The real disability myth

Published at Socialist Worker.

ARE FEDERAL disability benefits one big scam?

We're familiar with that claim coming from the right-wingers who make a career out of attacking "big government" programs. Back in the mid-1990s, then-House Speaker Newt Gingrich declared that poor children were being coached by their parents to fake crippling diseases in order to qualify for the government's Supplemental Security Income (SSI) program. Gingrich claimed kids were "punished for not getting what they call crazy money, or stupid money. We are literally having children suffering child abuse so they can get a check for their parents."

But that's par for the course from a reactionary hater of the poor like Gingrich. It's much more surprising to hear a version of this argument--dressed up in kinder language, but no less biased and deceptive--coming from National Public Radio's normally excellent show This American Life.

This American Life's episode was called "Trends with Benefits" and featured Chana Joffe-Walt, a journalist with NPR's "Planet Money" unit, on the rapid growth in government programs providing benefits for the disabled.

Over the course of an hour, Joffe-Walt implies that disability programs share the blame for everything from high unemployment (they keep the unemployed from finding a job) to low test scores in public schools (they discourage disabled children from trying hard).

The same basic story was repackaged for a series of reports on NPR's All Things Considered news show and for a website feature titled "Unfit for Work: The Startling Rise of Disability in America." (I'll concentrate on the website feature in order to quote directly from her writing.)
In all three places, Joffe-Walt's basic contention is that disability benefits have become "a hidden, increasingly expensive safety net" that has taken the place of welfare--in the wake of "welfare reform" passed under Bill Clinton in the 1990s--as a government program to be abused.

But the reality is quite different. Disability payments provide fairly meager help to some of the most vulnerable people in society--people born with disabilities, disabled veterans, people injured on the job, and older workers who have chronic conditions that make it impossible to continue in a job.

Though it comes from NPR, with its reputation for being "liberal," Joffe-Walt's reporting is part of an ideological campaign that seeks to justify the austerity agenda that dominates U.S. politics--and to provide cover for further cuts in what remains of the social safety net, from programs for the disabled to Social Security retirement benefits and the Medicare and Medicaid health care programs.

As is the case with these other targets of the budget-cutters, there's actually plenty of money to provide the aid that people need to cope with disabilities--if the government would tax the rich, switch off the Pentagon war machine and cancel the giveaways to Wall Street and Corporate America.

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JOFFE-WALT'S reports begin with Hale County, Ala., where just under one in four working-age people are on disability. According to Joffe-Walt, people with conditions such as chronic back pain, diabetes and high blood pressure have been declared disabled by a local doctor, while other people with the same affliction--ranging from a Hale County judge to Joffe-Walt's editor at NPR--aren't considered disabled.

The difference, as Joffe-Walt admits, is that for most people in Hale County--the judge aside--the only jobs available require manual labor that is difficult if not impossible to perform with a condition like high blood pressure. Joffe-Walt seems to accept this reality--yet she wonders if one particular doctor "was running some sort of disability scam, referring tons of people into the program."

Moving to the general picture, Joffe-Walt admits: "Part of the rise in the number of people on disability is simply driven by the fact that the workforce is getting older, and older people tend to have more health problems." But she then goes on to declare that

disability has also become a de facto welfare program for people without a lot of education or job skills. But it wasn't supposed to serve this purpose; it's not a retraining program designed to get people back onto their feet. Once people go onto disability, they almost never go back to work. Fewer than 1 percent of those who were on the federal program for disabled workers at the beginning of 2011 have returned to the workforce since then, one economist told me.

The implication is that going on disability is a choice people make in order to drop out of the labor force. Joffe-Walt suggests that it's the existence of a social safety net--and not a persistent jobs crisis or, for that matter, the many hazards of today's society, ranging from war injuries to more dangerous workplaces--that keeps people out of work.

Joffe-Walt also--stunningly--takes aim at disability benefits for children, including cash benefits for the very poor in the form of Supplemental Security Income. In one of the many anecdotes that Joffe-Walt substitutes for facts, she reports, "People in Hale County told me that what you want is a kid who can 'pull a check.'"

She uses the case of Jahleel, a child with a learning disability, to argue that because his mother depends on SSI payments that are contingent upon Jahleel's disability status, the program discourages children from going to school, doing well in school and becoming independent adults.

Finally, Joffe-Walt goes after what she calls the "disability-industrial complex"--which she argues works to "push more people onto disability" while the government allegedly has nobody on its side to defend against cases of fraud.

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SEVERAL JOURNALISTS and policy analysts poked gaping holes in Joffe-Walt's reporting.
Writing at The Century Foundation website, Harold Pollack pointed out that NPR listeners:

might be surprised to discover that the final award rate for disability applications has averaged about 45 percent. Moreover, low employment rates among denied applicants suggest that disability assistance is not inducing otherwise-employable people out of the workforce. The misfortunes of people wrongly denied benefits, the problem of sick people bleeding money as the ponderous bureaucratic process moves along, the plight of disabled people stick on the Medicare waiting period--these matters were also left unexplored.

Pollack also documents that rise of children receiving SSI benefits--which Joffe-Walt made a big deal about in her reports--has been "dwarfed by the decline in the number of children receiving cash assistance after the 1996 welfare reform." According to Pollack, there is little evidence that disability payments have picked up the slack from millions of people being dropped from the welfare rolls.

According to Michelle Chen, writing at In These Times, most of the increase in disability rolls in recent decades is attributable to an aging workforce, the entrance of women into the workforce and the increase in the retirement age before seniors can receive full Social Security benefits. For those who do receive disability payments, this is the only thing standing between them and abject poverty.
As Chen concludes:

"The real story is that disability does pretty much what it's supposed to. Established during the growth era of the late 1950s as a stopgap for people forced out of work by long-term impairments, the program issues meager monthly benefits to workers and their families through the Social Security Administration, averaging $1,100. Some heavily disadvantaged people with disabilities receive additional Supplemental Security Income payments.

The roughly 9 million worker beneficiaries tend to skew older--their average age is 53--and are disproportionately African-American, reflecting underlying racial health disparities...As long as gaps in class and social mobility persist, then disability insurance helps blunt the sharpest edges of vicious economic inequities.

Hannah Groch-Begley, writing at the Media Matters website, also systematically debunked Joffe-Walt's reporting.

Among other facts, she points out that more children are receiving SSI today not because their parents are using them to "pull a check," but because child poverty has increased to shocking levels, from 11.6 million in 2000 to 15.5 million in 2009. At the most basic level, this means many more children now meet the income requirements to receive SSI benefits.

Groch-Begley also shows that rather than a system of largesse, disability benefits are highly restrictive: more than one-half of all claims are eventually denied, and just one in four children with disabilities qualify.

While the benefits are relatively meager, SSI is a vital resource, according to the Center for American Progress, which "reduces costly and harmful institutionalization of children with severe disabilities" and "reduces poverty and increases economic security."

With millions of people out of work, an aging population faced with an uncertain future in retirement and mounting health care costs, and millions of children in poverty, there's a need for a stronger social safety net. But the U.S. ruling class is pushing a different agenda: reduced living standards for the working class, which are intended to increase the competitiveness of U.S. corporations worldwide.

Reports like Chana Joffe-Walt's smear of disability programs fit perfectly with the ideological campaign required to justify cutting away what remains of the social safety net.

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A MORE honest look at disability would paint a very different picture. Life for the disabled and their families is far from easy. They are more likely to live in poverty and suffer from unemployment than the population at large.

In 2011, median household income for families that include a working age person with a disability was $36,700--meaning half of such households survived on less than that. This is more than $13,000 less than median household income for the country as a whole, according to the U.S. Census Bureau.

Poverty rates are much higher for disabled people--27.8 percent in 2011, nearly twice the overall rate of 15 percent. And these numbers understate the true poverty rate, since the official federal poverty line, which in 2011 was $11,484 for an individual and $23,021 for a family of four, is abysmally low.

Joblessness is also much higher among the disabled than the national average. According to the 2011 Disability Status Report, just one third of working-age people (aged 21 to 64) with disabilities were employed--and only one in five had full-time, full-year work.

Disabled people face multiple barriers to receiving the health care they need. According to the Centers for Disease Control, in 2009, 27.4 percent of disabled people reported that the cost of health care limited their access to treatments they needed. This is more than twice the percentage for non-disabled people.

Then there is the question of transportation, which many people take for granted. For the physically disabled, particularly those who rely on the use of a wheelchair, access to adequate transportation is a major problem. According to the National Organization on Disability, "Approximately 30 percent of Americans with disabilities deal with inadequate transportation, compared to only 10 percent of those without disabilities."

On top of all of that, applying for and receiving benefits is incredibly difficult. From 2001 to 2010, just 28 percent of initial disability benefit applicants were awarded benefits on average, according to the Social Security Administration. Even after reconsideration on appeal, disability claims were denied 53 percent of the time.

