“A Systemic Problem Of Enabling The Rich”: Growing Income Gap Is Ripping The Social Fabric
Perhaps it’s a sign of the times that one man’s act of altruism has attracted national attention. Raymond Burse, interim president of Kentucky State University, has given up more than $90,000 of his annual salary in order to boost pay for the lowest-paid workers at the college, some of whom earn as little as the minimum wage of $7.25 an hour. His donation will bump their wages to $10.25.
Burse has noted that his sacrifice will hardly leave him impoverished. He is a retired General Electric executive (as well as a former president of the college) with good benefits, as he told the Lexington Herald-Leader. While his job as interim president is “not a hobby, in terms of the people who do the hard work and heavy lifting, they are at the lower pay scale,” he said.
Yet, Burse is not Mitt Romney rich, and he could easily have kept his entire $349,869 annual paycheck without raising an eyebrow among his peers. As acting head of a historically black institution, he’s not in the growing circle of college presidents whose annual compensation tops a million bucks. Still, his act of generosity shines a spotlight on the growing divide between the haves and the have-nots, the well-off and the working stiffs, the 1 percent and the rest of us.
The nation’s growing income inequality is one of its biggest challenges, a widening rip in the social fabric. The United States is not held together by a common religion or language or ethnicity, but by its promise of equal opportunity for all. While that’s always been a bit exaggerated, the nation has generally made good on the ideal that those who work hard can at least provide for their families.
But that notion has been less and less true since the 1980s, as globalization and technology starting stealing the factory jobs that paid good wages and gave average workers a toehold in the middle class. Then came the financial meltdown of 2008, which sped the decline. It’s no wonder that 49 percent of Americans, according to a new NBC-Wall Street Journal poll, think the country is still in a recession.
The Great Recession, though, just put rocket-boosters on a trend evident for decades. The problem is systemic. We’ve managed to create an economy that makes the rich richer while most others struggle to get by. Those with college degrees generally fare better than those with high school diplomas, but there are lots of twenty-something college grads working part-time jobs and living with their parents. They can’t afford to rent an apartment.
The economic climate isn’t the fault of Congress or the president. This globe-shaking dislocation is a mega-trend — the sort of frightening reordering of the universe that shook millions at the start of the Industrial Revolution. It’s not necessarily a bad thing that thousands of bank tellers, for example, are slowly being replaced by smart ATMs, but it does signal the disappearance of jobs that paid a decent wage.
Most Americans, however, aren’t buying the mega-trend explanation. They place the blame for their economic decline squarely on the shoulders of their elected leaders. The NBC-Wall Street Journal poll, conducted late last month, found that “seven in 10 adults blamed the malaise more on Washington leaders than on any deeper economic trends,” the Journal said.
That is easy enough to understand. Even if political leaders didn’t instigate a tectonic shift in the economy, they have done next to nothing to ease the dislocations. Indeed, a dysfunctional Republican Party, now comfortable in its role as enabler to the rich, will barely acknowledge the growing income gap.
Democrats, for their part, have recognized the problem but present few long-term solutions. Yes, raising the minimum wage would help, but it’s just a start. The nation needs an overhaul of its educational system, cheaper college costs and a public works program that pays a decent wage.
Burse’s noble sacrifice could help a few workers, but it’s not clear that it will stay in effect after he leaves. Still, his gesture is a step in the right direction. Too few men and women in his position have even noticed the plight of their poorly paid workers.
By: Cynthia Tucker, Visiting Professor, The University of Georgia; The National Memo, August 9, 2014
“Such Short Memories”: The Worst President Since World War II? Uh, Guess Again
When George W. Bush was inaugurated president of the United States on January 20, 2001, the unemployment rate stood at 2.4 percent. By the time Dubya completed his second term in office on January 19, 2009, the unemployment rate at risen to 7 percent. When Dubya took office in 2001, he was left with a budget surplus of $127.3 billion. When he completed his second term, he left a budget deficit of $1.4 trillion. The US national debt was $5.7 trillion on January 19, 2001. After eight years of Dubya, the debt was $10.6 trillion.
The US was at peace on January 20, 2001. After eight years of Dubya, the US was involved in two overseas wars in Afghanistan and Iraq that had cost US taxpayers nearly $1 trillion. The bigger of the two — Iraq — was launched based on mistaken, manipulated, or concocted information (or some combination of the three), and had resulted in the deaths of approximately 4,200 US military personnel and somewhere between 100,000 to 500,000 Iraqi civilians.
America’s image abroad took a serious plunge under Dubya, primarily because of Iraq. International surveys of tens of thousands of people taken by the Pew Research Center’s Pew Global Attitudes Project during those years consistently found extremely low opinions of Dubya and the US due to the war in Iraq, particularly among Muslims. The revelations of atrocities committed by US soldiers at Abu Ghraib prison and abuses by contracted security firms like Blackwater certainly didn’t help. Oh, and the little matter of holding prisoners at Guantanamo and… more torture.
