A fair way to shrink the wealth gap
SEATTLE AND SAN FRANCISCO
The new Democratic-led Congress has already made great strides on its ambitious legislative agenda. From hiking the minimum wage to cutting interest rates on student loans, Democrats have won impressive bipartisan support for their legislative goals.
Not included on the agenda, however, is any proposal designed to address what may be the most fundamental problem facing America right now: an alarmingly high degree of inequality.
Currently the top 10 percent of income earners in the US own 70 percent of the wealth, and the wealthiest 5 percent own more than the bottom 95 percent, according to a Federal Reserve Study. The ratio of average CEO pay to worker pay in the US shot up from a mere 301-to-1 in 2003 to 431-to-1 in 2004. The average CEO now earns $11.8 million per year, versus the paltry $27,460 for the average worker. As America tries to grapple with soaring healthcare costs and lack of universal coverage, UnitedHealth Group CEO William McGuire received an obscene $124.8 million in compensation in 2005. He's just one of many grossly overcompensated kingpins of the US economy.
Adding insult to injury, taxpayers actually subsidize these bloated CEO salaries. The federal government gives tax breaks to corporations for those salaries, to the tune of hundreds of millions, if not billions, of dollars.
We used to call this by another name: the Gilded Age.
The level of inequality and unfairness has risen to such eye-popping levels that it is attracting attention from unlikely sources. Ben Bernanke, Federal Reserve Board chair, has called rising inequality "a concern in the American economy." Mr. Bernanke's esteemed predecessor, Alan Greenspan, has said that disparate income distribution is "not helpful for a democratic society." President Bush's Treasury secretary, Henry Paulson, has noted, "[M]any Americans simply aren't feeling the benefits" of the US's recent economic expansion.
No doubt Democrats would agree. Oddly, however, in this country that was founded at least in part on the principle of equality for all, economic disparity has become a third rail of American politics.
Democrats don't dare touch the issue for fear of being labeled "tax-and-spend" liberals or being blamed for igniting class warfare. America needs to get over these rhetorical rigidities. Government has a role to play in restoring another fine American value: fairness.