"In a time of universal deceit telling the truth is a revolutionary act." -George Orwell

Posts Tagged ‘Civil Oligarchy’

As Obama, Romney Hold First Debate, Behind The Secret GOP-Dem Effort To Shut Out Third Parties

In Uncategorized on October 3, 2012 at 7:18 pm

Oldspeak: “The Obama and Romney campaigns have secretly negotiated a detailed contract that dictates many of the terms of the 2012 presidential debates. This includes who gets to participate, as well as the topics raised during the debates.” This pact ensures that no difficult questions will be asked, and candidates will be able to recite their talking points with no fear of having to talk about issues they don’t want to talk about.  “The Commission on Presidential Debates gets the vast majority of its money from major businesses that support it. Anheuser-Busch is far and away the biggest contributor to the commission. So, by and large, our presidential debates are brought to you by Bud Light. And if you actually go to some of these debate sites — I don’t know how it is this year, but in the past there have been Anheuser-Busch tents where scantily clad women are passing out pamphlets denouncing beer taxes. The CEOs of these companies get access to the debates, they sit in the audience, they’re invited to receptions to meet with campaign staff. They get a wonderful benefit because they are able to simultaneously demonstrate their support for both major parties, hit two birds with one stone and get a tax deduction to boot. –George Farah The U.S. Presidential Debates, brought to you by the Transnational Corporate Network. “Ignorance Is Strength”

By Amy Goodman @ Democracy Now:

Guest:

George Farah, Founder and Executive Director of Open Debates. He is also author of the book, “No Debate: How the Republican and Democratic Parties Secretly Control the Presidential Debates.”

AMY GOODMAN: We are broadcasting in Denver, Colorado. We are on the road, here, just miles from the University of Denver, the site of tonight’s presidential debate between Mitt Romney and President Obama. It is the first of three presidential debates before the November 6th election. Tonight’s debate will focus on domestic policy, but one issue that will not be covered is the actual structure of the debate itself. The Obama and Romney campaigns have secretly negotiated a detailed contract that dictates many of the terms of the 2012 presidential debates. This includes who gets to participate, as well as the topics raised during the debates. Now 18 pro-democracy groups are calling on the commission of presidential debates, a private corporation that runs the debates, to review the details of the negotiated agreement. Meanwhile, Libertarian nominee Gary Johnson, the former governor of New Mexico, has filed an antitrust lawsuit for entry into the debates against the Commission on Presidential debates. In addition, supporters of Green Party nominee Jill Stein plan to protest outside of the debate under the banner of Occupy the CPD. While Obama and Romney debate in Denver, Stein and Justice Party Candidate Rocky Anderson will appear on Democracy Now!‘s expanding the debate exclusive tonight. We will air the Obama-Romney debate, pausing after questions to include equal time responses from Dr. Stein and Rocky Anderson. We invited Gary Johnson, but his campaign said he had other plans for the night. Our special begins at 8:30 p.m. Eastern time. If it’s not being broadcast on your station as it’s being broadcast throughout the country, you can also go to our website at Democracynow.org. To talk more about the debates, we are joined now, in New York, by the George Farah. He’s the founder and Executive Director of Open Debates, the author of “No Debate: How the Republican and Democratic Parties Secretly Control the Presidential Debates.” George, welcome to Democracy Now!. You are there in our studios in New York, and we are here just outside Denver where the debates are taking place tonight, so we can bring folks and expanded version of the debates. George, how did it come to be that the commission of presidential debates came in to being? What is this commission?

GEORGE FARAH: The Commission on Presidential debates sounds like a government agency, it sounds like a nonpartisan entity, which is by design, is intended to deceive the American people. But, in reality, it is a private corporation financed by Anheuser-Busch and other major companies, that was created by the Republican and Democratic parties to seize control of the presidential debates from The League of Women Voters in 1987. Precisely as you said, Amy, every four years, this commission allows the major party campaigns to meet behind closed doors and draft a secret contract, a memorandum of understanding that dictates many of the terms. The reason for the commission’s creation is that the previous sponsor, The League of Women voters, was a genuine non-partisan entity, our voice, the voice of the American people in the negotiation room, and time and time again, The League had the courage to stand up to the Republican and Democratic campaigns to insist on challenging creative formats, to insist on the inclusion of independent candidates that the vast majority of American people wanted to see, and most importantly, to insist on transparency, so that any attempts by the Republican and Democratic parties to manipulate the presidential debates would result in and of enormous political price. And it’s precisely because the League…

AMY GOODMAN: George, you have a lot of time here, so I really want you to lay out how this happened. Explain the moment when this was taken out of the hands of The League of Women Voters and this commission was formed. How was this justified?

