Just a stupid rant

[jon]

I normally don't do this, let alone read this kind of stuff on here. This really isn't an anti-Bush rant. I can't say I really fall in any category as far as being having a liberal stance, I believe in our military and I don't have problem spending money on it, I'm also an environmentalist but I'm realistic in expectations. I supported the war in Iraq, maybe I made a mistake, but I hold hope that things will stabilize in that country and they will embrace democracy and freedom from the dictatorship.

 

My two biggest beefs with the current administrations agenda, or lack thereof, is education and American jobs. Falling into the same category as American jobs is homelessness. I have lived in the Redmond/Bellevue area all of my life and I enjoy living there. Quite a bit has changed in the past 10 to 15 years there, but the parks are still there for me to enjoy, albeit a bit more crowded. One thing I've noticed recently though is the number of homeless people standing at intersections. These are people who are well dressed and quite normal looking. I saw a guy standing at an intersection today, saying that him and his family are homeless and unemployed. It saddens me that there are families homeless while these Tyco assholes appear that they may get a mistrial after buying thousand dollar waste cans, where is fucking Sally Struthers when you need her.

 

Something that has bothered me for quite some time, and before W was in office, was how much money we spend on foreign aid and battles overseas, when our own people are homeless and American children are starving. I find it incredible that someone can dance over our border and get better medical care then one of our vary own citizens. With homeless up 50% under the current administration the problem is only getting worse. I don't have a figure on joblessness in America (where is PP when I need him), but judging from the number of people I know who are out of work and what I hear on the new it is obviously worse. America is all about coming to the need of others and I would never argue that we shouldn't help struggling nations at all, but for instance how much money have we spent on this thing in Haiti and how could have that money been better spent here at home.

 

It seems like every President's, let alone every candidates, agenda includes bettering education, but unless I'm blind I don't see things improving at all. Test scores are still down and schools are still crowded. The cost of higher education is skyrocketing, for instance the cost of the UW has gone up from $1200/quarter five years ago to over $1700/quarter starting next quarter, and this is a public school. How are people in middle to low income families able to afford this college? It seems our solution to our failing education program is to import people from other countries to take our jobs where they take education seriously. India for instance has probably one of most competitive education systems in the world and some of the best schools.

 

Anyways I'm done, I'll get off my soap box, just something I was thinking about today and needed to get off my chest. I'll be honest I don't really know who I'm going to vote for. As Andy Rooney put it best, "you aren't voting for the person you like the most, your voting for the person you dislike the least". Maybe someday America will wake up and get these problems fixed and then we can worry about blowing up other countries.

[Bill_Simpkins]

America needs to wake up. The problem is, no one wants to. It's too much work. It seems impossible, so we just accept it.

[j_b]

sobering: perfectly legal

 

sorry for the long post but here is the complete article for the people who don't want to register.

 

'Perfectly Legal'

By DAVID CAY JOHNSTON

 

Published: February 1, 2004

 

 

n 1977, the richest 1 percent of Americans had as much to spend after taxes as the bottom 49 million. Just 22 years later, in 1999, the richest 1 percent-about 2.7 million people-had as much as the bottom 100 million Americans. Few figures derived from the official government data on incomes present more starkly the growing chasm between the rising incomes at the top and the falling incomes at the bottom.

 

Those in the top 1 percent saw their average income, adjusted for inflation to 1999 dollars and after income taxes were paid, more than double from $234,700 in 1977 to $515,600 in 1999. Meanwhile, the 55 million Americans in the poorest fifth of the population lived in households whose average income fell from $10,000 in 1977 to $8,800 in 1999. The Center for Budget and Policy Priorities, a liberal group that advocates for the poor, calculated these figures from the sophisticated income data that the Congressional Budget Office began collecting in 1977. Studies by other economic research and advocacy organizations made similar findings using other official data. Across the political spectrum, economists found the same basic trend: the rich really are getting richer and the poor really are getting poorer.

 

Looking more closely at the top fifth gives a hint as to how incomes were changing in the last three decades of the twentieth century. Think of a ladder with 100 rungs. The poorest person in America stands at the bottom and the person with the biggest income stands at the top, with everyone else taking their place on the rungs in between.

