“Inheriting a Legacy of Misplaced Priorities”

Chuck Sheketoff

The word change was repeated so often by so many candidates of every political persuasion during the fall campaign that one might be forgiven for turning a deaf ear to it, even for becoming cynical.

Starting with enactment and signing of the State Child Health Insurance Program, the evidence is accumulating that we may be witnessing the birth of a new era in American politics.

The item that most recently (today!) and most vividly grabbed my attention came right after the President’s message in President Obama’s just-released first budget, A New Era of Responsibility, Renewing America’s Promise (PDF; 140 pages, 1.8 MB). These 12 pages, titled “Inheriting a Legacy of Misplaced Priorities” (PDF; 163 KB), succinctly state much of what has led us to the economic mess in which we find ourselves.

Particularly on point and refreshing to read in such an important document is the discussion on the corrosive effect of economic inequality:

Growing Imbalance: Accumulating Wealth and Closing Doors to the Middle Class

For the better part of three decades, a disproportionate share of the Nation’s wealth has been accumulated by the very wealthy. Technological advances and growing global competition, while transforming whole industries—and birthing new ones—has accentuated the trend toward rising inequality. Yet, instead of using the tax code to lessen these increasing wage disparities, changes in the tax code over the past eight years exacerbated them.

According to the Internal Revenue Service, the Nation’s top 400 taxpayers made more than $263 million on average in 2006, but paid income taxes at the lowest rate in the 15 years in which these data have been reported. In constant dollars, the average income of the top 400 taxpayers nearly quadrupled since 1992.

It’s no surprise, then, that wealth began to be ever more concentrated at the top. By 2004, the wealthiest 10 percent of households held 70 percent of total wealth, and the combined net worth of the top 1 percent of families was larger than that of the bottom 90 percent. In fact, the top 1 percent took home more than 22 percent of total national income, up from 10 percent in 1980 (see Figure 9, Top One Percent of Earners). And these disparities are felt far beyond one’s bank statement as several studies have found a direct correlation between health outcomes and personal income.

There is nothing wrong with people succeeding and making money. But there is something wrong when the opportunity for all Americans to get ahead, to enter the middle class, and to create a better life for their children becomes more and more elusive. That is what has been happening: The ladder into the middle class and beyond has become harder and harder to climb. The American dream has slowly slipped beyond the grasp of millions as we have deliberately ignored the very investments in our people that strengthen the middle class and neglected the drivers of economic growth that will sustain our economy for the long run.

While the wonk in me says “read the budget,” the practical side of me says “just read the introductory chapter Inheriting a Legacy of Misplaced Priorities (PDF). There's lots of good stuff in those 12 pages. It will help cure your cynicism.

By Chuck Sheketoff Feb. 26, 2009