We’re #1! In income inequality, that is

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It’s the economy, stupid.

James Carville coined the phrase in a strategy session with presidential candidate Bill Clinton. On the heels of a recession at the end of President George H. W. Bush’s tenure, the message obviously helped get Clinton elected.

It would be a winning message for 2018 Montana congressional candidates, too. A recent study by USA Today pegs Montana as #1 in income inequality.

The income generated by the middle fifth of households in Montana fell from 15.5% of all income in 2007 — one of the larger shares in the country — to just 14.5% in 2016, now one of the smaller shares and the largest decline of any state.

What’s behind this disparity? It’s “due to the rapid income growth among the upper class,” which has “increased the cost of real estate throughout the state and made housing less affordable for many members of the middle class.” Which also means that more-and-more of the average family’s paycheck is going to rent or mortgage payments. No surprise there.

There are two approaches to resolving the problem: the regressive way (tax cuts to the rich and corporations in the hope that their extra money will trickle down to the hoy polloi) or the progressive way (increasing wages and benefits for the working class, and upping taxes on the rich).

From historian Robert S. McElvaine in the Washington Post:

Yet the plain fact that the trickle-down approach has never worked leaves Republicans unfazed. The GOP has been singing from the Market-is-God hymnal for well over a century, telling us that deregulation, tax cuts for the rich, and the concentration of ever more wealth in the bloated accounts of the richest people will result in prosperity for the rest of us. The party is now trying to pass a scam that throws a few crumbs to the middle class (temporarily — millions of middle-class Americans will soon see a tax hike) while heaping benefits on the super-rich, multiplying the national debt and endangering the American economy.

As a historian of the Great Depression, I can say: I’ve seen this show before.

The flip side is making the middle class more prosperous through wage hikes (a living wage, for starters) and a tax increase on the wealthy. McElvaine continues:

…the (1993) tax increase on the wealthy was followed by one of the greatest periods of prosperity in American history and resulted in a budget surplus.

Of course, the Republicans will tout the recent tax cuts as putting cash in the pockets of the rank-and-file and spurring the economy. From the New York Times’ Paul Krugman:

So the message to middle-class taxpayers is, if you think you were helped by the tax cut, think again. Donald Trump and his allies pretended to give you a gift, but they gave themselves and their wealthy patrons much bigger gifts — and they’re going to stick you with the bill. You’ve been scammed.

As part of the scam Krugman points to corporations doing stock buybacks instead of paying bonuses ($170 billion in buybacks v. $6 billion in bonuses) and the GOP’s proposed cuts to Medicaid and Medicare and Social Security (which House Speaker Paul Ryan refers to as “entitlement reform”).

What does this all mean for Montana’s middle class? Well, maybe if the wealthy aren’t driving up the prices in the housing market, houses become more affordable. And maybe if your paycheck is a little better and you’re not shelling out big bucks for health care, you can afford that downpayment on a starter house.

The phony “populist” message of a Donald Trump: deregulation or immigrants stealing your jobs or “tax cuts paid for by growth” or repealing Obamacare… are all wearing thin. So, Democrats, don’t shy away from a progressive, economic message. A living wage would be a good start, as would a more progressive tax system and a single-payer health care plan.

And maybe we can put a dent in income inequality in Montana and the rest of the country.

 

 

 

 

 

 

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About the author

Pete Talbot

'Papa’ Pete Talbot is first and foremost a grandfather to five wonderful grandchildren. Like many Montanans, he has held numerous jobs over the years: film and video producer, a partner in a marketing and advertising firm, a builder and a property manager. He’s served on local and statewide Democratic Party boards. Pete has also been blogging at various sites for over a decade. Ping-pong and skiing are his favorite diversions. He enjoys bourbon.

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