USA Becomes Food Stamp Nation

[Destroit]

http://news.yahoo.com/usa-becomes-food-stamp-nation-sustainable-160645036.html

NEW YORK (Reuters) - Genna Saucedo supervises cashiers at a Wal-Mart in Pico Rivera, California, but her wages aren't enough to feed herself and her 12-year-old son.

Saucedo, who earns $9.70 an hour for about 26 hours a week and lives with her mother, is one of the many Americans who survive because of government handouts in what has rapidly become a food stamp nation.

Altogether, there are now almost 46 million people in the United States on food stamps, roughly 15 percent of the population. That's an increase of 74 percent since 2007, just before the financial crisis and a deep recession led to mass job losses.

At the same time, the cost doubled to reach $68 billion in 2010 -- more than a third of the amount the U.S. government received in corporate income tax last year -- which means the program has started to attract the attention of some Republican lawmakers looking for ways to cut the nation's budget deficit.

While there are clearly some cases of abuse by people who claim food stamps but don't really need them, for many Americans like Saucedo there is little current alternative if they are to put food on the table while paying rent and utility bills.

"It's kind of sad that even though I'm working that I need to have government assistance. I have asked them to please put me on full-time so I can have benefits," said the 32-year-old.

She's worked at Wal-Mart for nine months, and applied for food stamps as soon as her probation ended. She said plenty of her colleagues are in the same situation.

So are her customers. Bill Simon, head of Wal-Mart's U.S. operations, told a conference call last Tuesday that the company had seen an increase in the number of shoppers relying on government assistance for food.

About forty percent of food stamp recipients are, like Saucedo, in households in which at least one member of the family earns wages. Many more could be eligible: the government estimates one in three who could be on the program are not.

"If they're working, they often think they can't get help. But people can't support their families on $10, $11, $12 an hour jobs, especially when you add transport, clothes, rent." said Carolyn McLaughlin, executive director of BronxWorks, a social services organization in New York.

The maximum amount a family of four can receive in food stamps is $668 a month. They can only be used to buy food -- though not hot food -- and for plants and seeds to grow food.

Presidents Bill Clinton, George W. Bush and Barack Obama all made efforts to raise awareness about the program and remove the stigma associated with it.

In 2004, paper coupons were replaced with cards similar to debit cards onto which benefits can be loaded. In 2008 they were renamed Supplemental Nutritional Assistance Program (SNAP) benefits though most people still call them food stamps.

Despite the bipartisan support for the program in the past, some of the recent political rhetoric has food stamp advocates worried.

Presidential hopeful Newt Gingrich last year derided Democrats as "the party of food stamps". And Republican leaders in the House of Representatives propose changing the program so that the funding is through a "block grant" to the states, rather than allowing it to grow automatically when needed due to an emergency, such as a natural disaster or economic crisis.

In some parts of the country, shoppers using food stamps have almost become the norm. In May 2011, a third of all people in Alabama were on food stamps -- though part of that was because of emergency assistance after communities were destroyed by a series of destructive tornadoes. Washington D.C., Mississippi, New Mexico, Oregon and Tennessee all had about a fifth of their population on food stamps that month.

"Food stamps have traditionally been insulated from politics," said Parke Wilde, professor of U.S. food policy at Tufts University. "But as you look over the current fiscally conservative proposals, the question is, has something fundamentally changed?"

A LOW WAGE SUPPORT PROGRAM

Over the past 20 years, the characteristics of the program's recipients have changed. In 1989, a higher percentage were on benefits than working, but as of 2009 a higher percentage had earned income.

"SNAP is increasingly work support," said Ed Bolen, an analyst at the Center on Budget and Policy Priorities.

And that's only likely to get worse: So far in the recovery, jobs growth has been concentrated in lower-wage occupations, with minimal growth in middle-income wages as many higher-paid blue collar jobs have disappeared.

And 6 percent of the 72.9 million Americans paid by the hour received wages at or below the federal minimum wage of $7.25 an hour in 2010. That's up from 4.9 percent in 2009, and 3 percent in 2002, according to government data.

Bolen said just based on income, minimum wage single parents are almost always eligible for food stamps.

"This becomes an implicit subsidy for low-wage jobs and in terms of incentives for higher wage job creation that really is not a good thing," said Arindrajit Dube, an economics professor at the University of Massachusetts Amherst, whose research shows raising the minimum wage would spur economic activity.

Until a couple of weeks ago Tashawna Green, 21, from Queens Village, New York, worked 25 hours a week at an $8.08 hourly rate at retailer Target. She is on food stamps, and says a good number of her former colleagues are too.

"It's a good thing that the government helps, but if employers paid enough and gave enough hours, then we wouldn't need to be on food stamps," said Green, who has a six-year-old daughter.

Of course, with an unemployment rate over 9 percent, some argue that those with any job at all are lucky.

Millions of Americans whose unemployment benefits have expired have to exist only on food stamps and other government aid, such as Medicaid healthcare support. [nN1E7660K4]

And even with unemployment benefits, said Jessica King, 25, from Portland, Oregon, her family juggles bills to ensure the electricity stays on. They are also selling some belongings on Craigslist to raise funds.

King's husband Stephen, 30, an electronics assembly worker, lost his job two months ago when she was seven months pregnant with their second child. It was the third time he has been laid off since 2008.

She said she was reluctant, initially, to go on food stamps.

"I felt the way our national debt was going I didn't want to be part of the problem," said King, who used to work as a cook at a faith-based non-profit organization.

"But I didn't know what else to do and I got to a point where I swallowed my pride and decided to do what was best for my daughter."

Seems like the people in the photos had WAY nicer shit than I have. My house looks like I pulled up to a vacant building in the hood, got out my car, and said "This'll do". But I was also raised to be exceedingly anti-materialistic and that handouts are a disgrace to personal pride. I believe that some people need help, but if you're making $8.08 an hour at Walmart and live in either of the houses in the photo...you aren't one of those people. It means you have a house and a job, be happy. But I know I'm going to get reamed for suggesting that people take personal responsibility for themselves, to save their pennies and not be selfish, and encouraging others not to burden all of us...CLEARLY I'm a bad guy who just "doesn't understand what it's like to be poor". I've been on food stamps, but I was exceedingly poor and unemployed. People keep urging me to get one now, because I'm WELL below the poverty line, I've thought of it, but I keep putting it off because my pride won't let me.

Bottom line: People need it, exceedingly poor people, unemployed people, children should always be fed. Cash assistance needs to GO, there should be no such thing. And people really need to stop being a spanger off of the rest of us. I can't count how many people JUST in my neighborhood buy alcohol and cigarettes...and have a bridge card. I knew someone who got their cash assistance for their baby, came back with not a single child's item but rather a TV and goth boots. People who buy un-nutritional bullshit with OUR MONEY (pop for instance, should never be a Bridge Card item!) This is on your dime people, wake up and do something! It's theft!

[taysteewonderbunny]

http://news.yahoo.co...-160645036.html

Seems like the people in the photos had WAY nicer shit than I have. My house looks like I pulled up to a vacant building in the hood, got out my car, and said "This'll do". But I was also raised to be exceedingly anti-materialistic and that handouts are a disgrace to personal pride. I believe that some people need help, but if you're making $8.08 an hour at Walmart and live in either of the houses in the photo...you aren't one of those people. It means you have a house and a job, be happy. But I know I'm going to get reamed for suggesting that people take personal responsibility for themselves, to save their pennies and not be selfish, and encouraging others not to burden all of us...CLEARLY I'm a bad guy who just "doesn't understand what it's like to be poor". I've been on food stamps, but I was exceedingly poor and unemployed. People keep urging me to get one now, because I'm WELL below the poverty line, I've thought of it, but I keep putting it off because my pride won't let me.

Bottom line: People need it, exceedingly poor people, unemployed people, children should always be fed. Cash assistance needs to GO, there should be no such thing. And people really need to stop being a spanger off of the rest of us. I can't count how many people JUST in my neighborhood buy alcohol and cigarettes...and have a bridge card. I knew someone who got their cash assistance for their baby, came back with not a single child's item but rather a TV and goth boots. People who buy un-nutritional bullshit with OUR MONEY (pop for instance, should never be a Bridge Card item!) This is on your dime people, wake up and do something! It's theft!

I'm not going to suggest that assistance can't be abused, but I don't think it is the real issue here. Even if all that money spent on pop or otherwise ill-directed were recovered, it wouldn't be enough to help everyone in need of help. The real issue is, in my opinion, that the wage scale and taxes have been far too slanted in favor of the already rich. As I've argued before, economic, political, and social stability hinges on the effectiveness of that systems leveling mechanisms. When all the wealth is concentrated at the very top, the situation becomes volatile. THAT's when setbacks that normally could be compensated for collapse a system. Please read the article below.

