Waging Class War in Comfort
That’s
no accident. CEOs today purposively pack their
corporate boards with their pals, who often turn out to be current or former
chiefs at other corporations. Everybody who’s anybody just feels more
comfortable that way
President-elect
Donald Trump, a big-time business chief himself, certainly seems to want to
feel comfortable, too.
No other President-elect has ever packed his cabinet with more business
bigwigs.
At
Treasury, he’s installing former Goldman Sachs executive Steven Mnuchin.
Trump’s
pick for commerce, billionaire Wilbur Ross, runs his own investment firm and sits on five other corporate boards.
Trump’s
choice for labor secretary, fast-foods CEO Andrew Puzder, has made his own
fortune keeping wages low at the Hardee’s and Carl’s Jr. chains.
Betsy
DeVos, the Trump education secretary-designate, has never stepped foot in a
public school as a student, educator, or parent. But she does hail from the
billionaire family that runs the money-making machine that goes by the name of
Amway.
At
the Small Business Administration, Trump is situating Linda McMahon, the
billionaire who helps runs a sports entertainment empire.
And
the chair of Trump’s National Economic Council will be Gary Cohn, the president
of Goldman Sachs.
Trump
has named a variety of other tycoons to official advisory
bodies. Among these new advisors: Uber CEO Travis
Kalanick, Tesla CEO Elon Musk, and PepsiCo CEO Indra Nooyi.
Donald
Trump, to be sure,
won’t go down in history as the first President to ever plop business chiefs in
the federal government’s loftiest positions. Previous presidential business
picks have even generated some intense controversy.
In
1953, for instance, President Dwight Eisenhower put forward as his secretary of
defense the president of America’s most powerful company, Charlie Wilson of
General Motors.
That
January, Wilson went before the Senate Armed Services Committee for his
confirmation hearings. Some senators wondered whether the GM top dog would be
able to put the interests of the United States before the interests of General
Motors.
Wilson’s
purported answer —
“What’s good for General Motors is good for America” — soon became a staple of American
political folklore. But Wilson didn’t actually put his sentiments
exactly that way. His actual answer, the hearing transcripts show, smacked of
less arrogance.
Wilson
told his Senate inquisitors that he didn’t think he would face a conflict of
interest between his corporate and government service because, he explained,
“for years I thought what was good for our country was good for General Motors,
and vice versa.”
“Our
contribution to the nation” at GM, Wilson added, “is quite considerable.”
And
Wilson did have a point. In postwar America, big companies like GM did make a
contribution to the nation. They didn’t just extract wealth. They did some
serious sharing. Years of labor militance had convinced business leaders like
Wilson that corporations had to bargain reasonably with their workers.
In
1950, Wilson’s General Motors and the United Auto Workers had
signed a landmark contract that came to be known as the “Treaty of Detroit,”
and the basics of that treaty — productivity-based wage hikes above and beyond
inflation, significant pension and other fringe benefits — would soon spread
throughout America’s unionized heavy industries.
And
Charlie Wilson shared personally, too, via the steeply progressive tax rates
then in effect. In 1950, Wilson earned $586,100 from his GM compensation and
personal investments. He paid 73 percent of that — $430,350 — in income
taxes.
Just
ponder those numbers for a moment. In the middle of the 20th century, the top
exec at the top corporation in the United States had an after-tax income of
$155,750, the equivalent, after taking inflation into account, of a mere $1.56
million today.
Last
year, America’s top 200 corporate chiefs averaged $19.3 million. They took home
more than $1.56 million every month.
Now
we don’t know exactly
how much our contemporary corporate chiefs are paying in federal taxes. We do
know, from an IRS report released earlier this year, that Americans in
their income neighborhood — the top 0.01 percent — paid federal income taxes at
a 26 percent effective rate in 2013.
Charlie
Wilson paid taxes at nearly triple that
rate 66 years ago.
For
corporate chiefs, America has changed a good bit since Charlie’s time. And now
Donald Trump and the business kingpins he has populating his inner circle want
to change it a good bit more.
The
latest tax plan that Trump has advanced would on average, the Tax Policy Center calculates, slice the tax bill of America’s
top 0.1 percent households by over $1 million each in 2017.
Trump
and his pals aren’t signing treaties. They’re waging class war.
Sam
Pizzigati edits Too Much, the Institute for Policy
Study's online weekly newsletter on excess and inequality.