Where We Are Today
This is the third installment in a series by former Governor Mario Cuomo.
We live in the strongest nation in world history, where ten generations of seekers and strugglers from other lands have enjoyed a success they probably would have been denied in the place they or their forebears came from. We are however still far from being all that we could be for ourselves and for the rest of the world if only we managed our resources and opportunities more wisely.
We need to start a new era of opportunity in America particularly for the middle class and poorer population, going back to the kind of enlightened ideas that spurred our progress in the past by uniting us instead of stalling progress by a return to our first century elitism. The failure to do so has been particularly apparent in the first years of this 21st century. Only seven years ago it appeared that we had the wherewithal to correct major problems and to move boldly up the ladder to a richer, stronger and more inclusive union. When George W. Bush was elected in 2000 we had just completed eight years of economic growth, the four best years in market history, the creation of 22,000,000 new jobs, a balanced budget, a potential $5.4 trillion surplus, an ascendant middle class and a shrinking poor population. All of that progress has been reversed. Job creation is weaker, we have record setting deficits, a growing poor population and a middle class that is sliding backwards…although we do have more millionaires and billionaires than ever.
Measured by traditional econometrics, the current economy is said to be “growing.” That’s good, it means there is increasing production and distribution of goods and services and consumption of them at a profit that benefits owners of businesses and shareholders. What those econometrics do not tell us however, is whether the jobs that are created are here or overseas and how much most Americans are benefited as a result of our growing economy. In fact, it is an economy that has been wonderfully rewarding for high level corporate executives and big stockholders but not for most other Americans. If consumerism is high it is because people are spending more than they earn: they have a negative savings rate and are increasing their debt dangerously.
This regrettable reality is apparent from the numbers. It is described brilliantly in two books by the highly respected Republican analyst and commentator Kevin Phillips (The Politics of Rich and Poor and Wealth and Democracy), as well as in numerous publications in recent days. In the past 25 years median family incomes have risen by less than one percent a year—for a total of 18 percent overall—but median incomes for the top one percent have gone up more than 10 times faster—by an astounding 200 percent creating a widening gap between the richest and the poorest Americans. In 1980, CEOs were paid about 42 times as much as the average worker, in 2005 it was 411 times the average worker. We are in the midst of the first sustained period of economic growth since World War II that fails to offer a prolonged increase in real wages beneath the highest paid workers.
Most American workers are falling behind in part because so few are prepared to compete in the most lucrative areas of today’s economy: only one-in-four of our workers is “high skilled” (equated to four years of education beyond high school) and only about two-thirds of American teenagers graduate with a diploma after four years of high school. Meanwhile China is swiftly closing the education gap with this country and with respect to math and science is out-doing us, increasing their “skills” advantage over the United States. Our white collar professionals are beginning to understand the problem as well: their jobs are also disappearing. American workers have the right to expect that our country – through our government, as well as the private sector - will help deal with this problem since the market alone is failing to do so. At the very least that will require adequate education of our workers.
While the White House focuses on the gimmick-ridden mantra of “No Child Left Behind” generating expectations without the revenues to fund them, our elementary and secondary public schools in low-property-value areas are failing and a college education is growing increasingly out of reach for many middle class and poor students. We have lost our scientific and engineering competitive advantages and American employers are forced to import thousands of skilled workers from other countries or to outsource work not only to China but to countries like Ireland and India who produce more skilled workers than we do.
At the same time, the costs of healthcare, education, retirement security, transportation, housing and energy are growing far faster than the income of most working Americans.
And further down the ladder we have more poor than we had five years ago. Today, it is rare for a political candidate to make the plight of our desperately struggling brothers and sisters a major campaign issue. Apparently most candidates believe the poor just don’t help win elections. That’s especially regrettable because thirteen million of them are children deemed to be at risk of poverty, illiteracy and abuse. Some of them live in ghettos surrounded by pimps, prostitutes, drugs and violence and grow up familiar with the sound of gunfire before they’ve ever heard an orchestra play. Without adequate education their chance for economic self-sufficiency as adults is virtually nil.