To me, these are the bloodsuckers. Please pay careful attention to the parts I put in color text. I'm not making this up. This is the way it is.

http://sociology.ucsc.edu/whorulesamerica/power/wealth.html (retrieved August 23, 2011)

</h2>

<h2 class="title">Wealth, Income, and Power

by G. William Domhoff

September 2005 (updated July 2011)

This document presents details on the wealth and income distributions in the United States, and explains how we use these two distributions as power indicators.

Some of the information may come as a surprise to many people. In fact, I know it will be a surprise and then some, because of a recent study (Norton & Ariely, 2010) showing that most Americans (high income or low income, female or male, young or old, Republican or Democrat) have no idea just how concentrated the wealth distribution actually is. More on that a bit later.

As far as the income distribution, the most amazing numbers on income inequality will come last, showing the dramatic change in the ratio of the average CEO's paycheck to that of the average factory worker over the past 40 years.

First, though, some definitions. Generally speaking, wealth is the value of everything a person or family owns, minus any debts. However, for purposes of studying the wealth distribution, economists define wealth in terms of marketable assets, such as real estate, stocks, and bonds, leaving aside consumer durables like cars and household items because they are not as readily converted into cash and are more valuable to their owners for use purposes than they are for resale (see Wolff, 2004, p. 4, for a full discussion of these issues). Once the value of all marketable assets is determined, then all debts, such as home mortgages and credit card debts, are subtracted, which yields a person's net worth. In addition, economists use the concept of financial wealth -- also referred to in this document as "non-home wealth" -- which is defined as net worth minus net equity in owner-occupied housing. As Wolff (2004, p. 5) explains, "Financial wealth is a more 'liquid' concept than marketable wealth, since one's home is difficult to convert into cash in the short term. It thus reflects the resources that may be immediately available for consumption or various forms of investments."

We also need to distinguish wealth from income. Income is what people earn from work, but also from dividends, interest, and any rents or royalties that are paid to them on properties they own. In theory, those who own a great deal of wealth may or may not have high incomes, depending on the returns they receive from their wealth, but in reality those at the very top of the wealth distribution usually have the most income. (But it's important to note that for the rich, most of that income does not come from "working": in 2008, only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries. See Norris, 2010, for more details.)

This document focuses on the "Top 1%" as a whole because that's been the traditional cut-off point for "the top" in academic studies, and because it's easy for us to keep in mind that we are talking about one in a hundred. But it is also important to realize that the lower half of that top 1% has far less than those in the top half; in fact, both wealth and income are super-concentrated in the top 0.1%, which is just one in a thousand. To get an idea of the differences, take a look at an insider account by a long-time investment manager who works for the well-to-do and very rich. It nicely explains what the different levels have -- and how they got it.

As you read through the facts and figures that follow, please keep in mind that they are usually two or three years out of date because it takes time for one set of experts to collect the basic information and make sure it is accurate, and then still more time for another set of experts to analyze it and write their reports. It's also the case that the infamous housing bubble of the first eight years of the 21st century inflated some of the wealth numbers. The important point to keep in mind is that it's the relative positions of wealth holders and income earners that we are trying to comprehend in this document. (To get some idea about absolute dollar amounts, read the investment manager's insider account that was mentioned in the previous paragraph.)

So far there are only tentative projections -- based on the price of housing and stock in July 2009 -- on the effects of the Great Recession on the wealth distribution. They suggest that average Americans have been hit much harder than wealthy Americans. Edward Wolff, the economist we draw upon the most in this document, concludes that there has been an "astounding" 36.1% drop in the wealth (marketable assets) of the median household since the peak of the housing bubble in 2007. By contrast, the wealth of the top 1% of households dropped by far less: just 11.1%. So as of April 2010, it looks like the wealth distribution is even more unequal than it was in 2007. (See Wolff, 2010 for more details.)

One final general point before turning to the specifics. People who have looked at this document in the past often asked whether progressive taxation reduces some of the income inequality that exists before taxes are paid. The answer: not by much, if we count all of the taxes that people pay, from sales taxes to property taxes to payroll taxes (in other words, not just income taxes). And the top 1% of income earners actually pay a smaller percentage of their incomes to taxes than the 9% just below them. These findings are discussed in detail near the end of this document.

The Wealth Distribution

In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one's home), the top 1% of households had an even greater share: 42.7%. Table 1 and Figure 1 present further details drawn from the careful work of economist Edward N. Wolff at New York University (2010).

Table 1: Distribution of net worth and financial wealth in the United States, 1983-2007 Total Net Worth Top 1 percentNext 19 percentBottom 80 percent 198333.8%47.5%18.7% 198937.4%46.2%16.5% 199237.2%46.6%16.2% 199538.5%45.4%16.1% 199838.1%45.3%16.6% 200133.4%51.0%15.6% 200434.3%50.3%15.3% 200734.6%50.5%15.0% Financial Wealth Top 1 percentNext 19 percentBottom 80 percent 198342.9%48.4%8.7% 198946.9%46.5%6.6% 199245.6%46.7%7.7% 199547.2%45.9%7.0% 199847.3%43.6%9.1% 200139.7%51.5%8.7% 200442.2%50.3%7.5% 200742.7%50.3%7.0%

Total assets are defined as the sum of: (1) the gross value of owner-occupied housing; (2) other real estate owned by the household; (3) cash and demand deposits; (4) time and savings deposits, certificates of deposit, and money market accounts; (5) government bonds, corporate bonds, foreign bonds, and other financial securities; (6) the cash surrender value of life insurance plans; (7) the cash surrender value of pension plans, including IRAs, Keogh, and 401(k) plans; (8) corporate stock and mutual funds; (9) net equity in unincorporated businesses; and (10) equity in trust funds.

Total liabilities are the sum of: (1) mortgage debt; (2) consumer debt, including auto loans; and (3) other debt. From Wolff (2004, 2007, & 2010).

Figure 1: Net worth and financial wealth distribution in the U.S. in 2007

In terms of types of financial wealth, the top one percent of households have 38.3% of all privately held stock, 60.6% of financial securities, and 62.4% of business equity. The top 10% have 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate. Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America.

Table 2: Wealth distribution by type of asset, 2007 Investment Assets Top 1 percentNext 9 percentBottom 90 percent Business equity 62.4%30.9%6.7% Financial securities 60.6%37.9%1.5% Trusts 38.9%40.5%20.6% Stocks and mutual funds 38.3%42.9%18.8% Non-home real estate 28.3%48.6%23.1% TOTAL investment assets 49.7%38.1%12.2% Housing, Liquid Assets, Pension Assets, and Debt Top 1 percentNext 9 percentBottom 90 percent Deposits 20.2%37.5%42.3% Pension accounts 14.4%44.8%40.8% Life insurance 22.0%32.9%45.1% Principal residence 9.4%29.2%61.5% TOTAL other assets 12.0%33.8%54.2% Debt 5.4%21.3%73.4% From Wolff (2010).

Figure 2a: Wealth distribution by type of asset, 2007: investment assets

Figure 2b: Wealth distribution by type of asset, 2007: other assets

Inheritance and estate taxes

Figures on inheritance tell much the same story. According to a study published by the Federal Reserve Bank of Cleveland, only 1.6% of Americans receive $100,000 or more in inheritance. Another 1.1% receive $50,000 to $100,000. On the other hand, 91.9% receive nothing (Kotlikoff & Gokhale, 2000). Thus, the attempt by ultra-conservatives to eliminate inheritance taxes -- which they always call "death taxes" for P.R. reasons -- would take a huge bite out of government revenues (an estimated $1 trillion between 2012 and 2022) for the benefit of the heirs of the mere 0.6% of Americans whose death would lead to the payment of any estate taxes whatsoever (Citizens for Tax Justice, 2010b).

It is noteworthy that some of the richest people in the country oppose this ultra-conservative initiative, suggesting that this effort is driven by anti-government ideology. In other words, few of the ultra-conservative and libertarian activists behind the effort will benefit from it in any material way. However, a study (Kenny et al., 2006) of the financial support for eliminating inheritance taxes discovered that 18 super-rich families (mostly Republican financial donors, but a few who support Democrats) provide the anti-government activists with most of the money for this effort. (For more infomation, including the names of the major donors, download the article from United For a Fair Economy's Web site.)

