It’s time for progressives to launch a comprehensive challenge to America’s extreme concentration of income and wealth. This is not only morally and economically right; a number of developments suggest that it is also one of the areas where progressives can aggressively take the political offensive. As time goes on, the difficulties created by the Bush Administration’s deficit-driven economic policies are likely to make this a winning strategy.
America has experienced what economist and New York Times op-ed columnist Paul Krugman calls “tectonic shifts” in income and wealth in recent years. The top 1 percent now claim more income each year than the bottom 100 million Americans taken together. An only slightly larger elite group, the top 5 percent, own just under 70 percent of financial wealth and more than 80 percent of unincorporated business assets. The economist and Nobel laureate Paul Samuelson has regularly dramatized what the general patterns mean. In the 1948 version of his widely used textbook, Samuelson wrote, “If we made…an income pyramid out of a child’s play blocks with each layer portraying $1,000 of income, the peak would be far higher than the Eiffel Tower, but almost all of us would be within a yard of the ground.” By the end of the century, Samuelson found that although there would be some modest alterations at the bottom, the world had changed so much the peak would be as high as Mount Everest.
Three powerful forces are making a serious challenge on issues of income and wealth politically feasible. The most important is the pain created by the Bush tax and budget cuts. At 17 percent in fiscal year 2003, federal revenues as a share of GDP are at their lowest level since 1959. The budget deficits are causing cutbacks everywhere, and this in turn is creating increasing problems at the state level and in local communities. Public services are being radically reduced; healthcare and state college tuition are increasingly unaffordable not only for the poor and working poor but for an embattled middle class; school budgets are under intense pressure, which is driving an increase in property taxes–the list is endless.
Ultimately, the political pressures resulting from the growing pain must find an outlet. Indeed, just beneath the surface of conventional press reporting, they already are. Consider these largely overlooked recent developments: In the November elections California voters comfortably approved tax increases on those making more than $1 million and earmarked the proceeds for mental health programs. Last year New Jersey enacted legislation taxing those making more than $500,000 in order to offset regressive property taxes. Since Bush took office in 2001, numerous states, red and blue, have decided not to repeal estate taxes, and many others have refused to go along with Bush-driven revisions of depreciation guidelines that reduce corporate taxes. Even the conservative Virginia State Senate approved legislation that would have raised income taxes on those making more than $150,000.
The egregious behavior of the very rich, along with recent shifts in income and wealth patterns, reinforces this logic. At one level is the ever more obvious routine corruption among the wealthy–from the brokerage and insurance-industry insider deals and the $9 billion cooking of the books by Fannie Mae executives to the New York Stock Exchange’s self-dealing arrangements and the Enron, WorldCom and other scandals. At another level are outrageous consumption patterns among the elite. In recent years we have been treated to a $6,000 shower curtain and a $15,000 umbrella stand, and a $2 million birthday party for one boss’s wife. Even the Wall Street Journal had difficulty disguising its dismay in a recent front-page report on the conspicuous-consumption race among billionaire yacht buyers.