Both wars were carried out in retaliation for the terrorist attacks of September 11, 2001. The attacks, which took place during Dubya’s first year, resulted in the deaths of nearly 3,000 people and at least $10 billion in material damage.
A muscular foreign policy? Well, yeah… if you consider taking on third-rate powers like Iraq and Afghanistan “muscular.” Dubya couldn’t do much against Russia when it invaded Georgia in 2008, nor against Iran’s nuclear program. Also impotent to prevent the military rise of China. Some things just can’t be helped — not even if you’re a superpower.
The stock market? When Dubya took office in 2001, the Dow Jones stood at $10,587.59, the S&P 500 at $1,342.54, the NASDAQ at $2,770.38. Eight years later, the Dow was at $7,949.09, the S&P at $805.22, and the NASDAQ at $1,440.86. Those represented drops of 25 percent, 40 percent, and 48 percent, respectively.
The Great Recession in the US, which occurred during Dubya’s seventh and eighth years (2007-2008) in office, triggered a worldwide financial crisis — the worst since the Great Depression of the 1930s, and resulted in the collapse of numerous large financial firms in the US and around the world. It threatened the very viability of the international financial system.
During Dubya’s seventh and eighth years, Americans lost a total of $16.4 trillion in household wealth. In 2008 alone — Dubya’s last year — more than 1 million Americans lost their homes, and the foreclosure process had begun on another 2 million Americans.
Health care costs? Under the Dubya years, health insurance premiums doubled. According to the Kaiser Family Foundation, the average cost of employer-sponsored premiums for a family of four was $6,000 per year in January 2001. Eight years later, the average cost had risen to $12,680. It’s no wonder that the number of Americans with healthcare insurance dropped by 7.9 million under Dubya. Some 13.7 percent of Americans were uninsured in January 2001. Eight years later, the figure had risen to 15.4 percent.
Oh, Americans have such short memories — made only worse by how pathetically poor many choose to be informed. This is perhaps best reflected in the immensely entertaining poll recently taken by Quinnipiac University on June 24-30. The poll surveyed 1,446 people and asked them to rate US presidents since World War II. The result? Barack Obama was found to be the worst president since WWII. Right.
It brings to mind a gag quote I found online a couple of years ago. It was accompanied by a photo of Dubya. Went like this: “I screwed you all. But thanks for blaming it on the black guy.”
Bill Clinton perhaps put it best when he described the Republican Party’s position toward Obama: “We left him a total mess. He hasn’t cleaned it up fast enough, so fire him and put us back in.”
By: Marco Caceres, The Huffington Post Blog, July 8, 2014
“An Intellectual Hollowness”: Why Republicans Have No Ideas About Mass Unemployment
Last Saturday, the extension of unemployment benefits originally passed at the outset of the economic crisis expired. The position of Democrats in Washington, backed by a growing mountain of economic research, is that macroeconomic and humanitarian considerations alike both argue for an extension of unemployment benefits.
The position of Republicans in Washington is rather strange — less a moral or economic argument than an expression of indifference. “These have been extraordinary extensions, and the Republican position all along has been ‘we need to go back to normal here at some point,'” argues Representative Tom Cole. “[W]hat we did was never intended to be permanent. It was intended to be a very temporary solution to a very temporary crisis,” echoes Representative Rob Woodall. Of course nobody intended for the crisis of mass unemployment to last five years. Nobody intended for the crisis to happen at all. It is simply weird to argue that, since the problem has gone on longer than intended, the response to the problem must end as well. The fire trucks don’t shut off the hoses simply because the fire should have been put out by now.
Yet the weirdness, far from being random, reveals something deeper at work. The most obvious thing, of course, is a general lack of concern for the fate of the unemployed — or, at least, a casual assumption that the unemployed themselves must be to blame for their plight. But even a more generous reading of the Republican position, taking its most serious defenses at face value, reveals an intellectual hollowness. Half a decade into the economic crisis, the Republican Party has no serious ideas about the Great Recession.
One of the few Republicans to directly defend his party’s refusal to extend unemployment benefits is Rand Paul. Unfortunately, as is so often the case, Paul’s ideas about unemployment insurance are cracked. Paul has repeatedly cited studies that show that employers discriminate against job candidates who have been out of work a long time. Paul simply assumes that people are staying unemployed so they can continue collecting unemployment benefits. But the economics paper Paul cites, according to the economist who wrote it, suggests the opposite of his conclusion.