Actually, ultra-conservatives and their wealthy financial backers may not have to bother to eliminate what remains of inheritance taxes at the federal level. The rich already have a new way to avoid inheritance taxes forever -- for generations and generations -- thanks to bankers. After Congress passed a reform in 1986 making it impossible for a "trust" to skip a generation before paying inheritance taxes, bankers convinced legislatures in many states to eliminate their "rules against perpetuities," which means that trust funds set up in those states can exist in perpetuity, thereby allowing the trust funds to own new businesses, houses, and much else for descendants of rich people, and even to allow the beneficiaries to avoid payments to creditors when in personal debt or sued for causing accidents and injuries. About $100 billion in trust funds has flowed into those states so far. You can read the details on these "dynasty trusts" (which could be the basis for an even more solidified "American aristocracy") in a New York Times opinion piece published in July 2010 by Boston College law professor Roy Madoff, who also has a book on this and other new tricks: Immortality and the Law: The Rising Power of the American Dead (Yale University Press, 2010).

Home ownership & wealth

For the vast majority of Americans, their homes are by far the most significant wealth they possess. Figure 3 comes from the Federal Reserve Board's Survey of Consumer Finances (via Wolff, 2010) and compares the median income, total wealth (net worth, which is marketable assets minus debt), and non-home wealth (which earlier we called financial wealth) of White, Black, and Hispanic households in the U.S.

Figure 3: Income and wealth by race in the U.S.

Besides illustrating the significance of home ownership as a source of wealth, the graph also shows that Black and Latino households are faring significantly worse overall, whether we are talking about income or net worth. In 2007, the average white household had 15 times as much total wealth as the average African-American or Latino household. If we exclude home equity from the calculations and consider only financial wealth, the ratios are in the neighborhood of 100:1. Extrapolating from these figures, we see that 70% of white families' wealth is in the form of their principal residence; for Blacks and Hispanics, the figures are 95% and 96%, respectively.

And for all Americans, things are getting worse: as the projections to July 2009 by Wolff (2010) make clear, the last few years have seen a huge loss in housing wealth for most families, making the gap between the rich and the rest of America even greater, and increasing the number of households with no marketable assets from 18.6% to 24.1%.

Do Americans know their country's wealth distribution?

A remarkable study (Norton & Ariely, 2010) reveals that Americans have no idea that the wealth distribution (defined for them in terms of "net worth") is as concentrated as it is. When shown three pie charts representing possible wealth distributions, 90% or more of the 5,522 respondents -- whatever their gender, age, income level, or party affiliation -- thought that the American wealth distribution most resembled one in which the top 20% has about 60% of the wealth. In fact, of course, the top 20% control about 85% of the wealth (refer back to Table 1 and Figure 1 in this document for a more detailed breakdown of the numbers).

Even more striking, they did not come close on the amount of wealth held by the bottom 40% of the population. It's a number I haven't even mentioned so far, and it's shocking: the lowest two quintiles hold just 0.3% of the wealth in the United States. Most people in the survey guessed the figure to be between 8% and 10%, and two dozen academic economists got it wrong too, by guessing about 2% -- seven times too high. Those surveyed did have it about right for what the 20% in the middle have; it's at the top and the bottom that they don't have any idea of what's going on.

Americans from all walks of life were also united in their vision of what the "ideal" wealth distribution would be, which may come as an even bigger surprise than their shared misinformation on the actual wealth distribution. They said that the ideal wealth distribution would be one in which the top 20% owned between 30 and 40 percent of the privately held wealth, which is a far cry from the 85 percent that the top 20% actually own. They also said that the bottom 40% -- that's 120 million Americans -- should have between 25% and 30%, not the mere 8% to 10% they thought this group had, and far above the 0.3% they actually had. In fact, there's no country in the world that has a wealth distribution close to what Americans think is ideal when it comes to fairness. So maybe Americans are much more egalitarian than most of them realize about each other, at least in principle and before the rat race begins.

Figure 4, reproduced with permission from Norton & Ariely's article in Perspectives on Psychological Science, shows the actual wealth distribution, along with the survey respondents' estimated and ideal distributions, in graphic form.

Figure 4: The actual United States wealth distribution plotted against the estimated and ideal distributions.

Note: In the "Actual" line, the bottom two quintiles are not visible because the lowest quintile owns just 0.1% of all wealth, and the second-lowest quintile owns 0.2%. Source: Norton & Ariely, 2010.

David Cay Johnston, a retired tax reporter for the New York Times, published an excellent summary of Norton & Ariely's findings (Johnston, 2010b; you can download the article from Johnston's Web site).

Historical context

Numerous studies show that the wealth distribution has been extremely concentrated throughout American history, with the top 1% already owning 40-50% in large port cities like Boston, New York, and Charleston in the 19th century. It was very stable over the course of the 20th century, although there were small declines in the aftermath of the New Deal and World II, when most people were working and could save a little money. There were progressive income tax rates, too, which took some money from the rich to help with government services.

Then there was a further decline, or flattening, in the 1970s, but this time in good part due to a fall in stock prices, meaning that the rich lost some of the value in their stocks. By the late 1980s, however, the wealth distribution was almost as concentrated as it had been in 1929, when the top 1% had 44.2% of all wealth. It has continued to edge up since that time, with a slight decline from 1998 to 2001, before the economy crashed in the late 2000s and little people got pushed down again. Table 3 and Figure 5 present the details from 1922 through 2007.

Table 3: Share of wealth held by the Bottom 99% and Top 1% in the United States, 1922-2007. Bottom 99 percentTop 1 percent 192263.3%36.7% 192955.8%44.2% 193366.7%33.3% 193963.6%36.4% 194570.2%29.8% 194972.9%27.1% 195368.8%31.2% 196268.2%31.8% 196565.6%34.4% 196968.9%31.1% 197270.9%29.1% 197680.1%19.9% 197979.5%20.5% 198175.2%24.8% 198369.1%30.9% 198668.1%31.9% 198964.3%35.7% 199262.8%37.2% 199561.5%38.5% 199861.9%38.1% 200166.6%33.4% 200465.7%34.3% 200765.4%34.6% Sources: 1922-1989 data from Wolff (1996). 1992-2007 data from Wolff (2010).

Figure 5: Share of wealth held by the Bottom 99% and Top 1% in the United States, 1922-2007.

Here are some dramatic facts that sum up how the wealth distribution became even more concentrated between 1983 and 2004, in good part due to the tax cuts for the wealthy and the defeat of labor unions: Of all the new financial wealth created by the American economy in that 21-year-period, fully 42% of it went to the top 1%. A whopping 94% went to the top 20%, which of course means that the bottom 80% received only 6% of all the new financial wealth generated in the United States during the '80s, '90s, and early 2000s (Wolff, 2007).

The rest of the world

Thanks to a 2006 study by the World Institute for Development Economics Research -- using statistics for the year 2000 -- we now have information on the wealth distribution for the world as a whole, which can be compared to the United States and other well-off countries. The authors of the report admit that the quality of the information available on many countries is very spotty and probably off by several percentage points, but they compensate for this problem with very sophisticated statistical methods and the use of different sets of data. With those caveats in mind, we can still safely say that the top 10% of the world's adults control about 85% of global household wealth -- defined very broadly as all assets (not just financial assets), minus debts. That compares with a figure of 69.8% for the top 10% for the United States. The only industrialized democracy with a higher concentration of wealth in the top 10% than the United States is Switzerland at 71.3%. For the figures for several other Northern European countries and Canada, all of which are based on high-quality data, see Table 4.

Table 4: Percentage of wealth held in 2000 by the Top 10% of the adult population in various Western countries

wealth owned

by top 10% Switzerland71.3% United States69.8% Denmark65.0% France61.0% Sweden58.6% UK56.0% Canada53.0% Norway50.5% Germany44.4% Finland42.3%

The Relationship Between Wealth and Power

What's the relationship between wealth and power? To avoid confusion, let's be sure we understand they are two different issues. Wealth, as I've said, refers to the value of everything people own, minus what they owe, but the focus is on "marketable assets" for purposes of economic and power studies. Power, as explained elsewhere on this site, has to do with the ability (or call it capacity) to realize wishes, or reach goals, which amounts to the same thing, even in the face of opposition (Russell, 1938; Wrong, 1995). Some definitions refine this point to say that power involves Person A or Group A affecting Person B or Group B "in a manner contrary to B's interests," which then necessitates a discussion of "interests," and quickly leads into the realm of philosophy (Lukes, 2005, p. 30). Leaving those discussions for the philosophers, at least for now, how do the concepts of wealth and power relate?

First, wealth can be seen as a "resource" that is very useful in exercising power. That's obvious when we think of donations to political parties, payments to lobbyists, and grants to experts who are employed to think up new policies beneficial to the wealthy. Wealth also can be useful in shaping the general social environment to the benefit of the wealthy, whether through hiring public relations firms or donating money for universities, museums, music halls, and art galleries.

Second, certain kinds of wealth, such as stock ownership, can be used to control corporations, which of course have a major impact on how the society functions. Tables 5a and 5b show what the distribution of stock ownership looks like. Note how the top one percent's share of stock equity increased (and the bottom 80 percent's share decreased) between 2001 and 2007.

