[Vision2020] The Rich Get Even Richer

Wed Mar 28 13:47:43 PDT 2012

Dean Baker (Beat the Press blog) on Rattner:

[Rattner says]"Government has also played a role, particularly the George W. Bush 
tax cuts, which, among other things, gave the wealthy a 15 percent tax 
on capital gains and dividends. That’s the provision that caused Warren 
E. Buffett’s secretary to have a higher tax rate than he does.
"As a result, the top 1 percent has done progressively better in each economic recovery of the past two decades."

Yes, government has played a role, but the tax cuts for the wealthy 
has been the less important part of the story. Most of the increase in 
inequality has been in before-tax income. The government has affected 
income distribution by changing the rules of the game in ways that 
allowed the wealthy to benefit at the expense of everyone else.
For example, maintaining government guarantees for the banking system (remember the bailouts?) while relaxing Glass-Steagall and other 
restrictions amounted to a massive subsidy to the financial sector. Many of the top 1 percent get their money here.
There has also been a tightening and extending of patent monopolies. 
One result of this has been to hugely increase the amount of money being paid in patent rents, much of which goes to the 1 percent. We currently spend close to $300 billion a year for prescription drugs. We would 
spend close to $30 billion a year if drugs were sold in a free market 
without patent protection.

The difference of $270 billion annually is roughly 5 times as much money as is at stake with the Bush tax cuts. We would need alternative methods of financing drug research, but the 1 percent so completely dominate debate that alternatives to 
patent monopolies are not even considered in policy circles even though 
they would almost certainly be far more efficient and lead to better 
health outcomes.
The government has also taken steps to directly drive down the wages 
of less educated workers. Trade policy has deliberately placed U.S. 
manufacturing workers in direct competition with low paid workers in the developing world. By contrast, the barriers that make it difficult for 
foreign professionals, like doctors and lawyers, from working in the 
United States have largely been maintained or even increased.
The predicted and actual result of this policy is to depress the 
wages of less educated workers relative to the most highly educated 
workers. This effect is amplified by thehigh dollar policy that the United States began pursuing under Robert Rubin and used the 
muscle of the IMF to advance following the East Asian financial crisis. 
There are many other ways in which government policy has redistributed income upward over the last three decades. Rattner misdirects attention when he focuses on tax policy as a major cause of inequality.

________________________________
 From: Donovan Arnold <donovanjarnold2005 at yahoo.com>
To: lfalen <lfalen at turbonet.com>; Art Deco <art.deco.studios at gmail.com>; "vision2020 at moscow.com" <vision2020 at moscow.com> 
Sent: Wednesday, March 28, 2012 8:06 AM
Subject: Re: [Vision2020] The Rich Get Even Richer

The problem is not with our economic system where some people are rich and most are not. The problem is with our political and legal systems that prevents many from getting wealthy and the rich from ever getting poor.

The doors of opportunity have been shutting on the average American. There is just little chance of ever being able to make a wealthy amount of money because there are too many laws, rules, and regulations banning everyday people from doing what people use to be able to do. Meanwhile, the US government is giving billions and billions of taxpayer dollars to big corporations so they cannot fail. Even dollars meant for the average person, like a family farmer, is being diverted off to big multibillion dollar profit agricultural corporations while the single family farmer is being wiped out of existence. 

Tax rates are also unequal. The person that actually gets up in the morning and labors away all day gets a tax rate twice as high as the millionaire who just put the money in some stock company and can go on vacation. 

Our political system has been hijacked by special interests paying off career politicians to rig the economy in their direction. 

Donovan Arnold

From: lfalen <lfalen at turbonet.com>
To: Art Deco <art.deco.studios at gmail.com>; vision2020 at moscow.com 
Sent: Monday, March 26, 2012 12:32 PM
Subject: Re: [Vision2020] The Rich Get Even Richer

I would agree with some of what is said here, but not all. I read an economic report recently(don't remember where) that said everyone's income has improve, both for the high end and the low end of the economic scale.  The
 high end did however make greater gains.
There does need to be some changes made in the tax structure. One would be to take a look at all the tax exemptions. There should be a clearly defined benefit to retaining them. The same should be done for farm subsidies.
Roger

-----Original message-----
From: Art Deco art.deco.studios at gmail.com
Date: Mon, 26 Mar 2012 10:40:10 -0700
To: vision2020 at moscow.com
Subject: [Vision2020] The Rich Get Even Richer

