Home ALEC Inequality and Poverty

Inequality and Poverty


Government is failing Americans. A nation accustomed to creating new industries, technologies and good jobs within those industries can no longer expect vision from government. Incomes, fortunes in fact, earned abroad by owners of corporations go directly from the marketplace into the pockets of the already rich. This inequality of outcomes and incomes is causing huge problems for many Americans, and most certainly for Americans who fall below the median income.

The American rich today hoard money, investing it both here and abroad in financial ventures that benefit at most ten percent of the income earners in the country. But hoarding today does not mean lack of reinvestment. It means lack of reinvestment in opportunities for domestic manufacture and industries that would be able to handle the majority of domestic needs.

We make very little of our domestic consumption here any longer. We import it, put it on shelves and hire clerks, at clerks’ pay, to stock it and re-stock it. In the 1950s through the 1970s, we made as much as 88% of our domestic consumption, from automobiles to apparel, right here in the United States. Today, we make less than 20% of American good in the United States. And after the Great Bush Crash and Depression, American jobs have not recovered.

Working in Poverty

According to one study, by the National Employment Law Project, while fewer than 2 million of the absolutely lowest paid jobs, (minimum wage up to $13 an hour) were lost, almost 4 million were added at those wages since the Bush Depression. Over 3 million jobs in the mid-range wage category (up to $20/hour) were lost and only 2 million recovered. The rest dropped into the lowest category. And finally, among the highest paid worker category (up to $32/hour) a net million jobs were lost and returned at lower wage rates. In all, four million workers had their incomes reduced, and many more undoubtedly in exempt (non-hourly) employees who are paid on a weekly or monthly basis.

In the extensive study here in the U.S. by the Royal Bank of Scotland, one of our major banks, sixty percent of all new jobs since 2009 were in the low income category, replacing almost the same number of higher paying jobs lost during the Bush Depression. In addition, people working part-time, seeking full-time jobs but unable to find them, increased to 20 percent of all workers. About one-third of all workers (47 million out of about 142 million) are now in low-wage (up to $13/hour) jobs. About one-third of all Americans, at least 110 million, live in poverty. No wonder the national average wage rate has dropped 2%. It has probably dropped more than that recorded and published amount.

The Stock Market is doing fine, up to 17,000 almost 18,000 from 6900 at the lowest point in the Bush Depression in 2008-2009. Financial executives who both work in and participate from stock profits are becoming obscenely rich. Even our politicians are becoming rich and distant from the public that they are supposed to serve. By 2013 the median net worth of members of Congress was over $1 million, about 18 times that of the average American. While U.S. median net worth has declined 43% since 2007, the median wealth of those in Congress has increased by 28%.

Income Inequality

The income imbalance is one of the most significant factors in the problems facing the country. But most people don’t really learn why. Somehow, because national media does not want to take on corporate America, their advertisers and in many cases, like General Electric, are (or in GE’s case) were owners of major global corporations outside the media business. So you won’t hear the facts in a way that are meaningful. If you don’t, then the argument simply becomes something like this: “Why do so few people have so much money and we don’t?” If you are thinking, “that’s right,” it’s not. People become very rich for a variety of reasons. The most frequent reason is that someone in their family created or built something that everyone wants and that person died and left it to them. Like Sam Walton of Walmart did with his family, the Waltons or like Fred Koch did with his company, which he left to his three sons, two of whom became obscenely rich Republican very active Fascists. The point is not that a few people have a lot of money. The point is what they do with their money.

In this country, there are about 120 million workers. Of that number, the top 1% earn the lion’s share of the income. One percent of 120 million people is 1.2 million. That’s a lot of people. Government data shows that 95% of all new income between 2009 and 2012 went to the top 1%. Does that mean anything to you? It likely does not. There are some things that make it clearer. First of all, between 2009 and 2012, the income of a person in the top 1% (there’s a big variance for interpretation, but let’s use $400,000 at the low end) went up by 30%. OK? So $400,000 became $520,000. But the schlemiels who are like most of us only saw a 1% increase, if at all. And $50,000 times 1% is a mere additional $500 bucks. Big deal.