 

Between 1973 and 2001, those whose income ranked them above 80 percent of Americans but below the richest 5 percent-those on the eightieth up to the ninety-fifth rungs-saw their share of national income rise almost imperceptibly. The Bureau of the Census calculated that in 2001 they earned 27.7 percent of all income, up from 27 percent in 1973.

 

The top 5 percent did much better. Their share of the national income grew by more than a third, from 16.6 percent to 22.4 percent. There is the suggestion of a pattern here, of those at the top of the ladder having so much added income that it is reinforcing their position, holding the middle class in place and squeezing those at the bottom, whose incomes were falling.

 

While the Bureau of the Census did not break the numbers down further, many others did. The National Bureau of Economic Research, the nonprofit organization that makes the official decisions about whether the country is in recession or expansion, published the most extensive analysis. The bureau's president is Martin A. Feldstein, the Harvard University economics professor who was President Ronald Reagan's chief economics adviser. He is a leading proponent of supply-side economics, the idea that economic growth is most likely if taxes on high earners are lowered and more capital can be invested. Economists of every political view rely on the bureau's data and reports because of its reputation for analysis based on facts.

 

Thomas Piketty and Emmanuel Saez, both French economists, wrote a paper the National Bureau of Economic Research published in 2002 that examined in fine detail income and wealth data for the years 1917 through 2000. They relied mostly on the National Income and Products Accounts, the most comprehensive economic data the government collects, and on tax data. Their study focused not on all Americans, but on those who made the most and how they fared compared to everyone else.

 

There are many ways to measure income. First we will consider what Piketty and Saez found about the portion, or share, of income going to people at each income level. That is, how big each income group's slice of the pie was. Then we will examine the average incomes of people.

 

They drew their first line between the top 10 percent and the bottom 90 percent. Overall the bottom 90 percent lost ground. Their share of national income fell from two thirds to slightly more than half. And their average income, adjusted for inflation, was essentially the same in 2000 as in 1970. The average income for the bottom 90 percent in 2000 was $25,035, which was $25 less than three decades earlier.

 

The top 10 percent of Americans had done very well since 1970, or so it seemed at first blush. These 11.3 million households, comprising roughly the population of California, saw their share of national income grow by almost half, from just under 33 percent in 1973 to just above 48 percent in 1998. When examined more closely, however, a curious trend appeared. The figures showed that the higher the income group, the larger the income gains.

 

Piketty and Saez cut off the top 10 steps on the ladder and divided the top 10 percent into ever-smaller segments of the population.

 

They examined those on the rungs from 90 to 95. Their share of the national income was flat. Next came the slightly smaller group between rungs 95 and 99. Their share grew by 19.5 percent.

 

Next the professors sliced off the top rung on the ladder, the top 1 percent or about 1.3 million households, roughly the population of Kentucky. This group earned more than a fifth of all the income in the country. The economists broke the top 1 percent down into ever-finer amounts, into minirungs on the ladder, the smallest of which represented a hundredth of 1 percent, or about 13,400 of the country's 134 million taxpayer households.

 

They examined the bottom half of the top 1 percent. Their share of national income grew by 47 percent, which was more than twice the rate of the group just below them on the income ladder.

 

The professors then looked at those on the minirungs from 99.5 to 99.9. Their share of national income grew even more, rising by 90 percent. Next came those on the minirungs from 99.9 to 99.99, just 120,000 households. Their share of national income more than tripled, growing 227 percent.

 

Finally, the professors examined the very top rung, the richest 13,400 households. These are the people who made more than 99.99 percent of their fellow Americans. They had by far the biggest gains. Their share of national income in the year 2000 was more than five times what it had been in 1970. Back then this elite group received 1 percent of national income, while in 2000 it received more than 5 percent. Even more telling was how it had done compared to those fortunate enough to stand between the ninetieth and ninety-fifth rungs-the top group's share of income had grown almost 1,000 times faster.

