JUAN GONZALEZ: As voters head to the polls in Nevada and South Carolina Saturday, the economy remains one of the top issues for voters across party lines. Today, we’re going to spend the rest of the hour examining the growing income gap in the United States.


Economic figures show that in 2005, the wealthiest 0.1% of the country’s population had nearly as much income as all 150 million Americans who make up the lower economic half of the country. Of each dollar people earned in 2005, the top ten percent got 48.5 cents, the highest percentage since 1929, just before the Great Depression.

AMY GOODMAN: Pulitzer Prize-winning journalist David Cay Johnston has been closely tracking the nation’s income gap in the pages of the New York Times. In 2004, he published the bestselling book Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich—and Cheat Everybody Else. David Cay has just published a new book. It’s called Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (And Stick You with the Bill). He joins us now from the PBS station WXXI in Rochester.

Welcome to Democracy Now!, David.

DAVID CAY JOHNSTON: Thank you for having me, Amy and Juan.

AMY GOODMAN: Explain the wealth transfer.

DAVID CAY JOHNSTON: Well, I was struck, listening to the program from Kenya, 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.

The new owners of the Washington Nationals baseball team in Washington, D.C., paid $450 million for the team. But, in fact, they got the team for free, because the subsidy they’re getting for the new stadium is worth $611 million. We actually paid these people to buy the team.

Now, in this country right now, we are spending $2 billion a year subsidizing the big four sports: baseball, basketball, football and hockey. It accounts for all of the profits of that industry and more. Now, there may be individual teams that make money, but the industry as a whole is not profitable. And that’s astonishing because the big four leagues are exempt from the laws of competition. By the way, irony is not dead, because here are people who are in the business of competition on the field who are exempted by law from the rules of economic competition.

If you go to England and you want to start a soccer team, they have to let you join the soccer league. There are thirteen commercial soccer teams in the London area. New York City, the biggest city in the country, there are two baseball teams, because there’s no free entry into the market. In Los Angeles, there’s no football team. And the owners use this power to prevent others from owning teams, to prevent municipal governments from owning teams, to prevent nonprofits from owning teams, to extract money from the taxpayers to build them new stadiums.

At the same time that we’re doing this, we are starving our public parks for money. And I show in Free Lunch how the rise of urban gangs and now suburban gangs is connected to this. We used to have all sorts of programs in this country after World War II for young men and young women on Saturdays and during the summer and school holidays, where even if you didn’t have any money—didn’t matter that your parents didn’t have any money, because—and I know this because I did it as a child—you could go to any one of a half-dozen different places, and there were organized activities to keep you out of trouble. After all, idle hands are the devil’s workshop is not exactly a radical new idea. Well, we’ve cut and cut and cut those programs to fund two different subsidies: one to sports teams’ owners, one that goes to Tyco, General Electric, Honeywell and some other big companies. And, lo and behold, we’ve had a big rise in urban violence because of the vacuum being filled by young people who no longer have these organized activities.

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% 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% 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.

AMY GOODMAN: We’re talking to David Cay Johnston, Pulitzer Prize-winning investigative journalist. His new book is called Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill). We’ll come back to David Cay Johnston in a minute. [second part at url below]
http://www.democracynow.org/2008/1/18/free...hiest_americans

And While the white poor and middle-class are getting screwed, the Black poor and middle-class are being screwed even more....

JUAN GONZALEZ: A startling new report has predicted the subprime mortgage crisis will cause people of color to lose up to $213 billion, leading to the greatest loss of wealth in modern US history.


The figure appears in a new report from United for a Fair Economy called “Foreclosed: The State of the Dream 2008.” The group accuses mortgage lenders of deliberately targeting the poor and people of color with high-cost loans.


According to federal data, people of color are more than three times more likely to have subprime loans. High-cost loans account for 55% of loans to African Americans, but only 17% of loans to whites.

AMY GOODMAN: Dedrick Muhammad is co-author of the report, senior organizer and research associate at the Institute for Policy Studies, former coordinator of the Racial Wealth Gap project at United for a Fair Economy, joining us from Washington, D.C.

