Last week, BBC News announced that the top one percent of U.S. earners collected 19.3 percent of household income, breaking a record previously set in 1927.
Since the late 1970s, income inequality has surged. Compared to the current rate, the richest one percent of Americans in 1970 enjoyed nine percent of total national pre-tax income. We are living in a New Gilded Age, which has only accelerated since the financial crisis a few years ago.
Let that sink in for a minute. Now brace yourself.
Since 2009, the pre-tax incomes of the top one percent of households rose 19.6 percent compared to a one percent increase for the rest of Americans. Likewise, the richest 10 percent of households own about 90 percent of stocks in this country, ensuring that the divide will continue to widen.
Income inequality is not only a gross evasion of the supposed American ideal of being a place of opportunity – it's bad news for everyone.
As President Obama said at Knox College (Ill.) this summer, "This growing inequality – it's not just morally wrong. It's bad economics. Because when middle-class families have less to spend, guess what? Businesses have fewer consumers.
When wealth concentrates at the very top, it can inflate unstable bubbles that threaten the economy. When the rungs on the ladder of opportunity grow farther and farther apart, it undermines the very essence of America, that idea that if you work hard, you can make it here."
For many, it seems as if the American dream is a remnant of the past or an elusive myth. In fact, the United States ranks among the bottom of developed countries in economic mobility.
If there is even the slightest chance of reversing this trend, the ways in which Americans think about wealth must fundamentally change. We must stop talking about classes in simplistic and false terms of "job creators" and "welfare queens."
If we truly believe that income inequality is wrong, we must also recognize that tax cuts do not always lead to economic growth. In fact, they are quite susceptible to raising deficits which force the most vulnerable of Americans to bear the brunt.
Cuts in education and welfare and reductions in Social Security, Medicare and Medicaid take money out of the pockets of people who depend on them and stifle social mobility.
If we want to live up to our supposed values, these latter three programs should not have the label of "entitlement programs" but be seen for what they are – a very basic social safety net. Americans should likewise focus on the Affordable Care Act's reduction of the national debt by $200 billion in its first 10 years and $1 trillion after its second decade, instead of labeling it as socialism.
If there is to be any reaction to the rampant divide between the two Americas, there ought to also be a continued effort to raise taxes and eliminate loopholes on the wealthiest Americans – an idea which has widespread support.
If we want to be a country of equal opportunity, we must solve the dire problem of a tax code that allows Warren Buffett to pay a lower tax rate than his secretary. Correcting this inequality is not socialism, as many seem hell-bent on labeling the Obama administration, it is fairness and sound economics. And compared to the top marginal rates of around 70 percent from the 1940s to the 1980s – a time of great economic prosperity – today's top marginal rate of around 40 percent does not seem so bad.
If there is to be a reversal of this disturbing trend, immigration reform must be one of our highest priorities, and undocumented immigrants should be recognized as citizens rather than amnesty-seekers or a drain of society's resources.
The Congressional Budget Office has estimated that such reform would reduce deficits by $158 billion in 10 years and $685 in the following decade. In fact, if undocumented workers make at least minimum wage, the wages of everyone will rise, as employers would no longer have the leverage they enjoy now to pay citizens lower wages.
If we want to do anything about the single-most important issue of our time, we must first be willing to have the difficult discussions.
This requires acknowledging that the problem exists and that with the proper policies, its severity can be reduced. We must also admit, however uncomfortable or disappointing it may be, that as Americans, we are nowhere near living up to one of our sacred national values.
Though popular opinion and the facts are on the side of what is right, it does not seem that these problems will be solved anytime soon.
Online Editor Ross Fogg is a College senior from Fayetteville, Ga.
Photo courtesy of EN 2008, Flickr
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