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Robert Reich: The rich don’t work anymore — working is for poor people

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Robert Reich speaks to Conan O'Brien (Screencap)

Many believe that poor people deserve to be poor because they’re lazy. As Speaker John Boehner has said, the poor have a notion that “I really don’t have to work. I don’t really want to do this. I think I’d rather just sit around.”

In reality, a large and growing share of the nation’s poor work full time — sometimes sixty or more hours a week – yet still don’t earn enough to lift themselves and their families out of poverty.

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It’s also commonly believed, especially among Republicans, that the rich deserve their wealth because they work harder than others.

In reality, a large and growing portion of the super-rich have never broken a sweat. Their wealth has been handed to them.

The rise of these two groups — the working poor and non-working rich – is relatively new. Both are challenging the core American assumptions that people are paid what they’re worth, and work is justly rewarded.

Why are these two groups growing?

The ranks of the working poor are growing because wages at the bottom have  dropped, adjusted for inflation. With increasing numbers of Americans taking low-paying jobs in retail sales, restaurants, hotels, hospitals, childcare, elder care, and other personal services, the pay of the bottom fifth is falling closer to the minimum wage.

At the same time, the real value of the federal minimum wage is lower today than it was a quarter century ago.

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In addition, most recipients of public assistance must now work in order to qualify.

Bill Clinton’s welfare reform of 1996 pushed the poor off welfare and into work. Meanwhile, the Earned Income Tax Credit, a wage subsidy, has emerged as the nation’s largest anti-poverty program. Here, too, having a job is a prerequisite.

The new work requirements haven’t reduced the number or percentage of Americans in poverty. They’ve just moved poor people from being unemployed and impoverished to being employed and impoverished.

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While poverty declined in the early years of welfare reform when the economy boomed and jobs were plentiful, it began growing in 2000. By 2012 it exceeded its level in 1996, when welfare ended.
At the same time, the ranks of the non-working rich have been swelling. America’s legendary “self-made” men and women are fast being replaced by wealthy heirs.

Six of today’s ten wealthiest Americans are heirs to prominent fortunes. The Walmart heirs alone have more wealth than the bottom 40 percent of Americans combined.

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Americans who became enormously wealthy over the last three decades are now busily transferring that wealth to their children and grand children.

The nation is on the cusp of the largest inter-generational transfer of wealth in history. A study from the Boston College Center on Wealth and Philanthropy projects a total of $59 trillion passed down to heirs between 2007 and 2061.

As the French economist Thomas Piketty reminds us, this is the kind of dynastic wealth that’s kept Europe’s aristocracy going for centuries. It’s about to become the major source of income for a new American aristocracy.

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The tax code encourages all this by favoring unearned income over earned income.

The top tax rate paid by America’s wealthy on their capital gains — the major source of income for the non-working rich – has dropped from 33 percent in the late 1980s to 20 percent today, putting it substantially below the top tax rate on ordinary income (36.9 percent).

If the owners of capital assets whose worth increases over their lifetime hold them until death, their heirs pay zero capital gainstaxes on them. Such “unrealized” gains now account for more than half the value of assets held by estates worth more than $100 million.

At the same time, the estate tax has been slashed. Before George W. Bush was president, it applied to assets in excess of $2 million per couple at a rate of 55 percent. Now it kicks in at $10,680,000 per couple, at a 40 percent rate.

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Last year only 1.4 out of every 1,000 estates owed any estate tax, and the effective rate they paid was only 17 percent.

Republicans now in control of Congress want to go even further. Last Friday the Senate voted 54-46 in favor of a non-binding resolution to repeal the estate tax altogether. Earlier in the week, the House Ways and Means Committee also voted for a repeal. The House is expected to vote in coming weeks.

Yet the specter of an entire generation doing nothing for their money other than speed-dialing their wealth management advisers is not particularly attractive.

It puts more and more responsibility for investing a substantial portion of the nation’s assets into the hands of people who have never worked.

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It also endangers our democracy, as dynastic wealth inevitably and invariably accumulates political influence and power.

Consider the rise of both the working poor and the non-working rich, and the meritocratic ideal on which America’s growing inequality is often justified doesn’t hold up.

That widening inequality — combined with the increasing numbers of people who work full time but are still impoverished and of others who have never worked and are fabulously wealthy — is undermining the moral foundations of American capitalism.

 


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2020 Election

Wisconsin sees ‘nightmare scenario’ of COVID cases — as Trump ignores medical advice for campaign rally

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Wisconsin residents saw a “nightmare scenario” situation unfold Tuesday as 5,262 COVID-19 cases rocked the state, resulting in 64 deaths as President Donald Trump held a large campaign rally with few masks and zero social distancing.

"This is no longer a slow-motion disaster," said Gregory Poland, director of the vaccine research group at Mayo Clinic in Rochester, Minnesota. "This is a disaster in warp speed. And it's maddening to me as a physician because a whole lot of people have died and are dying."

https://twitter.com/MJSphotog/status/1321224234270625794

According to the Milwaukee Journal Sentinel, the state Department of Health Services reported 5,262 new cases and 64 deaths Tuesday, both records far above any previous daily counts. The death toll now stands at 1,852.

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2020 Election

Trump’s website hacked and defaced to stop the ‘fake-news’ spread by the president: report

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President Donald Trump's website appeared to have been briefly hacked on Tuesday -- one week before the 2020 presidential campaign.

Visitors to the site briefly saw a fake DOJ takedown notice.

"This site was seized," the message read. "The world has had enough of the fake-news spreaded (sic) by President Donald J. Trump."

"It is time to allow the world to know the truth," the message continued.

The message also claimed "secret conversations" prove the Trump administration "is involved in the origin of the coronavirus."

There is no evidence that is the case, experts believe the virus originated in China.

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GOP frets over ‘green tsunami’ as Democrats spend millions on the offensive in red House seats: report

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On Tuesday, The New York Times reported that Republicans are frustrated over the blitz of Democratic spending in House races, acknowledging they are likely to see their minority shrink even further.

"Bolstered by an enormous cash-on-hand advantage, a series of critical Republican recruitment failures and a wave of liberal enthusiasm, Democrats have fortified their grip on hard-fought seats won in 2018 that allowed them to seize control of the House," reported Emily Cochrane and Catie Edmondson. "They have trained their firepower and huge campaign coffers on once-solid Republican footholds in affluent suburban districts, where many voters have become disillusioned with Mr. Trump."

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