 

The average income of all households in 2000 was $42,700, while the 13,400 households at the very top had an average income of $24 million each or 560 times the average. It was not always this way. In 1970 the very top group had about 100 times the average.

 

Clearly the only significant income gains over three decades went to a very narrow slice at the top. After adjusting for inflation, for each dollar of income in 1970 the top 13,400 households had four additional dollars plus a dime to spend in 2000, while the average household in the bottom 99 percent had only eight cents more per dollar.

 

The enormous concentration of income among a very very few becomes even clearer with a simple comparison of income growth between 1970 and 2000. How did the top one hundredth of 1 percent compare to the bottom 99 percent? For each dollar of additional income going to each of those in the bottom 99 percent of Americans the richest each averaged an astonishing $7,500.

 

Applying the National Bureau of Economic Research report to the incomes reported on tax returns in 2000 produces an astonishing result. The 13,400 top households had slightly more income than the 96 million poorest Americans. That is a chasm vastly greater than the liberal Center on Budget and Policy Priorities reported when it said that the top 2.7 million had as much as the bottom 100 million.

 

The data show that slices of the pie have changed, with a few getting a lot bigger share and many getting less. Now let's look at a second way to analyze the data by examining actual incomes, at what Piketty and Saez found about how much money people at each income level made in 2000 compared to 1970.

 

What Piketty and Saez showed from the official government data was that two decades after the promise that lowering tax rates and reducing regulation would benefit everyone, the income gains were flowing straight up to the top of the income ladder. Even the derisive description by critics captured in the phrase "trickle-down economics" was not proving out. At the bottom there was less money for food, shelter and clothing. Four out of five Americans were making less or were no better off in 2000 than in 1970.

 

People in the middle class and even those making more than 95 percent of their fellow Americans were working harder than ever and going nowhere fast. For those on the ninetieth rung of the ladder, average income in 2000 was $90,271, which, after adjusting for inflation, was a one-fourth increase from the $72,320 in 1970. In real terms incomes for those on the ninetieth rung rose at less than 1 percent per year, which was far less than the rate of growth in the economy.

 

Those at the ninetieth rung saw their incomes rise at an annual average of less than $600 per year, compared to about $4,600 annually at the ninety-ninth rung and more than $672,000 annually for the top group, those 13,400 super-rich families.

 

Money, it seems, was made to flow uphill. The great majority of Americans were, at least through 2000, having their pockets flattened or even drained, the value created by their labor flowing in a Niagara of greenbacks not to the affluent or even the merely rich, but to the megarich. But just as the liberals at the Center for Budget and Policy Priorities had understated the chasm between rich and poor, so too did Piketty and Saez.

 

The figures Piketty and Saez used were pretax incomes. But changes in the tax system had vastly expanded the ability of the megarich to save while those making less than $72,000 had their ability to save stripped away by rising Social Security taxes. In 1970, the top income tax bracket was 70 percent. By 2000 it had fallen to 39.6 percent-and it is now just 35 percent. Over those same years, however, the maximum Social Security soared from $327 to $4,724, figures that double if one counts the employer contribution.

 

Internal Revenue Service reports show that from 1973 to 2000, when the Democrats were mostly in control of Congress, Social Security and Medicare taxes grew 82 percent faster than incomes. Because Social Security taxes applied only to the first $76,200 of wages in 2000 (and lesser amounts in previous years), this rising burden fell mostly on the middle class and the upper middle class.

 

The rich got a tax break beginning when their wages passed the maximum subject to Social Security. On dollars above the Social Security ceiling an individual pays 6.2 percent less tax because Social Security is no longer deducted from paychecks. Employers get the same tax break. For the rich, the top 1.3 million households, the Social Security tax was inconsequential.

 

The tax rate on capital gains, the source of more than half of income for the super rich, was 28 percent starting in 1987, fell to 20 percent in 1998 and then was lowered again in 2003 to 15 percent.

 

Over the last three decades of the twentieth century the average income grew modestly, but the share of earnings going to income and Social Security taxes rose. At the same time the super rich saw their incomes skyrocket and, because their tax rates fell, they kept an even higher percentage than before.

