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The wrecking-ball crew and the looting of America

History guarantees that Trump’s billionaires will overreach

Robert Reich Nov 18

Friends,

What do card sharks, magicians, pickpockets, and tyrants do to hide their tricks? They deflect your attention. “Look over here!” they say, as they create a commotion that preoccupies your mind while they bamboozle you.

At first, I thought Trump’s gonzo nominations were intended to flood the zone — overwhelm us, demoralize us, cause us to lose our minds.

Alternatively, I thought, they had a strategic purpose: Smoke out Senate Republicans who might stand in Trump’s way on other issues — such as allying with Putin and destroying NATO — so Trump could purge the holdouts through primary challengers and angry MAGAs.

But while flooding the zone and purging recalcitrant Senate Republicans may be part of it, I’ve come to think there’s a larger plan at work.

Trump wants to deflect our attention while he and his fellow billionaires loot America.

As he consolidates power, Trump is on his way to creating a government of billionaires, by billionaires, for billionaires.

Trump intuitively knows that the most powerful and insidious of all alliances is between rich oligarchs and authoritarian strongmen.

Two billionaires are leading his transition team. The richest person in the world and another billionaire will run a new department of “efficiency.” Other billionaires are waiting in the wings to be anointed to various positions.

America is now home to 813 billionaires whose cumulative wealth has grown a staggering 50 percent since before the pandemic.

Apologists for these mind-boggling amounts argue they’re not a zero-sum game where the rest of us must lose ground in order for billionaires to prosper. Quite the contrary, they say: The billionaire’s achievements expand the economic pie for everyone.

But the apologists overlook one important thing. Power is a zero-sum game. The more power in billionaire hands, the less power in everyone else’s. And power cannot be separated from wealth, or wealth from power.

The shameless feeding frenzy that has already begun at the troughs of Trump — planning for more tax cuts for the wealthy, regulatory rollbacks to make the wealthy and their corporations even wealthier, subsidies for the wealthy and their enterprises — constitute a zero-sum power game that will hurt average Americans.

The pending tax cuts will explode the national debt. As a result, the rest of America will have to pay more in interest payments to the holders of that debt — who, not incidentally, are wealthy Americans.

This will require that the middle and working classes either pay higher taxes or sacrifice some benefits they rely on (Social Security, Medicare, Medicaid, and the Affordable Care Act).

Meanwhile, regulatory rollbacks will make workplaces less safe, products more dangerous, our air and water more polluted, national parks less welcoming, travel more hazardous, and financial transactions riskier for average people.

Trump has tapped Elon Musk, who invested some $130 million to get Trump elected (not to mention in-kind gifts of support from X and a swing-state operation to register right-leaning voters) and former pharmaceutical executive Vivek Ramaswamy, to run a “Department of Government Efficiency.”

Musk calls it DOGE, named after Musk’s favorite cryptocurrency — whose value, not incidentally, has soared since Musk began using its name for his incipient department.

It now appears that DOGE won’t be an actual “Department” but a powerful advisory group outside the official government yet inside the Trump White House. It will announce — presumably posted with great fanfare on X — what Musk allies describe as “slash-and-burn business ideologies to the U.S. government.”

Musk has vowed to cut at least $2 trillion from the federal budget. The richest man in the world explains that “we have to reduce spending to live within our means. And, you know, that necessarily involves some temporary hardship.”

Hardship for whom? Not for Musk. Not for Trump. Not for the billionaires heading Trump’s transition team. Not for all the billionaires who will profit from the planned tax cuts and regulatory rollbacks.

And not for people responding to Musk’s recent X post calling for “super high-IQ small-government revolutionaries willing to work 80+ hours per week on unglamorous cost-cutting. If that’s you, DM this account…. Elon & Vivek will review the top 1% of applicants.”

Musk says we have to reduce spending “to live within our means?” Whose means?

Since Trump’s election victory on November 5, Musk himself has become $70 billion richer due to the rising value of his enterprises.

Why have Musk’s companies — Tesla, SpaceX, and X — risen so much in value? Because investors expect some or all of the 19 known ongoing federal investigations and lawsuits against Musk’s companies to wind down. (Lawsuits involving alleged securities law violations, workplace safety, labor and civil rights violations, violations of environmental laws, consumer fraud, and vehicle safety defects.)

Investors also expect SpaceX to become more profitable from more multibillion-dollar contracts. Musk’s xAI could also reap vast rewards as the new administration considers AI regulations.

Other billionaires who invested in Trump have also been raking it in.

Oracle founder Larry Ellison, the world’s second-richest person — a close friend of Musk’s and a former Tesla board member — is a longtime Republican donor who’s enjoying his own Trump bump. Since the election, Oracle’s share value has increased 10 percent, increasing Ellison’s own wealth by some $20 billion.

