people, too, my friends.” Former presidential candidate Mitt Romney uttered these words back in 2012 and although we mock his candor, he’s right. In America, corporations are afforded the same protections, under the 14th Amendment as people. There is debate whether this was the actual intent of the court or a clerical error [6], but the consequences are still the same. This is why, in part, the Supreme Court ruled in favor of unlimited corporate giving to PACs in Citizens United. This is why the Supreme Court will hear a case regarding Obamacare and the religious rights of corporations; the corporations arguing that they should not be forced to pay for contraceptives under Obamacare as it is a violation of their (the corporation’s) religious rights. [7]
You may be wondering if corporations are individuals, why do they often seem to be above the law? When was the last time a corporation was imprisoned for negligent or unscrupulous acts? Never. A for-profit corporation is a legal umbrella that protects the actual people who are making the decisions (these decisions of course are driven by the motive of higher profits) in the name of the corporation. The corporation can not exist without the people yet the people are protected under the very legal structure that is a corporation. Corporations want the same rights as people without having the same responsibilities as people…without the same consequences as people.
When the Deepwater Horizon explosion occurred, for example, in the Gulf of Mexico, 11 workers were killed. It was discovered that BP and its subcontractors made deliberate decisions on the oil rig that likely jeopardized the safety of its workers. Was BP brought to trial for manslaughter or murder? No. No one went to prison for that incident. BP paid out billions in lawsuits and fines. Of course, in 2009, BP was ranked 4th according to the Fortune Global 500, and in just two quarters of that year made $17 billion in profits. In December 2013, BP won an injunction to stop payment on certain claims it deemed untraceable to the spill. [8]
4) Corporate Tax Subsidies
You might think General Electric, Boeing and DuPont are wealthy, successful corporations…and you’d be right. You might also think that they pay their fair share in taxes…and you’d be wrong. These along with 23 other large corporations enjoyed negative federal taxes, according to the Citizens for Tax Justice. Tax deferrals, deductions and loopholes saved these companies (and many more) billions in tax subsidies.[9]
By the way, the argument that corporate tax breaks supports American jobs is simply not true. Nothing underscores this more than the fact that corporations enjoy tax breaks for creating oversea jobs. As Fox News explains, it is not a special loophole for sending jobs overseas, but a tax deduction for doing business (even if that business is in, say, China).[10]
5) Corporate-Controlled Information
It is no surprise to anyone that the mainstream news media are subsidiaries controlled by huge conglomerates. ABC News is a subsidiary of Walt Disney Company; NBCUniversal Inc., previously owned by General Electric and now by Comcast; Fox Broadcasting Company owned by media mogul Rupert Murdoch under the parent corporation, News Corp. Of course newspapers, large and small, are corporate-owned as well. Your small town newspaper is likely owned by a large conglomerate.
Six mega corporations own 90% of the media in the United States. Over the last three decades, through mergers and acquisitions, media consolidation occurred; in 1983 over fifty companies were in play.[11]
The Telecommunications Act of 1996 weakened regulations on ownership of media outlets and made the way for additional deregulation. In 2003, it came, through the Federal Communications Commission (FCC), under Bush appointed SEC Chair Michael Powell; the FCC altered decades-long regulations to favor changes lobbied hard [12] for by big media: [13]
The FCC largely ended a ban on joint ownership of a newspaper and a broadcast station in the same city. The provision lifts all “cross-ownership” restrictions in markets with nine or more TV stations. Smaller markets would face some limits and cross-ownership would be banned in markets with three or fewer TV stations. [13]
The concentration of news outlets leads to less unbiased news reporting and a corporate filter that is rarely in the public interest. Even these news-making changes to FCC regulations were not covered by the major television networks.
What is good for The Disney Company or NewsCorp is not good for the average American. If policies that combat Climate Change for example, are deemed bad for the corporate parent or subsidiary, will the issue be covered fairly through its news media sources?
