Top 1% Got 93% of Income Growth as Rich-Poor Gap Widened — “The recovery that officially began in mid-2009 hasn’t arrived in most Americans’ paychecks.”
While the U.S. economy was recovering from the Great Recession, Reyes, 52, a casino dealer from Minneapolis, was dining on $1.67 cans of soup and searching for a way to keep her house, which was foreclosed on last October.
“I went backwards,” Reyes said. “Two years ago, three years ago, I didn’t know I’d be looking at being homeless.”
Stephen Hemsley’s salary has been frozen too. His income hasn’t.
The chief executive officer of Minnetonka, Minnesota-based health insurer UnitedHealth Group Inc. (UNH) earned $1.3 million in salary every year since 2007. Still, as the economic recovery took hold from 2009 to 2011, Hemsley, 60, exercised stock options worth more than $170 million and made at least $51 million from share sales, making him the object of an “Occupy Lake Minnetonka” protest on the ice outside his lakeside home each winter.
The divergent fortunes of Reyes and Hemsley show that the U.S. has gone through two recoveries. The 1.2 million households whose incomes put them in the top 1 percent of the U.S. saw their earnings increase 5.5 percent last year, according to estimates released last month by the U.S. Census Bureau. Earnings fell 1.7 percent for the 96 million households in the bottom 80 percent — those that made less than $101,583.
The recovery that officially began in mid-2009 hasn’t arrived in most Americans’ paychecks. In 2010, the top 1 percent of U.S. families captured as much as 93 percent of the nation’s income growth, according to a March paper by Emmanuel Saez, a University of California at Berkeley economist who studied Internal Revenue Service data.
This is what especially pisses me off when people start talking about “personal responsibility” and how people who are struggling financially “just aren’t working hard enough.”
I’ve been in the IT/Customer Service field for over 16 years, it used to be I made a pretty good living at it too. Somewhere around 2008, it seemed like while everything else kept getting more expense, my income stayed about the same. I know exactly what they mean in the article by “going backwards”.
It’s fucking bullshit to work your ass off at a thankless fucking job for years upon years only to be rewarded jack shit for it.
I like the job I have now, but $20 an hour doesn’t go as far as it used to just a few years back, and if you complain about things being tight, there will always be some fucker that wants to say shit like, “Well, maybe you shouldn’t have had kids you couldn’t afford.” and various other dismissive bullshit.
I’m sick of that kind of bullshit. The working class is getting shit on and everyone just wants to dismiss it like it’s our own fault.
America has become a country not ‘with justice for all,’ but rather with favoritism for the rich and justice for those who can afford it — so evident in the foreclosure crisis, in which the big banks believed that they were too big not only to fail, but also to be held accountable.
This is an amazing article by Joseph E. Stiglitz, a Nobel laureate in economics
America likes to think of itself as a land of opportunity, and others view it in much the same light. But, while we can all think of examples of Americans who rose to the top on their own, what really matters are the statistics: to what extent do an individual’s life chances depend on the income and education of his or her parents?
Nowadays, these numbers show that the American dream is a myth. There is less equality of opportunity in the United States today than there is in Europe – or, indeed, in any advanced industrial country for which there are data.
This is one of the reasons that America has the highest level of inequality of any of the advanced countries – and its gap with the rest has been widening. In the “recovery” of 2009-2010, the top 1% of US income earners captured 93% of the income growth. Other inequality indicators – like wealth, health, and life expectancy – are as bad or even worse. The clear trend is one of concentration of income and wealth at the top, the hollowing out of the middle, and increasing poverty at the bottom.
It would be one thing if the high incomes of those at the top were the result of greater contributions to society, but the Great Recession showed otherwise: even bankers who had led the global economy, as well as their own firms, to the brink of ruin, received outsize bonuses.
A closer look at those at the top reveals a disproportionate role for rent-seeking: some have obtained their wealth by exercising monopoly power; others are CEOs who have taken advantage of deficiencies in corporate governance to extract for themselves an excessive share of corporate earnings; and still others have used political connections to benefit from government munificence – either excessively high prices for what the government buys (drugs), or excessively low prices for what the government sells (mineral rights).