GEORGE FARAH: The best part of the history starts in 1980. In 1980, John B. Anderson, an independent candidate for president, runs against Jimmy Carter and Ronald Reagan. President Jimmy Carter absolutely opposed independent candidate John Anderson’s participation in the presidential debates, and The League had a choice; do they support the independent candidate’s participation and defy the wishes of the President of the United States or do they capitulate to the demands of President Jimmy Carter? The league did the right thing, it stood to the President of the United States, invited John B. Anderson. The President refused to show up. The League went forward anyway and had a presidential debate that was watched by 55 million Americans. You fast forward four years later, Amy, and the Walter Mondale and Ronald Reagan campaigns vetoed 80 of the moderators that The League of Women Voters had proposed for the debates. The were simply trying to get rid of…

AMY GOODMAN: Eighty?

GEORGE FARAH: Eighty. They were trying to get rid of difficult questions.

AMY GOODMAN: Eight-zero?

GEORGE FARAH: Eight-zero. Eighty. And The League didn’t just say, OK that’s fine we’ll allow you to select a moderator that’s going to ask softball questions, The League held a press conference and lambasted the campaigns for trying to get rid of the difficult questions. Of course there was a public outcry. So The League marshaled public support to criticize when they attempted to defy our democratic process and the result was fantastic. For the next debate, the campaigns were required to accept The League’s proposed moderators for fear of an additional public outcry. And you fast forward four more years later and you have the Michael Dukakis and the George Bush campaign’s drafting the first ever 12-page secret debate contract. They gave it to The League of Women Voters and said please implement this. The League said, are you kidding me? We are not going to implement a secret contract that dictates the terms of the format. Instead, they release the contract to the public and they held a press conference accusing the candidates of “perpetrating a fraud on the American people” and refusing to be “an accessory to the hoodwinking of the American people.”

Well, Amy, conveniently, just a year earlier, the Republican and Democratic parties had ratified an agreement “to take over the presidential debates, and they created this artifice, this commission, and the commission was waiting in the wings and stepped right in and implemented the very same 12-page contract that The League had so effectively denounced, and ever since we’ve had a contract.

AMY GOODMAN: Since The League did release it — The League of Women Voters at the time — what was in this 12-page contract, at least then?

GEORGE FARAH: The 12-page contract then said very specific provisions that the candidates cannot actually ask each other any questions during the debates, that no third party candidates would be permitted to participate in those events, that there would be a certain number of audience members that would be supportive of the various candidates. Actually, it is quite tame compared to the contracts we have seen in recent years. That contract was 12 pages. The 2004 contract that we’ve managed to obtain a a copy of, was 32 pages. So, over time, the candidates have made even greater efforts to control various components of the debates to eliminate both third party candidates, unpredictable questions, and any threat to their dominance in our political process.

AMY GOODMAN: So, this Commission, talk about the heads of the commission and who they are, who they were when it started, Frank Fahrenkopf and Paul Kirk, and who they are today, and who they represent?

GEORGE FARAH: Frank Fahrenkopf and Paul Kirk were the original co-chairs on the Commission on Presidential Debates. Frank Fahrenkopf is the former hair of the Republican party, and Paul Kirk is the former chair of the Democratic party. When they created the commission, for 15 months, they simultaneously served as co-chairs of their respective parties and the commission, so, it was of course by definition an entity that was absolutely loyal to the two parties. Well, guess what, Frank Fahrenkopf still is co-chair of the Commission on Presidential Debates, decades later. And he has one other job, his day job; he is the director of the American Gaming Association. In other words, he is the nation’s leading gambling lobbyist. When I asked Frank, do you feel comfortable having a beer and tobacco companies paying for our most important election events, our presidential debates? He said, boy, you’re talking to the wrong guy, I represent the gambling industry. The other co-chair of the Commission on Presidential Debates now is Mike McCurry, former Press Secretary to Bill Clinton and also a lobbyist. He’s lobbied aggressively on behalf of the telecommunications industry. So, you have two people in charge of these presidential debates that, number one, are loyal to their parties, they’re political operatives, and number two, have demonstrated time and time again a willingness to sacrifice the interests of the American people for private, political, and financial interests. These are not exactly people who hesitate to subjugate the democratic process to the private interests that benefit from these actual debates.

AMY GOODMAN: Can you talk about what happened this past week, George Farah? The advertising agency BBH, the YWCA, Phillips North America, terminating their sponsorship of the debates. First of all, what are corporations doing sponsoring these presidential debates and why have these organizations pulled out?

GEORGE FARAH: Well, the Commission on Presidential Debates gets the vast majority of its money from major businesses that support it. Anheuser-Busch is far and away the biggest contributor to the commission. So, by and large, our presidential debates are brought to you by Bud Light. And if you actually go to some of these debate sites — I don’t know how it is this year, but in the past there have been Anheuser-Busch tents where scantily clad women are passing out pamphlets denouncing beer taxes. The CEOs of these companies get access to the debates, they sit in the audience, they’re invited to receptions to meet with campaign staff. They get a wonderful benefit because they are able to simultaneously demonstrate their support for both major parties, hit two birds with one stone and get a tax deduction to boot. Back when the League of Women voters used to sponsor these events, they struggled to raise $5,000 contributions from companies, it was very difficult. But, because they are now perceived as a sort of soft money donation, this is yet another avenue for businesses with regulatory interests before Congress to influence our political process.

