Money Rules

Rachel's Environmental and Health Weekly


One of the most important trends of the last half of the twentieth century was the spread of democracy into many countries that had never enjoyed it before. At the same time, democracy within the U.S. continued to shrivel as a wealthy elite gained increasing control. All three branches of government actively encouraged this shift of power from "the rest of us" to the wealthy.

In April, the U.S. Supreme Court made it easier for the wealthy to curry favor with government officials. The court ruled that substantial gifts to a government official are legal unless the official performs a "specific official act" in return for the gift. The matter came before the court because Sun-Diamond Growers of California gave gifts worth $5900 to Mike Espy when he was Secretary of Agriculture. Since Espy did not perform any specific official act on behalf of Sun-Diamond in return for the gifts, the gifts were legal, the court ruled. The American League of Lobbyists, expressed relief at the court's ruling. Lobbyists now know they can shower Congress with gifts without running afoul of the law. One favorite tactic is to give money to Congressional staffers, rather than directly to members of Congress. Another favorite is to pay for lavish vacations for members of Congress, disguised as "fact-finding trips."

By November, it was clear that the Supreme Court's April ruling would deepen the level of corruption in Congress. Federal prosecutors dropped almost all charges against Ann Eppard, former legislative chief of staff for Congressman Bud Shuster, a Republican from Pennsylvania. Between 1989 and 1993, while she was Schuster's chief of staff, Ms. Eppard accepted $230,000 in gifts from a lobbyist. She was subsequently indicted on seven counts. In November she pleaded guilty to one misdemeanor charge of taking illegal compensation and agreed to pay a fine of $5000. The other six charges were dropped. Federal prosecutors defended their plea bargain saying the Supreme Court ruling made it impossible to expect a conviction. Ms. Eppard now runs her own lobbying firm, Ann Eppard Associates.

The NEW YORK TIMES reported December 5 that state governor's offices are now thoroughly soaked in money, just as federal offices have been for more than a decade. "The 'permanent campaign' that has become a fixture of races for the presidency and the Senate has now descended upon the 50 state capitals," the TIMES reported.

It now routinely costs $10 million or more to run for the office of governor, so incumbent governors must raise at least $50,000 per week while they are in office. The TIMES commented, "Mr. Celucci [Governor of Massachusetts] and other incumbents are following one of the oldest political axioms, the golden rule: he who has the most gold, rules."

All of this private money in our elections has had a corrosive effect on our democracy, according to the NEW YORK TIMES. The distinction between Republicans and Democrats has been erased by money. "In fact," says the TIMES, "the public sector has increasingly become the champion of private enterprise.... The degree to which left and right have unified to become the champion of corporate priorities was on full display in the Congressional session that just ended. ...Look at the legislation business got killed," the TIMES says: there was no increase in the minimum wage, no new limits on "soft money" in elections, no ban on agricultural mergers. But Congress exempted corporations from any liability for Y2K computer failures, and legalized the merging of banks, insurance companies and stock brokerages. No doubt about it, money talks.

With the wealthy legally empowered to pour money into government, one might expect the government to return the favor. Late in 1999 the NEW YORK TIMES reported that "...the Internal Revenue Service [the nation's tax collection agency] is reducing its efforts to find cheating by businesses and high-income individuals, and stepping up investigations into two forms of cheating that are more likely to involve the working poor than the affluent."

"For wealthy individuals with gross income of $100,000 or more, fewer than an estimated one in 150 returns will be audited this year compared to one in 33 in 1992," the TIMES reported. "Please don't call us tax collectors in the newspaper," one longtime revenue officer in New York told the TIMES. "We don't collect taxes anymore. We aren't allowed to."

Instead of collecting taxes, I.R.S. auditors are answering phones, according to the TIMES: "Highly trained I.R.S. auditors who are paid up to $77,000 annually to examine corporate tax returns have been detailed to answer telephones and greet people at I.R.S. offices, even though their years of specialized work have left them ill equipped to handle mundane questions from the public."

Because of Congressional budget reductions, the I.R.S. has had to prune 82,000 staff positions (a 14% cut) in the last 4 years. However, the agency's workload has increased during the same period as Congress has made the tax laws more complex. Because of 1260 changes in the tax laws that Congress approved in 1997 and 1998, the I.R.S. has effectively had its total resources reduced by 29% during the past 4 years, the NEW YORK TIMES reported.

Despite these resource cuts, the I.R.S. is now conducting an aggressive campaign to ferret out abuses of the Earned Income Tax Credit, which allows the working poor to collect up to $323 for a single person and $3,556 for a family of four.

In 1999, a study by the liberal Center for Budget and Policy Priorities (CBPP) found that the "welfare reform" law passed by Congress three years ago has had the effect of making the poor poorer. The Congressional Committee that wrote the "welfare reform" law said the conclusions of the CBPP study were valid.

Since 1995 the poorest 20% of families have seen their annual incomes reduced by $577, falling to $8,047 annually. The situation was worse for the poorest 10% who lost $814 per year. Children were hardest hit. In 1995, 88% of poor children were helped by food stamps. By 1998, only 70% of poor children were being helped. "There are people at the bottom who are worse off," said Ron Haskins, staff director of the Congressional subcommittee that wrote the "welfare reform" law. "We need to do something about that," he said in August, but by December, nothing had been done.

Meanwhile 20% of American households have more debt than assets -- which is to say, they have a negative net worth. When real estate is factored out, 40% of American families have more debt than assets, according to the NEW YORK TIMES. A survey in early 1999 found that half of Americans had life savings of $3000 or less and another 40% said it would be "a big problem" if they had to deal with an unexpected bill for $1000, the TIMES reported. In early 1999, 35 million Americans (13.3%) were living in poverty.

The number of poor people would be considerably larger if prisoners were counted. The prison population of the U.S. will officially reach 2 million about six weeks from now, on February 15th. Two-thirds of prisoners are serving sentences for non-violent offenses. America's federal "drug czar," General Barry McCaffrey refers to the U.S. prison system as "America's internal gulag."

The prison industry in the U.S. has now taken on a life of its own. We build 50,000 new prison cells each year. Congress has taken steps to privatize the prison industry. The stock price of the Corrections Corporation of America, the nation's largest private jailer, has increased 10-fold since 1994, making prisons a killer investment. Nearly 60% of all federal prisoners are guilty of drug-related crimes. Americans do not use more drugs, on average, than citizens of other countries, and drug use has not declined for the past 10 years despite the ballooning prison population.

Worldwide, there are 8 million people in prison, so the U.S., with 4% of world population, holds 25% of all the world's prisoners. For an American born this year, the chance of spending some part of their life in prison is one in 20; for black Americans, it is one in 4.

Prisoners are not counted in unemployment statistics, poverty statistics, or welfare statistics -- so all these measures of national well-being are improved each time another person goes to prison. Furthermore, prisoners do not attend "Million Man Marches" or other political demonstrations. Most importantly, prisoners cannot vote; persons convicted of felonies lose their right to vote permanently.

A poll taken in February, 1999, revealed that 47% of Americans believe that the courts do not treat racial or ethnic minorities fairly. And a stunning 90% of respondents said they believe affluent individuals and corporations have an unfair advantage in court. The fix is in, 90% believe.

Democracy watch

Politics watch