How The Recession Has Benefited The Richest Of The Rich

Jul 6, 2020
Originally published on July 6, 2020 11:24 am
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It's been a very difficult economy for a lot of Americans to navigate over the past few months. There have been so many layoffs, a growing number of bankruptcies. But there is a small group of people who have emerged from the downturn richer than ever. As NPR's Jim Zarroli reports, these were already the people who were the richest among us.

JIM ZARROLI, BYLINE: Even after giving up a chunk of his fortune in a divorce last year, Amazon founder Jeff Bezos is still the richest man on the planet by far. Chuck Collins is with the left-leaning Institute for Policy Studies.

CHUCK COLLINS: We knew something maybe a hundred years ago about the Gilded Age about, you know, the sort of great industrial fortunes. But I don't think the planet has seen anything like Jeff Bezos. I mean, if he was still married today, he'd be worth over $210 billion.

ZARROLI: And since the pandemic started, Bezos has only gotten richer - at least $25 billion richer - even as he's faced controversy over pay and working conditions for Amazon warehouse employees. Collins says like Bezos, many of the super-rich, the 1% of the 1%, have come out of the pandemic even richer.

COLLINS: We've been watching, really, since the middle of March, billionaire wealth surge.

ZARROLI: Collins says during the Great Recession, it took 2 1/2 years for the nation's billionaires to recover the wealth they'd lost. This time, they've regained much of it in a matter of weeks. One reason the rich are so much better off has to do with changes in the tax code. When President Trump signed the $2 trillion CARES Act in late March, he said it would throw a lifeline to those most in need.

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PRESIDENT DONALD TRUMP: This will deliver urgently needed relief to our nation's families, workers and businesses.

ZARROLI: Less obvious was the way the CARES Act also benefited some of the richest Americans, says William Gale of the Tax Policy Center.

WILLIAM GALE: The benefits that went to high-income households were a little more complex or convoluted and certainly less easy to see. But they were also - on a per-capita basis, they were huge.

ZARROLI: Tucked into the bill are a series of provisions that mostly cut taxes for rich people. For example, they can now reduce their tax bills by claiming bigger losses from previous years, even though the losses they suffered had nothing to do with COVID-19.

The Joint Committee on Taxation says that provision alone will provide an average tax cut of $1.6 million for people in the top income bracket. That includes a lot of people in the real estate business, like the Trump family. Democratic Senator Sheldon Whitehouse of Rhode Island wants to reverse that change.

SHELDON WHITEHOUSE: It's just totally - I mean, unseemly is such a mild word. It's disgusting.

ZARROLI: A much bigger reason for the resurgence in wealth is the historic stock market rebound. A small group of favored tech stocks are actually trading higher than before the pandemic. Take Tesla. Its quirky CEO, Elon Musk, argues that people like him, people who've become rich by building companies, are actually good for the economy. He spoke on the podcast "The Joe Rogan Experience."

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ELON MUSK: So we all have this absurd view that the economy is like some magic horn of plenty. Now, let me just break it to the fools out there. If you don't make stuff, there's no stuff.

ZARROLI: And making stuff has been really good for Musk. His own wealth has more than doubled this year to $51 billion. Chuck Collins says these outsized gains in wealth by a lucky few during a deep recession only underscore the vast disparities of wealth in the country.

COLLINS: It shows that there's some kind of deep, unequal sacrifice that, you know, some people are doing so well when others are struggling so much.

ZARROLI: And Collins says that can only undercut the sense of unity and solidarity the country will need if it's going to get through the pandemic. Jim Zarroli, NPR News.

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