Obama Era a new Gilded Age, with Rich Getting Richer, Poor Poorer

(By Paul Buchheit)

Anyone reviewing the data is likely to conclude that there must be some mistake. It doesn't seem possible that one out of twenty American families could each have made a million dollars since Obama became President, while the average American family's net worth has barely recovered. But the evidence comes from numerous reputable sources.

Some conservatives continue to claim that President Obama is unfriendly to business, but the facts show that the richest Americans and the biggest businesses have been the main – perhaps only – beneficiaries of the massive wealth gain over the past five years.

1. $5 Million to Each of the 1%, and $1 Million to Each of the Next 4%

From the end of 2008 to the middle of 2013 total U.S. wealth increased from $47 trillion to $72 trillion. About $16 trillion of that is financial gain (stocks and other financial instruments).

The richest 1% own about 38 percent of stocks, and half of non-stock financial assets. So they've gained at least $6.1 trillion (38 percent of $16 trillion). That's over $5 million for each of 1.2 million households.

The next richest 4%, based on similar calculations, gained about $5.1 trillion. That's over a million dollars for each of their 4.8 million households.

The least wealthy 90% in our country own only 11 percent of all stocks excluding pensions (which are fast disappearing). The frantic recent surge in the stock market has largely bypassed these families.

2. Evidence of Our Growing Wealth Inequality

This first fact is nearly ungraspable: In 2009 the average wealth for almost half of American families was ZERO (their debt exceeded their assets).

In 1983 the families in America's poorer half owned an average of about $15,000. But from 1983 to 1989 median wealth fell from over $70,000 to about $60,000. From 1998 to 2009, fully 80% of American families LOST wealth. They had to borrow to stay afloat.

It seems the disparity couldn't get much worse, but after the recession it did. According to a Pew Research Center study, in the first two years of recovery the mean net worth of households in the upper 7% of the wealth distribution rose by an estimated 28%, while the mean net worth of households in the lower 93% dropped by 4%. And then, from 2011 to 2013, the stock market grew by almost 50 percent, with again the great majority of that gain going to the richest 5%.

Today our wealth gap is worse than that of the third world. Out of all developed and undeveloped countries with at least a quarter-million adults, the U.S. has the 4th-highest degree of wealth inequality in the world, trailing only Russia, Ukraine, and Lebanon.

3. Congress' Solution: Take from the Poor

Congress has responded by cutting unemployment benefits and food stamps, along with other 'sequester' targets like Meals on Wheels for seniors and Head Start for preschoolers. The more the super-rich make, the more they seem to believe in the cruel fantasy that the poor are to blame for their own struggles.

President Obama recently proclaimed that inequality "drives everything I do in this office." Indeed it may, but in the wrong direction.

Mirrored from Commondreams.org

Related video:

PBS Newshour reports on the end of extended unemployment benefits and growing economic inequality:

18 Responses

  1. #TruthCH

    Your are RIGHT! Largest SwissBanks love #Obama. President for the people? President’s best friend THE Robert “WOLF OF WALL ST /UBS”

  2. Jillian St Andre

    This is part of why I can’t identify as being far left, no matter how much I sympathize with the far left in terms of policy preferences. You can’t honestly blame President Obama for this state of affairs. What could he have done differently? How has he failed us in any way more grievous than how we, the American people have failed ourselves?

  3. If the 11 trillion gained by the top 5 percent were divided between the bottom 90 percent, they’d each get 40 dollars.
    The bottom 25 percent have zero or negative net worth. So, a person with a poverty-level income, but no debts and a trailer worth $3000, has a greater net worth than the bottom 25 percent.
    The Walton family has .13 percent of US wealth. Or, 99.87 percent of US wealth is not owned by the Waltons.

