Tag Archives: wealth inequality

Most Americans Don’t Share in Growing Economy

The main reason voters gave for their voting as they did in the Nov 2014 election was the economy as it affected them. Despite job growth going up and unemployment going down and the stock market going up and GDP increasing, most Americans were not sharing in the economy doing better.

As Steve Rattner points out in a New York Times article entitled “Inequality Unbelievably, Gets Worse” :

 “Inflation-adjusted earnings of the bottom 90 percent of Americans fell between 2010 and 2013, with those near the bottom dropping the most. Meanwhile, incomes in the top decile rose.”

Democrats got blamed for the impacts of this growing income inequality in the US. Ironically conservative Republican policies rather than progressive Democratic  policies have exacerbated this inequality. Republicans did a better job of blaming people’s economic woes on Obama and deflected their own culpability and contribution in opposing things like repealing tax loopholes on big oil and other profitable corporations  and pushing for lowering taxes on the rich.

In charts presented in Rattner’s piece, he notes that because of the US’s relative low tax rate compared to that of other developed countries, less funds are available to help people in need of government assistance. The result is that the US ranks at the top as having the most inequality. Rattner says:

“That’s because our taxes, while progressive, are low by international standards and our social welfare programs — ranging from unemployment benefits to disability insurance to retirement payments — are consequently less generous.

Conservatives may bemoan the size of our government; in reality, according to the Organization for Economic Cooperation and Development, total tax revenues in the United States this year will be smaller on a relative basis than those of any other member country.”

Democrats unfortunately did not talk about what they and Obama had been doing to help working families despite Republican opposition.  Again Rattner noted:

To his credit, President Obama has succeeded in keeping income disparities from growing even wider, by such measures as by forcing tax rates on the wealthiest Americans up toward fair levels.

Paul Krugman Rightly Critical of Obama’s Commission on Fiscal Responsibility and Reform

In a column in today’s New York Times, Paul Krugman assails President Obama’s “National Commission on Fiscal Responsibility and Reform.” Calling it “The Hijacked Commission“,  Krugman is responding to the recently released comments by the Commission’s Chairs entitled “Guiding Principles and Values”.

Krugman’s analysis – Under the guise of facing our fiscal problems, Mr Bowles and Mr Simpson are trying to smuggle in the same old, same old – tax cuts for the rich and erosion of the social safety net.”

Here is part of Krugman’s analysis:

“…what the co-chairmen are proposing is a mixture of tax cuts and tax increases — tax cuts for the wealthy, tax increases for the middle class. They suggest eliminating tax breaks that, whatever you think of them, matter a lot to middle-class Americans — the deductibility of health benefits and mortgage interest — and using much of the revenue gained thereby, not to reduce the deficit, but to allow sharp reductions in both the top marginal tax rate and in the corporate tax rate.

It will take time to crunch the numbers here, but this proposal clearly represents a major transfer of income upward, from the middle class to a small minority of wealthy Americans. And what does any of this have to do with deficit reduction?”

In a poll of Midterm Voters done by Democracy for America they asked to pick between the following choices and got the following response:.

1. Congress should make up for possible budget gaps by cutting Social Security benefits?
agree – 4%
2. Congress should make up for possible budget gaps by changing the social security tax to also apply to income above $108,000, which currently is not taxed by Social Security?
agree – 55%
3. Congress should not make any changes to Social Security?
agree – 31%
Not sure – 11%

Clearly proposals to cut benefits for working families and retired citizens whatever their political persuasion are not going to be popular. They are not solutions that would benefit most Americans.

As Nickolas D Kristoff writes in a column in the New York Times entitled “Our Banana Republic”,  the solutions to our fiscal state in America will not be solved by right wing proposals supported by corporations and the wealthy. America is becoming the land of opportunity only for the wealthy and proposals for more tax cuts for the wealthy makes it harder for working families in America to survive.

While Republicans and Tea Party Conservatives argue for extending the Bush tax cuts for the wealthy, they do so in the face of the ugly reality that the rich in America are accumulating more and more of America’s wealth. Working class families struggle and find it harder and harder to make ends meet.
As Kristof  points out,  the wealthy are accumulating more and more of our country’s wealth.

