October 8, 2015

Every time layoffs are announced or vital government benefits are slashed, we're told that there is no alternative because the money isn't there. But this is a bald-faced lie, explains Danny Katch , author of Socialism...Seriously: A Brief Guide to Human Liberation .

DOUGLAS, ARIZONA, is a town on the Mexico border with 17,000 people and now no hospital.

Since Chochise Regional Hospital closed at the end of July, Gilbert Gutierrez has been worried about older people who don't have the transportation to get to the nearest medical center in Bisbee. "A 20-minute drive is really, may-make-it-or-not, life-and-death," Gutierrez told a reporter from Phoenix public radio.

To listen to Donald Trump and other fear-mongering politicians, you would think that the reason the hospital in Douglas went broke is too many Mexicans coming north to use its services.

In fact, Chochise closed because of the same problem that faces hospitals far from the border: The Affordable Care Act (ACA) has cut Medicare payments and payments to hospitals for the uninsured, while many state governments haven't expanded their Medicaid coverage as the ACA dictated.

Thanks to this combined government stinginess, one in five residential areas in the U.S. is now a "medical desert," lacking quick access to an acute care hospital. The deserts range from rural areas like Douglas to bustling neighborhoods in Los Angeles and Washington, D.C.

(Eric Ruder | SW)

Hospital closures are often described in the media as symptoms of the "new reality" of "health care economics"--as if there is something inevitable about the richest country in the world having increasing swaths of land that no longer have one of the basic markers of life in an industrialized country.

But the flip side of this "new reality" is the massive wealth being sucked up by the health care industry.

Days after the closure of Cochise Regional Hospital, the Hospital Corporation of America announced that its second-quarter profits had jumped to more than $500 million>/a> for three months.

That's a drop in the bucket for insurance giant UnitedHealth Group, which made $10.3 billion in profits in 2014 and has seen its stock price rise almost 400 percent since the ACA's passage, according to the Center for Public Integrity.

Then there are the drug companies, whose vast army of lobbyists made sure the ACA wouldn't impact their ability to gouge taxpayers for lifesaving drugs. Last year, the five largest U.S. pharmaceutical companies made total profits of $50 billion. If these five companies were left with a profit of "only" a billion dollars each, the remaining $45 billion could restore more than half of the Medicare cuts that closed so many hospitals.

WE LIVE in a selective time warp. For the 1 Percent, the economic crisis of 2007-08 is ancient history--stock prices and profits have been booming for years.

But most of us seem to be stuck in some Groundhog Day scenario, reliving the same conditions over and over for the past seven years. Jobs, pensions and health care are still being cut. Restoration of wages and vital government services is still somewhere around the corner.

This is the politics of permanent austerity, based on a classic bait and switch. First, let the 1 Percent loot an ever-larger proportion of society's resources. Then find a patsy to blame for stealing the crumbs that are left.

Immigrants are usually today's scapegoat of choice, but any bogeyman will do. Poor people in Michigan suffered a devastating cut to food stamps this summer--from $100 a month to $16--after federal reductions that Republicans justified with a Fox News report about a California surfer who used some of his benefits to buy sushi.

Maine also has a problem with food stamp recipients daring to be outdoor enthusiasts. "Hardworking Mainers should not come home to see snowmobiles, four-wheelers or jet skis in the yards of those who are getting welfare," declared Gov. Paul LePage as he pushed to cut food assistance for residents with $5,000 in assets.

Audits have shown that Michigan offers corporations more tax break "megadeals" than any other state in the country--totaling over $7 billion--and that Maine's corporate tax breaks lose $100 million more than they add to the economy. But neither state seems to be concerned about what type of food or recreational activities corporate executives are paying for with their welfare money.

To resist this constant scapegoating, we need to understand how much money is out there--just in the bank accounts of the 1 Percent. The politics of permanent austerity tries to impose on us a hopelessness that passes for practical common sense--times are tough and that's just the way it is. But that obscures the nonstop transfusion of our money to corporate parasites who exist so far above us we often can't see them.

According to research from the Federal Reserve, U.S. corporations made $1.8 trillion in profits after taxes in the second quarter of 2015--double what they made just 11 years ago.

That money has come from us. The Washington Post recently noted that wages have stagnated for men for the past 40 years and for women for the past 15, even productivity--how much wealth workers produce per hour worked--keeps going up.

