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Obama lays out Opportunity Agenda to attack inequality, restore upward mobility

President Obama during the State of the Union address laid out an Opportunity for All agenda aimed at reducing inequality and restoring upward mobility,  keystone of the ideal of the American Dream.
President Obama during the State of the Union address laid out an Opportunity for All agenda aimed at reducing inequality and restoring upward mobility, keystone of the ideal of the American Dream.© 2014 Karen Rubin/news-photos-features.com

Ponder this: 82 of the richest people in the world have more wealth than half the planet - 3.5 billion people.

Form the image in your mind for a moment.

According to a recent report by Oxfam America, "Working for the Few: Political capture and economic inequality":

  • The wealth of the one percent richest people in the world amounts to $110 trillion. That’s 65 times the total wealth of the bottom half of the world’s population.
  • 400 Americans, with net worth more than $2 trillion, have more wealth than half of all Americans (158 million people) combined.

"This massive concentration of economic resources in the hands of fewer people presents a real threat to inclusive political and economic systems, and compounds other inequalities – such as those between women and men. Left unchecked, political institutions are undermined and governments overwhelmingly serve the interests of economic elites – to the detriment of ordinary people," conclude the study's authors Ricardo Fuentes-Nieva and Nicholas Galasso.

Among the 82 super-richest-in-the-world are the Koch Brothers, who personally and through the PACs and organizations they fund spent $400 million on the 2012 election campaigns - that more money than all the Congressional candidates spent. They are eagerly looking toward 2016, meeting last month with other uber-wealthy donors to plot strategy.

This is why the Koch's are so anxious to make sure that the inequality gap in this country remains - it's not so much about being able to afford the biggest yacht or mansion. It's not even about being able to lord your name on hospitals, houses of worship, university wings or museums.

It's about being able to afford the government you want in order to perpetuate the policies that made you rich and keep you -and your progeny - a Master of the Universe. In the Koch Brothers' case, it is about getting the Keystone XL Pipeline approved, which will net them $100 billion and getting rid of estate taxes. And on the way there, they will make sure Fossil Fuels remain supreme, access to voting is restricted and women's reproductive rights are prescribed.

Here's another example: CEOs who crashed their businesses and the economy still got to collect their "golden parachutes" on the way out because somehow their work contract was considered inviolate under the Constitution, but the pension and retirement benefits of Detroit public workers are voidable. The difference isn't contract law, but who gets to appoint those who decide the law.

And for those who say "the market determines compensation," and "we have to pay these guys or they will leave," how do you justify the fact that just 40 Wall Street guys make the equivalent of 300,000 public school teachers. Who is more valuable to society? Would a Wall Street guy leave his job and become a garbage man if he made $50,000 and the garbage man made $100,000?

Or take Congressman Stephen Fincher (R-TN), who is the second highest recipient of agricultural subsidy in Congress. He is the one who stood up to quote the Bible to justify denying other Americans the ability to eat. The government "handout" that he decries seems to stop at the handout he received, $70,000 farm subsidy haul in 2012, dwarifing the average 2012 SNAP benefit in Tennessee of $1,586.40, and is nearly double of Tennessee's median household income, Donald Carr reported at Huffington Post.

But Fincher is rich and in a position of power - thanks to other rich people - and the people who rely on SNAP are voiceless and powerless.

And the lawmakers in Congress are in that band of brothers, not the one to which the vast majority of the people they are elected to represent belong. Indeed, the President delivered his State of the Union message calling upon the need to address income inequality, to the wealthiest Congress in history.

According to Open Secrets, for the first time, more than half of Congressmembers are worth more than $1 million. (The statistic I want to see is what their net worth is like at the end of their term, compared to when they entered office.)

This reality directly impacts how the lawmakers legislate, Richard Eskow writes, in "A Congress of the Wealthy, by the Wealthy, and for the Wealthy". Millionaires make most of their money from investment income.

He quotes economist Jared Bernstein saying, "Think about these differences the next time you hear a politician explaining why we need to cut taxes on corporate income or capital gains. Or … why, as in the House budget, we have to slash the safety net in order to pay for such upper-end tax cuts.”

And with lawmakers showing a penchant for investing in "too big to fail institutions” like Wells Fargo, Bank of America, and JP Morgan Chase, Eskow says. "Is it any wonder that these institutions haven’t been broken up and Congress has failed to restore the protections of Glass-Steagall?"

Open Secrets found that the most popular investment for members of Congress was General Electric. That is interesting considering that General Electric, despite being hugely profitable (it's a defense company as much as an appliance manufacturer) has managed to pay zero tax for four years. Thank you Congress!

Instead of pointing to the tax code, wage stagnation and how the "little" people get to foot the bill for the powerful people, Republicans, like Paul Ryan, have used the argument that people are rich because they work harder.

"Rich people are rich because they worked harder, my ass," writes Laura Clawson for Daily Kos Labor. "This is a convenient belief if you're wealthy, but in the vast majority of cases, reality it is not. And on that mistaken—and often self-interested—belief rests a long list of Republican policy positions that are increasing inequality and poverty, year by year by year.