Dedrick Muhammad, welcome to Democracy Now! Talk about your findings.

DEDRICK MUHAMMAD: Yes, Amy. Well, thank you for having me.

And I think in this time of—where there’s a lot of discussion about politics, what we are trying to reveal and what we think will be revealed over the next few years, just as Katrina a few years ago revealed the great wealth divide and how racialized this wealth divide is in this country, we’re going to see the subprime crisis do similar things.

As African Americans, Latino Americans, in particular, we’re trying to become homeowners, which is the number one source of wealth for most Americans. We see private companies taking advantage of African Americans and Latinos, putting them into loans that they could not afford, which will, in fact, actually take away the little wealth that African Americans and Latinos have been able to develop over these last thirty, forty years.

JUAN GONZALEZ: Now, the City of Baltimore recently filed a lawsuit related to some of this discrimination, didn’t they?

DEDRICK MUHAMMAD: Yes. Yes, sir. Yes, Juan. We had been in some contact actually with Mayor Dixon’s office, and what we’re seeing is that cities—and we’re going to see that states—around the country are going to realize what a dramatic effect it’s going to have on their areas, as well, because with the decrease in home value that is part of this subprime crisis, the subprime crisis is going to lead to mass foreclosures in many areas—Baltimore, D.C., in Michigan, as well, Nevada. It’s one of the—Las Vegas is one of the highest foreclosure rates. It’s bringing down the prices of homes substantially. And what that means is that property taxes are going down, so now cities and states are going to have less revenue to provide services to the people of those areas.

AMY GOODMAN: Cleveland, the mayor there also has filed suit.

DEDRICK MUHAMMAD: Oh, that’s absolutely right. And as I said, it’s going to be a national issue. And we’re already seeing some of the presidential candidates start talking about this issue. But what I haven’t heard them talk enough about is what type of policies are they going to do to support wealth-building for middle-income, working-class Americans, because over the last thirty, forty years, we’ve had policies that have really showered wealth upon the already-wealthy and have left the middle class and working class with stagnant wages and skyrocketing costs, like homeownership, like healthcare. And the middle class and working class have been looking for some way to try to cover those costs, and too many have been talked into refinancing their homes, refinancing their cars, into loans which they cannot afford, so they end up losing their homes, losing their cars and being in a worse economic situation than they were before they even started this process.

JUAN GONZALEZ: I’d like to ask you, almost a year ago, when I started doing some columns on this, on the whole subprime crisis, I was told by some business writers and also real-estate people that there was no racial discrimination involved, that this was just the reality that in the minority communities, there were a disproportionate number of people who had bad credit, and so they made the mistakes of taking out loans they couldn’t afford, and that there was no deliberate or conscious discrimination involved. Your response and what’s—and some of the evidence that’s come forth since then?

DEDRICK MUHAMMAD: Well, I think what’s clear is that whether the intent was we are going to focus on African Americans and Latinos, what’s clear is that subprime industry was focusing on the weak in our society and was trying to take advantage of people who—most people do not have the opportunity to read through the long complicated forms that happen when you refinance or when you’re taking out a home loan. And so, because of historic racism in this country, African Americans have only about a tenth of the wealth of white Americans. And again, homeownership is a primary means of wealth development. And so, African Americans are trying to, for the first time, really become majority homeowners, and the subprime industry took advantage of that situation. So whether they had in their minds they’re going to take advantage of African Americans or not, the problem is that they were taking advantage of American citizens, and this disproportionately is impacting African Americans and Latinos, but it’s also going to impact millions of working-class and middle-class white Americans, as well.

AMY GOODMAN: Dedrick Muhammad, can you talk about the connection to Wall Street and the particular companies?

DEDRICK MUHAMMAD: Well, and the way the subprime crisis has been able to develop into the point that it’s at is that there was a great financial arrangement made between Wall Street and between mortgage lenders, where mortgage lenders would take out loans from a, let’s say, a Latino American family who made a good income but had very little wealth, and would steer them into a high-cost loan and for a property that they really could not afford. And now, oftentimes in the past, mortgage lenders wouldn’t sign on to something like this, because they would be concerned about getting their money back.