Venture capital billionaire Marc Andreessen, who donated at least $4.5 million to a super PAC that supported Trump, expects to cash in by having Trump ease the antitrust crackdown on Big Tech, in which Andreessen has invested heavily. Andreessen’s wish has already been partly monetized: Big Tech has reaped most of the stock market gains since Election Day.

There’s also crypto. Since the election, the price of bitcoin has surged to record levels. The crypto exchange Coinbase, a major contributor to candidates friendly to crypto, expects regulators to keep their hands off it. Coinbase CEO Brian Armstrong has become about $4.5 billion richer since Trump’s victory, as Coinbase shares soared 67 percent.

Oh, there are also the private prison corporations. George Zoley, a top executive at GEO Group and another major donor to Trump, expects Trump’s reelection to drive up demand for empty beds at detention centers the company runs for Immigration and Customs Enforcement. Since the election, GEO Group has had the largest surge in its stock price since 2016, after Trump was elected the first time.

GEO Group executives told Wall Street analysts on a recent earnings call that Trump’s election could help GEO Group fill as many as 18,000 empty beds at its facilities, which would generate as much as $400 million in annual business.

Venture capitalists and investors in new military technologies are now swarming around the Defense Department like bees over a vast flower bed. They also donated to Trump and expect a big quid pro quo.

The fossil fuels CEOs who plunked down millions of dollars for Trump in the expectation they’d get a fat return in the form of rollbacks of environmental regulations are also celebrating.

The list of wealthy beneficiaries from Trump’s election goes on and on.

So who will suffer the “hardship” Musk predicts?

I doubt that Musk will recommend cutting the billions of dollars in government contracts Musk’s corporations receive, or the GEO Group’s contracts for private prison space, or the military budget. Quite the contrary: Government spending on all these will increase.

Instead, Musk will want to cut the enforcement of antitrust laws, securities laws, workplace safety laws, labor laws, civil rights laws, laws against consumer fraud, laws mandating vehicle safety, tax laws, and environmental laws.

And because there’s no other place to find anything close to the $2 trillion he’s promising to cut from the federal budget, I expect Musk will turn to cutting Social Security and Medicare benefits.

Here’s where the trick comes in. We’ll all be so distracted by what Gaetz is doing at the Justice Department, Gabbard to national intelligence, and RFK Jr. to public health, that we may not notice.

After all, the next months will be filled with Trump theatrics — a major fight in the Senate over the Gaetz nomination, another fight over recess appointments, another over RFK Jr. and his plans for destroying public health.

Meanwhile, Musk and company will be recommending all sorts budget cuts that cause hardship for hardworking Americans but almost no one will notice because of the distractions.

I prefer to end this post on a hopeful note, so here goes.

There has always been a close relationship in America between wealth and power, but it has usually been thought slightly shameful — something to be hidden or elided — because it contradicts the basic tenets of democracy.

Recall the admonition credited to Justice Louis Brandeis that America has a choice: either great wealth in the hands of a few, or democracy — but we cannot have both.

Hence, American politicians typically play up their humble origins. CEOs and bankers minimize their political clout. The wealthy refrain from overt displays of power.

But in Gilded Ages — such as the one that dominated the turn of the 20th century and the one we’re now in — the ultra-rich abandon such humility. The linkages between wealth and power becomes apparent for all to see. Conspicuous consumption becomes the handmaiden of conspicuous clout.

In such times, the wealthy brag about their access to politicians, talk openly about how many tens of millions of dollars they’ve donated to campaigns and about the “return” on these “investments,” and want everyone to know how they’ve turned their affluence into influence and their influence into even more affluence.

Ultimately, these insults to democracy — delivered by the new oligarchs shamelessly, openly, and arrogantly — go too far. They invite a backlash.

If history is any guide, at some point the public will become revolted by the stench of legalized bribery. It will not abide the quid pro quos of billionaire campaign donations for tax cuts and regulatory rollbacks.

The public will also become fed up with brazen billionaire propaganda delivered through billionaire ownership of key media, such as Musk’s X, right-wing radio, and Murdoch’s Fox News, New York Post, and editorial pages of the The Wall Street Journal.

More than a century ago, this sort of revulsion generated what historians refer to as the “Progressive Era.” It was responsible for pushing Teddy Roosevelt to break up the monopolies, institute the nation’s first income tax, stop corporations from funding candidates for president and Congress, and create the Food and Drug Administration.

And when the excesses finally caused the economy to collapse, another upsurge in progressivism prompted Teddy’s fifth cousin, Franklin D., to raise taxes even further on the affluent, create the 40-hour workweek with time-and-a-half for overtime, force corporations to negotiate with unions, institute unemployment insurance, create a minimum wage, and establish Social Security.

If history is any guide, there is no limit to how greedy the greedy will get when the guardrails are lifted. So Gilded Age excesses are almost guaranteed.

And when the corruption and ensuing hardship become so blatant that they offend the values of the majority of Americans, that majority will once again demand systematic reforms that bring us closer to those values.