The Republicans’ willingness and ability to use the budget process to offer another staggering redistribution of wealth from average Americans to the top two or three percent is pretty depressing. Let’s look at how things stood right before the onset of the Great Recession:
In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one’s home), the top 1% of households had an even greater share: 42.7%.
That was before millions of people had their homes seized by banks who couldn’t even be bothered to properly and legally maintain the paper trail. Things are much worse now.
Besides illustrating the significance of home ownership as a source of wealth, the graph also shows that Black and Latino households are faring significantly worse overall, whether we are talking about income or net worth. In 2007, the average white household had 15 times as much total wealth as the average African-American or Latino household. If we exclude home equity from the calculations and consider only financial wealth, the ratios are in the neighborhood of 100:1. Extrapolating from these figures, we see that 70% of white families’ wealth is in the form of their principal residence; for Blacks and Hispanics, the figures are 95% and 96%, respectively.
And for all Americans, things are getting worse: as the projections to July 2009 by Wolff (2010) make clear, the last few years have seen a huge loss in housing wealth for most families, making the gap between the rich and the rest of America even greater, and increasing the number of households with no marketable assets from 18.6% to 24.1%.
It’s amazing that American workers aren’t out in the streets demanding some justice, but they are so beaten down that the Republicans have no fear of proposing to take $6.2 trillion away from them over the next decade while extending for eternity the Bush’s tax cuts for the fabulously wealthy.
On CNBC, Tea Party Founding Father Rick Santelli was positively giddy that Rep. Paul Ryan’s budget proposal to gut Medicaid and Medicare would change the conversation in this country. Santelli knows a thing or two about changing conversations. I think that the real threat of the GOP’s budget proposal isn’t that it will pass into law, but that it will shift the conversation even further to the right and make it harder for us get back to a fair system.