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13 Jul, 2010 23:17

Income gap between rich and poor growing in America

Desperation. You catch a glimpse of it on the streets of Washington DC during rush hour as the gap between the have’s and the have not’s is growing.

Under one awning near Union Station you find “Radio Joe” as they call him. He’s traded the hard hat he wore for 13 years, for a sombrero, a comedy act, and the spare change he collects from commuters going home from work.

Unfortunately I’m between jobs and training programs but I still have to live,” he said. “I might make $22 to $25, on a bad day maybe $2.50.”

He’s been struggling to make a living since losing his job in construction in May of 2007. The people leaving their 9:00 to 5:00 jobs pass by him on the streets looking like they’re on their way up the corporate ladder. In reality though, most Americans are closer to Radio Joe here on the streets than they are to the nation’s wealthiest in their multi-million dollar mansions on a hill.

A new study by the Center on Budget Policy Priorities, a non-partisan left-leaning think tank in Washington DC, shows that the income divide between the top one percent of Americans and everyone else has tripled in the last three decades leading up to the recession. The gap between the rich and poor hasn’t been this large since 1928, better known as the year before the Great Depression.

The have’s are getting a larger slice of the pie, while the have not’s are getting less.

It means there is plenty of income growth in last 20 to 30 years but it hasn’t been reaching most American households,” said Arloc Sherman, a senior researcher at the Center on Budget and Policy Priorities.

Those include working and middle class households, such as the Zell’s in Germantown, Maryland.

I’m in negotiations to keep the house,” said Bernard Zell, an unemployed union electrician.

The CBPP believes government policy isn’t helping decades of rising inequality.

Congress is having trouble getting passed at least the kinds of things that would help at the margins,” said Sherman.

They let an extension of unemployment coverage run out last month, for example.

That’s really the first time that’s happened at such a high level of unemployment in this country,” reminded Sherman.

Losing your benefits, it feels like you can be losing your whole world,” says Zell, who receives them as his only source of income now that his retirement and savings have run out.

Meanwhile the rich are still getting “very oversized tax cuts,” according to Sherman, that were put in place when George W. Bush was President.

It’s a trend that shows no sign of changing according to analysts and economists, possibly making Radio Joe, the new Average Joe, in America today.


Mike Norman, the chief economist at John Thomas Financial argued that the gap between the rich and poor can only be altered to favor the middle class when policies are changed.

One very easy measure would be a cut or a total suspension in the payroll tax,” said Norman.

Current policies channel wealth to the top one or two percent of the American population, creating an income disparity. Norman added, the wealth transfer to the rich has been larger under US President Barack Obama’s policies than under former President George W. Bush

There are measurements that show the United States just below Brazil in terms of income equality, far away from countries where there’s more quality like Sweden and Japan,” said Norman.

Norman said the current economic direction is simply not sustainable and there needs to be more production of goods and services to help shrink the gap.


Les Leopold, author of "The Looting of America" said there is a growing divide in the US, even among the current economic recovery. This is because none of the policy changes or proposals under financial reform address the issue of the rich and poor divide.

We have a almost a pathetic tax system where the people at the top one fraction of one percent pay very little tax and the rest of us have to make up the difference. That’s one of the problems. The other problem is, the deregulatory regime that was put in place for the last 30 years has created an environment for an unbelievable amount of speculation,” said Leopold.

He called the situation a “recipe for disaster on Wall Street.”

Leopold argued that it is much easier for America’s wealthy to rebound than the Middle and poorer class because the upper-class on Wall Street received bailout funds to ensure they continued to profit.

Obama’s financial reform plan is not enough. The plan keeps too big to fail institutions in place and does not address the concerns of the people, argued Leopold.

I don’t think this bill is going to protect us from the next collapse,” said Leopold.


Michael T. Snyder, a blogger and attorney behind TheEconomicCollapseBlog.com argued that the US is headed for a long-term economic collapse.

“The United States government has piled up the biggest amount of debt in the history of the world,” said Snyder.

He argued that the US economy is “swamped in debt” and that the nation is headed for a collapse, even if stimulus plans are attempted.

Snyder further argued that the financial reform bill will do very little, because it has been taken apart by lobbyists to ensure it will bring the least amount of change to the system.

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