The benefits for those who do qualify are meager. In February of this year, Average monthly disability benefits were $978.52, and the average monthly SSI payment was just $526.41.

Theresa, who has Crohn's disease, lives in New York City on $730 per month in disability benefits. She described the process to get benefits as a bureaucratic nightmare:

It took three years and a hearing in front of a judge. It was a constant documentation of every hospital stay, every hospital I had ever been to, along with every doctor, every name and address, every medication, and every employer, my salaries and length of employment. It was a nightmare of paperwork that had to be re-filed after every denial. It was devastating to be denied, and I would never have been able to keep going without my mother and my rep's help. That is deliberate, and everyone in the process except the patients know it.

And yet the money is certainly there to make the lives of people like Theresa far more comfortable. In just three months last year, corporate profits totaled $1.75 trillion, more than twice the amount spent on Social Security benefits for the entire year and more than 10 times the amount spent on disability programs.

With corporate rates at a 40-year low, raising taxes on business and lifting the regressive income caps on payroll taxes could easily cover an increase in benefits so that the disabled don't live in poverty--as well as a jobs program to deal with the unemployment crisis.

In reality, it all comes down to priorities: What's more important, providing for the needs of the many or indulging the boundless greed of the few?

Stop-and-terrorize

Published at Socialist Worker and the Indypendent.

Written with Wesley House

THE NEW York Police Department's "stop-and-frisk" policy is nothing less than state-sponsored persecution, explicitly designed to "instill fear" in Black and Latino youth.

That's the ugly picture emerging from the first weeks of testimony in Floyd v. City of New York, a federal class action lawsuit challenging the legality of the NYPD's policy on these searches.
Witnesses have painted a picture of a police department driven by quotas for stops and racist contempt for youth of color, who are routinely and systematically targeted for harassment. The vast majority of the victims are innocent of any crime, and only a fraction of the searches turn up a weapon of any kind.

The trial has proven already that stop-and-frisk encourages New York cops to racially profile and abuse young Blacks and Latinos. After all, that's what their bosses intend. According to the explosive testimony of a state senator and former officer, NYPD Commissioner Ray Kelly told him explicitly that the purpose of stop-and-frisk was to make youth of color fear an encounter with police whenever they step out the door.

Stop-and-frisk has been the focus of increasing opposition and protest by New Yorkers, including a dramatic silent march of tens of thousands in Manhattan last June. This energy has kept the issue in the media, especially in New York, and put pressure on politicians and the courts to allow the class-action lawsuit to move forward.

Now, with a hoped-for favorable ruling in the case, the movement may be poised to achieve a landmark victory against the largest and most prominent program of racial profiling in the U.S. today.

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THE NYPD's stop-and-frisk policy allows officers to stop and search people anyone they suspect may be committing a felony, a misdemeanor or in possession of a weapon.

Touted by New York City Mayor Michael Bloomberg as "a strategy that we know saves lives," supporters of stop-and-frisk claim the goal is to confiscate guns and reduce crime. However, according to the New York Civil Liberties Union (NYCLU), no research has ever proven stop-and-frisk to be effective in decreasing the city's crime rate. Nearly 90 percent of those stopped since 2002 were innocent of any crime whatsoever, and guns were uncovered in less than 0.2 percent of cases.

The racial bias of the program is impossible to deny. In 2012, of the 533,042 New Yorkers stopped by police officers, 87 percent of them were Black and Latino. During the year prior, according to the NYCLU's analysis, more young Black men were stopped by the NYPD than their numbers in the population of New York City--meaning young Black men was stopped more than once, on average.

Even in neighborhoods that are predominantly white, youth of color bear the brunt of this racist policy. In 2011, Black and Latino New Yorkers made up 79 percent of stops in Park Slope in Brooklyn, though they were less than one-quarter of the neighborhood's population.

In filing the Floyd lawsuit, the Center for Constitutional Rights (CCR) is challenging the legality of stop-and-frisk under the constitution. As the CCR said in a press statement, "The case charges the police department with a policy and practice of unreasonable, suspicionless and racially discriminatory stops in violation of the Fourth Amendment's prohibition against unreasonable searches and seizures and the Fourteenth Amendment's Equal Protection Clause barring racial discrimination."

There are four chief plaintiffs in the case--David Floyd, David Ourlicht, Lalit Clarkson and Deon Dennis--representing the grievances of hundreds of thousands of New Yorkers, mostly African American and Latino, who have been subjected to millions of stops.

The vast majority of those stopped are harassed and intimidated simply for walking down the street while being a person of color. In an interview with ColorLines.com, David Floyd said:

The whole experience is humiliating and embarrassing. It doesn't matter how tough you are, it's a scary thing when you don't know what's going to happen with your life or your freedom...This type of activity is unacceptable, and I don't like walking around, feeling like I'm being treated like a nigger. And I say that because that's what it feels like when people stop you and threaten to take your freedoms away.

The itself has galvanized activists, cultural groups, and community and religious organizations, which have come together to demand police accountability and an end to racial profiling. As Aidge Patterson, coalition coordinator for the police watchdog and community empowerment coalition Peoples' Justice, said:

The Floyd case is of utmost importance to the police brutality movement right now, as stop-and-frisk acts as the main feeder for the mass incarceration of NYC communities of color, while NYPD practices are being spread across the U.S. and internationally. While ending stop-and-frisk will not end police violence or harassment against our communities, it is a powerful step we can take toward taking power out of the hands of the NYPD and back in to the hands of the people.

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ONE CRUEL aspect of institutionalized racism in the U.S. is that it is generally not enough to prove in court that a criminal justice policy has a disproportionate impact on racial minorities. Proving illegal discrimination in a U.S. court requires evidence of intent. This can be difficult to present, since racial bias isn't always overt, and code words are often used--many in the NYPD talk about stopping "the right people," for example.

However, the testimony in the Floyd case has cleared that hurdle by a long ways--revealing the overt racism of the stop-and-frisk program.

Most notoriously, according to New York state Sen. Eric Adams, a 22-year veteran of the NYPD, Commissioner Ray Kelly "stated that he targeted and focused on [Black and Latino men] because he wanted to instill fear in them that every time that they left their homes they could be targeted by police."

Testimony from two NYPD whistleblowers shows that supervisors below Kelly got the message loud and clear.

Pedro Serrano, an NYPD officer in the Bronx, testified that the pressure he faced to make a certain numbers of stops led him to secretly record his performance reviews with his supervisor, Christopher McCormack.

On the tape, which was played in court, McCormack criticizes Serrano for not stopping enough people. McCormack then goes on to insist that Serrano has a duty to prevent crime by stopping "the right people at the right time [and] the right location." When pressed by Serrano on what that meant, McCormack replied, "I have no problem telling you this. Male blacks 14 to 20, 21."

Adhyl Polanco, another Bronx officer, presented tapes that also confirmed the existence of quotas, as well as the racial bias encouraged in officers. According to Polanco, if officers see a group of Black or Latino kids on a street corner, they re to "handcuff the kids" even if they aren't committing a crime.

Tapes provided by NYPD officer Adrian Schoolcraft further revealed the contempt many officers have for youth of color--who are referred to, for example, as the "fucking riff-raff on the corners." Another officer is heard to say, "They might live there, but we own the block."

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WHENEVER THE New York police have been confronted with accusations of racial profiling in the past, they have claimed that stop-and-frisk prevents violence. "Commissioner Kelly said he wants gunmen to be deterred from carrying weapons on them in the streets, particularly in those communities most victimized by gun violence," said NYPD spokesperson Paul Browne in October 2011.

But far too often, it's the police who are the gunmen, shooting down young people of color in their own communities and even their homes.

Just nine days before the Floyd trial began, officers killed 16-year-old Kimani Gray in Brooklyn, sparking furious outrage and nightly protests. Police claim that Gray was armed and pointed a gun at officers, but eyewitness accounts contradict this claim. Officers from the very same precinct shot unarmed 23-year-old Shantel Davis and left her to bleed to death on Brooklyn streets late last spring.

These latest killings have given fresh urgency to the movement to confront the NYPD's serial violence. Key to that struggle has been the participation of family and friends of the cops' victims in recent years--such as Ramarley Graham, gunned down in his own bathroom while his 6-year-old brother and grandmother were nearby; 22-year-old Noel Polanco, a National Guardsman shot during a traffic stop; and Reynaldo Cuevas, a 20-year-old bodega worker shot by police as he fled armed men robbing the store where he worked.

While the potential always exists for a stop-and-frisk to turn deadly, more often, they result in arrests for possession of small amounts of marijuana--supposedly decriminalized in New York. According to a report by the Drug Policy Alliance, since 2002, the NYPD has spent 1 million hours making some 440,000 arrests for marijuana possession, at a cost of hundreds of millions of dollars.

