Brad Plumer of Wonkblog published a piece today (“The shocking truth behind the saddest chart in Congress”) that readers of this blog will find all too familiar. It was accompanied by this chart:
Keep an eye on that bottom line, that depressing gray line that represents, quite likely, everyone reading this post. Think about all the colorful activity above and all the stagnation that defines the movement of that dreary gray line at the bottom.
Then think about the next presidential election. Many of us believe it is too late for anything meaningful to be done during the Obama administration about trying to make that bottom gray line as dynamically active as those colored lines above it. Improving the economic lot of the bottom 90% of Americans is not even on the radar screen for the Republicans who now effectively have control of the legislative branch of the federal government, as well as control of many governorships and state legislatures around the country.
But if I were Hillary Clinton, who most certainly is going to run in 2016, I would make that 90% my priority. In every speech, in every interview, in every op-ed she will write or every Tweet she will peck out between now and then, my focus would be on that 90%, that gray line of stagnation.
Wonkblog’s Dylan Matthews also published an interesting chart a couple of months ago:
Read this amazing paragraph that Matthews included with the graphic:
Until the 1970s, the bottom 90 percent had actually seen its income grow more than any other income group. The income gap was shrinking. But the ultra-rich quickly reversed that trend. In 2007, the top 0.01 percent had an average income almost seven times that of 1917; the average income of the bottom 90 percent had barely tripled. The country has grown more unequal, not less, since then. And, interestingly, the 90-99th percentiles all saw their average income grow faster than all but the tippy-top of the top 1 percent. The divide between the rich and the rest isn’t the only gap growing, in other words. The gap between the ultra-rich and the merely rich is growing, too.
Again, look at that graph. That red line representing you and me and most people in America was, from about 1940 through the early 1970s, on top of the stack. We did all right as a country, didn’t we? We did all right as a country with that red line on top, wouldn’t you say? And that red line of 90 percenters was on top of that deep blue line of the richest-of-the-rich until the 1990s. What happened to thrust that blue line of wealthy folks so high into the sky?
In 1997—with a Clinton in the White House—capital gains taxes were reduced from 28% to 20%, via the Taxpayer Relief Act of 1997, which was one of the largest tax cuts in history (the child tax credit and some other items meant to lure Democrats was a part of the mix).
The bill was sponsored in the House by Republican John Kasich (now the right-wing extremist governor of Ohio) and was opposed by some among my contingent of bellwether liberal legislators: Bernie Sanders (in the House at the time), Barney Frank, Elijah Cummings, Ed Markey (now running for John Kerry’s senate seat in Massachusetts), and Henry Waxman. Sadly, only eight Democrats in the Senate voted against final passage of the bill (the late and great Paul Wellstone was one of them).
Bill Clinton, Hillary’s husband, signed it into law, saying, among other things, that he had reservations about the capital gains tax cut component of the law:
I continue to have concerns that the across-the-board capital gains relief in H.R. 2014 is too complex and will disproportionately benefit the wealthy over lower- and middle-income wage earners.
Well, those “concerns” turned into reality fairly quickly, as the graph above demonstrates, especially since Republicans, via George W. Bush’s signature in 2003 (part of the infamous “Bush tax cuts”), further lowered the capital gains rate for the wealthiest Americans from 20% to 15%. Just what effect have these insanely low tax rates had on income inequality? As Wonkblog’s Dylan Matthews says, a lot:
If you don’t look at capital gains, the top 0.01 percent only captures 3.15 percent of income in the United States. That’s about a third smaller a share as when capital gains are included. That suggests that capital gains income is exacerbating the income inequality problem.
Here’s my point: Hillary Clinton, running in 2016, can use the issue of income inequality as a nationwide campaign to not only win the White House, but, at least as important as far as I’m concerned, win control of the House and Senate for Democrats, which would be the only way she could effectively govern and do a damn thing about income inequality.
She should begin with Bill Clinton’s rather muted and understated warning in his signing statement in 1997 that the tax-cut law would “disproportionately benefit the wealthy over lower- and middle-income wage earners,” then move on to attack Republicans for the 2003 tax cut (she voted against it), and, finally, base her campaign on moving the trajectory of that sad, gray line that represents nearly the entire American electorate. The ridiculously low tax on capital gains, which overwhelmingly benefits the wealthy, is the perfect vehicle to make the case that America needs a come-to-Jesus moment over the growing disparity between the rich and poor in our country.
In other words, she should run for president not just because she has a very good chance of becoming our first female chief executive, an amazing achievement in itself, but because if she can do something to move that gray line of stagnation she will be the people’s champion in the vein of a Franklin Delano Roosevelt and go down in history as something more than being the first President of the United States without a Y chromosome.
And, even as conservative pundits and politicians are trying to pin blame on her for the the tragedy in Benghazi, she should start talking about these income inequality issues today.