Before the federal government shutdown recedes into the mists of time — such things happen at warp speed in the daily churn of the Trump era — let’s pause to recall how the president and his advisers processed the hardships they imposed on federal workers.
■ Commerce Secretary Wilbur Ross, whose net worth runs in the hundreds of millions of dollars, professed to be puzzled why furloughed federal employees were resorting to food banks for sustenance, instead of just going to a bank and taking out a loan.
■ Chief economic adviser Kevin Hassett, who likened the shutdown to a vacation for federal employees, said that when they returned to work and got their back pay “then they’re, in some sense, better off.” Hassett also didn’t know the federal pay schedule, as he doesn’t need to consult his checking account balance on a regular basis.
■ The president himself suggested that local banks and grocery stores would be only too happy to help out longtime customers by extending credit or ignoring payment deadlines during the shutdown.
All this moved House Speaker Nancy Pelosi to invoke Marie Antoinette. “Is this the ‘let them eat cake’ kind of attitude?” she asked. Indeed, such comments have been aptly described as “tumbril remarks” — after the carts on which aristocrats were trundled to the guillotine during the French Revolution — combining as they do callous indifference to and gross ignorance of the struggles of ordinary Americans.
Unabashed ostentation is another characteristic of the ultra-rich. This was underscored by last month’s news that Chicago hedge fund manager Ken Griffin had purchased a 24,000-square-foot penthouse on Central Park South in Manhattan for $238 million. He plans to use the apartment as a pied-à-terre when he is occasionally in New York, as he also has homes and apartments in Chicago, Miami and London.
Wretched excess and tone-deaf heedlessness produced a propitious moment for Sen. Elizabeth Warren, of Massachusetts, a probable Democratic presidential contender in 2020, to propose a wealth tax on the super-rich. It would focus on all assets, not just income, and would apply only to households with net worth of $50 million or more — the wealthiest 75,000 households, or the top 0.1 percent. These households would pay a 2 percent tax annually on every dollar of net worth above $50 million and a 3 percent tax on every dollar of net worth above a billion dollars.
The backdrop is that the share of all wealth controlled by this tiny category of household has nearly tripled since the late 1970s, from 7 percent to 20 percent. Meanwhile, the bottom 90 percent of American households has seen its share of wealth decline from 35 percent to 25 percent during that same period. In fact, wealth is now so concentrated in the top 0.1 percent that even the low rates of taxation proposed would yield an estimated $2.75 trillion in revenue over 10 years — money that could be devoted to public goods such as infrastructure repair, universal prekindergarten and student-loan debt relief.
There are other approaches on the table besides a wealth tax. Sen. Bernie Sanders, I-Vt., last week proposed increasing the number of rich Americans subject to the estate tax and establishing different tax rates depending on the size of the inheritance. U.S. Rep. Alexandria Ocasio-Cortez, of New York, earlier proposed a top rate of 70 percent on income over $10 million a year.
Whatever the merits of a wealth tax — which no doubt will be debated as the presidential primary season draws closer — Warren’s plan is serious and well thought out. Her proposal is intended not only to capture revenue for making investments to benefit all Americans, but also treats great inequality of wealth as a problem in itself.
Because economic power and political power are inextricably linked and mutually reinforcing, extreme concentration of wealth leverages rules of the road that make it easier for the super-rich to amass additional wealth. The U.S. Supreme Court’s 2010 decision in the Citizens United case, which allowed unlimited election spending, made this abundantly clear. Unchecked, this power can lead to oligarchy — rule by and for the few and the rich, who perpetuate their power by passing their fortunes down from generation to generation. The Founders of the American Revolutionary era feared that extreme concentration of wealth was at odds with a political system in which power was to be broadly shared. Those fears remain well-founded.