There's a debate brewing in the Democratic Party about whether to talk about the nation's widening inequality. Some Democratic strategists say that's too risky. Most of America's vast middle class wants and expects to be rich some day themselves, they say. Talk about widening inequality and you risk sounding too negative.
Well, I think conventional wisdom is wrong. In September's Wall Street Journal-NBC News poll, inequality ranked as the second most important economic issue, right after the cost of gas and energy. A few months ago when Congress was debating whether to raise the minimum wage, polls showed 85 percent of the public in favor. And about 80 percent of Americans polled by The Los Angeles Times and Bloomberg said CEOs are overpaid. Remember what happened last year when Congress debated the Central American Free Trade Act? Despite a heavy lobbying blitz from the White House and business, it squeaked by with a margin of just two votes in the House. Polls show most Americans no longer favor free trade because they think it's hurting the wages of average people.
The fact is, we haven't experienced inequality on this scale since the 1920s -- by some measures since the age of the Robber Barons in the 1890s. Twenty five years ago, the richest one percent of Americans took home about 8 percent of total income. Now, they're taking home almost 20 percent. To be in the top 1 percent today you've got to be taking home over $750,000 a year.
The American economy has been growing nicely. Corporate profits are up. The Dow is back to its 2000 peak. Top executives are raking in eight-digit compensation packages. But the paychecks of most people haven't budged. Median household earnings are actually below what they were in 1999. Meanwhile, the costs of energy, health insurance, and college tuitions are skyrocketing.
The Bush White House wonders why most people aren't feeling better about the economy. The chairman of the Council of Economic Advisors says there's lots to cheer about. The Bushies attribute the glum mood to a glum media that stresses the negative. If the White House were more in touch with what average people are experiencing, they'd understand.
The American Dream is still very much alive. But most Americans are getting worried it will stay just that -- a dream.
So don't be surprised if you hear lots of Democratic candidates and maybe even a few Republicans talk about restoring fairness to the economy. That means rolling back the Bush tax cuts for the wealthy, raising the minimum wage, lifting the ceiling on earnings subject to Social Security payroll taxes, and cutting taxes on the middle class. It also means making health insurance and college affordable again.
The new political motto: It's fairness, stupid.
Robert B. Reich is co-founder of The American Prospect. A version of this column originally appeared on Marketplace.
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