Economic indicators suggest 2014 will be the year when a recovery finally arrives, but the long downturn revealed problems that will require a fundamental shift in politics and national priorities to fix.
Certainly the economic side is getting better. The stock market has soared above 16,500 and achieved a record close more than 50 times times this year. Housing prices are improving, auto sales are robust and the unemployment rate is falling.
However, the nation’s recovery from the Great Recession is starkly uneven. Emmanuel Saez, a University of California at Berkeley economist who tracks the rise of top incomes in the United States, reports that between 2009 and 2012 the top 1 percent of incomes grew by 31.4 percent while the bottom 99 percent of incomes grew only by 0.4 percent. When those gains are looked at proportionally, Saez found that the top 1 percent captured 95 percent of the income gains in the first three years of the recovery.
The Great Recession made obvious what has been a steady trend since the 1970s: the increasing concentration of the nation’s wealth in the hands of top earners. Now the top 10 percent receive half the nation’s total income – the highest concentration since 1917.
The wealth disparities of the early 20th century led to the Great Depression. Coming out of that financial catastrophe, the federal government under President Franklin Roosevelt undertook the New Deal, a collection of regulations, taxes and programs that stabilized the economy by sharing the nation’s wealth.
Yet as the nation recovers from a economic downturn exceeded only by the Great Depression, there is no similar legislative movement or even a major political agenda aimed at addressing inequality and its long-term threat not only to the middle- and low-income Americans, but to the nation itself. Indeed, the most animated and focused political movement – the tea party through the Republican Party it holds captive – is committed to doing nothing or undoing the New Deal.
Thus we have a “do nothing” Congress that has offered no response to the crisis endured by working Americans and their children. That indifference has been accompanied by pushes in the states to undermine or prevent unionization, block increases in the minimum wage and obstruct the one large federal program that helps middle- and low-income people, the Affordable Care Act.
President Obama has tried to raise economic inequality as an issue, but he has come to it late and at a time when his political capital – thanks to the GOP’s endless demonizing of Obamacare – is at low ebb.
Democrats generally have managed to roll back some of the Bush tax cuts and impose new regulations on the financial industry, but the tea party has had greater success in the other direction by forcing sequester cuts, reductions in food stamps and an end to extended unemployment benefits. Such callousness endures despite the growing ranks of the poor, a trend in North Carolina that Gene Nichol has so ably documented in his 12-part series on poverty that concludes today on the op-ed page.
Saez says that the mix of doing little on most fronts and retreating on others will only perpetuate the lopsided concentration of wealth. In his report “Striking it Richer” he wrote: “Policy changes that took place coming out of the Great Recession are not negligible but they are modest relative to the policy changes that took place coming out of the Great Depression. Therefore, it seems unlikely that U.S. income concentration will fall much in the coming years.”
On the eve of 2014, there is faint applause over signs of recovery. But the attention shouldn’t be on the rising indicators. It should be on what the Great Recession exposed about the economic balance of the nation, the gaps in the safety net and the inability or unwillingness of Congress and state legislators to take on the most compelling issue of our time – the undoing of the American dream.
The markets are up, unemployment is coming down, but the broader crisis is not abating. May the new year bring a resolve by citizens and political leaders to once more make fairness – and particularly care for those to whom life has been unfair – one of the nation’s defining ideals.