Mitt
Romney said he wasn't concerned about the very poor, because they have a
safety net. This is typical of the widespread ignorance about
inequality in our country. Struggling Americans want jobs, not handouts,
and for the most part they've paid for their "safety net." The real
problem is at the other end of the wealth gap.
How
many people know that out of 150 countries, we have the fourth-highest
wealth disparity? Only Zimbabwe, Namibia and Switzerland are worse.
It's
not just economic inequality that's plaguing our country, it's lack of
opportunity. It's a dismissal of poor people as lazy, or as threats to
society. More than any other issue over the next four years, we need to
address the growing divide in our nation, to tone down our
winner-take-all philosophy, to provide job opportunities for people who
want to contribute to society.
Here are some of the common misconceptions.
1. Americans believe that the poorest 40 percent own about 10% of the wealth.
Most
people greatly underestimate the level of inequality in our country,
guessing that the poorest 40 percent own about 10% of the wealth, when
in reality they own much less than 1% of the wealth. Out of every
dollar, they own a third of a penny.
Factor
in race and it gets worse. Much of minority wealth exists in home
values. But housing crashed, while the financial wealth owned almost
entirely (93% of it) by the richest quintile of Americans has rebounded
to lofty pre-recession levels.
As
a result, for every dollar of non-home wealth owned by white families,
people of color have only 1 cent. Median wealth for a single white woman
is over $40,000. For black and Hispanic women it is a little over $100.
2. Entitlements are the problem.
No,
they're not. The evidence is overwhelming. Social Security is a popular
and well-run program. As summarized by Bernie Sanders, "Social
Security, which is funded by the payroll tax, has not contributed one
nickel to the deficit, and according to its trustees, can pay 100
percent of all benefits owed to every eligible American for the next 21
years." Dean Baker calls it "perhaps the greatest success story of any
program in US history."
Medicare,
which is largely without the profit motive and the competing sources of
billing, is efficiently run, for all eligible Americans. According to
the Council for Affordable Health Insurance, medical administrative
costs as a percentage of claims are about three times higher for private
insurance than for Medicare. And it's just as popular as Social
Security.
3. Welfare benefits are a drag on the economy.
Critics
bemoan the amounts of aid being lavished on lower-income Americans,
making dubious claims about thousands of dollars going to every poor
family. But
despite an ever-growing need for jobs and basic living necessities,
federal spending on poverty programs is a small part of the budget, and
it's been that way for almost 50 years, increasing from 0.8 percent of
GDP in 1962 to 1.2 percent of GDP in 2007.
Temporary
Assistance for Needy Families (TANF) has dropped significantly over the
past 15 years, leaving benefit levels far below the poverty line for
most families. Ninety percent of the available benefits go to the
elderly, the disabled or working households. For
each family, current federal budgets pay about $400 per month for food,
housing, and traditional "welfare" programs. Food stamp recipients get
$4.30 a day.
4. The American Dream is still alive, if you just work hard enough.
The Horatio Alger tale has been a popular one for conservatives, but the OECD, the Economic Policy Institute and the National Journal
all came to the same conclusion: the future earnings of a child in the
U.S. is closely correlated to the earnings of his or her parents. This
lack of mobility is more prevalent in the U.S. than in almost all other
OECD countries.
Only
4 percent of those raised in the bottom quintile make it to the top
quintile as adults. Only about 20 percent even make it to the top half.
A
big part of the problem is the severe degree of poverty for our
nation's children. According to UNICEF, among industrialized countries
only Romania has a higher child poverty rate than the United States.
Just in the last 10 years the number of impoverished American children
increased by 30 percent.
And
it's much worse for minorities. While 12 percent of white children live
in poverty, 35 percent of Hispanic children and 39% of black children
start their lives in conditions that make simple survival more important
than the American Dream. Eighty percent of black children who started
in or near the top half of U.S. income levels experienced downward
mobility later in life.
5. Prison puts away the bad guys.
Despite
a falling violent crime rate in the U.S., there are now, as noted by
Adam Gopnik, "more people under 'correctional supervision' in America --
more than six million -- than were in the Gulag Archipelago under
Stalin at its height."
Almost
half of the inmates in federal prisons were jailed for drug offenses.
Between 1980 and 2003, the number of drug offenders in prison or jail
increased by 1100% from 41,100 in 1980 to 493,800 in 2003.
African Americans constituted 53.5 percent of all persons who entered
prison because of a drug conviction. In the nation's largest cities,
drug arrests for African Americans rose at three times the rate for
whites from 1980 to 2003.
In
Washington, DC, it is estimated that three out of four young black men
will serve time in prison. In New York, with 50,000 marijuana arrests
per year, 90% are black or Latino. In Seattle, the 8% black population
accounts for 60 percent of the arrests. Over the last 10 years Colorado
police have arrested Latinos at 1.5 times the rate of whites, and blacks
at over three times the rate of whites. Newly passed marijuana laws
reflect the beginnings of a backlash.
Perversely,
this is all happening as studies by the Substance Abuse and Mental
Health Services Administration find that both black and Hispanic
adolescents use drugs less than the general population. And a
study by the National Institute of Health shows that the prevalence of
marijuana use in colleges and universities was highest for white
students.
The greatest misconception: The rich are being soaked.
Redistribution
has not spread the wealth, it has concentrated the wealth. Conservative
estimates say the richest 1% have doubled their share of America's
income in 30 years. It's worse. From 1980 to 2006, the richest 1%
actually tripled their share of after-tax income.
The
real problem is tax avoidance: lost revenue from tax expenditures
(deferrals and deductions), corporate tax avoidance, and tax haven
losses could pay off the entire deficit. But the very rich refuse to
pay. They have their own safety net in the House of Representatives.
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