Because of racial profiling, Blacks and Latinos are much more likely to face charges for marijuana possession. As Harry Levine of Queens College wrote in the Brooklyn Rail:

The arrests unjustly target young African Americans and Latinos and their neighborhoods. United States government surveys consistently find that young whites use marijuana at higher rates than young Blacks and Latinos. But for many years, New York City has arrested African Americans at seven times the rate of whites, and Latinos at nearly four times the rate of whites...For the last 15 years, 87 percent of the people arrested for marijuana possession have been blacks and Latinos, who use marijuana at lower rates than young whites.

The city's warped priorities are such that Mayor Bloomberg would rather close schools and devote resources to harassing and arresting youth than provide the jobs and services proven to actually reduce crime.

As of 2012, fewer than one-half of African Americans in New York City of working age had employment of any kind. Instead of spending hundreds of millions of dollars criminalizing Black and Latino youth, a jobs program would do much to improve the lives of youth of color while actually reducing crime in low-income communities.

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ACTIVISTS HAVE played a central role in exposing the racist nature of stop-and-frisk, creating the political space for the Floyd trial to move forward. In recent years, they have engaged in civil disobedience and held mass marches to protest racial profiling in particular--in addition to organizing around cases of police brutality and murder.

Black and Latino youth are leading the way in challenging the policy that targets them, in particular by documenting and speaking out about how stop-and-frisk impacts them.

For example, last fall, a Harlem teenage name Alvin recorded and distributed a tape of NYPD brutality against him. Tyquan Brehon of Brooklyn--who estimates he was stopped and frisked 60 times by the time he turned 18, was featured in a New York Times short film called "The Scars of Stop and Frisk."

The trial itself is drawing activists and New Yorkers fed up with stop-and-frisk--day after day, they pack the courtroom to listen to the testimony.

On March 28, LGBTQ groups, including the Aurdre Lorde Project and FIERCE, showed up to raise awareness of the way sexual minorities, particularly LGBTQ youth of color, are targeted by the NYPD. The day before, Muslims United Against Stop-and-Frisk attended, organized by the Muslim American Civil Liberties Union.

The week before, Jews for Racial and Economic Justice and the Arab American Association of New York were at the courthouse, joining forces for a march and street seder, while VOCAL-NY and New York Communities for Change mobilized their forces as well.

According to Five Mualimm-AK, an activist with the Campaign to End the New Jim Crow:

This landmark trial in New York is a beacon that shines a light on the sad fact that New York needs help policing its police. Every day since its start, droves of citizens, tired of being abused, have poured into the court as witnesses, supporters, and advocates for their communities, and to say New York has had enough. Even NYPD officers themselves have testified that they are pressured by this COMPSTAT performance quota system into making false arrests.

David Floyd, the lead plaintiff in the case, is a member of the Malcolm X Grassroots Movement (MXGM), which released a study last year showing that a Black person was killed somewhere in the U.S. by police, security guards or vigilantes once every 36 hours in the first half of 2012. According to Linda of MXGM, who spoke at the trial on April 2, things have gotten even worse--since then, "every 28 hours, someone who looks just like us is shot and killed," she said.

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THE TRIAL and the publicity surrounding it have put increasing pressure on politicians to take a stand.

For example, Democratic City Council Speaker and candidate for mayor Christine Quinn broke her silence on the Community Safety Act, a collection of bills that would target discriminatory street stops and create an independent Inspector General to oversee the NYPD. Quinn vowed to pass a bill creating an Inspector General, and to override Bloomberg's threatened veto.

The Floyd case also comes on the heels of another legal victory in January, when federal judge Shira Scheindlin, who will also rule on Floyd, declared that the NYPD's "Clean Halls" program in the Bronx--a "stop-and-frisk" program focused on apartment buildings--was unconstitutional.

But two weeks later, Scheindlin issued a stay on her ruling after New York City lawyers argued that immediately halting the unconstitutional stops outside Bronx apartment buildings would place an "undue burden" on the NYPD--one that apparently outweighs the burden on Bronx residents subject to illegal searches.

The city is determined to continue its policies of racial profiling--so even if there is a favorable decision in the Floyd case, continued pressure from below will be needed to ensure that court decisions are enforced and that the NYPD doesn't simply replace stop-and-frisk with another racist policy.

A victory in Floyd v. City of New York would be a big step forward, but no matter what outcome is, the struggle against police racism, abuse and violence will continue.

Natalia Tylim and Lee Wengraf contributed to this article.

The sickening cost of health care

Published in Socialist Worker.

HEALTH CARE costs in the United States continue to skyrocket, with dire consequences ranging from personal bankruptcies to the growing national debt. Yet the even more outrageous fact is that these inflated costs--the highest in the world--produce health outcomes that trail countries which spend far less.

In a Time magazine special report titled "Bitter Pill: Why Medical Bills Are Killing Us," published in February, investigative journalist Steven Brill pulls back the curtain to expose the price-gouging and profiteering that explains why health care in the U.S. costs so much.

Brill's article details the devastating impact that health care costs--which are behind six in 10 personal bankruptcies--have on working-class people. As Time managing editor Richard Stengel pointed out, Brill "inverts the standard question of who should pay for health care and asks instead: Why are we paying so much?"

Barack Obama used the urgency of this crisis to press Congress to pass his health care law. But the Patient Protection and Affordable Care Act does little to address rising health care costs.

On the contrary, it will almost certainly make things worse by requiring the uninsured to get coverage from for-profit companies and providing subsidies from taxpayer revenues to pay the premiums. Rather than challenging industry giants, Brill writes, "Obamacare enriches them. That, of course, is why the bill was able to get through Congress."

Meanwhile, outsized health care costs--which continue to rise faster than inflation--are a central reason for big government deficits, which the very same politicians then use as a pretext to push for cuts in "entitlement" programs like Social Security and Medicare, by reducing payments for the former and raising the eligibility age for the latter.

However, as Brill points out, Medicare, the government's universal health care system for the elderly, is one of the few bright spots in the current system. Whatever its flaws, caused by cuts and restrictions over the past few decades, it is still far more efficient than private insurance, it offers universal coverage while even Obama's health care law will leave tens of millions of people uninsured--and it has mechanisms to keep costs down.

If Medicare, instead of being cut, was expanded to cover everyone and to provide even better care than it does now, it would save about $380 billion per year by cutting down on administrative waste, according to a study published in the New England Journal of Medicine--and on top of that, it would actually improve health care.

Over 10 years, that's just about the same amount--$4 trillion--that Barack Obama's deficit reduction commission proposes to save, with massive cuts to entitlement programs that dwarf proposed increases in taxes.

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IT'S TRUE that government spending on Medicare has been rising much faster than inflation and is a major cause of government deficits. Medicare spending, after adjusting for inflation, increased fivefold from $110.2 billion in 1990 to $554.3 billion in 2011, according to the Centers for Medicare & Medicaid Services (CMS). And that was after it nearly tripled in 10 years from $37.4 billion in 1980.

In fact, according to Congressional Budget Office figures, protected increases in health care costs are behind most of the expected growth in government debt.

While a significant part of this increase is the result of a growing and aging population, much of the increase in Medicare spending is being driven by increased health care costs overall. The CMS reports that total per capita health care spending in the U.S., adjusted for inflation, more than tripled from $2,854 in 1990 to $8,680 in 2011. Health care accounts for nearly one-fifth of the GDP in the U.S..

Other advanced industrial countries such as Germany have a significantly higher percentage of their populations over age 65. Yet they spend much less on health care than the U.S.--and achieve better outcomes.

In "Bitter Pill," Brill examines hospital bills to expose how extreme price inflation generates massive hospital industry profits, while driving health care costs sky-high--a price that is ultimately paid by consumers.

According to Brill, hospitals charge patients different amounts for the same equipment and procedures, depending on what kind of insurance they have. While Medicare and Medicaid pay a set amount for each item, various insurers negotiate the rates they pay. Many insurers negotiate a discount off the "chargemaster"--a hospital's list of charges for everything from aspirin and gauze to major procedures and cancer drugs that cost tens of thousands of dollars each.

Because hospitals use the chargemaster as a starting point in negotiations, these prices are much higher than the items actually cost. To cite one example, Brill points out a hospital that charges $24 for a niacin pill which costs about 5 cents in an ordinary pharmacy: a markup of 47,900 percent.

Hospitals also gouge patients by charging multiple times for the same procedure. In the article, Brill quotes Patricia Palmer, who is paid to negotiate with hospitals on behalf of patients to lower exorbitant bills:

First, they charge more than $2,000 a day for the ICU, because it's an ICU and it has all this special equipment and personnel. Then they charge $1,000 for some kit used in the ICU to give someone a transfusion or oxygen...And then they charge $50 or $100 for each tool or bandage or whatever that there is in the kit. That's triple billing.

