Trenton 1936 Washington, D.C. 2020 Deja Vu: Greed Wins as Labor Loses Leverage

By Bob Hennelly | August 9, 2020

Insider NJ

 

The week closed out with the U.S. Congress still locked in dysfunction over how best to address the rapid socio-economic deterioration of our national circumstance.

As our Federal government’s paralysis continues, our state government borrowed almost $10 billion to tide it over.

In one of our neighboring states, the Governor resisted calls to close his multi-billion-dollar budget gap by raising taxes on the wealthy for fear they would opt to flee to another state.

Even leading Democrats like Gov. Cuomo, who would describe himself as a progressive, are concerned about the care, feeding and preservation of his wealthiest denizens, worries that higher taxes for them during this existential crisis would prompt them to quickly leave the Empire State

AMERICAN PYRAMID

For decades now, as the marginal tax rate for the highest end earners dropped from 90 percent during Eisenhower’s tenure, great wealth has been on a roll pressing it down to 37 percent. Wealth preservation has become such a national priority that when Rep. Alexandria Ocasio-Cortez suggested raising that top rate to 70 percent the establishment howled it was far too radical.

In the years since, with the capture of our politics by the corporations and the country’s richest this approach of bending over to serve them has resulted in the amassing of massive government debt loads which generates bonds, which can be purchased and speculated in by the very folks at the top of our pyramid.

It has prompted governments to proliferate gambling as a source of revenue despite the destruction it brings to so many families in the most marginal of circumstances.

Meanwhile, in the midst of this once in a century pandemic, a killer virus is proliferating along our socio-economic fault lines, at the base of this weighty pyramid, exacting the heaviest toll on the poor and the essential workforce

Here in New Jersey, according to data from the Department of Labor the last week in July saw 28,063 new unemployment claims bringing the total number of workers sidelined by the pandemic to 1.44 million, roughly 25 percent of our state’s workforce.

At its worst, during the Great Recession, the state’s jobless rate got as high as 9.8 percent.

By comparison, over the arc of the several years of the Great Depression,  here in New Jersey joblessness ranged between 25 to 33 percent, with African-American joblessness as high as 50 percent.

 

RECOVERY STUMBLES

According to the July national job numbers, the rebound that came after the economy’s COVID meltdown, has lost steam, as dozens of states reported increased infection and mortality rates.

In June, employers made 4.8 million new hires after having laid of tens of millions earlier in the year. By July, the U.S. Bureau of Labor Statistics reported only 1.8 million had been added. CNN reported that uptick was fueled disproportionately by lower paying part-time hires.

A few weeks back, the Commerce Department announced that in the second quarter the nation’s GDP shrunk at an annualized rate of 32.9 percent,  the most severe contraction on record.

Yet, as the bad news piled up whatever sense of urgency we might feel, down here on planet earth where evictions loomed for millions, the U.S. Congress remained deadlocked, incapable of rising to the occasion.

It’s understandable.

 

PLANET PLATINUM

So many of them are insulated by their wealth and privilege from the daily experience of the swelling ranks of Americans struggling day to day amidst a killer pandemic which hits the poorest and people of color the hardest.

Back in 2018, Quartz examined the personal financial disclosure filings for all of the members of Congress and found that “the typical U.S. Congress member” was “12 times richer than the typical American household.”

That same analysis found that “unlike the typical household lawmakers were relatively unscathed by the most recent recession” with the average member of Congress continuing to get richer while “the typical American household saw their wealth decline, dented by the 2008-09 financial decline.”

That eye-opening analysis came right after Congress passed the $2.0 trillion Trump/McConnell Tax Cut and Jobs Act, which in its first year bestowed 50 percent of the tax cuts on the top five percent income earners, according to a study by the Economic Policy Institute and the Center for Popular Democracy.

And, while the “tax benefits to middle or low-income individuals are modest and will expire in 2025… the enormous tax breaks for corporations are permanent. By 2027, after the individual provisions expire, the top 1 percent of households alone will see 83 percent of the benefits of the TCJA.”

And post pandemic, the ratio between the wealth of Congress and our President is  surely even more grotesquely skewed.

 

21st CENTURY FEUDALISM

An analysis from the Americans for Tax Fairness (ATF) and the Institute for Policy Studies – Program on Inequality (IPS) documented that in the span of just three months during the pandemic, “the U.S. added 29 more billionaires while 45.5 million filed for unemployment.”

Now, tens of American families hang over the abyss of a pandemic while some Republicans suggested that the $600 a week pandemic unemployment allotment they let lapse was too generous.

With long lines for food pantries and COVID testing, the nation that fancied itself the planet’s wealthiest is awash in disease and food insecurity. It’s like we are living in a dystopia that is a cross between the Hunger Games and The Apprentice.

This has all been a half-century in the making.

This pandemic caught us at a time of grotesque wealth concentration and income disparity which was the direct consequence of a bi-partisan effort over decades to advance the interests of multinational corporations over that of America’s working families.

Between the hundreds of millions in campaign contributions and the revolving door incentives that reward ‘public service’ with lobbying work the fix was in.

 

TOUGH ALL OVER

U.S. tax policy has long provided incentives for American based multinationals to shift their operations off-shore and even to shift their profits to tax havens that are always trying to outdo each other to attract capital.

“This is the perfect time to highlight the role of global tax,” said James Henry, an attorney and senior advisor to  the Tax Justice Network, which tracks international tax avoidance trends. “We now have you have public budgets on a worldwide basis under an extreme fiscal stress due to the loss of revenue and with governments at all levels facing cruel decisions of making cuts in the midst of a pandemic.”

