America doesn’t have a debt crisis; America has a concentration of wealth crisis. In this diary I present data that proves conclusively that between 1983 and 2007, the wealth of citizens in the top 5% of households and the total U.S. federal debt both increased dramatically. The debt problem existed before President Obama and is primarily a result of Neoliberal policies that have redistributed income and wealth from the bottom to the top. Now we have a larger debt problem and a massive concentration of wealth crisis. The elite don’t want you to know the debt problem could be solved by progressive taxation; they want you to think the debt problem is a result of social security and Medicare. Don’t believe them.
(All Data in this diary is in 2007$)
In 1983, the Bureau of Economic Analysis indicates that U.S. GDP was $7.36 trillion; by 2007 it was $14.1 trillion. Over the twenty four year period, U.S. GDP increased by $6.74 trillion dollars, a 91.6% increase, or 3.8% per year.
In 1983, total U.S. federal debt was $2.85 trillion; by 2007, it was $9.3 trillion. Over the twenty four year period, U.S. total federal debt increased by $6.45 trillion, a 226% increase, or 9.4% per year.
In 1983, total U.S. federal debt was 38.7% of total U.S. GDP; by 2007 it was 66%.
So let’s be clear about the federal debt problem in America, it started happening long BEFORE Barack Obama became president. Between 1983 and 2007, a period in which a Republican was president for sixteen of the twenty-four years, America’s total federal debt increased by $6.45 trillion, This represents a whopping 96% of the $6.74 trillion increase in GDP over the period. The only Democratic president during this entire period was Bill Clinton, who balanced the budget and left George W. Bush with a sizeable budget SURPLUS, who quickly handed the surplus over to his base, the wealthiest Americans, via two of the largest tax decreases in U.S. history.
Speaking of the wealthy, how did the richest among us make out between 1983 and 2007 while the government was running up all that federal debt? Let’s take a look.
The U.S. Federal Reserve Survey of Consumer Finances study in 1983 showed that citizens living in the top 5% of U.S. households controlled 56.1% of total U.S. wealth. In the same year, the U.S. Federal Reserve Flow of Accounts Report indicated that total U.S. household net worth was $24.78 trillion. Therefore in 1983, Americans living in the top 5% had combined HH net worth of $13.91 trillion.
There were 83.9 million HH in 1983, so Americans living in the top 5% had an average (mean) HH net worth of $3.3 million. In 1983, median HH net worth was $63,616. In 1983, the average HH net worth for citizens in the top 5% was 52 times greater than the median HH net worth.
In 2007, the U.S. Federal Reserve Survey of Consumer Finances showed that citizens living in the top 5% of U.S. HH had increased their share of total U.S. wealth to 61.9%. The same year, the U.S. Federal Reserve Flow of Accounts Report indicated that total U.S. HH net worth had risen to $64.4 trillion. Therefore in 2007, Americans living in HH in the top 5% had combined net worth of $39.9 trillion.
There were 116.1 million HH in 2007, so Americans living in HH in the top 5% had an average (mean) net worth of $11 million. Between 1983 and 2007, the average net worth for Americans living in HH in the top 5% increased by $7.7 million, or 233%.
In 2007, median HH net worth was $120,300. Between 1983 and 2007, median HH net worth increased by $56,684, or 89%
In 2007, the net worth of an average HH in the top 5% was 91.4 times greater than the median HH net worth; in 1983, it had been 52.2 times greater.
Let me summarize the data in this diary about the twenty-four year period between 1983 and 2007.
1. GDP increased by $6.74 trillion, or 91.6%.
2. Federal Debt increased by $6.45 trillion, or 226%.
3. The wealth of the top 5% increased by $26 trillion, or 187%.
4. In 1983, citizens in the top 5% were worth 52 times as much as an average American; by 2007 they were worth 91 times as much.
What does this all really mean?
It means we live in a country where the wealthy make far too much money – they earn far too large a share of national income. In 1980, citizens in the top 1% captured less than 10% of total national income; today they control almost 25% of the total.
It means we live in a country where the wealthy pay far too little in federal income taxes. In 1980, married citizens paid 70% on all income over $615,335; today, a married couple only pays 35%.
It means we live in a country where the wealthy pay far too little on capital gains. In 1980, citizens paid 28% on capital gains, today only 15%.
Simply put, we live in a country where the wealthy are no longer paying their fair share. If we want to have a decent future for our children and grandchildren, we must ask the most fortunate among us to look in the mirror and be honest. They must answer the following question. How was it possible for the top 5% of households in America to accumulate an additional $26 trillion in net worth between 1983 and 2007 while the U.S. federal debt was increasing by $6.45 trillion?
I believe they know the answer. The wealthy in America have not been paying their fair share for at least a quarter century. It is time for the wealthy in America to step up to the plate. We cannot allow the wealthy to continue accumulating wealth while the government takes on more debt and average Americans are worse off than they were a decade ago. This is not democratic. Hell, this is not even Christian!
But this is going to be hard. The wealthy will not give up one penny without a fight. They think they pay too much in taxes. It’s like the NRA and their guns. If average Americans want to protect social security, Medicare and Medicaid, if we want to keep our cities safe, if want to build better roads and high speed rail, if we want to expand broad band, if we want better schools and teachers, if we want affordable, renewable energy we had better dig our heels in and take a stand against the wealthy. The wealthy want to lower their own income and capital gains taxes and if they have their way, they will dramatically lower corporate tax rates too.
If we want to rebuild the middle class, reduce poverty and restore the American Dream, we must construct a bottom up philosophy of democratic capitalism. Before we do that, we must drive a stake in the heart of Neoliberalism, the free market economic dogma that has driven this country to its knees since the election of Ronald Reagan.
We need a bold, progressive alternative vision. It starts by admitting that we cannot allow the top 5% to accumulate $40 trillion in wealth while the federal government is piling up $14 trillion in debt. I don’t think you have to be a genius to see where all of the money is going. If we do not get the wealthy to pay their fair share in taxes, they will destroy the great, moral programs created to protect the majority of Americans from the rough, under side of free market capitalism.