We have launched a campaign since the inception of my organization in 2004 to pushing our supporters, which number in the tens of thousands, to write letters and e-mails to the very sponsors demanding that they withdraw their support of the commission. This year, with the support of other organizations, one called Help the Commission, an infusion of enthusiasm from third parties, including the Libertarian party and the Green party, for the first time ever we actually have succeeded in achieving some tangible goals. Not just one sponsor, but three of the ten sponsors have withdrawn support. BBH, a British advertising agency, YWCA, a nonprofit, and most importantly, Philips Electronics, a tech giant. Due to the extraordinary public pressure that we have exerted on them, they have said they will no longer be affiliated with an entity that is perceived, correctly, as being partisan and fundamentally anti-democratic. This is a triumph for the debate reform movement and I hope the beginning of unveiling the commission for what it truly is, and displacing it.

AMY GOODMAN: George Farah, say again the companies that continue to support the Commission on Presidential Debates?

GEORGE FARAH: There are seven remaining sponsors. There are three companies; Anheuser-Busch, again the poster child for contributing to the commission, you have Southwest Airlines, you have the International Bottled Water Association, then you have two foundations, The Howard Buffett Foundation, Howard Buffett happens to be a board member of the commission, something called the Marjorie Kovler Fund that’s affiliated with the Kennedy Library. And then you have two law firms, Korman, a specific law firm that focuses on specific issues in Washington, and Sheldon Cohen, a national security lawyer. These are the seven entities that are backing our Commission on Presidential Debates. This is not the way these ought to be run. These should be supported by civic groups, non-partisan organizations with a real focus on the democratic process, and instead they’re subcontracting out our presidential debate process to Anheuser-Busch.

AMY GOODMAN: It will be interesting to see if there is bottled water on their podiums, or if there is Bud Light. I wanted to go to one of the third party candidates shut out of tonight’s debate, Libertarian candidate Gary Johnson the former governor of New Mexico. He appeared recently on Neil Cavuto’s show on Fox Business.

NEIL CAVUTO: Governor, half the battle is getting on those ballots and polling well to get in those debates. So, it’s sort of like a tough…

GARY JOHNSON: Very catch-22. Right now I’m 5% nationally. Fact is I’m not being recognized though at 5% nationally and if people recognized that I was at 5% nationally, Neil, the overwhelming reaction would be well who the hell is Gary Johnson.

NEIL CAVUTO: What does it take to get into the debates?

GARY JOHNSON: Well, you got to get in the polls first to determine who’s in the debates.

AMY GOODMAN: And earlier this summer the Green Party wrapped up its convention with the nomination of its presidential candidate the physician Dr. Jill Stein and her running mate the anti-poverty activist Cheri Honkala. Stein called her ticket a viable third-party challenge too corporate-beholden Republicans and Democrats.

CHERI HONKALA: I strongly agree that grass-roots democracy grows from the local community up, but at the same time, we have a state of emergency, I think, at the national level. And to silence the only hope of an opposition voice in this election when so much is at stake, I think, would be just a terrible loss for the American people. There is no reason why Americans should have to walk into the voting booth in November and only effectively two Wall Street-sponsored choices.

AMY GOODMAN: That was Green Party presidential nominee Jill Stein. Democracy Now! spoke to Justice Party nominee Rocky Anderson during the Republican National Convention in Tampa, Florida last month.

ROCKY ANDERSON: These two parties, Republicans and Democrats, have a stranglehold on our democracy. They are depriving people around this country of not only being able to get on the ballot. They are denying all us of our freedom of choice. We are seeing it in the most aggressive ways.

AMY GOODMAN: Again, we are going to have this presidential debate, including Rocky Anderson, the presidential candidate from the Justice Party, Dr. Jill Stein, the presidential candidate from the Green Party, we will be doing that tonight, expanding the debates. Just having them, not comments afterwards, but actually they will participate in the debate. We’ll just hit pause on the presidential debate, they will be given the same amount of time in the same format as the main presidential candidates, so that TV and radio and Internet audiences at Democracynow.org can hear what democracy sounds like. George Farah, there was a third-party candidate outside of Anderson, of course, Ross Perot. So, George, how did he get into the debates? Why was it agreed to then?

GEORGE FARAH: Amy, the Ross Perot story is absolutely fascinating, and I’d love to talk briefly. About 1992 and 1996, Ross Perot managed to get into the 1992 presidential debates. One of the great public misconceptions is that the Commission invited him. The commission loves to take credit as well. They say we are not as bi-partisan or as partisan as people accuse us of being. We included Ross Perot in 1992. That is not what happened. President George H.W. Bush believed strategically that Ross Perot was taking votes from then challenger Bill Clinton. So Bush’s campaign insisted on Ross Perot’s inclusion. The commission actually opposed Perot’s inclusion, first pushing to keep out of all three debates, then lobbying for allowing him to participate in just a single debate. It was only because President George H.W. Bush and Bill Clinton pushed for Perot’s inclusion that he was included. If you fast forward four years later, Ross Perot ran for president again. He had $29 million in taxpayer funds. Seventy-six percent of the American people wanted to see him in the debates. He was widely deemed the winner of two of the three debates in 1992, yet, he was excluded. Why, because this time, the candidates wanted to keep him out.

Bob Dole was desperate to keep Perot out of the presidential debates because he thought Perot would take more votes away from him. Bill Clinton did not want anyone to watch the debates. He wanted what George Stephanopoulos told me was a non event because he was comfortably leading in the polls. So they reached an outrageous agreement; Bill Clinton agreed to exclude Perot on the condition that one of three debates was canceled, and the remaining two debates were scheduled opposite the World Series of baseball, and no follow-up questions were asked. So, this is what viewers at home got. They got not Perot, they got two debates at the same time as baseball and they had no follow up questions, and that’s exactly what President Bill Clinton wanted, by design, the lowest debate audience in the history of presidential debates. Who took the heat? Not the candidates. The candidates never paid a political price. The polls after the debate showed 50% of the public blamed the commission. Only 13% blamed President Clinton, and only 5% blamed the Bob Dole. In other words, the critical role that the commission plays is allowing the candidates to engage in anti-democratic manipulations behind closed doors without having to pay a political price. If Bob Dole and Bill Clinton had to look in the camera and tell the American people, we’re going to keep out a candidate out you’re paying for, that you’re supporting and that you want to see, they would have never have had the courage to do so. It would have been perceived as cowardly and they would have been forced to allow Ross Perot up on that stage.

AMY GOODMAN: What about this comment, that Gary Johnson made, the former governor of New Mexico who’s running for president on the Libertarian line, this point about what you poll and this catch-22 of how you increase your standing in the polls if you are not in the debates?

GEORGE FARAH: Due to explicit criticism of the commission in 1992 and 1996 and an investigation by the Federal Election Commission, the commission was forced to adopting a numerical figure as a kind of decision making, at what point third-party candidates could participate in the presidential debates. So, they have announced that if a third party candidate, or any candidate gets 15% of the polls, that they will invite them to a presidential debate. Fifteen percent of the polls? Amy, that is crazy. There has not been a third-party candidate in the last 100 years that’s gotten close to 15% in the polls prior to any sort of presidential debate, it’s ridiculously high. Congress gives candidates millions of dollars of taxpayer funds if they win 5% of the popular vote. How is it that we actually can we subsidize a candidate, yet they need three times that level of support just to get into these presidential debates? Third-party candidates faced extraordinary structural barriers, discriminatory ballot access, scant media coverage, loyalties of the political class in the voting public, enormous campaign finance disparities. So, if they managed to convince a majority of Americans that they ought to be included in the presidential debates, it is outrageous that a private corporation backed by Anheuser-Busch, controlled by the two parties is telling them no. It absolutely is a catch-22. The presidential debates are the gatekeepers to credibility. If third party candidate gets in, he is instantly deemed credible, viable worthy of voter attention and worth of media attention, but if he is excluded, he is dismissed as marginal unworthy of voter attention of media attention, and his campaign is relegated in many ways to the dustbins of history. These is outrageous that the gatekeepers to our election process are not non-partisan entities like The League [of Women Voters], but partisan individuals with loyalties to the Republican and Democratic parties. It stifles debate, by design.

AMY GOODMAN: How do you see this changing right now, George Farah? You are the founder and executive director of Open Debates. You have been watching this over the years. The League of Women Voters, are they organizing? How are groups actually organizing? How do you see this playing out?

