The Math Behind “Class Warfare” – a Middle Class Under Attack

Washington – President Obama said on Monday that his proposal would bring taxes for millionaires in line with those paid by the middle class. This “is not class warfare; it’s math,” he stated. But he could have easily been referring to math that hasn’t favored working-class and middle-class households for most of the past 30 years.

To be among the bottom 90 percent of income earners in the United States is to be under siege in an economic war in which the top 10 percent have been winning all of the territory.

That nine in 10 Americans have been struggling for decades is a direct consequence of policies that have stacked the deck in favor of corporations and the wealthy. Those policies range from the tax breaks highlighted in Obama’s address to the decline in wages and benefits received by rank-and-file workers, as unions have lost power.

The Racial Wealth Gap?

One way to get a sense of the consequences is to go to an Economic Policy Institute website, stateofworkingamerica.org. There, an interactive chart answers the question, “When income grows, who gains?”

This handy chart shows that between 1994 and 2000, the richest 10 percent of Americans gained 71 percent of income growth. What remained was spread among the lower 90 percent.

Look at what happened from 2002 to 2007, the period featuring the tax cuts of George W. Bush: The bottom 90 percent received only 13 percent of the income growth, while those at the top banked 87 percent.

As a whole, African Americans and Latinos have fared the worst.

Recent data from the 2010 U.S. Census show that in the past decade the median income of African American households dropped 14.6 percent, while Latino household income fell 10 percent.

The result underscores a record racial wealth gap the Pew Research Center reported in July. Pew found the median wealth of white households ($113,149) is now 20 times that of black households ($5,677) and 18 times that of Hispanic households ($6,325).

The disappearing middle class, the increasing concentration of wealth at the top and the widening wealth gap between white people and people of color coincides with a series of policies championed by the very lawmakers who are invoking the “class warfare” charge today.

One particularly pernicious inequity involves capital gains, money made by selling stock and other assets. That income is taxed at a much lower rate than earned income. It is how billionaire Warren Buffet, who earns all of his money through capital gains, pays taxes at a lower rate, usually 15 percent, than his secretary, whose paycheck—likely taxed at 25 percent—is most, if not all, of his or her income.

To his credit, Buffett has called for a higher tax rate on such income. President Obama’s “Buffett rule” would require millionaires to pay taxes at a similar rate as the people who work for them—a simple principle that has promoted the loudest cries of “class warfare.”

What’s driving this “class warfare” language is the continuing defense by conservative ideologues of a worldview that idolizes society’s “haves” and belittles, if not outright scorns, society’s “have-nots.” That view is at the core of the writings of the late Atlas Shrugged author Ayn Rand, a chief inspiration for such conservatives as Rep. Paul Ryan, R-Wisc., who led the fight this year to replace Medicare with a voucher for private insurance and who is a chief defender of maintaining the status quo for the wealthy.

“Job Creators” Did Little

Out of that ideological context comes the constant exaltation of corporations and the rich as “job creators,” even though these members of the moneyed class did precious little hiring—at least not in the United States—with the tax cuts they received from the Bush administration in 2001 and 2003.

Between 2003 and 2007—following the economic “dot-bomb” slump—job growth was at the slowest pace of any previous economic recovery this century. Those meager employment gains were more than wiped out by the 2008 economic implosion caused by Wall Street.

The combination of policies that President Obama has sent to Congress in the past two weeks at the very least draws the correct contrast between policies designed to rebuild the middle class and have working people share in the fruits of economic growth and policies that would continue to push wealth upward.

If anything, the United States need bolder, more far-reaching policies that would move the nation toward more equitable, sustainable growth.

It’s no surprise that people who can look down on economically struggling households and command “shared sacrifice” from the comfort of their mansions are pushing back against the bottom 90 percent.

The message from those standing up for their interests says, “If you share the sacrifice, you also have to share the prosperity.”

Progressive activists are now working on the strategy to overwrite the “class warfare” mantra of conservative lawmakers with the principle of shared benefit.

That will be a dominant theme of the “Take Back the American Dream” conference in Washington in October, led by the Campaign for America’s Future and Van Jones’ Rebuild the Dream movement. As President Obama said, it is math; specifically, making the economic math work for working people again.