For the un- or underinsured, tragic illnesses can be a financial catastrophe. The terminally ill can even be forced into an impossible choice: whether to extend their lives and leave their families with a crippling debt, or give up time with their families to avoid burdening them financially.

This was the choice faced by Steven D., who Brill profiles in his article. After being diagnosed with terminal cancer, Steven's wife Alice, who earns about $40,000 a year, racked up over $900,000 in debt to pay for treatment to keep her husband alive for an extra 11 months. Although Alice was able to get Medi-Cal (Medicaid) coverage and hired an advocate to negotiate with the hospital, she still ended up owing $142,000, more than three times her yearly salary. Not only did she have to cope with losing her husband, but she was left financially crippled as well.

When pressed by Brill, hospital administrators weren't able to give a plausible explanation for the chargemaster rates, except to say that they are only a starting point and patients aren't actually expected to pay them. The grim irony is that it is the uninsured patients--those among the least likely to be able to afford it--who are charged full chargemaster prices. And many don't know negotiation is an option.

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WHILE THE majority of hospitals are technically "non-profit," they generate immense amounts of revenue, with some of the biggest bringing in billions of dollars each year. While they don't pay dividends to shareholders, executives are rewarded with lavish salaries, and hospitals frequently invest earnings, which can run into the hundreds of millions, in new capital projects.

Many "non-profit" hospital CEOs make more than $1 million a year. For example, Dean Harrison of Northwestern Memorial Hospital in Chicago raked in $9.72 million in 2010.

Of course, the majority of hospital employees make much less. In addition to overcharging patients, hospitals make a killing by paying staff much less than the revenue they generate through their work.

Brill cites a case where the Memorial Sloan-Kettering Cancer Center in New York City charged a patient about $800 per hour for the services of a nurse. The nurse, of course, didn't receive nearly that much. Assuming a 40-hour workweek, $800 an hour works out to around $1.7 million per year, more than 20 times the actual average salary for a registered nurse in the New York metropolitan area.

And if you ever wondered why Washington politicians--Democrats as well as Republicans--are so eager to serve the health care bosses, consider all the legalized bribery, otherwise known as lobbying and campaign contributions.

According to the Center for Responsive Politics, the hospital industry spent over $481 million spent on lobbying in 2012, trailing only FIRE (finance, insurance and real estate) among the various economic sectors. This helps explain why during the debate over health reform, proposals like a single-payer health care system were never even on the table, and every option considered protected industry profits.

The health care industry's case for forcing the rest of us to pay these inflated costs might be more reasonable if they resulted in better care. But while the U.S. spends far more per capita on health care than any other nation, health outcomes in many areas are poor compared to other industrialized countries. Life expectancy in the U.S. is actually over one year less than the OECD average, despite the fact that Americans spend double the average on health care.

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RATHER THAN Medicare and Medicaid being a model to construct a rational system for providing health care, the health care industry increasingly encroaches on the government programs. And now there's worse to come as Democrats and Republicans alike propose further cuts in entitlements in the name of deficit reduction.

The latest attack has come in the form of the "the sequester"--across-the-board cuts in discretionary spending that will total $85 billion this year and $1.1 trillion over the next decade. The sequester is another manufactured crisis which provides the justification for more and more harsh austerity measures that disproportionately hit workers and the poor. Medicare is one of the big victims of the sequester, with a 2 percent cut in payments to physicians that, along with other reductions, will total nearly $10 billion this year.

In addition, the debate over what to do about the sequester is providing a cover for proposals for even deeper cuts. For example, according to Reuters, "conservative Republican Senator Lindsey Graham of South Carolina said he was open to raising $600 billion in new tax revenue if Democrats accepted significant changes"--translation: cuts--"to Medicare and Medicaid as part of a long-term budget deal." A few days later, Obama said once again that he's open to exactly this kind of deal that cuts hundreds of billions in Medicare, Medicaid and Social Security, in exchange for some increased tax revenue.

Obama's offer is nothing new. In 2010, Alan Simpson and Erskine Bowles, appointed by Obama to chair the National Commission on Fiscal Responsibility and Reform, released a report recommending making poor people pay more for Medicaid and introducing caps that would force "force Congress and the President to increase premiums or co-pays or raise the Medicare eligibility age," as Talking Points Memo described the report.

Obama offered cuts to Medicare again in the debt ceiling debate in the summer of 2011, as well as during the fiscal cliff negotiations at the end of last year.

While Republicans seek to privatize Medicare--the former Republican vice presidential candidate wants to replace the program with vouchers to purchase private insurance, which would fall far short of the cost of caring for seniors--Obama and the Democrats are in favor of whittling away at the program. Hence, the debate in Washington centers around how much to cut, not whether to cut.

Left out of the debate entirely are the opinions of the majority of people in the U.S. In a Kaiser Family Foundation/Robert Wood Johnson Foundation/Harvard School of Public Health poll from January, 58 percent opposed any cuts to Medicare, while only 10 percent supported major cuts. Medicare is overwhelmingly popular: 60 percent of people said it is "working well," including 80 percent of those aged 65 and up, the age of eligibility for Medicare.

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BRILL'S CONCLUSIONS correlate with public opinion concerning Medicare--the program is much more efficient than private health care, keeps costs down by tying reimbursements to actual costs and is universally available to everyone aged 65 and over.

Contrary to the ideas that the private sector is more efficient than government, Medicare administrative costs are much smaller than those of private insurers. Brill compares Medicare, which spends less than 1 percent of total claims on administration and management, to major private insurer Aetna, which spends 29 percent. Medicare pays out more than 20 times the amount in claims that Aetna does, while spending less than half overall on things besides health care.

And Medicare would be even more effective at controlling costs if it weren't prevented by law from negotiating with drug companies to get better prices.

Because Medicare is so much cheaper than private insurance, the claims that raising the Medicare eligibility age to 67 will reduce the deficit ring hollow. In fact, this measure would most likely increase government spending on health care overall.

As Brill points out, many of the 65- and 66-year-olds who would no longer receive Medicare would instead have to purchase private policies when the health-care exchanges in the Affordable Care Act kick in next year--and these purchases would in turn be subsidized by the government. According to Brill, "[T]he cost of that private insurance--and therefore those subsidies--will be much higher than if the same people were enrolled in Medicare at an earlier age."

While Brill doesn't think it's politically realistic, he does admit that the same logic against raising the Medicare eligibility age would apply to extending Medicare to all under a "single-payer" system where everyone has insurance. Not only would this be much cheaper than the Affordable Care Act's subsidizing of private health insurance, but it would be truly universal health care--some 30 million are expected to remain uninsured after the Obama health care law fully kicks in.

According to the Center for Economic and Policy Research, if the U.S. spent as much on health care as Britain--whose public universal health care system, according to the Commonwealth Fund, outperforms the U.S. while spending less than half as much per capita--we would save $3.7 trillion over the next 10 years.

If Democrats and Republicans were serious about reducing the government deficit, they would take on health care costs--price gouging by hospitals, the outrageous profits of the industry, and the vast administrative waste of the medical-pharmaceutical-insurance complex. This would also produce a system that's much more effective at meeting the needs of people in it.

Instead, the government debt crisis is used as a pretext for policies that put profits before people.

No justice, no pizza!

Published at Socialist Worker.

DOMINO'S WORKERS staged a rally on February 27 outside a Domino's franchise in Manhattan to announce an important victory in their struggle for basic rights and fairness--one that could have far-reaching implications for all fast-food workers.

Chanting "no justice, no pizza," about 50 Domino's pizza workers, other delivery and food service workers as well as supporters picketed and rallied for workers' rights and fair treatment in front of a Domino's at Third Avenue and 32nd Street.

The rally was organized by the "Justice Will Be Served" campaign sponsored by the Chinese Staff and Workers Association, National Mobilization Against Sweatshops, and 318 Restaurant Workers Union. It is part of a struggle for justice going back over two years.

According to a press release, for the first time, workers at a franchise are able to sue the parent corporation--in this case, Domino's Pizza Corp.--for alleged violations committed by franchisee Dave Melton.

The lawsuit was originally filed in 2010 by six workers alleging Melton violated state and federal labor laws. More workers joined the next year, bringing the total to over 70 plaintiffs. Workers' grievances include allegations of paying workers less than minimum wage, requiring unpaid overtime, denying workers time for breaks and lunch, unsafe working conditions (including being forced to make deliveries on bicycle in severe rain and snow), as well as retaliation against workers for standing up against these offenses.

Former Domino's worker and plaintiff Carlos Rodriguez told the crowd that Melton and Domino's "make millions of dollars by forcing the workers to work under all kinds of horrible conditions whether there are storms [or] hurricanes."

Victor, another former Melton employee, spoke at the rally, saying, "We want to end this exploitation, and we call on the corporation to also take responsibility for the abuses we suffered as workers there. Many of us worked many hours doing deliveries and we were cheated out of 20 to 25 hours per week of our pay. We call on everyone to join us to end this exploitation."

