The Book That Uncovered ‘Wealthfare’
Total tax expenditures (a.k.a. tax breaks) in fiscal 2018 are expected to cost the federal government more than $1.5 trillion; most Americans will get at least a dollop, but the lion’s share by far will line the pockets of people whose pockets are already bulging.
Over 20 years ago, long before the experts caught on, the writers Mark Zepezauer and Arthur Naiman zeroed in on the upward redistribution of income in the United States. They called it “wealthfare,” and used the term to open their 1996 book Take the Rich Off Welfare. Here’s the first sentence: “Wealthfare—the money we hand out to corporations and wealthy individuals—costs us at least $448 billion a year.”
It’s no exaggeration to say that the book predicted America’s fortune (or, more accurately, misfortune). Government actions to make the rich richer have become standard fare. There’s more allegiance to corporate profits than there is to the common good. “Wealthfare” is the ruling national ethos—economically, politically, even in the courts; at bottom, Citizens United is a Supreme surrender to the supremacy of people with money.
That $1.5 trillion easily tops what the country spends for any other single purpose. In fiscal 2015, according to the Center for Budget and Policy Priorities, tax breaks on the federal income tax alone “cost more than Social Security, or the combined cost of Medicare and Medicaid, or defense or non-defense discretionary spending.”
Defense spending itself might not sound like “wealthfare,” but Zepezauer and Naiman believed it described almost two-thirds of the military’s 1996 budget of $265 billion. They took on defense outlays in the book’s opening chapter, “MILITARY WASTE AND FRAUD ($172 billion a year).” The route to all those billions? “Take one bloated budget. Add the most incompetent bureaucrats on earth. Only two more ingredients are needed: greed and guile.” Needless to say, they found plenty of both.
Their assault on military spending also included this quote from President Dwight Eisenhower: “Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.” (In contrast, President Trump wants a new defense budget of $603 billion. That’s a year-over-year $54 billion increase, to be paid for by $54 billion in non-defense cuts.)
In 23 scathing chapters, Zepezauer and Naiman listed and estimated the costs of everything they considered “wealthfare”—from preferential taxes on capital gains to agribusiness subsidies, from the 30-year savings-and-loan bailout to the Social Security tax break for high incomes. For good measure, they topped it off with a chapter titled “WHAT WE’VE LEFT OUT (untold billions every year).”
Specifics aside, the book’s real finding was the upward flow of income. After decades of shared prosperity in America, the sharing had ended and the prosperity was moving solely toward the already prosperous. “Wealthfare” presciently saw the rich getting richer, the middle class getting more middling, and income inequality rising to record highs.
These simple facts weren’t fully embraced until the 2014 arrival of Thomas Piketty’s Capital in the Twenty First Century; for Zepezauer and Naiman, the trend was plain to see well back in the twentieth. They traced the outgrowth to “a series of tax ‘reforms’ that began in 1977 [and] cut the rate paid by the richest Americans nearly in half...” This was their biting view of 1996 America: “[S]tealing from the poor—actually, from anybody who isn’t rich—has become standard operating procedure in this country. In fact, the US government today functions mostly as a huge Robin-Hood-in-reverse.”
The “wealthfare” tide has mostly risen since then. The George W. Bush tax cuts went overwhelmingly in the rich-get-richer direction. President Obama did pull back modestly on the gains, but the plans advanced by Trump and the GOP will likely erase those moves and then some. The odds strongly favor another tax cut tilted heavily upward.
“Wealthfare”: Zepezauer and Naiman were right on the money, long before anybody else.
Copyright 2017 Gerald E. Scorse. Gerald E. Scorse helped pass the bill requiring basis reporting for capital gains. He writes on taxes.
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This story was published on May 18, 2017.