Mind the Gap: A Fight for Opportunity for America۪s Poor
America’stop one percent of earners currently hold more assets than the bottom 90 percentcombined. This is a remarkable level of inequality, but it۪s not an inevitableone. It didn۪t happen by accident, but was brought about through decades ofspecial interest pressure and conscious political choices that allowed a selectfew to prosper as the gap between rich and poor grew wider.
Unfortunately,we won۪t reverse this trend without a serious and concerted push to return hopeand opportunity to low- and middle-income Americans.
America۪sincome gap has grown at a startling rate. America’s middle-income workers sawtheir income increase by a mere 21 percent from 1979 to 2006. Meanwhile, theincome of the top two percent grew by 260 percent.
Thistrend is disturbing, but to understand how we got here, it۪s critical to looknot at economic history, but political history. According to politicalscientists Jacob Hacker and Paul Pierson, American corporations began theirascendency in the 1970s when they realized they could individually gain more byworking together in Washington.
Aroundthis time, corporations formed lobbying groups and began substantial outreachto both political parties. Over the next three decades, the mounting cost ofpolitical campaigns made corporations۪ ability to deliver donations increasingly important to the politicalprocess. The financial industry, for instance, made political donations of $1.7billion in the first decade of this century alone.
Overtime, American corporations were well rewarded for their largess. They receivedfavorable trade and tax policies, subsidies, and they promoted a national mindsetthat seems to follow what former Secretary of Defense Charles Wilson once said:”What was good for our country was good for General Motors and vice versa.”
Buildingon increased political engagement in the 1970s, corporations began looking foradditional constituencies to carry their message. In 1985, business andcorporate interests funded the newly-created Americans for Tax Reform (ATR), a Washington-basedgroup that lobbies at the federal level against any tax increase, for anypurpose, at any time. ATR President Grover Norquist brags that 276 of 289 RepublicanMembers of Congress have taken ATR’s pledge never to vote for a tax increase. Since1991, none have. They also will not vote to revoke federal subsidies to anycorporate group.
Tomake matters worse, ATR does not make its finances public, so no one knowsexactly which individuals or organizations are funding an organization thatseems to have so many Republican office holders in its grip.
AsATR gained power in Congress, both Presidents Ronald Reagan and George H.W.Bush relaxed regulation and taxes on the very rich. Helping big business isn۪tjust a Republican traditionPresidents George W. Bush, Bill Clinton, and BarackObama have all relied on Wall Street veterans for economic policy advice.
Inaddition to corporate influence in Washington, institutional and global forces havealso fought against the interests of the average American. Organized labor, forinstance, began to lose strength in the 1980s and its decline continues.
Theerosion of the middle class also has macro-economic repercussions. Robert Reichmakes a strong case in his new book AfterShockthat super concentration of wealth contributed to America’s recession. It isthe middle class, Reich says, who take their paychecks and go out and buy, and keepthe economy moving.
Afterdecades of corporate influence in Washington, it is no surprise that Americanindicators of poverty remain unacceptably high. The standard of living forAmerica’s bottom quarter has been effectively stagnant for thirty years. Wehave some 90 million fellow citizens living in or close to the poverty level. Onein five of our children grow up in poverty. The situation is made worse by thefact that the traditional vehicle for immigrants and the poor to move into theAmerican middle class our public education system – is mired in mediocrity.
Inthe recent debates over the budget and deficit between Republicans andDemocrats, the starting point has been to find spending cuts in programs thatsupport America’spoor and working class. The impact on the health,education, and future of these Americans is little noticed in public debatebeyond vague claims of Republican Party leaders that they are working to savethese programs.
Whilethe proposed budget cuts are a severe economic problem for the poor, they arealso a moral problem for a nation that prides itself on its sense of equalityand opportunity for all.
Noone has stepped up and provided a strong guideline. Tragically, there are few innational politics who have made this question a priority. It is up to theAmerican people to take a vested interest in our poor and working classcitizens. We cannot afford for the income and standard of living gap tocontinue to grow.
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FredRotondaro is a senior fellow at the Center for American Progress.