Vincent Cao, a former worker at Saigon Grill who is part of another Justice Will Be Served campaign against similar conditions at his former employer, spoke as well. "I was fired because I spoke against unfair labor practices," Cao said. "We're here today to support the Domino's Pizza workers. We say enough sweatshop conditions! All the sweatshop owners, they use asset transfers, closing down, fake bankruptcy, to try to run away and avoid lawsuit. So we will fight to get justice."

In fact, Melton himself just recently filed for bankruptcy, claiming poverty due to legal fees related to the lawsuit. Workers called on Domino's and the franchise owner to "take responsibility, pay workers what they are owed, rehire those workers fired for speaking out and end their sweatshop conditions."

After a round of speakers, Carlos Rodriguez and others went into the Domino's location to hand a copy of the judge's decision to a manager. The manager refused to meet with Carlos and other workers, but when the latter refused to leave, he sent an employee to collect it.

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THE ABILITY to include the Domino's corporation as a defendant in the lawsuit against Melton is an important victory, as major corporate chains like Domino's have in the past evaded accountability for violations of labor law committed by franchisees--who own their own restaurants, but pay a fee to the parent corporation to use the brand.

Domino's, which demands significant franchise fees and nearly 10 percent of sales after taxes, makes tens of millions from its franchises, and has seen a spike in profits in recent years. As Victor said, "The corporation, Domino's, knows what is going on in these stores, and tolerates this exploitation."

According to Forbes, Domino's corporate CEO J. Patrick Doyle took home over $6 million in total compensation in 2011. Yet the franchise system, where stores are owned by private "partners," enables chains like Domino's to plead innocence when it comes to dirty deeds done by franchisees. These workers are not only taking on a major corporation, but they are standing up to Dave Melton, a prominent Domino's franchisee.

Ironically Melton, who owns several Domino's restaurants in New York City and Connecticut, was celebrated in a 2008 New York Times story for how well he supposedly treats his employees and all of the opportunities available for them at his restaurants.

Melton even co-authored a book with a top Domino's executive entitled "Hiring the American Dream." On the promotional website, Melton claims that "my minimum-wage workers find their work fun and rewarding."

Melton said to the Times about his restaurants: "This is one of the places where so many people get their first experience in America," he said. "It is fun exposing them to the way capitalism and business in America works."

According to former Melton employees at the rally, this means subjecting them to an experience all too common for immigrant workers in the U.S.: ruthless exploitation made possible through intimidation.

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THE JUSTICE Will Be Served campaign has called for a citywide rally on April 2 at the same Dave Melton's Domino's Pizza location at 464 Third Avenue and 32nd Street to keep the pressure on Melton and Domino's. The rally will demand that Domino's take responsibility, pay workers back for stolen wages, and rehire those fired for taking a stand. They are calling on workers from across the city to join the demand for justice.

Carlos Rodriguez said, "We're calling out to all Domino's workers from different franchises to join us so we can unite against this exploitation and...we are reaching out to all other workers including those of McDonalds and Dunkin' Donuts and Wendy's to come together so we can end this exploitation."

"We're facing the same issue, and we should unite, no matter Latino, Chinese workers--we should come together," stated Vincent Cao of the Boycott Saigon Grill effort. "They use many different ways to divide the workers, documented/undocumented, Chinese versus Latino. They want workers to support the boss, not join a union."

Cao spoke about the importance of continuing with actions against Domino's and other sweatshop employers: "Picket lines are important. You have a base, an opportunity for other workers to join you, not just Domino's and Saigon Grill. Workers see there are so many workers there, and if they join there is a bigger chance to win."

The kings of corporate welfare

Published in Socialist Worker and the Indypendent.

WHO'S LIVING high on the hog off handouts and giveaways from the government?

If you're Republican Rep. Paul Ryan, the answer's obvious--it's the "takers" at the bottom of the income ladder who are raking it in from government programs. "[A]bout 60 percent of the American people get more benefits in dollar value from the federal government than they pay back in taxes," Ryan declared in 2010. "So we're going to a majority of takers versus makers in America."

If you're Barack Obama, you criticized Ryan and GOP presidential candidate Mitt Romney during the 2012 campaign for their upside-down view of who had it good in American society. But like all top Democrats, Obama shares the view that working people and the poor are also to blame for government deficits--and therefore everyone needs to sacrifice.

When he signed the fiscal cliff agreement at the start of the year that raised taxes somewhat on the richest of the rich, but hit ordinary working people just as hard with a hike in the payroll tax, Obama made his views clear: "The deficit needs to be reduced in a way that's balanced. Everyone pays their fair share. Everyone does their part."

But you, the reader, are almost certainly neither Paul Ryan nor Barack Obama. And if you're reading SocialistWorker.org, you probably know or suspect that both of them got it wrong.

Neither Republicans nor Democrats talk about the real welfare cheats: Corporate America, which profits from a little-talked-about, but extremely lucrative array of subsidies, tax breaks and other government handouts.

Big business even managed to come out ahead in the fiscal cliff deal, when the Obama administration worked with Congress to preserve more than $200 billion in so-called "tax extenders" for businesses of all kinds. And that's on top of a system in which some of the biggest corporations in the U.S.--the real takers--pay no taxes while making record profits, thanks to ruthlessly exploiting their workers, while raking in big money in subsidies.

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THE FEDERAL government's huge subsidies to Corporate America are so commonplace that the media establishment barely notices. But the amount of money is immense, and what's more, it ends up in the pockets of the richest corporations, including those with a demonstrably negative impact on the majority of people in society.

Perhaps the most outrageous of the government subsidies is the vast amount of public money--tens of billions of dollars from the federal government alone--handed to the oil and gas industry.

This is one of the profitable industries in the world. The oil and gas industry is one of the most profitable in the world: The top five oil companies posted record profits of $137 billion in 2011, and they were raking in $341 million per day in the first half of 2012. ExxonMobil and Chevron hold the number one and two spots on the Forbesmagazine list of the 20 most profitable companies in the world.

Not only are these companies awash in cash, but the use of their product is the leading cause of the greenhouse gas emissions driving catastrophic climate change. The fossil fuel extraction process in North America alone--from deepwater drilling in the Gulf of Mexico to the development of tar sands in Canada, with fracking everywhere in between--threatens ecosystems with dangers ranging from the BP oil spill to everyday pollution.

The costs associated with climate change aren't borne by the oil and gas industry, but by ordinary people. Hurricane Sandy and severe droughts across the Midwest--disasters made more likely and frequent by climate change--caused as much as $100 billion in damages in 2012. And those are just the major disasters.

Beyond the government subsidies, the infrastructure of the U.S. is designed to force people to rely on fossil fuel-burning automobiles for transportation, guaranteeing the industry a massive market for their product. Yet instead of using tax revenue to build reliable, affordable green public transportation systems, these systems are starved of resources by budget cuts, forcing fares to increase and service to be cut--while billions of dollars continue to flow into the pockets of the oil and gas giants.

Another major recipient of subsidies puts our health and safety at even greater risk: nuclear power. This industry literally wouldn't exist if not for government largesse.

For one thing, the cost of the devastation caused by accidents at nuclear power plants is so great that purchasing private insurance would be prohibitively expensive. Instead, the nuclear industry is only responsible for the first $12.6 billion in damages in the case of a disaster. Taxpayers are on the hook for the rest--and the costs of a nuclear meltdown at a U.S. plant have been estimated at $720 billion in today's dollars. Of course, much of the damage to life, health and the environment from such a disaster would be irreversible.

As the Union of Concerned Scientists pointed out in 2011, subsidies protect dangerous and expensive nuclear power at the expense of safer, more environmentally friendly alternatives:

Nuclear subsidies effectively separate risk from reward, shifting the burden of possible losses onto the public and encouraging speculative investment. By masking the true cost of nuclear power, subsidies also allow the industry to exaggerate its economic competitiveness; consequently, they diminish or delay support for more economical and less risky alternatives like energy efficiency and renewable energy.

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THE DARK secrets about federal government subsidies extend beyond the energy sector.

Another major recipient is agribusiness. Each year, billions of taxpayer dollars are appropriated to help "farmers"--and they mostly end up in the bank accounts of giant corporations like Archer Daniels Midland and Cargill. According to a recent study by U.S. PIRG, "Since 1995, taxpayers have spent over $277 billion on agricultural subsidies. Reflecting the political clout of the biggest producers, the lion's share of agricultural subsidies go to a very small number of large operations--75 percent of subsidies go to just 3.8 percent of U.S. farmers."

Rather than subsidizing healthy foods, a much larger share of federal handouts go to commodities that are used to produce junk food. U.S. PIRG found that "only one of the top 20 federal [agricultural] subsidy programs directly supports a fresh fruit or vegetable: apples."