GEORGE FARAH: We created something in 2004 called The Citizen’s Debate Commission in. It was comprised of 17 civic leaders from across the political spectrum, from Tony Perkins of the Family Research Council on the right, to Randall Robertson, founder of Transafrica on the left. It was backed by 60 civic groups on its advisory board, 23 newspapers around country from The L.A. Times to The Seattle Times editorialized in support of the Citizen’s Debate Commission. And its specific purpose was clear; we were going to break the monopoly that the commission exerts over our presidential debate process. Unfortunately, Amy, we failed for the simple reason that there wasn’t sufficient public pressure. But, this is not reason to throw up your arms in defeat and say, oh my gosh, we can’t break this, that was just planting the seeds. This was the beginning of a broad based movement. The only way to truly break the monopoly of The Commission on Presidential Debates is to create a viable alternative that has so much grass roots support that it becomes politically costly for the major party nominees to avoid those debates. Once upon a time, the major party candidates could avoid debates altogether. There were no presidential debates in 1964, ’68 and ’72 because it wasn’t expected. Now any major party candidate seen avoiding the debates looks cowardly. It’s impossible, they must debate, whether they like it or not. We just want to take that expectation the public has and elevate it, so that not only will a candidate pay a price if they avoid the debates, but they will pay a political price if they avoid real debates that they aren’t controlling. So this is a matter of evolving and pushing the public expectation and step by step, I think we’re going to succeed. It is just a matter of time. The fact that three of the ten sponsors this election cycle withdrew their support is testimony to the fact that it is now becoming expensive to be too politically associated with the commission. If we can broaden that attack to not just include corporations but actually the individual candidates, we’re going to start to see some headway, we’re going to start to break the commission’s monopoly.

AMY GOODMAN: George Farah, I want to thank you for being with us. Founder and Executive Director of Open Debates, also author of “No Debate: How the Republican and Democratic Parties Secretly Control the Presidential Debates.” He’ll be joining us tonight. We will be starting a half hour before the actual presidential debate at 8:30 Eastern Standard time. Vincent Harding will also be with us, close ally of Dr. Martin Luther King. He is based here in Denver. He helped to write the speech that Dr. King gave in Riverside Church in New York, why he opposed the war in Vietnam a year to the day before Dr. King was assassinated. Then we start the debate exactly at 9:00 Eastern time, just as the debate begins here in Denver. We will broadcast the debate, it is moderated by Jim Lehrer of the PBS News Hour. He will put the questions to the major party candidates, Mitt Romney and President Barack Obama, and then we will hit pause, we will expand the debate. The candidates will be here with us in the studio also in Denver; Dr. Jill Stein and Rocky Anderson, both presidential candidates, third parties. Gary Johnson was invited but he won’t be in the city. We will expand the debate just as if they were standing right there at the University of Denver.

Oligarchy In The U.S.A.- How The Wealth Defense Industry Protects The Ultra-Rich: The .0001%

In Uncategorized on March 2, 2012 at 5:51 pm

Oldspeak:A small fraction of wealthy Americans constitute a powerful donor class that provides the vast majority of candidates’ funds. Long before ordinary citizens get to vote, they say, their choices are reduced to politicians deemed acceptable by the richest Americans via a “wealth primary,” in which candidates straying from a narrow economic agenda are shut out of campaign funding.“For all their influence at the polls, guys like Joe the Plumber aren’t typically campaign contributors,” explains Sheila Krumholz, executive director of the Center for Responsive Politics. “You’re more likely to see John the Bond Trader bankrolling these campaigns.” And she’s right: Of the roughly 1.4 million individual contributions of $200 or more during the 2008 elections, three-fourths of the money came from a mere one-fifth of the donors, who in turn comprised one-tenth of 1 percent of American adults.”-Jeffery A. Winters Today in America, being ‘merely-rich’ is not enough to live ‘comfortably’ and be represented by government. Apparently living comfortably involves avoiding taxation by paying untold sums and devoting whole industries of lawyers, accountants, and wealth management agents to defrauding the government. A government by virtue of their extreme wealth and inherent political power resources, 400 men run. Democracy’s gone, Oligarchical Capitalism reigns.

By Jeffery A. Winters @ In These Times:

In 2005, Citigroup offered its high net-worth clients in the United States a concise statement of the threats they and their money faced.

The report told them they were the leaders of a “plutonomy,” an economy driven by the spending of its ultra-rich citizens. “At the heart of plutonomy is income inequality,” which is made possible by “capitalist-friendly governments and tax regimes.”

The danger, according to Citigroup’s analysts, is that “personal taxation rates could rise – dividends, capital gains, and inheritance taxes would hurt the plutonomy.”

But the ultra-rich already knew that. In fact, even as America’s income distribution has skewed to favor the upper classes, the very richest have successfully managed to reduce their overall tax burden. Look no further than Republican presidential contender Mitt Romney, who in 2010 paid 13.9 percent of his $21.6 million income in taxes that year, the same tax rate as an individual who earned a mere $8,500 to $34,500.

How is that possible? How can a country make so much progress toward equality on other fronts – race, gender, sexual orientation and disability – but run the opposite way in its policy on taxing the rich?

In 2004, the American Political Science Association (APSA) tried to answer that very question. The explanation they came up with viewed the problem as a classic case of democratic participation: While the poor have overwhelming numbers, the wealthy have higher rates of political participation, more advanced skills and greater access to resources and information. In short, APSA said, the wealthy use their social capital to offset their minority status at the ballot box.