Table 5a: Concentration of stock ownership in the United States, 2001-2007 Percent of all stock owned: Wealth class200120042007 Top 1%33.5%36.7%38.3% Next 19%55.8%53.9%52.8% Bottom 80%10.7%9.4%8.9%

Table 5b: Amount of stock owned by various wealth classes in the U.S., 2007 Percent of households owning stocks worth: Wealth class$0 (no stocks)$1-$10,000More than $10,000 Top 1%7.4%4.2%88.4% 95-99%7.8%2.7%89.5% 90-95%13.2%5.4%81.4% 80-90%17.9%10.9%71.2% 60-80%34.6%18.3%47.1% 40-60%52.3%25.6%22.1% 20-40%69.7%21.6%8.7% Bottom 20%84.7%14.3%2.0% TOTAL50.9%17.5%31.6%

Both tables' data from Wolff (2007 & 2010). Includes direct ownership of stock shares and indirect ownership through mutual funds, trusts, and IRAs, Keogh plans, 401(k) plans, and other retirement accounts. All figures are in 2007 dollars.

Third, just as wealth can lead to power, so too can power lead to wealth. Those who control a government can use their position to feather their own nests, whether that means a favorable land deal for relatives at the local level or a huge federal government contract for a new corporation run by friends who will hire you when you leave government. If we take a larger historical sweep and look cross-nationally, we are well aware that the leaders of conquering armies often grab enormous wealth, and that some religious leaders use their positions to acquire wealth.

There's a fourth way that wealth and power relate. For research purposes, the wealth distribution can be seen as the main "value distribution" within the general power indicator I call "who benefits." What follows in the next three paragraphs is a little long-winded, I realize, but it needs to be said because some social scientists -- primarily pluralists -- argue that who wins and who loses in a variety of policy conflicts is the only valid power indicator (Dahl, 1957, 1958; Polsby, 1980). And philosophical discussions don't even mention wealth or other power indicators (Lukes, 2005). (If you have heard it all before, or can do without it, feel free to skip ahead to the last paragraph of this section)

Here's the argument: if we assume that most people would like to have as great a share as possible of the things that are valued in the society, then we can infer that those who have the most goodies are the most powerful. Although some value distributions may be unintended outcomes that do not really reflect power, as pluralists are quick to tell us, the general distribution of valued experiences and objects within a society still can be viewed as the most publicly visible and stable outcome of the operation of power.

In American society, for example, wealth and well-being are highly valued. People seek to own property, to have high incomes, to have interesting and safe jobs, to enjoy the finest in travel and leisure, and to live long and healthy lives. All of these "values" are unequally distributed, and all may be utilized as power indicators. However, the primary focus with this type of power indicator is on the wealth distribution sketched out in the previous section.

The argument for using the wealth distribution as a power indicator is strengthened by studies showing that such distributions vary historically and from country to country, depending upon the relative strength of rival political parties and trade unions, with the United States having the most highly concentrated wealth distribution of any Western democracy except Switzerland. For example, in a study based on 18 Western democracies, strong trade unions and successful social democratic parties correlated with greater equality in the income distribution and a higher level of welfare spending (Stephens, 1979).

And now we have arrived at the point I want to make. If the top 1% of households have 30-35% of the wealth, that's 30 to 35 times what they would have if wealth were equally distributed, and so we infer that they must be powerful. And then we set out to see if the same set of households scores high on other power indicators (it does). Next we study how that power operates, which is what most articles on this site are about. Furthermore, if the top 20% have 84% of the wealth (and recall that 10% have 85% to 90% of the stocks, bonds, trust funds, and business equity), that means that the United States is a power pyramid. It's tough for the bottom 80% -- maybe even the bottom 90% -- to get organized and exercise much power.

Income and Power

The income distribution also can be used as a power indicator. As Table 6 shows, it is not as concentrated as the wealth distribution, but the top 1% of income earners did receive 17% of all income in the year 2003 and 21.3% in 2006. That's up from 12.8% for the top 1% in 1982, which is quite a jump, and it parallels what is happening with the wealth distribution. This is further support for the inference that the power of the corporate community and the upper class have been increasing in recent decades.

Table 6: Distribution of income in the United States, 1982-2006 Income Top 1 percentNext 19 percentBottom 80 percent 198212.8%39.1%48.1% 198816.6%38.9%44.5% 199115.7%40.7%43.7% 199414.4%40.8%44.9% 199716.6%39.6%43.8% 200020.0%38.7%41.4% 200317.0%40.8%42.2% 200621.3%40.1%38.6% From Wolff (2010).

The rising concentration of income can be seen in a special New York Times analysis by David Cay Johnston of an Internal Revenue Service report on income in 2004. Although overall income had grown by 27% since 1979, 33% of the gains went to the top 1%. Meanwhile, the bottom 60% were making less: about 95 cents for each dollar they made in 1979. The next 20% - those between the 60th and 80th rungs of the income ladder -- made $1.02 for each dollar they earned in 1979. Furthermore, Johnston concludes that only the top 5% made significant gains ($1.53 for each 1979 dollar). Most amazing of all, the top 0.1% -- that's one-tenth of one percent -- had more combined pre-tax income than the poorest 120 million people (Johnston, 2006).

But the increase in what is going to the few at the top did not level off, even with all that. As of 2007, income inequality in the United States was at an all-time high for the past 95 years, with the top 0.01% -- that's one-hundredth of one percent -- receiving 6% of all U.S. wages, which is double what it was for that tiny slice in 2000; the top 10% received 49.7%, the highest since 1917 (Saez, 2009). However, in an analysis of 2008 tax returns for the top 0.2% -- that is, those whose income tax returns reported $1,000,000 or more in income (mostly from individuals, but nearly a third from couples) -- it was found that they received 13% of all income, down slightly from 16.1% in 2007 due to the decline in payoffs from financial assets (Norris, 2010).

And the rate of increase is even higher for the very richest of the rich: the top 400 income earners in the United States. According to another analysis by Johnston (2010a), the average income of the top 400 tripled during the Clinton Administration and doubled during the first seven years of the Bush Administration. So by 2007, the top 400 averaged $344.8 million per person, up 31% from an average of $263.3 million just one year earlier. (For another recent revealing study by Johnston, read "Is Our Tax System Helping Us Create Wealth?").

How are these huge gains possible for the top 400? It's due to cuts in the tax rates on capital gains and dividends, which were down to a mere 15% in 2007 thanks to the tax cuts proposed by the Bush Administration and passed by Congress in 2003. Since almost 75% of the income for the top 400 comes from capital gains and dividends, it's not hard to see why tax cuts on income sources available to only a tiny percent of Americans mattered greatly for the high-earning few. Overall, the effective tax rate on high incomes fell by 7% during the Clinton presidency and 6% in the Bush era, so the top 400 had a tax rate of 20% or less in 2007, far lower than the marginal tax rate of 35% that the highest income earners (over $372,650) supposedly pay. It's also worth noting that only the first $106,800 of a person's income is taxed for Social Security purposes (as of 2010), so it would clearly be a boon to the Social Security Fund if everyone -- not just those making less than $106,800 -- paid the Social Security tax on their full incomes.

Do Taxes Redistribute Income?

It is widely believed that taxes are highly progressive and, furthermore, that the top several percent of income earners pay most of the taxes received by the federal government. Both ideas are wrong because they focus on official, rather than "effective" tax rates and ignore payroll taxes, which are mostly paid by those with incomes below $100,000 per year.

But what matters in terms of a power analysis is what percentage of their income people at different income levels pay to all levels of government (federal, state, and local) in taxes. If the less-well-off majority is somehow able to wield power, we would expect that the high earners would pay a bigger percentage of their income in taxes, because the majority figures the well-to-do would still have plenty left after taxes to make new investments and lead the good life. If the high earners have the most power, we'd expect them to pay about the same as everybody else, or less.

Citizens for Tax Justice, a research group that's been studying tax issues from its offices in Washington since 1979, provides the information we need. When all taxes (not just income taxes) are taken into account, the lowest 20% of earners (who average about $12,400 per year), paid 16.0% of their income to taxes in 2009; and the next 20% (about $25,000/year), paid 20.5% in taxes. So if we only examine these first two steps, the tax system looks like it is going to be progressive.

And it keeps looking progressive as we move further up the ladder: the middle 20% (about $33,400/year) give 25.3% of their income to various forms of taxation, and the next 20% (about $66,000/year) pay 28.5%. So taxes are progressive for the bottom 80%. But if we break the top 20% down into smaller chunks, we find that progressivity starts to slow down, then it stops, and then it slips backwards for the top 1%.

