Much has been made of the 1% vs. the 99%; the “super-rich” vs. the rest of us, who are presumably the hard working, loyal Americans who’ve been left behind. But who are the rest of us, and how does who we are affect how much we pay in taxes, and how we may vote?

The chart below depicts the American electorate divided not into two groups – the 1% vs. the 99%, but four groups – the 1% super-rich, then 20% representing government workers, 46% representing citizens who either pay zero net taxes or negative taxes (ala the “earned income credit”), and the remaining 33% who are neither super-rich, government employees, or not paying taxes. One might term this group the forgotten 33%, because no special interest will speak for them. They have neither the numbers nor the financial wherewithal to decisively influence elections.

The choice of colors – red for the 20% political class AND for the 46% entitlement class, is not accidental. These voters have an identity of interests that automatically inclines them to favor more government spending; government workers because more government spending means more job security, higher pay and benefits, and more expansion of their organizations, and citizens who pay no taxes because their economic status is enhanced through receiving entitlements for which they bear no share of the costs. This identity of interests between the political class and the entitled class has created a supermajority of voters in America who have a self-interest in supporting big-government.

Perhaps the most appalling – and unchallenged – fallacy promoted by the big-government supermajority, primarily through their spokespersons in the public sector unions, is that the super-rich are “trying to destroy the middle-class by pitting the private sector workers against the public sector workers.” Nothing could be further from the truth.

The middle class can indeed be represented by the 20% of the population who works for the government, combined with the 33% of the population who works in the private sector and make enough money to pay income taxes. But the similarity ends there. Government workers have pay and benefits that are, on average, twice what private sector workers earn. Their pension funds offer defined retirement benefits that are literally five times better, on average, than what private sector workers collect from social security.

While the government worker union spokespersons want us to believe that Wall Street is trying to divide and conquer the middle class by pitting private sector workers against government workers, the truth is this: Government workers have joined with Wall Street and turned against the private sector taxpayers, because it is in their mutual economic interests to do so. Nothing illustrates this fact more clearly than the existence of nearly $4.0 trillion in government employee pension fund assets, paid for by taxpayers, invested and managed by Wall Street, with taxpayers guaranteeing the returns (if the investments fall short, taxes go up), and government workers guaranteed the defined benefit that allows them to retire, on average, 10-15 years earlier than private sector workers, with pensions that average 3-4 times as much money as social security.

The “super-rich” embody, of course, more financial interests than just those of Wall Street bankers. But Wall Street bankers, who used their bipartisan political influence to over-build America’s financial sector and defer any sort of meaningful regulations that might have introduced competition and accountability into their industry, are the ones who most deserve the ire of the American electorate. They are also the ones who are most co-dependent with the political class, because there is no source of money pouring into Wall Street that comes anywhere close to the hundreds of billions each year that taxpayers have to fork over to the public employee pension funds.

To turn around and suggest that somehow the super-rich are aligned with the forgotten 33% – those middle-class private sector workers who make enough to pay taxes – strains credulity. Both the super-rich as individuals and the super-rich to the extent they are associated with corporations or financial institutions are completely bi-partisan in their political contributions. For that matter, Republicans are only scarcely less addicted to big government programs and higher taxes than Democrats. Many of the super-rich are not capitalists in the most virtuous and productive sense of the word – they aren’t trying to altruistically imagine innovations that will make our lives better, then fighting to convince people to voluntarily purchase these products – they are using their political influence to lock out competitors, access government subsidies, and force people to purchase their products through laws and regulations.

America’s forgotten 33%, those who are neither entitled to avoid all taxes, nor members of the political class who pay no taxes, nor the super-rich, might be called “The Atlas Generation.” They carry the world on their shoulders. Their challenge is daunting – they must convince the political class to support sustainable taxpayer funded benefits under formulas that apply equally to ALL workers, public or private, without relying on Wall Street speculative investments to pay for this. Equally challenging, they must convince the entitled class that there is an alternative to identity politics, the politics of envy, and the cycle of government dependency. And they must convince a critical mass of the politically influential super-rich to embrace and advocate a political economy that nurtures competition instead of crony capitalism.

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    11 Responses to America’s Atlas Generation – The Forgotten 33%

    1. Justin Wonder says:

      What a ridicous and shallow piece. Government workers pay the same taxes as private sector workers.
      When comparing jobs where duties and responsibities are identical or similar, government workers earn less in day-to-day compensation, but when pensions or deferred compensation is added to the analysis their pays are about the same,

    2. art says:

      This is a great piece. Of course we all pay taxes but govt workers get back multiples of what they put in while private sector gets fractions. Plus unless things change private sector is on the hook for govt pension shortfalls as they have been deliberately under funded to fool private sector taxpayers. Also while doctors may make less in govt(that is changing as many medical practices are declining due to reduced reimbursements and doctors are switching to govt employment) the vast amount of jobs pay more in govt(for ex DMVehicle or Welfare offices are essentially bank teller jobs but pay 40-50K plus bene for a job that pays 20K at bank). A few high school math/science teachers may have transferable skills, but most are low academic achievers that go to “teachers colleges”(which used to be called “normal colleges” that were structured in an an agriculture age to give students “normal” skills to function.