Likewise, part of the wealth of those in finance comes from exploiting the poor, through predatory lending and abusive credit-card practices. Those at the top, in such cases, are enriched at the direct expense of those at the bottom.
It might not be so bad if there were even a grain of truth to trickle-down economics – the quaint notion that everyone benefits from enriching those at the top. But most Americans today are worse off – with lower real (inflation-adjusted) incomes – than they were in 1997, a decade and a half ago. All of the benefits of growth have gone to the top.
The Tax Policy Center has released its formal analysis of Mitt Romney’s tax plan. The result? Regressive, but not as regressive as the tax plans of his rivals. Compared to current rates, Romney’s plan would cost a family in the bottom 20 percent $157 and save a family in the top 1 percent $82,000. That looks pretty tilted toward the rich. But here it is against the other GOP tax plans the Tax Policy Center has assessed — and against President Obama’s September proposal to the supercommittee:
The Tax Policy Center hasn’t modeled Rick Santorum’s tax plan yet, but Howard Gleckman did take a first look. “Like other Republican tax planks, Santorum’s would benefit corporations and high-income individuals. No surprise there. But unlike his rivals, he’d also cut taxes for many families with children. Santorum is no bleeding heart, however. Even as he’d cut their taxes, he’d shred direct government spending for programs aimed at assisting these same households.”
John Hammergren, CEO of health care McKesson Corp., made $46 million last year, & that’s not including the many & lavish perks
John Hammergren, the CEO of health-care giant McKesson Corp., made $46 million last year thanks to one of the most generous executive pay packages in his, or any other business. Gary Rivlin of The Daily Beast has a breakdown of some of the outrageous provisions that contribute to Hammergren’s outrageous wealth including some figures that at least one compensation consultant calls “excessive.” When someone whose job is to craft multi-million dollar pay packages for corporate CEOs thinks you’re overpaid, you’re probably overpaid.
Hammergren is not the richest or even the highest-paid CEO in the world, but the structure of his compensation is raising eyebrows even in the already outsized world of the 1%. He took over McKesson, a firm that specializes in supplying presrciption drugs to pharmacies, in 1999 after a fraud scandal took out of many of the company’s top executives. Since that time he’s been paid nearly $500 million as the CEO and Chairman of the Board.
Excerpts, by Gary G. Kohls, MD,
from Milton Mayer’s, They Thought They Were Free: The Germans, 1933-45
It may well be that the greatest tragedy of this period of social change is not the glaring noisiness of the so-called bad people, but the silence of the so-called good people. —Martin Luther King. Jr.
“What no one seemed to notice,” said a colleague of mine, “was the ever widening gap, after 1933, between the government and the people.
“What happened here was the gradual habituation of the people, little by little, to being governed by surprise; to receiving decisions deliberated in secret; to believing that the situation was so complicated that the government had to act on information which the people could not understand, or so dangerous that, even if the people could understand it, it could not be released because of national security.
“This separation of government from people, this widening of the gap, took place so gradually and so insensibly, each step disguised (perhaps not even intentionally) as a temporary emergency measure or associated with true patriotic allegiance or with real social purposes. And all the crises and reforms (real reforms, too) so occupied the people that they did not see the slow motion underneath, of the whole process of government growing remoter and remoter.
” I was a scholar, a specialist. Then, suddenly, I was plunged into all the new activity, meetings, conferences, interviews, ceremonies, and, above all, papers to be filled out, reports, bibliographies, lists, questionnaires. And on top of that were the demands in the community, the things in which one had to, was ‘expected to’ participate that had not been there or had not been important before. It was all rigmarole, of course, but it consumed all one’s energies, coming on top of the work one really wanted to do. You can see how easy it was, then, not to think about fundamental things. One had no time.
No time to think. Who wants to think anyway?