>  [image: The New York Times] <http://www.nytimes.com/>
> 
> 
> ------------------------------
> March 25, 2012
> The Rich Get Even Richer By STEVEN RATTNER
> 
> NEW statistics show an ever-more-startling divergence between the fortunes
> of the
 wealthy and everybody else — and the desperate need to address this
> wrenching problem. Even in a country that sometimes seems inured to income
> inequality<http://topics.nytimes.com/top/reference/timestopics/subjects/i/income/income_inequality/index.html?inline=nyt-classifier>,
> these takeaways are truly stunning.
> 
> In 2010, as the nation continued to recover from the
> recession<http://topics.nytimes.com/top/reference/timestopics/subjects/r/recession_and_depression/index.html?inline=nyt-classifier>,
> a dizzying 93 percent of the additional income created in the country that
> year, compared
 to 2009 — $288 billion — went to the top 1 percent of
> taxpayers, those with at least $352,000 in income. That delivered an
> average single-year pay increase of 11.6 percent to each of these
> households.
> 
> Still more astonishing was the extent to which the super rich got rich
> faster than the merely rich. In 2010, 37 percent of these additional
> earnings went to just the top 0.01 percent, a teaspoon-size collection of
> about 15,000 households with average incomes of $23.8 million. These
> fortunate few saw their incomes rise by 21.5 percent.
> 
> The bottom 99 percent received a microscopic $80 increase in pay per person
> in 2010, after adjusting for inflation. The top 1 percent, whose average
> income is $1,019,089, had an 11.6 percent increase in income.
> 
> This new data, derived by the French economists Thomas Piketty and Emmanuel
> Saez
 from American tax returns, also suggests that those at the top were
> more likely to earn than inherit their riches. That’s not completely
> surprising: the rapid growth of new American industries — from technology
> to financial services — has increased the need for highly educated and
> skilled workers. At the same time, old industries like manufacturing are
> employing fewer blue-collar workers.
> 
> The result? Pay for college graduates has risen by 15.7 percent over the
> past 32 years (after adjustment for inflation) while the income of a worker
> without a high school diploma has plummeted by 25.7 percent over the same
> period.
> 
> Government has also played a role, particularly the George W. Bush tax
> cuts, which, among other things, gave the wealthy a 15 percent tax on
> capital gains and dividends. That’s the provision that caused Warren E.
>
 Buffett’s secretary to have a higher tax rate than he does.
> 
> As a result, the top 1 percent has done progressively better in each
> economic recovery of the past two decades. In the Clinton era expansion, 45
> percent of the total income gains went to the top 1 percent; in the Bush
> recovery, the figure was 65 percent; now it is 93 percent.
> 
> Just as the causes of the growing inequality are becoming better known, so
> have the contours of solving the problem: better education and training, a
> fairer tax system, more aid programs for the disadvantaged to encourage the
> social mobility needed for them escape the bottom rung, and so on.
> 
> Government, of course, can’t fully address some of the challenges, like
> globalization, but it can help.
> 
> By the end of the year, deadlines built into several pieces of complex
> legislation will force a
 gridlocked Congress’s hand. Most significantly,
> all of the Bush tax
> cuts<http://topics.nytimes.com/top/reference/timestopics/subjects/t/taxation/bush_tax_cuts/index.html?inline=nyt-classifier>will
> expire. If Congress does not act, tax rates will return to the higher,
> pre-2000, Clinton-era levels. In addition, $1.2 trillion of automatic
> spending cuts that were set in motion by the failure of the last attempt at
> a deficit reduction deal will take effect.
> 
> So far, the prospects for progress are at best worrisome, at worst
> terrifying. Earlier this week, House Republicans unveiled an unsavory stew
> of highly regressive tax cuts, large but unspecified reductions in
> discretionary spending (a category that importantly
 includes education,
> infrastructure and research and development), and an evisceration of
> programs devoted to lifting those at the bottom, including unemployment
> insurance, food stamps, earned income tax credits and many more.
> 
> Policies of this sort would exacerbate the very problem of income
> inequality that most needs fixing. Next week’s package from House Democrats
> will almost certainly be more appealing. And to his credit, President Obama
> has spoken eloquently about the need to address this problem. But with
> Democrats in the minority in the House and an election looming, passage is
> unlikely.
> 
> The only way to redress the income imbalance is by implementing policies
> that are oriented toward reversing the forces that caused it. That means
> letting the Bush tax cuts expire for the wealthy and adding money to some
> of the programs that
 House Republicans seek to cut. Allowing this disparity
> to continue is both bad economic policy and bad social policy. We owe those
> at the bottom a fairer shot at moving up.
> 
> Steven Rattner <http://stevenrattner.com/> is a contributing writer for
> Op-Ed and a longtime Wall Street executive.
> 
> 
> -- 
> Art Deco (Wayne A. Fox)
> art.deco.studios at gmail.com
> 
> 

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