 

In addition, the rates at which state and local governments levied sales, property and income taxes all rose in those last three decades, eating into incomes. Those taxes tend to be regressive; that is, they tend to hit harder the lower one's income.

 

Piketty and Saez's facts and figures show us what happened, but they do not say why these changes occurred. Understanding how this happened involves many issues because, in a nation as complex and diverse as America, there are many ways to collar a dollar. Some of these, as we shall see, involved pumping up compensation for those high in the corporate structure, no matter how it affected the company's workers and shareholders. These strategies, in turn, had an important side effect: creating a demand for corporate tax shelters, which helped shift the overall tax burden off capital and onto labor. By 2002, the portion of federal revenues coming from corporations was below 10 percent, down from a third in the Eisenhower years. The demand for tax shelters in turn encouraged an anything-goes morality about hiding money, both corporate profits and individual incomes, from the IRS. Some companies went so far as to renounce America as their headquarters, at least on paper, once they learned that if they used a Bermuda mailbox as their tax headquarters they could earn profits tax-free in the United States.

 

Arranging to have torrents of money flow to a very few pockets also required putting immense pressure on Corporate America's front lines, the employees, to make the numbers demanded from on high. Even if it meant cheating people out of their wages or disability benefits, or foisting costs off onto the taxpayers, corporate managers were driven to produce the results the home office demanded or else join the ranks of the downsized. The cuts in regulatory agencies, and even in many law enforcement agencies, made such thievery easy. When people complained that they had been cheated out of overtime or even regular pay, the agencies had no resources to pursue the cases, even when there was a pattern of abuse by brand-name companies like Wal-Mart and Taco Bell.

 

In all of this, both big corporations and those among the very wealthy who wanted to handcuff law enforcement-at least when it came to stealing by business practice-had as allies their good friends in Congress. Corporate America's effort to mold both political parties to do its bidding was increasingly successful as politicians needed ever more contributions to buy the television ads that got them reelected. Politicians insisted that no one bought their vote with their donation and that was true. But what donations did buy, every politician acknowledged, was access. That access meant that every senator and representative was listening primarily to the concerns and ideas of the super rich, of the political donor class. At the same time the forces arrayed on the other side-unions, consumer advocates and social service charities-had little to give and, except for the unions, were barred by law from making campaign donations.

 

Continues...

[Lars]

[willstrickland]

Not that I agree with the distribution of wealth in our country, BUT:

 

The period you're talking about encompassed one of the greatest bull markets in history. Of course those in the top bracket made alot of money. The average wage adjusted for inflation is about the same, but staple goods are cheaper when adjusted. Even right now, with seemingly sky-high gas prices, we're paying 25-30% LESS on an adjusted basis than in 1981. You can buy a DVD player for 1/4 what a VCR would have cost you in 1980 on an adjusted basis.

 

The other side is that the tax structure has changed pretty dramatically in favor of high earners. This is IMO, a much bigger issue than the simple income discrepancy.

 

As an isolationist, less govt type, I tend to agree with Jon's sentiment that we need to take care of our own before spending on foreign aid. But at the same time I recognize that the return our country may receive on well placed foreign aid or even military intervention can often outperform the return from simply keeping the money at home. A million invested in keeping the Saudi monarchy propped up may easily yield a billion in returns to our country through favorable OPEC influences/pricing. That's a grossly simplistic example, but I trust you get my point.

[JoshK]

Not that I agree with the distribution of wealth in our country, BUT:

 

The period you're talking about encompassed one of the greatest bull markets in history.

 

It also encompossed several economic downturns and recessions. I wonder what the numbers from 1990 to 2000 would look like?

 

The numbers back up the obvious fact that the rich get richer while the poor get poor. More money and power gets you even more of both, while lack of them just gets you fucked even harder. What is amazing is the way the republicans are able to fool a good % of the middle class into believing their economic and tax strategies will actually benifit them, rather than the uber-rich.

[Harry_Pi]

Hello capitalist!

Thank you for allow me to post.

[Harry_Pi]

Hello capitalist!

Please send all you american homeless people to my country. We have plenty work in sweat factory.