Even academia is not spared from corporate interests. Corporate funding has been long infiltrating the ivy league through donations used to underwrite research projects. Just recently, it has been noted that the Koch Brothers, petrochemical-based business billionaires that actively support conservative agendas, have been funding academic projects through the Charles Koch Foundation. Along with the funding, comes the condition that Koch operatives are able to choose professors and course-required readings. [14]
In Pennsylvania, the Marcellus Shale Coalition, a trade and lobbying association for the gas industry, paid Penn State University (PSU) to publish several reports on the economic impacts of the industry.
The first study, in 2009, initially failed to disclose its industry funding and was used by lawmakers to kill a state tax on gas drillers. It was characterized as advocacy for producers by groups such as the nonprofit Pennsylvania Budget and Policy Center in Harrisburg. [15]
The Coalition attempted to fund another report but PSU professors weren’t biting this time.
Without at least one full-time faculty member, the externally funded study can’t be researched and published under Penn State’s name, said William Easterling, dean of the College of Earth and Mineral Sciences. [15]
The public has the right to accurate and fair information. Unfortunately, with corporate controls we don’t know if you’re getting the full, accurate story or simply the story that corporate America wants us to hear.
6) Working Class Fighting Wars for the Elite
There is no longer a draft in this country. Our military is made up of young men and women, predominately from lower and middle class households, looking for opportunity. Often times, the military can mean an education, on the job training, tuition reimbursement, a future. It can also can mean a one-way ticket to a far away war.
Our wars today don’t seem to be fought for American freedom or even to promote democracy; sure these might be how the wars are sold to the American people but the back story is that war is big money. Wars deliver millions, no billions, of dollars to corporations aka war profiteers. They lobby hard for defense contracts and support war mongering politicians.
The United States spends more on its military than every other industrialized nation, combined. [16] Not just on wars but on equipment and technology. Often times, it is politicians in districts representing defense contractors (Lockheed Martin, Boeing, see Top 100 Contractors) that defend huge defense contracts…even when the military itself doesn’t need or want the product. Often times it is the defense contractors that win out (and the taxpayers that lose). [17]
Dick Cheney’s former corporate employer, Halliburton, alone made billions off the Iraq War. In 2012, according to OpenSecrets.org, the Halliburton Co PAC spent over $500K, 93% of which went to republicans, to guarantee their place at the war table. A good investment.
7) The Wealthy Imprisoning the Poor
In Luzerne County (PA) a few years ago, judges were accepting bribes from private juvenile detention centers in exchange for guaranteed prisoners; the judges were sending juveniles to prison in these facilities for easy cash. [18]
The private prison industry in the United States is all about big profits and their profits rely on more and more Americans behind bars. The two largest private prison companies combined brought in close to $3B in revenue in 2010. In order to make this amount of money, the right politicians and the right policies need to be in place; therefore, “the largest private prison companies have spent tens of millions of dollars on lobbying and campaign contributions over the past decade.” [19]
According to The Economist, “America has [approximately] 5% of the world’s population, and 25% of its prisoners.” The U.S. prison population has quadrupled since 1980 and has reached 2.4 million or one out of every 107 American adults. The reason: harsher drug laws and mandatory prison sentences related to drug offenses. [20] In fact, nearly 51% of those imprisoned had a drug offense as their most serious crime. [21]
This percentage includes those convicted on marijuana offenses. 58% of Americans, according to a Gallup poll, believe marijuana should be legalized. Legalizing marijuana could cut into the profits of the private prison industry; that’s why the industry is spending tens of millions of dollars, along with other lobbying interests, to keep it illegal. [22]
The profit motive of the rich drive the policy that is imprisoning Americans…whether they should be imprisoned or not.
The big problem with our criminal system is that the people that should be in prison aren’t – those for example that crashed our economy a few years ago, leaving millions of americans without retirements, jobs and even homes. No one went to prison for the 2008 Wall Street crash…because they’re wealthy, have very good attorneys, know the judges (or the politicians that appointed the judges) and also because much of what they did was legal… they’re rich and quite simply, they wrote the laws.
Unfortunately, our judicial system disproportionately benefits the wealthy and hurts the poor and minorities. I suppose #8 below underscores this point.
