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Spring Books

Laying bare 'wealthfare': finding budget's real fat

By Mark Zepezauer and Arthur Naiman
Odonian Press, 191 pages, $9


While Bill Clinton and Newt Gingrich scheme to eliminate more resources for the elderly, the middle class and poor people, citizens below the top one-percent bracket should fork over $9 for this little gem, Get the Rich off Welfare.

This fact-jammed text is to anyone befuddled by the budget and welfare debates what the honest child was to the public deluded by the emperor's invisible clothes. Zepezauer and Naiman disrobe corporate and military pork, leaving them naked.

The flab laid bare in 23 snappy chapters categorizing $448 billion in "Wealthfare" or "the money we hand out to corporations and wealthy individuals," is shocking enough to create one of the most critical groundswells of citizen outrage in the history of the United States.

For that to happen, this book must be read. And readable it is -- it takes just a few hours to finish. What's more, even those who cringe at the thought of balancing a checkbook will find it easy to digest the authors' descriptions of the systems propping up the rich and their explanations of how these government-sanctioned mechanisms sap energy and resources from the rest of us and the environment.

The book's message is clear: "It's not fair for people to get rich -- and stay rich -- by defrauding people who are poorer than they are." The urgency is even clearer: "As you'll soon see, stealing from the poor -- actually, from anybody who isn't rich -- has become standard operating procedure in this country. In fact, the U.S. government today functions mostly as a huge Robin Hood in reverse."

This equation is so lopsided, the authors insist, that even if a wave of conversion were to sweep through Washington, convincing policymakers to slash perks and pork to the wealthy by 75 percent, "welfare for the rich would still cost almost as much each year as the federal deficit." In short, wealthfare presently amounts to three-and-a-half times more than the $130 billion spent on welfare for the poor, and a mere reduction of the pork by 26 percent would allow Congress to eliminate the deficit without further exacerbating homelessness and poverty.

Even more shocking, 11 years of perks to the rich amount to more than the entire federal debt accumulated by the United States since the founding of this nation 200 years ago

The system of preferences benefiting an elite few and running the government into the red, Zepezauer and Naiman remind us, has not always been the norm and it need not be protocol in the future. In the 1950s, U.S. corporations paid 31 percent of the federal government's general revenues, as compared to 15 percent today. "If businesses paid taxes at the same rate they did 40 years ago, the federal deficit would disappear overnight -- and that's without eliminating a single direct subsidy or handout," the authors predict.

So, who is gobbling up the bacon?

The Pentagon and its contracting cronies sit at the top of the list, according to Zepezauer and Naiman. With a budget "bigger than the next nine [countries'] military budgets combined and 16 times larger than the combined military budgets of all of our 'regional adversaries' -- Cuba, Syria, Iran, Iraq, North Korea and Libya," the sheer scale of military spending facilitates what New York Times columnist Anthony Lewis has described as "incalculable waste."

The authors, using conservative estimates, put taxpayers' money lost annually to military waste and fraud at $172 billion. More specifically, using a Senate hearing as a source, the authors claim that "$13 billion handed out to weapons contractors between 1985 and 1995 was simply 'lost.' Another $15 billion remains unaccounted for because of 'financial management troubles.' That's $28 billion -- right off the top -- that has simply disappeared."

But, the authors chide, "Let's not sweat a few billion dollars here and there -- the way the Pentagon really wastes money is by overpaying contractors." Their sampling of frauds includes nuts worth a few cents each that McDonnell Douglas sold to the Navy for $2,043 apiece; a toilet seat Lockheed sold the government for $640; and then there is the authors' "personal favorite: a plastic cap that goes over the end of a stool leg -- special price from Boeing: just $1,118 each."

The list of military contracting boondoggles frequently provokes the authors' sarcasm. They describe "a coffee-maker Weber Aircraft charged $7,622 for -- but in fairness, it was designed to handle a 100 degree drop in room temperature or 40 g's of acceleration (we don't know about you, but the first thing we want after being frozen solid or turned into a blob of jelly is a nice, hot cup of coffee)."

