I wrote this a week ago. It was the true reason as to why I thought about starting a blog. Read it if you'd like; but, if you feel my political views or fiscal views would bother you, I understand. I wrote this on word and I just pasted it. If the links don't work, I'll fix that tonight. If I were to expand, this would also entail the newest war we are in (yes, it is a war) for the security of economic resources.
Last night I came across an article on MSN Money titled, “Down and Out on $250,000 a Year?” The article looks at the number given by Obama and others given as to what it means to be rich in America. As only 2.9% of American couples earn that much money or more, I certainly would agree this is a nice threshold of what it would mean to be rich. The analysis, given by The Financial Times, takes 8 cities across the country, applies a budget for a family of four and
“Assumes that this hypothetical couple -- let's call them Mr. and Mrs. Jones -- both have professional positions at their companies. They take advantage of all tax benefits available to them, such as pretax contributions to 401k plans and flexible spending accounts for medical care, childcare and transportation. They have no credit card debt, but Mr. Jones racked up $40,208 in student loan debt in undergraduate and graduate school, and Mrs. Jones borrowed $22,650 to get her undergraduate degree (both amounts are equal to the national averages for their levels of education). They also have a car loan on one of two cars, and a mortgage for 80% of the value of a typical home in their communities for a family of four, which includes one toddler and one school-age child.”
The final conclusion of the article is that $250,000 isn’t really rich because the hypothetical family in 7 of the 8 test cities ends up being over budget at the end of the year.
My first question is how are families that make less than $250,000 expected to make changes in their budgets/sacrifices when it comes to how their money is used?” These hypothetical families get to use $19,909 on food and staples for the year and that doesn’t include $2,400 for eating out (ridiculous amounts of money to spend on this by the way!). Where is the analysis of the family of four that makes $80,000? If a family that makes $250,000 can’t make it, how can any family that makes less? A closer look finds that this family is able to afford things many Americans would hope to have money to spend on (i.e. college fund AND retirement).
What is the purpose of this article? To make the 97.1% of Americans have sympathy or even guilt for those that make more than us? As the article finishes…
“The bottom line: For folks like the Joneses -- who live in high-tax, high-cost areas, who save for retirement and college, who pay for child care to enable them to earn two incomes and who pay higher prices for housing in top school districts -- $250,000 does not a rich family make.”
What malarkey. The rich are able to save for retirement and college, are able to pay for childcare, and are able to pay for housing in the top school districts. They can afford $5,000 to have that house cleaned, spend $2,400 for the year eating out (not including the $5,000 lunches at work or the $1,250 takeout meals), and $4,000 on a family vacation.
Imagine my surprise when I read an article that said, “4 out of 10 Millionaires say They Don’t Feel Rich.” As Fidelity observes, “the wealthiest 5 percent of Americans hold more than 55 percent of the nation's wealth.” This is in conjunction with the fact that globally, 1,210 people (Billionaires) hold the combined wealth of $4.5 TRILLION (more than the GDP of Germany). America’s wealthiest dominate this group as they make up one-third of the billionaires. Why does this matter? “Because these moguls have the power to shape our world.” Forbes gives a few philanthropic uses of this money. Don’t you think that there are also self-serving uses of this money? Millionaires don’t feel rich, so don’t they want more?
This brings me to what I have been seeing take place in OUR state, OUR region, and OUR country: Class Warfare. Whether we like to talk about it or not, that is exactly what goes on when there are attacks on the services and entitlements that Americans not just use, but depend on. Programs that begin at the local level such as the Free/Reduced Lunch for kids in PK-12. In Iowa, there were 189,645 kids (38.2% of PK-12 Enrollment) that were eligible for the program. That means for a family of 4 to be eligible for receiving assistance they would have to make no more than $40,793 for the year. If $40,000 a year isn't enough to make sure your kids have a healthy breakfast or lunch, what happens to those that make less?
Although there isn’t a politician that would speak it, class warfare has been going on since 1982. From 1936 to 1981, the wealthy elite (I define as the top bracket in Federal Tax breaks), never had a top marginal tax rate less than 70%. When Ronald Reagan left office in 1988, that rate was at 28%. Since his philosophy tax philosophy has prevailed, as the top rate hasn’t gone above 39.6%, why not ask whether or not Reagan’s tax policies delivered on the promised results. The rhetoric continues to state, “Lower taxes spur faster economic growth and increased prosperity.” Analyzing the period in which this tax philosophy has reigned supreme, there is a positive correlation between the top marginal tax rate and the annual growth in real GDP. This means that when there has been a higher top marginal tax rate, real economic growth has been faster, not slower. Conversely, lower top marginal tax rates have coincided with less economic growth.
If lower rates (spouted as a means to create jobs) mean less economic growth (jobs with less growth?), it also means less in government revenue. This means less in infrastructure, public health, scientific research, education, and alleviating poverty. The people that benefit most from these are the 97.1% of Americans that don’t make $250,000 (even though all Americans benefit). The purpose of taxing the extraordinarily rich is to prevent an aristocracy from developing and to maintain a true democracy, a feat Aristotle recognized as impossible in the face of great income inequalities. What we have seen over the past 30 years is in fact greater inequality. This disparity is easily shown in the wealth ownership in this country. In 1974, the bottom 90 percent held 80.1 percent of the wealth. In 2007, the bottom 90 percent held 34.6 percent of the wealth. The winners are taking all and leaving the rest of us behind. WE are not getting ahead.
So, who stands up for the lower and middle classes? It was unions and collective bargaining agreements. They balance the power of corporations and governments. Even the aforementioned Ronald Reagan believed
“Unions represent some of the freest institutions in this land. There are few finer examples of participatory democracy to be found anywhere. Too often, discussion about the labor movement concentrates on disputes, corruption, and strikes. But while these things are headlines, there are thousands of good agreements reached and put into practice every year without a hitch.”
Attacks on unions are taking place all over the country. The private unions have been busted already, leaving a promise to workers to the wayside. Many of those private sector pension plans have been dumped on the Federal Pension Guaranty Corporation, which pays pennies to the dollar on what pensioners previously received. Public pension plans are being targeted now because governments are said to be broke. All we hear is how spoiled, bloated public workers are and the big fat pensions they have. We are told that teachers to sacrifice more; Pay cuts, benefits cut, cut, cut, cut. Since we are down, we have to drag them down with us. The lower and middle class is fighting amongst itself instead of organizing together like it once did 70-80 years ago. That period bore the fruit of democracy. People who were in nearly the exact position we find ourselves today - except that they had no safety net at all - organized, agitated for and won a federal jobs program, a mortgage foreclosure moratorium, unemployment insurance, minimum wage and Social Security, among many other benefits they fought for and won.
We have been duped by the Savings and Loan rip-off following deregulation by Reagan (cost: over $500 billion); the stock market bubble of the Clinton-Bush years (401(k)s and IRAs wiped out); corporate manufacturing's flight from about 1975 on (and the associated loss of middle-class jobs and status); and the most recent fraud visited upon us, the fraudulent mortgage-backed securities bubble made possible by Clinton administration deregulation (its related losses still unfolding), all the while there were massive bailouts at our expense and not a single person going to jail for the fraud that was perpetrated on the American people.
The ironic thing is that many of the struggles that are taking place against OUR class (I’m talking to YOU 97.1% income, lower 90% wealth) will only be solved with discussion and democracy in our physical neighborhoods and locals. That is were common struggles take place and where common support should be. Turn off the T.V. and talk with your neighbors. Educate yourself on the issues. I admit, I have failed in this regard. But this isn’t some nice New Year’s resolution that if I fail to follow through on it is no big deal. This is what will define how I will live out my life and my daughter will live hers. Will OUR government be one run by us or by the aristocracy in this country?
"There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning." -Warren Buffett to The New York Times, November 26, 2006
When I was graduating high school, a teacher I respected told my grandfather that he didn’t believe I was destined for great things but that I would be an outstanding citizen. At the time, I was very offended by those remarks. As I have grown and matured, now I feel proud of what he said and can only hope to be so. We need to demand that all of our rights be taken seriously.
