Since its release in 2007, this book has been called "horrifying," "truly shocking," "mind-boggling," and "infuriating." That's no small praise for a book that's not a Stephen King thriller or one of the new apocalyptic novels, like Cormac McCarthy's post nuclear The Road.
Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (And Stick You with the Bill) by David Cay Johnston describes how during the past three decades a whole series of government programs have taken money from the poor, middle class and upper middle class and funneled it to the very wealthiest of Americans. The book investigates the tax breaks, subsidies and giveaways that amount to hundreds of millions of dollars - a "free lunch" for the rich at the expense of everybody else.
Johnston, a reporter for the New York Times, describes the tectonic shift the American government has undergone from serving the middle class, those who pay the taxes, to serving the wealthiest of Americans.
The book could indeed be classified as a horror story - a system gone corrupt that undermines the backbone of the U.S. economy, as well as society. Its message seems particularly timely with our economy seemingly on the edge of recession. It also underscores a question that many have been raising about the exploitive lending practices of America's mortgage industry that underlie the recession: where was the government when this was happening?
As a reporter, Johnston's investigative skills and insights are superb. In 2001, he won the Pulitzer Prize for coverage of inequities in the tax system. In 2003, he wrote the best-seller Perfectly Legal: the Covert Campaign to Rig Our Tax System to Benefit the Super Rich - and Cheat Everybody Else.
The story of a small sporting goods storeowner in Hamburg, Pa., is among Johnston's more poignant ones. The owner was forced to close his family-owned business after local government officials approved $32 million in subsidies to attract a major chain store, Cabela's.
Cabela's made the deal sound like a gift that would vastly increase the economy of the area and create jobs. They received an exemption from paying property taxes for years to come. Part of the store where stuffed and mounted animals were kept on display qualified as a tax-exempt "museum." Cabela's also got to pocket the sales taxes, using them to pay for the building.
While the family business had paid property, school and other taxes, Cabela's paid none. The subsidies paid to the store amounted to over $8,000 from every man, woman and child in the town. Cabela's never created the influx of business they had promised. The few jobs they created paid $8-$9 per hour.
The author points out that Cabela's actions were not part of a new or isolated scheme. It was following in the footsteps of a retail pioneer: Wal-Mart. Sam Walton, Wal-Mart's founder, practiced corporate socialism, Johnston said. Whenever he could, Walton used the government to get free land, long-term cheap leases, pocket sales taxes, and even get workers trained at government expense. Johnston quotes from Phil Mattera of Good Jobs First, a group that tracks corporate subsidies, in stating that Wal-Mart has received over $1 billion in such subsidies.
Johnston also cites George W. Bush's involvement with the Texas Rangers as a case in point. After purchasing the team, Bush threatened to move it if taxpayers didn't approve a tax for a new stadium that cost $180 million. Bush got the local government to invoke eminent domain so the land could be bought below fair value. People lost homes and ranches that had been in families for generations. The subsidy exceeded $200 million by some accounts.
Bush and his investor group paid $86 million for the team and sold it for $250 million. Bush himself invested $600,000 and made $17 million. Bush, who will go down in history as the great tax cutter, owes almost all of his personal fortune to a tax increase that was "funneled into his pocket," Johnston said.
Its important to point out that Free Lunch is not an attack on wealthy Republicans, however. When it comes to handouts to the rich, both Democrats and Republicans are equally guilty.
Fundamentally, Johnston concludes, "We have gone astray." Local, state and federal governments have all failed to protect the majority of citizens while making the rich richer at the expense of everyone else. Reform, he says, starts with the individual, who is ultimately responsible for making our government work.
You can start by reading this book.