Monday, November 15, 2010

The Increasing Income Inequality Between The Wealthiest Americans And Everyone Else

Excerpts from an Op-Ed by New York Times columnist FRANK RICH
"Who Will Stand Up to the Superrich?"

Can this country afford the systemic damage being done by the ever-growing income inequality between the wealthiest Americans and everyone else?

The wealthiest 1 percent of American earners took in 23.5 percent of the nation’s pretax income in 2007 — up from less than 9 percent in 1976.

During the boom years of 2002 to 2007, that top 1 percent’s pretax income increased an extraordinary 10 percent every year.  Over that same period, the median income for non-elderly American households went down and the poverty rate rose.

The wealthiest 1 percent of Americans now have tax rates a third lower than the same top percentile had in 1970.

Only 40 percent of those asked in the 2010 election Nov. 2 exit poll approved of an extension of all Bush tax cuts. President Obama’s argument against extending the cuts for the wealthiest has now been reduced to the dry accounting of what the cost would add to the federal deficit. As he put it to CBS’s Steve Kroft in a "60 Minutes" interview, “the question is — can we afford to borrow $700 billion?”

The very top earners will be by far the biggest beneficiaries if there’s an extension of the expiring Bush-era tax cuts for income over $200,000 a year (for individuals) and $250,000 (for couples). The G.O.P. has vowed to fight to the end to award this bonanza, but that may hardly be necessary given the timid opposition of President Obama and the lame-duck Democratic Congress.

“How can hedge-fund managers who are pulling down billions sometimes pay a lower tax rate than do their secretaries?” ask the political scientists Jacob S. Hacker (of Yale) and Paul Pierson (University of California, Berkeley) in their deservedly lauded new book, “Winner-Take-All Politics.”

The Tax Policy Center found in 2008 that only 2 percent of all Americans reporting small-business income, regardless of tax bracket, would see tax increases if Obama fulfilled his pledge to let the Bush tax cuts lapse for the top earners.

The economist Dean Baker calculated that the yearly tax increase at the lower end of that bracket, for those with earnings between $200,000 and $500,000, would amount to $700 — which “isn’t enough to hire anyone.”

Those in the higher reaches aren’t investing in creating new jobs even now, when the full Bush tax cuts remain in effect, so why would extending them change that equation? American companies seem intent on sitting on trillions in cash until the economy reboots. Meanwhile, the nonpartisan Congressional Budget Office ranks the extension of any Bush tax cuts, let alone those to the wealthiest Americans, as the least effective of 11 possible policy options for increasing employment.

Nor are the superrich helping to further the traditional American business culture that inspires and encourages those with big ideas and drive to believe they can climb to the top. Robert Frank, the writer who chronicled the superrich in the book “Richistan,” recently analyzed the new Forbes list of the 400 richest Americans for The Wall Street Journal and found a “hardening of the plutocracy” and scant mobility. Only 16 of the 400 were newcomers — as opposed to an average of 40 to 50 in recent years — and they tended to be in industries like coal, natural gas, chemicals and casinos rather than forward-looking businesses involving the Green Economy, tech or biotechnology. This is “not exactly the formula for America’s vaunted entrepreneurial wealth machine,” Frank wrote.

As “Winner-Take-All Politics” documents, America has been busy “building a bridge to the 19th century” — that is, to a new Gilded Age. To dislodge the country from this stagnant rut will require all kinds of effort from Americans in and out of politics. That includes some patriotic selflessness from those at the very top who still might emulate Warren Buffett and the few others in the Forbes 400 who dare say publicly that it’s not in America’s best interests to stack the tax and regulatory decks in their favor.

Many of the countless tasks that need to be addressed to start rebuilding an equitable America are formidable, but surely few, if any, are easier than eliminating a tax break that was destined to expire anyway and that most Americans want to see expire. Two years ago, Obama campaigned on this issue far more strenuously than he did on, say, reforming health care. Now he and what remains of his Congressional caucus are poised to retreat from even this clear-cut battle. You know things are grim when you start wishing that the president might summon his inner Linda McMahon.

Broadcast Union News:
Instead of raising the age for collecting Social Security, just remove the income cap so everyone pays in on their full income. Instead of cutting taxes, cut tax breaks for corporations and the top 5% of income earners. Give tax rebates for actual full-time job creation, and impose tax penalties for moving jobs overseas.  Pass the Employee Free Choice Act (EFCA) to create a more level playing field for collective bargaining. Create massive public works projects to fix America's crumbling infrastructure and create jobs. Bring back the draft so that all Americans, from every economic sector, have a stake in ending the wars that have gone on far too long. Make campaign contribution reforms that create a fair chance for candidates to compete without huge corporate contributions.  Pass the Marriage Equality Act, eliminate "Don't Ask, Don't Tell", and increase funding for enforcement of human rights, worker rights, and civil rights. Do these things and we will have made a start on saving Democracy in this great nation. - BD

No comments: