| Recently released government reports show that the gap is widening between the superrich and the vast majority of the working class in the United States. Both the Congressional Budget Office and the Federal Reserve Board have issued reports confirming this development. Data released by the Center on Budget and Policy Priorities is also clear—the rich are becoming richer while the working class is falling farther and farther behind. From 1979 to 2003, the wealthiest 1 percent of the population saw their average after-tax yearly income increase 129 percent from $305,800 to $701,500. For this same period, the poorest 20 percent of the population saw their income change by less than 5 percent from $13,500 to $14,100—an increase of only $600.
The CBPP report states that “income is now more concentrated at the very top of the income spectrum than in all but five years since the mid-1930s. … The richest 1 percent of households now receive a larger share of the national income than at any time since 1937.” From 2001 to 2004, the wealthiest 10 percent saw their average net worth grow by 6 percent to 3 million dollars. In contrast, those in the bottom quarter of the wealth scale saw their net value fall from $50 in assets to $1400 in debt during the same time period. While the U.S. ruling class falsely claims to be spreading democracy and equality by occupying Iraq and Afghanistan, institutional racism remains a daily reality in the United States and economic segregation is growing. The Federal Reserve reports that growth in net worth rose faster for white families than for families of color. The median value of assets—home, savings, car and so on—rose for white families but fell for families of color. These reports reveal that the increasing wealth gap between the ruling class and the working class is a systematic trend in capitalism. A system that relies on producing ever-expanding profits for the banks and corporations can only result in greater poverty for the vast majority of working-class people, who must work to survive. Capitalism: profits over people In the capitalist system, the accumulation of wealth for a tiny elite is the driving force in society. Tax cuts for the rich and massive cuts to social programs are all part of the nature of capitalism. In spite of all the propaganda rationalizing and justifying the wealth of the ruling class and their managers in government, there is an economic truth that Marxists understand. It is only human labor in the productive process that creates profits for the ruling class. Workers are paid for some of the value they produce each day, but the remainder of the value they create in producing goods and services is kept by the owners as profits. The unpaid labor of the working class is the source of profits that the billionaires and millionaires legally steal every day. This points to an irreconcilable contradiction in capitalist society: Wealth is created by those who work to survive, yet society’s wealth is utilized to improve the “well being” of a tiny minority of enormously rich owners. If profits are the driving force in society, then increasing profits is the ultimate aim for capitalists—both in the private sector and in the government. One of the quickest ways to maximize profits for the ruling class is to drive down the costs of production. This attempt to push down production costs is behind the trend to reduce or eliminate health, retirement and other benefits paid by the owners to the workers. It is behind the trend of government cutbacks and massive tax breaks for the wealthy. The capitalist owners want all workers to either pay for social benefits themselves or go without them. The number of people without health insurance has skyrocketed from 40 million in 2000 to 46 million in 2004. Pension plans are being gutted and de-funded as corporations use bankruptcy to steal these deferred wages from workers to pay banks and corporate investors. Government for the rich Private corporations aren’t the only ones pushing to eliminate benefits. The Bush administration has worked especially hard to increase profits for the rich at the expense of the entire working class. In February 2005, President Bush submitted a $2.7 trillion budget for the year 2006 to Congress that increased spending on the military and homeland security. In order to “afford” these increases, the Bush administration proposed cuts in social service programs that would make millions of people poorer, increase homelessness and drive down the quality of life for the elderly and those on fixed incomes. Bush’s recently unveiled budget for 2007 continues these regressive cuts and proposes another boost in military spending. In addition to the budget cuts, the passage of new tax laws during Bush’s first term was an assault on the working class. These laws greatly reduced the taxes paid by the richest 10 percent of the population. They shifted the burden for paying for the cost of the federal government to the working class. This shift in wealth has been carried out under both Democratic and Republican administrations. Immediately after Sept. 11, 2001, the ruling class used the events to ram through a host of repressive laws and legislation. Capitalist politicians of all stripes said that workers must sacrifice civil liberties and their pocketbooks in the interest of “national security.” An unlimited amount of government funding has been used to forward so-called national security initiatives. The Transportation Safety Administration was formed, as was the menacing Department of Homeland Security. The government told working-class people that, along with a loss of many hard-won civil liberties, it was their patriotic duty to pay for these expenditures through heightened taxes on air travel and other fees. The capitalist government made huge expenditures to bomb Afghanistan and invade Iraq, all the while justifying the cuts in social services as necessary to fund these imperialist wars and reduce government red ink. As more and more services historically provided by the government are eliminated, more and more working families are becoming poorer and going into debt. More billionaires as poverty increases The tax cuts enacted in 2001 are set to expire at the end of 2010. The Bush administration is fighting to have Congress make the cuts permanent. If the cuts are made permanent or extended, it would result in the wealthiest 1 percent of households receiving a total return of $917 billion—29 percent of the total tax savings.
