March 28, 2011- Many people might think that the country's problems stem from the fact that too much money has been going to the very rich. Over the last three decades, the richest 1 percent of the population has increased its share of national income by almost 10 percentage points. This comes to $1.5 trillion a year, or as the deficit hawks are fond of saying, $90 trillion over the next 75 years.
To put this in context, the size of this upward redistribution to the richest 1 percent over the last three decades is roughly large enough to double the income of all the households in the bottom half of the income distribution. The upward redistribution amounts to an average of more than 1.2 million dollars a year for each of the families in the richest 1 percent of the population.
And this upward redistribution was brought about by deliberate policy. We pursued a trade and high dollar policy that was intended to put downward pressure on the wages of manufacturing workers. The Federal Reserve Board deliberately kept unemployment higher than necessary in order to weaken workers' bargaining power. We extended patent monopolies to allow drug companies to jack up prices, raking in hundreds of billions a year. And, we gave the Wall Street banks the benefit of "too big to fail" status so they can borrow with a government subsidy.
These policies and others fueled this enormous upward redistribution. But the deficit hawks don't want us talking about any of these things.
The deficit hawks insist that we have to cut Social Security and Medicare benefits now! They are busy hyperventilating over the enormous deficits, which are the result of the economic collapse, which was in turn the result of their economic mismanagement. (Wait, we are not supposed to talk about that.)
And the deficit hawks have clear ideas on how they want to deal with the costs of Social Security and Medicare over the coming decades. And it does not involve taking money from the tiny group of wealthy people who have profited enormously at the expense of the middle class over the last three decades?