We do not have budget problems in this state and country because we spend too much on poor people.

We do not have budget problems because we spend too much for teachers.

We do not have budget problems because we spend too much on the middle class.

We do not have budget problems because we pay public employees too much.

Getting It Right

We have budget problems because there is the widespread belief converted into public policies that government exists chiefly as an instrument of capitalism. 

We have budget problems because too many politicians think that government should eliminate any  obligation for companies to contribute to the public good.

We have budget problems because too many politicians, including those on the U.S. Supreme Court think that putting their thumbs on the scale to tip it in favor of a system flooded with corporate political money.

We have budget problems because the middle class is deluded into believing that tax cuts trickle down to them instead of flowing up to the concentrated wealth of the top 1% of Americans.

The U.S. as Banana Republic

It’s an incredible fact of life in American politics today.  So many people, particularly white men, believe that federal tax policies benefit them and that the continuation of the Bush tax cuts is good for them.

A few months ago, the Associated Press penned an article based on the fact that “the income gap between the richest and poorest Americans grew last year to its widest amount on record,” and the news service could not manage in about 1,000 words to consider whether federal tax policies aren’tt a large driver of that disparity.

It’s a sign of the times.  At the precise moment that we need journalists to get behind the numbers and dig out the facts, the news media are entranced by celebrity journalism and talking heads.  It’s no wonder that 90% of Americans, regardless of their age, race, income, gender, or political persuasion, think the top 20% controlled 60% of American wealth when in fact, the top 20% control 85%.

It’s the kind of disparity that is more customary in banana republics and third world countries.  In an analysis of wealth inequality around the world, the U.S. falls between Uruguay and Cote d’Ivoire.  The countries with the greatest wealth equality are Sweden, Denmark, and Slovenia.  The next 20 countries are all in either Western Europe or former Eastern Europe Communist bloc countries. 

The Rich Get Richer

No industrial nation in the world approaches the level of wealth inequality found in American today.  As for Tennessee, it’s even slightly higher than the U.S.  We’re the Rwanda of U.S. states.

Perhaps, at a time when American is accused of being a colonial power, the truth is that we are a corporate colony.  Between 1978 and 2008, almost 35% of America’s total income growth went to the top 1/10th of 1%, and between 2002 and 2007, two-thirds of wealth went to the wealthiest 1%, the highest rate since the years before the Great Depression.

Something clearly is not working.  Since 1980, the richest Americans’ incomes have quadrupled while the lowest 90% of Americans saw their incomes fall.  The average wage today is lower than it was in the 1970s while productivity has risen 50%. 

The Bush tax cuts were extended at a time when the CEOs of the largest American companies earned more than 550 times more than their average workers.  In 1980, CEOs earned an average of 42 times the average worker.  The median compensation for CEOs in all industries is about $4 million, and for the companies listed on the Dow-Jones Industrial Average, the average salary is $19.8 million.  From 2006-8, the top five executives at the 20 banks that accepted federal bailout dollars averaged $32 million each (100 average workers would have to work more than 1,000 years to make as much).

Enough is Enough

The supply siders argue that raising taxes on the wealthiest Americans will slow economic growth, but history proves them wrong.  Between 1951 – 1980, America’s top marginal tax rate was 70 to 92% and the average national annual growth was just under 4%.  The rate was far lower in 1983 and the years following it, but the economy grew at a rate of 3%, and despite right wing rhetoric to the contrary, the boom in the economy under Ronald Reagan took place after his tax increase.  Interestingly, the 1990s boom followed Bill Clinton’s tax increase in 1993.  During the Clinton years, the economy created 22 million net new jobs and unemployment dropped to 4%.

Here’s our point: The past few decades have been exceedingly good for a few, and it’s time for the rest of us to take to the streets to reject as loudly as possible any suggestion that our budget problems are caused by public unions, high-paid teachers, and greedy public employees.  We live in strange times, and chief among them is the propaganda that it’s the middle class that’s the source of our problems and the places to cut costs are safety net programs.

Somehow, we have to cut through the clutter and get to the clear connection between wealth and power.  Somehow, we have to eliminate the notion that the purpose of government is to make the “right” people wealthier.  All of us studied the robber barons in American history, but in that era of accumulated family wealth, the richest 1% controlled 18% of the nation’s income.  Today, the top 1% controls about 25%.

There has to be a point when we come to grips with the fact that income inequality is a homeland security threat to the democratic principles on which our country was built.  The trends of the past 30 years are simply unsustainable as the middle class drowns and the costs of increased income inequality are measured in much more than financial terms.  Rather, the costs will be measured in a breakdown of social cohesion, frayed national focus, a collection of special interests, and  the kind of frustration already emerging in states like Wisconsin.