The Occupy Wall Street protests spreading Arab Spring-style across the land are an inspiring display of civic engagement, finally giving popular voice to the entirely valid complaints of ordinary Americans frustrated as their quality of life stagnates or declines while the prosperity of the superwealthy metastasizes beyond all proportion. Like any major rally, these have also attracted elements reminiscent of the extreme Tea Party variety (the guy wielding an “Osama bin Bernanke” poster). But there’s no question that the bottom 99 percent have something to complain about and that this movement is giving voice to their valid grievances.
“No job, no healthcare, no savings, no retirement fund,” reads the sign held up by an unemployed and disabled art teacher from Rochester, New York, on the “We Are the 99 Percent” Tumblr blog that chronicles these voices. Scroll through the hundreds of photos on the blog and a coherent set of legitimate gripes emerges from the tapestry of words and faces: accelerating income inequality, shrinking income mobility, a tax code that favors the wealthy, a democracy corrupted by money, and a government unwilling or unable to protect the middle class even as it bails out Wall Street.
These are the concerns of the vast majority of Americans. They demand our attention and deserve Washington’s immediate action.
Rising income inequality
Here’s where it begins: The richest 1 percent of Americans control 40 percent of the country’s wealth, own 50 percent of U.S.-owned stocks and bonds, and earn 24 percent of total income. The top 1 percent earn more than the bottom 40 percent of the population (and the richest 20 percent get more income than everyone else combined). In the aftermath of the worst economic downturn since the Great Depression, this tiny slice of the U.S. population controls more of its country’s money than it has since the 1920s.
And the richening of the rich has come at the direct expense of the middle class, the data show. As the income of the top 1 percent skyrocketed from 9 percent of all income in 1974 to 24 percent in 2007, the share of income going to the middle 60 percent of Americans fell from 52 percent to 47 percent. From 2001 to 2007, incomes of the top 1 percent increased by 60 percent after adjusting for inflation, while the median income fell.
Today, young and low-income Americans continue to bear the brunt of the recession after-effects. Nearly 6 million young adults lived with their parents last year, up from less than 5 million before the recession. Households headed by a person age 15 to 24 experienced the largest income decline of any age group last year, falling by more than 9 percent. And households in the bottom 20 percent last year saw their incomes fall by 5 percent, more than six times as much as the households in the top quintile, according to recent data.
A shrinking middle class and massive concentration of wealth is alarming enough. That these trends are intensifying after an economic collapse caused by the very industry that employs many of the super-rich is maddening to both the protesters and the people watching at home—and understandably so.
Shrinking income mobility
Massive inequality might well be easier to bear if people felt higher incomes were within their reach, by dint of hard work and education. But the rising inequality fueling the social protests also comes at a time when it’s harder to move from one income class to another.
The American Dream story holds that this country’s greatness is grounded in the ability of its citizens to rise to the top. In fact, the United States now lags behind other developed countries such as Denmark, Finland, Norway, and Sweden when it comes to economic mobility.
“There is no evidence that opportunity has increased in a way that might offset the slower and less broadly shared growth of income and wealth that families have experienced,” according to Brookings Institution scholar Isabel Sawhill. That’s the stuff of Middle Eastern despair, not American Dreams. Makes you want to take the streets and yell at somebody.
A rigged tax code
Meanwhile, tax rates on millionaires have declined while the bottom 99 percent are asked to help reduce a federal budget deficit exacerbated by the reckless speculation of—millionaires.
The effective tax rates paid by millionaires declined from about 31 percent in 1995 to about 22 percent in 2009, thanks to tax cuts in the George W. Bush administration that conservatives in Congress are determined to maintain, even if that means effectively abolishing Medicare, as House Republicans have proposed. And low tax rates on capital gains are a godsend to the super-rich, such as the 400 richest Americans who get two-thirds of their combined income from investment income. Their tax rates plummeted from 30 percent in 1995 to 18 percent in 2008.
The $1.1 trillion we spend every year on the special exemptions, credits, and deductions littering the tax code are also a boon to the wealthy. Being wealthy means you can afford to pay for accountants to mine the code for arcane and valuable loopholes. But they’d come out ahead even if they just used TurboTax like everyone else. That’s because our system of tax breaks is structured to benefit those who need them the least.
A rigged democracy
The demonstrators in Lower Manhattan’s Zuccotti Park aren’t allowed to use amplification, so organizers communicate to protesters using the so-called Human Microphone, in which crowds echo the speaker in unison.
The rich have a less ingenious but more effective method of amplifying their voices in the halls of power: campaign donations, lobbyists, and corporations.
It costs money to run a winning congressional campaign: about $1.4 million on average for House races, and six times that for a Senate seat, according to the Center for Responsive Politics. While politicians like to boast about ordinary-folk armies of small donors sending in $5 checks, the truth is about three-quarters of all campaign cash comes from people who can afford to make large contributions and from political action committees backed mostly by corporations, business associations, and lobby groups.
Money buys access and the biggest special interest group by far behind all this cash is the combined financial services, insurance, and real estate industries. Through PACs and individual donors, they gave nearly 20 percent of political donations from 1990 through 2010. They also as a group spend more on lobbyists than any other industry.
Considering that this same troika of finance (banks), insurance (AIG), and real estate (subprime mortgages) made up the toxic stew that crashed our economy in 2008 and got bailed out in 2009, you can forgive the Occupy Wall Street protesters for thinking the fix is in—and that the bottom 99 percent are being played for suckers.
An assault on fundamental protections
Meanwhile, the news out of Washington seems to daily bring fresh assaults on the fundamental protections the bottom 99 percent have long counted on—and shouldn’t have to take to the streets to preserve. House Republicans are on record wanting to abolish Medicare as we know it and weaken Medicaid. A leading Republican contender for the presidency has likened Social Security to a criminal venture. In the name of job creation, the right wing would weaken worker protections and eliminate clean air and water rules while blocking the president’s American Jobs Act—a bill economists say would actually create as many as 2 million jobs.
And why such ferocious resistance to a jobs bill at a time of persistently high unemployment? That brings us back to where we began: because it asks the top 1 percent to help pay for it—to join the bottom 99 percent and do their fair share.
Americans do not begrudge the rich their riches, but they do resent an uneven playing field. This is the chief complaint that unites and animates the Occupy Wall Street protesters. It’s a legitimate gripe, and with Wall Street bonus season just around the corner, it’s not likely to go away anytime soon.
Gadi Dechter is Associate Director of Government Reform at the Center for American Progress.