Meanwhile, The Wall Street Journal editorial page gamely defends the Republican stance:
The Administration claims that every $1 of jobless benefits creates $1.80 in economic growth, based on the notorious “multiplier” in Keynesian economic models. This is the theory that you can increase employment by paying more people not to work, and that you can take money out of the private economy by taxes or borrowing without cost.
The argument here is that there’s a “cost” to “taking money out of the economy” to pay for unemployment benefits. What is that cost? Well, in normal conditions, higher deficit spending will cause interest rates to rise. But these are not normal conditions. Interests rates are as low as they can be. The zero bound is the policy dilemma of the moment. The Journal editorial page has been warning for years that rising interest rates are on their way, or already occurring. The utter failure of these predictions has not even slightly dented its jaunty confidence.
It is true that some research has shown that cutting off unemployment benefits can force the unemployed to search more aggressively (or desperately) for work — say, an out-of-work machinist might take a job for lower wages at the 7-11. But those studies all take place in the context of a normal economic cycle, not the mass unemployment we see today. The conditions of mass unemployment from the Great Recession dictate that cutting off benefits from the unemployed simply immiserates them because there are no jobs.
Republicans in North Carolina proactively demonstrated their party’s stance by cutting off benefits to the unemployed before it was tried elsewhere in the nation. The result was dismal: The state’s labor force is shrinking. Rather than getting jobs, the unemployed have simply stopped looking for them, because they don’t exist.
Sharp conservative ideas about the recession can be found on the margins of the political debate. (See, for instance, Michael Strain in the Weekly Standard.) It’s certainly possible to reconcile conservative doctrine about the size of government with specific plans to address mass unemployment. But Republicans in Congress have not bothered to adopt any of these alternative proposals. Nor have conservatives in general displayed much of an interest in the topic of unemployment benefits. There’s an asymmetry of partisan interest on the subject somewhat akin to Benghazi, which obsesses the right and bores the left. Republican thought on mass unemployment is a restaurant with tiny portions that taste terrible.
This is not to say that the GOP lacks any ideas about economic policy. Both parties have fairly well-defined ideas about the general role of taxes, spending, and regulation. The difference is that the Democratic Party also has a policy agenda that is specifically related to the special conditions of high unemployment and low interest rates. The Republicans are still merely asserting that their normal agenda applies just as well now as ever. The unique, dire conditions of the Great Recession shouldn’t be expected to undo all the party’s program, or to alter its general long-term ideas. (Democrats have not, and should not, given up their preference for universal health insurance, reduced greenhouse gas emissions, and so on, nor should Republicans have to abandon their preference for the opposite.) What they lack is any legislative response to the economic crisis. They just want to get back to normal, and since normality has not arrived, they’d just as soon pretend it has.
By: Jonathan Chait, New York Magazine, December 31, 2013
“Income Inequality Creates Huge Gaps In Opportunity”: The Class Divide Is One Of The Biggest Problems Now Facing The Country
By now, you’ve surely heard of the Texas drunken-driving case that has sparked national outrage — angering victims, upsetting psychologists and sending Twitter into overdrive. A 16-year-old who killed four people while intoxicated was sentenced to 10 years’ probation and treatment in a tony rehab facility.
As unusual as that example of mercy may be, it was the rationale offered by a defense expert that drove observers into a frenzy. A psychologist hired by defense attorneys told the court that the young man’s tragically irresponsible actions were the fault of his rich parents, who didn’t rear him with sufficient discipline. As a consequence, G. Dick Miller said, the teenager suffered from “affluenza” and didn’t know right from wrong. (Many other psychologists have disagreed vociferously, saying there is no such diagnosis.)
It’s hard to stomach that notion, especially since Judge Jean Boyd of the Fort Worth Juvenile Court seems to have swallowed it whole. I can’t imagine how bitter and resentful — not to mention mystified — the victims’ families must be.
But Boyd might have unintentionally done us a favor by opening the door to a dank, dark room that we have worked too hard to keep closed. She has let out the putrid aromas of economic inequality, which we have long ignored. Wealthy people, the judge’s sentence reminds us, have huge advantages over ordinary folk, despite an American mythology about equal opportunity. And the opportunity gap is growing as inequality cleaves the country into haves and have-nots.
The very terms “wage gap” and “disappearing middle class” have become clichés in Washington, often muttered by pandering politicians and comfortable journalists who have little real understanding of the effect that income inequality has had on the lives of ordinary Americans. But the fallout is real enough.
Since the 1970s, the wages of working-class Americans — those without college degrees — have stagnated and fallen further and further behind. Meanwhile, the wealthy have only become more prosperous.
Despite what you may believe to be true, the individual’s work ethic has little to do with those results. No matter how hardworking you are, a job at Walmart won’t give you much in the way of financial security. And if you are born to parents who can give you a trust fund, it doesn’t matter how little you work; you’ll still have plenty of security.
