´╗┐February 2012

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The Growing Gap

The media and an increasing number of Capitol Hill politicians are finally openly debating one of the most vexing problems confronting our economy: income inequality.

Even Republican presidential candidate Rick Santorum — who as senator never met a tax cut for the rich he didn't like — is now decrying the fact that Americans enjoy less social mobility than their peers in Canada and Europe.

Worker productivity continues to surge, but wages have remained essentially stagnant for more than 30 years. Experts estimate that if wages had kept pace with productivity, the average median household income would be nearly $92,000, not $50,000.

It is no surprise that two-thirds of Americans now rank the clash between the rich and the poor as America's greatest social conflict.

There is a tendency by some observers to claim that the widening income gap is a fact of nature, an inevitable problem in today's globalized, high-tech economy, unrelated to any real-world policy decisions made by elected officials.

As convenient as it might be for some to blame inequality on impersonal forces, it is the political decisions made by Washington that are fundamentally responsible for the overall health of the middle class.

The post-World War II period initiated almost 30 years of across-the-board income growth amongst all groups, but the 1980s saw the beginnings of the great divergence between the very rich and everyone else. This was in large part thanks to the introduction of trickle-down economics and overt union busting under President Reagan.

The top 5 percent of taxpayers accounted for 23 percent of total income in 1981, but 37 percent in 2005. The top 1 percent of earners has seen their income go up by more than $670 billion since 1979, while those in the middle-income range have lost more than $220 billion over the same period.

The 1 percent was given major tax breaks, minimum wage increases have been stalled and Wall Street regulations have been loosened. Now legislators are waging a national campaign to weaken collective bargaining rights.

As we learned in Ohio, Wisconsin and Florida, elections matter. This year's elections will either propel us on the hard road to restoring the dream of economic opportunity for all or accelerate us on the path to another gilded age.

We are kicking off our coverage of the election year — Smart Choices for Our Future — in this issue, focusing on the issues of importance to you as a working person. And supporting candidates who understand that government must work for all Americas — not just the 1 percent — is our priority.


Also: Chilia: Smart Choices in Obama's Recess Appointments

Edwin D. Hill
International President