Once again, money isn’t really the issue, is it? Do you care what the guy making $400,000 makes over three or four years….if you’re making the same 30% increase? You’d have $65,000 instead of $50,500. That’s the point. And that is the problem. The rich are making more and making it at a faster rate. The worker class, the middle and lower middle classes, growing smaller these days as more workers are forced to settle for poverty level wages, are not making any income increases while prices continue to rise. The rich simply give their excess income to politicians who use it to control jobs, wages, taxes, imports, exports and the Stock Market. These same politicians decide where government expenditures go—usually to their friends, well-heeled Republican corporations.

When Ronald Reagan walked through the White House door, the largest employer in the U.S., i.e., jobs. in the United States, was General Electric. Today those jobs are overseas and the largest employer of Americans in the U.S. is Walmart. Walmart is a retail employer, selling products largely made in Asia and discount retailer. Employees are basic wage earners, stock clerks and check-out personnel. That check out person who hands you your plastic bags makes $9.06 an hour, for an average work week of 34 hours or about $15,500 per year. The poverty level for anyone having a spouse or dependent child is $23,000. In the pre-Reagan era, GE employees made about average wages, about $50,000 per year in today’s income. The important factors come when you break down various aspects of the numbers.

A Simple Solution – More Government Revenues

The top .1% of American workers, which means about 120,000 income earners, average about $2.5 million per year. And, before you start to worry that we will suggest “redistributing” that income, you should know that they have an average net worth of at least $6 million. So let us assume that in order to create a better society—nothing specific, just better—we taxed just these individuals so that they came away with an average of just 50% of that income or a substantial $1.25 million per year. This is not necessarily a suggestion but more of a calculation so that you can see what numbers mean. That taxation plan—once again, remember, just on those making an average of $2.5 million every single year—(the top ten percent of the top 1%) would create $150 billion additional revenue per year.

In addition the United States presently receives just 1% of GDP in revenue from corporations. They have a nominal tax rate of 35% at the top, but they pay less than 12% in actual dollars. Some huger corporations pay no taxes at all. Consequently, our revenue from corporations is the least it has ever been. Since 1945, we have had much higher rates of participation, from 7% of GDP to 5%, then 4%, but in recent years, our moguls grouse at a mere 1%. We could double our national corporate tax revenues to 2% of GDP, which would still leave us with the lowest corporate taxes in two centuries but would add $340 billion to our revenues. Nothing would change in our economy as a result. Numerous studies, by Liberals and Conservatives—despite the lies by those politicians and economists owned by big corporations—show that higher tax levels (like those under Clinton) or low tax levels (like those under Bush) have no effect one way or the other on GDP and jobs. In fact, despite lower tax rates, which led to an increase in the national debt in 8 years from $5.6 trillion to $12 or $13.5 trillion, (depending on whether you blame Bush for the Stock Market Crash which happened on his watch) lower taxes under Bush did not prevent a disaster that cost Americans $14 trillion in lost assets.

So, by taxing multi-millionaires and corporations, leaving them with plenty of money but not as much as they would like, we can restore this country to a balanced budget. The simple tax on the rich, which would still leave them rich, and a tax on corporations would balance our budget over night. It would remove all controversy, even though there is no …real…controversy over Social Security. That is, we could begin to repay the Social Security funds that Republican Administrations have borrowed to pay for government while taking us into deficit after deficit, from 1981 to 2014. Our Social Security funds, funds taxpayers have paid in for premiums on retirement programs would become solvent. Using balanced budgets we could also dispose of the invented controversy over the costs of the Affordable Care Act. Reducing our national debt will bring down our second largest cost—interest on the national debt. This will bring about a surplus and a cost savings.

The Excess Income of the Rich

Republicans often inquire about how the welfare funds are spent that we provide to workers at Walmart who cannot live on $9 an hour/ 34-hour weeks at Walmart. So, in turn, lets see how multi-millionaires and billionaires spend their money. They buy luxury goods from Fifth Avenue in New York, the Magnificent Mile on North Michigan Avenue in Chicago or Rodeo Drive in Beverly Hills. They buy very large homes or apartments, several expensive cars, a boat or a plane, and travel, not merely to the shore, but around the world. That part, all that excess, is fine. After all, the United States, despite its benevolence in emergencies, is a materialistic society at just about every level. So–are we prudes? No, we should not care how wealthy people spend their money.

