Many people might think that the country's problems stem from the fact that too much money has been going to the very rich. Over the last three decades, the richest one percent of the population has increased its share of national income by almost 10 percentage points (Excel spreadsheet). This comes to $1.5 trillion a year, or as the deficit hawks are fond of saying, $90 trillion over the next 75 years.
To put this in context, the size of this upward redistribution to the richest one percent over the last three decades is roughly large enough to double the income of all the households in the bottom half of the income distribution. The upward redistribution amounts to an average of more than 1.2 million dollars a year for each of the families in the richest one percent of the population.
And this upward redistribution was brought about by deliberate policy. We pursued a trade and high dollar policy that was intended to put downward pressure on the wages of manufacturing workers. The Federal Reserve Board deliberately kept unemployment higher than necessary in order to weaken workers bargaining power. We extended patent monopolies to allow drug companies to jack up prices, raking in hundreds of billions a year. And, we gave the Wall Street banks the benefit of "too big to fail" status so they can borrow with a government subsidy.
These policies and others fueled this enormous upward redistribution. But the deficit hawks don't want us talking about any of these things.
The deficit hawks insist that we have to cut Social Security and Medicare benefits now! They are busy hyperventilating over the enormous deficits, the result of the economic collapse, which was in turn the result of their economic mismanagement. (Wait, we are not supposed to talk about that.)
And the deficit hawks have clear ideas on how they want to deal with the costs of Social Security and Medicare over coming decades. And, it does not involve taking money from the tiny group of wealthy people who have profited enormously at the expense of the middle class over the last three decades.
Nor are the deficit hawks interested in reining in the drug companies, the insurance companies or the doctors. The bloated prices and exorbitant pay of these actors is the main reason that U.S. health care costs are so wildly out of line with health care costs in other wealthy countries.
But deficit hawks don't get paid to go after rich people or the health care industry. Deficit hawks get paid to go after the benefits of middle-income people. This is why we were treated to a Washington Post column by finance industry executive Robert Pozen telling liberals that they should support his plan for raising the retirement age and cutting Social Security benefits for higher-income earners.
When Pozen talks about cutting benefits for higher-income earners he is not thinking of people like Peter Peterson or Robert Rubin. He has his gun sights on people earning $40,000 to $80,000 a year. In other words, Pozen wants to cut benefits for workers like schoolteachers, firefighters and nurses.
These are workers that definitely enjoy somewhat higher pay and a higher standard of living than most of the workforce, but only in Washington deficit hawks' circles are these people living lavish lifestyles that need to be cut back. These workers are quite explicitly the target of the Washington deficit hawk gang.
The deficit hawk crew will even shed some crocodile tears for the poor who earn near the minimum wage and live near the poverty level. They would raise their benefits if not for those greedy plumbers and mechanics who insist on getting the Social Security benefits that they paid for.
In the next few weeks we will be treated to an endless parade of budget experts who will be yapping about "entitlements" and insisting that middle-income workers are living too lavishly. While all these experts have really impressive credentials it is important to remember that these credentials did not prevent this highly paid crew from overlooking the largest asset bubble in the history of the world.
If this group had paid a tenth as much attention to the housing bubble as they are now paying to the deficit projections, we would not be sitting around with 25 million who are unemployed, under-employed or out of the workforce altogether. The deficit hawks are very good when it comes to whining about the deficit and demanding sacrifices from middle-class workers. They just aren't very good when it comes to understanding the economy.
We saw this point very clearly in the Wisconsin union busting a few weeks ago. The Republicans in that state think that teachers and other government workers make too much money and want too many benefits, so they want to rip the teeth out of their unions and so forth. Since when has a teacher been a fat cat? It's ludicrous, so there must be something else happening. Hiring someone cheaply always has popular with the rich.
The attack on the middle class in America doesn't just come from breaking up unions. It's coming from a lot of different angles. Another little commented upon fact connected to the teacher debate has to to with teacher tenure. My mom and I have been in education for quite a while when you add up both of our years of experience. We've seen teacher's hounded out of their jobs not because they were bad teachers but because they were middle aged teachers and the district wanted to hire someone straight out of college because they were a lot cheaper.
What is the value of their wealth, when the society it can be harnessed within is stifled? Isn't the best possible scenario for a filthy rich person to live in a society that is stable, secure, and has great felicity among its people; that pushes the boundaries of health care; advances technology in all fields, protects its people and position in the world, creates great art and music--can they do better with their money than enjoy the fruits of a vibrant, healthy and productive society?
If the rich understood their self interest on the grand scale, not by the measure of each dollar, they would want an economy that channels their wealth with maximum efficiency into the well being of its society; taking on a large part of the tax burden of our government is part of that. If you are filthy rich, a tax burden on people so great that it depresses the well-being of some 80% of your society's citizens is the last thing in your self-interest!
like 5 pointless military actions.
A more grotesque group of social and economic psychopaths has never existed. They know all to well that America can fund all of its needs without going through the debt creation forced on America by the Federal Reserve.
They know as Benjamin Franklin and Lincoln knew that funding the nations needs can be accomplished with debt-free/interest-free currency. But admiting to that would mean an end to the Ponzi scheme and the trillions in unearned income delivered to the 4-500 families who are the owners of the Fed.
I'm disapointed that Dean Baker doesn't raise this point in his critiques of the Fed. Krugman and Stiglitz are also silent and fear to tell us aout the Fed's Ponzi scheme and the fact that we never needed the Fed.
What really galls is the fact that the Fed has failed miserably in maintaing stable prices and full employment key objectives of its Charter. Because no one in Congress will dare force the issue of a thorough audit/evaluation of the Fed we will remain debt slaves passing that legacy on to our children and grandchildren and all their progeny.
you're kidding right? Where I live in NY you need at LEAST 60k to be "comfortable."
I believe the word for that is called extortion.
That's what socialists don't get. They don't understand the underlying purpose of a business is not to employ people or provide their employees with a certain lifestyle. They are in existance to be a competitive business which generates a profit for their owners, period.