The richest 1 percent of Americans now take home almost 24 percent of income, up from almost 9 percent in 1976. As Timothy Noah of Slate noted in an excellent series on inequality, the United States now arguably has a more unequal distribution of wealth than traditional banana republics like Nicaragua, Venezuela and Guyana.

C.E.O.’s of the largest American companies earned an average of 42 times as much as the average worker in 1980, but 531 times as much in 2001. Perhaps the most astounding statistic is this: From 1980 to 2005, more than four-fifths of the total increase in American incomes went to the richest 1 percent.

That’s the backdrop for one of the first big postelection fights in Washington — how far to extend the Bush tax cuts to the most affluent 2 percent of Americans. Both parties agree on extending tax cuts on the first $250,000 of incomes, even for billionaires. Republicans would also cut taxes above that.

The richest 0.1 percent of taxpayers would get a tax cut of $61,000 from President Obama. They would get $370,000 from Republicans, according to the nonpartisan Tax Policy Center. And that provides only a modest economic stimulus, because the rich are less likely to spend their tax savings.

Republicans are arguing that taxing the rich will hurt small businesses because they will not have the money to spend on reinvesting in their business.  This is nonsense, because any money invested in their business is pre-tax money. It gets written off as a business expense and would not count toward calculation of any income tax owed. To me it seems that more investment is likely in small business if personal income  taxes are higher on the wealthy because then they can spend the full amount on their business without having to pay tax on it.

Exxon Gets Bush’s Blessing

Terrance Hunt writing for the AP says in today’s PI says that

President Bush defended the huge profits of Exxon Mobil Corp. Wednesday, saying that they are simply the result of the marketplace and that consumers socked with soaring energy costs should not expect price breaks.”

Bush, a former Texas oilman, said of oil costs, “I think that basically the price is determined by the marketplace, and that’s the way it should be.”

On Tues, in our blog “Where Your Spare Change Went” we questioned the excess profits of Exxon Mobil and other oil companies being made at the expense of the American public. How is the price determined by the marketplace; I don’t set prices? What am I supposed to do when my heating oil bill comes; refuse to pay? Give me a break.  How about imposing an excess profits tax on oil companies, like proposed by some in Congress and use it to fund programs for conservation and alternative fuels?

Government has a duty to protect the little guy, not just the big corporations soaking the American public for all they can. Except not the Republicans, who see their duty to help the corporations and wealthy with more tax breaks. Wealth continues to concentrate in the hands of a few in America.

Wealth is concentrated in the hands of a few in America. In 2001 according to figures from the Federal Reserve Board, the top 10% of households in America own 71% of the wealth. The bottom 40% own less than 1%. Between 1983 and 2000, the top 20% increased their wealth distribution from 81.3% to 84.4%. The bottom 40% went from .9% to .3%. And Bush wants more tax breaks for the wealthy.

A June 2004 Merrill- Lynch report noted that the concentration of wealth at the top resumed upward spiral in 2003. It attributed it to a “…a rising stock market in 2003, and the decision of the wealthy early on in the year to significantly increase their stock holdings. On average, high net worth individuals (HNWIs, as the report labels them) increased their investments in stocks to 35 percent of their holdings in 2003 from 20 percent in 2002.”

The American Way is the “free enterprise way” which is the George Bush Way which is the Republican Corporate Mantra. Get used to it. If you don’t like it you need to get the Republicans and George Bush types out of office. They’re working for themselves – the ruling elite – that already have the wealth and they intend to keep it and accumulate as much more as they can. When they say they are for lower taxes they just aren’t telling you the whole truth – they are for lower taxes for themselves and if you’re foolish enough to still believe that they are out to help the majority of American citizens then they have you brainwashed. Just open your eyes and look around.

Aren’t you the one who is going to pay more to go to the doctor, pay more for your medicine and more to send your kids to college? The Republican Congress just cut money for these programs It’s been their plan all along. Cut taxes for the rich and cut programs for the poor and middle class. It’s the Ruling Class’s Way.