In 2005, the Tax Justice Network estimated that $11.5 trillion was held offshore by the world’s wealthiest individuals. A decade later, the international advocacy group published an estimate that the offshore stash ranged from $21 to $32 trillion.

Post WW II, as multinational capital became ‘king of the world’ labor was losing its luster as corporations raced around the planet to play one nation’s workforce off another.

 

THE GREAT UNCOUPLING

By the 1970s the wages we earned did not keep pace with our productivity, the profits we generated with our labor. Even as women entered the workforce in ever greater numbers, American families kept falling further behind as U.S. corporations became multinational behemoths. Instead of wage growth, Americans took on more and more debt.

As the power of capital consolidated its grip on our political system from the Beltway to State Street, labor unions withered.

Fifty years ago, one out of three workers was in a union. In 1981, President Ronald Reagan’s mass firing of striking air traffic controllers was a body blow to the movement. By 1983, one in five workers was represented.

Today, it is just one in ten and on the decline.

 

GREED REDUX

There’s a strong historic parallel between our current wealth and income disparities and what happened in the run-up to the Great Depression.

“Where labor is concerned, recent decades strongly resemble the run-up to the Great Depression,” wrote the New Yorker’s Caleb Crain. “Both periods were marked by extreme concentrations of personal wealth and corporate power. In both, the value created by workers decoupled from the pay they received: during the nineteen-twenties, productivity grew forty-three per cent while wages stagnated; between 1973 and 2016, productivity grew six times faster than compensation.”

He continues. “And unions were in decline: between 1920 and 1930, the proportion of union members in the labor force dropped from 12.2 per cent to 7.5 per cent, and, between 1954 and 2018, it fell from thirty-five per cent to 10.5 per cent.”

Out the outset of the pandemic much was made of the “essential workforce” who were all hailed as heroes but as the weeks have churned into months it appears these workers have lost their leverage.

Union supporters in Congress have not been able to get a sufficient number of their colleagues to sign on to the COVID19 hazard pay provisions even though essential workers in industries like meat processing as well as health care providers and first responders are getting sick from the virus and dying, all while putting their families at risk.

Similarly, there’s a real resistance from Republicans in Congress to backstop local, county and state governments in fiscal freefall. As a consequence, more than a million public workers have already been laid off in the midst of a once in a century public health crisis.

 

GRAVITY WINS

Once these kinds of structural dominoes start falling gravity takes over. There’s a synergy to it. With the Federal government’s refusal to launch a coordinated national public health response compounded by its abdication of its role as fiscal guarantor, the states, counties and local governments will all bear the burden of Washington’s neglect.

New Jersey’s Great Depression timeline remains instructive.

Just two years after 1929 Stock Market crash,

“confronted with sharply reduced revenue, the state government cut its budget from $34.5 million in 1931 to $19.7 million in 1933, according to the New Jersey Almanac.

The collapse of Trenton’s tax revenues was accompanied by a precipitous decline in county and local property tax revenues as real estate values collapsed. Some local governments had to issue scrip, promissory notes that committed the municipality to actual cash money payment at some prescribed date in the future.

 

OCCUPY TRENTON

At one point in 1936, the state was close to running out of money to provide the most basic sustenance for over 100,000 families on relief.

Back then, Trenton, like Washington today, was hopelessly deadlocked on what to do, even as the state’s population’s situation continued to deteriorate.

According to a digest of Daily Record news accounts collected by the Morris County Library, covering the action in Trenton through March in April of 1936, the legislature was stuck. It couldn’t decide if it wanted to divert money from highway accounts, levy a “luxury tax” on amusements, soft drinks, cosmetics and cigarettes or just dump the administration of the program on the local governments.

“All day and all night and into the early hours of yesterday morning they sat, flanked by State police, in belief their presence would be pressure enough upon the legislators to bring about relief measures, while Republicans caucused and caucused until worn down to the breaking point. One Assemblyman keyed to the limit of sane endurance broke into song with ‘Home, Sweet Home,’ another emerged from the caucus room, tears streaming down his cheeks, and sat exhausted in his seat in the assembly chamber. ‘My God, do they know they are dealing with human souls?’ cried a woman in the gallery. ‘Have they ever experienced relief? Do they know what it means to starve?’”

As the political stalemate continued, the AP dispatches carried accounts of thousands of unemployed workers converging on Trenton.

“TRENTON, (AP) – Powell Johnson, secretary of the Workers’ Alliance, whose members have held possession of the New Jersey Assembly chamber night and day since Tuesday afternoon, said today the group would surrender the chamber when the lawmakers return to their desks tonight… Several thousand of the unemployed were expected to come to Trenton from various sections of the State to take part in a State House demonstration on behalf of the unemployed”

For going on a week “a hundred members of the Workers’ Alliance” spent the “night sleeping in the Assemblymen’s swivel chairs” subsisting “on coffee, bread, cold meats and macaroni donated by Trenton merchants and friends of the group.”

The Daily Record reported that at a Trenton prayer services in support of the takeover by the unemployed, the Rev. Robert Smith of the Grace Episcopal Church, told the “shabby men and women to ‘keep up the fight,’ and invoked the deity to ‘break down all smugness and self-complacency and lead all men to be more indignant of injustice, more indignant of oppression and deprivation.’”

That same night, as the occupation continued “spectators in white collars and fur coats watched the good-natured jobless poke fun at the Assemblymen in their sixth ‘evening session’ of a mock legislative meeting. They adopted a resolution ‘appropriating $1,000 to permit Governor Harold G. Hoffman and Mayor Frank Hague of Jersey City to go to Alaska and survey the Alaska salmon, its life, loves and tax problems, so the New Jersey Legislature will be free to do its duty without outside influence.”

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