FacebookTwitterRedditEmail

How to Wage War, FDR-Style, on the COVID-19 Pandemic

Roosevelt and Winston Churchill aboard HMS Prince of Wales for 1941 Atlantic Charter meeting – Public Domain

The United States, President Donald Trump is now proclaiming, stands at “war.” We are facing, in the novel coronavirus, “an invisible enemy” that could claim the lives of more Americans than every shooting war America has ever fought.

But that sort of terrible toll, public health people have been working so hard to remind us, doesn’t have to be inevitable, not if we all sacrifice for the common good.

In 1942, in the months right after Pearl Harbor, President Franklin Roosevelt faced the same basic challenge as we do today. To overcome the fascist forces aligned globally against us, FDR understood, the American people were going to have to sacrifice as never before.

That sacrifice, FDR also understood, would have to be shared. The war’s burden, he believed, had to be “equitably distributed” to ensure that “a few do not gain from the sacrifices of the many.”

“The great masses of our people,” FDR adviser Randolph Paul would add, will sacrifice gladly “if they know that no group is being favored, that rich and poor alike are giving up the comforts of peacetime in order that we may more effectively prosecute the war.”

Our rich today and the corporations they run don’t seem, sadly, to be exactly rushing to give up any of their contemporary comforts. They’re rushing instead to line up for bailouts. Airline executives are asking for over $50 billion in grants, deferred taxes, and loan guarantees. The cruise, hospitality, and gaming industries are clamoring for corona cash, too.

President Trump has been more than sympathetic.

“We’re going to back the airlines 100 percent,” he’s opined in one typical comment. “It’s not their fault.”

That doesn’t happen to be quite true. The airlines are reeling right now in no small part, notes Institute for Policy Studies analyst Sarah Anderson, because they’ve spent the past decade squandering their “free cash flow” — the money left over after operating expenses and capital expenditures — on share buybacks. A whopping 96 percent of the dollars the biggest U.S. airlines could have spent on strengthening their operations for the long haul has gone instead to buying back their own shares of stock, a move that serves only to pump up the rewards that go to top airline execs and shareholders.

U.S. corporations outside the airline industry, meanwhile, have been playing the same make-the-rich-richer games. Overall, S&P 500 companies have spent 50 percent of their available “cash flow” dollars on buybacks.

Corporate America’s top execs would like to see all their lucrative games continue. They’re seeking no-strings-attached federal bailout aid that helps them restore their comfortable pre-corona status quo. But progressive lawmakers on Capitol Hill, backed by the labor movement, are pushing back. They want bailout aid earmarked only for vulnerable workers, not the occupants of executive suites.

Franklin Roosevelt would most definitely approve this pushback thrust. FDR spent a good chunk of World War II fighting to keep top corporate executives from making a killing off the conflict.

In June 1942, for instance, Roosevelt’s war procurement agencies sent 100,000 war contractors a pamphlet that warned against excessive executive compensation. Salary packages over $25,000, the federal contracting pamphlet indicated, could be “open to question and subject to limitation.”

The limitation would come that October when a presidential proclamation created a new federal Office of Economic Stabilization and directed that new agency to limit corporate executive pay after taxes to $25,000 per year, about $400,000 in today’s dollars.

Supreme Court justice James Byrnes stepped down from the nation’s highest tribunal to run this new office, and he quickly issued regulations that established a maximum fine of $1,000 — and up to a year in jail — for any executive violating the $25,000-cap rule. He also denied corporations tax deductions on the entire salary paid out to cap rule violators, not just “the amount in excess of $25,000.”

Unfortunately, in the new Congress that convened the following January, progressive lawmakers no longer had a working majority, mainly because many conservative-leaning election officials had effectively disenfranchised FDR-leaning soldiers serving abroad. Less than 1 percent of the nation’s five million active-duty service personnel voted in the 1942 election.

Conservatives in the resulting new Congress attached language killing the $25,000 corporate pay cap to a badly needed raise-the-debt-ceiling bill, and FDR didn’t have the votes to sustain a veto. So FDR didn’t win his corporate executive pay-cap battle, but he did win the broader war for shared sacrifice — thanks to his aggressive action on the tax front. America’s rich would be paying, by 1944, about four times more of their income in taxes than the rich paid at any point during World War I.

In 1939, the year the war in Europe began, the first dollar of taxpayer income over $200,000 faced a 66 percent federal income tax rate. In 1944 and 1945, that first dollar over $200,000 faced a 94 percent tax rate. That top rate would hover around 90 percent for the next two decades, years that would see the emergence in the United States of the first mass middle class in world history.

Shared sacrifice had become shared prosperity.

