While various right-wing pundits have derided the recent Occupy Wall Street protests, this new movement is giving voice to entirely valid grievances. Why does our allegedly democratic government seem to wildly favor the richest 1 percent over the other 99 percent? In what way is that “democratic”?
First, there is the problem of ever-increasing income inequality. The richest 1 percent own 50 percent of American stocks and bonds, earn more than the bottom 40 percent combined, and now control more wealth, percentage-wise, than at any time since the 1920s. (And that wealth disparity contributed to the Great Depression.)
The current wealth and earnings disparities have come largely at the expense of the middle class. From 2001 to 2007, incomes of the top 1 percent increased by 60 percent after inflation, while the median income fell.
But the young and poor have been even harder hit. Nearly 6 million young adults lived with their parents last year, up from fewer than 5 million before the recession. Households headed by persons under age 25 experienced the largest income decline last year, falling more than 9 percent. Incomes of households in the bottom 20 percent last year fell by 5 percent, more than six times as much as those of households in the top 20 percent.
This rising inequality comes at a time when it's increasingly hard to move from one income class to another. The American Dream depends on the ability of enterprising workers to get ahead, but that requires a level playing field, which no longer seems to exist.
Meanwhile, the tax rates paid by millionaires declined from around 31 percent in 1995 to about 22 percent in 2009, thanks to cuts enacted by the George W. Bush administration, which Republicans seem determined to maintain, at any cost. And reduced tax rates on capital gains are further padding the wallets of the super-rich, since the 400 richest Americans derive two-thirds of their incomes from investment profits. Their capital gains taxes plummeted from 30 percent in 1995 to 18 percent in 2008. That’s a walloping 40 percent tax cut on their major source of income.
Furthermore, the $1.1 trillion we spend every year in the form of special tax exemptions, credits and deductions is yet another boon to the wealthy. They can find all sorts of loopholes because our system of tax breaks is designed to benefit those who need them the least.
The rich also exert an undue influence on elections. The average House campaign costs approximately $1.4 million, while the average Senate campaign costs six times as much, according to the Center for Responsive Politics. About three-quarters of all campaign contributions come from well-heeled individuals or from political action committees backed mostly by corporations, business associations and lobby groups.
Money buys access and the main special interest group, by far, is the combined financial services, insurance and real estate industries. Through PACs and individual donors, those sectors gave nearly 20 percent of political donations from 1990 through 2010. They also spent more on lobbyists than any other industries. Since this same unholy trinity crashed our economy in 2008, then got bailed out in 2009, the Occupy Wall Street protesters seem to have a point when they claim the bottom 99 percent are being played for suckers.
Meanwhile, Republicans want to either jettison or hobble Social Security, Medicare and Medicaid, which they demonize as “entitlements,” ignoring the fact that the vast majority of Americans must depend on them the day they are no longer able to work. Republican presidential candidate Rick Perry has compared Social Security to a criminal Ponzi scam. The Republican right wing works constantly and energetically to eliminate or weaken unions, the EPA and Planned Parenthood, while blocking or stonewalling every attempt of the Obama administration to help people in dire need, by asking the super-rich to help shoulder their share of the load.
Americans are entirely within their rights to demand a level playing field, and the Occupy Wall Street protesters have legitimate grievances. We live in a democracy, so if the 99 percent ever open their eyes and vote accordingly, the right-wing lackeys of the super-rich 1 percent may find themselves out of office, and at the end of an increasingly long unemployment line.
(Editor’s note: Gadi Dechter, the associate director of government reform at the Center for American Progress, provided the facts and figures cited in this piece.)