In addition, we have corrupted the flow of desirable immigrant workers into our nation. As legal immigrants are forced to wait for years to become citizens, twelve or more million illegal aliens who have been allowed to ignore our laws of entry take lower level jobs and are often forced to live in squalor because the nation tough enough to declare wars preemptively has not been strong enough or smart enough to protect its own borders or accommodate adequately the undocumented workers already here.
Our fiscal situation has impaired our ability to deal with these problems. Together with our huge record trade deficits – more than $200 billion with China alone - budget deficits and debt put great pressure on our weakened dollar which helps us sell products but also makes us vulnerable because of our need to borrow huge amounts from China, Japan and other foreign interests. In November of 2005, Goldman Sachs Group, Inc. predicted five trillion dollars in deficits over the next decade. The President responded by proposing huge reductions in programs for the great majority of Americans, the middle class and the poor, including Medicaid, mentoring for at-risk children, food stamps, police who are badly needed especially in poorer urban areas, child support and job training. At the same time the President asked that tax cuts for the already wealthy top ten percent of earners rise more than $74 billion annually, in addition to the reductions they have already received. This continued a trend toward a less progressive tax system. Taxes for the well to do are lower today then they have been in 60 years!
On January 31, 2007, President Bush finally admitted that our “strong” economy was also producing an undesirable and hurtful level of income inequality...then he offered Congress a budget that would make it worse. He claimed that by 2012 – 5 years from now – his proposals would produce a budget surplus. But, if enacted, he would have given 73 billion dollars in tax cuts for millionaire households, while cutting 34 billion dollars worth of programs for middle class and poor Americans, including cuts to SCHIP, the child health program for moderate income families.
We should take note that many of these problems have occurred at a time we are being told we have a strong and growing economy. That makes it clear that no matter how hard we try to find solutions from our market system – which should always be our first recourse – government support will also be needed. Record-setting budget deficits and debt impede that government help but, [ as I will discuss later this week, they need not deny it entirely.
Not everyone agrees that government should intervene to help us with these problems. For example, Republican candidates for President are telling their Conservative constituents they are opposed to using government to help fill the 47 million-person gap in health care coverage because they fear “socialized” healthcare. They say the only good solutions to the problem are private sector market solutions relying on giving our insurance companies and HMO’s more business. That’s what Conservatives have always said about health care, Social Security, Medicare and Medicaid. What they appear to forget is that we had depended on the market system for nearly 200 years before government acted to deal with these problems, and for nearly 200 years poor people died sooner than they should have, retirement meant banishment to dire poverty for millions of our workers and people lived in pain because they couldn’t pay the market its price for decent health care.
Even now, the health care private sector market is working. HMOs and insurance companies are getting rich while 47 million people go without health care insurance, praying their malady is nothing worse than a cold and others struggle to find enough money to pay for their prescriptions.
Lincoln was right. Good government was made for moments like this.
Especially when added to the terrible tangle of foreign policy issues, the lack of proportionality and apparent unfairness in our economy have confused, frightened and angered many Americans. We need and deserve answers from our political leaders that are honest, clear and sensible and that will unite us as a people instead of pitting us against one another. And our candidates must be willing to face the challenge of explaining the truth to voters and the American people, especially when other political forces have been successfully “conning” the voters for years as they have with respect to taxes.
Conservatives have done a good job of getting many Americans to believe every tax cut is good and every tax increase is bad no matter who the recipients are in either case. For those who are familiar with the truth, it’s apparent that some of the Bush tax cuts have been excessive and unfair. We cannot afford to have so called leaders who know that truth but are afraid to speak it because they believe voters are not sufficiently educated or their opponents are too good at dissembling for the truth to be made clear. (More on this subject in the days to come.)
Our leaders should start a new national discussion by making clear what most Americans want and expect for themselves and for all Americans in the 21st Century. Much of what we want we used to be able to take for granted: the assurance that education, hard work, integrity and risk-taking would guarantee economic success. Restoring that basic expectation will require that we deal with all of the situations that I will address over the next few days.
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Posted at 6:21 AM, Sep 12, 2007 in Economy | Fiscal Responsibility | Foreign Policy | Government Accountability | Governmental Reform | Middle-class squeeze | Tax Policy
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