  4. The article, while important, fails to identify the essential causes of gross income and wealth inequality: Changing norms and institutions not technological change or globalization. The latter forces have affected every advanced country, however, many countries have not experienced US rates of inequality growth. (As an example of the significance of norms and institutions, consider that Denmark’s Gini Index was 24.7 in 1992 and 24.8 in 2011(est.) while the US’s respective numbers were 43 and 47.)
    “[W]hen economists, startled by rising inequality [in the early 2000s], began looking back at the origins of middle-class America, they discovered…that the transition from the inequality of the Gilded Age [1870s to the beginning of the 20th century] to the relative equality of the…[post WWII] era wasn’t a gradual evolution. Instead, America’s postwar middle-class society was created, in just the space of a few years, by the policies of the Roosevelt administration…”
    link to detailedpoliticalquizzes.wordpress.com

  5. All of Obama’s policies have benefited the super rich. Obamacare is a gift of tens of billions in taxpayer money to the greedy, useless private insurance and drug companies, sugarcoated with a few minor benefits to real people to try to hide its real purpose. Larry Summers, Bernanke, Geithner and all the other Rubin acolytes who formed Obama’s economic team was the greatest gift the super rich could possibly have had. Their policies bailed out the super rich by transferring the wealth of the middle class to the 1%, not to mention immunizing all the Wall Street crooks from criminal prosecution. No Republican could have done more for the super rich.

  6. Juan Cole

    Hi, Jillian. I think the “far left” would be Maoism. As for Obama, he’s likeable enough. But his DOJ didn’t prosecute Wall Street malfeasance, he didn’t fight for end to Bush tax breaks for superwealthy, etc. etc.

  7. I don’t think it’s fair to blame Obama about growing wealth inequality either. He has tried to increase taxes on the rich but the GOP stopped him.

    Looking at the big picture, I think leftists should consider abandoning wealth redistribution policies. I feel that pursuing these policies angers the right-wing to such an extent that they refuse to compromise on other issues, such as foreign policy and climate change. They see leftists essentially as thieves, not to be trusted on anything after that point.

    I saw a 2012 exit poll at Fox News that showed that 45% of the top 2% income earners in the US voted for Obama. 55% did the same in 2008. So there are plenty of rich Democrats who can donate their money to the poor if they so choose. Why force the Republican rich to do the same? By and large, wealthy people got rich legally and without force involved.

    I also wonder if Democrat wealth redistribution policies helps suppress criticism from the poor regarding foreign policy, NSA spying and so on.

  8. Hey, Professor, this post sure brought out some apologists and True Believers. Do they monitor the ‘net for posts that might threaten their perfect womb? And of course the Obamites, he’s naught but a figurehead in any event, over the whole Imperial monster, have done nothing to rein in or convert to plowshares or PV panels all that wealth that’s flooding into Contractorland to feed the Great Global IdioticInternetworked Inoperable Battlespace thingie and its actions-without-consequences-or-apparently-much-informed-thought… I like the “what else could he have done?” notion, and the “we have no one to blame but ourselves” talking-point bullet… And don’t let us “anger” our wealthy rulers by “pursuing wealth-redistribution policies,” obscuring that the whole course of political economics in the US for many decades has been exactly that: redistributing wealth from the poorest and least lobby-protected to the richest and most cancerous… All, of course, “legally,” that meaningless fraudulent fig leaf…

    • I just cannot buy this argument. The rich pay huge sums in taxes. The IRS data doesn’t lie, or of it does, we have a massive conspiracy that’s been going on for decades. Most of those taxes go downwards towards the poor.

      Take a look at page 6 of this Congressional Budget Office report: link to cbo.gov

      Excerpt: “Government transfers increase income in all groups,
      but those increases, both in dollars and as a percent-
      age of market income, are larger for groups with
      lower market income”

      It then goes on to say:
      “Because of taxes and transfers, the after-tax income
      distribution is a little more equal than the market
      income distribution. In 2010, households in the
      highest income quintile received 57.9 percent of mar-
      ket income and 47.2 percent of after-tax income… and households in the bottom three
      quintiles received larger shares of after-tax income
      than market income—with the largest difference for
      households in the lowest quintile, which received
      2.3 percent of market income and 9.3 percent of
      after-tax income.”

      The bottom 20% of Americans only make 2.3% of yearly income in the US, but after wealth-redistribution policies take effect, they get 9.3%.