Thank you for allow me to post.

[jjd]

Below is a link to some of the raw data that underlies the NY Times piece and the study quoted. It is interesting to note that incomes of ALL grew in real terms over the 34 years in the tables. As you go up in the income distribution the rates of increase also rise. However, note that the poor DID NOT get poorer. I will refrain from any normative analysis about what it all means, I just wanted to provide some additional facts to the discussion. I would suggest looking at tables IE-3, H-3,F-2, and F-3.

 

http://www.census.gov/hhes/income/histinc/ineqtoc.html

[Jake]

Hey cool, this thread isn't endless partisan bickering... yet. There are many good points here - I don't think anybody is totally happy with the way things are - there are always probs.

One thing I did notice about the foreign aid thought though is that the US spends WAY LESS per capita on foreign aid than other developed countries - I can't find a good link right now but there are good charts out there on this.

Also, I don't think Presidents have much impact impact on the economy one way or another. Clinton didn't somehow create huge growth, Bush didn't cost everybody jobs, and his policies haven't really done much to contribute to the apparent recent improvement.

As for losing jobs overseas, that's the way its gonna be. I don't really like it, but there isn't really any alternative. We can go the protectionist route, but what good is that really gonna do? Isolated parts of the economy don't really help anyone that much. Sure certain areas are good to protect, but extensive protection is obviously bad. So we're stuck with industrial and an increasing amount of technology based jobs going overseas. We have to focus on our competitive advantage - whatever it is we do best - whether it be computers or whatever. This is good - because we lead in these growing areas, but also sucks cause not everyone is a computer nerd. I wish you could still go out and a get a factory job where you old man worked 40 years and you too could get in 40 yrs, but that's not gonna happen. Today people are gonna have to focus more on getting an education - difficult, as you say, when you can buy a pretty good car for the price of one year of education. And, grad school of one sort or another seems to be more important these days - and that isn't cheap either.

Edited March 30, 2004 by Jake

[j_b]

will: the mentioned study is based on after tax income, which does not include capital gain, so your comment about the 90's bull market does not really apply. some items are indeed cheaper but others such as housing and social security are a lot more expensive today.

 

jjd: data used for the study is cbo data and census data. this is what the cbpp has to say about census data: "Conclusions about changes in income disparities should not be based on Census data alone, as the Census data miss substantial amounts of income received by people at the top of the income scale. For example, the Census data do not include capital gains income, a large source of income for high-income individuals. IRS data show that in 1998, some 72 percent of capital gains income went to the 1.7 percent of tax filers with the highest incomes, those with adjusted gross incomes exceeding $200,000. In addition, the Census Bureau places an upper limit on the amount of certain types of income counted for any individual, regardless of that individual's actual income. The highest salary that the Census Bureau records is $999,999. An individual with a salary of $10 million is recorded as earning $999,999. (This is done to preserve confidentiality.) Finally, the Census data are based on a voluntary survey of approximately 50,000 households. Since those with very high incomes are a very small portion of the population, the Census survey does not pick up many of these households. Better data on income disparities are compiled by the Congressional Budget Office. These data are contained in a major CBO study published in May. (Historical Effective Tax Rates, 1979-1997, Congressional Budget Office, May 2001.) CBO combines the Census data with data from actual tax returns that the Internal Revenue Service compiles and produces a data series that makes use of the best features of both data sources."

 

thus, the study concludes that the after tax income of the lowest earners fell over the last 30 years, despite what census data says.

[jjd]

the mentioned study is based on after tax income, which does not include capital gain, so your comment about the 90's bull market does not really apply

 

From the CBO study:

 

"... CBO does, however, include in its measure of household income realized capital gains reported on individual income tax returns, but it does not adjust those gains for inflation because of limitations in the data."