      • Peggy says:

        well said, Art; the above piece does a good job of spelling out the overlooked but obvious injustices, needs to be addressed.

    3. Tough Love says:

      Justin …. Isn’t it odd that Public Sector (but rarely others) not only support, but often rally for tax INCREASES? Not when one realizes that for each $1 in incremental taxes paid by Public Sector workers they get back $6, most of which goes to supporting their grossly excessive pensions and benefits.

      And the US Gov’t BLS has shown that cash pay in the Public Sector is equal or better than cash pay in comparable Private Sector jobs. With this as the backdrop, there is ZERO justification and ANY greater pensioner benefits. Today, the Taxpayer paid-for share of Public Sector pensions are 2-4 times(6 times for safety workers) greater in value at retirement than their Private Sector counterparts.

      Public Sector pension plans (for future service) should be frozen and replaced with a 401K-style DC plan with a modest taxpayer match. Their retiree healthcare subsidy should grow no further or be fully paid for from their own wages.

      Collective Bargaining must be outlawed. Public Sector Unions are a cancer on society.

    4. Chuck McCoy says:

      Justin Wonder,

      You have a very poor understanding of how the economic system works in a free market economy. All tax dollars have their origin in the private sector where economic creation is spawned. Government employee tax dollars are “second generation” tax dollars that come first from the private sector.

      Think it through man, also question your education, did you go to government run schools?

    5. Shawn says:

      As much as I sympathize with the gist of your argument, the 46% do pay sales taxes, and those who work pay “payroll” taxes – FICA and Medicare add up to over 14%, counting the “employer contribution”. And everyone pays property taxes, the renters pay them indirectly.

      And no, government worker’s taxes do not help to support the system, any more than I can fly by pulling on my own bootstraps.

    6. Charles says:

      I have worked for a living. I pay taxes. California takes my time and pays me for it. I also get benefits.

      So?

    7. Bill says:

      Charles, you’re absolutely correct. You have been paid for your time. But you have added absolutely nothing by way of increased value to the economy. I’d be willing to bet that means nothing to you; parasites don’t concern themselves with how their host is faring.

    8. Steve Adams says:

      15 mil state and local full time, 4.5 mil part time, 3 mil federal. http://www.census.gov/govs/apes/

      Approx 20 mil fte – seems more like 13% then 20%.

      Still your point is great – add up the people that get the majority of their income from forcibly taking money from others via the government and we’ve passed the tipping point.

      Greece – here we come!

    9. Pat says:

      My husband worked in the private sector for 45 years at a well-known national company. He retired last year, and shortly after, met two schoolteachers who had recently retired also. They asked what his pension was, he told them and they snickered. They thought that the $3200 monthly pension was peanuts…
      Neither one of them worked over 30 years and they got more than a 45 year private sector worker?

      • Editor says:

        Pat,

        Sadly, this is typical. As you can see from the links to the raw data (below), even public school teachers now receive pensions far, far in excess of what social security or a corporate pension can offer. Even combined, they rarely come close. Those “snickers” may have been misguided empathy, not cruelty, because most public sector workers with this attitude actually think we could afford to pay EVERYONE pensions equivalent to what they receive. This is ridiculously out of touch with reality however – if every one of the 10 million Californians over the age of 55 collected a pension of $65,000 per year, it would cost 650 billion dollars per year – an amount equivalent to about 40% of California’s entire GDP.

        The average state or local government worker in California makes nearly $70,000 per year (ref. U.S. Census 2010 State Payroll – California and U.S. Census 2010 Local Government Worker Payroll – California). The average state or local government worker in California, if they work 30 years, will retire with a pension that averages $66,864 per year, and the average public school teacher in California, if they work 30 years, will retire with a pension that averages $68,316 per year (ref. CalPERS Annual Financial Report FYE 6-30-2011, page 153, and CalSTRS Annual Financial Report FYE 6-30-2011, page 149). Bearing in mind that most private sector workers spend at least 40 years performing full-time work – for example, from age 25 until age 65 – a public school teacher in California who works 40 years will receive an average retirement pension of $103,128 per year.

        Feel free to share these links. They are not concocted numbers, they are raw data from CalPERS and CalSTRS actual annual reports, as well as U.S. Census data. It is disappointing, to put it mildly, that the public relations machines who represent CalPERS and CalSTRS reference average pension numbers so much lower than the reality, which is buried in the fine print. The low numbers they reference include people collecting pensions who only worked a few years, and barely qualified for a minimal pension. These misleadingly low numbers also include people who retired 15 or more years ago, before pension formulas, along with the base salaries they are calculated upon, were increased far beyond sustainable levels.

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