On April 20 I gave a speech at the City Club of Chicago on the populist movement we are experiencing in our country. Despite what many Republicans claim, we are the richest country humanity has ever seen, and we are at our richest moment. Yet hardworking Americans keep coming home to "a plate full of worry." This is largely because over the last few decades the wages of the bottom 80 percent of Americans have fallen or stagnated while the super-rich rake in all the profits. We can do better, and we must. Please see the full text of my speech below.
I was born and raised in Rogers Park in Chicago. My father sold furniture, and my mother was a Chicago public school teacher and proud member of the Chicago Teachers Union for decades. My first seven years were in an apartment, and then my parents were able to buy a small three-bedroom house in West Rogers Park, right near Rogers School and a short bus ride away from Sullivan High School. We were far from rich, but I never remember my parents worrying about money.
In retirement, they were able to travel, thanks in large part to my mother's teacher pension, which also assured my dad's income after she died.
Every Sunday we would drive down Western Ave. to visit my grandparents in Humbolt Park. A couple of weeks ago, I drove past 2606 W. Walton to see their house and, more importantly, the garage, which was my favorite place, because it was the barn at the time, the home of Teddy the horse. Every morning before dawn, Teddy would pull my grandfather's wagon to the central market to pick up the heavy bags of potatoes and other vegetables that my grandpa would sell up and down the alleys of the neighborhood, schlepping those bags up and down the back stairs. All four of his children went to college: one lawyer, two teachers, one businesswoman.
On Sundays, the grown-ups would be in the kitchen, gossiping in Yiddish. My grandparents and parents were born in Russia, except my mother who was born in the New World -- Canada -- before they made their way, with the help of the Salvation Army, to America. A typical immigrant story. A typical Chicago story.
All of their children did better than they did, as was expected by just about everyone. In our case, we had a cottage in Michigan City, built in part by my dad's own hands and shared with my aunt and uncle. Even the men that worked a union job in the South Side steel mills in the '50s and '60s could afford a cabin where his wife and kids could go for the summer. Most of those are now torn down as the Indiana/Michigan lake shore becomes more tony and for the wealthier.
We were not rich, but neither were we worried. How different from today, when most families come home every night, as Richard Trumka, President of the AFL-CIO, put it, "to a full plate of worry."
Elizabeth Warren tells about her childhood, when her family of three could make it on the minimum wage. That wage has not gone up in real buying power since 1966.
But I'm not here just to reminisce about the good old days. Many may describe my childhood as so 20th century. So yesterday. So gone and gone forever. But I want to tell a different story, with a happy ending: that economic security for everyday Americans not only is possible, but unless we achieve it, all of us are in deep trouble.
Here's the most important data point. The United States of America has never been richer. We are the richest country humanity has ever seen, and its richest moment.
Between 1979 and 2014, the per-capita gross domestic product grew 77 percent, and productivity rose 75 percent. But over the last decades, the wages of the bottom 80 percent of Americans has fallen or stagnated. Just since the Great Recession of 2008, the richest 1 percent of Americans has seen 95 percent of the benefits from this growth. According to Larry Summers, former Treasury Secretary, if the U.S. had the same income distribution it had in 1979, that bottom 89 percent would have $1 trillion more in income -- $11,000 per family.
Eight Americans made at least $10 billion each in 2013. Ten billion dollars is as much as almost 200,000 Americans earn in a year combined. The vast majority of those eight fortunes were realized not as a result of work but the old-fashioned way: inheritances, stock market and other investments. The best way to earn a fortune in America is to already have one.
And speaking of inheritance, last Thursday the Republican-majority House voted to eliminate the estate tax altogether. Understand that you can already pass on to your children $5.4 million, or $10.8 million as a couple. But now they wanted to do more for 5,500 estates by scrapping any tax. Doing that will cost the treasury $259 billion over 10 years. Remember, this is money passed on to the likes of Paris Hilton and her bratty brother, who did not work even one single hour to earn it. And this tax cut is part of a $1-trillion tax cut, almost all for the wealthiest, over 10 years, unpaid for, adding to the debt.
