There’s an idea in America that if you are “financially literate,” there is a specific way you bank: You have a checking account and a savings account at a big-name bank. You have your checks from your employer directly deposited every two weeks, like clockwork, and you save at least 10 percent out of every check, until you have enough saved to cover living expenses for six to eight months. You contribute to a 401k your employer matches, and your health insurance—which your employer pays for—offers full coverage for you and your family with, perhaps, a $30 co-pay.
The moneyed populace is adroit at getting Congress to shift America's tax burden to workers, consumers, small businesses -- anyone but them. Sen. Russell Long, the former chair of the finance committee, used to quote a little back-country ditty on this point: "Don't tax me, don't tax thee, tax that fellow behind the tree."
It is said that the rich and poor will always be among us—but nowhere is it written that the middle class is a sure thing.
As 2017 drew to an end, it was perhaps fitting that Congress chose to close out the year with the passage of a tax bill that does more to redistribute wealth to the already wealthy than any other piece of legislation since the Gilded Age.
Outclassed: The Secret Life of Inequality is The Guardian and EHRP's new column about class. Read all articles here.
The last time our country was governable was back in 2009 and 2010. Democrats had a supermajority in the Senate and a substantial lead in the House of Representatives. During those two years, President Obama got more accomplished than any president since Franklin Delano Roosevelt. In fact, the policies passed during those two years are responsible for all economic progress, however anemic, that was made under President Obama.
This post originally appeared on the blog of the Institute for New Economic Thinking.
How 90 Percent of American Households Lost an Average of $17,000 in Wealth to the Plutocrats in 2016
The Richest 1 Percent Extracted Wealth from Every Other Segment of Society
These multi-millionaires effectively shifted nearly $4 trillion in wealth away from the rest of the nation to themselves in 2016. While there's no need to offer condolences to the rest of the top 10 percent, who still have an average net worth of $1.3 million, nearly half of the wealth transfer ($1.94 trillion) came from the nation's poorest 90 percent—the middle and lower classes, according to Piketty and Saez and Zucman. That's over $17,000 in housing and savings per lower-to-middle-class household lost to the super-rich.
Put another way, the average 1 percent household took an additional $3 million of our national wealth in one year while education and infrastructure went largely unfunded.
It Gets Worse: Each Middle-class Household Lost $35,000 to the 1 Percent
According to Piketty and Saez and Zucman, the true middle class is "the group of adults with income between the median and the 90th percentile." This group of 50 million households lost $1.76 trillion of their wealth in 2016, or over $35,000 each. That's a $35,000 decline in housing and financial assets, with possibly increased debt, for every middle-class household.
Housing Wealth for the 90 Percent Has Been Converted into Investment Wealth for the Plutocrats
In the 1980s, the housing wealth of the bottom 90 percent made up about 15 percent of total household wealth (Figure 8 here and Page 41 here).
In the 1980s, the corporate equities owned by the richest .01 percent made up about 1.2 percent of total household wealth (Figure 8 here).
Housing was 12 times greater than super-rich stock holdings back then. Now they're nearly equal. The home values of 112,000,000 households have been reduced to just over 5 percent of total wealth, while the stocks and securities of the richest 12,000 households are approaching 5 percent of total wealth. Our homes have turned to dust, and the plutocrats have turned the dust into gold.
Even the Wages of the Poorest Americans Have Been Transferred to the Plutocrats
It's bad enough that the poorest 50 percent of America have no appreciable wealth, but their income has not increased in 40 years (see Table 1 here). More evidence comes from Pew Research.
As Piketty, Saez and Zucman note, the richest 1 percent and the poorest 50 percent "have basically switched their income shares." They explain, "We observe a complete collapse of the bottom 50 percent income share in the U.S. between 1978 and 2015, from 20 percent to 12 percent of total income, while the top 1 percent income share rose from 11 percent to 20 percent."
Making America Great for 1 Percent of Us
In his book, Glass House: The 1 Percent Economy and the Shattering of the All-American Town, Brian Alexander describes today's America through the lens of his hometown of Lancaster, Ohio, which had been a leading glasswares manufacturer.
This piece was originally published at Evonomics.
Newt Gingrich openly bragged recently at the Heritage Foundation that the Trump administration and Republicans in Congress were going to “break out of the Franklin Delano Roosevelt model.” That “model,” of course, created what we today refer to as “the middle class.”
During his campaign, President-elect Donald Trump promised that he would take the side of American workers against economic elites when evaluating policy. Yet, the policy proposals he put forth during the campaign had nothing in them that would actually help working- and middle-class Americans. Now that more plans and potential cabinet appointments are coming into focus, it looks worse than many of us thought even before the election. Across a broad range of crucial issues, the incoming Trump administration appears likely to betray the promises he made to the American middle class. Here’s a rough sketch of how.