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Hotels Recruiting Scabs (8-30-2006)
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About Marc Norton Online

Beyond Chron
January 18, 2011

Copyright © 2011 Marc Norton

“It’s a war,” proclaimed Blackstone Group Chairman, CEO and co-founder Stephen Schwarzman.  “It’s like when Hitler invaded Poland in 1939.”  For those a little fuzzy on their history, that’s what finally got England and France into World War II.

Blackstone is the owner of Hilton Hotels, currently at war with UNITE HERE Local 2.

Andrew Ross, the business writer for the San Francisco Chronicle, regurgitated Schwarzman’s now-infamous quote in his column last Tuesday.

But neither Schwarzman nor Ross was thinking about Blackstone’s war on hotel workers.  Ross was writing about Schwarzman’s war with President Barack Obama.

Schwarzman was calling out the troops because Obama had the temerity to suggest closing one of his favorite tax loopholes.  Closing that particular tax loophole would require financial oligarchs like Schwarzman to pay income taxes by the same rules as the workers who clean the rooms, wash the dishes and mop the floors at Hilton Hotels.

To Schwarzman, Obama’s proposed legislation put the President in the same class as Adolf Hitler and the Nazis.

The particular tax loophole that had Schwarzman up in arms allows him, and other managers of giant private equity companies like Blackstone, to pretend that their bloated compensation – which runs in the umpteen millions per year -- should be taxed at no more than 15%, as if it was “capital gains,” instead of wages or salaries.

Don’t you wish the income tax on your wages was capped at 15%?  Well, if you are rich enough, you get to make the rules.  That’s why “capital gains” taxes are capped at 15% to begin with – while wages are taxed up the wazoo.

If the Hilton somehow boo-booed and paid its room cleaners one million dollars last year, those room cleaners would be paying 35% to Uncle Sam.  But, then, room cleaners actually work for a living.

Schwarzman, in actual fact, didn’t need to start making war plans.  The lobbyists for all the rich financial managers ganged up on Congress and easily defeated Obama’s legislation last year.  Now, with the Republicans ruling the roost in the House of Representatives, Schwarzman and company can keep raking in the bucks without worrying too much about the Tax Man.

Schwarzman and company saved their tax loophole in the same deal that preserved George W. Bush’s tax cuts for millionaires.  In the words of Citizens for Tax Justice, “It would be difficult to explain to a high school social studies class how this happened.  The majority of Americans want the Bush tax cuts for the rich to expire.  The majority of the House of Representatives and the Senate feel the same.  So does the President of the United States.”

But it happened anyway.  Doesn’t it feel great to live in a democracy?

“I don’t feel like a wealthy person,” Schwarzman told The New Yorker a couple of years ago.  Schwarzman is worth something north of $4 billion, according to Forbes Magazine.

Schwarzman, of course, is just one among a whole class of rich people who claim they aren’t rich, and yet demand that the government do whatever they tell them to do.  And most of the time, they get just what they want.

That’s why it’s called Class War.