Under systems of progressive taxation that have been the norm across the world since the early 20th century, elites are supposed to return at least some of our money via income and corporate taxes, but this redistribution has been on the decline in the U.S. for decades.

The tax rate for households making over $450,000 a year has dropped from 70 percent in the late 1970s to under 40 percent today. Meanwhile, corporations are so good at avoiding the 39 percent tax on their profits that economists have had to invent a term known as the "effective tax rate" to describe what they actually pay: which is 12.6 percent--far less than almost anyone reading this article.

IF ALL that seems unfair, defenders of the 1 Percent have a ready response.

"I fight like hell to pay as little as possible [in taxes]," Donald Trump said in August. "Number one, I'm a businessman, and that's the way you're supposed to do it. And you put the money back in your company and employees and all of that. But the other reason is that I hate the way our government spends our taxes. I hate the way they waste our money, trillions and trillions of dollars of waste and abuse."

Many people who despise Trump's bigotry assume that he's correct that businesspeople make better use of money than governments. But nothing could be farther from the truth.

To begin with, corporations don't direct most of their money back toward the employees who produce it. In fact, the proportion of overall corporate income going to wages is at an all-time low, while the part going to profits is at a record high.

So what are rich people doing with all of their--which is to say, our--money? Some of it is lavishly plunked down for beach houses and vacation homes, private jets and other luxury indulgences. But most of it is going to something even more shockingly wasteful: nothing at all.

At the end of last year, U.S. corporations were sitting on a record $1.7 trillion in cash--twice as much as 10 years ago. JPMorgan Chase strategist Michael Hood perfectly captured the inhuman logic of capital in a 2013 comment to a reporter: "It's not that companies are hoarding money. It's that they're making so much money there aren't enough places to spend it."

In other words, at a time when bridges are collapsing, when migrants trying to find a better life die in the Arizona desert and Mediterranean Sea, the people supposedly most qualified to handle our society's wealth can't find enough good uses for it.

WHEN THE 1 Percent does find causes "worthy" of investment, it's often the opposite of what most human beings would choose.

In California, for example, a historic drought caused by climate change and the wasteful practices of the agriculture industry has created an urgent need for resources to be devoted to developing renewable energy and fixing leaky water pipes.

Instead, according to the New York Times, investors are pouring hundreds of millions to a far-fetched scheme by Cadiz Inc. to mine water deep under the Mojave Desert--in the hopes of making a fortune with exclusive rights to water when future climate changes make it even more scarce.

It's hard to see how government spending can approach this level of waste--except for the one program never criticized by the likes of Trump. The Pentagon has a 2015 budget of almost $600 billion dollars. That's about one out of every six dollars spent by a federal government that has many other programs--from Social Security to Pell grants to workplace safety inspections--that are the opposite of Corporate America: starved of funding and desperately needed.

The early success of Bernie Sanders' presidential campaign, which calls for a "Robin Hood" tax on Wall Street transactions to pay for free public college tuition and other programs, shows that millions of Americans see through the lies of permanent austerity.

Unfortunately, Sanders' decision to run inside the corporate-dominated Democratic Party and endorse the party's eventual Wall Street-approved nominee means that after the primaries next spring, his call to tax the rich will likely fade from official politics--or be greatly watered down.

That's why it's crucial to build grassroots protests and political parties that can show the vast wealth that exists for the top of society and demand that we get it back.

During the Depression of the 1930s, activists in the Communist and Socialist Parties organized unemployed councils to demand food and rent relief from cities that claimed--with a lot more credibility than they could today--that there was no money to help those who needed it.

Their protests were so large and disruptive that Chicago Mayor Anton Cermak warned Congress to either send his city $150 million for relief programs, or send federal troops to put down a rebellion.

"Driven by the protests of the masses of unemployed and the threat of financial ruin," Frances Fox Piven and Richard Cloward concluded in their landmark book Poor People's Movements, "mayors of the biggest cities of the Unites States, joined by business and banking leaders, had become lobbyists for the poor."

Those protests culminated in the passage of the Social Security Act and the creation of a social welfare state--funded by higher taxes on the wealthy--that has been under attack for the past generation.

To win back those gains--and win support for the socialist idea that the wealth of society shouldn't be controlled by a band of hoarders and hare-brained speculators--starts with teaching a new generation the power of three simple words: tax the rich.