Occupy Wall Street Has Forced Politicians to Address "99% v. 1%" Economic Inequality As a Key 2012 Election Issue
On September 17, 2011, a group of young people occupied Zuccotti Park in New York City’s financial district. Shortly thereafter, their oft-repeated slogan of being the “99%” started to ricochet in the news media. The heavy news coverage has allowed their slogan to seep into the public consciousness.
Henceforth, the “Occupy movement,” as it became known, started influence political conservation. Before the launch of the movement, the issue of inequality was a mere afterthought. The agitation of the Occupiers put the spotlight on the ever-growing chasm between the “1%” and the “99%.” Their plight will make economic inequality one of the central issues in the upcoming presidential campaign.
As this debate starts to percolate, it is important to examine some of the factors that have contributed to this deep inequality. From 1945 to 1986, the top tax rate ranged from 90% to 50%. During those decades, there was a consensus between both parties that the government had to be funded by keeping taxes at an appropriate level. Many Republicans opposed President Kennedy’s tax cuts because they feared that it could lead to deficit.
Unlike the decades following World War II when the economic prosperity was broadly shared, those at the top of the economic ladder began to enjoy a greater share of the economic pie during the 1980s. Moreover, since the 1970s, the income of the average worker started to stagnate.
The economy, however, had been able to produce enough jobs to keep the unemployment low for most of the past three decades. The en-mass entry of women into the job market had cushioned the blow that would have resulted from this income stagnation, since one paycheck could no longer provide economic security.
Even though the economy was still producing jobs, the country had seen a rise in service jobs that neither paid nor provide the same benefits as manufacturing jobs. As a result, even households with two paychecks sometimes struggle to maintain a middle class lifestyle. The economic boom of the 1990s helped strengthened the middle class because of the tremendous number of jobs that were created and other policy initiatives targeting middle income Americans.
Whereas the 1990s was a decade in which the middle class had made some economic gains, the following decade has been characterized as a “lost decade.” During those years, the income of the middle class had barely budged; in fact, it was the first recorded decade to see a decline in median income and a zero net job growth. Worse yet, a great number of Americans ran up their credit cards or borrowed money on their homes, especially during the housing bubble, to maintain their middle class lifestyle. During the Bush years, there was a weak economic expansion driven in part by home construction. In the words of the economist Paul Krugman, Americans “made a living by selling houses to each there." This housing boom was fueled by easy credit, which was seemingly given to anyone.
The bursting of the housing bubble and the financial collapse that ensued has wiped out the home equity of a large number of Americans. This negative equity has sunk many middle class families into debt. Even worse, millions of people lost their homes. In a society where owning a home had always been synonymous to having a foothold in the middle class and living the American Dream, this loss turned that dream into a recurring nightmare for those Americans.
In the past 30 years the wages of many middle class families have not kept up with the increase in the cost of living. The housing devastation occurred in the midst of this. In an excellent article, Michael Hirsch highlights the bleak economic realities. For instance, he points out that it would require a yearly salary of $68,000 for a family of four to pay for their mortgages, college and health care costs, along with their gas prices. In 2010, however, half of the jobs in the U.S. pay “less than $33, 840.” It is no wonder, then, that many families are drowning in debt.
While American manufacturing has never been more productive, change in technology and competition from China and other emerging economies have led to the elimination of millions of jobs. This post industrial economy tends to disproportionately benefit the well educated and the wealthy. But with a high school diploma, it is nearly impossible to secure a job that would afford one a middle class lifestyle. Instead of looking for innovative solutions to this vexing problem, the Republican Party has embraced a rigid tax cut ideology. For many conservatives, tax cut is a panacea that cures whatever ills the economy. The tax cuts that they favor are those that chiefly benefit the wealthy. This approach to taxation has been predicated on the belief that a lower rate on the investor class would spur economic growth. Thus, it would be “a rising tide that would lift all boats.” For more than thirty years, however, many struggling middle and working class Americans are still awaiting this growth.
In the past, when the economy was still growing jobs and the overall economic situation had not been as desperate as it is today, conservatives had been successful in stifling any serious debate about inequality and the need for any increase in taxes by characterizing the very discussion as “class warfare.” They quickly resorted to the same characterizations when Obama began to talk about tax fairness. We are living in different times. Those oft-repeated buzzwords do not carry the same resonance at a time when people are still reeling from the financial collapse.
As long as the average American continues to feel the pinch of the Great Recession, economic inequality, which has been exacerbated by a regressive tax policy that decidedly favors the super rich, will be a potent political issue in the presidential election. Even more important, if the “class warfare” slogan continues to lose its resonance among the public, the Republicans, particularly the party’s nominee, would need to come up with concrete proposals to address the growing economic inequality, and the slow recovery that has been turning a significant segment of middle income Americans into MINO, middle class in name only.
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