A Tale of Two Economies

MoneyTo call the post-Great Recession economic recovery “lopsided” would require extraordinary levels of rhetorical restraint. The fact is that since the so-called end of the recession, the ultra-rich have continued to get richer, while everyone else has seen their share of wealth flatline or plummet. 

If you want to know what this record-breaking income inequality truly looks like, here are two chilling examples from recent news stories:

Item #1. “US CEOs break pay record as top 10 earners take home at least $100m each”

GMI Ratings released their latest report on CEO pay, and found record-high payouts to top executives, further widening the income gap between top executives and the people who work for them.

CEO PayFrom the Guardian’s coverage:

For the first time ever, the 10 highest-paid chief executives in the US received more than $100m in compensation last year, and two took home billion-dollar paychecks, according to a leading annual survey of executive pay.

Overall, GMI’s poll of pay and other forms of compensation for 2,259 US CEOs found an average rise of 8.47%, less than the double-digit growth they have enjoyed for the past two years. But the average hides a more complex picture. This year’s top earners far outstripped those below them by making huge fortunes cashing in share options as the stock markets bounced back.

The report further illustrates the widening gap between CEO pay and that of the average worker. According to the US census bureau, median household income, adjusted for inflation, was $51,017 in 2012, broadly unchanged from 2011.

Wages for the average household have fallen about 9% from an inflation-adjusted peak of $56,080 in 1999. The census figures show a sharp recovery for those at the top of the wage scale as those at the bottom continue to see falls.

As we’ve written about before, corporate profits are also at a record high—they make up a bigger share of the economy than they have since 1929. These corporations and CEOs have grabbed record profits and payouts by cutting their workers’ hours, wages, and health benefits.

Item #2. Congressional Republicans are cutting food stamp benefits to struggling families

At the same time—at the same exact time—that corporate CEO has skyrocketed, Congressional Republicans have pushed forward their plan to cut federal food stamps to families who literally have nowhere else to turn. We’re talking about the elderly, children, and working families whose employers pay them so little that they have to turn to federal assistance just to eat and keep a roof over their heads.

Already, the average family on food stamps is looking at a $29 per-month cut, thanks to Congressional Republicans. But that’s not enough for the Tea Party members controlling the House of Representatives—they’re pushing for even deeper cuts to the nation’s most vulnerable families.

So we have working families forced to rely on food stamps because big corporations refuse to pay anything close to a living wage—effectively, these corporate interests have dumped their labor costs on the backs of taxpayers. And now the Tea Party Republicans, who were put into office largely through funding by these big corporate interests, want to shred the social safety net.

Oregonian columnist David Sarasohn, who’s written about hunger and poverty with more depth than probably any Oregon writer, laid this at the feet of Congress.

The impact will be especially hard on Oregon, with 21 percent of our population in families receiving food stamps, partly due to our persistent hunger problems and partly due to energetic outreach. The impact will be felt on both dinner tables and in supermarket cash registers, and in the Oregon economy in general.

Besides the budget numbers, the House has slipped a few other things into the food stamp stocking. It wants to change the eligibility rules, cutting 280,000 kids from food stamp families from automatic eligibility for free school lunches. It adds a work requirement for childless adults, even though work is not exactly abundant in much of the country.

Those requirements didn’t come out of the House Agriculture Committee; they were added by Republicans in amendments on the House floor, and the leadership is so fond of them that it named the amendments’ sponsor to the conference committee, even though he’s not on the Agriculture Committee – a move (Rep. Kurt) Schrader notes is “pretty darn unusual.”

So, while ultra-rich CEOs get even richer and corporate profits pile up, Tea Party Republicans are playing dangerous political games with the lives of vulnerable families.

The “lopsided” economic recovery isn’t the product of chance—it’s been carefully designed by corporate interests and billionaires in order to grow their share of wealth while everyone else suffers.

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