Now is a great time to be an American, right? The economy is picking up steam, corporations are racking up profits again, and the Dow just hit a new high. The rest of the world is still struggling; Japan is slipping back into recession, and the rest of the world is hoping the U.S. economy can pull it out of the doldrums.
Except there's one problem. When the American economy grows, darn near all of that growth gets pipelined straight into the hands of the few at the top. What most Americans get out of an expanding economy is a pittance compared to what could be done - if the gains were shared out more equitably. Instead, the gap between top and bottom is getting worse. Even before the latest round of 'good' news, it was clear only a tiny fraction of America was experiencing a 'recovery'.
So, here's the challenge: transform the U.S. economy. It's currently a wealth extraction machine that diverts money from people who work for a living into the hands of people who own things for a living. It is also proving incapable of adjusting to the real world without a lot of disruption. With a Republican Congress for the next two years, there is not a lot that can be done by legislation - but there's one measure that could begin the transformation. More below the Orange Omnilepticon.
The Right Wing narrative is simple: 47% of Americans are takers who are getting a free ride from the government and ripping off the rest of us. Tax and Spend Democrats are using Big Government to destroy our freedom and cripple the Job Creators. In fact, Obama and the Democrats hate America so much, Obama has brought Ebola to America in order to take our guns away.
In the face of this kind of lunacy, it shouldn't be hard to come up with an effective counter message. (The problem is spreading it, absent a dedicated propaganda machine, a main stream media determined to not appear too Democrat-friendly, and a party with no message discipline. But that's a matter for a separate discussion.) There's plenty of material to work with in making the case that the American economy has been seriously distorted to advantage the few at the expense of the many.
Mother Jones has been doing excellent work on this for a long time. (Drop them some money if you appreciate their work.) A set of charts here detail some of the particulars.
THE GREAT RECESSION officially ended five years ago, but that's news for millions of Americans: A stunning 95 percent of income growth since the recovery started has gone to the superwealthy. If an average household currently earning $71,000 had enjoyed the same gains as the 1 percent since 2000, it would now make more than $83,000. And the widening income gap is not just about the 1 percent anymore: Take a closer look, and you'll see that it's really a tiny fraction—the 1 percent of the 1 percent—that hoovers up the lion's share of the nation's wealth. With Washington paralyzed on bread-and-butter issues and the midterms ahead, we put together a primer on the state of America's frozen paychecks.
emphasis added
A few more points from the article. Click on the link to see the charts - here's the captions on just a few of them..
• TRICKLE UP - For every dollar earned by a family in the bottom 90%, one in the top 0.01% earns nearly $1000.
• THE RICH AND THE MEGARICH - Since 1980, the average real income of the 1% has shot up by more than 175%, while the bottom 90%'s income didn't budge. But as this chart shows, the vast majority of gains have gone to the tippy-top.
• WORKING MORE, EARNING LESS - You're working harder than ever, but you're still treading water. In 2012 the median household income had dropped to where it was in 1996 (adjusted for inflation.)
• X MARKS THE SPOT - For the first time in a century, the top 10% of Americans control more than half of all income. Economist Thomas Piketty foresees that their share will soon rise to 60%.
There are additional graphics that show even more damning information, such as the way the tax burden on the top has evaporated away, how unevenly the scraps the rest of get are distributed, and how the ultra-rich see themselves as a persecuted group under attack - even as they scarf up more of the economy.
Take a look at the whole thing.
And why do Americans settle for this state of affairs? They know something is wrong, but most simply have no idea how bad things really are.
The graphic above is taken from another Mother Jones article,
It's the Inequality, Stupid- Eleven charts that explain what's wrong with America by Dave Gilson and Carolyn Perot. Again, look at the whole thing, and remember this:
the article was published in 2011. Things haven't changed in for the better in that distribution - they've gotten worse.
From Annie Lowrey at the NY Times in 2013:
The new data shows that the top 1 percent of earners experienced a sharp drop in income during the recession, of about 36 percent, and a nearly equal rebound during the recovery of roughly 31 percent. The incomes of the other 99 percent plunged nearly 12 percent in the recession and have barely grown — a 0.4 percent uptick — since then. Thus, the 1 percent has captured about 95 percent of the income gains since the recession ended.
emphasis added
There's a basic problem for Democrats here. Obama can hardly trumpet the news about the stock market picking up and the job situation looking better if he has to add "but most of you are going to be no better off." A big part of that is neoliberalism, which has gotten in bed with Big Money at the expense of pushing a meaningful economic agenda. Democrats have been part and parcel of the process that has gotten us where we are today. Kevin Drum has a take on Democratic problems with the White Working Class which are killing them at the ballot box.
