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Entries since February 2012Page Previous 1 • 2 • 3 • 4 Next
February 15, 2012 · By Sarah Anderson
I had the opportunity to testify on inequality before the Senate Budget Committee last week. No one seems to recall the last time the committee devoted a whole hearing to this issue. So you can add this to the signs of the Occupy movement's impact on our political discourse.
Here's a link to my written testimony. My oral statement is below.
On the Democratic witness side, I was joined by two excellent economists: Jared Bernstein, who served as Vice President Biden's economic adviser and is now with the Center on Budget and Policy Priorities, and Heather Boushey from the Center for American Progress. Jared gave an incisive summary of recent inequality and mobility trends, while Heather focused on some of the most disturbing impacts of extreme wealth concentration on health care, education, and other key middle class indicators.
The Committee's Ranking Member, Senator Jeff Sessions, and Republican witnesses tried to raise doubts about the inequality data, questioning whether things were really as bad as they look. I didn't envy them the task of being an inequality denier in the face of overwhelming evidence to the contrary. See below for the video and script of my remarks:
Oral Testimony of Sarah Anderson Before the Senate Budget Committee, Feb. 9, 2012
Thank you very much for this opportunity. I believe inequality is the pressing issue of our time, and I applaud the committee for giving it this level of attention.
Let me begin by emphasizing the good news, which is that our nation has tackled this problem before. A century ago, we had extremely high levels of inequality comparable to those we are seeing today. But over several decades, policymakers managed to use fair taxation and effective social programs to build the world's strongest middle class. And there is much we can learn from that experience.
At the Institute for Policy Studies, we have particular expertise in one key driver of inequality that has not yet been mentioned -- and that is executive compensation.
For nearly 20 years, we've tracked the upward spiral in CEO pay. My written testimony includes several indicators. Let me just mention that the ratio between CEO and worker pay has risen from 42-to-1 in 1980 to 325-to-1 in 2010 and average S&P 500 CEO pay is about $11 million.
Beyond contributing to inequality, excessive compensation is a problem because the chance of hitting such massive jackpots gives executives incentives to behave in ways that may bump up short-term profits and their own paychecks, while undermining our nation's long-term economic health.
In our annual Executive Excess reports, we've looked at corporate behaviours such as tax dodging, mass layoffs, reckless financial activities, and offshoring jobs. All of these appear to boost CEO pay. But they have dealt one body blow after another to the American middle class.
Policymakers should also be concerned about executive pay because extreme inequality within firms is simply bad for business. It is now well-documented that when companies have massive gaps between their top and bottom earners it hurts employee morale and productivity and increase turnover rates.
Congress has taken some recent steps to rein in executive pay and I'd like to highlight two:
The first is the provision in the Dodd-Frank financial reform legislation that requires all U.S. corporations to report their CEO-worker pay ratios, which could encourage corporate boards to narrow these gaps. Unfortunately, there's been intense backlash from lobby groups representing CEOs, and the SEC has delayed this important transparency measure.
The second executive pay reform I'd like to highlight is a little-known provision in the TARP bailout bill that capped the tax deductibility of executive compensation at bailout firms at $500,000. A similar provision was included in the health care reform legislation for insurance companies. If such deductibility caps were extended to all U.S. corporations it would fix a loophole that encourages excessive pay. As it is now, the more they pay their CEO, the more they can deduct from their taxes.
Beyond the issue of executive pay, we clearly need a broader agenda to reverse extreme inequality. If you look back at the previous era, it's clear that one of their most important tools was progressive taxation.
In my written testimony, I have three charts that look back over the past century, showing that the decades of the highest top marginal tax rates were also the decades of the lowest levels of inequality and the highest GDP growth rates.
I end with seven tax reforms that could get us back to healthier levels of inequality. I'd like to highlight one that deserves more attention. This is the idea of placing a small levy on trades of stocks, derivatives, and other financial instruments. Such a financial transactions tax could both generate substantial revenue and discourage the short-term speculation that has driven up financial sector pay while contributing little to the real economy.
In conclusion, I want to acknowledge that reversing extreme inequality will be a long-term challenge. But we have transformed a highly divided nation into a more stable and equitable society before. And we can certainly do it again. Thank you.
February 14, 2012 · By Karen Dolan
Mitt Romney said it this way:
"I'm not concerned about the very poor. We have a safety net there. If it needs a repair, I'll fix it. I'm not concerned about the very rich, they are fine....I'm concerned about the very heart of America."
President Barack Obama said it this way:
"We can restore an economy where everybody gets a fair shot, everybody does their fair share, everybody plays by the same set of rules — from Washington to Wall Street to Main Street. That’s the America we believe in."
Both want to appeal to a hurting middle-class electorate. Only one has a populist message with appeal and effect. He most likely will win re-election in 2012.
Obama's $3.8 trillion 2013 budget proposal, with its 10-year outlook, is by design a populist campaign tool. Though not politically viable now, his newly released budget is critically important in this election year both for the values it reflects, the vision it promotes and the potential it promises.
