120.8 million American adults

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“The Middle Class Is No Longer America’s Economic Majority” – HuffPost Business:

There are now more low-income and high-income Americans combined than there are people in the middle class, a study released Wednesday found.

According to a Pew Research Center report, there were 120.8 million adults living in middle-income households and 121.3 million in lower- and upper-income households combined in early 2015, marking the first time in the center’s four decades of tracking this data that the size of the latter groups has transcended that of the first.

The study defines middle income as adults earning two-thirds to double the national median, which translates today to somewhere between $42,000 and $126,000 a year for a three-person household.

 
One caveat to the narrative is that while the low-income grew 4 points since 1971, the high income share grew by 7. So off the 11 points lost from the middle class, a majority actually exited the top (oddly enough), rather than sinking below:

Since 1971, the percentage of adults living in the low income bracket has increased from 25 percent to 29 percent, and the percentage of adults living in the highest income bracket has shot up from 14 percent to 21 percent. The middle class, meanwhile, has shrunk from 61 percent to about 50.

 
Of course, mostly the story is that the existing rich just got way richer, very fast.

Op-Ed | Donald Trump: The Democrats’ Best 2016 Asset

The essay below was co-authored with Stephan Richter, Editor-in-Chief of The Globalist, where it originally appeared.

Donald_Trump_by_Gage_Skidmore_3

Hillary Clinton’s campaign may not develop the sizzle the would-be first Madam President and her team has long planned for. But the race has already created its first, truly searing image in the skin of the American nation.

To the Democratic Party establishment’s great relief, this is not the result of any of Hillary Clinton’s missteps, of which there have been some.

Rather, the problem emerged from the inside of the tent of the Republican Party. It is commonly called the “Donald Trump problem.”

The worst part for the Republicans is that Trump has the same effect as a Trojan horse. (Beware of the “Greeks” bearing gifts, Republicans of the United States!)

Trump’s emergence in the polls in Iowa and New Hampshire gives the Democrats a secret weapon to frame the race – and the entire Republican field — well before a Republican nominee emerges.

Trump’s troublesome personality characteristics and policies are essentially also true of nearly all the other Republican candidates, but nobody knows who they are and there are twenty of them. He jumped from 3% to 12% in CNN’s polling of Republican voters nationwide from May 31 to June 28. That puts him within striking distance of Jeb Bush, whose campaign is floundering.

Donald Trump’s net worth

It would be one thing if Trump’s downer effect were only that he embodies ostentatious – even offensive – wealth, far more so than Mitt Romney, the party’s 2012 candidate, ever did. The comparatively reserved Romney came to symbolize the 1% class with “just” $250 million. Forbes values the flamboyant Trump at a minimum of $4.1 billion.

That also means that Trump outperforms the previous wealthiest candidate ever to seek the U.S. presidency — Ross Perot – by a factor of two. (Perot ran in 1992 as an independent against President George H.W. Bush and then-Governor Bill Clinton.)

So, he paints Republicans firmly into the corner of the money worshippers (which inoculates Hillary Clinton against similar charges).

But an ocean of money is not Trump’s only similarity to Mr. Perot. Trump represents a similar brand of nativist economic populism that is popular with a sizable chunk of American voters.

In an era where Democrats are publicly debating the economic values of their party, Trump helps divert the (rightly or wrongly) feared label of “economic populist.”

That alone would not cause Republicans a problem, were it not for the unfortunate fact that nearly all their major candidates this cycle are promoting similarly ridiculous and nativist platforms on economics, immigration and beyond.

Hillary’s man in the Republican camp

Where Trump does Hillary’s (and the Democrats’) bidding is that he is a very loud magnet for media attention. Without the Democrats trying (and leaving fingerprints), Trump highlights how not-ready-for-primetime the rest of the Republican field is.

His outrageous views on racial minorities are doubly politically problematic: First, he profits off employing “illegal” workers at construction sites.

And second, the silence of the Republican field to stand up to Trump’s race-baiting is as deafening as it is electorally deadly.
Read more

O’Malley on GOP economics: “Kind of patently bullshit”

Former Maryland Gov. Martin O’Malley, weighing a Democratic presidential bid, continued to hit his recent themes of re-regulating the economy to protect ordinary people, in a pre-recorded upcoming NPR interview, this time much more strongly:

“And, certainly, the concentrated wealth and accumulated power and the systematic deregulation of Wall Street has led to this situation where the economy isn’t working for us. All of that is true. But it is not true that regulation holds poor people down or regulation keeps middle class from advancing. That’s kind of patently bullshit.

NPR’s full interview with former Maryland Gov. Martin O’Malley will be broadcast Monday on NPR’s Morning Edition.

