Surprise, surprise: rich get richer
THIS IS the biggest stickup in American history. First we were told that in order to save the nation, we had to bail out irresponsible banks and decrepit car companies, and to extend the Bush-era tax cuts. Last week, we were told that the federal government would be shut down without $38.5 billion in cuts that will slash labor, education, transportation, and health programs, as well as State Department diplomacy. Those cuts are only the beginning as House Budget Committee Chairman Paul Ryan, the Wisconsin Republican, wants $6 trillion in cuts over the next decade, plus $4 trillion in tax breaks for corporations and the wealthy.
The only people being saved are the wealthy.
While unemployment remains at close to 9 percent, the average salaries for CEOs at 200 of America’s largest companies rose 20 percent, to $11.7 million, according to the New York Times. Last month, the Wall Street Journal reported that CEO bonuses at 50 major corporations rose 30.5 percent last year, the biggest gain in three years, to an average bonus of $2.5 million.
The rich have recovered so fast that their share of America’s income is on track to break the all-time record. According to Emmanuel Saez of the University of California, the top 10 percent of Americans hoarded 46.3 percent of the nation’s income in 1932. That fell to around 31 percent in the 1950s and held steady into the early 1970s, due to a combination of World War II fiscal shocks, more progressive income and corporate tax policies, unions, and social programs. The top 1 percent had 19.6 percent of the nation’s income in 1928 and that fell to 7.7 percent by 1973.
Then income for the wealthy roared back full circle. The share for the top 10 percent was back up to 45.6 percent in 2008. For the top 1 percent, it was back up to 18.3 percent in 2007. All signs point to these shares breaking the records of the 1920s and ’30s. In an email, Saez said, “I expect top income shares to be going up sharply in the near future . . . With a split Republican/Democrat, Congress/administration, it does not look like the government will take drastic policy steps to change this trend in the medium run (such as more progressive taxation, or stringent regulations). So I don’t see this trend changing.’’
This is nothing less than a moral tragedy. If we had just ended the Bush-era tax cuts and returned to the Clinton years — which were booming ones for the economy — the Treasury said it would get back $3.7 trillion over the next decade. Instead, in a bipartisan disaster, Capitol Hill gave all that away. The Center on Budget and Policy Priorities estimates that the tax benefits for the ultra-wealthy reached the point where they paid only 16.6 percent of their income in federal income taxes in 2007, compared to 30 percent in 1995. The Institute for Policy Studies calculates that maintaining tax brackets for high earners similar to those in much of Europe while closing corporate tax loopholes could amount to $4 trillion in additional revenue over the next decade. Instead, we have Ryan’s proposal for $4 trillion in even more tax cuts.
Meanwhile, the US Census last year said the rich-poor income gap reached record levels, nearly doubling gaps of the late 1960s. The United States is the richest nation on earth, yet we rank 97th in family-income equality, according to the CIA Factbook. Our inequality is so profound that we rank behind nations we associate with corruption, poverty, oppression, or collapsed governments — Nigeria, China, India, Ivory Coast, Tunisia, Egypt, Burundi, Nicaragua, Bangladesh, Ethiopia, and Greece. The most economically equal country in the world is Sweden.
Even the CIA says the United States is now a nation where “those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits. Since 1975, practically all the gains in household income have gone to the top 20 percent of households.’’
For all of those “gains,’’ we are sliding backward with each announcement of CEO pay. The gain for a few has become the great American loss.
Derrick Z. Jackson can be reached at firstname.lastname@example.org.