But this explanation has one major flaw. Regardless of the Occupy movement’s rhetoric, most of the growth in the wealth gap has actually gone to a tiny sliver of the 1% – one-tenth of it, or even one-one-hundredth.

Even more shockingly, that 1 percent of the 1% has shifted its tax burden not to the middle class or poor, but to rich households in the 85th to 99th percentile range. In 2007, the effective income tax rate for the richest 400 Americans was below 17 percent, while the “mass affluent” 1% paid nearly 24 percent. Disparities in Social Security taxes were even greater, with the merely rich paying 12.4 percent of their income, while the super-rich paid only one-one-thousandth of a percent.

It’s one thing for the poor to lose the democratic participation game, but APSA has no explanation for why the majority of the upper class – which has no shortage of government-influencing social capital – should fall so far behind the very top earners. (Of course, relative to middle- and lower-class earners, they’ve done just fine.)

For a better explanation, we need to look more closely at the relationship between wealth and political power. I propose an updated theory of “oligarchy,” the same lens developed by Plato and Aristotle when they studied the same problem in their own times.

Who are the oligarchs?

How much wealth does it take to make someone an oligarch in the United States?

Not just any rich person is an oligarch. Oligarchs are those rich enough to buy the professional firepower of the WDI to defend their wealth. Pulitzer Prize-winning economics reporter David Cay Johnston says that “this can sometimes be an outlay of $10 million to avoid $30 million in taxes, and other times spending only $1 million to save the same amount.”

For some perspective, look at the income chart above, which breaks down the extent of material inequality in the United States. Pay special attention to the last column, the Material Power Index (MPI), which defines each income level as a multiple of the average income among the bottom 90 percent of American taxpayers.

Even at more than 30 times the average income of the bottom 90 percent of Americans, an average annual income of $1 million for those in the top one-half of one percent is still too modest to make them oligarchs. These citizens are certainly rich. But they don’t have enough material power to hire anything beyond the cheapest foot soldiers of the WDI.

Starting with the next threshold, however — the top one-tenth of 1 percent of incomes — the MPI suddenly quadruples from 32 to 124, and then leaps another six-fold to 819 for those with incomes in the top one-one-hundredth of one percent. In 2007, about 150,000 Americans had average annual incomes of $4 million and above. This is the threshold at which oligarchs begin to dominate the landscape.

A quick review

First, let’s review what we think we know about power in America.

We begin with a theory of “democratic pluralism,” which posits that democracy is basically a tug-of-war with different interest groups trying to pull government policy toward an outcome. In this framework, the rich are just one group among many competing “special interests.”

Of course, it’s hard not to notice that some groups can tug better than others. So in the 1950s, social scientists, like C. Wright Mills, author of The Power Elite, developed another theory of “elites” – those who wield more pull thanks to factors like education, social networks and ethnicity. In this view, wealth is just one of many factors that might help someone become the leader of a major business or gain a government position, thereby joining the elite.

But neither theory explains how the super-rich are turning public policy to their benefit even at the expense of the moderately rich. The mass affluent vastly outnumber the super-rich, and the super-rich aren’t necessarily better-educated, more skilled or more able to participate in politics; nor do the super-rich dominate the top posts of American government – our representatives tend to be among the slightly lower rungs of the upper class who are losing the tax battle.

Also, neither theory takes into account the unique power that comes with enormous wealth – the kind found in that one-tenth of the 1%. Whether or not the super-rich hold any official position in business or government, they remain powerful.

Only when we separate wealth from all other kinds of power can we begin to understand why our tax system looks the way it does – and, by extension, how the top one-tenth of 1% of the income distribution has distorted American democracy.

Enormous wealth is the heart of oligarchy.

So what’s an oligarchy?

Across all political spectrums, oligarchs are people (never corporations or other organizations) who command massive concentrations of material resources (that is, wealth) that can be deployed to defend or enhance their own property and interests, even if they don’t own those resources personally. Without this massive concentration of wealth, there are no oligarchs.

In any society, of course, an extremely unequal wealth distribution provokes conflict. Oligarchy is the politics of the defense of this wealth, propagated by the richest members of society.

Wealth defense can take many forms. In ancient Greece and Rome, the wealthiest citizens cooperated to run institutionalized states that defended their property rights. In Suharto’s Indonesia, a single oligarch led a despotic regime that mostly used state power to support other oligarchs. In medieval Europe, the rich built castles and raised private armies to defend themselves against each other and deter peasants tempted by their masters’ vaults. In all of these cases oligarchs are directly engaged in rule. They literally embody the law and play an active role in coercion as part of their wealth defense strategy.

Contemporary America (along with other capitalist states) instead houses a kind of “civil oligarchy.” The big difference is that property rights are now guaranteed by the impersonal laws of an armed state. Even oligarchs, who can be disarmed for the first time in history and no longer need to rule directly, must submit to the rule of law for this modern “civil” arrangement to work. When oligarchs do enter government, it is more for vanity than to rule as or for oligarchs. Good examples are New York City Mayor Michael Bloomberg, former presidential candidate Ross Perot and former Massachusetts Governor Mitt Romney.

