Trump nominee reaffirms support for assault on Medicare and Medicaid

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By Zaida Green
19 January 2017

Republican Representative Tom Price, president-elect Donald Trump’s nominee to head the Department of Health and Human Services (HHS), reiterated his intention to repeal Obamacare and his support for the dismantling of Medicaid and gutting of Medicare, in testimony before the Senate Wednesday.

Over the course of the nearly four-hour confirmation hearing, Price made clear his intent to keep unfettered the right of the healthcare industry to profit from mass suffering, calling for the transformation of Medicaid into a state-run program funded via federal block grants and refusing to commit to maintaining any of the minimal patient protections afforded by the Affordable Care Act, generally referred to as Obamacare.

Speaking before the Senate Health, Education, Labor and Pensions Committee, Price gave few details on the Republicans’ plan to replace Obamacare. While claiming, “Nobody is interested in pulling the rug out from anybody,” Price refused to give a timetable or any other specific details on a substitute health plan, suggesting that any replacement legislation would be implemented piecemeal, leaving open the possibility that the 30 million people who have gained minimal health care coverage through the ACA’s exchanges and Medicaid expansion could be left stranded without health insurance for an indefinite length of time.

Price, who was chairman of the House Budget Committee, refused to commit to Trump’s repeated campaign promise that his administration would not impose any cuts to Medicare and Medicaid, claiming that dollars were “the wrong metric” to measure resources for patient care. The Empowering Patients First Act (EPFA), the legislation which Price proposed in 2015 to replace the ACA last year, would cut $449 billion from Medicare and $1.1 trillion from Medicaid over the next decade.

Price gave vague and non-committal answers to questions about whether replacement legislation would maintain the limited protections afforded by the ACA, such as the prohibition on lifetime caps on most benefits; the requirement that insurance companies not exclude coverage for pre-existing conditions; the requirement that health plans include benefits such as mental health care, emergency services, and prescription drug coverage; and the right of young people to receive coverage from their parents’ insurance plans up to the age of 26.

All of Price’s answers amounted to variations on the themes of “patient choice” and the freedom “for every American to access the type of coverage they want.” In reality, this is the “freedom” to be either sucked dry by insurance companies for minimal coverage, to pay even more for comprehensive coverage, or to gamble on health and go without any coverage at all.

On the other hand, Price spoke sympathetically of the insurance companies preparing the premiums they would levy on patients in 2018, saying that “What they need to hear from all of us, I believe, is a level of support and stability in the market.”

Senate Democrats mounted a cynical assault against Price, citing Trump’s lying promise about not touching Medicare and Medicaid and repeatedly asking Price if he would uphold it, thus presenting the billionaire president-elect as sympathetic to these government-run health insurance programs, and giving themselves a pretext for collaborating with the new administration.

Democratic Senators Elizabeth Warren of Massachusetts and Al Franken of Minnesota referred to the billionaire real estate mogul’s recent comment that his administration would give “insurance for everybody”, and attempting to wring out of Price a commitment to Trump’s supposed promise.

Senator Bernie Sanders, the self-described “democratic socialist” who ran for presidency in the Democratic primary, urged Price, “Will you work with us on this?” as he questioned him on whether he would support the opening up of a market to cheaper imported prescription drugs.

The Democrats also criticized the blatant conflict of interest in Price holding investments of hundreds of thousands of dollars in pharmaceutical and medical device companies as he introduced bills that would boost the profits of these companies.

One senator, Democrat Christopher Murphy from Connecticut, pointing worryingly to the financial backgrounds of the rest of Trump’s cabinet, said, “I raise [these conflict of interests issues] because I think there’s great concern … [among] Americans that this whole administration is starting to look like a get-rich scheme.”

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Trump names Medicare opponent to head health programs: Who is Tom Price?
[01 December 2016]

http://www.wsws.org/en/articles/2017/01/19/pric-j19.html

How Diversity Makes Us Smarter

Being around people who are different from us makes us more creative, more diligent and harder-working

Credit: Edel Rodriguez

IN BRIEF

  • Decades of research by organizational scientists, psychologists, sociologists, economists and demographers show that socially diverse groups (that is, those with a diversity of race, ethnicity, gender and sexual orientation) are more innovative than homogeneous groups.
  • It seems obvious that a group of people with diverse individual expertise would be better than a homogeneous group at solving complex, nonroutine problems. It is less obvious that social diversity should work in the same way—yet the science shows that it does.
  • This is not only because people with different backgrounds bring new information. Simply interacting with individuals who are different forces group members to prepare better, to anticipate alternative viewpoints and to expect that reaching consensus will take effort.

The first thing to acknowledge about diversity is that it can be difficult. In the U.S., where the dialogue of inclusion is relatively advanced, even the mention of the word “diversity” can lead to anxiety and conflict. Supreme Court justices disagree on the virtues of diversity and the means for achieving it. Corporations spend billions of dollars to attract and manage diversity both internally and externally, yet they still face discrimination lawsuits, and the leadership ranks of the business world remain predominantly white and male.

CONTINUED:

https://www.scientificamerican.com/article/how-diversity-makes-us-smarter/

Obama’s farewell address: One last round of clichés and lies

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By Niles Niemuth
11 January 2017

President Barack Obama capped his eight years in office with a vacuous and hypocritical farewell address Tuesday night delivered at the McCormick Place convention center in downtown Chicago.

The first-ever presidential farewell address delivered outside of Washington, DC had the atmospherics of an overblown, cheap spectacle. Obama strode onto the stage like a rock star, flanked by oversized American flags, a massive illuminated presidential seal and an introductory soundtrack by the rock band U2.

As with every address Obama has delivered over the last eight years, his speech in Chicago was full of clichés, his rhetoric padded with empty phrases and delivered with a false gravitas, signaled by his trademark pursed lips and affected whisper.

The speech was rife with contradictions, the starkest being the juxtaposition of Obama’s boasting of the great social progress achieved by his administration and his warning of threats to American democracy arising from ever-growing social inequality and economic insecurity.

The president declared: “If I had told you eight years ago that America would reverse a great recession, reboot our auto industry, and unleash the longest stretch of job creation in our history… if I had told you that we would open up a new chapter with the Cuban people, shut down Iran’s nuclear weapons program without firing a shot, and take out the mastermind of 9/11… if I had told you that we would win marriage equality, and secure the right to health insurance for another 20 million of our fellow citizens—you might have said our sights were set a little too high.

“By almost every measure, America is a better, stronger place than it was when we started.”

He made no attempt to explain why, given this impressive record of social progress and foreign policy success, his party was routed in the elections and the billionaire demagogue Donald Trump was preparing to succeed him in the White House.

A basic component of the answer, of course, is the grotesquely false rendering of his record and the state of American society as he leaves office. Hardly a week goes by without a new report on signs of extreme social crisis or ever-more obscene levels of wealth among the financial elite. Just in the past month, studies have been published showing the first decline in US life expectancy in 23 years, plunging pay for young adults, a 72 percent surge in deaths from synthetic opioids, and home ownership rates at historic lows for young people.

Other surveys have documented a $237 billion increase in the wealth of the world’s richest 200 billionaires, driven largely by the US stock market boom under Obama, and an acceleration of the transfer of wealth from the bottom half of the US population to the top one percent.

In boasting of presiding over a record number of consecutive monthly job increases, Obama neglected to mention that 94 percent of the new jobs created in the last eight years have been either part-time or temporary.

Noticeably absent from Obama’s remarks was any mention of the social conditions in the city where he was speaking, which is ravaged by high levels of poverty and unemployment, an epidemic of police killings and violence, and a skyrocketing homicide rate.

He lamented in general terms the growth of social inequality and the dangers it poses to American democracy—that is, the threat of a social explosion in the United States.

“While the top one percent has amassed a bigger share of wealth and income, too many families, in inner cities and rural counties, have been left behind—the laid-off factory worker; the waitress and health care worker who struggle to pay the bills—convinced that the game is fixed against them, that their government only serves the interests of the powerful—a recipe for more cynicism and polarization in our politics.”

As always, he spoke as if none of these social ills had anything to do with the policies pursued by his administration, including severe cuts in social spending on the one side and the bailout of the banks and flooding of money into the stock market on the other.

Another piece of monumental hypocrisy was Obama’s pose of fighting to defend democracy when he has done more to destroy it than perhaps any other US president.

“Democracy can buckle when we give in to fear,” he declared. “So just as we, as citizens, must remain vigilant against external aggression, we must guard against a weakening of the values that make us who we are. That’s why, for the past eight years, I’ve worked to put the fight against terrorism on a firm legal footing. That’s why we’ve ended torture, worked to close Gitmo, and reform our laws governing surveillance to protect privacy and civil liberties.”

This is from a president who has personally authorized the assassination of American citizens and thousands of others around the world with drones-fired missiles, protected and promoted those in the CIA responsible for torture, kept the prison at Guantanamo Bay open, persecuted journalists and jailed whistleblowers, militarized the police, and expanded the illegal surveillance of electronic communications.

Obama also used his farewell address take parting shots at Russia and China, lumping the war against ISIS with efforts to counter both countries, and arguing that aggressive action against the world’s second- and third-largest nuclear-armed powers was the only way to avoid war.

“[T]he fight against extremism and intolerance and sectarianism are of a piece with the fight against authoritarianism and nationalist aggression,” he said. “If the scope of freedom and respect for the rule of law shrinks around the world, the likelihood of war within and between nations increases, and our own freedoms will eventually be threatened.”

Obama spent his eight years in office waging war abroad and war on the working class at home. With Tuesday’s speech, he passed the reins to Trump with a shrug.

WSWS

Pity the sad legacy of Barack Obama

Our hope and change candidate fell short time and time again. Obama cheerleaders who refused to make him accountable bear some responsibility

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‘Most well-paid pundits on TV and radio celebrated the Obama brand.’

Eight years ago the world was on the brink of a grand celebration: the inauguration of a brilliant and charismatic black president of the United States of America. Today we are on the edge of an abyss: the installation of a mendacious and cathartic white president who will replace him.

This is a depressing decline in the highest office of the most powerful empire in the history of the world. It could easily produce a pervasive cynicism and poisonous nihilism. Is there really any hope for truth and justice in this decadent time? Does America even have the capacity to be honest about itself and come to terms with its self-destructive addiction to money-worship and cowardly xenophobia?

Ralph Waldo Emerson and Herman Melville – the two great public intellectuals of 19th-century America – wrestled with similar questions and reached the same conclusion as Heraclitus: character is destiny (“sow a character and you reap a destiny”).

The age of Barack Obama may have been our last chance to break from our neoliberal soulcraft. We are rooted in market-driven brands that shun integrity and profit-driven policies that trump public goods. Our “post-integrity” and “post-truth” world is suffocated by entertaining brands and money-making activities that have little or nothing to do with truth, integrity or the long-term survival of the planet. We are witnessing the postmodern version of the full-scale gangsterization of the world.

The reign of Obama did not produce the nightmare of Donald Trump – but it did contribute to it. And those Obama cheerleaders who refused to make him accountable bear some responsibility.

A few of us begged and pleaded with Obama to break with the Wall Street priorities and bail out Main Street. But he followed the advice of his “smart” neoliberal advisers to bail out Wall Street. In March 2009, Obama met with Wall Street leaders. He proclaimed: I stand between you and the pitchforks. I am on your side and I will protect you, he promised them. And not one Wall Street criminal executive went to jail.

We called for the accountability of US torturers of innocent Muslims and the transparency of US drone strikes killing innocent civilians. Obama’s administration told us no civilians had been killed. And then we were told a few had been killed. And then told maybe 65 or so had been killed. Yet when an American civilian, Warren Weinstein, was killed in 2015 there was an immediate press conference with deep apologies and financial compensation. And today we still don’t know how many have had their lives taken away.

We hit the streets again with Black Lives Matter and other groups and went to jailfor protesting against police killing black youth. We protested when the Israeli Defense Forces killed more than 2,000 Palestinians (including 550 children) in 50 days. Yet Obama replied with words about the difficult plight of police officers, department investigations (with no police going to jail) and the additional $225m in financial support of the Israeli army. Obama said not a mumbling word about the dead Palestinian children but he did call Baltimore black youth “criminals and thugs”.

 In addition, Obama’s education policy unleashed more market forces that closed hundreds of public schools for charter ones. The top 1% got nearly two-thirds of the income growth in eight years even as child poverty, especially black child poverty, remained astronomical. Labor insurgencies in Wisconsin, Seattle and Chicago (vigorously opposed by Mayor Rahm Emanuel, a close confidant of Obama) were passed over in silence.

In 2009, Obama called New York City mayor Michael Bloomberg an “outstanding mayor”. Yet he overlooked the fact that more than 4 million people were stopped-and-frisked under Bloomberg’s watch. Along with Carl Dix and others, I sat in a jail two years later for protesting these very same policies that Obama ignored when praising Bloomberg.

