Re: The Wealth Gap and the Collapse of the U.S.
As Strobes says, the cancer must be removed before the patient dies. The financial sector is like the trucking industry. It’s supposed to service the wealth building portion of the real economy, not suck the life out of it. Mainstream America was robbed and is continuing to be held up at gun point. The financial oligarchs are not too big to fail; they are too big to exist. After they are busted down into smaller banks, then we must work on overhauling our broken, corrupt government. Absolute term limits on Congress (have you seen TV shots of Senator Byrd of West Virginia in a wheel chair , slobbering on himself?) & a law prescribing a felony for any former member of congress to lobby congress. A very high proportion of senators are millionaires, they should have no need to lobby. They should go home and live under the laws they have created for the rest of us peasants.
I like these ideas here—————-
“Redistribution Done Right:
The scale of this inequality should make one thing clear – efforts to regulate executive compensation are completely inadequate to the task.
Rather, we must be prepared to redistribute wealth far more substantially.
Progressive Taxation – the first step in achieving a more equal society is to make our tax system more progressive. We should work to gradually expand our capital gains, estate, and income tax rates, especially focusing on making these taxes more progressive by adding additional brackets at the top. For example, our current income tax brackets end at 35% of all incomes over $373,000 a year as if there were no difference between a household consisting of two affluent professionals and a household of multimillionaires. There is no sane reason why additional brackets should not be added at $500k, $1 million, $5 million, and so forth.
Progressive Redistribution – in addition to increasing normal social spending, which by its very nature benefits ordinary Americans more than the poor, we should also combine a progressive change in taxation with the expansion and progressivization of our social benefits. While I will expand more upon this subject in future posts, I believe that one of our chief mechanisms of redistribution must be the expansion of the earned income tax credit and the various child-related tax credits into a guaranteed minimum income for workers. Just to take the current EITC, the credit at present is virtually worthless to single people and couples without children (maxing out at $428 a year), while the maximum benefit of $$4,716 is restricted to those with two or more children.
The Goal: I believe that our goal must be to gradually push economic distribution back towards where it was in 1979, when the quintile distribution of income looked like this (2007 numbers shown in parentheses):
1st Quintile – 44% (49.7%)
2nd Quintile – 24.7% (23.4%)
3rd Quintile – 16.9% (14.8%)
4th Quintile – 10.3% (8.7%)
5th Quintile – 4.2% (3.4%)
You will see that this is hardly a dramatic levelling of the sort envisioned by Marx or Engels; indeed, the top quintile of Americans would lose a mere 6 percentage points of their income, which would hardly bring anyone to penury. It’s also worth noting how broadly increasing inequality has been felt – the 2nd and 3rd quintiles have lost far more ground, absolutely, then the bottom 4th and 5th quintiles in the last thirty years. In this sense, redistributing wealth would be almost as far from “class legislation” as one can imagine, in that it would benefit 4/5ths of the population.
Accomplishing this by means of taxation and redistribution would mean, as Larry Summers(!) points out, that the top 1% of households would lose $500,000 a year from additional taxes (although given that the top 1% starts well over $250k a year, this shouldn’t be too painful), and the bottom 80% of Americans should receive $8000 per year per family – easily accomplished by expanding the EITC (or a combination of the EITC and the Child Credits) to a universal and automatic $8000 rebate for all Americans making less than $100,000 per year. Moreover, all of this could be gradually accomplished if that would soothe the fears of those solicitous of the rich, turning the yearly bite on the rich to no more than, say $25,000 a year.
A scheme to redistribute some $670 billion in wealth might seem to risk attacks of “class warfare.” Certainly, the Blue Dog and New Democrats who balk at income tax surcharges on the wealthy to pay for universal health insurance would quickly run out of superlatives should a proposal of this scope ever be seriously introduced. However, as the 2008 campaign and the subsequent battles over the stimulus, the budget, health care, and even something so babies, apple pie, and flags as “Cash For Clunkers” have shown, we will be attacked for “class warfare” no matter what we do.
So let’s be rather be hanged, if hanged we will be anyway, for stealing a sheep than a lamb. Let’s have a real fight over what kind of society we want to have, one in which America has the same wealth distribution patterns we had under President Reagan, or one in which America has the same wealth distributions as we enjoyed under President Bush.”