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August 3, 2011

How the Billionaires Broke the System


The US deficit reduction plan makes no sense – until you remember who’s
behind the Tea Party movement.

By George Monbiot

There are two ways of cutting a deficit: raising taxes or reducing spending.
Raising taxes means taking money from the rich. Cutting spending means
taking money from the poor. Not in all cases of course: some taxation is
regressive; some state spending takes money from ordinary citizens and
gives it to banks, arms companies, oil barons and farmers. But in most cases
the state transfers wealth from rich to poor, while tax cuts shift it from poor
to rich.

So the rich, in a nominal democracy, have a struggle on their hands.
Somehow they must persuade the other 99% to vote against their own
interests: to shrink the state, supporting spending cuts rather than tax rises.
In the US they appear to be succeeding.

Partly as a result of the Bush tax cuts of 2001, 2003 and 2005 (shamefully
extended by Barack Obama), taxation of the wealthy, in Obama’s words, “is at
its lowest level in half a century”(1). The consequence of such regressive
policies is a level of inequality unknown in other developed nations. As the
Nobel laureate Joseph Stiglitz points out, in the past 10 years the income of
the top 1% has risen by 18%, while that of blue collar male workers has fallen
by 12%(2).

The deal being thrashed out in Congress as this article goes to press seeks
only to cut state spending. As the former Republican senator Alan Simpson
says, “the little guy is going to be cremated.”(3) That, in turn, will mean
further economic decline, which means a bigger deficit(4). It’s insane. But
how did it happen?

The immediate reason is that Republican members of Congress supported by
the Tea Party movement won’t budge. But this explains nothing. The Tea
Party movement mostly consists of people who have been harmed by tax
cuts for the rich and spending cuts for the poor and middle. Why would they
mobilise against their own welfare? You can understand what is happening
in Washington only if you remember what everyone seems to have forgotten:
how this movement began.

On Sunday the Observer claimed that “the Tea Party rose out of anger over
the scale of federal spending, and in particular in bailing out the banks”(5).
This is what its members claim. It’s nonsense.

The movement started with Rick Santelli’s call on CNBC for a tea party of city
traders to dump securities in Lake Michigan, in protest at Obama’s plan to
“subsidise the losers”(6). In other words, it was a demand for a financiers’
mobilisation against the bail-out of their victims: people losing their homes.
This is the opposite of the Observer’s story. On the same day, a group called
Americans for Prosperity (AFP) set up a Tea Party Facebook page and started
organising Tea Party events(7). The movement, whose programme is still
lavishly supported by AFP, took off from there.

So who or what is Americans for Prosperity? It was founded and is funded by
Charles and David Koch(8). They run what they call “the biggest company you’
ve never heard of”(9), and between them they are worth $43 billion(10).

Koch Industries is a massive oil, gas, minerals, timber and chemicals
company. Over the past 15 years the brothers have poured at least $85m into
lobby groups arguing for lower taxes for the rich and weaker regulations for
industry(11). The groups and politicians the Kochs fund also lobby to destroy
collective bargaining, to stop laws reducing carbon emissions, to stymie
healthcare reform and to hobble attempts to control the banks. During the
2010 election cycle, Americans for Prosperity spent $45 million supporting its
favoured candidates(12).

But the Kochs’ greatest political triumph is the creation of the Tea Party
movement. Taki Oldham’s film AstroTurf Wars shows Tea Party organisers
from all over the Union reporting back to David Koch at their 2009 Defending
the Dream summit, explaining the events and protests they’ve started with
AFP help. “Five years ago,” he tells them, “my brother Charles and I provided
the funds to start Americans for Prosperity. It’s beyond my wildest dreams
how AFP has grown into this enormous organisation.”(13)

AFP mobilised the anger of people who found their conditions of life
declining, and channelled it into a campaign to make them worse. Tea Party
campaigners appear to be unaware of the origins of their own movement.
Like the guard in Geoffrey Household’s novel Rogue Male who has been
conned into working for the enemy, they take to the streets to demand less
tax for billionaires and worse health, education and social insurance for

Are they stupid? No. They have been systematically misled by another
instrument of corporate power: the media. The Tea Party movement has been
relentlessly promoted by Fox News, which belongs to a more familiar
billionaire. Like the Kochs, Rupert Murdoch aims to misrepresent the
democratic choices we face, in order to persuade us to vote against our own
interests and in favour of his.

What’s taking place in Congress right now is a kind of political coup. A
handful of billionaires has shoved a spanner into the legislative process.
Through the candidates they’ve bought and the movement that supports
them, they are now breaking and reshaping the system to serve their
interests. We knew this once, but now we’ve forgotten. What hope do we
have of resisting a force we won’t even see?

Follow George Monbiot on Twitter: @GeorgeMonbiot.







6. http://www.cnbc.





11. Tony Carrk, April 2011. The Koch Brothers: What You Need to Know About
the Financiers of the Radical Right. Center for American Progress Action
Fund. http://www.americanprogressaction.

12. As above.