 

Here are a couple of other things to consider when reading interpretations of the data:

 

"A second, and related, limitation is that some forms of income come irregularly, particularly capital gains from the sale of a business, of shares of stock, or of another asset. A business owner who sells his firm, for example, will appear wealthy in the year of the sale because of the large capital gain realized at that time, even though the increase in the firm's value accrued over a much longer period. Placing that person near the top of the income distribution in the year of the sale and at a much lower rank in other years misstates his economic status in all years, overstating it in one and understating it in all others"

 

The Department of the Treasury has constructed longitudinal files for a random sample of taxpayers over periods as long as 10 years, which have been used to examine the year-to-year variation in income for individuals. Those data indicate that there is significant movement of taxpayers within the income distribution but that year-to-year shifts tend to be small. For example, over the 1979-1988 period, roughly half of all taxpayers who were ever in the top 1 percent of all families were in that percentile for only one year. At the same time, virtually none of those who ever appeared in the top 1 percent were ever below the top 10 percent of taxpayers ranked by annual income

 

More importantly, this study really wasn't designed to measure income disparity, it was designed to analyze tax distribution. One last quote from the CBO study:

 

The study's principal goal is to understand the distribution of federal taxes, not to examine the distribution of income either for a single year or over time. To the extent possible, given the limitations of the available data, the study examines the distribution of federal taxes using measures of income that reflect the relative economic positions of households. Compromises result from missing information about specific sources of income as well as the lack of longitudinal data

 

http://www.cbo.gov/showdoc.cfm?index=3089&sequence=3

[lummox]

here is a quote in an op-ed piece about wacking yassin from the Haaretz which is an israeli paper: "This isn't America; the government did not invent intelligence material nor exaggerate the description of the threat to justify their attack."

 

that summarizes everything i dislike about the dude who currently shits in the white house. i prefer someone who tells the truth.

[j_b]

the mentioned study is based on after tax income, which does not include capital gain, so your comment about the 90's bull market does not really apply

 

From the CBO study:

 

"... CBO does, however, include in its measure of household income realized capital gains reported on individual income tax returns, but it does not adjust those gains for inflation because of limitations in the data."

 

neither studies mentioned in the nyt article (cbpp's and the one by the National Bureau of Economic Research, aka Thomas Piketty and Emmanuel Saez's) are cbo studies. however they appear to be partially based on cbo data. the piketty and saez paper is not available for free however the appendices are (http://www.nber.org/data-appendix/w8467/w8467-app.pdf). you'll note that the timelines of income shares are based on table A1. the income shares in table A1 do not include capital gain. moreover, here is paul krugman's comment on the piketty and saez study: "According to estimates by the economists Thomas Piketty and Emmanuel Saez--confirmed by data from the Congressional Budget Office--between 1973 and 2000 the average real income of the bottom 90 percent of American taxpayers actually fell by 7 percent. Meanwhile, the income of the top 1 percent rose by 148 percent, the income of the top 0.1 percent rose by 343 percent and the income of the top 0.01 percent rose 599 percent. (Those numbers exclude capital gains, so they're not an artifact of the stock-market bubble.)"

http://www.thenation.com/doc.mhtml?i=20040105&s=krugman

[willstrickland]

Even so j_b, the numbers are meaningless without inclusion of a standard CPI adjusted for inflation. I'm not arguing that it happened, but a 7% drop in "real income" could be easily offset by >7% drop in the CPI or better yet a more representative basket of staple goods (I don't think the CPI basket is particularly good as far as being representative).

[j_b]

hm ... i am not sure i understand. for the purpose of income comparison over time, the numbers are expressed in year 2000 dollars which means that inflation is accounted for. in turn, over the long term, inflation is the evolution of the cost of the cpi basket.

[willstrickland]

Yeah, I'm not making sense. My point is that the CPI is the basis of inflation adjustment to express wages in a standard year. The CPI, as computed by the BLS, is the typical yardstick, but it is only one of any number of possible yardsticks of inflation.

 

I don't feel that the basket is well suited for wage comparison because it includes things that you don't typically purchase on a recurring basis...bedroom furniture for example.

 

The intent is to express wages in purchasing power by relating it to goods, but I don't think it should include things that could be reasonably considered non recurring capital expenditures or non-necessities. A more meaningful sample to me would be bare staples...electricity rates, loaf of generic bread, dozen eggs, gallon of gas, average rent, etc and nothing else, basically those things we consider commodities.