Entitlements are for the Rich and the War Machine

It seems that when it comes to health care, pension benefits etc. these entitlements are causing a crisis in which the US will soon be spending much more than it can afford. However, tax cuts and exemptions that often benefit the rich most are apparently good policy. Money for the military seems to be readily available. I suppose any money for the military-industrial complex is just supporting the troops.
The country is not getting richer, the rich are getting richer and the country is going further in debt but that is a small price to pay for keeping the military industrial political complex well fed.

If This Is Such a Rich Country, Why Are We Getting Squeezed?
By Heather Boushey and Joshua Holland, AlterNet

Posted on July 18, 2007, Printed on July 18, 2007
http://www.alternet.org/story/57180/

The commercial media is telling us two perfectly contradictory stories
about the American economy. The first is how wonderfully rich we are in

the United States. The stock market's booming -- some analysts predict
the Dow will break the 15,000 this year -- the economy is expanding at
a
healthy clip, productivity growth is up and unemployment and inflation
are relatively low.

But, at the same time, we're also told that we don't have the money to
pay for a robust social safety net. When it comes to paying for
universal health coverage, affording retirement security for our
elderly, investing in programs for the poor or educating our children,
we need to pinch pennies. According to this storyline, we face a
looming
"entitlement crisis" -- we won't be able to afford to keep the Baby
Boomers in good health and out of poverty, we're told, unless we slash
their benefits and privatize the programs that their elderly parents
enjoy today.

This is the line we hear from the Administration when it talks about
entitlement "reform": Treasury Secretary Henry Paulson says that "The
biggest economic issue facing our country is the growth in spending on
the major entitlement programs: Medicare, Medicaid, and Social
Security." The solution, according to the Heritage Foundation, is to
cut
entitlement spending: "Reforming Social Security, Medicare, and
Medicaid
is the only way to get the budget under control."

How can two narratives that are so clearly at odds with each other be
so
pervasive? Are we seriously supposed to believe that Paris Hilton has
to
dig between the cushions of her sofa to buy a can of tuna?

What reconciles these two themes is absent from our mainstream economic

discourse: we "can't afford" all sorts of programs that are clearly in
the common good because most of the benefits of our growing economy
have
gone to a very small group of Americans, who have, in turn, seen their
taxes slashed again and again in the past six years. It's a story that
isn't told as often as it should in the commercial press because it's a

supposedly "liberal" narrative -- never mind that über-conservative
former Fed Chairman Alan Greenspan told Congress that there is a
"really
serious problem here, as I've mentioned many times … in the
consequent
concentration of income that is rising."

Saying that the majority of the country's economic gains in recent
years
have gone to the top one percent of the income ladder understates the
trend. You have to cut the pie into even smaller slices to get the full

picture. Because while the bottom half of the top one percent of the
income distribution have done far better than the average wage slaves,
it is a smaller slice still -- the top .01 percent -- that has grabbed
most of the gains--seeing an impressive 250 percent increase in income
between 1973 and 2005 -- from an economy that's grown by 160 percent.

An analysis by economists Thomas Piketty and Emmanuel Saez gives us the

best perspective of what's going on for everyone else. They found that
despite several periods of healthy growth between 1973 and 2005, the
average income of all but the top ten percent of the income ladder --
nine out of ten American families - fell by 11 percent when adjusted
for
inflation. For three decades, economic growth in the United States has
gone first and foremost to building today's modern Gilded Age. The
recipients of those gains don't care about a fully funded Social
Security system or a healthy Medicare program -- they don't need them.

Meanwhile, even as the top earners' incomes have gone through the roof,

their tax burden has shriveled. At the same time, the share of federal
revenues contributed by corporations has declined -- by two-thirds
since
1962.

It's important to understand how that plays out in our national
economic
discourse. When people tell us that our economy cannot "afford" things
like universal health care or paid sick days, it fits with the economic

experience that most Americans have had in their real lives -- the
benefits of our boom-boom economy have not gone to the great masses,
but
to "someplace else."

Americans feel pinched. Polls show that they feel a time crunch--not
having enough time for family and friends--and that they're anxious
about getting into or staying in the middle class. Over the past
generation, the economy has not been good to the typical,
married-couple
family (let along single-parent families) and families feel, rightly,
that they need to be careful about where their dollars go.

