The Streets Were Paved with Gold - Ken Auletta [99]
Big business inevitably comes to think that big government will always protect them. Lockheed seeks and wins a government bailout. The airlines prefer the security of government regulation and a guaranteed market to competition. Naturally, the public pays through cost overruns and steeper fares. Just as they pay steeper consumer bills to artificially support crop prices and subsidize farmers not to farm land. Each year, Congressman Charles A. Vanik of Ohio compiles figures on the tax payments of major corporations. In 1976, seventeen major American corporations, with combined earnings of $2.6 billion, paid no U.S. income taxes. Admittedly, many of these corporations paid taxes abroad. But of the 168 companies surveyed, 41 paid to the U.S. government less than 10 percent of their worldwide earnings. The corporate tax rate prescribed by law is 48 percent—yet the average effective U.S. tax rate for all 168 companies was 13.04 percent. American Airlines, U.S. Steel, General Dynamics and Chase Manhattan Corp. paid no taxes; Exxon, just 8 percent on earnings of $7.5 billion. To pay less than 13 percent of their income in taxes, the average American family would have to earn less than $20,500. Not that beating the government on taxes is alien to John Q. Citizen. The government estimates, for example, that it loses billions in uncollected taxes from people who work off the books and comprise what they call a “subterranean economy.” The state reports 5,000 New Yorkers are illegally drawing unemployment insurance—$400,000 a week—while basking in Florida’s sunshine. Ten percent of all National Student Loans to New York State residents—$55 million—have not been repaid.
In March 1978, coal miners received a three-year 39 percent wage and benefit hike. The Teamsters Union reflexively demanded the same. According to the White House Council on Wage and Price Stability, since 1950 doctors’ fees multiplied 80 percent faster than inflation, and in 1977 zoomed 9.3 percent, or 50 percent more than consumer prices. The pay of Edgar Griffiths, head of RCA, jumped 26 percent in 1977, to $475,000. Chairman David Rockefeller, according to a 1976 Chase prospectus, was compensated $279,168 annually (exclusive of his dividend payments) and was eligible for a $125,904 annual pension upon retirement. When he was chairman of Bendix Corporation, Treasury Secretary Michael Blumenthal received a free box at Forest Hills tennis stadium and 200 free tickets for all Notre Dame games. Johnny Carson, in addition to an annual salary of $2.5 million, receives fifteen weeks’ vacation, works only three afternoons for twenty-five weeks a year, owns free RCA stock and reportedly snares a free $1 million life insurance policy. Professional sports, which is supposed to be competitive, features athletes demanding no-cut contracts. No-cut contracts already exist for most civil servants. Also for members of the New York Newspaper Guild, who, except in extreme cases, cannot be fired after fifteen years’ service; or for the nation’s 500,000 postal workers who have a no-layoff clause in their contract. Also for longshoremen, who last year muscled guarantees for 2,080 hours of work a year, even if there was no work. In New York, there was no work in 1977 for 3,000 longshoremen. But shipping companies were compelled to pay them up to $16,640 anyway. Of course, the cost is passed along to the consumer. Demands for lifetime job security are becoming more common. “Why should steelworkers have lifetime security?” a union official said to the Times. “I’ll answer with another question. Why should a teacher have lifetime tenure? Why should government workers be protected for life by the Civil Service?” Me too.
Featherbedding and bloated benefits are taken in stride not just because they are more common or workers are more insecure, but because the benefactors are usually so big that it is assumed cost is of no consequence. Unlike members of a family, a small community or a small business, people feel little responsibility toward strangers.