The last few decades have seen massive giveaways to the very rich in the US that has resulted in huge increases in the inequalities in income and wealth. See these charts for how bad the situation has become. Even in the last year when almost everyone was badly hit by the economic recession, the millionaires and billionaires saw their wealth jump by almost 20%.

But whenever there is any suggestion of narrowing the gaps, the arguments raised in opposition are fascinating. Suddenly, the very rich people start arguing that those going to be most affected by tax policies aimed at them are actually the poor people. It is quite amazing how there is always a surge in solicitousness for the welfare of the poor whenever the wallets of the rich are threatened.

For example, when suggestions are made that in order to close the budget deficit, the marginal tax rates on the highest income brackets should be raised, we are told that the people who would be hurt most by this move are the people at the low end of the income scale, whose income is in the lowest tax brackets. Why? Because supposedly if you increase taxes on the rich, they will have less money to invest in businesses and so businesses will have less capital and thus will not hire more people or will even close, throwing people out of work. These arguments are usually made in the form of these kinds of just-so stories, without supporting evidence.

When it comes to farm subsidies, they are always sold as essential in order to protect the ‘small family farmer’, a phrase that conjures up a mental image of dad on the tractor, mom baking bread, and the children before and after school cleaning out the barn and feeding the chickens on a small farm that the family has owned for generations, when in reality these subsidies are mostly giveaways to the same large agribusiness that are destroying the environment, keeping livestock in inhumane conditions, and actually driving genuine small family farms out of business.

As another example, the estate tax is imposed on people who die leaving enormous amounts of wealth to their heirs, people like Paris Hilton. The very wealthy, the only ones affected by this tax, have long tried to repeal it and again tried to make out that they were acting on behalf of poor people. They again invoked the small family farmer, who had struggled hard to make a living all his life and after his or her death, the so-called ‘death tax’ was going to be so onerous that the descendants would have to sell the farm to pay off the tax. This is totally bogus. No one could produce even a single example of such a case. To pay any estate tax, the estate would have to be worth more than $3.5 million.

Recently there have been moves to close a loophole that enables the managers of hedge funds and investors in derivatives, the people behind the recent financial collapse who made enormous profits (Making Big Bucks by Betting on Collapse by Carl Ginsburg in the May 16-30, 2010 issue of CounterPunch), to pay only 15% in taxes on this income instead of the top rate of 35% they would have to pay if those profits were treated like ordinary income. On NPR I heard one person opposing closing this loophole, saying that doing so would harm (surprise!) poor people. Why? Because hedge funds provide financing for (among other things) construction and thus taking some of their huge incomes as taxes would mean less money for building projects and thereby put construction workers out of work. So closing a loophole that prevents vastly wealthy people from paying their fair share in taxes is now argued to be a move aimed at construction workers. Again, no evidence is given to support this argument.

BP is playing the same game. In order to pay for the damage caused by the Gulf oil spill, they are being asked to not pay dividends to their shareholders. Suddenly we are hearing that the people who would be harmed most by not paying dividends would be the old pensioners in England who depend on the BP dividend to keep them from starvation and freezing in the cold English winters. In reality, the largest shareholders in BP are big institutions, with Wall Street banking giant JP Morgan Chase topping the list.

Just last night, the auto industry obtained an exemption from oversight by the new consumer watchdog contained in the financial industry regulations to protect consumers that are being sought in the wake of the financial meltdown. Their argument to for special consideration? That they represent the ‘neighborhood auto dealer’, that they are ‘Main Street and not Wall Street’ (to use a current populist cliché), when in reality more than 70% of the loans they offer are backed by the same big Wall Street firms.

The image that the very rich try to impose on the rest of us is that what they constantly seek to do with their money is find opportunities to invest in new business and create new jobs, when in reality what they do is use their money to make more money by financial manipulation. They don’t care even if, as it often does, their greed results in low wages or throws people out of work because of the pressure to squeeze more profits out of them. When they do spend their money, it is on luxurious living, so perhaps it results in more business for yacht makers and a few people in the service sector such as high-end restaurants, hotels, and places of entertainment.

What these examples illustrate is that the one thing that very rich people are good at is spinning stories that can make their naked greed and self-interest seem like civic mindedness.

POST SCRIPT: Bill Maher’s New Rules

The only thing that is working in favor of Obama and the Democrats, despite their terrible performance in office so far, is that the Republican Party has gone crazy. American conservatism has been hi-jacked by demagogic know-nothings who pander to and fuel the most paranoid and xenophobic fears of people. See this video by Bill Maher on the difference between British and American conservatives.