Walmart's Off to a Terrible 2013: Is Ravage-Capitalism Reaching a Point of Diminishing Returns?
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When economic inequality increases, the people who have become economically more powerful will often attempt to use that power in order to gain even more political power. And once they are able to monopolize political power, they will start using that for changing the rules in their favor.
While it is first and foremost Republican obstructionism that's prevented Washington from doing more – or, at this point, anything – to address persistently high unemployment and declining incomes for most of us, it's the political inequality that gives them that luxury. According to a Sunlight Foundation analysis of spending during the 2010 midterms, the most rarified elites – the top 1 percent of the top 1 percent of households – accounted for almost a quarter of all political spending in this country, including direct donations to candidates and financing outside PAC spending.
According to the report:
The One Percent of the One Percent are not average Americans. Overwhelmingly, they are corporate executives, investors, lobbyists, and lawyers. A good number appear to be highly ideological. They give to multiple candidates and to parties and independent issue groups. They tend to cluster in a limited number of metropolitan zip codes, especially in New York, Washington, Chicago, and Los Angeles.
In the 2010 election cycle, the average One Percent of One Percenter spent $28,913, more than the median individual income of $26,364.
This helps explain why the one painless way to reduce the deficit – addressing unemployment and doing something to boost stagnant incomes – gets so little traction within a political establishment that's come to a bipartisan consensus that ordinary Americans have to experience some “pain” in order to achieve fiscal balance. According to a recent report by Demos, “While a number of factors may explain this hierarchy of priorities in Washington, one point is clear: The focus on deficit reduction over jobs has reflected the concerns of affluent Americans and financial interests while downplaying an urgent desire by a majority of Americans to address job creation.”
The other shoe is about to fall – or another shoe is about to fall – if the sequester kicks in on March 1, as is widely expected. According to an analysis by Macroeconomic Advisers, the cuts will kill 700,000 jobs and reduce economic growth by more than half of a percentage point. That's aside from the pain deep cuts to programs that aid the working poor will inflict.
The donor class may not be happy about that outcome, but it's the product of the Tea Party monster a small number of the wealthiest Americans created to advance their narrow self-interests. As Greg Sargent noted in the Washington Post, Republicans could simply declare victory and kill the sequester – the deficit is falling fast and they've gotten far more than they've given:
Right now, we’ve already achieved around $2.2 trillion in deficit reduction: Dems have agreed to around $1.5 trillion in spending cuts; Republicans have agreed to around $700 billion in revenues. Where does that leave us? The total: Dems have thus far conceded around twice as much in spending cuts as Republicans have in revenues.
But we're in the grip of a vicious cycle. Households in the top percent today take in twice as much pre-tax revenue as they did during the four decades following World War II, leaving less for the rest of us. That's hurting our ability to buy the goods and services that keep the economy humming at full employment. They've invested their windfall in politicians, who are looking to inflict more pain on ordinary working people in order to keep their benefactors' taxes low. They've driven the discourse to embrace catastrophic austerity policies in the grip of a depression. And now the economy is reaping what they have sown, as Walmart's customers are too tapped-out to buy even the company's crappy Chinese imports.