      A lot of that after-tax income is surely Social Security recycling money back to the now low-income, old people who paid into it when they were younger and with higher incomes. But at the end of the day, I doubt most of that 7% gain in income for the bottom 20% is all just money recycling back to once-rich-and-young-but-now-poor-and-old people.

    • And here is Business Insider’s take on each quintile’s effective tax rates: link to businessinsider.com

      I’d like to see how that changes the “after tax income” of the poorest 20% of Americans. After factoring in those local/state taxes, which are agreed to be “regressive” it’s unlikely the bottom 20% have a 9.3% after-tax income per year. Still, I doubt the rich are gaining ground after all taxes are said and done.

      • The difference is in the tax rates on unearned income, which are very low, and which are typically lacking in the portfolios of the bottom quintiles.

        As for doing better, the top 1% took home 10% of the national income in 1970, and it is 20% now, so they are clearly doing twice as well whereas the average wage of the average worker has been flat in real terms since 1970.

  9. All boring comments. Except for blabbering, do any of you have suggestions on how to replace the corrupt rich oligarchy that is ruling America and the world, and stealing the wealth away from hard workers of all classes?

    Presented below are some solutions. The problem is how to initiate the solutions. All suggestions welcomed. Who’s got the guts and wisdom to step up and begin solving the problems? Some Occupy movements?

    Problems/Solutions

    1. Money controls Congress and the news media with their useless headline news and propaganda that keeps many if not a majority of Americans believing that Obama, Congress and politicians are do their best. For whom?

    1. Take the money out of politics. No stupid paid for advertising in any media, no more spin, instant TV blast ads. All campaigning free in all public media.

    All candidates must meet all requirements for the specific position and thus will get equal time, space, interviews, debates, etc.

    2. Congress is half millionaires, the other half becoming millionaires with “inside information” for “inside investments”.
    Many if not most Congress members cannot and do not relate to the working 98% of Americans, nor represent them. And it appears than some don’t know what their doing and don’t consider the long term results.

    Simply prohibit millionaires, their families, corporations and wealth from running for government and public offices.

    3. Is Obama using executive orders to fight the corrupt rule by the rich have on America and the world? No.

    Americans to demand that the President issue executive orders to get rid of the corrupt rule by the rich billionaires and millionaires. Some Occupy movements without disruptive secret agents planted by the FBI, CIA and policing authorities.
    The Occupy movements “must focus” on solutions by supporting candidates for government and public offices that will replace the corrupt millionaires and billionaires.

    4. The Military Industrial Complex is a money making machine for the millionaires and billionaires. It’s not too big to stop.

    Stop fighting useless wars with the Military Industrial Complex. Strengthen the United Nations so that it has the negotiating and military power to stop crimes against humanity in all countries. There must be UN inspections ongoing in all countries. Nuclear bombs are to be eliminated before they begin destroying the world. How stupid can humans be?

    5. The Federal Reserve is a private corporation. Try to buy stock in it……It’s not too big to replace. Incomplete audits….

    Replace the Federal Reserve with a US government department and state banks similar to the North Dakota State Bank..

    Money is the Root of Much Evil.

  10. I’m glad you used the term wealth inequality. Too often, this problem is described in terms of income – income inequality. But the power of the 1% lies not in their income but their massive wealth, that accretes like a black hole, sucking more and more wealth into it from the powerless.

    This is a systemic problem, and it won’t be understood by namecalling and finger-pointing – at Obama, or Congress, or lobbyists. It can only be understood systemically.

  11. Economic analyses that use the term “Obama Era” or otherwise compare today to 2008 and attribute the consequences to President Obama all fail for the seam reason: they don’t take into account the consequences of the previous decade of policy, and how those factors continued, and continue, to influence the American economy. As a result, they attribute those consequences to Obama-era policies, even when Obama-era policies have run directly counter to those pre-existing trends.

    For instance, conservatives like to compare current unemployment rates to those just prior to Obama taking office, as if the job losses that occurred “under Obama” in the first six months of 2009 had nothing to do with the Bush administration.

    I can’t help but notice that, despite the cheap-shot claim that Obama has been driven to promote wealth inequality, the author has been unable to name a single policy of the Obama administration that has contributed to the problem.

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