Still, after all the goods are purchased, multi-millionaires have money left over. What do they do with that money? This is where life in America has changed. The rich, who used to endow universities and hospitals and museums, have so much money that, after the last donation to their charities, they spend the remaining excess to buy politicians. They insert themselves into the funding for political campaigns for the House and Senate and give large amounts of money to elect governors whom they can control. And what do those governors do? They immediately cut taxes for the wealthy, who made huge donations to their campaigns. Then the politicians help the members of the secret political action committees from whom they disassociated themselves during the campaign.

Today, giant corporations and multimillionaires and religious and other lobbyists, like the NRA and private prisons, spend gigantic sums that dwarf individuals and grass roots organizations at the local level. Since it is not enough that their other hired political guns have sent most of the manufacturing jobs abroad, these hired-guns break up unions, union “busting” it’s called and move towards “right-to-work” states in which it is still legal to organize a union but reduces the effectiveness and the membership. Without the ability to organize, unions cannot seek better wages or working conditions, and most of all, from the perspective of the rich, they cannot use the thousands of bodies in a union as “boots on the ground” to counter the virtually unlimited amounts of campaign donations, thanks to Citizens’ United, to Right Wing candidates in election campaigns. These are the war mongers. The sons of the Boehners and the Cruzes and the Romneys and the Pauls do not go to war. Only Senators or House members who were former military, like Senator John McCain, who never saw an international conflict he didn’t want to solve by blowing people up have sons in the military. The military equipment industry, from weapons and aircraft to pots and pans and mercenaries has become one of the largest, if not the largest business in the United States. It is woven into the very fabric of society. And this is how the rich prosper—over the bodies of the poor who often have no better opportunity than to enter the military.

Too Much Money Breeds a Lust for Political Power

The excess money of the rich is used to help remove regulations from Wall Street, continue the 20-24% interest on credit cards from companies that get that money for 1-2% or sell fraudulent stocks to create the next big Stock Market crash. They will resume the sale of the same kinds of fraudulent derivative securities that already bankrupted most of the world. They want to keep manufacturing abroad and send more manufacturing jobs abroad. They want to clamp down on the individual citizens when they resist poverty and the deliberate lack of jobs and government services and oppression from police, they are already in the process of building more private prisons. Within those prison walls, right now, prisoners are forced to work at wages anywhere from fifty cents an hour to $1.15 an hour.

This is how the rich would use that extra $1.25 million that we would use to build schools, roads, hospitals, parks and real public transportation. The multi-millionaires would use their extra millions to create wage slaves in private prisons that today, right now, are places of such great filth that they would not substitute as pens for the least desirable animal. They elect the legislators. They tell state and national legislators how to vote and they even write the legislation.

There are many solutions to our economic “problems.” Most of our problems are self-created. We allow a few racist, psychopathic, greedy, cowardly, ignorant people to be led by the nose to voting booth and told to pull the lever for their candidate, one who will send us all off to the waste bin of history. People in small towns in Mississippi, Alabama, Louisiana and Texas, and even in places like Ohio, Michigan and Wisconsin have been so brain washed by propaganda, that they are like the mindless followers of the fascist regimes of the 1930s. The truth cannot reach them. The media is owned by the rich and the only messages they allow are Right Wing lies and hate-filled diatribes. Even though they often live in shacks so destitute that they are dying of infections and inflammations that could be fixed with a simple visit to a dentist, they will not vote to save themselves.