Yet the mainstream media and academia failed to highlight these painful truths linked to Obama. Instead, most well-paid pundits on TV and radio celebrated the Obama brand. And most black spokespeople shamelessly defended Obama’s silences and crimes in the name of racial symbolism and their own careerism. How hypocritical to see them now speak truth to white power when most went mute in the face of black power. Their moral authority is weak and their newfound militancy is shallow.

The gross killing of US citizens with no due process after direct orders from Obama was cast aside by neoliberal supporters of all colors. And Edward Snowden, Chelsea Manning, Jeffrey Sterling and other truth-tellers were demonized just as the crimes they exposed were hardly mentioned.

The president’s greatest legislative achievement was to provide healthcare for over 25 million citizens, even as another 20 million are still uncovered. But it remained a market-based policy, created by the conservative Heritage Foundation and first pioneered by Mitt Romney in Massachusetts.

Obama’s lack of courage to confront Wall Street criminals and his lapse of character in ordering drone strikes unintentionally led to rightwing populist revolts at home and ugly Islamic fascist rebellions in the Middle East. And as deporter-in-chief – nearly 2.5 million immigrants were deported under his watch – Obama policies prefigure Trump’s barbaric plans.

Bernie Sanders gallantly tried to generate a leftwing populism but he was crushed by Clinton and Obama in the unfair Democratic party primaries. So now we find ourselves entering a neofascist era: a neoliberal economy on steroids, a reactionary repressive attitude toward domestic “aliens”, a militaristic cabinet eager for war and in denial of global warming. All the while, we are seeing a wholesale eclipse of truth and integrity in the name of the Trump brand, facilitated by the profit-hungry corporate media.

What a sad legacy for our hope and change candidate – even as we warriors go down swinging in the fading names of truth and justice.

https://www.theguardian.com/commentisfree/2017/jan/09/barack-obama-legacy-presidency?CMP=share_btn_fb

Capitalism Is Collapsing — and Nothing Is Rising to Replace It

ECONOMY
Author Wolfgang Streeck describes the phenomenon as “a death from a thousand cuts.”

Photo Credit: Shutterstock.com/durantelallera

Some anonymous wise person once observed that it is easier to imagine the end of the world than the end of capitalism. But Wolfgang Streeck, a 70-year-old German sociologist and director emeritus of the Max Planck Institute for the Study of Societies, thinks capitalism’s end is inevitable and fast approaching. He has no idea what, if anything, will replace it.

This is the premise of his latest book, How Will Capitalism End?, which goes well beyond Thomas Piketty’s Capital in the 21st Century. Piketty thinks capitalism is getting back into the saddle after being ruined in two world wars. Streeck thinks capitalism is its own worst enemy and has effectively cut itself off from all hope of rescue by destroying all its potential rescuers.

“The end of capitalism,” he writes in the introduction, “can then be imagined as a death from a thousand cuts… No effective opposition being left, and no practicable successor model waiting in the wings of history, capitalism’s accumulation of defects, alongside its accumulation of capital, may be seen… as an entirely endogenous dynamic of self-destruction.”

According to Streeck, salvation doesn’t lie in going back to Marx, or social democracy, or any other system, because there is no salvation at all. “What comes after capitalism in its final crisis, now under way, is, I suggest, not socialism or some other defined social order, but a lasting interregnum — no new world system equilibrium… but a prolonged period of social entropy or disorder.”

Five developments, three crises

If we need a historical parallel, the interregnum between the fall of Rome and the rise of feudalism might serve. The slave economy of Rome ended in a chaos of warlords, walled towns and fortress-estates, and enclaves ruled by migrant barbarians. That went on for centuries, with warlords calling themselves “Caesar” and pretending the Empire hadn’t fallen. Streeck sees the interregnum emerging from five developments, each aggravating the others: “stagnation, oligarchic redistribution, the plundering of the public domain, corruption, and global anarchy.”

All these problems and more have grown through “three crises: the global inflation of the 1970s, the explosion of public debt in the 1980s, and rapidly rising private indebtedness in the subsequent decade, resulting in the collapse of financial markets in 2008.” Anyone of a certain age in  British Columbia has vivid personal recollections of these crises and the hurt they caused. The strikes and inflation of the 1970s preceded the Socreds’ “restraint” era, and now we mortgage our lives for a foothold in the housing market. Streeck reminds us that it was nothing personal, just business. We weren’t just coping with one damn thing after another; given his perspective, we can see how it all fit together with an awful inevitability.

When the bubble pops

And it continues to fit together. Temporary foreign workers and other immigrants make unions’ jobs harder. “Recovery” amounts to replacing unemployment with underemployment. Education is an expensive holding tank to keep young people off the labour market. Women are encouraged to work so they can be taxed. But middle-class families need two incomes anyway to maintain their status, so they import underpaid immigrant women as nannies. At some point soon these nannies will be sent back to their home countries when Vancouver’s housing bubble pops.

Perhaps the middle-class families will then make their payments by taking in boarders. Streeck’s essays were written over the past few years, and are sometimes a bit dated. For example, he writes that “American oligarchs, unlike their counterparts in other societies like Ukraine or Russia, are of a ‘non-ruling’ type, since they are content to live alongside a public bureaucracy, a state of law, and an elected government run by professional politicians.”

That changed on Nov. 8, when the American oligarchs ousted noncompliant professional politicians and assumed direct power through Donald Trump and his cabinet. (We may yet see an analysis of Trump on Streeck’s blog.) In one essay, Streeck shows how the economic crisis of the 1970s led to the political crisis of today. Postwar Europe and America rebuilt the world by “Fordism” — mass production of durable goods at an affordable price, with few or no options. But Fordism eventually glutted the market with all-too-durable goods. In the 1960s, I wore the hand-me-down nylon socks my father had bought in the 1940s.

In 1972 my wife and I bought a washer and dryer that still run reliably in 2016, without repairs. That couldn’t last, especially as the baby boom tapered off. Capitalism’s solution was to offer customized, short-lived products that didn’t just meet your needs, but met your wants as well. That meant avocado-coloured refrigerators in the 1970s and granite kitchen countertops today, but nothing that really made life easier. It just let consumers express their changing personal tastes and status. And it wasn’t just consumer goods — it was information as well. Streeck notes that public broadcasting systems and a few private networks dominated the media for decades. Now we have hundreds of private channels competing for our attention (and our money).

Public media like the CBC have tried to compete with private radio and TV, with generally awful results: instead of classical music, CBC Radio 2 gives us Mozart’s greatest hits plus Mozart gossip. Radio 1 promotes the careers of inarticulate hip-hop artists and reports commuter woes caused by housing prices and the lack of decent public transit.

Politics as personal fashion statement

What Streeck calls the “individualization of the individual” has afflicted whole nations, including Canada. We no longer vote for a party because our family always has, or because we support most of its policies. We want avocado-coloured day care programs, and granite-counter “world-class” pipeline safety, and if we don’t get both in one party, we stay home and sulk. In effect, we prefer to be consumers of politics as personal fashion statement rather than actually take part in running the country. Marx thought communism would see the withering-away of the state. Instead, capitalism has reduced the state until its chief functions are protecting the rich and policing the poor.

But in the process, capitalism has killed off its rescuers. Who’s going to save the banks in the next collapse? Who’s going to bail out the masters of the financial universe when artificial intelligence takes their jobs? And who’s going to police the poor when taxpayers can’t pay for the cops and the rich are hiring cops for their own gated communities? Wolfgang Streeck sees neither a single cause of capitalism’s collapse nor any obvious successor regime.

The European Union may break up. Climate change may drown south Florida, including Donald Trump’s Mar-a-Lago. Refugees will keep coming north; they will eventually overwhelm the fences and guards and create new enclaves in Europe and the U.S.A. and Canada.

New pandemics will sweep unchallenged around the world. No coherent political communities will be there to respond to such disasters. Such communities may arise centuries from now, but if Streeck is right, capitalism has ensured that we and our children will never live in them.

Trump’s budget director’s Fannie Mae and Freddie Mac bill would socialize risk and privatize profit

Rep. Mitch Mulvaney, who Trump tapped to be budget director, is the swampiest swamp thing of them all

Donald Trump's budget director's Fannie Mae and Freddie Mac bill would socialize risk and privatize profit
FILE – This Monday, Aug. 8, 2011 file photo shows the Fannie Mae headquarters in Washington. (Credit: AP)

President-elect Donald Trump’s choice for budget director, Rep. Mick Mulvaney of South Carolina, sponsored legislation in April that would release Fannie Mae and Freddie Mac from government control — likely costing taxpayers billions in the process.

