Home ALEC Of the Rich and the Poor in America

Of the Rich and the Poor in America


Income and wealth inequality in the United States is on the rise again. The gap between the rich and poor was much smaller from the end of the Depression to the 1980s but things changed with the Presidency of Ronald Reagan.

There are numerous studies, the rants and propaganda of Wall Street flacks and Fox “news” to the contrary, that show the connection between politics and policies and income inequality. The incontrovertible evidence of these studies is that, in countries where unions are weaker, liberal or more populist governments are weaker and where corporations have a large influence on economic policy, the result is a wider and widening gap between the rich and the poor and between the very rich and the average income earner.

For example, in the United States, the average annual earnings of the top 1 percent of wage earners grew 156 percent from 1979 to 2007; for the top 0.1 percent they grew 362 percent. In contrast, earners in the 90th to 95th percentiles had wage growth of 34 percent, less than a tenth as much as those in the top 0.1 percent tier.

Workers in the bottom 90 percent had the weakest wage growth, at 17 percent from 1979 to 2007. In other words, put more simply, the rich get rich and the poor get poorer.

The actual result of these trends has been a doubling of the share of total income in the United States received by the top 1 percent between 1979 and 2007. It has meant a very large increase in the income gap between the very wealthy and the overall mass of Americans.

In 2007, average annual incomes of the top 1 percent of households were 42 times greater than incomes of the bottom 90 percent (up from 14 times greater in 1979), and incomes of the top 0.1 percent were 220 times greater (up from 47 times greater in 1979).

To be clear, that means, roughly, that the top 1.1 million American households had incomes of an average of $8,000,000 as against an average American income of $45,000, and that may be generous to the average worker these days. That’s just math. It may be $7 million versus $30 thousand. But you get the idea abut the disparity.

Where is all the money coming from? Well, post-Reagan, CEO compensation increased seven times, over 700%. CEO pay rose faster than stock market growth. But workers saw only about 6% wage growth during that period. Not 6% per year, but 6% over 30 years! And that includes Senator Teddy Kennedy’s berating and embarrassing the Senate into finally raising the minimum wage.

CEOs used to make, in the 1960s about 20 to 30 times what the average worker makes. Today the average CEO makes 230 times what the average worker makes. And in practice, it is worse than that. Take the health care industry.

The average CEO makes $14 million a year. That is for a company that takes your doctor’s bill and pays it, subtracting it from the premiums you and all other health insurance (victims) pay. So that adds to your bill. But even more importantly, the total top executive suite paycheck can come to as much as 40% of total profits!. So, 4 out of ten dollars of the excess you pay for premiums goes right into the pocket of those top executives.

So what is wrong with people making as much as they can? There is really nothing wrong with it if what they do generates enough jobs to maintain full employment at a living wage. If everyone has a job and everyone can live a reasonable life on that job, have a house, transportation, health care, good public education, and at least some form of recreation…why should anyone care?

Normally, they shouldn’t but remember the studies we talked about? The studies showed that in those countries where the income disparities were far less, the quality of life for the average citizen was much better. And the reason that those states had those smaller inequities was public policy. A far more popular form of government, less influenced by lobbyists. A higher tax rate on those who make far more money. And unions that help balance the political spectrum.

In the United States you need only to look at a couple of examples. First, Linda McMahon. She is the Connecticut-based wife of Vince McMahon, the World Wrestling Foundation, founder and President. He has made a fortune by promoting wrestling as entertainment…and great entertainment it is in its way…on television. Linda McMahon, with her share of the take, decided to run as a conservative Republican candidate for the Senate. The conservative perspective? Lower her taxes. So she took a reported $90 million dollars from her purse and plunked it down to buy a Senate seat to lower her taxes. She lost…but what if she had won?

In California, Meg Whitman, of Ebay renown, decided to run for the Senate to restore California to a more sound and stable, in her opinion, state and state of affairs. Her personal bankroll? She spent a reported $184 million of her own money in losing to Governor Jerry Brown. And what had been her goal? To make California a good as it had been in the 1970s when she moved there. Who was governor then? You guessed it. Jerry Brown.

And then there are the Koch Brothers, infamous by now as Neo-Fascists, trying to perpetuate the legacy of their anti-social and anti-Socialist father, Fred Koch, an imperious, hyper-Right Winger, founder of the venomous John Birch Society, which attacked and did destroy the careers of any politician whom Fred Koch considered a “Communist.”

The Kochs are worth billions and have founded anti-Middle Class “think tanks” like the Cato Foundation, the Heritage Foundation, the Manhattan Institute and have given millions to universities around the country to teach Right Wing propaganda. They also founded and support both Americans for Prosperity, trying to defeat universal health care for citizens, and the American Legislative Exchange Council (ALEC) which has agents in each of the 50 state legislatures and tries to enact laws to end pollution controls, laws that would extend gun ownership, laws that would build private prisons and laws that keep citizens from suing the Koch Brothers when they spill oil or chemicals on your lawn.

So the point is this. Do people need hundreds and billions of extra dollars that they only use to reduce the incomes and lifestyles and very existence of the average American? If a billionaire spends ten million dollars a year, your money would still not run out by the time he or she reaches age 100. Do people really need that much money, when others are in dire poverty?

And what about poverty in the United States?

Here’s what poverty means. See if you think it is realistic, or as the Koch Brothers would have you believe, people in poverty really have plenty of money. The government says that a single person who makes less than $11,700 is in a fiscal classification that we call “poverty.” A couple without kids has an income of $15,140 or less and they are considered poor. A family of four is poor if they make less than $23,050.

If you have a family of four living on less than $23,000 would you be able to survive? Maybe. But just barely survive. The government says that today about 46 million live in poverty. Of course they do. The Republican House of Representatives, over the last 5 years, has not produced one jobs bill, despite the fact that the economy is in a Deprssion.

The unemployment rate has gone as high as 10% and no lower than 7.7%, with 5% being the absolute minimum to keep the economy afloat and therefore keep people out of poverty. The Republicans in the Senate have filibustered jobs bills and other bills over 400 times, a record for obstruction of legislation in this country not seen since the Southern Senators used filibusters to block anti-slavery laws.

We have 2 million people visiting food banks. We have 625,000 homeless, 40,000 of them literally living in tent cities. We have a real problem of poverty, folks and it is not getting better under the Billionaire’s Tea Party representatives. The Tea Party, another group taken over and funded by the Koch Brothers, these Fascist pigs who would destroy our country, has blocked every attempt to create jobs and improve a national infrastructure of a country that is falling apart.

And the final straw was the Farm Bill. Last week, mid-July 2013, the Republicans in the House of Representatives, particularly the anti-American, Koch-sponsored Tea Party Republicans voted to give billions to corporate agriculture and firms like Cargill and Conagra and the soybean lobby….but cut food stamps for the poor.

This is the United States of 2013. You can live in it and love it or you can change it. But, if you want to change it, you’d better act fast. Because the very wealthy are trying to buy your country right out from under you.

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