Five New Rules to Live By

Posted on January 24, 2012 by

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by  David Morris

The conversation about program will go on for months. To contribute to that conversation I offer five new rules: two of them Constitutional Amendments and three of them laws.

1. Corporations are not persons.

The 14th Amendment, ratified in 1868 gave blacks the constitutional right of citizenship: “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”

In 1886, in a case that had nothing to do with corporate personhood, the court clerk wrote a headnote to the case that contained these fateful sentences, “The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does.”

Since the case itself never addressed the question these words did not comprise a legal precedent. Nevertheless, from then on the Supreme Court has considered the question settled. Some 65 years later Justice William O. Douglas observed, “the Santa Clara case becomes one of the most momentous of all our decisions. Corporations were now armed with constitutional prerogatives.” And they made the most of these new prerogatives.

The 14th Amendment, written to protect weak and largely defenseless ex-slaves, was mostly used to protect big and powerful corporations. Of the 150 cases based on the 14th amendment the Supreme Court heard between 1886 and 1896, 15 involved blacks and 135 involved business entities.

In the next 20 years, relying on the 1886 “precedent” the Supreme Court steadily expanded the number of Constitutional rights accorded to this new type of person. The Women’s International League for Peace and Freedom (WILPF) offers a partial list: in 1893 the Court accorded corporations the right of due process under the 5th Amendment. In 1906 it extended to them the protection against search and seizure in the 4th Amendment. In 1908 it extended to corporations the 6th Amendment right to a trial by jury.

By the 1940s Justice Felix Frankfurter could accurately declare, “Artificial or not, corporations have won more rights under law than people have– rights which government has protected with armed force.”

In early 2010 the Supreme Court gave corporations the right, as persons, to spend unlimited amounts of money to influence elections.

Does it need to be said that unlike a real person, a corporation lacks a conscience. It is guided neither by ethics nor morality but rather by laws that required its Boards to elevate the maximization of profits above all other concerns. Does it need to be said that if a person makes a decision that kills or maims people he will go to jail. If a CEO makes such a decision he, at worst, receives a golden parachute.

A wonderful sign at the Occupy Wall Street protest reads, “I won’t believe corporations are people until Texas executes one.”

We need a constitutional amendment consisting of four words. Corporations are not persons.

2. Money is not speech

In 1976 the Supreme Court ruled that money is speech and therefore protected by the First Amendment. Today members of Congress now spend 25-40 percent of their time begging for money. Political scientist Thomas Ferguson observes, “Public opinion has only a weak and inconstant influence on policy. The political system is largely investor-driven, and runs on enormous quantities of money”.

When states or the federal government have tried to make elections fairer the Supreme Court says no. Vermont passed a law to cap campaign expenditures for state offices. The Court struck it down.

Congress tried to close a loophole in the campaign finance law that allowed billionaire candidates to spend an unlimited amount of their own money on their own campaigns. The Court struck down the law. Speaking for a 5-4 majority, Justice Samuel Alito told Congress that trying to “level electoral opportunities for candidates of different personal wealth” is not “a legitimate government objective.”

The Supreme Court rulings declaring money is speech and corporations are persons make for a lethal cocktail. Jamie Raskin, a Maryland state senator and law professor at American university points out that Fortune l00 corporations had profits in 2008 totaling about $600 billion. If they spent only l percent of their profits on elections, a trivial sum to protect and foster their interests, the total comes to $6 billion. That is more money than was spent for and on behalf of all congressional and presidential candidates in 2008.

We need a Constitutional Amendment consisting of four words. Money is not speech.

3. Tax Financial Transactions

In 1936, John Maynard Keynes first proposed a financial transactions tax. “The introduction of a substantial Government transfer tax on all transactions might prove the most serviceable reform available, with a view to mitigating the predominance of speculation over enterprise in the United States.”

Economist Dean Baker suggests that a modest tax (0.25 percent) could easily raise more than $100 billion a year. “A small increase in trading costs would be a very manageable burden for those who are using financial markets to support productive economic activity. However, it would impose serious costs on those who see the financial markets as a casino in which they place their bets by the day, hour or minute.”

4. Tax all income as ordinary income

Billionaire Warren Buffett has commented on the unfairness of having a lower tax rate than his secretary. That is so because most of his income derives from dividends and capital gains taxed at half the rate as income from work. (I think it altogether fitting that economists use the term “unearned income” to describe this kind of income.)

In 2007 the 400 Americans with the highest income—nearly $345 million—were taxed at less than 17 percent, less than half the ordinary income tax rate of 35 percent because most of their income was derived from investments. If we were to require that all their income be taxed at the 1999 tax rate of 39.6% this alone would generate an additional $300 billion in revenue over the next 10 years.

5. Declare a moratorium on foreclosures

Foreclosures hurt individuals, neighborhoods and the economy. Dumping millions of homes on the market depresses the overall value of all real estate, increases unemployment and disrupts lives and neighborhoods.

The most effective way to stop the tidal wave of foreclosures is through permanent, sustainable loan modifications that reduce homeowners’ mortgage principal and interest rates to market value. In a 2010 report, National Peoples Action proposed one strategy. “Across the country, some 11 million homeowners are $766 billion under water with their mortgages. Paid off over 30 years this means $73 billion a year needed to reset all underwater homeowners’ principals and interest rates would be about half of the $143 billion the top six banks alone are getting ready to pay in 2010 in bonuses and compensation. Even if the top six banks were to absorb the full cost of modifying all underwater mortgages in the country, they would still have $70 billion left for bonuses and compensation.”

The Wall Street occupiers have taken a stand against monied democracy and corporate power. We would do well to join them. Make your voices heard. And demand new rules that will honor the 99% and restore democracy to the nation.

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Posted in: Democracy