The Census Bureau released its new report on poverty in America and middle class decline this month. The report received its usual media attention, a few days of stories before moving on to something else. Governor Romney used the report to claim that President Obama’s policies were not working, as if poverty were a short-term problem.
The Census report said that 46.2 million Americans were living in poverty, defined as less than $23,000 per year for a family of four. We know from earlier reports that an additional 90 million Americans live just above the poverty line, making less than $40,000 per year for a family of four. And, we also know that middle class income has been stagnant for three decades.
What we do not know from the media reports is why poverty is so persistent. Nor do we know why the middle class, which shared in the general prosperity of the nation from the end of World War I through the 1970s, has been shut out of the latest rounds of prosperity.
There are at least partial answers to these questions, but they require a difficult mental adjustment for most of us.
America has a storied mythology about itself. It is a belief that we have a social fabric than can keep us together as one nation, that by working together we can all prosper. It is the Lincoln myth, that any of us can rise from the bottom rung of society and reach the top echelons of power. The myth holds that nowhere in the world is there such social and economic mobility as in the United States. This myth concludes that those who have attained power and economic success are there by virtue of their talent, their industry, their wisdom, and that we should turn to them for as a nation for economic counsel. Relatedly, although it is a subject we do not like to dwell on, those at the bottom end of the economic scale are doubtlessly there because they deserve to be there. So goes the myth.
The myth helps us as we struggle: Things will be better, if we keep working, if not for us than for our children.
It is hard for us to come to grips with the fact that the economic and social realities that supported this myth began to unravel in the 1970s. We are subconsciously wounded anytime someone attacks our myth. The American Dream belongs to the very heart and soul of this country.
In his new book “Who Stole the American Dream,” New York Times writer and Pulitzer Prize winner Hedrick Smith writes:
Over the past three decades, we have become two Americas. We are no longer one large American family with shared prosperity and shared economic and political power.
Smith attributes this change to a conscious and aggressive effort by America’s corporate and business elite to assert its power, combined with virtually complete cooperation from the GOP and partial cooperation from the Democrats, to assist in the accumulation of trillions and trillions of dollars in new wealth for America’s powerful, even while the rest of the society suffers.
Smith’s analysis may sound extreme – hence the need for us to make a difficult mental adjustment to even hear it – but it is supported by other studies such as “Unequal Democracy” by Larry Bartels, “Winner Take All Politics,” by Paul Peirson and Jacob Hacker, and “The Betrayal of the American Dream” by Pulitzer Prize winners Donald Bartlett and James B. Steele.
How did this de facto takeover of American government and politics take place?
It began in the 1970s as American businesses engaged in intense cooperation on many issues. Lobbyists were hired by the hundreds, the U.S. Chamber of Commerce was mobilized for political action, and, of course, money – always money – was raised for lobbying and campaign contributions. Smith reports, for instance, that between 1998 and 2010, business and trade groups spent $28 billion on lobbying compared to $492 million spent by labor, a nearly sixty to one advantage.
What did all this money buy? President Reagan started quickly with deregulation and anti-union activities. Trade policies were enacted that helped American corporation but disregarded the needs of American workers. Laws were enacted that made it easier for businesses to renege on their pension guarantees to workers. Outsourcing became standard and companies got tax breaks for engaging in it. As unions declined and corporate dominance soared, wages were lowered with impunity and corporate profits have reached their highest percentage of GDP since the 1950s. Wages are at their lowest percentage.
The ever constant drumbeat for lower taxes for corporations and the wealthy have been marketed as the stimulus for job creation.
There were quick and very positive results. Think Progress reports that from 1983 to 2007, inflation-adjusted income in America increased by $27 trillion. The top 1 percent took 49 percent of this increase. The top ten percent took the remainder. The bottom 90 percent had no share.
Think Progress notes that if these huge sums were returned to the Treasury, all of our funding problems would be solved. Medicare, Medicaid, Social Security, Children’s health insurance, all would be covered.
Neither political party has spent much time talking about poverty and what can be done about. The Democrats avoid the issue because the poverty rates are high and they worry they will get blamed, although polls show most Americans continue to blame the increases in both poverty and unemployment as the result of the recession, and most voters place the blame for that on George W. Bush, not Barack Obama.
I wish that President and the Democrats would be more forceful about the need to face poverty head-on, to address the social and educational hurdles faced by those who seek a better life for themselves and their children.
The Ryan budget that passed the GOP-controlled House this year, and which has broadly been endorsed by Governor Romney, takes direct aim at those programs that both help people climb out of poverty and assist those who tried to climb but couldn’t. The Ryan budget proposes to cut $2.3 trillion over ten years from programs like Medicaid, Pell Grants, job training and other programs designed to help the poor lift themselves into the middle class. Meanwhile, the budget calls for even larger tax cuts for the wealthiest Americans. According to the independent Tax Policy Center, those tax cuts would amount to over $4.2 trillion over the next four years.
The United States Conference of Catholic Bishops has already stated that the Ryan budget failed their moral criteria for evaluating budgetary matters. Nobel Prize winning economist Paul Krugman, unfamiliar with Catholic moral categories, called the budget “intellectual dishonest.”
The problem is deeper, however than one budget proposal. The problem is found in certain myths that continue to gain currency in American politics. For example, Americans continue to believe that the rich have earned their wealth, and to afford them an almost moral, as well as financial, superiority over the poor, who are portrayed as feckless, lazy, and inherently weak. These myths are perpetrated by those with a vested interest in them.
We have had a dozen banking scandals since deregulation began in the 1980s under Alan Greenspan. Yet even such relatively liberal Democrats as Bill Clinton and Barack Obama look to Wall Street for economic guidance.
How many millions of middle class Americans, against all evidence and against their own interests, believe that programs that help the poor are responsible for the national debt? Faced with evidence of the greatest income inequality in eighty years, and with a concentration of wealth unparalleled in out history, millions of Americans can be whipped into moral fervor because 47 % of Americans do not pay federal income taxes. This myth ignores the fact that you can’t pay income tax on income you don’t have and, even worse, ignores the taxes the poor and working poor do pay, often at a higher percentage of their income than the billionaires who take all their income as a capital gain.
Alexis DeTocqueville began his “Democracy in America” by writing that nothing struck him more forcefully than the “equality of conditions” that obtained in the young United States. Is it too late to strike at the conditions that perpetuate poverty and further weaken the middle class?