"A child raised in the bottom fifth of the income scale through much of the southern United States has around a 5 percent chance of rising to the top fifth—4 percent in Atlanta and 4.3 percent in Charlotte—while a low-income child has a 9.6 percent chance of rising in Los Angeles and 11.2 percent in San Francisco. Do Republicans think poor kids in California are just twice as likely to be hardworking as poor kids in Georgia and North Carolina? Or might there be something else going on?

"The 'this is about advantages and inequality, not individual merit' hypothesis gains strength when you learn that rich kids with below-average test scores are more likely to graduate from college than poor kids with above-average test scores."

Incomes for the top 1% have increased, and incomes for the top 0.01% have increased even more. Between 1979 and 2007, the average incomes of the 1% increased 241%, compared to 19% growth for the middle fifth of America and 11% for the bottom fifth. Put another way, in 1980 the average American CEO earned forty-two times as much as his average worker. In 2001, he earned 531 times as much, Pierce Nahigyan reported, in "8 Facts About American Inequality."

"Compare the $29,840 average income for the bottom 90% to the $161,139 of the top 10%. Compare the $1 million average income of the top 1% to the $2.8 million of the top 0.1%. Yet both still pale beside the $23 million average income of the top 0.01%."

Whenever anyone brings up the subject of making the tax code fairer or the fact that the vast majority of Americans pay a greater percentage of tax that the wealthiest because they pay 8.5% FICA taxes on 100 percent of their income, but the top 1% pay it on virtually none, since it caps off at $106,000 they scream "Socialist!" "Income Redistribution!" "Handouts!"

Here's what Texas Republican Congressman Randy Weber tweeted just before Obama entered the Capitol to deliver the State of the Union address: " On floor of house waitin on "Kommandant-In-Chef"... the Socialistic dictator who's been feeding US a line or is it "A-Lying?"

There are those who completely discount the growing inequality gap - because it is convenient and suits their interest But studies have shown that the American Dream is becoming the rarest of exceptions - more of a delusion. The United States ranks at the bottom of industrialized countries in mobility, that is, the ability to rise up from one's status.

Today, in contradiction of the myth of America's Exceptionalism, your destiny is in fact linked to your genes or zipcode.

America has the second-highest level of income inequality, after Chile, according to the Organization for Economic Cooperation and Development which studies 34 developed countries.

Back in 2011, Obama observed in a speech in Kansas that whereas half of people living in poverty were able to rise into the middle class after World War II, "it’s estimated that a child born today will only have a one-in-three chance of making it to the middle class."

This has been developing over the past 30 years and the factors include the destruction of unions, tax policy, trade policy, the SEC's laissez-faire regulatory policy, and now the capper is the Supreme Court's Citizen United decision equating cash with speech and corporations as people.

President Obama appreciates that the growing inequality is a crisis in the social and political order on par with how climate change is an impending environmental (and economic) catastrophe.

Obama has set addressing the underlying causes of income inequality as the theme for the 2014 "Opportunity for All" agenda - which it is important to recognize does not mean "equal" outcomes, as if everyone should make the same amount of money, but "equal opportunity" to rise up.

What I believe unites the people of this nation -- regardless of race or region or party, young or old, rich or poor -- is the simple, profound belief in opportunity for all -- the notion that if you work hard and take responsibility, you can get ahead in America....

The bottom line is Michelle and I want every child to have the same chance this country gave us. But we know our opportunity agenda won’t be complete -- and too many young people entering the workforce today will see the American Dream as an empty promise -- unless we also do more to make sure our economy honors the dignity of work, and hard work pays off for every single American.

Obama recognizes the complex interaction of various forces that perpetuate the cycle of poverty and crush opportunity.

One of the essential elements is to raise the minimum wage to $10.10 (starting with federal contractors). this is a proposal that is supported by two-thirds of Americans, but Republicans are dismissive saying "why not raise it to $1000 an hour?" Obviously because no one is suggesting that. Also, they argue, making it more costly to hire people means fewer people will be hired. Except that is not what has happened over the decades when the minimum wage was raised.

Instead, you would be able to cut the budget deficit - which is what Republicans say is the Number One national security threat (not terrorism, not poverty, not joblessness, not climate change) - because more people would be making more money, which means more income tax revenue for the government, and less outlay of safety net benefits like food stamps (which Republicans hate so much but which big donors like Walmart and McDonald's expect their employees to use, because working 40 hours a week at $7.25 an hour doesn't bring a family above the poverty line). It would also result in fewer people taking the Earned Income Tax Credit. And more money in the pockets of families means more consumer demand for the products and services that businesses want to sell, which means they will finally be able to hire again. And so this cycle of a jobless recovery finally would be broken.

As the President said: No one in America who is working full time should be have to live in poverty.

Other proposals that Obama is advancing to address income inequality: MyRA, a new kind of Roth IRA geared to lower-income earners to enable them to save with pre-tax money; pay equity; expanding the Earned Income Credit; new protections for homeowners, recognizing that home ownership was not only a keystone of the American Dream but traditionally the greatest source of wealth for most middle class Americans.

Opportunity Agenda initiatives that would help restore upward mobility include universal Pre-K in order for children to maximize their potential in school and not enter the system already left behind and behind the eight-ball: job training, expanding apprenticeships by mobilizing business, community colleges and labor; making college more affordable and limiting student loan repayments to 10% of salary; investing in research and development; encouraging employers not to discriminate against the long-term unemployed (starting with his admonition to federal agencies in their hiring).

Extending benefits to the long-term unemployed would also shore up consumer demand which bolsters businesses and ultimately leads to more hiring, as opposed to cutting off benefits for 1.3 million (which will soon grow to 4 million), which will act as a drag on local economies.

Now, Republicans keep insisting that the only role that government should play in mitigating the inequality gap is to increase jobs because with more jobs, wages will rise. And the way to do that, they say, isn't to invest in infrastructure or research and development (which in every era has sparked the creation of new industries), but the way to create jobs is to cut taxes and cut spending (even though that has never been shown to work).

They continue to make this claim even though that has not proved to be true as the Recovery and the lost decade of Bush tax cuts have shown: not only is it a jobless recovery in face of record corporate profits (and private sector hoarding $3 trillion in cash), but wages have remained stagnant, which means that W-2 earners actually have less buying power. (The only reason the unemployment rate has fallen is that more Baby Boomers who were compelled to go back to work or stay in the workforce because of the collapse of their retirement funds, now have seen their funds rebound with the record rise in the stock market.)

So, other Obama initiatives have to do with incentivizing businesses from around the world to produce here in the United States: he continues to call for a "grand bargain" on jobs to pay for investments in infrastructure by reforming business taxes and closing loopholes that help companies ship jobs overseas.

He is calling for expansion of SelectUSA to create the first-ever federal effort to bring jobs from around the world to the U.S. and transforming communities across the country into global centers of advanced manufacturing through a national network of manufacturing institutes.

Nothing demonstrates the complexity of solving the problem of income inequality as much as the proposal for comprehensive reform of the Immigration System.

"Too many employers game the system by hiring undocumented workers and there are 11 million people living in the shadows. Neither is good for the economy or the country. Immigration reform will grow our economy by more than $1 trillion over the next two decades, help create thousands of new jobs, raise productivity, and unite families in a timely and humane manner."

Giving undocumented workers legal status would bolster wages for everyone, make it easier for the government to collect income and FICA taxes.

Think back to not too long ago - before the progressive agenda took force - and college admissions, jobs, management were pretty much an "ol'boys club". It was okay to blacklist and blackball and restrict people based on race, gender, age, ethnicity, and on and on and on.

It's been only a relatively brief time - a couple of generations only - that many of these barriers were broken down, and these are the very ones the rightwing zealots want to put back, so that women will know their place (barefoot and pregnant and giving obeisance to their husband).

There may not be the same laws that allow communities like Levittown to be "restricted" to whites-only who received generous mortgages, or colleges or jobs that can use quotas to keep out Jews, Blacks or Women, but there are barriers to opportunity that begin with what zipcode you live in which will define your educational opportunity, the network you graduate college into or that your family can open up to you; the amount of money you get to keep in your pocket because of tax structure, or the amount of grants and tax incentives your business venture can obtain (like David Samson and the Rockefeller Group by virtue of the Chris Christie connection).

As the president noted in the SOTU: "A child born into the bottom 20% of the income scale has a less than 1-in-20 shot of making it to the top if they do not go to college. Earning a college degree changes those odds to closer to 1-in-5."

Our community can scoff because I'll bet the vast majority of us are on a path to fulfillment, starting with the quality of our schools and neighborhoods which are able to launch our kids into the best schools, and so on and so forth.

And we have had our share of individuals who game the system, like selling success on the SAT, advancing the Madoff Ponzi scheme, or cultivating a culture of insider trading like Steven A. Cohen.

But in the end, these advantages can only take you so far; in the end, the numbers of truly successful become like winning the lottery, rather than a matter of talent or initiative. The numbers don't work out and the whole society implodes. We have seen this time and again over the millennia of human history, all boiled down to the adage, "how the mighty must fall." Because such societies are unsustainable.

Obama has laid out an Opportunity Agenda that can put us back on track to true economic revitalization and progress. The kind of progress where in fact, "a rising tide lifts all boats."

Society will benefit by inclusion because the process will allow each individual to fulfill their potential.

And the elites shouldn't be so self-confident that they can contain the masses forever.

"Change is coming anyway," Robert Reich, the former Labor Secretary, wrote in a column, "Why There’s No Outcry," for Nation of Change. "We cannot abide an ever-greater share of the nation’s income and wealth going to the top while median household incomes continue to drop, one out of five of our children living in dire poverty, and big money taking over our democracy.

"At some point, working people, students, and the broad public will have had enough. They will reclaim our economy and our democracy. This has been the central lesson of American history.

"Reform is less risky than revolution, but the longer we wait the more likely it will be the latter," Reich stated.

Karen Rubin, Long Island Populist Examiner
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