Specifically, the next 10% (about $100,000/year) pay 30.2% of their income as taxes; the next 5% ($141,000/year) dole out 31.2% of their earnings for taxes; and the next 4% ($245,000/year) pay 31.6% to taxes. You'll note that the progressivity is slowing down. As for the top 1% -- those who take in $1.3 million per year on average -- they pay 30.8% of their income to taxes, which is a little less than what the 9% just below them pay, and only a tiny bit more than what the segment between the 80th and 90th percentile pays.

What I've just explained with words can be seen more clearly in Figure 6.

Figure 6: Share of income paid as tax, including local and state tax

Source: Citizens for Tax Justice (2010a).

We also can look at this information on income and taxes in another way by asking what percentage of all taxes various income levels pay. (This is not the same as the previous question, which asked what percentage of their incomes went to taxes for people at various income levels.) And the answer to this new question can be found in Figure 7. For example, the top 20% receives 59.1% of all income and pays 64.3% of all the taxes, so they aren't carrying a huge extra burden. At the other end, the bottom 20%, which receives 3.5% of all income, pays 1.9% of all taxes.

Figure 7: Share of all income earned and all taxes paid, by quintile

Source: Citizens for Tax Justice (2010a).

So the best estimates that can be put together from official government numbers show a little bit of progressivity. But the details on those who earn millions of dollars each year are very hard to come by, because they can stash a large part of their wealth in off-shore tax havens in the Caribbean and little countries in Europe, starting with Switzerland. And there are many loopholes and gimmicks they can use, as summarized with striking examples in Free Lunch and Perfectly Legal, the books by Johnston that were mentioned earlier. For example, Johnston explains the ways in which high earners can hide their money and delay on paying taxes, and then invest for a profit what normally would be paid in taxes.

Income inequality in other countries

The degree of income inequality in the United States can be compared to that in other countries on the basis of the Gini coefficient, a mathematical ratio that allows economists to put all countries on a scale with values that range (hypothetically) from zero (everyone in the country has the same income) to 100 (one person in the country has all the income). On this widely used measure, the United States ends up 95th out of the 134 countries that have been studied -- that is, only 39 of the 134 countries have worse income inequality. The U.S. has a Gini index of 45.0; Sweden is the lowest with 23.0, and South Africa is near the top with 65.0.

The table that follows displays the scores for 22 major countries, along with their ranking in the longer list of 134 countries that were studied (most of the other countries are very small and/or very poor). In examining this table, remember that it does not measure the same thing as Table 4 earlier in this document, which was about the wealth distribution. Here we are looking at the income distribution, so the two tables won't match up as far as rankings. That's because a country can have a highly concentrated wealth distribution and still have a more equal distribution of income due to high taxes on top income earners and/or high minimum wages -- both Switzerland and Sweden follow this pattern. So one thing that's distinctive about the U.S. compared to other industrialized democracies is that both its wealth and income distributions are highly concentrated.

Table 7: Income equality in selected countries Country/Overall RankGini Coefficient 1. Sweden 23.0 2. Norway 25.0 8. Austria 26.0 10. Germany 27.0 17. Denmark 29.0 25. Australia 30.5 34. Italy 32.0 35. Canada 32.1 37. France 32.7 42. Switzerland 33.7 43. United Kingdom 34.0 45. Egypt 34.4 56. India 36.8 61. Japan 38.1 68. Israel 39.2 81. China 41.5 82. Russia 42.3 90. Iran 44.5 93. United States 45.0 107. Mexico 48.2 125. Brazil 56.7 133. South Africa 65.0

Note: These figures reflect family/household income, not individual income. Source: Central Intelligence Agency (2010).

The impact of "transfer payments"

As we've seen, taxes don't have much impact on the income distribution, especially when we look at the top 1% or top 0.1%. Nor do various kinds of tax breaks and loopholes have much impact on the income distribution overall. That's because the tax deductions that help those with lower incomes -- such as the Earned Income Tax Credit (EITC), tax forgiveness for low-income earners on Social Security, and tax deductions for dependent children -- are offset by the breaks for high-income earners (for example: dividends and capital gains are only taxed at a rate of 15%; there's no tax on the interest earned from state and municipal bonds; and 20% of the tax deductions taken for dependent children actually go to people earning over $100,000 a year).

But it is sometimes said that income inequality is reduced significantly by government programs that matter very much in the lives of low-income Americans. These programs provide "transfer payments," which are a form of income for those in need. They include unemployment compensation, cash payments to the elderly who don't have enough to live on from Social Security, Temporary Assistance to Needy Families (welfare), food stamps, and Medicaid.

Thomas Hungerford (2009), a tax expert who works for the federal government's Congressional Research Service, carried out a study for Congress that tells us about the real-world impact of transfer payments on reducing income inequality. Hungerford's study is based on 2004 income data from an ongoing study of a representative sample of families at the University of Michigan, and it includes the effects of both taxes and four types of transfer payments (Social Security, Temporary Assistance to Needy Families, food stamps, and Medicaid). The table that follows shows the income inequality index (that is, the Gini coefficient) at three points along the way: (1.) before taxes or transfers; (2) after taxes are taken into account; and (3) after both taxes and transfer payments are included in the equation. (The Citizens for Tax Justice study of income and taxes for 2009, discussed earlier, included transfer payments as income, so that study and Hungerford's have similar starting points. But they can't be directly compared, because they use different years.)

Table 8: Redistributive effect of taxes and transfer payments Income definitionGini index Before taxes and transfers0.5116 After taxes, before transfers0.4774 After taxes and transfers0.4284

Source: Congressional Research Service, adapted from Hungerford (2009).

As can be seen, Hungerford's findings first support what we had learned earlier from the Citizens for Tax Justice study: taxes don't do much to reduce inequality. They secondly reveal that transfer payments have a slightly larger impact on inequality than taxes, but not much. Third, his findings tell us that taxes and transfer payments together reduce the inequality index from .52 to .43, which is very close to the CIA's estimate of .45 for 2008.

In short, for those who ask if progressive taxes and transfer payments even things out to a significant degree, the answer is that while they have some effect, they don't do nearly as much as in Canada, major European countries, or Japan.

Income Ratios and Power: Executives vs. Laborers

Another way that income can be used as a power indicator is by comparing average CEO annual pay to average factory worker pay, something that has been done for many years by Business Week and, later, the Associated Press. The ratio of CEO pay to factory worker pay rose from 42:1 in 1960 to as high as 531:1 in 2000, at the height of the stock market bubble, when CEOs were cashing in big stock options. It was at 411:1 in 2005 and 344:1 in 2007, according to research by United for a Fair Economy. By way of comparison, the same ratio is about 25:1 in Europe. The changes in the American ratio from 1960 to 2007 are displayed in Figure 8, which is based on data from several hundred of the largest corporations.

Figure 8: CEOs' pay as a multiple of the average worker's pay, 1960-2007

Source: Executive Excess 2008, the 15th Annual CEO Compensation Survey from the Institute for Policy Studies and United for a Fair Economy.

It's even more revealing to compare the actual rates of increase of the salaries of CEOs and ordinary workers; from 1990 to 2005, CEOs' pay increased almost 300% (adjusted for inflation), while production workers gained a scant 4.3%. The purchasing power of the federal minimum wage actually declined by 9.3%, when inflation is taken into account. These startling results are illustrated in Figure 9.

Figure 9: CEOs' average pay, production workers' average pay, the S&P 500 Index, corporate profits, and the federal minimum wage, 1990-2005 (all figures adjusted for inflation)

Source: Executive Excess 2006, the 13th Annual CEO Compensation Survey from the Institute for Policy Studies and United for a Fair Economy.

Although some of the information I've relied upon to create this section on executives' vs. workers' pay is a few years old now, the AFL/CIO provides up-to-date information on CEO salaries at their Web site. There, you can learn that the median compensation for CEO's in all industries as of early 2010 is $3.9 million; it's $10.6 million for the companies listed in Standard and Poor's 500, and $19.8 million for the companies listed in the Dow-Jones Industrial Average. Since the median worker's pay is about $36,000, then you can quickly calculate that CEOs in general make 100 times as much as the workers, that CEO's of S&P 500 firms make almost 300 times as much, and that CEOs at the Dow-Jones companies make 550 times as much. (For a more recent update on CEOs' pay, see "The Drought Is Over (At Least for CEOs)" at NYTimes.com; the article reports that the median compensation for CEOs at 200 major companies was $9.6 million in 2010 -- up by about 12% over 2009 and generally equal to or surpassing pre-recession levels. For specific information about some of the top CEOs, see http://projects.nytimes.com/executive_compensation.

If you wonder how such a large gap could develop, the proximate, or most immediate, factor involves the way in which CEOs now are able to rig things so that the board of directors, which they help select -- and which includes some fellow CEOs on whose boards they sit -- gives them the pay they want. The trick is in hiring outside experts, called "compensation consultants," who give the process a thin veneer of economic respectability.

