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Trump wants socialism for the rich, harsh capitalism for the rest

By Robert B. Reich, Tribune Content Agency on

"America will never be a socialist country," Donald Trump declared in his State of the Union address. Someone should alert Trump that America is now a hotbed of socialism. But it is socialism for the rich. Everyone else is treated to harsh capitalism.

In the conservative mind, socialism means getting something for doing nothing. That pretty much describes the $21 billion saved by the nation's largest banks last year thanks to Trump's tax cuts, some of which went into massive bonuses for bank executives. On the other hand, more than 4,000 lower-level bank employees got a big dose of harsh capitalism. They lost their jobs.

Banks that are too big to fail (courtesy of the 2008 bank bailout) enjoy a hidden subsidy of some $83 billion a year, because creditors facing less risk accept lower interest on deposits and loans. Last year, Wall Street's bonus pool was $31.4 billion. Take away the hidden subsidy and the bonus pool disappears.

Trump and his appointees at the Federal Reserve are easing the bank requirements put in place after the bailout. They'll make sure the biggest banks remain too big to fail.

Trump is promoting socialism for the rich and harsh capitalism for everyone else in other ways. Since he was elected, GM has received more than $600 million in federal contracts plus $500 million in tax breaks. Some of this has gone into the pockets of GM executives.

GM Chairman and CEO Mary Barra raked in almost $22 million in total compensation in 2017 alone.

 

But GM employees are subject to harsh capitalism. GM is planning to lay off more than 14,000 workers and close three assembly plants and two component factories in North America by the end of 2019.

When he was in business, Trump perfected the art of using bankruptcy to shield himself from the consequences of bad decisions -- socialism for the rich at its worst -- while leaving employees twisting in the wind.

Now, all over America, executives who run their companies into the ground are getting gold-plated exit packages while their workers get pink slips.

Sears is doling out $25 million to the executives who stripped its remaining assets and drove it into bankruptcy, but the company has no money for the thousands of workers it laid off.

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