Monday, November 26, 2007

The American rich get richer, while the middle class shrinks

Billionaires Up, America Down
By Holly Sklar
ZNet Commentary

When it comes to producing billionaires, America
is doing great.
Until 2005, multimillionaires could still make
the Forbes list of the 400 richest Americans. In
2006, the Forbes 400 went billionaires only.
This year, you'd need a Forbes 482 to fit all
the billionaires.
A billion dollars is a lot of dough. Queen
Elizabeth II, British monarch for five
decades, would have to add $400 million
to her $600 million fortune to reach $1
billion. And she'd need another $300 million
to reach the Forbes 400 minimum of $1.3
billion. The average Forbes 400 member
has $3.8 billion.
When the Forbes 400 began in 1982, it was
dominated by oil and manufacturing
fortunes. Today, says Forbes, "Wall Street
is king."
Nearly half the 45 new members, says
Forbes, "made their fortunes in hedge funds
and private equity. Money manager John
Paulson joins the list after pocketing more
than $1 billion short-selling subprime credit
this summer."
The 25th anniversary of the Forbes 400 isn't
party time for America.
We have a record 482 billionaires -- and
record foreclosures.
We have a record 482 billionaires -- and a
record 47 million people without any
health insurance.
Since 2000, we have added 184
billionaires -- and 5 million more
people living below the poverty line.
The official poverty threshold for one person was
a ridiculously low $10,294 in 2006. That won't get
you two pounds of caviar ($9,800) and 25 cigars
($730) on the Forbes Cost of Living Extremely
Well Index. The $20,614 family-of-four poverty
threshold is lower than the cost of three months
of home flower arrangements ($24,525).
Wealth is being redistributed from
poorer to richer.
Between 1983 and 2004, the average wealth of
the top 1 percent of households grew by 78
percent, reports Edward Wolff, professor of
economics at New York University. The bottom
40 percent lost 59 percent.
In 2004, one out of six households had zero
or negative net worth. Nearly one out of three
households had less than $10,000 in net
worth, including home equity. That's before
the mortgage crisis hit.
In 1982, when the Forbes 400 had just 13
billionaires, the highest paid CEO made $108
million and the average full-time worker made
$34,199, adjusted for inflation in $2006. Last
year, the highest paid hedge fund manager
hauled in $1.7 billion, the highest paid CEO
made $647 million, and the average worker
made $34,861, with vanishing health and
pension coverage.
The Forbes 400 is even more of a rich men's
club than when it began. The number of
women has dropped from 75 in 1982 to 39 today.
The 400 richest Americans have a conservatively
estimated $1.54 trillion in combined wealth. That
amount is more than 11 percent of our $13.8 trillion
Gross Domestic Product (GDP) -- the total annual
value of goods and services produced by our nation
of 303 million people. In 1982, Forbes 400 wealth
measured less than 3 percent of U.S. GDP.
And the rich, notes Fortune magazine, "give away
a smaller share of their income than the rest of us."
Thanks to mega-tax cuts, the rich can afford more
mega-yachts, accessorized with helicopters and
mini-submarines. Meanwhile, the infrastructure
of bridges, levees, mass transit, parks and other
public assets inherited from earlier generations
of taxpayers crumbles from neglect, and the holes
in the safety net are growing.
The top 1 percent of households -- average income
$1.5 million -- will save a collective $79.5 billion on
their 2008 taxes, reports Citizens for Tax
Justice. That's more than the combined budgets
of the Transportation Department, Small Business
Administration, Environmental Protection Agency
and Consumer Product Safety Commission.
Tax cuts will save the top 1 percent a projected
$715 billion between 2001 and 2010. And cost
us $715 billion in mounting national debt
plus interest.
The children and grandchildren of today's
underpaid workers will pay for the partying
of today's plutocrats and their retinue of lobbyists.
It's time for Congress to roll back tax cuts for the
wealthy and close the loophole letting billionare
hedge fund speculators pay taxes at a
lower rate than their secretaries.
Inequality has roared back to 1920s levels. It
was bad for our nation then. It's bad for our
nation now.
Holly Sklar is co-author of "Raise the Floor:
Wages and Policies That Work for All of Us" and
"A Just Minimum Wage: Good for Workers,
Business and Our Future." She can be reached at

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