Subsidies to U.S. agribusiness have a devastating impact on farmers in other countries, who can't compete with American products that are so heavily subsidized. For example,millions of Mexican farmers were pushed off their land when NAFTA removed tariffs protecting them from competition from subsidized U.S. corn and other agricultural goods. Thanks in large part to U.S. government subsidies, Mexico--the first place in history where corn was cultivated--is now a net importer of corn.

But the subsidies for agribusiness seem almost humane when contrasted to the vast sums of government money given away to the arms industry.

In 2010, world military spending was $1.63 trillion, according to the Stockholm International Peace Research Institute, with the U.S. accounting for over 40 percent of the world's total. And a lot of this spending came in the form of government money given to private companies that produce weapons, airplanes, drones, trucks, personnel (mercenaries) and military equipment and related services.

Of the top 10 recipients of federal government contracts in 2011, all were corporations in the "defense" industry. The top 10 alone received nearly $150 billion in 2011. Lockheed Martin, the top recipient of federal contracts, received over $42 billion in 2011, which accounted for more than three-fourths of its revenue.

And while politicians today, especially Democrats, talk about gun control, governments are subsidizing corporations that produce the same type of weapons being used in the mass shootings that led to demands for gun control. For example, New York state has subsidized Remington Arms to the tune of $5.5 million since 2007, supporting the production of semiautomatic rifles that are illegal in the state.

The harm of corporate subsidies is clear even in an industry that is clearly about mass entertainment: professional sports. Despite receiving millions in tax breaks and subsidies to build stadiums, ticket prices charged by pro sports teams continue to be beyond the means of most people. And while the stadiums are publicly funded, the profits end up in the owners' pockets. According to Nation sportswriter Dave Zirin:

In sports, corporate welfare is embodied in the public funding of stadiums. This is like a neoliberal Trojan Horse: wrapping organized theft of the public till in the packaging of sports. These days, the only way many working class and poor fans can attend games is if they're working in the stadiums.

Notice that the cities with the most publicly funded, gleaming stadiums--Pittsburgh, Cleveland, Detroit--are also places that have de-industrialized. Stadiums act as ways to change the very nature of work in the so-called Rust Belt from union jobs with benefits to service, "seasonal" work at poverty wages. It's sickening because it exploits what has historically been identified with community cohesion--sports--and turned it into a blunt instrument of community destruction.

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FEDERAL GOVERNMENT subsidies are just one part of the picture. State and local governments also lavish tens of billions of dollars on corporations in an effort to attract investment.

The odds in this game favor big business. Companies can demand subsidies from states and localities in the form of tax breaks and other incentives in exchange for their promises--often hollow--to create or retain jobs in the area. A recent study by the New York Times calculated state and local corporate subsidies worth over $80 billion each year--although according to the Times, "the cost of the awards is certainly far higher." Reporters identified over 150,000 separate subsidies, but were unable to track them all.

Businesses routinely use the threat of moving to another city, state or even out of the country in order to extort more tax breaks and subsidies. According to the Times:

Over the years, corporations have increasingly exploited that fear [of corporations moving jobs overseas], creating a high-stakes bazaar where they pit local officials against one another to get the most lucrative packages. States compete with other states, cities compete with surrounding suburbs, and even small towns have entered the race with the goal of defeating their neighbors.

There's no proof that meeting the corporations' demands for advantages is beneficial to states or local communities--but there is plenty of evidence suggesting otherwise.

The Times study, for example, found that Texas offers more incentives to businesses than any other state. While the state has seen significant increases in employment, for the most part, the jobs don't pay a living wage. Texas, the Times reported, "has the third-highest proportion of hourly jobs paying at or below minimum wage. And despite its low level of unemployment, Texas has the 11th-highest poverty rate among states."

Of course, extracting subsidies or tax breaks doesn't bind companies to remain in a given area. They are typically free to take the money and run if they get a better offer somewhere else--which, in turn, is used as leverage to get even more concessions.

By playing states and localities off against one another, Corporate America is encouraging a race to the bottom. Not only are workers' wages and benefits driven down, but public funds that could be spent on public-sector jobs and providing services like education, health care, parks and public transportation are instead handed to private corporations in the interest of creating low-paying jobs.

So whether or not a given city or state "wins" the zero-sum competition of attracting jobs, workers everywhere lose. Making a region "business friendly" means making it hostile to workers and especially the unions that represent them. When workers' living standards decline in one area, it puts a downward pressure on wages and benefits everywhere else.

But the opposite is also true. When workers organize to improve wages, benefits and working conditions, they have positive impact on other workers, workplaces and communities.

Instead of competing for jobs with other regions by handing more public money to private corporations, workers have an interest in building solidarity across borders, whether local, state or national.

Stealing from seniors so the rich can get richer

Published in Socialist Worker.

CALL IT Robin Hood in reverse: The super-rich comes out of the so-called "fiscal cliff" debate with most, if not all, its tax breaks from the Bush years intact--before Washington gets down to the project of cutting benefits for the elderly and most vulnerable by "reforming" Social Security, Medicare and Medicaid.

Translation: Take from the poor to give to the rich.

Much of the focus in the fiscal cliff deal that passed Congress focused on the income tax increase for the richest Americans--those making $400,000 or more ($450,000 for couples filing jointly). Less noticed was the giveaway to the rich, worth nearly $400 billion over 10 years, by reversing what would have been a significant increase in the estate tax.

Without action by Congress, the estate tax was set to increase substantially as of January 1, back to the levels of the Clinton years. The exemption--that is, the amount that can be passed to heirs at death, or as gifts during one's life, without paying the estate tax--would have fallen from $5.12 million per person ($10.24 million for couples) to $1 million ($2 million for couples). The tax rate on the portion of estates exceeding the exemption would have risen from 35 percent to 55 percent.

Instead, the exemption will stay where it is--and even grow with inflation. And the new tax rate amounts over the threshold will be just 40 percent. And unlike the Bush tax breaks, this massive cut in the estate tax from Clinton-era levels is permanent, with no expiration date.

Barack Obama was already willing to split the difference in the fiscal cliff negotiations. His starting-point proposal reduced the estate tax exemption to $3.5 million (double that for couples) and set the rate at 45 percent. So naturally, the "compromise" after negotiations with Republicans was even more generous to the rich.

The deal on the estate tax will cost $375 billion over the next 10 years, compared with letting it return to Clinton-era levels, according to the Atlantic. Tens of thousands of millionaires will be let off the hook each year: "Only 3,770 households will pay the estate tax next year if the exemption is set at $5 million, versus 47,170 if it's set at $1 million," the Atlantic reported.

Critics of the estate tax complain that it is a form of double taxation because it applies to assets that have already been taxed once as income. In fact, the biggest estates consist of large amounts of "unrealized" capital gains because the assets, such as stocks or investments, weren't sold before their holder died--so the estate tax is necessary to ensure this income is taxed at all.

From the perspective of reducing record levels of inequality, raising taxes on wealth, such as the estate tax, is arguably more effective than raising income taxes on the rich. This is because wealth inequality is even greater than income inequality. And wealth inequality is a driver of income inequality, since the rich use their wealth to invest and accumulate an even greater share of the value produced by workers.

While the top 1 percent collects just under one-fourth of all income in the U.S.--a huge gap to begin with--they hold more than a third of the wealth, amounting to over three times what the bottom 80 percent holds.

The amount of wealth in the hands of the super-rich is astounding. The richest 400 Americans alone were worth $1.7 trillion in 2012, an increase of 13 percent from the year before. And the wealth gap continues to grow: The top 1 percent has average wealth of over $16 million, 288 times that of the median household, more than double what it was half a century ago.

President Obama claimed the fiscal cliff deal as a victory--a compromise where everyone would pay their "fair share." Instead, the deal preserved important aspects of the Bush-era tax breaks for the super-rich, ensuring that inequality will go on.

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IT'S NOT surprising that Congress--half of whom are millionaires, and all of whom rely on donations from millionaires and billionaires to run their campaigns--would cut a deal that protects cuts in the estate tax.

But what's particularly galling is that it comes at the same time as Washington gears up to make historic cuts in Social Security and Medicare, using the excuse that there just isn't enough money to fund these programs that are essential to keeping millions of elderly people above the poverty line.

From Paul Ryan's Medicare voucher scheme to George W. Bush's failed attempt to privatize Social Security, Republicans have long sought to cut these so-called "entitlement" programs. Until recently, they've failed due to overwhelming public support for these programs, which led Democrats to challenge the cuts.

But this time around, Obama and the Democrats are responsible for putting cuts to Social Security and Medicare on the table.

"Entitlement reform" has been a goal for Obama since he took office. In 2010, he appointed Alan Simpson and Erskine Bowles to chair the National Commission on Fiscal Responsibility and Reform, whose mission was to come up with a program for reducing the deficit. When he offered cuts to Social Security and Medicare as part of a "grand bargain" during the 2011 debt ceiling debate, Obama used the Simpson-Bowles commission as a framework.