And while we are told we can't increase nutrition spending for the one in five American children who are "food-insecure" without cutting something else to pay for it -- doing otherwise would be irresponsible, of course, leaving our children with a huge debt burden -- and yet ending the estate tax is unpaid for, all adding to the deficit and debt.
But what am I saying? We didn't increase child nutrition at all, even paid for. No, the Republican-passed budget cuts the SNAP (food stamps) by $125 billion. I asked them, "Did you really come to Congress to take food out of the mouths of hungry children. Who are you?" So it's part of their plan to make hundreds of thousands of American children, our Chicago children, go hungry in order to help the Walton kids. That's just a fact.
Twenty-six profitable Fortune 500 companies paid no taxes from 2008 to 2013, Verizon and GE among them, and they got refunds that I promise is much bigger than any of yours -- $2.9 billion for GE, an effective tax rate of negative 9 percent, only $732-million refund for Verizon on $42 billion in U.S. profits.
Apple, the nation's most profitable tech company (we love our Apple everything), dodged taxes on an estimated $74 billion in earnings over a four-year period through foreign tax shelters and loopholes.
I could go on -- so I will for a minute more. Governor Bruce Rauner reduced his Illinois tax liability by $750,000 when the rate went from 5 percent to 3.5 percent. Now he wants to cut Medicaid by $1.4 billion and eliminate adult dental and foot care, breast and cervical cancer programs, 30 percent for higher education and way more. That's what you do with a turnaround company. Bottom line matters; people don't.
Americans can't afford to retire. The National Institute on Retirement Security put out a chilling report recently: Four out of five household have less than one year's income in retirement savings. In fact, the average working-age household has only $2,500 in retirement assets, while average near-retirement households have a whopping $12,000.
So in this richest country in the world at its richest moment, government operates in a framework of scarcity -- when it comes to investments that help regular people. We're going broke, or we are broke. We can't even agree on a long-term transportation bill to fund our roads and bridges and mass transit and all the jobs they create, much less fix the huge number of schools in desperate need of repair.
In Washington, both the House and Senate Republicans passed budgets that cut investments in heath care, education, housing, and other domestic priorities by almost 40 percent -- the lowest level seen in the last 50 years.
Problem is, this is really bad. Even if you don't care about regular people, it's really bad for our economy.
Working families spend about 90 percent of their income on consumption -- buying stuff. The rich spend less than 45 percent. In 2012 alone, an estimated $1.3 trillion was sucked out of our economy because it sat in bank accounts of the richest Americans instead of being spent. If that money went to people who would spend it, it is estimated that it would create 10 million jobs.
I'm trying to stick to economics and not morality -- what's good for the American economy and not about right and wrong.
But I can't. Here's what Congressman Tom Price, Chairman of the Budget Committee said in justifying a budget that makes the worst income inequality since 1929 considerably worse:
Many of our friends here on this floor have asked about budgets being moral documents, and they are. Let me ask, Madam Chair: Where is the morality in trapping disadvantaged people in a web of welfare programs that discourage self-sufficiency and, instead, shackle them to government dependency? Where is the morality, Madam Chair, in committing retirees to a health coverage program that is going bankrupt and that can't keep its promises if its so-called protectors keep blocking reform? Where is the morality, Madam Chair, in forcing low-income people into second-rate health programs in which many can't get appointments and in which doctors are grossly under-reimbursed by the government? Where is the morality, Madam Chair, in tying college students to years of crippling debt because of a government-run loan program that drives up tuition? Where is the morality in heaping trillions of dollars of debt onto future generations to finance today's government spending because today's policymakers refuse to stop overspending?
If you agree with this definition of morality, you haven't been spending much time reading the scriptures of any religion. You also don't understand the facts about the success of Medicare and Medicaid or who really contributes to college debt by cutting Pell Grants, and how many people who need government help go to work every day for poverty wages. When pious words like "shared sacrifice," making "tough decisions," or "reform" are used, regular people better hang on to their wallets.
