America’s most powerful economic policy maker dramatically charges that inequality is choking off opportunity for average families. Political candidates across the nation pay absolutely no attention.
By Sam Pizzigati
The most revealing moment of our ongoing 2014 election season? That may have come last week in a Florida gubernatorial debate when former governor Charlie Crist, now a Democrat, and current governor Rick Scott, a Republican, went mano a mano over who “has led a more privileged life.”
Crist — net worth, $1.2 million — pronounced that Scott’s lavish “oceanfront mansion” lifestyle had him out of touch with average Floridians. Scott — net worth, over $132 million — countered that he had grown up in much more hardscrabble home than Crist.
“You grew up with money,” Scott fumed.
“You can’t tell my story,” Crist retorted.
Great theater, observers agreed. In fact, the exchange amounted to much more than theater. Crist and Scott had stumbled into what should be the central issue of this year’s elections: America’s great divide. The U.S. economy, as Businessweek put it last week, has become “lousy” at helping struggling families gain basic economic security, but “great at making a very few very rich.”
Why should that be? Scott and Crist never debated that question. Neither have all but a handful of this fall’s candidates. The 2014 races are turning instead, as America’s elections typically do, on marginal concerns and claims that everyone involved, voters included, will promptly forget the morning after Election Day.
Still another campaign season is shedding no light whatsoever on the staggering concentration of wealth at America’s summit.
We are witnessing, in short, still another campaign season that sheds no light whatsoever on the staggering concentration of wealth at America’s summit, the inequality that President Obama three years ago — in a fleeting moment of political clarity — called “the defining issue of our time.”
These days, almost everybody with a finger on America’s pulse — except those running for public office — seems to recognize the threat this inequality poses. The latest to enunciate this angst: Federal Reserve Board chair Janet Yellen.
“The extent of and continuing increase in inequality in the United States,” Yellen told an October 17 Fed conference in Boston, “greatly concern me.”
Societies grow more unequal, the Fed chief went on, when incomes for the rich rise faster than the incomes of everyone else. Societies grow unequal even faster when incomes for the rich rise and incomes for everyone else stagnate.
“Unfortunately,” Yellen points out, this latter situation essentially defines the United States over “the past several decades.”
The 62 million households in America’s least affluent half, new Fed stats show, averaged only $11,000 in net worth last year, 50 percent less than bottom-half families averaged after inflation in 1989. Over those same years, top 5 percent household average net worth nearly doubled — to $6.8 million.
Inequality of outcomes is nurturing a profound inequality of opportunity.
Tax cuts for the rich and other public policies that speed wealth’s concentration, apologists for our unequal economic order like to claim, encourage “entrepreneurship” and “job creation.” The opportunity to build a business, Yellen acknowledges, “has long been an important part of the American dream.”
But America’s “pace of new business creation,” the Fed chair details, “has gradually declined” as inequality in the United States has increased. This “slowdown in business formation” may be jeopardizing “a significant source of economic opportunity” for families “below the very top in income and wealth.”
Yellen finds the same dynamic operating within education. Wealthy families shower their children with ever more advantages at the same time poorer families have a “harder time affording college.”
Our “inequality of outcomes,” Yellen concludes, seems to be nurturing a profound “inequality of opportunity.”
In a real democracy, Yellen’s basic charge — that the rising wealth of America’s rich appears to be choking off opportunity for America’s hard-pressed — would be setting off political fireworks.
In that real democracy, incumbents would now be squirming to explain why they’ve allowed the gap between the rich and the rest of us to widen on their watch. Challengers would be proudly presenting five-point plans for ending America’s ridiculously top-heavy distribution of income and wealth.
In a real democracy, incumbents would now be squirming to explain why they’ve allowed the gap between the rich and the rest of us to widen.
None of this has taken place. Yellen’s challenge to the nation’s political order sank out of sight in a single news cycle, buried under relentless barrages of brain-numbing 30-second campaign ads that keep potential voters alternatingly confused, angry, and uninterested.
This campaign advertising has clearly been election 2014’s biggest story. Campaign spending on current congressional races, the Center for Responsive Politics estimated last week, will total $4 billion, over double the 1998 total.
The bulk of these billions are coming from America’s wealthy. In 1982, the top 0.01 percent of the voting age population accounted for less than 10 percent of all federal political contributions. In the 2012 elections, political scientists calculated last year, top 0.01 percenters contributed over 40 percent.
Court decisions over the past four years have essentially eliminated the few remaining political campaign contribution restrictions put in place after the Watergate scandal 40 years ago.
Restrictions still formally on the books do limit how much wealthy donors can give directly to a single candidate to $5,200 per election cycle. But donors in 2014 are “double dipping,” the Brennan Center for Social Justice reported last week, via a new twist on super PACs called a “buddy group.”
“Buddy” groups devote all their resources to the election of a specific candidate. They can accept unlimited donations from individuals and corporations.
Candidates today court the fantastically rich obsessively.
The biggest double dipper so far in 2014: Robert Mercer, the co-CEO of a $15 billion New York hedge fund. Mercer gave Iowa Republican Senate hopeful Joni Ernst $5,200, the legal limit, the Brennan Center notes, then pumped another $350,000 into a new buddy group dedicated to Ernst’s election.
Two other Ernst buddies, hedge fund billionaires Paul Singer and Julian Robertson, ponied up about another $500,000.
To remain “competitive” in today’s political environment, candidates today need plenty of buddies like Mercer, Singer, and Robertson. They court these fantastically rich obsessively. They dare not give them cause for irritation.
So don’t expect our billionaire-bankrolled candidates to target — or even discuss — the ongoing concentration of America’s wealth. And don’t expect America’s voters, in turn, to concentrate on these candidates. Only 15 percent of voters, note Pew Research pollsters, are paying any serious attention to this fall’s campaigning.
Sam Pizzigati edits Too Much, the Institute for Policy Studies online weekly on excess and inequality. His latest book: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class (Seven Stories Press).