Alan Simpson is a right-wing former Republican senator from Wyoming who has made it his mission to "stabilize"--read: cut--Social Security, a program he has referred to as "a milk cow with 310 million tits" whose beneficiaries "milk it to the last degree."

Bowles, for his part, is a Democrat who thinks Paul Ryan is "amazing" and who supports Ryan's budget-slashing proposals.

The recommendation of the Simpson-Bowles commission won support from Obama and leading members of Congress of both parties, as well as business leaders like JPMorgan Chase CEO Jamie Dimon. They include raising the retirement age to collect full Social Security benefits to 68 and later to 69, and indexing cost-of-living adjustments to the "chained Consumer Price Index (CPI)." The commission also proposed harsh cuts to Medicare, Medicaid and other social safety net spending.

The chained CPI understates inflation by accounting for substitutions people tend to make when prices rise. While it sounds like a technical matter, the result is that Social Security benefits will increase more slowly, leading to an overall cut in benefits of about $300 billion over 10 years.

In reality, the erosion in the standard of living for elderly Social Security beneficiaries is already happening. Seniors spend more on health care and housing, which have increased in cost in recent decades much faster than overall inflation. A recent study found that participants spent an average of "$38,688 [on health care] in the last five years of life. Even more shocking was the fact that a quarter of participants made an average contribution of $101,791, and the same number spent more than their total household assets on healthcare."

The U.S. Bureau of Labor Statistics (BLS) has an experimental CPI-E index that more accurately measures the spending habits of those age 62 and over. According to the BLS, "From December 1982 through December 2011, the all-items CPI-E rose at an annual average rate of 3.1 percent, compared with increases of 2.9 percent for both the CPI-U and CPI-W."

As David Rosnick wrote at MRZine, this adds up: "Compared with current law, a retiree who received $878 per month in 2001 would, in 2012, see his/her annual benefit decrease by $462 (3.3 percent) under the chained CPI...The same retiree seeing $462 lower annual benefits under the chained CPI would see instead $230 higher benefits under the CPI-E."

In other words, just to maintain retirees' current--and far from extravagant--standard of living, Social Security benefits should be increased, not cut.

Outrageously, the savings from switching to the chained CPI would amount to about $220 billion over the next 10 years, some $150 billion less than the cost of the estate tax giveaways to multimillionaires in the fiscal cliff deal.

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WHILE THE mainstream media focus on stories of palace intrigue and the standoff between Democrats and Republicans in negotiations to resolve the latest manufactured crisis, the real impact of cuts to Social Security and Medicare is less visible.

As the 1 percent worries about how to avoid paying taxes on the fortunes they pass on to heirs, tens of millions of workers, nearly half of all retirees, will die broke.

For millions of people, especially the elderly, Social Security is all that stands between them and abject poverty. According to the Center on Budget and Policy Priorities, Social Security keeps some 21 million people, including 14 million elderly and 1 million children, out of official poverty. In 2012, average monthly Social Security benefits were just $1,230, enough to keep an individual out of official poverty--barely--but not enough to ensure seniors with expensive medical bills that they wouldn't go without.

And because of decades of cutbacks to pensions--and the steady decline of fixed-benefit retirement programs overall--more and more retirees rely mostly or entirely on Social Security benefits in old age. According to the Social Security Administration (SSA): "Social Security benefits represent about 39 percent of the income of the elderly...[A]mong elderly Social Security beneficiaries, 53 percent of married couples and 74 percent of unmarried persons receive 50 percent or more of their income from Social Security, [and] 23 percent of married couples and about 46 percent of unmarried persons rely on Social Security for 90 percent or more of their income."

Social Security also provides for over 10 million disabled workers and their dependents, and over 6 million survivors of workers who have passed away.

For tens of millions of people working today, Social Security will be their only source of income in retirement--"51 percent...has no private pension coverage [and] 34 percent...has no savings set aside specifically for retirement," according to the SSA.

This is especially true for Blacks and Latinos. As a result of institutionalized racism, Blacks and Latinos are much less likely to have pensions and assets that provide income in retirement. In 2010, the AARP reported that among the elderly, 22.2 percent of African Americans and 18.5 percent of Latinos relied on Social Security for 100 percent of their income, compared with just 12.4 percent of whites.

The cuts will also disproportionately affect women. Women live longer on average than men and make up over two-thirds of Social Security beneficiaries 85 years old and up--and since the cuts to benefits under the chained CPI grow over time, older beneficiaries will be hit hardest.

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PERHAPS THE most neglected point in all the talk about "entitlement reform" as a necessary part of reducing the deficit is that Social Security doesn't actually contribute to the deficit. The Social Security program is funded through payroll taxes, and the fund for paying benefits is expected to remain solvent for another quarter century.

At that point, Social Security would only be able to pay about three-quarters of benefits if no changes are made. But the shortfall could be covered by raising the payroll tax cap--currently, the highest-income Americans pay payroll taxes only up to $106,800.

The drive to cut Social Security is not about fixing fiscal problems. It's about cutting spending on the backs of elderly and disabled workers, with Blacks, Latinos and women taking the hardest hits. And it's part of a broader assault on workers' living standards to restore U.S. capitalism's competitive advantage.

Those at the top of U.S. society are quite willing to sacrifice what remains of dignity and security in retirement for elderly workers to achieve their aims. Social Security, itself the product of the mass social upheaval of the 1930s, can only be defended by mass struggle again today.

The vultures that prey on disaster

Published in Socialist Worker.

FREE-MARKET fundamentalists went to work on some of New York City's most vulnerable communities even before the last winds from Superstorm Sandy had died down.

Privatization and deregulation are the tools these vultures use to exploit disaster, but the irony is that Hurricane Sandy and its aftermath have shown the need for more government assistance and regulation of corporate excess, not less.

One week after Hurricane Sandy hit, Naomi Klein wrote a piece titled "Hurricane Sandy: Beware of America's disaster capitalists" to warn of attempts to apply the "shock doctrine"--the phrase she coined for how a crisis is used to further entrench corporate interests and neoliberal policy--in New York City in the wake of the storm.

Klein, author of The Shock Doctrine and a leading participant in 350.org's "Do The Math" tour to combat global warming, explained the goals of those seeking to exploit this crisis:

[T]he fact that this storm has demonstrated that poor and working-class people are far more vulnerable to the climate crisis shows that this is clearly the right moment to strip those people of what few labor protections they have left, as well as to privatize the meager public services available to them. Most of all, when faced with an extraordinarily costly crisis born of corporate greed, hand out tax holidays to corporations.

She catalogued a series of arguments from right-wingers--including those who "blamed New Yorkers' resistance to Big Box stores for the misery they were about to endure" or who warned that reconstruction would be slowed by the Davis-Bacon Act that "requires workers on public works projects to be paid not the minimum wage, but the [higher] prevailing wage in the region."

Klein also had words of caution about efforts to use the hurricane to push "public-private partnerships"--infrastructure-rebuilding projects that involve private companies that "could install tolls and keep the profits."

Some advocates of such neoliberal measures have been particularly bald-faced, according to Klein:

The prize for shameless disaster capitalism, however, surely goes to right-wing economist Russell S. Sobel, writing in a New York Times online forum. Sobel suggested that, in hard-hit areas, Federal Emergency Management Agency (FEMA) should create "free-trade zones--in which all normal regulations, licensing and taxes [are] suspended." This corporate free-for-all would, apparently, "better provide the goods and services victims need."

Even some "liberals" got in on the act. Writing in Slate, Matt Yglesias argued against laws banning price-gouging during disasters, asserting that such safeguards against profiteering cause shortages and overconsumption. He does not address what happens to poor people who cannot afford inflated prices.

At a time when more regulation is needed to stop climate change and the for-profit polluters responsible for it, these arguments are especially insidious. And less than a month after the hurricane hit, the failings of the private sector to provide relief for the victims of the storm are clear. A key lesson is that more--not less--government planning and intervention is needed.

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THE MARKET fails to meet human needs even in normal times. There are tens of millions of people in the U.S.--and billions more around the world--who cannot afford what they need and therefore must go without, even when there is enough to go around.

Without money, their demand is not "effective," as economists say. During crises, the market makes this worse, not better: gaps between rich and poor sharpen, and the consequences of these disparities become more grave, even deadly.

In times of crisis, as in the "normal" periods between them, the production of goods and services under capitalism is driven by the pursuit of profit, not human need. Decades of neoliberal reforms--privatization of the public sector, attacks on unions and workers' rights, the elimination of subsidies to the poor, deregulation--have only worsened inequality and insecurity across the globe.

The most obvious immediate failing of the private sector in the wake of Sandy was widespread power outages, which hit more than 8 million households and still darkened more than 100,000 homes in New York and New Jersey nearly two weeks after the storm. The scale and the duration of the outages were almost certainly made worse by energy corporations prioritizing profits over service.

