The State of the 99 Percent
While we’re still waiting for actions to match his rhetoric, President Barack Obama made three critical points in his big speech about the problem of inequality—a problem that the Occupy movement has pushed into the public consciousness.
1. The Rules are Rigged in Favor of the Rich
Early in his address, the president said that “We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by. Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules.”
Despite the popular myth that the rich are rich solely because of their hard work and talent, in reality, much of the explosion of wealth at the top is a result of the rich rigging the rules.
Case in point: rich people, who make most of their income on the stock market, pay a far lower tax rate than ordinary Americans. Warren Buffett pointed this out several years ago when he offered a million dollars to any CEO who could prove he paid a higher tax rate than his secretary. Not one came forward.
In a brilliant stroke of political theater, Obama invited Buffett’s secretary to sit with the First Lady during the speech. This came just hours after Mitt Romney revealed he had paid only a 13.9 percent rate on his 2011 income taxes—thanks to the deep discount rate of 15 percent for financial earnings, compared to the top rate of 35 percent for income from actual work. Obama proposed a minimum tax rate of 30 percent for people who make more than one million dollars a year.
2. We Have Tackled Extreme Inequality Before
A century ago, the rich were enjoying the so-called “Gilded Age” with extreme levels of inequality. Starting in the mid-1930s, in the depths of the Great Depression, our government, pressed hard by a militant labor movement, raised taxes on the rich, protected worker rights, and began a four decade march toward much greater equality. By speaking of “restoring an economy where everyone gets a fair shot,” Obama reminded Americans that our current levels of inequality, which rival those of the Gilded Age, are hurting tens of millions and degrading our democracy, and that we know how to reduce extreme inequality in this country.
3. The Occupy Movement is Not About Envy
The president also effectively rebutted the common conservative argument that all this Occupy ruckus is about nothing more than petty jealousies. “When Americans talk about folks like me paying my fair share of taxes, it’s not because they envy the rich. It’s because they understand that when I get tax breaks I don’t need and the country can’t afford, it either adds to the deficit, or somebody else has to make up the difference – like a senior on a fixed income; or a student trying to get through school; or a family trying to make ends meet.”
Obama’s sharp rhetoric is an important contribution to the public discourse about inequality. Yet deeds are stronger than words. And right now, Obama is not expected to include the millionaires tax increase in the budget he delivers to Congress next month. For the millions of young people who joined the Occupy sites last fall because they can’t find jobs nor pay off their student loans, Obama weakly admonished colleges not to raise tuitions. No word of what many of those students demand, namely that they not be required to repay those loans until they have incomes.
No real relief from Obama for the millions of Americans who can’t pay their mortgages. He said he was proposing a small fee on the big banks to help pay for a program to allow homeowners to save on their mortgages by refinancing. This is small compared to what is needed: a reduction in the principle on those mortgages down to what the market says they are worth.
So, the challenge to the American people remains huge. Yes, we now have a President who is talking about the obscene inequality that is ripping this country apart. Yet, it will only be through massive pressure from below that bold measures to tax Wall Street, tax corporations, tax the wealthy, and tax pollution get enacted.
And, while Obama talks of wind farms and other green jobs, he still is not articulating a bold vision to transform this nation’s economy from a war economy still addicted to fossil fuels to a green Main Street economy that creates jobs while advancing ecological balance. The Congressional Progressive Caucus has released an Act for the 99% that included some of this vision, particularly for millions of new jobs paid by a fairer tax system.
We all know that thirty years of deregulating Wall Street and lowering tax rates on the rich won’t be undone quickly. For years, Wall Street has crashed the economy and corrupted our politics. Only bold, transformative vision and action can restore our democracy and improve the lives of our people.
Sarah Anderson and John Cavanagh wrote this article forYES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions. Sarah is the Global Economy Project Director of the Institute for Policy Studies in Washington, DC. John is director of the Institute for Policy Studies, and is co-chair (with David Korten) of the New Economy Working Group.
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