Steven Rattner is a Wall Street executive who looks around at his fellow high-earners and is frankly horrified at what he sees — the rapidly deepening divide between the wealthy 1 percent of the nation’s earners and the rest of us.
While income inequality has been in the news for months, Rattner’s research shows it is rapidly becoming more pronounced and, in his opinion, is one of the major problems facing the nation.
Here are some of the facts he gathered for an article this week in the New York Times:
“In 2010, as the nation continued to recover from the recession, a dizzying 93 percent of the additional income created in the country that year, compared to 2009 — $288 billion — went to the top 1 percent of taxpayers, those with at least $352,000 in income. That delivered an average single-year pay increase of 11.6 percent to each of those households.
“Still more astonishing was the extent to which the super rich got rich faster than the merely rich. In 2010, 37 percent of those additional earnings went to just the top .01 percent, a teaspoon-size collection of about 15,000 households with average incomes of $23.8 million. These fortunate few saw their incomes rise by 21.5 percent.
“The bottom 99 percent received a microscopic $80 increase per person in 2010, after adjusting for inflation. The top 1 percent, whose average income is $1,019,089, had an 11.6 percent increase in income.”
Rattner, using data collected by two French economists who laboriously went through stacks of U.S. income tax returns, looked for information about those who make up that 1 percent. He discovered the wealth came disproportionately from high-tech companies with highly educated managers.
Inflation-adjusted pay for college graduates in the U.S. economy has risen by 15.7 percent over the past 32 years, he learned, while the income of a worker with a high school diploma has dropped by 25.7 percent over the same period.
The Bush tax cuts made a big difference, too. Dropping the income tax rate to 15 percent on capital gains and dividends — the provision that causes Warren Buffet’s secretary to have a higher tax rate than he does — has permitted the very rich, who live largely on the income from their investments, to keep much more of what they earn, and continue to grow even richer.
Because money makes money, income inequality is skyrocketing: in the Clinton era, when the economy was rapidly expanding, 45 percent of the total income gains went to the top 1 percent; in the Bush recovery, the figure was 65 percent; now it is 93 percent.
THERE ARE THINGS that can be done to reverse the trend and treat the 99 percent of us more fairly. Better education and training should be provided to more people. A fairer tax system is desperately needed. There should be more aid programs for the disadvantaged to give them the tools they need to escape from the bottom of the economy.
“We owe those at the bottom a fairer shot at moving up,” Rattner concludes.
He plans to write a book to make his argument in full. It should be required reading in Congress and across the land.
An economic royalty is rapidly being created in the U.S. Unless the trends that Rattner — and hundreds of others — have so vividly documented and so earnestly deplored are reversed, they will make our country into a new and very different land of the privileged in which the future of the newborn is predetermined. Those born into the 1 percent will inherit the enormous power that enormous wealth confers. The rest — the 99 percent — will find rising to the top more challenging with every passing year.
— Emerson Lynn, jr.