As Chris Williams pointed out at Socialistworker.org, Con Edison, a for-profit corporation that provides electricity to New York City, did not "spend the $250 million in investment the company deemed necessary to install submersible switches and move high-voltage transformers above ground level, things that may have prevented the explosion that wiped out electricity in lower Manhattan--even though the company made $1 billion in profit last year."

Without the profit motive, making these investments would have been a no-brainer, but since they would have cut into Con Ed's bottom line, the company took the chance and delayed upgrades. In addition to poor infrastructure, power companies lacked sufficient staff to deal with the emergency and were forced to call in tens of thousands of workers from across the country--workers unfamiliar with the particulars of the local power grid.

The Long Island Power Authority (LIPA) faced the most severe criticism and even a lawsuit as residents went weeks without power, leading to the resignation of its chief operating officer and an executive order from New York Gov. Andrew Cuomo to investigate the authority.

While LIPA is under the authority of New York state, it is an example of a "public-private partnership"--LIPA contracts with National Grid to provide "the operation, maintenance and construction of LIPA's transmission and distribution facilities, customer service, financial services and back-office support services." National Grid is a for-profit corporation, with the profit motive creating an incentive to cut costs as much as possible.

On the other hand, the publicly owned Metropolitan Transit Authority received the most praise for getting New York City's subway system up and running quickly--despite years of mismanagement and chronic lack of sufficient funding. Buses were back online almost immediately, running free of charge. Limited subway service was restored two days after the storm hit, and most of the lines were running when power was restored the weekend following the storm.

Despite their efforts, many MTA employees were docked for missing work on the Monday and Tuesday of the storm, when the city's transportation system was shut down.

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THE AFTERMATH of the storm also brought price gouging--namely, companies charging vastly higher prices because of the sudden shift in the balance between supply and demand.

Price gouging on essential goods during a crisis is illegal in many states, including New York and New Jersey, but that didn't stop businesses from looking to make a quick buck. New York Attorney General Eric Schneiderman launched an investigation into price gouging after receiving hundreds of complaints, such as businesses jacking up prices for necessities such as food, water and gasoline.

If special "free trade zones" were set up in disaster areas, as Sobel suggested, price gouging would have been legal, and thus even more widespread, as desperate people would have no choice--due to the conspicuous absence of government aid and relief--but to pay sky-high prices for basic goods. Those without extra disposable cash would have been even less able to procure the goods and services they needed to survive.

During Hurricane Sandy, residents in areas without power had to rely on cash on hand because ATM machines and credit/debit cards didn't work in stores without power. And since many businesses were shuttered for a number of days, money was especially short for workers making hourly wages or dependent on tips from service-industry jobs.

When power went out, some households lost hundreds of dollars of perishable food. Tens of thousands of those without power in New York City were public-housing residents, nearly half of whom live below the poverty line.

According to the New York Daily News, food service workers, most of whom "are employed by catering companies in corporate dining rooms," were docked sick or vacation days during the time when their offices were closed.

At a time when needs were especially great and money exceptionally scarce, the removal of laws preventing price gouging would have made the crisis more acute for those with the least means. Even more poor and working-class people would have gone without, while businesses would have made even greater profits at their expense. The rich, as always, would have been able to afford everything they needed and then some.

Nor would allowing Wal-Mart to build in New York City have solved the problem. First of all, it's unclear how people trapped without public transportation or cars would have gotten to and from Wal-Mart in the first place. And while Wal-Mart brings lower prices, this comes at a cost.

As Wal-Mart workers standing up to the corporate giant have made clear, Wal-Mart does not pay a decent wage and is willing to do whatever it takes to bust unionization efforts. Wal-Mart is leading the race to the bottom, and its expansion into New York City--which has union density double that of the nation as a whole--would serve to further undermine living standards and thus workers' ability to ride out crises like Hurricane Sandy.

The recent fire that killed at least 112 people at a Bangladesh factory which produces goods for Wal-Mart is a tragic reminder of the steep costs that Wal-Mart imposes on workers around the world in order to keep prices low and profits high.

Similarly, the removal of protections for workers employed in various aspects of Sandy cleanup and recovery is not only unfair, but it would also set a precedent that would plunge more workers into poverty, turning every day into a manmade crisis for those getting the city back on its feet.

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AT THE core of arguments in favor of privatization and deregulation is the idea that the best way to coordinate economic life is through unleashing private gain as a motivating factor--in other words, the profit motive. In this view, government will only get in the way.

One major problem with this argument is that in an unequal society, where large sections of the population don't have the money to buy what they need, the market won't provide for the needs of everybody. That's especially true in New York City, the most unequal city in the most unequal country in the advanced industrialized world.

Those who face social and economic oppression and marginalization--poor and working-class people, people of color, undocumented immigrants and others--will be least able to afford to buy what they need on the market, especially during crises, when high demand and scarce supply drive up prices.

This dynamic was evident in the aftermath of Hurricane Katrina in New Orleans. Thousands of poor and working-class residents--overwhelmingly African American--were left to fend for themselves and then demonized by the media and hunted by police.

During Hurricane Sandy, disproportionately Black and Latino public-housing residents, nearly half of whom live in poverty and many of whom are elderly or disabled, were less likely to have the means to evacuate and were far more likely to be left stranded without power and heat. And poor and working-class neighborhoods were some of the hardest-hit areas, but among the last to receive attention from the government.

Preyed upon by payday lenders and corner-store price gougers in normal times, the private sector abandoned the poorest people in the wake of the hurricane because they lacked the ability to pay for what they desperately needed: food, water, warm clothes and other essentials.

Instead, tens of thousands of volunteers sprung into action, answering the call put out by Occupy Sandy and other community organizations to meet the urgent needs of residents abandoned by city, state and federal agencies. In any case, these agencies have been gutted over they years by budget cuts and layoffs--cuts that were justified by tall tales about the "invisible hand of the market" meeting the needs of those stuck in disaster scenarios, instead of government agencies.

Driven by a sense of solidarity and an ethos that anyone in need is deserving, some 50,000 volunteers have already donated their time, and countless thousands more donated their money and supplies. As in so many disasters, ordinary people--driven not by the promise of personal gain but by a desire to serve the common good--sought to fill the vacuum left by the private sector, the hollow neoliberal state and the shredded social safety net.

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A KEY lesson of Hurricane Sandy is that, after decades of neoliberal privatization, the free-market fundamentalists have gotten much of what they want. Seemingly unlimited resources are available for record profits, wars abroad and repression here at home--to secure markets for Corporate America and to expand the wealth of the elite--while these same elites claim there is not enough for social spending and basic public services.

There is a need for more, not less, government intervention in disaster relief, prevention and reconstruction. Many more relief workers--including hundreds of thousands of un- and underemployed New Yorkers who need the work--could have been mobilized had government funds been made available to pay them for their efforts.

And the impact of what efforts did take place could have been exponentially increased had the government provided trucks and buses, rather than leaving volunteers to rely on private cars, U-Hauls and other donated private vehicles.

The shortages of goods that worried Yglesias could be easily addressed by the government providing necessities free of charge. The state distributed free gasoline during the storm--there is no reason why this should not have been expanded to include food, water, diapers, cleaning supplies and other basics that Occupy Sandy and various community groups continue to scramble to get to those in need.

If the U.S. government is able to maintain military bases in three-quarters of the world's countries, including equipping an occupying force of nearly 70,000 troops in Afghanistan, certainly it has the resources and technical know-how to supply the people of the New York-New Jersey metropolitan area with basic goods in the wake of Hurricane Sandy.

Beyond the nearly $1 trillion spent each year on war, the richest 400 Americans alone are worth $1.7 trillion. The money is there. It is simply a question of priorities.

Finally, the workers who do the difficult and dangerous work of reconstruction in the months and years following the storm should receive a living wage and full benefits to support a family. The reconstruction effort provides the opportunity to implement a public jobs program at a time when workers continue to face high rates of unemployment.

A system of affirmative action in hiring could make a dent in the Black unemployment rate, which is more than double that of whites. And an effort to employ those with felony convictions would be a blow against the New Jim Crow and the exclusion of Blacks and Latinos from the economy.

This is not without precedent. The mass struggles of the Civil Rights and Black Power movements of the 1950s and 60s, including the ghetto uprisings that involved hundreds of thousands, forced the government at all levels to expand social services. Public-sector union organizing won decent pay and benefits. These struggles won bans against racial discrimination, the result of which is that public-sector jobs became a key means of advancement for African Americans.

Weeks after the storm, residents of impacted areas, union and nonunion workers, activists and others have begun to build movements to demand that the city, state and federal government address needs for decent housing, health care and a "peoples' recovery." While these efforts remain modest, they are a step towards the mass struggles needed to shift the balance of class forces and begin to turn the demands outlined above into a reality.