Even as the economy slowly recovers from the worst downturn since the Great Depression, government-haters and deficit-hawks are sticking to their same story: Americans have lived beyond their means and must now learn to live within them.
The reality is quite different: The means of most Americans haven’t kept up with what the economy could and should provide. The economy is twice as large as it was three decades ago, and yet the typical American is earning about the same, adjusted for inflation. All the gains have been going to the top.
The notion that we can’t afford to invest in the education of our young, or rebuild our crumbling infrastructure, or continue to provide Social Security and Medicare and Medicaid, or expand health insurance is absurd.
If the median wage had kept up with the overall economy, it would be over $90,000 today — and tax revenues would be more than adequate to cover all our needs. If the wealthy were paying the same marginal tax rate they were paying up to 1981, tax revenues would be far more.
Get it? The problem isn’t that most Americans have been living too well. The problem is we haven’t been living nearly as well as our growing economy should have allowed us to live.
Widening inequality is the culprit. If President Obama is looking for a central theme for his second term, this is it.