...But when the economy stagnates and life gets harder, people get meaner. That's just human nature. And the economy has been stagnating for the working class for well over a decade—and then practically collapsing ever since 2008.
So who does the WWC take out its anger on? Largely, the answer is the poor. In particular, the undeserving poor. Liberals may hate this distinction, but it doesn't matter if we hate it. Lots of ordinary people make this distinction as a matter of simple common sense, and the WWC makes it more than any. That's because they're closer to it. For them, the poor aren't merely a set of statistics or a cause to be championed. They're the folks next door who don't do a lick of work but somehow keep getting government checks paid for by their tax dollars. For a lot of members of the WWC, this is personal in a way it just isn't for the kind of people who read this blog.
And who is it that's responsible for this infuriating flow of government money to the shiftless? Democrats. We fight to save food stamps. We fight for WIC. We fight for Medicaid expansion. We fight for Obamacare. We fight to move poor families into nearby housing.
This is a big problem because these are all things that benefit the poor but barely touch the working class. Does it matter that the working class barely pays for most of these programs in the first place, since their federal income taxes tend to be pretty low? Nope. They're still paying taxes, and it seems like they never get anything for it. It's always someone else.
The GOP has been exploiting the politics of resentment for a long time, to the point where Democrats are afraid to even talk about it. Being poor has been transformed into a crime, and the idea of using government to change things for the better has been demagogued so thoroughly,
even Democrats have bought into it.
..."We know big government does not have all the answers. We know there's not a program for every problem. We have worked to give the American people a smaller, less bureaucratic government in Washington. And we have to give the American people one that lives within its means. The era of big government is over."
George W. Bush? Actually, that was Bill Clinton, in his 1996 State of the Union address. Clinton added with pride, "Today our federal government is 200,000 employees smaller than it was the day I took office as President."
The irony is that the rest of Clinton's speech went on to propose a long list of goals that only the government could achieve--clean up the environment, improve job security, restore educational opportunity. His conceit was that he could combine smaller government and even disparagement of government with a commitment to more nimble government. But his headline message undermined the details of his program and his ability to win support for it.
emphasis added
TRANSFORMING THE ECONOMY - WHY NOW, AND WHERE TO START?
Since the midterm elections where Democrats got beat up pretty badly, and Republicans saw gains nearly everywhere (although there were some bright spots where progressive issues and candidates gained ground), President Obama has seemed liberated in some ways. He's no longer going to be a candidate, he no longer has to worry about 'protecting' a Democratic majority in the Senate or elsewhere, he saw a Democratic party that tried to distance itself from him as much as possible, and a Republican Party that has adopted as its sole reason for existence the goal of demolishing everything he has tried to accomplish.
In short he has little to lose and a lot to gain by rejecting what has been Democratic neoliberal orthodoxy, and a chance to begin reshaping the party both internally and in terms of popular perception of it. There's also a game changer taking place whether we will it or not. Climate change is going to fundamentally disrupt the global economy, including the U.S. The status quo has proven incapable of dealing with it. Now is as good as any time as any for the idea that it's time to start rethinking a lot of things we've assumed were constant and unchanging need to be re-examined. President Obama has already demonstrated he will now act where he can, and where it can make a difference - and there's a particular low-hanging fruit just waiting to be plucked. It's one place to start pushing the idea that the economy could work differently and for the benefit of more people than it currently rewards.
Over at Salon Paul Rosenberg has a great suggestion: Let’s all screw the 1 percent: The simple move Obama could make to strengthen the rest of us.
...Although the details are a bit complicated, the bottom line is not: there’s a wage level below which everyone qualifies for mandatory time-and-a-half overtime, even if they’re on a salary, and that level has only been raised once since 1975, with the result that only 11 percent of salaried Americans are covered today, compared to over 65 percent of them in 1975. If you make less than $23,660 a year as a salaried worker, you qualify for mandatory overtime—if not, you’re out of luck. Only those hanging on to the lowest levels of the middle class have those protections anymore. Just adjusting the wage level for inflation since 1975—an act of restoration, not revolution—would be as significant an income increase for millions of middle-class Americans as a $10.10 or even $15 minimum wage is for low-wage workers. It would cover an additional 6.1 million salaried workers (by one account) up to $970 per week, about $50,440 annually—the vast majority of those it was originally designed to protect, but who have slowly lost their protections since the 1970s. Hanauer proposes a slightly greater increase, intended to cover roughly all the workforce that was covered in 1975. That would raise the threshold to $69,000 annually, and would cover an added 10.4 million workers.
emphasis added
The critical thing about this is the way it works: redefining the level at which workers become eligible for overtime pay is purely within the purview of the executive branch. It does not require an action from Congress. With the stroke of a pen President Obama could make life better for millions of Americans. There's a perfect opportunity to do it now. With the growth in GDP and the gains in the DOW, Obama could easily make the case that it is time for business to share the gains from the recovery with the workforce that has made it possible.
To the certain GOP opposition to this (and not a few corporate Democrats), the President could ask a simple question: "Why are you against rewarding Americans who have been working longer and harder than ever? Isn't that the promise of the American dream? If you strive and sacrifice, aren't you supposed to get what you've earned? Isn't this about really rewarding work? Isn't that what we want to encourage?"
There's growing support for increasing the minimum wage - this is aimed at everyone above that threshold who wants their fair share as well. It would certainly address the disgruntled WWC Kevin Drum is writing about - and a lot of other people.
Rosenberg isn't enthusiastic about Obama to date. As he notes:
This is the sad truth about Obama’s economic policy—it’s still stuck in Ronald Reagan’s first term, when trickle-down was still a wild, untested theory, rather than one that had been thoroughly discredited by 30+ years of evidence, showing that supply-side economics is inferior in producing investment growth, productivity growth, GDP growth, faster job creation, growth in median income or wages while also causing the national debt to increase substantially. Obama doesn’t just say nice things about Ronald Reagan from time to time, he thinks like Ronald Reagan, deep down in his bones, and—like Reagan—no amount of pesky facts are going to change his mind. But groundswells of public pressure got Reagan to change his tune several times—in making Dr. Martin Luther King Jr.’s birthday a national holiday, for example. So a similar groundswell of pressure on Obama to restore overtime protections to what they were in 1975 sure couldn’t hurt—and it could even help shape the direction of the next presidency, provided that the Democrats win, as now still seems overwhelmingly likely.
emphasis added
The voice of Elizabeth Warren is raising awareness of the distortions in an economy that is not working for the vast majority of Americans. With a Corporate Congress arriving in the New Year, she'll have plenty of opportunities to keep hammering away on that message. Occupy Wall Street may have been driven from the front pages (and public spaces), but the issues they raised are still out there. President Obama could build on that, as well as on the vast amount of data showing how badly most Americans make out under the policies the GOP has been pushing for so long. By doing so, he could also change the neoliberal narrative that has undermined the strength of the Democratic Party, restore the traditional base of the party, and grow it. Again from Rosenberg:
That’s money that would not just make those workers better off, it’s money that would fuel the rest of the economy as well, in sharp contrast to money in the hands of the 1 percent or higher, who spend far less of what they earn, and invest far more in speculative ventures, rather than solid productive enterprises. That’s how the basic logic of Keynesian economics works, and despite decades of propaganda to the contrary—much of it coming from economists who should know better—that’s exactly what America’s economic history confirms. Doing what Hanauer advises—and firing the supply-siders in his own administration—would be the smartest thing President Obama could do right now, to ensure that the economy keeps on growing, regardless of what congressional Republicans try to do in the next two years.
The question is, will President Obama even consider this? Despite the huge mass of data that suggest this really is the right thing to do, conventional 'wisdom' and business-friendly political groupthink would reject it out of hand. Corporate-owned politicians will work hard to fight it, including many in the President's own party. Obama has been described as a "progressive minimalist" - would he push this as far as it needs to go, or would he just raise the threshold a token amount, lest he 'damage the recovery' as austerians and supply-siders would frantically warn was a real danger? (Never mind that they've been consistently wrong on everything.)
There's also the temptation that Mitch McConnell will try to sucker the President into some kind of Grand Bargain that will trade meaningless tax reforms in exchange for further cuts to the social safety net programs. (The third-wayers will love the idea. So will the GOP. Not so most of America.) Republicans will also be offering up any number of bills intended to 'help' the economy - along with poison pills that will force a veto, so that the President can be cast as an obstructionist.
One thing is for sure: there will be any number of people (some them paid and paid well for the purpose) whose message will be that this is a Bad Idea and We Must Not Even Consider It or Talk About It. Class Warfare! If we want to see this - and now would be a really good time - we're going to have to make it happen.
It's a simple question to ask every politician and pundit: "Would you support the President if he chose to restore the threshold for overtime pay, which has essentially been unchanged since 1975?" Make it a litmus test, the same way raising the minimum wage has become, and make it clear. You're either with us, or against us.