Another feature of American oligarchy is that it allows oligarchs to hire skilled professionals, middle- and upper-class worker bees, to labor year-round as salaried, full-time political advocates and defenders of the oligarchy. Unlike those backing ordinary politicians, the oligarchs’ professional forces require no ideological invigoration to keep going. In other words, they function as a very well-paid mercenary army.

Whatever views and interests may divide the very rich, they are united in being materially focused and materially empowered. The social and political tensions associated with extreme wealth bond oligarchs together even if they never meet, and sets in motion the complex dynamics of wealth defense. Oligarchs do overlap with each other in certain social circles that theorists of the elite worked hard to map. But such networks are not vital to their power and effectiveness. Oligarchic theory requires no conspiracies or backroom deals. It is the minions oligarchs hire who provide structure and continuity to America’s civil oligarchy.

The U.S. Wealth Defense Industry

The threats to wealth that oligarchs face, and want to overcome, create the enormous profit-making opportunities that motivate the wealth defense industry, or WDI. In American oligarchy, it consists of two components.

The first is the mercenary army of professionals – lawyers, accountants, wealth management agencies – who use highly specialized knowledge to navigate 72,000 pages of tax code and generate a range of tax “products” and advice, enabling oligarchs to collectively save scores of billions of dollars, every year, that would otherwise have to be surrendered to the state. While most of us are what I call “TurboTaxpayers,” buying cheap tax software to navigate our returns and make routine deductions, oligarchs purchase complex “tax opinion letters” from professional firms. These letters are drafted to justify enormous nonpayments of taxes if the IRS ever questions how certain transactions produce losses, or how other accounting gymnastics make it appear that no gains or compensation occurred. The letters can cost up to $3 million each, but can save an oligarch tens or hundreds of millions of dollars in a given year.

Written by some of the most high-powered attorneys and firms in the industry, tax letters serve to intimidate the legal department of the IRS even before a prosecution is contemplated.

The Senate is aware of these letters – noting in a 2003 report on the “tax shelter industry” that “respected professional firms are spending substantial resources … to design, market, and implement hundreds of complex tax shelters, some of which are illegal and improperly deny the U.S. Treasury of billions of dollars in tax revenues” – but getting specific information about them is extremely difficult, since the IRS rarely prosecutes oligarchs. When it does, most cases are sealed, and oligarchs who work with tax attorneys can invoke attorney-client privilege. But in 2003, there was a breach of this fortress of secrecy when the Senate published detailed reports about illegal tax shelters created by the accounting firm KPMG.

According to the Senate, the KPMG tax shelters created “phony paper losses for taxpayers, using a series of complex, orchestrated transactions involving shell corporations, structured finance, purported multi-million dollar loans, and deliberately obscure investments” for 350 clients between 1997 and 2001. The fake losses totaled about $8.4 billion, or $24 million per client; applied against their incomes, these losses reduced the taxes of each oligarch by an average of $8.3 million, or $2.9 billion for the group.

One of the reasons this case was exposed is that it was all rather down-market, using cheap cookie-cutter tax opinion letters priced at a mere $350,000 each.

Not only did all the firms and banks conspiring on behalf of these 350 oligarchs – and the oligarchs themselves – know that the investments “had no reasonable potential for profit,” but KPMG calculated that even if it was fined for failing to disclose the shelters, it would still earn far more in fees than it would pay in fines. The firm was fined $456 million. Even more incredibly, more than a dozen KPMG clients sued the firm for the taxes and penalties incurred after being discovered – the suits claim that KPMG bungled its job of creating shelters for tax evasion with zero legal risks for oligarchs. It’s tantamount to suing your hit man for a sloppy murder.

The second component of the WDI is the nitty-gritty legwork that keeps the tax system sufficiently porous, complex and uncertain enough to be manipulated. Some oligarchs do this work themselves, speed dialing public officials to directly complain about laws and regulations, but most do not. Instead, WDI professionals, motivated to earn a share of annual oligarchic gains, constitute a highly coherent and aggressive network for political pressure. These lobbyists fight to insert favorable material into the tax code, cut sections that cause problems, and block threats on the horizon.

Apologists for havens

Discussions about money in politics often begin with campaign finance reform. Advocates argue that a small fraction of wealthy Americans constitute a powerful donor class that provides the vast majority of candidates’ funds. Long before ordinary citizens get to vote, they say, their choices are reduced to politicians deemed acceptable by the richest Americans via a “wealth primary,” in which candidates straying from a narrow economic agenda are shut out of campaign funding.

