In the lead up to the 1992 Presidential election, James Carville famously coined the phrase “It’s the economy, stupid.” It soon became a mantra for Bill Clinton’s successful campaign.
That was thirty years ago. With how much our country has changed since then, we’d like to suggest updating the famous refrain to “It’s the inequality, stupid.”
Economic inequality has exploded in the US since Bill Clinton took office. (It started to tick up after Clinton’s predecessor Ronald Reagan came on the scene, but Clinton’s tenure witnessed a continuation of this trend.) Today, there are 735 billionaires in the US, three of whom – Elon Musk, Larry Ellison, and Jeff Bezos – hold wealth more than 1 million times (!) the median American household wealth. Meanwhile, nearly 60% of Americans live paycheck to paycheck, 1/3 of workers make less than $15 an hour, and roughly 38 million Americans live below the poverty line.
It’s no coincidence that as the rich have gotten richer, more and more Americans have struggled to make ends meet. All available evidence shows that poverty and inequality are intricately linked. A recent report found that the US – a country with one of the highest levels of inequality among developed countries – has more intergenerational poverty than several peer countries. Further, high inequality hurts social mobility and GDP growth, two key mechanisms by which people are able to escape poverty. There is a clear, undeniable relationship between the number of people living in poverty and the size of the gap between the rich and the poor, and policymakers would be foolish not to see it.
There are other reasons besides poverty, though, why we should care about extreme inequality. One of the most important involves the ways in which extreme wealth concentration among a small group of people destabilizes our democracy. As the rich have gotten richer over the last four decades, they have contributed more to political campaigns. (This is especially true since the 2010 Supreme Court Citizens United ruling, which opened the floodgates to unlimited spending by Super PACs.) They have used their wealth to push policy in their preferred direction, which has created a vicious cycle by which economic inequality produces political inequality which creates more economic inequality.
Nowhere is this clearer than in the tax code. Our tax code was once impressively progressive. During World War II, the top marginal federal income tax rate hit 94%, and it stayed above 90% until 1964, covering the entirety of the 1950s, widely considered to be an economic “Golden Age” for the US. Our estate tax was also once very robust – it had a top rate of 77% between 1941 and 1976 – and was effective in shrinking large fortunes.
As time has passed, our tax code has grown much less progressive. Billionaires pay far lower tax rates than average Americans – and sometimes get away with paying no federal income taxes at all. The estate tax has become so riddled with complicated loopholes and exemptions that it’s essentially become an “optional” tax for the rich. Billion-dollar sports leagues like the PGA Tour (which recently merged with LIV Golf, a golf league backed by Saudi Arabia, a country infamous for its human rights abuses) have no tax obligations whatsoever.
We launched our campaign over a decade ago to clean up this mess. We want governments to tax rich people like us properly, just like they did in the past, to contain inequality – NOT just to raise revenue. As time has gone by, the widespread understanding that the tax code plays an important role in shaping the distribution of wealth in America has faded, replaced with a short-sighted, limited view of taxes as mere revenue raisers.
We don’t believe we need to raise taxes on the rich to raise revenue to pay for things the government wants to do. We believe we need to raise taxes on the rich to reduce inequality. Inequality is, as we have already laid out, bad for our economy, bad for the poor, and bad for our democracy. Eliminating inequality through the tax code shouldn’t be a secondary concern as we look for revenue – it should be our absolute first priority.
We recognize that some politicians promoting tax increases on the rich might find it politically expedient to directly link them to new or expanded government programs. Most lawmakers, even the ones who want to tax the rich, aren’t entirely confident that the public will understand how their lives will be directly improved by taxing the rich, and they think they need to convince them to support tax increases by offering other programs.
We don’t think that’s necessary. The problem that we face is NOT lack of support for our vision – most Americans agree that inequality is a problem and that the wealthy and corporations don’t pay what they rightfully owe in taxes. The American people overwhelmingly support raising taxes on the rich – in fact, when the original Biden agenda was proposed as the Build Back Better Act, one of the most popular parts of the bill involved, you guessed it, taxing the rich.
Instead, our problem in advancing our agenda is the political capture by the rich. As things stand in America right now, elected officials respond to the interests and preferences of the wealthy, not their constituents or working people across the country. Something has to give, and we believe that in order to undo this political capture and fight inequality, we need those working people who are most adversely affected by inequality to stand together and demand change. To that end, we recently launched a new initiative, the Great Economy Project, in Whiteville, North Carolina. We are taking our message about the need to fight inequality and tax the rich to small town America and giving people the tools they need to disrupt the vicious cycle of economic and political inequality in America. (Our work was recently featured on NPR’s Morning Edition, which you can read or listen to HERE.)
Everyone that we’ve met in Whiteville – single mothers, retirees, minimum wage workers – has lived inequality in America. From their own experience, they intimately understand how the economy just isn’t working for the many, and only serves to siphon off wealth and income for the few. And now, because of our program, many of them feel compelled to do something about it. In order to close the gap between the rich and the rest and pull our democracy back from the brink of authoritarianism, we all need to come together to demand change. We believe that our work in Whiteville is a start here.
Here’s the Patriotic Millionaires’ mantra: if you care about fighting poverty, and if you care about saving democracy, then fix the inequality, stupid.