An American Political Agenda for 2018 and 2020: Six Suggestions for the Upcoming Election Cycles: Part 3

In the first two parts of our series of six suggestions for a political message for the coming election cycles—restoring the dignity of the Presidency compromised by Trump’s bad behavior and healing the racial and cultural fractures Trump created or exacerbated.  Our third suggestion – addressing income inequality and economic dislocation caused by globalization, inequitable tax policy, and other factors – requires more detailed policy exploration and development than we could ever do in a thousand words (the usual length of our posts).  But we can lay out a skeleton, to which we and others can attach meat in the coming months.

First, we must explode a myth. Trump’s campaign didn’t address income inequality. His government, staffed as it is by millionaires from business, hasn’t attacked the structurally created problem of the top one per cent of income earners getting 40% more in one week than the bottom fifth gets in a year.  His tax plan will likely give wealthy Americans most of the breaks.  Trump made a lot of noise about bringing back manufacturing and coal mining jobs.  The media spun the fact working class people attracted to that message also suffered the effects of income inequality into a narrative that made Trump appear the income inequality candidate.  That wasn’t true in the campaign and it’s not true now.

Income inequality results from a myriad of factors, including failures of the educational system, the inability of some groups to adapt to globalization, government tax and wage policies, and what economists call “rent seeking” by individuals at the top.  Rent seeking occurs when those at the top use their wealth and influence to promote governmental policies that keep the largest share of economic assets in their hands and prevent others from getting a bigger slice, in part by keeping the overall pie smaller.  Attacking income inequality requires action on at least three broad fronts.

Education   
America needs a vibrant, effective public school system.  Trump’s Education Department promotes so-called charter schools to the detriment of public schools, a shortsighted and immoral policy.  Promoting charter schools drains student and faculty talent from public schools, leaving low-income communities most dependent on a robust public education system with fewer educational resources when they need more.  Improved economic opportunity and, therefore, less income inequality, also requires strong technical schools and community colleges that prepare people for jobs that exist now and will exist in coming years.  Finally, the federal government must address student debt for traditional college students.  Americans will still need college educations; the difference in income over time for college and non-college graduates remains undeniable.  Reasonable minds can differ about the wisdom of free college, as Bernie Sanders proposed in 2016, but we can’t differ about needing to make college affordable for low income and middle class families.   

Tax and Wage Policies   
Trump’s tax reform proposal remains murky.  The details that have emerged suggest wealthy tax payers will benefit unfairly.  Republicans spin the proposal as a cut in corporate taxes that will spur business creation and, therefore, job growth.  Early indications, however, suggest tax payers in higher brackets and business owners will get large breaks.  We don’t think that will reduce income inequality and amounts to no more than the trickledown theory discredited by our experiences in the Reagan and George W. Bush years.  A tax plan aimed at alleviating income inequality would raise taxes in upper income brackets and reduce or eliminate taxes on middle and low-income individuals.

Attacking income inequality also requires a minimum wage increase to $15 an hour in the quest for a “livable wage” that helps working people get off public assistance.  The current system subsidizes corporate interests by forcing tax payers to make up wages corporations won’t pay in the form of public assistance for which low wage earners remain eligible.

Rent-Seeking   
We’ve heard stories about how, following the 2007-08 recession, Wall Street bankers, hedge fund managers, and other corporate executives continued raking in huge bonuses, even after banks got government bailouts.  This happened for a reason. Economists call it “rent-seeking” – rigging the system for a favored few. Rent-seeking, for example, includes making large campaign contributions so lobbyists employed to influence legislators will find a receptive audience.  Why isn’t the tax system fairer?  In part because special interests have so much influence in writing tax laws.  Campaign contributions from rent seekers eager to keep tax laws in their favor grease the skids for lobbyists.  Why does the federal minimum wage remain at $7.25?  In part because rent seeking business executives successfully advance their argument that raising it will cost jobs.  Despite flimsy evidence for that proposition, legislators – especially Republicans – accept it, in part, because of campaign contributions from individuals and corporations wanting to keep their incomes and profits up.

We’ve only scratched the surface of what it will take to fix income inequality in America.  It won’t happen by promising to bring back jobs to sectors of the economy that saw their peak in the 1950s and may never reach such heights again.  Eradicating income inequality requires rolling up our sleeves and getting our hands dirty on policy questions many don’t want to face.  We have to face them.  If we don’t, those at the bottom, as in other countries, will take their complaints to the streets.  It won’t be pleasant.  We don’t really want that, do we?