Spreading the Wealth Around? Why Not?

Published on

Spreading the Wealth Around? Why Not?

Robert Buzzanco

According to the Republican candidate for U.S. president, John McCain, whose family wealth exceeds $120 million, and who owns eight houses and thirteen cars, Democrat Barack Obama poses a grave threat to our democracy and economy because he will, as he told a voter in Ohio, "spread the wealth around."

Though socialism has been essentially dead for decades, and there is no viable left in the United States, the McCain campaign is resurrecting claims of "class warfare" and calling Obama a radical. On one point, McCain is right: there is class warfare in the United States, and for the past three decades, it has been waged from the top down, by the wealthiest class, the likes of John and Cindy McCain, against the middle- and working-classes of America.

Since the 1970s, middle- and working-class Americans have seen a fairly steady decline in real income, with brief spurts of recovery in the 1990s. Overall, however, the trend has been downward. By the year 2000, average net worth for Americans, adjusted for inflation, was less than it had been in 1983.

Subsequently, propelled by tax cuts for America's wealthiest and deregulation of financial markets and corporations, between 2001 and 2006 the average income of the top tenth of Americans increased about 15 percent a year, to about $250,000, while the average income of the lower 90 percent decreased, the first time since such data was first collected in 1917 that those conditions of increased wealth at the top and decline for everyone else had occurred. More to the point, the average income of the top tenth of wage earners is about 8 times greater than the bottom 90 percent, a wealth gap greater than that under Herbert Hoover during the Great Depression.

Since the mid-1970s the top 1 percent of households have doubled their share of national wealth and now have more wealth, 60 percent or more, than the bottom 95 percent.  Meantime, in the late 1980s and 1990s, inflation-adjusted net worth for a median household fell, from about $55 to $50 thousand dollars, and about 20 percent of households had zero or negative net worth [more debt than assets]. Those numbers are growing rapidly, especially as home foreclosures reach record heights.

Again adjusting for inflation, weekly wages for workers were down over 12 percent from the early 1970s, when that notable liberal Richard Nixon, who instituted wage and price controls to combat the recession of 1973, was president. Indeed, the Nixon years may have marked the heyday for American workers, as family incomes today are about the same as they were in the early 1970s and far more families have two wage-earners than they did thirty-five years ago.

Today, about two-thirds of Americans make less than $50,000 per year.  The bottom 40 percent of Americans controls just 0.2 percent of wealth; the next 40 percent has about 15 percent of national wealth; the next 10 percent owns about 13 percent of wealth; and the top tenth has the rest.

Once could continue with such statistics ad infinitum but the point is obvious. Unless one lives in the rarified air of the top ten percent, she or he has experienced an economic downturn over the past decades, and a particularly acute decline in wealth in the past 8 years. That, of course, does not even take account of the current economic disasters in housing, credit and in the stock market, as jobs are lost and pensions are disappearing. Most families now survive by going deeper into debt and household debt as a percentage of personal income has risen from about 60 percent in the early 1970s to about 90 percent, and is increasing, today.

Given such stark data, and the drastic decline in income and wealth for nine-tenths of Americans, the idea of having state policies and a tax system to "spread the wealth around" is simply a recognition that our current economy has collapsed, as if the housing bubble and stock market eruptions haven't shown us that yet anyway. Too few people hold the overwhelming share of our national wealth, and the vast majority of Americans have to survive by using a credit card, not simply for "luxuries," as the conservative canard goes, but to pay for food, rent, and medical care.

Rather than complain about "class warfare," John McCain should recognize his privilege and promote policies that would make his family, his class cronies, and American corporations, especially those who ship jobs overseas, pay their fair share -- not seek more tax cuts for those who have already gotten rich at the government trough. And if that involves "spreading the wealth around," then it's long overdue.

Robert Buzzanco is a professor and Chair of the Department of History at the University of Houston.

Share This Article

More in: