WASHINGTON – Of all the buzzwords and phrases popping up early in the presidential campaign, “income inequality” must be close to the top of the list. And it’s not just Democrats insisting that the nation must deal with it firmly and fast.
While Hillary Rodham Clinton and new primary opponent Sen. Bernie Sanders are hitting the idea hard, Republican candidates, too, are playing up the notion that people at the bottom of the economic ladder are getting a raw deal while the rich get richer.
Since you’re sure to hear a lot more about income inequality over the next 18 months, here’s a closer look at what it means, where it came from and what the candidates want to do about it.
In a nutshell, economic inequality refers to the yawning gap between the income of the richest Americans and everyone else. No one disputes that the gap exists, although there is debate about its size.
There are all kinds of subtexts associated with this idea, among them: stagnating middle-class incomes, increasing economic power for the privileged few, barriers to upward mobility for the poor and a culture of cronyism in Washington that protects the well-connected.
And that churns up feelings of envy, outrage, frustration and despair for candidates to tap into as they try to show they understand the economic angst of the middle class.
The prominence of the issue has been building, off and on, for years, as the share of total income and wealth claimed by the richest Americans has grown. Incomes for the highest-earning 1 per cent of Americans rose 31 per cent from 2009 through 2012, after adjusting for inflation, according to data compiled by Emmanuel Saez, an economist at University of California, Berkeley. For everyone else, it inched up an average of 0.4 per cent.
The Occupy protest movement of 2011 and 2012 jump-started a global conversation about the wealth gap, with the rallying cry of “We are the 99 per cent.” And everyone from Pope Francis to President Barack Obama picked up on it. In 2013, Obama called economic inequality “the defining challenge of our time.”
LOOK WHO’S TALKING
Just about all the 2016 candidates are chattering about it. And when candidates describe the problem, it’s sometimes hard to distinguish Republicans from Democrats.
See if you can guess who’s sounding off here:
1. “The top 1 per cent earn a higher share of our income nationally than any year since 1928. The people who have been hammered … are working men and women.”
2. “While the average person is working longer hours for lower wages, we have seen a huge increase in income and wealth inequality, which is now reaching obscene levels.”
3. “The economy is booming for people at the top. It is not booming for the bottom 90 per cent of the workforce in America. The bottom 90 per cent, which is most of America, has had stagnant wages for 40 years.”
4. “The deck is still stacked in favour of those already at the top. And there’s something wrong with that. There’s something wrong when CEOs make 300 times more than the typical worker.”
5. “Wage stagnation is happening at a time when the cost of everything is going up dramatically. And it’s not just that the cost of everything is going up, we have expenses we didn’t used to have.”
6. “The policy aim of government absolutely should be that government should not contribute to income inequality.”
Answers: 1. Republican Sen. Ted Cruz of Texas. 2. Sanders, a Vermont independent who’s running as a Democrat. 3. Republican Mike Huckabee, former governor of Arkansas. 4. Clinton. 5. Republican Sen. Marco Rubio of Florida. 6. Republican Sen. Rand Paul of Kentucky.
There will be huge debate on this over the next year and a half, and Republicans and Democrats offer far different solutions.
In general, Republicans like to stress upward mobility — giving those at the bottom more opportunity to move up — rather than taking something away from those at the top.
“The American people tend not to be envious people,” says Mike Needham, head of the conservative Heritage Action for America. “People are worried about their opportunity to succeed.”
Democrats are inclined to look at increasing taxes for those at the top to allow government to do more for those below.
“It’s very difficult to do much about the middle class and the poor without tapping some of the wealth and income at the very top, or at least changing the structure of the economy so that so much wealth and income don’t percolate upward,” says Robert Reich, who served as Bill Clinton’s labour secretary.
Most of the candidates are still fleshing out their economic proposals. But they’ve already thrown plenty of ideas in the mix, circling back to classic debates over taxation and the proper role of government.
Sanders wants to make the wealthy pay more taxes. Rubio’s pushing a big tax cut to spur growth. Clinton has criticized excessive CEO pay and wants to raise the minimum wage. Cruz wants a “simple flat tax.” Paul pushes “economic freedom zones” offering lower taxes in distressed areas. Former Florida Gov. Jeb Bush wants to give people more opportunities for “earned success.” Christie wants to cut income and corporate tax rates while changing deductions and credits.
ODDS ANYTHING WILL CHANGE?
Obama said Tuesday he hopes growing awareness of inequality will help bridge the ideological divide over how to address it. At the same time, progressive Democrats who want to close the gap released a wide-ranging policy agenda, with Sen. Elizabeth Warren of Massachusetts saying it was time to fight those who “want the game to stay rigged.”
But skepticism abounds. Sanders questions whether Clinton or any of the Republicans are ready to take on the “big-money interests who control so much of our economy.” Paul thinks Democratic policies make income inequality worse. Carly Fiorina, the former technology executive who recently joined the GOP nomination race, says it will take someone from outside Washington to fix things.
Whatever the odds and the hurdles, people are more than ready for a change: For the past 30 years, Gallup reports, polls have consistently found that six in 10 Americans believe the way income and wealth are distributed in the U.S. is unfair.
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EDITOR’S NOTE _ An occasional look at words we hear in the 2016 campaign and what’s behind them