Obama's budget has a populist tone, appeals to the middle class, and has some good proposals, both on investment and revenue-raising. But it also reflects the strict spending caps mandated this past summer by the Budget Control Act and hits some struggling families hard. It doesn't go nearly far enough in revenue-raising. For instance, it does't propose a tax on financial transactions that would curb Wall Street's worst speculation or propose significant corporate tax reform that would actually raise needed funds. And, by reducing non-security discretionary spending from its current 3.1 percent of GDP to a 50-year low of 1.7 percent over the next decade, a lot of pain will set in when the populism starts to wears off.
Let's start with the good. Among the good proposals on investment side:
- The extension of the payroll tax cut and unemployment benefits through the end of 2012.
- School modernization and plans to retain teachers and first responders.
- Project Rebuild which helps to match unemployed in distressed communities with those communities' infrastructure needs.
- A small business tax credit that incentivizes new hiring.
- Increased child care funding.
- Improvements in Earned Income Tax Credit and Child Tax Credit.
- Tax incentives for manufacturers that keep and create jobs here in the United States.
- A National Infrastructure Bank that would fund projects that increase sustainable transportation and infrastructure investment.
- A total of $850 million in Race to the Top education proposals intended to improve the quality of education from early childhood through higher education.
- Efforts to make college more affordable through sustaining Pell grant funding, keeping interest on student loans from increasing, and reining in tuition hikes.
- A 7 percent increasing in new biomedical research grants.
- Support for a more sustainable economy through goals of increasing electric car production, doubling the share of "clean energy" electricity sources, and reducing the energy consumed by buildings by 20 percent by 2020.
And, among good proposals on the revenue side:
- Support sustainable energy and environment innovations by eliminating 12 tax breaks to the oil, gas, and coal industries by $41 billion over the next 10 years.
- Spend $487 billion less on the military over the coming decade.
- Make the "Buffet Rule" law, ensuring that millionaires pay a 30 percent tax rate on un-earned income.
- Let the Bush Era tax cuts for families making over $250,000 a year expire.
On to the bad. Here are some aspects of Obama's proposed budget that aren't as good as they might first seem:
- According to the Citizen's For Tax Justice, although the Obama plan proposes revenues from letting Bush era tax cuts expire for couples making over $250,000, it makes permanent 78 percent of the Bush tax cuts at a cost of $3.4 trillion over the next 10 years.
- Obama's proposal to replace the Alternative Minimum Tax with the "Buffet Rule" may not produce any new revenue at all.
- Details remain undisclosed about corporate tax reform proposals, but Obama has suggested they will be revenue-neutral. How is that a good thing?
- Even with this modest reduction in Pentagon spending, Obama's budget proposal still leaves an extreme imbalance between military and non-military spending.
Now, for the Ugly: Last year's Budget Control Act mandated $1 trillion in discretionary cuts. Much of that must come from programs that low-income people rely on for critical human needs. After a hard year of cuts in 2011, this budget proposal calls for a devastating 14 percent cut in social spending. Here are some examples where cuts occur:
- Health care services, career opportunities programs for low-income people.
- Children's mental health services.
- Housing for disabled people.
- Housing for people with HIV/AIDS.
- Rental Assistance benefits for low-income people.
- Home heating assistance for low-income people.
- Community Development Block Grants which help to fund critical human need services.
- Programs in the Environmental Protection Agency.
- Programs in the National Park Service.
This budget proposal will appeal to the middle class and puts Obama in a more popular position than Romney as the 2012 presidential election season heats up. But while this budget has the populist thrust of cutting long-term deficit and debt by attempting to balance spending cuts and revenue increases, it falls short. It bolsters some needed programs, but unnecessarily defunds others. By not calling for all of the Bush era tax cuts to expire, not calling on Wall Street to pay its fair share through enacting a small levy on speculative financial transactions, not cutting military base and war spending deeply enough and not calling for the kind of corporate tax reform that will produce revenue, Obama is letting the 1 percent off rather easy, while the rest of us, especially the poor, shoulder the pain.
February 13, 2012 · By Emily Schwartz Greco
In this week's OtherWords editorial package, Salvatore Babones makes the case for boosting Social Security benefits instead of cutting them and Bartlett Naylor calls on the government to fulfill a commitment to curb reckless behavior on Wall Street. Get all this and more in your inbox by subscribing to our weekly newsletter. If you haven't signed up yet, please do.
- The Real Social Security Crisis / Salvatore Babones
It may be difficult to face facts in an election year, but the fact is that Social Security retirement benefits are just too low.
- Black Women Make History Too / Martha Burk
Coretta Scott King was MLK's equal partner.
- Risky Business / Bartlett Naylor
Astronomic compensation remains the norm on Wall Street.
- Politics, Perpetrators, and the Plight of Women / Allyson Neville-Morgan
Angelina Jolie's "In the Land of Blood and Honey" is an important reminder that the international community can't forgo its responsibility to respond to genocide.
- Un-Presidential Primaries / Donald Kaul
Despite the Santorum speed bump, it seems certain now that Mitt Romney will be the eventual nominee.