“One had no time to think. There was so much going on.
“The dictatorship, and the whole process of its coming into being, was above all diverting. It provided an excuse not to think for people who did not want to think anyway. I do not speak of your ‘little men,’ I speak of my colleagues and myself, learned men, mind you. Most of us did not want to think about fundamental things. Nazism gave us some dreadful things to think about—we were decent people—and kept us so busy with continuous changes and ‘crises’ and so fascinated…that we had no time to think about these dreadful things that were growing, little by little, all around us. Who wants to think?
“To live in this process is absolutely not to be able to notice it… Each step was so small, so inconsequential, so well explained or, on occasion, ‘regretted,’ that, unless one were detached from the whole process from the beginning, unless one understood what the whole thing was in principle, what all these ‘little measures’ that no ‘patriotic German’ could resent must some day lead to, one no more saw it developing from day to day than a farmer in his field sees the corn growing. One day it is over his head.
A leading Senate Republican is taking aim at tax breaks that he says amount to welfare for millionaires. The report found millionaires enjoy about $30 billion worth of “tax giveaways” and federal grants every year — almost twice NASA’s budget.
By Alexander Bolton | thehill.com
A leading Senate conservative is taking aim at tax breaks that he says amount to welfare for millionaires, a line of critique that usually comes from liberal Democrats.
Sen. Tom Coburn (R-Okla.) released a report detailing special tax breaks for wealthy income earners that could give members of the supercommittee common ground for raising tax revenues.
The report found millionaires enjoy about $30 billion worth of “tax giveaways” and federal grants every year — almost twice NASA’s budget, the report notes.
“From tax write-offs for gambling losses, vacation homes and luxury yachts to subsidies for their ranches and estates, the government is subsidizing the lifestyles of the rich and famous. Multimillionaires are even receiving government checks for not working,” Coburn said in a statement Monday.
The report is significant because Coburn is one of the Senate’s outspoken conservatives and has spent more than a year working intensely on a bipartisan grand bargain to reduce the deficit.
I’m not sure how it started, but the slogan “We Are the 99%” is doing something that Democrats have failed to do and Republicans have feared for decades.
What is this?
Take a step back with me for a second and I’ll show you what Occupy Wall Street is doing that hasn’t happened over the past 30 years. And why.
In 1971, Lewis Powell, then a member of 11 corporate boards, drafted a blueprint for the monied interests of the country represented by the U.S. Chamber of Commerce.
Powell considered the business owners of America and capitalism itself under attack.
In the Powell Memo, as it became known, he recommended that business fight back or in the words of Mr. Powell:
“The time has come … for the wisdom, ingenuity and resources of American business to be marshalled against those who would destroy it.”
I’m not going to get into if they were really under “attack,” but Powell felt like they were under attack and he convinced the U.S. Chamber of Commerce and others to follow his recommendations.
I encourage you to read the Powell Memo for the full scope, but what Powell describes is a fear among businesses that the majority in our American Democracy sympathized little with businessmen and would eventually vote for a “socialist” government.
To halt what he saw as an anti-business movement, he proposed influencing the educational and political systems with a pro-business agenda.
“To enlighten public thinking - not so much about the businessman and his individual role as about the system which he administers, and which provides the goods, services and jobs on which our country depends.”
Starting to sound familiar?
Over the past 30 years, in one form or another, we’ve seen aspects of Powell’s plan put into effect by the U.S. Chamber of Commerce and others creating views such as these:
- A belief in “free” markets, laissez-faire economics, and letting the markets work
- “Trickle down” theory (supply-side economics)
- The idea that the private sector creates jobs
Basically, government should give to the business owners, get out of the way, reduce their taxes, and then the business owners would in turn bring wealth and prosperity to everyone.
Keep in mind the view that government should aid those at the top started out as an extremely unpopular minority view.
When your arguments start from an extreme minority position, how do you effectively market your idea and form coalitions?
The key number to get to in a Democracy is 51%.