The process has been explained in detail by a retired CEO of DuPont, Edgar S. Woolard, Jr., who is now chair of the New York Stock Exchange's executive compensation committee. His experience suggests that he knows whereof he speaks, and he speaks because he's concerned that corporate leaders are losing respect in the public mind. He says that the business page chatter about CEO salaries being set by the competition for their services in the executive labor market is "bull." As to the claim that CEOs deserve ever higher salaries because they "create wealth," he describes that rationale as a "joke," says the New York Times (Morgenson, 2005).

Here's how it works, according to Woolard:

The compensation committee [of the board of directors] talks to an outside consultant who has surveys you could drive a truck through and pay anything you want to pay, to be perfectly honest. The outside consultant talks to the human resources vice president, who talks to the CEO. The CEO says what he'd like to receive. It gets to the human resources person who tells the outside consultant. And it pretty well works out that the CEO gets what he's implied he thinks he deserves, so he will be respected by his peers. (Morgenson, 2005.)

The board of directors buys into what the CEO asks for because the outside consultant is an "expert" on such matters. Furthermore, handing out only modest salary increases might give the wrong impression about how highly the board values the CEO. And if someone on the board should object, there are the three or four CEOs from other companies who will make sure it happens. It is a process with a built-in escalator.

As for why the consultants go along with this scam, they know which side their bread is buttered on. They realize the CEO has a big say-so on whether or not they are hired again. So they suggest a package of salaries, stock options and other goodies that they think will please the CEO, and they, too, get rich in the process. And certainly the top executives just below the CEO don't mind hearing about the boss's raise. They know it will mean pay increases for them, too. (For an excellent detailed article on the main consulting firm that helps CEOs and other corporate executives raise their pay, check out the New York Times article entitled "America's Corporate Pay Pal", which supports everything Woolard of DuPont claims and adds new information.)

If hiring a consulting firm doesn't do the trick as far as raising CEO pay, then it may be possible for the CEO to have the board change the way in which the success of the company is determined. For example, Walmart Stores, Inc. used to link the CEO's salary to sales figures at established stores. But when declining sales no longer led to big pay raises, the board simply changed the magic formula to use total companywide sales instead. By that measure, the CEO could still receive a pay hike (Morgenson, 2011).

There's a much deeper power story that underlies the self-dealing and mutual back-scratching by CEOs now carried out through interlocking directorates and seemingly independent outside consultants. It probably involves several factors. At the least, on the workers' side, it reflects their loss of power following the all-out attack on unions in the 1960s and 1970s, which is explained in detail in an excellent book by James Gross (1995), a labor and industrial relations professor at Cornell. That decline in union power made possible and was increased by both outsourcing at home and the movement of production to developing countries, which were facilitated by the break-up of the New Deal coalition and the rise of the New Right (Domhoff, 1990, Chapter 10). It signals the shift of the United States from a high-wage to a low-wage economy, with professionals protected by the fact that foreign-trained doctors and lawyers aren't allowed to compete with their American counterparts in the direct way that low-wage foreign-born workers are.

(You also can read a quick version of my explanation for the "right turn" that led to changes in the wealth and income distributions in an article on this site, where it is presented in the context of criticizing the explanations put forward by other theorists.)

On the other side of the class divide, the rise in CEO pay may reflect the increasing power of chief executives as compared to major owners and stockholders in general, not just their increasing power over workers. CEOs may now be the center of gravity in the corporate community and the power elite, displacing the leaders in wealthy owning families (e.g., the second and third generations of the Walton family, the owners of Wal-Mart). True enough, the CEOs are sometimes ousted by their generally go-along boards of directors, but they are able to make hay and throw their weight around during the time they are king of the mountain.

The claims made in the previous paragraph need much further investigation. But they demonstrate the ideas and research directions that are suggested by looking at the wealth and income distributions as indicators of power.

Further Information

• The 2010 Wolff paper is on-line at http://www.levyinstitute.org/publications/?docid=1235; Edward Wolff's home page at New York University is at http://www.econ.nyu.edu/user/wolffe/.
• The Census Bureau report is on line at http://www.census.gov/hhes/www/wealth/wealth.html
• The World Institute for Development Economics Research (UNU-WIDER) report on household wealth throughout the world is available at http://tinyurl.com/wdhw08; see the WIDER site for more about their research.
• For good summaries of other information on wealth and income, and for information on the estate tax, see the United For A Fair Economy site at http://www.faireconomy.org/. Their research on CEO pay can be found here: http://www.faireconomy.org/issues/ceo_pay
• For some recent data on taxes from a variety of angles -- presented in a number of colorful charts and graphs -- the Center on Budget and Policy Priorities created a page entitled "Top Ten Tax Charts" in April 2011.
• The New York Times ran an excellent series of articles on executive compensation in the fall of 2006 entitled "Gilded Paychecks." Look for it by searching the archives on NYTimes.com.
• For a brief 2010 account by tax expert David Cay Johnston on how the owners of oil pipelines have avoided taxes for the past 25 years simply by converting from the corporate form of ownership to partnerships, check out his brief video on YouTube. For the full details, see his column on tax.com.
• To see a video of Ed Woolard giving his full speech about executive compensation, go to http://www.compensationstandards.com/nonmember/EdWoolard_video.asp (WMV file, may not be viewable on all platforms/browsers)
• The Shapiro & Friedman paper on capital income, along with many other reports on the federal budget and its consequences, are available at the Center on Budget and Policy Priorities site: http://www.cbpp.org/pubs/recent.html
• The AFL-CIO maintains a site called "Executive Paywatch," which summarizes information about the salary disparity between executives and other workers: http://www.aflcio.org/corporatewatch/paywatch/.
• Emmanuel Saez, Professor of Economics at UC Berkeley, has written or co-authored a number of papers on income inequality and related topics: http://elsa.berkeley.edu/~saez/
• An update on the lack of wage growth in the 2007-2010 recession ("Recession hits workers' paychecks") can be found at the Web site of the Economic Policy Institute.

References

AFL-CIO (2010). Executive PayWatch: CEO Pay Database: Compensation by Industry. Retrieved February 8, 2010 from http://www.aflcio.org/corporatewatch/paywatch/ceou/industry.cfm.

Anderson, S., Cavanagh, J., Collins, C., Lapham, M., & Pizzigati, S. (2008). Executive Excess 2008: How Average Taxpayers Subsidize Runaway Pay. Washington, DC: Institute for Policy Studies / United for a Fair Economy.

Anderson, S., Cavanagh, J., Collins, C., Lapham, M., & Pizzigati, S. (2007). Executive Excess 2007: The Staggering Social Cost of U.S. Business Leadership. Washington, DC: Institute for Policy Studies / United for a Fair Economy.

Anderson, S., Benjamin, E., Cavanagh, J., & Collins, C. (2006). Executive Excess 2006: Defense and Oil Executives Cash in on Conflict. Washington, DC: Institute for Policy Studies / United for a Fair Economy.

Anderson, S., Cavanagh, J., Klinger, S., & Stanton, L. (2005). Executive Excess 2005: Defense Contractors Get More Bucks for the Bang. Washington, DC: Institute for Policy Studies / United for a Fair Economy.

Central Intelligence Agency (2010). World Factbook: Country Comparison: Distribution of family income - Gini index. Retrieved October 26, 2010 from https://www.cia.gov/library/publications/the-world-factbook/rankorder/2172rank.html.

Citizens for Tax Justice (2010b). State-by-State Estate Tax Figures: Number of Deaths Resulting in Estate Tax Liability Continues to Drop. Retrieved December 13, 2010 from http://www.ctj.org/pdf/estatetax2010.pdf.

Citizens for Tax Justice (2010a). All Americans Pay Taxes. Retrieved April 15, 2010 from http://www.ctj.org/pdf/taxday2010.pdf.

Dahl, R. A. (1957). The concept of power. Behavioral Science, 2, 202-210.

Dahl, R. A. (1958). A critique of the ruling elite model. American Political Science Review, 52, 463-469.

Davies, J. B., Sandstrom, S., Shorrocks, A., & Wolff, E. N. (2006). The World Distribution of Household Wealth. Helsinki: World Institute for Development Economics Research.

Domhoff, G. W. (1990). The Power Elite and the State: How Policy Is Made in America. Hawthorne, NY: Aldine de Gruyter.

Gross, J. A. (1995). Broken Promise: The Subversion of U.S. Labor Relations Policy. Philadelphia: Temple University Press.

Hungerford, T. (2009). Redistribution effects of federal taxes and selected tax provisions. Washington: Congressional Research Service.