They are afraid that some black neighbor may be allowed to have enough food to eat or some gay person might have medical care if they vote Democratic. They are afraid of government, as they were taught to do by Ronald Reagan so that they would vote against government, against the people who really need a strong government—in other words, against themselves. They would rather die than allow a black person to get health care. The old states of the Confederacy are composed of majorities who have been persuaded to follow insane policies. They will not improve their lives because the Republicans have persuaded them that African-Americans are not their equal, that government wants to take away their superstitious religion, or their useless and dangerous guns or make them conform to laws that everyone else must obey. They obsess that some poor woman somewhere with too many children and no money may somehow have an abortion, which they have been led to believe by cruel and insincere people is killing a baby. Or the same media spends half its time shocking the poor into fear of a Muslim terror that kills less than one percent of those killed in auto accidents or by handgun accidents in our society. The bombardment from Right Wing radio and television keeps up the steady drumbeat of lies and fear, holding them in the grip of liars and exploiters.

Changes in the Demographic Structure of Society

The sad part of this is the continued oppression of and increased numbers of the poor. People in poverty now comprise approximately a third of the population and much of that has fallen out of the Middle Class since 2009. In the last four years, the number of people qualifying for food stamps has grown from 27 million to 47 million.

Not even physicians are safe from the oppression of the billionaires. Not only are physicians not in the top 1% any longer, the group that was always among the most respected and top earners must now struggle to stay in the top ten percent. The average broker on Wall Street now makes more than the average physician. In order to pay for their own retirement, which many individual doctors must do, on about $200,000 per year after taxes, they need to save $40,000 to $60,000 per year. Physicians do not have great early earning years, which may only start at age 29 or 30, or in their final earning years which, given the 60 to 70-hour weeks and pressures of medical practice could be as early as age 55. But now, to cut taxes for billionaires, who more than frequently inherited their income, the Neo-Fascist Republicans want to cut payments to doctors who serve Medicare patients. It is not enough that the Republicans want to raise rates on both workers and the elderly for Medicare but they also want to reduce rates of payment for physicians, some of our most valuable resources, at the same time.

Physicians will survive but some of the poor will not. One of the saddest parts of poverty is the negligent actions of many in government, particularly these days in Congress, towards the poor. For example, the Republicans have been working hard to cut food stamps for the poor. They won’t agree to one tenth of one cent in new taxes on the rich, but cut $9 billion dollars from the food stamps program, affecting 850,000 people, reducing their benefits by $90 per month. Doesn’t sound like much unless you don’t have it. Lee Trevino once said that making a putt for $50,000 in a tournament was far less pressure than making a putt to prevent losing a $20 bet—when you don’t have the $20 in your pocket.

The Great Bush Crash and Depression of 2008 was particularly hard on the poor, and those whom it made poor. To see how rapidly and how disastrously the Bush Crash and Depression unfolded, in April of 2008, the unemployment rate was 5% percent and by April of 2009, exactly one year, it was 9%. We went from approximately six million unemployed to 12 million almost overnight. Over 700,000 people lost their jobs in January of 2009 alone. The situation was so bad that many were out of work for 99 weeks. At its peak, there were more than 5 people applying for every job. In some cases, there were as many as 50 applicants. In some calls for workers at new stores, like Walmart, as many as 5000 people would show up for 200 jobs. The “99rs” they were called.

Then the Republicans, awash in campaign funds, joined in the propaganda attacks on the poor and unemployed. Media owned by the rich and the global corporations began to literally attack the unemployed as lazy. Human resources staffs were told not to hire anyone who was not currently employed elsewhere. To make matters worse, in January 2014, the Republicans in the House cut off unemployment benefits to 1.3 million people, who had still not been able to find jobs. Part of the problem was the Republican-corporate attitude not to hire those whom the Bush Depression had kept from employment for so long. As of early 2014, at least 3 people applying for every job offer.

From 2008 through 2014 there were 13.8 million foreclosure filings and over 5 million foreclosures in the U.S. This means that, of those 12 million unemployed in 2009, a large number were out of work long enough to lose their homes, apparently about a third of them. The lack of government response was appalling, but the President’s proposals met with filibuster after filibuster in the Senate.

There is no happy ending to this story. You’ve seen the general reduction of wages in this country, and the oppressive politics of the Right Wing. It is your country but you cannot restore it to greatness alone.

If you do not participate, get out and work for candidates, financially support candidates with whatever you can muster or help find outstanding candidates yourself, then you, yourself, are part of the problem.

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