- The Chief Twinkie Goes Ding Dong / Jim Hightower
After sinking into bankruptcy, Hostess Brands is trying to squeeze its workers without disrupting its junk food sales.
- Racist Double Whammy / William A. Collins
African Americans are disproportionately impacted by the Great Recession and the Great Disenfranchisement.
- American Roulette / Khalil Bendib
February 12, 2012 · By Matias Ramos
Bill Moyers, the journalist and political commentator who first came to prominence as LBJ's press secretary, calls out the plutocracy and recommends Too Much, an IPS newsletter.
In America’s Plutocrats Play the Political Ponies, Sam Pizzigati described how the current electoral process resembles a horse race. "Wealthy connoisseurs of political talent pick a candidate. These wealthy connoisseurs then keep that candidate racing until they lose interest," wrote Pizzigati. You can watch an excerpt from Moyers' new show here:
To get the "Too Much" newsletter in your inbox every Monday, click here.
February 10, 2012 · By E. Ethelbert Miller
On Thursday, February 9, 2012, the George Washington University Library held an event to honor IPS co-founder Marcus Raskin, whose collected papers will be archived at the library's Special Collection Research Center. The collection, titled "THE MARCUS RASKIN PAPERS: Social and Scholarly Activism" will include much of Raskin's work here at our Institute. The following remarks were delivered by IPS Boarc Chair E. Ethelbert Miller at the reception:
There is something special about Marcus Raskin. One becomes immediately aware of this when you hear him playing the piano. If I was a Hollywood writer, Raskin would be one of those individuals in that television series Heroes. He would have a unique gift, not the ability to walk through walls or hear other people's thoughts but the gift and the ability to see the larger pattern in life; to understand the true purpose of being and doing.
For many of us, Marcus Raskin is a hero. He is a visionary. A man who looks at the world and realizes one can change it. For me, he has been a father, teacher and friend. I like how this man thinks. I like how he peels a question, how he bites into it. I like how this man chews a thought; a creative taste lingering on his tongue. When Raskin speaks he often sheds light on the levels and degrees of life.
Last year at IPS we started doing "The Raskin Readings." This consisted of IPS fellows reviewing the work written by Raskin and selecting a few pages in order to lead an afternon discussion. It's amazing how much Raskin has written over the years. I imagine his paper will reveal how certain ideas were formed, matured and took flight. There will probably be items in his papers that show how some of his ideas were too young to go steady.
I think it will be important in the future to admire Raskin as a builder and architect. It will be important to study the man as well as the Institute for Policy Studies.
Why do we save things? Why donate papers?
The past always seems sexier after it undresses. We have a tendency to leave papers and documents behind like discarded clothes. Yet didn't we strut in the old wares once? I wonder what Marcus Raskin's papers will tell us about the 1960s, about nuclear disarmament, National Security, Civil Rights, poverty and social inequality. What will his papers tell us about a year like 1968?
I think we save things in order to determine what should be the blueprint for the future.
I think we save things because life is filled with victories and defeats, and sometimes we confuse the two.
I think we save things because it measures the length - the shadow one person can cast.
We donate papers because we understand the importance of sharing and the hope that what one man might have owned can now be shared with others.
Maybe all of Marcus Raskin's work should be filed under the heading - For The Common Good.
I know he once said:
Winter is always coming, the children are always sick, loved ones are always dying before their time.
Yet, somehow we survive and that is why we donate papers. It is a way of reaching the future.
It is the preservation of memory. With memory comes meaning. This is what the blues singer struggles to achieve. A sense of meaning carved out of the tree of life.
In his book BEING AND DOING published in 1973 by Beacon Press, Raskin spoke of the need to develop a philosophy of reconstruction in politics and public policy. The task of such a philosophy was to break the bounds of absurdity and develop new moods of thought.
Hopefully the material given by Raskin to the Gelman Library will help some future student or scholar develop an analysis that will help create new and better structures not only for institutions but for individuals, for lovers and the sons and daughters of lovers.
What Raskin has done today is plant more seeds. Somewhere ahead of us is the new harvest. Because he has been an excellent teacher and mentor, we know the harvest will be good and the people will be fed.
Let not the present American hunger only find us serving and consuming tea. The life of Marcus Raskin is a song of celebration. Just as Raskin's fingers mastered the genius of many composers, so too might future patrons of this library benefit from his generosity and provide us with a new music and a chorus for change.
There is much Raskin to be read.
Let me conclude my brief remarks by simply saying that the staff here at the Gelman Library is exceptional. There is much good news coming out of this place. It's beginning to feel sacred.
Not far from here, Mahalia Jackson listening to Martin Luther King, Jr at the March on Washington, reminded him to tell the people about the dream. "Tell them about the dream Martin. Tell them about the dream" she said.
This evening as we honor Marcus Raskin, I feel the need to say -
Tell us about your dream Marcus. Tell us about your dream.
For more from E. Ethelbert Miller, visit his blog at http://eethelbertmiller1.blogspot.com/