Their answer was to change the target markets. You’re probably familiar with a few ways the monied interests have re-targeted the market:
- Republicans vs. Democrats: In this target segmenting, the segments are roughly 50/50.
- White vs. minority: The most frequent segmenting here is black vs. white. By crafting a message that appeals to whites, you shift the target markets in your favor by roughly 88 / 12 %
- Straight vs. gay: Don’t know exact numbers, but it’s clear who’s in the minority.
- Religious vs. non-religious: According to a 2008 survey, only 15% claim no religious affiliation. Target the religious.
Look at the recent fight in states like Wisconsin and Ohio.
Governors like Kasich and Walker have introduced legislation to break the strength of public unions and limit their freedom to bargain so that management is effectively in control of decisions.
This was not a popular viewpoint. It is, in fact, a viewpoint of the 1% and originally had large majorities against it.
So what did they do?
They reframed the debate to divide the market differently. They reframed the fight as unions vs. taxpayers.
Because union members represent a minority (about 15% of the workforce in Ohio), you claim to be fighting for a majority, the taxpayers.
This is how conservatives fight when they have unpopular arguments.
The False Divide
A joke making the rounds on the Internet goes like this:
There’s a plate of 12 cookies sittng on a table. The rich take 11 cookies leaving only 1 cookie left on the plate. They then turn to the Tea Party and say ‘Those unions are trying to take your cookie.’
This works about equally well with Republicans vs. Democrats.
It’s why Republicans versus Democrats is largely a false divide. The monied interests would rather have us arguing Republican vs. Democrat (50/50 split) than Rich vs. Everyone Else (1/99 split).
Democrats represent the U.S. Chamber of Commerce almost as well as Republicans. Don’t forget that Glass-Steagall was repealed under President Bill Clinton.
Democrats simply play the game differently. Rather than trying to purposefully divide the electorate to play the statistical odds, Democrats try to appeal to a majority with a populist message.
The trouble is that this populist message gets undercut frequently once they’re in office.
A great example of this is the Affordable Care Act enacted by President Obama and the Democratic (at the time) majority Congress.
Rather than implement a single-payer plan or a plan that included a public option, Democrats put forward a plan that keeps health care in the hands of the health care industry.
Note that the idea of mandating health care insurance was originally proposed by Stuart Butler of The Heritage Foundation. That is, it was a corporate-approved plan.
Also observe the failure of the Democratic Party to pass the Employee Free Choice Act.
Because of this conflict, Democrats constantly undermine their brand. During elections, they market to the 99%, but then often work towards the interests of the 1%.
No wonder the voting public is cynical.
Without a strong brand, Democrats win mostly in the face of strong reaction to the opposition party - 1992 and 2008 being the two most recent examples.
The Importance of “99%”
The rich vs. the rest of us is the fight the 1% fear most. So why have we been so unwilling to fight this fight?
- Democratic unwillingness to offend potential major donors
- The emergence of the Tea Party which focused much of the anti-establishment anger on government itself (rather than on those who actually caused the financial crisis)
- An effective counter strategy which claims any attempt to make the rich pay their fair share is “class warfare”
By claiming the 99% mantle, Occupy Wall Street is finally target segmenting the market effectively.
As hard as this may be to believe, the 99% message may encourage some non-traditional (for Democrats anyways) allies who share the same frustrations: members of the Tea Party, small business owners, and members of the Republican party who may be dissatisfied with their party’s lack of new ideas for dealing with the economy.
“We are the 99%” is a fight we should not back away from despite the attempts (and you know more are coming) to divide the electorate differently to keep those in power in power.
And to keep our government focused on the needs of the 1%.
Remember these “false divides” and the desired target segmenting (hint: 99/1%).
It helps you determine who you want to win over and who to fight. Think about that the next time you’re considering calling someone a “teabagger” or arguing among any of the numerous false divides.
Is that who your fight is really with?
Are they in the 99% target market or not? Occupy Wall Street so far has picked the right fight. Let’s continue to follow their model.