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The Wealthiest Who Benefit Most From Government

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The recent dust-up over conservative historian Niall Ferguson's Newsweek article, "Hit the Road, Barack, Why We Need a New President," has highlighted the welfare debate. But it isn't the debate that helps America to grow. Because the real recipient of government 'welfare' since the 1980s have been many of the wealthiest among U.S., the Oligarchs, not the poorest. And that has almost wrecked the American economy.

That is, many of the wealthiest (the Warren Buffets and Bill Gates excepted) have been working ceaselessly to create an oligarchy where once there was a democracy, where mega dollars vote rather than citizens. And that has left just one branch of government beyond their control, which is why they want President Obama to "hit the road."

"Oligarchy (from Greek ὀλιγαρχία (oligarkhía); from ὀλίγος (olígos), meaning "a few", and ἄρχω (archo), meaning "to rule or to command" is a form of power structure in which power effectively rests with a small number of people," says Wikipedia.

By using government -- whether Congress to deregulate or defund regulation of any kind, or the Supreme Court in Citizens vs. United that allows unlimited corporate political contributions -- to divert so much wealth to themselves, and then hiding that fact by blaming Obama and the poorest for their predicament, those who would be oligarchs at the top of the income ladder have impoverished the majority of Americans.

Harvard Professor Ferguson echoed almost word for word the traditional Republican scapegoating of the poor and disabled:

Welcome to Obama's America: nearly half the population is not represented on a taxable return -- almost exactly the same proportion that lives in a household where at least one member receives some type of government benefit," said Ferguson. "We are becoming the 50-50 nation -- half of us paying the taxes, the other half receiving the benefits.

This is intentionally misleading, of course. Some 48 percent pay no federal income taxes at the moment because they are the unemployed due to the Great Recession, the aged or disabled, and children. While more than 80 percent pay federal payroll and excise taxes on their incomes. Professor Ferguson's attack has been refuted by too many economists, such as Paul Krugman, and historians to count.

His attack is just the latest development in the misinformation campaign designed to hide the redistribution of so much wealth, not only by using their power to restrict or bar outright collective bargaining for both government -- and non-governmental workers in right to work states. This is when the middle and lower income classes have not seen real income growth since the 1970s, at the same time that long term economic growth has declined.

But the would-be Oligarchs have also worked to weaken the institutions that safeguard Americans' savings and health, such as social security and Medicare, and now the Affordable Care Act, or Obamacare. Hence the attacks on taxes. For with reduced incomes, many Americans come to blame taxation policies when they should blame the lack of income growth, since economic growth only happens when incomes are rising.

This simple truth is what extreme conservatives of today want most to hide. By allowing collective bargaining, instead of opposing it at almost every level -- whether private or public sector -- our economy would grow almost exponentially. For this would spur consumer spending which powers 70 percent of economic activity, as countless studies have shown.

And so Dr. Ferguson has made President Obama the ogre of the moment to scare social conservatives in particular. He is the ogre that took away their 'freedoms.' What freedoms? Only one, the freedom from having to pay any taxes at all, though Republicans would now take away a woman's freedom to control her own health care options by banning abortion, even for rape victims.

Because facts don't back up conservatives' assertions that government limits freedoms, they have had to make up their own facts about the harmful effects of taxation. The real facts are that government is starved of enough tax revenues to function effectively. Why not starve government, since the misinformation gang opposes almost any form of financial or environmental regulation, while neglecting aging infrastructure and falling behind other developed countries in education?

So we know why the misinformation gang has such a blatant disregard for facts. It's very simple. Ferguson, vice presidential candidate Paul Ryan, et al., are trying to divert attention from those who have been the real recipients of government largesse -- the wealthiest -- in the most massive redistribution of wealth since the 1920s. And it has been paid for by taxpayers, as have the two wars and just ended recession of the GW Bush Administration.

2012-08-24-CBPP

Graph: CBPP.org

"In fact, the deficit for fiscal year 2009 -- which began more than three months before President Obama's inauguration -- was $1.4 trillion and, at 10 percent of Gross Domestic Product (GDP), the largest deficit relative to the economy since the end of World War II," said the Center for Budget and Policy Priorities, a progressive think tank. And that has left very little for middle class taxpayers in particular to live on. Where did all that income go? To record corporate profits, for one, said the New York Times. It is the highest profits in history, as a share of Gross Domestic Product.

It has also fueled the greatest era of conspicuous consumption since the 1920s by the wealthy, which doesn't create many jobs. Neither corporations nor their wealthy investors are using their wealth to invest in growth by boosting capital expenditures, for example. Rather, much of it is being used to lobby for further tax breaks, deregulation, and attempts to unseat Barack Obama, who stands in their way of raking off more of the American wealth pie.

That is the real reason for Professor Ferguson's rabid attack on Obama's record. President Obama stands in their way.