OK. Now comes the good-news part of my speech. There are solutions to all these problems. We can ask people who have more than they or their children or grandchildren can ever spend to pay a bit more to the common good, money that won't dent their lifestyles, money that will hardly be missed. I just happen to have bills that will do that, including H.R. 389, the Fairness in Taxation Act. Right now there are seven tax brackets up to $413,201 in taxable income, 39.6 percent for the top bracket, whether you make $413,000 or $413 million. So my bill says let's update the code and create five more brackets but still keep the rate under what it was during most of Reagan's administration: 50 percent. (It was 92 percent during Eisenhower.) So for $1 million in taxable income, the rate is 45 percent and ratchets up to 49 percent for $1 billion in income. Capital gains and dividends would be taxed at those same rates. That raises a cool $800 billion over the next decade. I have support from millionaires, by the way. More than you think.
Senator Bernie Sanders and I introduced H.R. 1790, the Corporate Tax Dodging Prevention Act, to stop profitable corporations from sheltering income in places like the Cayman Islands and other tax havens, and end tax breaks for companies that encourage them to ship jobs overseas. Profits would be taxed wherever they are earned by American companies. This bill would raise half a trillion dollars in additional revenue.
I'm full of good ideas like these. Social Security would be solvent into the next century if we just lifted the cap on income for which one has to pay into the trust fund. Instead of stopping payment at $113,000, people like Bruce Rauner who make that much in less than five hours (he makes about $25,000 and hour) would have to pay FICA again, say, after his income exceeds $200,000 or $250,000. We would have enough not only to protect Social Security but to expand and strengthen it. Retirees are increasingly depending on all or nearly all of their retirement income coming from Social Security. The average earned benefit check is $1,300 per month -- less for women. The Tribune editorialized against even the talk of improving Social Security, chastising Elizabeth Warren by name. We are celebrating Social Security's 80th birthday this year, and celebrating that Social Security never missed a check. Sorry, Tribune, Americans of all stripes support Social Security and will work to make it even better.
Senator Durbin and I will be reintroducing a bill that rewards American companies that are paying good wages and benefits to their workers here at home. It's called the Patriotic Employer Tax Credit Act and provides a $1,200-per-U.S.-employee tax credit for companies that meet those benchmarks and grow or maintain their U.S. workforce. How can we afford it? By closing those corporate tax loopholes.
Those are the kind of "reforms" and "hard choices" and "shared sacrifice" that make sense to me.
But here's the best news of all, and the reason that I keep smiling even though it's pretty miserable in Washington these days and people are always asking me, "How can you stand it?" My answer is that, despite the way things appear right now, we are actually in a progressive, populist moment. Here's my evidence:
- More than 80 percent of Americans believe we should raise revenue for needed investments by closing corporate loopholes and outsourcing incentives and limiting deductions for the wealthy.
- More than 60 percent of voters want to end the lower tax rate for capital gains and dividends so that actual work is not taxed at a higher rate than investments.
- More than 80 percent of Americans want us to increase taxes on the profits that American corporations make overseas.
- Almost 70 percent of voters believe that we should end tax breaks to large corporations that ship jobs overseas -- and use that money to invest in jobs in America.
Also, much to the surprise of some of my colleagues, there are important things happening outside of Congress. I have participated in the Fight for 15, minimum-wage workers striking for $15 an hour and the right to have a union. I have been out on the street several times in Chicago, and also in Washington and New York. Bruce Rauner's obsessive fight against organized labor is actually helping to create a backlash. Good union jobs that afforded those South Side steel workers a decent middle -class life and a secure retirement don't have to be relics of the last century. If farm workers could organize, so can home-care workers and nursing-home workers and fast-food workers. Sí se puede -- not just a slogan.
Immigrants have inspired a new fighting spirit. A huge coalition, including most of the business community, supports comprehensive immigration reform. It will happen. Certain things have the stamp of inevitability about them, and immigration is at the top of that list -- along with marriage equality. Every generation of Americans, and Chicagoans especially, has been revitalized and enriched by a new wave of immigration. It will happen.
I'm feeling really optimistic about the 2016 elections. I think that many Americans who are struggling are tired of being used as cannon fodder by the richest and most self-interested gazillionaires and corporate interests. The problem, as Hillary Clinton puts it, that "the deck is stacked against them," is gaining traction every day.
The answer to "Why is this woman smiling?" is simple: Change is on its way, and not a minute too soon for this great country of ours.