Fannie Mae and Freddie Mac are housing entities created by the government and referred to collectively as the GSEs, or government-sponsored enterprises. When George W. Bush’s treasury secretary Henry Paulson put them into conservatorship nine days before Lehman Brothers filed for bankruptcy in September 2008, he pledged for the government to cover their costs. This ultimately amounted to $187 billion.

While it may seem then like a good idea for the government to rid itself of Fannie and Freddie, Mulvaney’s “Housing Finance Restructuring Act of 2016″ will only further line their pockets at taxpayer expense.

“Unlike earlier housing finance reform proposals, the Mulvaney bill does not phase out Fannie or Freddie,” wrote The Wall Street Journal in May. “Rather, it requires both companies to retain earnings to build capital until their capitalization reaches 5 percent of assets. They would be released from conservatorship when capital reaches 2.5 percent of assets.”

Not only would this reverse the existing government policy, which annually reduces the capital cushions received by each company until hitting zero in 2018, but it also cancels the requirement that the companies pay a dividend to the treasury department every fiscal quarter. The government’s shares (which the bill would cancel) have a liquidation preference of $187 billion (appropriately), but last year the GSEs only paid dividends amounting to $15.8 billion to the treasury department. Since 2012 a change to the bailout agreements required companies to pay nearly all of their profits to the treasury department, and Mulvaney’s bill would effectively nullify this as well.

“Most strikingly, the bill would bar Treasury from charging the companies for the remaining $258 billion the government has pledged as ongoing support for the companies,” The Wall Street Journal wrote. “Which means Fannie and Freddie would enjoy an explicit government backstop in perpetuity for which they would pay nothing.”

As it later added, “The current dividend amounts to a perpetuity owned by taxpayers. Under standard financial calculations, at an assumed discount rate of 4 percent, the present value of $15.8 billion annual payment would be $395 billion. Under the bill, Treasury surrenders that for nothing.”

When combined with the price of the prohibition on charging the backstop, the total cost of Mulvaney’s bill will equal roughly $405 billion. The beneficiaries would be investors in Fannie Mae and Freddie Mac.

In September, the same month that it was first reported that Mulvaney was working on this bill, employees of Perry Capital — a major shareholder in Fannie and Freddie — as well as lawyers from Gibson Dunn, which lobbies for Perry Capital, donated $4,500 to Mulvaney’s political campaigns.

 

Matthew Rozsa is a breaking news writer for Salon. He holds an MA in History from Rutgers University-Newark and his work has appeared in Mic, Quartz and MSNBC.

The United States of Inequality

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20 December 2016

Earlier this month, economists Thomas Piketty, Emmanuel Saez and Gabriel Zucman, leading experts on global inequality, released a groundbreaking study on the growth of income inequality in the United States between 1946 and 2016.

While the economists’ earlier studies made substantial advances in documenting inequality in the United States, the most unequal developed country in the world, this is the first survey claiming to “capture 100 percent of national income,” including the impact of taxation, social programs such as Medicare and Medicaid, and income from capital gains.

The result is a fuller picture of social inequality in the United States than any previous attempts. The conclusions are staggering, revealing that over the course of the past four decades there has occurred one of the most rapid upward redistributions of income in modern history.

The economists found that the pre-tax share of national income received by the bottom half of the US population has been cut nearly in half since 1980, from 20 percent to 12 percent, while the income share of the top one percent has nearly doubled, from 12 percent to 20 percent. “The two groups have basically switched their income shares,” the authors note, “with 8 points of national income transferred from the bottom 50 percent to the top 1 percent.”

The study documents a sharp change between 1946-1980 and 1980 to the present. In the first period, the pre-tax incomes of the bottom 50 percent of earners more than doubled, growing by 102 percent, while the incomes of the top 1 percent increased by only 47 percent and the top 0.001 percent by 57 percent.

Since 1980, however, the incomes of the bottom 50 percent of earners have stagnated at about $16,000 a year (in current dollars), while the incomes of the top 1 percent have grown by 205 percent, and the top 0.001 percent by 636 percent.

After accounting for the impact of various tax credits and social programs, the economists found that the incomes of the bottom half of income earners increased by 21 percent since the 1980s. They note, however, that none of this increase has gone into disposable income. Rather, it is almost entirely the result of increased health care payouts from Medicare, which has simply been absorbed by the pharmaceutical giants and insurance companies engaged in price-gouging for vital health care services.

