The top 1 percent of earners more than doubled their share of the nation’s income over the last three decades, the Congressional Budget Office said Tuesday, in a new report likely to figure prominently in the escalating political fight over how to revive the economy, create jobs and lower the federal debt.
In addition, the report said, government policy has become less redistributive since the late 1970s, doing less to reduce the concentration of income.
“The equalizing effect of federal taxes was smaller” in 2007 than in 1979, as “the composition of federal revenues shifted away from progressive income taxes to less-progressive payroll taxes,” the budget office said.
Also, it said, federal benefit payments are doing less to even out the distribution of income, as a growing share of benefits, like Social Security, goes to older Americans, regardless of their income.
In its report, the budget office found that from 1979 to 2007, average inflation-adjusted after-tax income grew by 275 percent for the 1 percent of the population with the highest income. For others in the top 20 percent of the population, average real after-tax household income grew by 65 percent.
By contrast, the budget office said, for the poorest fifth of the population, average real after-tax household income rose 18 percent.
And for the three-fifths of people in the middle of the income scale, the growth in such household income was just under 40 percent.
Also cited as factors contributing to the rapid growth of income at the top were the structure of executive compensation; high salaries for some “superstars” in sports and the arts; the increasing size of the financial services industry; and the growing role of capital gains, which go disproportionately to higher-income households.
The report found that higher-income households got a larger share of the pie, while other households got smaller shares.
FP: As this trend accelerates – as it does in crises – it won’t be sustainable and this ain’t nothing yet. (see also next).
Phillip Longman: The Cure
The politics of debt have gotten so insane that both parties are on the verge of gutting Medicare. The moment might be right to actually fix it.
…All but six Republicans in the House of Representatives have voted to turn Medicare into a voucher program—a vision endorsed by all the GOP’s major presidential candidates as well. Under the proposal, famously crafted by Representative Paul Ryan, each senior citizen would receive only a fixed amount of money (about $8,000 on average in 2022) to spend on private health care insurance each year, regardless of what his or her health care needs and costs might actually be. The Congressional Budget Office (CBO) estimates that under the plan, seniors would pay about 68 percent of their health care costs out of their own pockets in 2030, as compared to 25 percent to 30 percent under traditional Medicare.
Democrats rightly characterize this plan as “ending Medicare as we know it,” but both President Obama and party leaders agree that deep cuts in Medicare spending must happen soon. “With an aging population and rising health care costs, we are spending too fast to sustain the program,” the president told a joint session of Congress on September 8. As part of his most recent deficit reduction plan, he has proposed $248 billion in Medicare savings over the next ten years. This includes higher copays for many beneficiaries and steep cuts in payments to providers. If you think Obama and the Democrats are bluffing, consider that the health care law they passed last year came with hundreds of millions in Medicare cuts and includes a mechanism that could cut vastly more. And though the president in September came out against Republican plans to raise the Medicare retirement age to sixty-seven, in the debt limit negotiations earlier this year he signaled his willingness to go along with it.
FP: We can’t afford Medicare because we bail out rich speculators and fraudsters and reward corporate managers for corruption and incompetence. And they wonder why the US is bankrupt and there is societal unrest?
Harold Meyerson: Steve Jobs and the Chinese Wall
Isaacson’s description may make it easier to understand Apple’s production process, in which its products were designed to a fare-thee-well in Apple’s tony Silicon Valley headquarters, but manufactured in China in Foxconn’s compound in Shenzhen, where hundreds of thousands of workers turned out all the iPods, iPads and iPhones that have delighted consumers the world over. We might not know about the Foxconn compound but for the spate of worker suicides there that shook the plant, the province, and China itself last year. When investigators and journalists ventured into the compound, they found a factory complex worthy of Fritz Lang’s Metropolis—300,000 workers, many of them still in their teens, working long hours at piddling wages to turn out the latest in Apple technology, then domiciled together ten in a room.
FP: Good old American genius, Jobs was.
Forty-four percent of Italians are prejudiced or hostile toward Jews, according to a study issued last week.
Deputy Fiamma Nirenstein, the committee’s chairwoman, told The Jerusalem Post on Tuesday that the findings were “very disturbing.” It was a “shock for everybody how much anti-Semitism in Italy and Europe” exists, she said.
“The first group (10%) holds the ‘traditional’ anti-Jewish stereotypical views, such as that ‘Jews are not fully Italian,’ ‘you can never really trust them,’ and ‘when it comes down to it, they have always lived at the expense of others,’ but reject the ‘contingent’ prejudices (toward Israel and the Shoah).”
The report continued that “the second group (11% of the population) only approve of the ‘modern’ stereotypical views, rejecting the ‘traditional’ and ‘contingent’ ones. They consider that ‘the Jews are rich and powerful,’ ‘they control and direct politics, the media and the banks,’ and moreover ‘they are more faithful to Israel than to the country of their birth.’” A “third group (12%) maintains ‘contingent’ convictions (‘all Jews use the Shoah to justify Israeli policy’), ‘they talk too much about their own tragedies disregarding other people’s,’ ‘Jews behave like Nazis with the Palestinians’), but they do not share the ‘traditional’ prejudices.”
FP: Well, what else are Italians gonna do when they go bankrupt?
The two largest credit-card networks, Visa Inc. and MasterCard Inc., are pushing into a new business: using what they know about people's credit-card purchases for targeting them with ads online.
Their plans, if implemented, would represent not only a technological feat—tying people's Internet lives with shopping activities—but also an erosion of the idea of anonymity on the Web. It's an effort by the two companies to profit by selling access to the insights they gather about people with every credit-card transaction.
The technology is still evolving. According to ad executives briefed on some of the ideas, a holy grail would be to show, for instance, a weight-loss ad to a person who just swiped their card at a fast-food chain—then track whether that person bought the advertised products. Currently, Web ads generally are based on a person's online behavior but not information tied to his or her identity or activities in the brick-and-mortar world.
In one particularly futuristic idea, a Visa patent application published this year describes incorporating information from DNA databanks, among other personal details, into profiles that could be used to target people online. [...]
FP: In communism, the government knew everything about and used it against you. In the corporate welfare state corporations know all about and exploit you, and they will sell your personal data to the highest bidder, regardless of how nefarious the purpose.