O’Malley also asked:

“The bigger issue is, do we have the ability as a party to lead by our principles? Or are we going to conduct polls every time we try to determine where the middle is on any given day?”

 
The former governor also recently addressed the National Action Network (Al Sharpton’s organization) and spoke at quite some length — drawing upon his experiences as Governor of Maryland and Mayor of Baltimore — about the death of Walter Scott, police violence against Black Americans more broadly, and the general challenges surrounding race in America today. More than six minutes of excerpts were posted in this video:

Most of his remarks were pretty solid, in my opinion, and I think it’s been a while since a White politician spoke this openly with these words for this amount of time on this issue.

Clinton takes aim at executive pay, hedge fund managers

On day two of Hillary Clinton’s campaign through Iowa, she made an effort to distance herself from some of the Wall Street crowd she used to represent (and drew a lot of financial support from) as a US Senator from New York. Reuters:

“There is something wrong when hedge fund managers pay lower tax rates than nurses or the truckers that I saw on I-80 as I was driving here over the last two days,” Clinton said, perched on a stiff metal chair in the automotive shop of a community college.

Some hedge fund managers and private equity firm partners, among the wealthiest financiers on Wall Street, benefit from a tax code loophole that lets them pay the capital gains tax rate, which is lower than the ordinary tax rate, on large portions of their incomes.

Clinton also repeated her concerns, first voiced on Sunday, that chief executives make 300 times more than the average worker, and sympathized with students discussing the high cost of a college education.

 
The United States has the highest executive pay packages in the world, and the already large disparity between CEO compensation and salaries of the average American worker has exploded since 1980 (although the gap peaked in 2000).

The Globalist itemizes the facts in “CEOs and the Rest of Us”:

1. On average, the CEOs of large U.S. companies received $12.3 million in compensation in 2012, based on an analysis of S&P 500 companies.

2. Given that the average American worker earned $34,645 in 2012, the typical U.S. CEO earns 354 times what the average worker does.
[…]
5. A worker at the U.S. minimum wage would have to work 813 hours — or 20 weeks — to earn an hour’s worth of CEO pay.
[…]
9. The CEOs of the 100 largest companies in the United Kingdom earned an average of just under $3.8 million in 2012. That is 84 times the average British worker’s compensation of $44,743.

10. Britain’s CEO-to-worker wage ratio today is almost exactly the same as the one in the United States in 1990 — more than two decades ago.

11. At that time, U.S. CEOs earned “only” 85 times the average U.S. worker’s wage.

 
Vermont Senator Bernie Sanders, a democratic socialist, has been speaking in Iowa on these issues as well for many months, as he decides whether or not to run against Clinton for the Democratic presidential nomination. Another likely contender, Maryland Gov. Martin O’Malley, also called recently for stronger regulations on Wall Street.

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Fourteen years of exploding wealth at the tippy-top

I pulled this eye-popping bit out of a recent article in The Globalist on the ultra-wealthy in the world of soccer team ownership:

Large fortunes today are really, really large. The top ten billionaires on the Forbes list have the combined net worth of over half a trillion dollars.

To get into the ranks of the world’s top 500 billionaires, you now need $3.3 billion. Back in 2000, the top ten were worth just $280 billion, half as much as today’s bunch, and there were only 322 billionaires in the entire world total. While the fortunes of the super-rich doubled, the average household income in the UK, for example, went up by just one third.

Plutocrats have become a new global ruling class. They live in an effectively borderless world, socialize with other rich people around the globe, keep their fortunes in low-tax havens and influence the political process in their own countries in such a manner that they pay little or no taxes.

Op-Ed: The Problem With Billionaires

My latest op-ed from The Globalist:

In the 1980s, the supply-siders became ascendant in Washington D.C., preaching voodoo economics as “the way, the truth and the life.” Their central claim was that rich people create jobs, while high taxes on the rich leave them with less money to create jobs. Therefore tax cuts for the rich equal job growth.

In reality, this hasn’t borne out. Neither the macroeconomic data nor academic studies have shown much evidence of a direct correlation between rich people having more money and using it to create jobs.

Instead, they mostly just use it to speculate, because it’s essentially extra wealth well above and beyond any other spending or genuine investments they could possibly conceive of.

Read the full op-ed here.

AFD 62 – Role of Government

Latest Episode:
“AFD 62 – Role of Government”
Posted: Wed, 06 November 2013

Sasha discusses the Kentucky Health Insurance Exchange. Then Bill assesses the progress of implementing the rest of the exchange and discusses the role of government in 21st century America.

Additional links:

www.slate.com/articles/business/billion_to_one/2013/10/sweden_s_billionaires_they_have_more_per_capita_than_the_united_states.html