But the deal they worked out with Wall Street is that they could sell this debt to Wall Street, and then Wall Street could sell it again and again and again, and you have a whole bunch of different people at different layers making money off of bad loans. So it really became to a point where mortgage lenders didn’t even care if they were going to actually get the money back from the individual they lent it to, because they knew they were making their money off of the loans being sold over and over again in Wall Street, which is why now you’re seeing major financial institutions across the country shaking from this subprime crisis, because debt had to be paid back at some point. And even though many wealthy people have made much money off of this, at some point this debt had to be collected. And so, now we’re seeing major financial institutions suffering the consequences. But who’s going to suffer the worst consequences are those who are going to have their homes foreclosed, who are going to have their credit destroyed, and have already weakened financial communities in a much worse situation.

AMY GOODMAN: Dedrick Muhammad, we will link to your report, “Foreclosed"—senior organizer, research associate, Institute for Policy Studies, worked with United for a Fair Economy on this report, “Foreclosed: State of the Dream 2008.”
http://www.democracynow.org/2008/1/17/repo...causing_african

It's true the poor and middle class have been comprehensively screwed by the rich.

With a deep recession very likely, coupled with increasing energy prices and a rapacious and dishonest corporate sector seemingly owning both major parties, one might think the electorate would swing sharply left in the upcoming US election. In some western countries this would happen. Maybe not enough for the left to become Government, but a strong voter rejection of the current system.

I don't think this is likely in the US. There's no left that I can see. The left can't get any traction. They could only gain public acceptance if the US was a democracy, but it's a corporate oligarchy of course. The oligarchy will not allow ideological opponents equal airtime--or any time.

The left have become the New Right. The "right" must combat this by becoming the "new even more right". And so the circus continues to repeat itself until a "new uncle Adolf" comes to power.

Come to think of it, our George is doing a pretty good imitation -- invading sovereign nations under false pretenses, hounding and killing religious minorities, manipulating the legal system to suit his designs, re-establishing the torture police and establishing the new Gestapo -- "Homeland Security". All we need are the new ergastulums dedicated to improving the profits of his corporate partners and the "Final Solution" to take care of the bothersome minorities and bam!, history has repeated itself. Again.

Yes, I know. In addition, that piece of scum in Washington boasts about his record of zero execution reprieves while Texas Governor. All he needs is to get the goosestep right.

As for the left, I think you're right. The crusading left leaning journalists here in Oz seem to have disappeared. Some have taken early retirement and others have changed their views and become corporate apologists. Seems to be happening everywhere. The blogosphere could be the left's last hope.

p.s. one encouraging event for the left is the long running writer's dispute in Hollywood, imo. Seems to be a lot of solidarity there, and strong public support.

Sadly, Just as the average American have been sold a false out-of-touch-with-nature is natural anti-reality and other false values such as buy!BUY! B_U Y!!!, many have also been sold the 'bill of goods' [read lies] on history and what constitutes a decent/ethical society/government/polity. It was all planned. Less education, less history and independant thinking; circus for the masses; control of the media and framing of the debate and even the consentual reality by the media and propaganda ministries aplenty. Homo ovis, not homo sapiens, generally. America, unlike much of Europe is also anti-intellectual at heart. To be a teacher or professor in Europe is prestigious, in America it is something not quit up to the mark [the 'mark' is marked by how much you make and what you own - not by anything in your head or heart...sadly. I know this has spread far and wide and was certainly not invented in the USA...only perfected, packaged, advertised, marketed and sold there to the nth degree. Time to awake, my sleeping beauty...or perish, along with the Planet shortly.

Further evidence of Bush's dictatorial regime is the Violent Radicalization and Homegrown Terrorism Prevention Act. Scary:


http://www.alternet.org/rights/73991/?page=entire


Good to see the House put up such a good fight. 400 odd to six.