Johnston, D. C. (2010b). United in Our Delusion. Retrieved October 12, 2010 from http://www.tax.com/taxcom/taxblog.nsf/Permalink/UBEN-8A6TUW?OpenDocument.

Johnston, D. C. (2010a). Tax Rates for Top 400 Earners Fall as Income Soars, IRS Data. Retrieved February 23, 2010 from http://www.tax.com/taxcom/features.nsf/Articles/0DEC0EAA7E4D7A2B852576CD00714692?OpenDocument.

Johnston, D. C. (2009, December 21). Is Our Tax System Helping Us Create Wealth? Tax Notes, pp. 1375-1377.

Johnston, D. C. (2006, November 28). '04 Income in U.S. Was Below 2000 Level. New York Times, p. C-1.

Keister, L. (2005)

[Simon Bar Sinister]

take away the ability to buy junk food and drink, and I'm all for not only keeping the level of spending the same, but for raising it.

[Slogo]

I see no harm in removing pop and cookies and a number of other things that I only like to refer to as shit. Actually, I see it doing negative harm. If there is a child out there (under at least 16) who eats more than I do, we have a serious problem as a country. For years, the fat were usually those who had money (because they could afford food). Now with dollar menus at every fast food place nobody eats balanced meals anymore. I'm sorry a Big Mac is not a balanced meal just because it has all 4 food groups in it. I think one thing that could help is gardening. Have a raspberry or blueberry bush. Grow tomatoes, corn, peppers, cucumbers, etc...That's also less money that you have to spend on a bridge card (I suppose you could do this with meat as well but many of us don't live in areas that allow for cows and pigs.).

[taysteewonderbunny]

I see no harm in removing pop and cookies and a number of other things that I only like to refer to as shit. Actually, I see it doing negative harm. If there is a child out there (under at least 16) who eats more than I do, we have a serious problem as a country. For years, the fat were usually those who had money (because they could afford food). Now with dollar menus at every fast food place nobody eats balanced meals anymore. I'm sorry a Big Mac is not a balanced meal just because it has all 4 food groups in it. I think one thing that could help is gardening. Have a raspberry or blueberry bush. Grow tomatoes, corn, peppers, cucumbers, etc...That's also less money that you have to spend on a bridge card (I suppose you could do this with meat as well but many of us don't live in areas that allow for cows and pigs.).

That's why I think more communities should be forced to allow people to breed rabbits and chickens for meat. And goats. Goats will also mow your lawns and provide you with instant compost. A pygmy goat can yield up to two quarts of milk in one day and the kids are tasty.

Oh, and welfare recipients on arable land should be taught how to grow food on their land organically. But if they don't own this land, it's problematic. Many landlords won't allow their renters to build gardens. Subdivisions and condo communities can prohibit it too.

I, myself, am trying to convert our home (rented from the in-laws) to organic. Once I have the lawn and flower beds established, I will have to convince both his parents and the subdivision association to allow me to grow food. It's so stupid. Farms is in the sub name, but there are restrictions on growing food.

Edited August 23, 2011 by taysteewonderbunny

[Destroit]

take away the ability to buy junk food and drink, and I'm all for not only keeping the level of spending the same, but for raising it.

If they took the ability to buy junk food and drinks away...why would it need to be raised?

[taysteewonderbunny]

If they took the ability to buy junk food and drinks away...why would it need to be raised?

Read ALL of my first post. It's because it's not enough. The work and the wages aren't there to allow a reasonable standard of living without there being an increase in government benefits. Ultimately, the best solution is to grow businesses wherein workers are fairly compensated and more Americans have jobs with fair compensation, but until we get there, help has to come from somewhere.

[Vater Araignee]

take away the ability to buy junk food and drink, and I'm all for not only keeping the level of spending the same, but for raising it.

Well you can buy Monster with EBT. It is a start. Every time I suggest that all carbonated beverages be added to the no buy list, is when they namby pambys who wont stand up for the constitution start yelling about freedom. Never mind the fact that they are taking away someones freedom so they can have the illusion of theirs.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

I collect EBT.

My cash income is 1400 a month.

I pay 700 in rent.

Electricity averages out to 250 a month. I have electrical heating and refuse to use the AC.

Internet + sub basic cable = 81 and change a month. That is based on a 30 day month, they charge me less in February and more in 31 day months.

Telephone 30 and change.

Maintenance medication.

Son 20 a month

Daughter 20 a month

Wife 50 a month

Self 0 a month but that's because I am the only one not even slightly ensured so they would cost me 400

Now we are at 249

I started buying my daughter a cello before I lost my 19.62 an hour job, that is 31 a month.

Gasoline costs between 100 and 125 a month. I'll call it 100

That leaves me with 118 a month to feed 4 people not counting clothing (most of it we get by way of donation) cleansers, personal grooming items, vehicular maintenance, etc etc. Thank whatever that I stopped smoking and started vaping so I'm only spending 10 a month and decreasing.

To stay politically active I depend the charity of those less articulate with the same ideals.

EBT still doesn't cover what I need for food here so...

My wife goes to a food bank only collecting for 3 so that they don't know I am involved. They wont let collectors volunteer because they don't want to give the impression of working for food. When we first realized that we needed the help I was already giving them 8 hours a week.

It is sad. If I stopped volunteering, we could get an extra 50 lbs every 2 months.

Stop letting the banks, corporations and welfare frauds have a free ride and I could survive without EBT and food banks. And don't tell me to put my children at risk and receive an even shittier education so I can have lower rent.

[Simon Bar Sinister]

Every dollar put into the economy via food stamps yields a payoff of a little more than $1.60. unemployment payments yield just about the same.

that's why cutting either program during a period of slow economic growth, let alone in a downturn, is extremely damaging to the economy as a whole.

[phee]

Cherny you have told me that you live their because you choose to.

[Destroit]

Cherny you have told me that you live their because you choose to.

This particular house? I had $13,000 in my pocket, I wasn't expecting the Taj Mahal. My budget wasn't a choice, the neighborhood was. Even if I get more cash down the road, no I don't plan to move (but hopefully my house will no longer look like Kowloon Walled City, and engineered the same way, on the inside).

If I had the budget to blow, and had no restraints on location (I have to stay in Macomb County because my school grant is drastically reduced if I don't), I would probably pick a very old mansion or at least a sizable "Detroit-built" house, somewhere in Detroit itself, and fix it up.

Edited August 27, 2011 by Chernobyl

[phee]

This particular house? I had $13,000 in my pocket, I wasn't expecting the Taj Mahal. My budget wasn't a choice, the neighborhood was. Even if I get more cash down the road, no I don't plan to move (but hopefully my house will no longer look like Kowloon Walled City, and engineered the same way, on the inside).

And here I thought you were proud of its ghettoness

[Destroit]

Well you can buy Monster with EBT. It is a start. Every time I suggest that all carbonated beverages be added to the no buy list, is when they namby pambys who wont stand up for the constitution start yelling about freedom. Never mind the fact that they are taking away someones freedom so they can have the illusion of theirs.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

I collect EBT.

My cash income is 1400 a month.

I pay 700 in rent.

Electricity averages out to 250 a month. I have electrical heating and refuse to use the AC.

Internet + sub basic cable = 81 and change a month. That is based on a 30 day month, they charge me less in February and more in 31 day months.

Telephone 30 and change.

Maintenance medication.

Son 20 a month

Daughter 20 a month

Wife 50 a month

Self 0 a month but that's because I am the only one not even slightly ensured so they would cost me 400

Now we are at 249

I started buying my daughter a cello before I lost my 19.62 an hour job, that is 31 a month.

Gasoline costs between 100 and 125 a month. I'll call it 100

That leaves me with 118 a month to feed 4 people not counting clothing (most of it we get by way of donation) cleansers, personal grooming items, vehicular maintenance, etc etc. Thank whatever that I stopped smoking and started vaping so I'm only spending 10 a month and decreasing.

To stay politically active I depend the charity of those less articulate with the same ideals.

EBT still doesn't cover what I need for food here so...

My wife goes to a food bank only collecting for 3 so that they don't know I am involved. They wont let collectors volunteer because they don't want to give the impression of working for food. When we first realized that we needed the help I was already giving them 8 hours a week.

It is sad. If I stopped volunteering, we could get an extra 50 lbs every 2 months.

Stop letting the banks, corporations and welfare frauds have a free ride and I could survive without EBT and food banks. And don't tell me to put my children at risk and receive an even shittier education so I can have lower rent.

I like this, but what does lower rent have to do with shittier education?

[Destroit]

And here I thought you were proud of its ghettoness

Ghettoness is fun when you're in a car driving through it, or doing some urban exploring. But when you live in it, and the ghettoness is not intentionally decorative, it wears on you day after day. The inside of the house is the only real thing that bothers me, the outside looks a little warn, and the backyard could use more sprucing (landscaping never ends anyway, so that's an ongoing project), but it's coming along better than the interior . I was also able to get a massive flower garden going out front this year, and a decent crop garden in the back. We don't have a single patch of grass in the backyard, but that's cool, because then I don't have to cut it.