This wit would be entertaining, but the absurdities at the heart of it inflict social and economic anguish on U.S. society. "Building weapons we don't need is so wasteful that the economy would probably be better off if we just paid the people the same money to stay at home," they observe. They add that for every $1 billion the U.S. government spends on making arms, it creates 25,000 jobs. Were that billion spent in transport, 30,000 people would be put to work; were it channeled into housing, 40,000 people would have work; into education, 41,000; health care, 47,000.

The section's conclusion is blunt: "By now it should be obvious that the defense budget isn't based on any rational calculation of what the defense of this country actually requires -- it's based on what U.S. arms manufacturers can get away with (almost anything, it turns out)."

Military waste, though the biggest category, is only the beginning. Next in line is Social Security taxes, "a major technique for transferring the tax burden from the rich." In this section, precious facts abound: Bill Gates, for example, pays as little Social Security tax as anyone who earns $62,700 or more annually; between 1971 and 1991, families making the mean U.S. income of $37,800 saw their combined Social Security and income taxes rise 329 percent while the joint tax burden of families making more than $1 million annually declined 34 percent.

Then there are the corporate games to decrease tax contributions, fine-tuned through successive "reforms" like accelerated depreciation -- "the writing off of costs of equipment and buildings faster than they actually wear out."

The end result of such maneuvers is hardly believable: "Of the 250 largest and most profitable companies in the United States, a quarter -- whose pretax profits totaled $50 billion -- paid no federal income tax at all between 1981 and 1983, and half of them didn't pay in one or more of those three years."

Zepezauer and Naiman move on to demythologize capital gains tax breaks and reveal how the middle class is "penalized for working." The authors point out that "97 percent of the benefit from the 1993 capital gains tax cut went to the richest 1 percent of the population," and that gains made on "risk venture" endeavors, often the most highly profitable investment schemes, "aren't taxed at all."

The book provides a comprehensive overview of the savings and loan bailout, of agribusiness ripoffs, tax avoidance by transnationals (of those boasting assets over $100 million, 37 percent paid no U.S. federal taxes at all in 1991; the average rate of payment for those who did was a measly one percent of gross receipts), municipal bonds and media handouts, government pension scams and insurance loopholes, nuclear, aviation, mining and export subsidies. And the list goes on -- oil and gas tax breaks under which "it would be cheaper in some cases for the government to just buy gasoline from the companies and give it to taxpayers free of charge"; logging subsidies that have detrimental consequences for grizzly bears and bald eagles; a history of destruction of street cars to benefit the auto giants; even "horse writeoffs."

Key chapters expose policies that sound good for the poor and middle class but when viewed comprehensively contribute to the enrichment of an elite few and shift the tax burden to the working majority.

The authors outline how homeowners' tax breaks, for example, actually represent $29 billion in housing subsidies to wealthy families, while the entire Housing and Urban Development budget -- another resource potentially on the congressional chopping block -- totals only $26 billion. "Because these provisions are called 'deductions' and 'exemptions' rather than 'subsidies,' they're enshrined in our current tax code, and middle-class homeowners think they're the ones getting the deal. If you believe that, you're being had," Zepezauer and Naiman quip.

"It's the classic case of being tossed a few scraps from the table. If we'd simply eliminate all the handouts and boondoggles this book documents, our tax rates would drop so far, so fast, that special little deals like these homeowners' loopholes would seem archaic and silly."

Oddly enough, this book does not feed the hopelessness many U.S. citizens have been feeling since the massive transference of wealth began in the 1980s. By clarifying just how each scheme works and removing such matters from the exclusive realm of "experts" and self-interested politicians, Zepezauer and Naiman leave their once-deluded public with a sense that change to benefit all is not such a complicated task.

The authors also provide a glossary, a solid list of sources and resources and solid assurance that the economic imbalance, the health of our communities and our basic dignity can be corrected.

"Wealthfare can't stand the light of day: Once it's seen for what it is, there's enormous pressure to eliminate it," they conclude. The rest is up to those willing to follow the example of the child who was not afraid to say the bare truth about the emperor.

Leslie Wirpsa, head of NCR's West Coast Bureau in Los Angeles, is also Latin American editor.

National Catholic Reporter, February 7, 1997