During his budget justification speech in 2005, Bush said that social programs were subject to reductions in order to fund the “war on terror.” Therefore, cuts were deemed necessary by the capitalist class and their government managers in the following programs: education, veteran’s health benefits, medical research, environmental protection and low-income assistance in the form of housing, energy assistance, nutrition and childcare. The Center on Budget and Policy Priorities reports, “The total savings that would be achieved over the next five years from the cuts the budget would make in these domestic and other ‘discretionary’ programs would be less than the cost of the tax cuts just for households with incomes over $1 million.” In other words, the programs counted on by the working class had to be cut in order to give the millionaire class $67 billion in tax cuts. Between the budget cuts aimed at the poor and the tax breaks for the wealthy, the United States is on a short list of countries that suffer the most unequal distribution of wealth. In this category, the United States is behind only capitalist Russia and Mexico. For example, Wal-Mart’s owners, the Walton family, have 771,287 times the wealth of the median family household. And the average CEO now brings home a paycheck that is 431 times that of the average worker. Additionally, as of 2004, 374 billionaires lived in the United States. While the billionaire club continues to expand, the wealth of these super-rich exploiters also grows. In the 1980s, the average net worth of the richest 400 people in the United States was $400 million. Today, the average is a whopping $2.8 billion. Growing old getting more costly While the capitalist class accumulates wealth, the further impoverishment of the working class is creating structural changes in how workers live out their retirement years. According to the Federal Reserve, about 70 percent of families in the United States own their own home as a primary residence. For many working-class families, paying off a home mortgage ahead of retirement and leaving it to their survivors is one of the achievements of a lifetime of working. Those who survive the homeowner use the inheritance to continue the cycle, passing on decades of labor that the house represents to the next in the family line. However, as more workers are living longer lives, the benefits received are not sufficient to keep up with the increasingly high cost of living. Many elderly people cannot afford the rising cost of health care and medicine. Because of this, working-class people are less able to own homes and pay off mortgages. The number of retirees turning to “reverse mortgages” to finance their existence is increasing. Reverse mortgages are loans against the value of a home that are normally paid off when the house is sold or when the borrower dies. In 2005, more than 43,000 retirees took out reverse mortgages insured by the Federal Housing Authority, a six-fold increase from 2000. If this trend continues, the result will be the further impoverishment of future generations of the working class who will no longer be able to benefit by inheriting family homes and property. Fighting the anti-worker attacks The ruling class is on an offensive to grab more of the wealth created by the working class. It is wielding the club of “national security” and budget cuts by the government, along with elimination of benefits by private capitalists. The ruling class is attempting to continue to push down the standard of living for all workers in the United States. As living standards decline for all workers, many sectors of the working class are becoming willing to fight against the owners because they are forced to do so. Even in the face of a rise in class hatred by the working class based on this theft, organized mass resistance is the only way to stop the ruling class offensive. Articles may be reprinted with credit to Socialism and Liberation magazine. |
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