It's exciting though, waking up and thinking, "...I wonder wtf will go wrong with my house today?" Current issue at hand is that the bathroom floor is caving in, and we have a basement, so that is going to be really interesting to watch progress until I can get the time and cash to fix it .

Edited August 27, 2011 by Chernobyl

[Fierce Critter]

My budget wasn't a choice...

OT, but related - the argument I tend to see from uber-conservatives is if your budget sucks, it's because you are lazy or made poor life decisions.

Somewhat related to the discussion at hand, a teensy bit.

That sort of viewpoint is one reason I stopped involving myself in discussions of topics like this. Not that I haven't tried offering evidence that that's not what a person's lot in life all boils down to. I have. But some people just don't want to believe not EVERYONE can make the American Dream happen for themselves just be deciding that's what they want to happen.

[Vater Araignee]

I like this, but what does lower rent have to do with shittier education?

The worse the area the lower the rent. The worse the area the lower the education quality.

Of course there is the occasional school the breaks the rule, good luck finding it.

[Destroit]

The worse the area the lower the rent. The worse the area the lower the education quality.

Of course there is the occasional school the breaks the rule, good luck finding it.

That would be true, if every reputable school wasn't a school of choice. So you're wrong on that.

Edited August 28, 2011 by Chernobyl

[phee]

OT, but related - the argument I tend to see from uber-conservatives is if your budget sucks, it's because you are lazy or made poor life decisions.

Somewhat related to the discussion at hand, a teensy bit.

That sort of viewpoint is one reason I stopped involving myself in discussions of topics like this. Not that I haven't tried offering evidence that that's not what a person's lot in life all boils down to. I have. But some people just don't want to believe not EVERYONE can make the American Dream happen for themselves just be deciding that's what they want to happen.

+1

[creatureofthenyte]

If the corporate tax rate in this country wasn't as high as it is now, then more companies would have money for their payroll.

Then they could Hire more people, yes you heard right, more available Jobs.

The solution is Not more funding for food stamps.

A Nanny state nation is Not sustainable. <--this is why so many other countries hate us when we visit them on vacation; a lot of Americans have an overdeveloped sense of entitlement.

If you say I'm not compassionate for saying this, I say that it was even More un-compassionate to raise taxes on companies so much that they are forced to lay people off, which put people into the situation in which they need food stamps.

The federal government is Broke. 42 cents of every dollar they spend, is borrowed. We CAN'T AFFORD anymore spending, and the spending we're doing now is Not sustainable.

The government can Not Tax their way out of this.

The bottom line is: lower taxes on businesses = more available payroll = More Jobs for people = less need for food stamps = Economy out of the crapper.

Higher taxes on businesses= less available payroll = Less Jobs for people = more people on food stamps = Economy in the shitter.

I find it highly ironic when Lefties say Tax the rich, they demonize the "rich" and yet a lot of these "rich" people are the ones that sign Their Paychecks.

I also find it ironic that Lefties demonize the rich, and yet they take huge wads of money from the rich, in campaign contributions, and they don't scoff then...

[Slogo]

^ I don't think the "Corporate tax rate is too high really works" Do you remember the 90's? When was a whopping 3 percent higher than it is now. If I remember correctly we had a somewhat decent economy at that point. Or how about the 1950's. We had a big bada booming economy then and the corporate tax rate hovered around 90% thanks to the great American socialist leader Dwight Eisenhower.

We were told last winter "If we keep the tax cuts for the rich, we'll see huge job growth". So...where is it?

[phee]

The bottom line is: lower taxes on businesses = more available payroll = More Jobs for people = less need for food stamps = Economy out of the crapper.

Higher taxes on businesses= less available payroll = Less Jobs for people = more people on food stamps = Economy in the shitter.

I find it highly ironic when Lefties say Tax the rich, they demonize the "rich" and yet a lot of these "rich" people are the ones that sign Their Paychecks.

I also find it ironic that Lefties demonize the rich, and yet they take huge wads of money from the rich, in campaign contributions, and they don't scoff then...

The flaw in the bottom line here is that one assumes that with lower taxes on corporations you are assuming a few things...

1.) You are assuming that the corporations will put this into a payroll for their employees and NOT into their own pockets and bonuses... while this might be true for SOME businesses, history has shown that this usually does not happen on any large scale, the CEOs (not all of them but far too many of them) will often give themselves millions if not billions of dollars in treats, yachts, etc... and STILL end up kicking the employees to the curb to get more... Taxing them while FAR FROM ideal at least puts money back into the system and not into the off shore accounts, mistresses, and to the pay out money to their assorted politicians that they buy to GET MORE TAX BREAKS. (Sadly it is sort of a downward spiral... the more breaks they seem to get the more they can buy out government officials to get more breaks...)

2.) Let's say they do add it to payroll... that would be great if they added it to payroll here in THIS COUNTRY... the problem is that (far too often) when they do have some kind of surplus, they use it to build factories over seas, where they can pay employees a dollar a day instead of creating jobs over here. I would love to think that there is some sort of deeper meaning or higher good in the minds of those who run a lot of these places... where they say "Oh the government is giving us a break on taxes... let's open a factory in Nebraska instead of Saipan!" But usually it turns into "Oh the government is giving us a break on taxes.... let's open 3 factories in Saipan instead of just 1!" It's about profit not about payroll.... companies by their very nature will look at the bottom line of the margin, and it is naive to think otherwise. (IT IS EQUALLY NAIVE to think that everyone who gets's government aid actually needs it).

3.) It makes it very easy for "Lefties" to demonize the rich, when the rich act so friggen DEMONIC... stealing money and destroying lives... But of course I don't think it is a left vs right thing... I think it is simply a matter of corruption vs non-corruption. I think both main political parties are pretty shady... but ones policies seem to look out for the benefit of the the population as a whole, instead of just the top 2%. But putting some money back in the hands of your average consumer makes sense... if a family is not starving and living check to check, and worried about how to buy their next packet of Ramen... big surprise, they can buy more stuff! And when they can buy more stuff... more stuff gets made! And when people have more money to spend they can make the choice to "buy American" instead of always having to go for what they simply need to make it to the next day... more people buy American means more jobs here... and all of a sudden, the CEO sees it is not in the best interest for his company to build a factory in Saipan after all, because no one is buying their crap made there... they end up building it in Nebraska after all!

4.) I can fully understand the temptation to use terms like "Lefties" or "Righties" (Although I don't think I have heard the "lefties" use that term before)... To pigeon hole the issue into a one side vs another kind of dynamic... But history has shown that giving the rich and powerful tax breaks... and cutting the benefits to the poor and giving them to the rich DOES NOT WORK (I think most of us can agree that "trickle down economics" does not work yes?) And we can also agree that utterly destroying the rich does not work either... what we seem to forget here is the BALANCE that is needed to make this happen... If the left's main ideal is to "Help out everyone equally, including those who are in tough times." And the right's main ideal is "To encourage people to take care of themselves and become successful" Than I don't see why the ideas can't co-exist.... HOWEVER I don't think either side is living up to those ideals very well... It would appear (TO ME) that these days the right's ideal is to "protect the rich and powerful at all cost, while trying to ignore the problem of the poor, with a healthy helping of forced morality in the bedroom, classroom, and religion." And the left just seemed to have dropped their ideals for a "Not in the face! Stop hurting me please! we will give you whatever you want, just don't take our lunch money!" Then that balance cannot and will not happen.

*pant pant*

Wow... long post for me.

[taysteewonderbunny]

Wow... long post for me.

Long....and epic! Loved it. [i need more than one +1 votes each day. Five would be nice. That way I could "+1" two political posts, one clever wordplay, one catty remark, and one solid piece of advice, daily. That, I'd like.]

Rather than the general business tax breaks, I'd like to see those cuts better directed so that they don't get abused. I think tax clemency for businesses should be directly related to the number of Americans they keep in their employ at salaries that can sustain a family.

[phee]

Rather than the general business tax breaks, I'd like to see those cuts better directed so that they don't get abused. I think tax clemency for businesses should be directly related to the number of Americans they keep in their employ at salaries that can sustain a family.

Now there.... is a progressive idea I can get behind... kudos.

[Fierce Critter]

I think tax clemency for businesses should be directly related to the number of Americans they keep in their employ at salaries that can sustain a family.

Bravo.

[phee]

Of course.... how cynical I am.... I think it would only be a matter of time until the corrupt corporations find a way to cook the books and fake the records so their army of sweatshop workers shows up to the IRS as "Americans" and they get their tax break anyway... *sigh*