Can we today follow in FDR’s bold footsteps? Some lawmakers on Capitol Hill are certainly trying to march in his direction. The Congressional Progressive Caucus Center, for instance, has released an innovative menu of policy proposals for making sure that bailout dollars help the many and not the few.

Among the proposals: requiring CEOs of bailed-out businesses to cap executive compensation at 50 times the pay of their most typical workers, the upper limit of the CEO-worker pay gap in the decades right after World War II. In 2018, by contrast, 50 U.S. corporations paid their top executives over 1,000 times their typical worker pay.

Linking executive pay at bailed-out companies to worker compensation would give top execs a powerful incentive to raise their worker pay. Limiting CEO compensation during the corona crisis would also help us transition toward a more equal economy for our post-corona world.

“If major corporations can be effectively run by CEOs getting one tenth the going rate, it would set a valuable precedent,” as economist Dean Baker observes.

Our world would look quite different, he adds, “if we had the same ratios of CEO to worker pay as fifty years ago.”

If we win the war the right way, in other words, we can go on to win the peace.

More articles by:

Sam Pizzigati writes on inequality for the Institute for Policy Studies. His latest book:The Case for a Maximum Wage  (Polity). Among his other books on maldistributed income and wealth: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970  (Seven Stories Press). 

Weekend Edition
August 07, 2020
Friday - Sunday
John Davis
The COVID Interregnum
Louis Yako
20 Postcard Notes From Iraq: With Love in the Age of COVID-19
Patrick Cockburn
War and Pandemic Journalism: the Truth Can Disappear Fast
Eve Ottenberg
Fixing the COVID Numbers
Jeffrey St. Clair
Roaming Charges: Every Which Way to Lose
Paul Street
Trump is Not Conceding: This is Happening Here
Robert Hunziker
The World on Fire
Rob Urie
Neoliberal Centrists and the American Left
John Laforge
USAF Vet Could Face ‘20 Days for 20 Bombs’ for Protest Against US H-Bombs Stationed in Germany
Andrew Levine
Clyburn’s Complaint
Kavaljit Singh
Revisiting the Idea of Pigou Wealth Tax in the Time of Covid-19
Paul Ryder
Here Come the 1968 Mistakes Again
T.J. Coles
Fighting Over Kashmir Could Blow Up the Planet
David Macaray
Haven’t We All Known Guys Who Were Exactly like Donald Trump?
Conn Hallinan
What’s Driving the Simmering Conflict Between India and China
Joseph Natoli
American Failures: August, 2020
Ramzy Baroud
Apartheid or One State: Has Jordan Broken a Political Taboo?
Bruce Hobson
The US Left Needs Humility to Understand Mexican Politics
David Rosen
Easy Targets: Trump’s Attacks on Transgendered People
Ben Debney
The Neoliberal Virus
Evelyn Leopold
Is Netanyahu Serious About Annexing Jordan Valley?
Nicky Reid
When the Chickens Came Home to Roost In Portlandistan
Irma A. Velásquez Nimatuj
The Power of the White Man and His Symbols is Being De-Mystified
Kathy Kelly
Reversal: Boeing’s Flow of Blood
Brian Kelly
Ireland and Slavery: Framing Irish Complicity in the Slave Trade
Ariela Ruiz Caro
South American Nations Adopt Different COVID-19 Stategies, With Different Results
Ron Jacobs
Exorcism at Boston’s Old West Church, All Hallows Eve 1971
J.P. Linstroth
Bolsonaro’s Continuous Follies
Thomas Klikauer – Nadine Campbell
Right-Wing Populism and the End of Democracy
Dean Baker
Trump’s Real Record on Unemployment in Two Graphs
Michael Welton
Listening, Conflict and Citizenship
Nick Pemberton
Donald Trump Is The Only One Who Should Be Going To School This Fall
John Feffer
America’s Multiple Infections
Kollibri terre Sonnenblume
Thinking Outside the Social Media Echo Chamber
Andrea Mazzarino
The Military is Sick
John Kendall Hawkins
How the Middle Half Lives
Graham Peebles
The Plight of Refugees and Migrant Workers under Covid
Robert P. Alvarez
The Next Coronavirus Bill Must Protect the 2020 Election
Greg Macdougall
Ottawa Bluesfest at Zib: Development at Sacred Site Poses Questions of Responsibility
CounterPunch News Service
Tensions Escalate as Logging Work Commences Near Active Treesits in a Redwood Rainforest
Louis Proyect
The Low Magic of Charles Bukowski
Gloria Oladipo
Rural America Deserves a Real COVID-19 Response
Binoy Kampmark
Crossing the Creepy Line: Google, Deception and the ACCC
Marc Norton
Giants and Warriors Give Their Workers the Boot
David Yearsley
Celebration of Change
FacebookTwitterRedditEmail