The principal factor in the surge in income inequality, particularly since 2000, has been the growth in “capital income,” that is, the stock market. The inflation of stock market bubbles has been the primary form through which the ruling class and its political representatives have engineered a massive transfer of wealth.

The figures contained in the report by Piketty, Saez and Zucman reflect historical transformations in the structure of American capitalism and class relations in the United States. The colossal growth of social inequality is bound up with the decay of American capitalism and decline in its world economic position.

Historians have often remarked that during its early days, the United States was the most socially egalitarian region of the Western world. The growth of monopolization and finance capital in the latter part of the 19th century transformed America into a land of “robber barons” at one pole and workers and immigrants whose living conditions were exposed in such works as Jacob Riis’ How the Other Half Lives, published in 1890, and Upton Sinclair’s The Jungle of 1906.

But along with these processes came the growth of the workers’ movement, which, largely through the efforts of socialists, fought to organize the American working class across its myriad ethnic, religious and regional divisions. The Russian Revolution of 1917 gave new impetus to these struggles, including the militant labor actions of the 1930s that led to the formation of the industrial unions.

The American ruling class, alarmed by the prospect that American workers would follow the example set by the Bolsheviks, and having at its disposal the economic might of the world’s largest and most advanced industrial economy, set out on a program of social reform exemplified by President Franklin D. Roosevelt’s New Deal, which introduced Social Security and curbed the worst abuses of Wall Street.

The United States emerged from the Second World War as the dominant global power, commanding more than 50 percent of world economic output. By the late 1960s, however, the economic domination of American capitalism began to decline, as the economies of Europe and Asia were rebuilt. A series of economic and political crises culminated in the combination of economic stagnation and inflation of the 1970s.

The US ruling class responded by embarking on a policy of class war, deindustrialization and financialization. With President Jimmy Carter’s appointment of Paul Volcker to head the Federal Reserve in 1979, the US central bank threw the United States into a manufactured recession. After coming to power in 1981, Ronald Reagan launched a full-scale social counterrevolution, initiated by the breaking of the PATCO air traffic controllers’ strike and firing and blacklisting of the strikers. Similar policies were pursued by the ruling classes throughout the world.

The trade unions played a vital role in facilitating this offensive, isolating and betraying every attempt at resistance by the working class throughout the 1980s and incorporating themselves into the structure of corporate management and the state. By the end of the decade, the unions had transformed themselves, for all practical purposes, into arms of the companies and the government. The bureaucratic elites that dominated them devoted all their efforts to suppressing and sabotaging working class struggle.

Every subsequent administration, Democratic and Republican alike, has pursued policies that promote social inequality, including successive rounds of financial deregulation, repeated tax cuts for corporations and top income earners, the slashing of social programs, and the elimination of workplace protections.

After the 2008 financial crisis, the Obama administration accelerated these processes. The White House continued and expanded the bank bailouts initiated under the Bush administration and helped funnel trillions of dollars to Wall Street through the Federal Reserve’s “quantitative easing” programs, while working, as in the 2009 auto restructuring, to slash wages.

Under the incoming administration of President-elect Trump, the offensive against the working class will sharply intensify. The election of Trump represents something new. He has staffed his cabinet with billionaires, far-right, pro-business ideologues, and generals—all of them dedicated to the impoverishment of the working class and the ever more violent suppression of popular opposition.

But Trump does not emerge from nowhere. He is not some aberration. Rather, he is the noxious culmination of the decay of American capitalism, growth of unprecedented levels of social inequality and collapse of American democracy.

These same processes have created the objective foundations for socialist revolution. In the mid-1990s, when the Workers League in the US and the sections of the International Committee of the Fourth International in the rest of the world began to transform themselves from leagues into parties, adopting the name Socialist Equality Party, we recognized the immense revolutionary significance of “the widening gap between a small percentage of the population that enjoys unprecedented wealth and the broad mass of the working population that lives in varying degrees of economic uncertainty and distress.”

The past two decades have confirmed this prognosis. The fight against social inequality requires the building of a new political leadership, embodied in the SEP, to organize and unify the struggles of the working class on the basis of a revolutionary program. The capitalist profit system must be replaced with a society based on equality, international planning and democratic control of production—that is, socialism.

Andre Damon

WSWS