It's not that they're not working hard. The typical U.S. family puts in

more time at work than ever before. The typical married couple works an

additional 13.3 weeks per year--533 hours--compared to a generation
ago.
But even though families are working more, their incomes have grown by
only a third between 1973 and the present. That's much worse than the
generation before -- between 1947 and 1973, the typical married-couple
family saw their income rise by 115 percent. And that was often just
one
parent's income -- this was a period when most families could afford a
stay-at-home mother. Of course, fewer families have that luxury today
--
those with stay-at-home moms have the same inflation-adjusted median
income in 2007 as they did in 1973 -- they haven't gained a penny from
three decades of growth.

When we talk about the slow growth of family income, economists like to

mention globalization, mechanization, or other factors that require us
to be lean and mean and more "competitive." The storyline is that U.S.
families have not seen their income grow because America has had to
fight it out in a wide-open global economy, and these are lean times
for
workers.

But that's simply not true.

The economy--as measured by gross domestic product (GDP)--has grown by
over 160 percent since 1973 (PDF). This is only slightly less than the
period from 1947 to 1973 when GDP grew by 176 percent. That's come as
Americans have become much more productive -- productivity has grown by

over 80 percent since 1973 -- meaning it now takes fewer workers to
produce the same number of widgets as it did in the past.

As each worker in the U.S. economy produces more "stuff" per hour, be
that DVD players or clients served, those goods and services are being
sold in greater numbers. In a healthy economy, that growth is shared
between workers and investors and wage growth should rise with
productivity. This was the case in the decades between World War II and

the early 1970s, when productivity and median wages both increased by
an
average of two to three percent every year. But since 1973,
productivity
increased sharply, especially after the late 1990s, but median wage
growth has been flat. So firms are getting much more output per worker,

but they're not paying for it. They've pocketed the difference in
executive compensation and corporate profits. The share of national
income going to wages is at the lowest level ever recorded, while the
piece of the pie gobbled up by corporate profits is at its highest
point
since 1960.

But when the masses ask for help paying for health insurance or child
care, or request that everyone be given the right to paid sick days,
we're told we cannot afford it. "Afford" seems to be a very special
term
in the current American context: letting the wealthy take ever-bigger
pieces of our national product is something we always seem able to
afford.

We work hard. We--the 99.9 percent-- and deserve a bigger piece of the
pie. With a growing economy, we can afford it and we all know just
where
to look for how to pay for it.

Heather Boushey is a Senior Economist with the Center for Economic
Policy and Research. Joshua Holland is an AlterNet staff writer.

Top US income earners increase share of the pie.

NEW DATA SHOW EXTRAORDINARY JUMP IN INCOME CONCENTRATION IN 2004
By Aviva Aron-Dine and Isaac Shapiro

Economists Thomas Piketty and Emmanuel Saez have recently made available an updated version of their groundbreaking data series on U.S. income inequality.[1] The data are unique because of the detailed information they provide regarding income gains at the top of the income spectrum, and also because they extend back to 1913. By contrast, widely used Census data on income developments do not capture income trends among the top one percent of households and go back only to the end of World War II. CBO data, which do capture income trends among the top one percent, show there was a substantial increase in income concentration between 2002 and 2003, but those data do not yet extend beyond 2003.[2]

The Piketty and Saez data offer the first real snapshot of income trends among those at the pinnacle of the income spectrum in 2004. The data show that income gains between 2003 and 2004 were particularly large for those at the very top of the income spectrum, resulting in a nearly unprecedented one-year increase in income concentration.[3] The Piketty and Saez data show:

This is old but perhaps not everyone has seen it. The whole article is here.


From 2003 to 2004, the average incomes of the bottom 99 percent of households grew by less than 3 percent, after adjusting for inflation. In contrast, the average incomes of the top one percent of households experienced a jump of more than 18 percent, after adjusting for inflation. (Census data show that real median income fell between 2003 and 2004. Average income is pulled up by gains at the top of the income spectrum; much of the 2.3 percent rise among the bottom 99 percent seems to largely reflects gains by households in the top decile of the income spectrum. In contrast, trends in median income capture the experience of households in the middle of the income spectrum.)

The top one percent of households (those with annual incomes above about $315,000 in 2004) garnered 53 percent of the income gains in 2004.