“For all their influence at the polls, guys like Joe the Plumber aren’t typically campaign contributors,” explains Sheila Krumholz, executive director of the Center for Responsive Politics. “You’re more likely to see John the Bond Trader bankrolling these campaigns.” And she’s right: Of the roughly 1.4 million individual contributions of $200 or more during the 2008 elections, three-fourths of the money came from a mere one-fifth of the donors, who in turn comprised one-tenth of 1 percent of American adults.

But while this fraction does coincide with our approximation of the size of the American oligarchy, campaign donations are not oligarchs’ primary or even most effective strategy for political influence. Academics Michael Graetz and Ian Shapiro explain this in their 2005 book, Death by a Thousand Cuts: The Fight over Taxing Inherited Wealth.

“Campaign contributions, soft money, spending limits for political candidates and the like have become controversial issues,” they admit, “but they mattered little in the estate tax fight.” The battle was between smaller oligarchs and the biggest players at the top. Believing it unlikely that the elimination of the estate tax could be extended indefinitely, a significant number of wealthy Americans with a net worth between $5 and $15 million wanted the threshold moved up to exempt their estate tax. In exchange, they supported a higher estate tax rate on everyone above the threshold. Big oligarchs took the opposite position. They wanted no estate tax at all. But if Congress was going to bring it back, the ultra-rich supported a lower exemption in exchange for a lower overall rate.

The big oligarchs won again – but not because of campaign finance. “Money mattered more fundamentally in shifting the tectonic plates underlying American tax debates,” Graetz and Shapiro suggest. And this is precisely where oligarchs deploy their resources in the WDI.

Oligarchs’ “three decades of investments in activist, conservative think tanks” has blazed an ideological path that drones in the WDI follow. Activists at institutions like the Heritage Foundation supply “ideological ammunition to the lobbyists and interest groups … who work relentlessly … to keep up the tax-cutting pressure on the Hill.”

This pressure was hard at work in President Obama’s feeble attempt to curtail offshore tax havens in 2009. In the middle of massive public bailouts to the financial system and large bonuses on Wall Street, the president proposed stronger measures to fight against who he called “tax cheats,” the individuals using offshore tax havens to deny the government nearly $70 billion a year – a level equal to about seven cents on every dollar of taxes paid honestly.

But Obama’s proposals were less aggressive than his rhetoric. The president urged Congress to support efforts to sanction nations that maintained secrecy on bank accounts and corporate entities, and sought to hire 800 additional IRS agents “to detect and pursue American tax evaders abroad”; these measures were projected to save a mere $8.7 billion over 10 years – about one percent of the losses from offshore accounts. Despite the timidity, the proposals received only a lukewarm response from Democrats and outright hostility from Republicans, who argued that they would cripple American corporations’ ability to compete globally.

Dan Mitchell, a senior fellow (i.e. mercenary) at the Cato Institute (a think tank financed by American oligarchs), defended tax havens as “outposts of freedom.” If Americans are concerned that “individuals are moving their money to countries with better tax law, that should be a lesson to us that we should fix our tax law.”

In other words: Let’s decrease taxes on the super-rich.

The WDI, arising naturally from the opportunities and risks created by enormous wealth, has spawned its own pile of these opinion-makers, free to spread their ideas through a compliant corporate media while oligarchs themselves are free to look on.

Oligarchy, or Democracy?

To argue that the United States is a thriving oligarchy does not imply that our democracy is a sham: There are many policies about which oligarchs have no shared interests. Their influence in these areas is either small or mutually canceling.

Though it may strike at the heart of elitism, greater democratic participation is not an antidote to oligarchic power. It is merely a potential threat. Only when participation challenges material inequality – when extreme wealth is redistributed – do oligarchy and democracy finally clash.

The answer to the question of inequality, then, is troubling. Wars and revolutions have destroyed oligarchies by forcibly dispersing their wealth, but a democracy never has.

Democracy and the rule of law can, however, tame oligarchs.

A campaign to tame oligarchs is a struggle unlikely to fire the spirits of those outraged by the profound injustices between rich and poor. However, to those enduring the economic and political burdens of living among wild oligarchs, it is an achievement that can improve the absolute welfare of average citizens, even if the relative gap between them and oligarchs widens rather than narrows.

A graduate student in one of my seminars – resisting my terminology – once declared that the “U.S. has rich people, not oligarchs.” More than anything else, that statement claims that somehow American democracy has managed to do something no other political system in history ever has: strip the holders of extreme wealth of their inherent power resources and the political interests linked to protecting those fortunes.

Of course, this hasn’t happened.

But it is endlessly fascinating that we’re now in a moment when Americans are once again asking fundamental questions about how the oligarchic power of wealth distorts and outflanks the democratic power of participation.

Jeffrey A. Winters is an associate professor of political science at Northwestern University. For a more extensive explanation of his theory of oligarchy, read Oligarchy (Cambridge University Press, 2011).