The trends that have eaten away at the great American middle — including globalization and technological gains — have been evident for decades, but the Great Recession accelerated the consequences. Even as economic data show huge gains in productivity, the jobless rate remains high, stuck at around 7 percent. (Translation: Companies have found ways to get more and more work done with technology, whether it’s through eliminating bank tellers and installing more ATMs, or using more robots in factories.)
This is a complex problem with no easy answers, but we could make a start toward solutions by looking squarely at the issue and refusing to call it by other names. Here are a few things it’s not: indolence, racism, the failure of the welfare state.
Mitt Romney became appropriately infamous for his condescending dismissal of the “47 percent” who he claimed don’t want to work, but that wrong-headed idea doesn’t stop with Romney. U.S. Rep. Jack Kingston (R-GA), running for the GOP nomination for the U.S. Senate, has proposed that poor children sweep school cafeteria floors in exchange for free or reduced lunches, a deal that would get the “myth out of their head that there is such a thing as a free lunch,” he said.
But liberals often get it wrong, too — confusing rampant income inequality with racism. The legacy of racism has certainly contributed to the wealth gap between black and white Americans, but class is now a bigger factor in a child’s future than race. President Obama’s children are virtually assured a bright future, while millions of their cohort among the working classes are not.
The class divide is one of the biggest problems now facing the country, and it’s time we started to confront it. Judge Boyd’s unjust sentence is just the provocation to force us to take it on.
By: Cynthia Tucker, The National Memo, December 28, 2013
“Five Times George W. Bush Extended Unemployment Insurance Benefits”: It’s Just Bad Policy To Refuse To Renew The Extension
In his December 14, 2002 weekly radio address, President George W. Bush reminded Congress that “no final bill was sent to me extending unemployment benefits for about 750,000 Americans whose benefits will expire on December 28th.”
He went on, “These Americans rely on their unemployment benefits to pay for the mortgage or rent, food, and other critical bills. They need our assistance in these difficult times, and we cannot let them down.”
What was the unemployment rate in December 2002?
It had just risen to 6.0 percent.
The unemployment rate today is 7.0 percent and at the end of this year 1.3 million Americans — including 20,000 veterans — who have been out of work for more than six months will have their unemployment insurance benefits cut off. Republicans in Congress have refused to extend these benefits, though the Congressional Budget Office predicts failing to do so will cost the economy 200,000 jobs.
The Republican Congress heeded George W. Bush’s call to extend unemployment insurance as they had the March before. They passed a bill and he signed it.
In 2003, the American economy was still dealing with the residue of the dot-com bust and economic shock of the 9/11 attacks — but it was still considerably stronger than the America that lived through the Great Recession and continues to see its growth hindered by government austerity.
The extended unemployment benefits Congress is about to let expire actually began under George W. Bush, long after his 2003 extension expired as unemployment dipped below 5 percent again. In 2008, as the financial crisis began to rock the economy, President Bush signed an extension of 13 weeks, 39 weeks total in most states, for anyone living in a state with unemployment over 6.0 percent. He also signed unemployment extensions that specifically helped the victims of 9/11 and Hurricane Katrina.
All five times Bush extended unemployment benefits, he did so with the majority of Republicans in Congress supporting him.
At the peak of the crisis, when unemployment was around 10 percent, Congress and President Obama extended benefits to 99 weeks. The current maximum is 73 weeks.
A requirement of receiving benefits is seeking a new job, but with an estimated three people out of work for every one job opening, cutting off benefits likely won’t encourage jobseekers — as Senator Rand Paul (R-KY) imagines — but instead doom them to permanent unemployment. And the Center for Budget and Policy Priorities (CBPP) estimates that the 1.3 million who will be cut off in 2014 will soon swell to 5 million.
There are two huge reasons why now is not the time to cut off the long-term unemployed, explains the CBPP’s Brad Stone.
While the unemployment rate has declined, the overall employment rate has not grown as it usually would during a recovery.
Secondly, cutting off benefits now for those who need them most is unprecedented.
“At 2.6 percent, the long-term unemployment rate is at least twice as high as when any of the emergency federal UI programs that policymakers enacted in each of the previous seven major recessions expired,” Stone wrote.
Even conservatives recognize that it’s just bad policy to refuse to renew the extension.
Democrats in Congress have vowed to tie the extension to the passage of the farm bill in order to force Republicans to approve it retroactively. They’re expected to be supported by an organized grassroots effort from the left to force vulnerable congressmembers to encourage the GOP leadership to take up the bill.
But it’s safe to assume that if it were President Bush asking for the extension rather than President Obama, the GOP would be happy to just say yes.
By: Jason Sattler, The National Memo, December 20, 2013
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