8) Affluenza = Get Out of Jail Free Card
Sixteen-year old Ethan Couch, son of a wealthy Texas tycoon, decided to steal a car, and while driving intoxicated (his blood alcohol level three times the legal limit), killed four people and critically wounded several others. [23]
His defense team claimed affluenza – a term that describes psychological problems that can afflict children of privilege. Prosecutors urged the judge to institute a 20-year prison term. Instead, the judge agreed with the defense and ordered the accused to a posh, long-term treatment facility which will cost his family $450,000/year.
Was justice served to the families of the deceased ? Did this young man learn that his actions have real consequences? Will he be cured of his affluenza (if such a thing exists) in a ritzy spa?
The families of the victims will likely seek damages in civil court and they may even get millions in a settlement. But is this justice? In this society, the rich pay their way for whatever they want – they want into a good college, write a big check; they want out of a marriage, write a big check; they want to persuade a congressmen, write a big check. They need to know that they just simply can’t write a check for egregious behavior.
This case is the ultimate consequence of living in a plutocracy.
Endnotes
[1] Landes, Luke. “Updated: 2013 Federal Income Tax Brackets And Marginal Rates”, Forbes.com. January 5, 2013.
[2] Blodget, Henry. “7,000 Millionaires Paid No Income Tax“, Business Insider. September 18, 2012.
[3] The Wall Street Journal. “How Much are Super PACs Spending?“, projects.wsj.com.
[4] Confessore, Nicholas and Michael Luo. “GOP Donors Showing Thirst to Oust Obama in November“, The New York Times. January 31, 2012.
[5] Totenberg, Nina. “Supreme Court Hears Another Challenge to Campaign Finance Law“, NPR. October 8, 2013.
[6] Clark, Josh. “The 14th Amendment and Artificial Personhood“, HowStuffWorks.com.
[7] Hurley, Lawrence. “Supreme Court to Hear Obamacare Contraception Cases“, Reuters. November 26, 2013.
[8] Bloomberg. “BP wins order stopping some spill payments“, Fuelfix.com. December 2, 2013.
[9] Citizens for Tax Justice. “Big No-Tax Corps Just Keep on Dodging“. April 9, 2012.
[10] FoxNews.com. “Fact Check: Tax Break for Shipping Jobs Overseas? Well, Sort of“. October 4, 2012.
[11] Lutz, Ashley. “These 6 Corporations Control 90% of the Media in America“, Business Insider. June 14, 2012.
[12] Chozik, Amy. “Murdoch’s Appetite for Los Angeles Times May Depend on FCC Changes“, The New York Times. March 25, 2013.
[13] The Associated Press. “FCC Votes to Relax Rules Limiting Media Ownership“, The New York Times. June 2, 2003.
[14] Fang, Lee. “Report: Koch Fueling Far Right Academic Centers at Universities Across the Country“, ThinkProgress.org. May 11, 2011.
[15] Efstathiou, Jr. Jim. “Penn State Faculty Snub of Fracking Study Ends Research“, Bloomberg. October 3, 2012.
[16] “Always more, or else“, The Economist, December 1, 2011.
[17] Griffin, Drew and Kathleen Johnson. “Army to Congress: Thanks, but no Tanks“, Cnn.com. October 9, 2010.
[18] “Luzerne Kids for Cash Scandal“. Juvenile Law Center, February 2012.
[19] Snyder, Michael. “Private Prisons: The More Americans they Put Behind Bars, the More Money they Make“, The Economic Collapse Blog. March 11, 2013.
[20] Atlanta, J.F. “Why does America have such a big prison population?“, The Economist. April 14, 2013.
[21] Klein, Ezra. “Wonkbook: 11 facts about America’s prison population“, The Washington Post. August 13, 2013.
[22] Fang, Lee. “The Top Five Special Interest Groups Lobbying to Keep Marijuana Illegal“, Republic Report. 2012.
[23] Fernandez, Manny and John Schwarz. “Teenager’s Sentence in Fatal Drunken-Driving Case Stirs ‘Affluenza’ Debate“, New York Times. December 13, 2013.