This book is by the author of the book, "Perfectly Legal," which I have also reviewed. Like its predecessor, this one will also get your blood boiling, assuming you are concerned about the super rich getting richer and richer via our current federal tax policies and other loopholes and give-a-ways.
Like "Perfectly Legal," this one contains a good blend of stories, literary techniques, well-thought-out opinions and solid factoids. I highly recommend it.
The thesis is that "the elites have captured the government and are milking it for their own benefit...." Put another way, when Ronald Reagan asked the American public if they were "better off now than you were four years ago," he was not really asking this of the middle class. No, he was asking this of the rich and powerful. And under his leadership, he began an extended period where "government has been to make the rich richer."
Johnston says that "our founders did not create America to make us rich....Yet for more than a quarter of a century, we have acted as if economic gain is the great purpose of government....It is the rich who are gorging themselves on the government with giveaways, favors, contracts, rules that rig the economy, tax breaks and secret deals." And he has the details and stories to back this up.
He starts with the story of the Brandon Dunes golf course on the southern coast of Oregon, how the developer bought the land on the cheap, then saw that state regulations were changed to allow his project. He then got a huge government subsidy to build an airport, primarily for corporate jets. Per the author, the project is a net loser for the American tax payer, who, essentially, pays for every round of golf played by the wealthiest Americans.
For the vast amount of Americans, "annual income has been on a long, mostly downhill slide for more than three decades," per Johnston, who claims that despite overall gains in the economy, the bulk of the earnings went "straight to the top." Significant has been the growth of lobbyists in Washington, going from about 17,000 in 2000 to more than 35,000 in 2008. With this gang, per the author, it is all about free lunches.
There is the story about CSX railroad cutting its budget for rail inspections. When an accident happens, a jury eventually awards a huge settlement to the victims. But CSX simply sends a bill to AMTRAK for reimbursement and is paid in full. And there is the story of the new Yankee Stadium, which involved the government seizing public parkland for this private enterprise. And the stories of the owners of sports teams and the way they seek subsidies and tax breaks, while the values of their enterprises rise. In most cases, they pay little or no rent on stadiums built and owned by the public. Says Johnston, "We starve libraries - and parks, bridge safety and schools - to enrich sports-team owners." Of course, this is how George W. Bush made his money.
George Herbert Walker Bush was in the White House, when George W. put together a partnership to buy the Texas Rangers, which was a struggling team playing in an aging stadium. Bush borrowed $600,000 for a two-percent stake in the deal. What the team needed to prosper was a new stadium. Bush saw to it that land was seized by government and that the voters agreed to tax themselves to fund the building of a new ballpark. Nine years later, the team that was bought for $86 million was sold for $250 million. Based on his initial investment, George W. should have made about $2 million on the deal, but somehow he made about $17 million, which he reported as capital gains on his income taxes, not income from a bonus paid to him by the other owners. His tax statement was never audited. He was a wealthy man, thanks to the generosity of the Texas taxpayers.
And then there are the big box stores, like Wal-Mart, that get breaks on property and sales taxes when they move into town. Essentially, the taxpayers are subsidizing the store, so that it can charge less for goods and put competitors out of business. Even Warren Buffet has a history of getting government handouts in subsidized projects for his GEICO Insurance call center locations. And, per the author, "Buffett is a master at delaying the payment of taxes."
Johnston also has stories about Tyco and Enron. And he tells us the post-dating scandals for corporation stock options awarded to company officers. Another is that the Medicare Modernization Act of 2003 "was written in a way that looked out first for the interests of drug makers and health insurance companies...." And there are the hedge funds that bury much of their earning in off-shore banks and are experts at avoiding taxes, both for the companies and their officers.
"For the richest Americans, the years since 1980 have been very good," says Johnston. And his thesis is that those at the top have had government at their side all the way. One result is a health care system that costs much more than any other in the world, but with overall outcomes that are worse or no better. Another is a shrinking middle class that is certainly no better than it was 30 years ago.
"Free Lunch" is a compelling, informative read. I recommend it.
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Top reviews from other countries
Al
After reading this book I feel I have a better understanding of the meaning of CORPORATE WELFARE
Reviewed in Canada on February 8, 2015
Amazon Customer
Great tirade but only for Americans
Reviewed in the United Kingdom on December 24, 2021Grantie
The rich get richer....and you get poorer.
Reviewed in Canada on July 1, 2014