US income gap reaches its widest point since the 1920s

[marble falls]

http://www.chicoer.com/ci_24061870/us-income-gap-reaches-its-widest-point-since
By Paul Wiseman, Associated Press
09/10/2013 01:38:58 PM PDT

http://www.chicoer.com/ci_24061870/us-income-gap-reaches-its-widest-point-since

<snip>

WASHINGTON — The gulf between the richest 1 percent and the rest of America is the widest it's been since the Roaring '20s.

The very wealthiest Americans earned more than 19 percent of the country's household income last year — their biggest share since 1928, the year before the stock market crash. And the top 10 percent captured a record 48.2 percent of total earnings last year.

U.S. income inequality has been growing for almost three decades. And it grew again last year, according to an analysis of Internal Revenue Service figures dating to 1913 by economists at the University of California, Berkeley, the Paris School of Economics and Oxford University.

One of them, Berkeley's Emmanuel Saez, said the incomes of the richest Americans surged last year in part because they cashed in stock holdings to avoid higher capital gains taxes that took effect in January.

In 2012, the incomes of the top 1 percent rose nearly 20 percent compared with a 1 percent increase for the remaining 99 percent.

<snip>

But since the recession officially ended in June 2009, the top 1 percent have enjoyed the benefits of rising corporate profits and stock prices: 95 percent of the income gains reported since 2009 have gone to the top 1 percent.

That compares with a 45 percent share for the top 1 percent in the economic expansion of the 1990s and a 65 percent share from the expansion that followed the 2001 recession.

The top 1 percent of American households had pretax income above $394,000 last year. The top 10 percent had income exceeding $114,000.

The income figures include wages, pension payments, dividends and capital gains from the sale of stocks and other assets. They do not include so-called transfer payments from government programs such as unemployment benefits and Social Security.

The gap between rich and poor narrowed after World War II as unions negotiated better pay and benefits and as the government enacted a minimum wage and other policies to help the poor and middle class.

The top 1 percent's share of income bottomed out at 7.7 percent in 1973 and has risen steadily since the early 1980s, according to the analysis.

Economists point to several reasons for widening income inequality. In some industries, U.S. workers now compete with low-wage labor in China and other developing countries. Clerical and call-center jobs have been outsourced to countries such as India and the Philippines.

Increasingly, technology is replacing workers in performing routine tasks. And union power has dwindled. The percentage of American workers represented by unions has dropped from 23.3 percent in 1983 to 12.5 percent last year, according to the Labor Department.

The changes have reduced costs for many employers. That is one reason corporate profits hit a record this year as a share of U.S. economic output, even though economic growth is sluggish and unemployment remains at a high 7.2 percent.

<snip>

[Cal Carpenter]

1. K & R

[TheMastersNemesis]

2. Welcome To the Brave New Economic World Sponsored By The GOP

[R. Daneel Olivaw]

3. Just the GOP?

[Romulox]

6. GOP made bailing out the banks their first priority? Pretty sure that was our President. nt

[marble falls]

8. That's a common misconception, especially among Teabillies whose grasp of history ...

can't process that the bank bailout occurred in 2008 and GWB didn't leave office until January 20, 2009.

[Romulox]

9. Your info is wrong.

The bank bailouts began in 2008, but the vast majority of the monies were disbursed in 2009, the first year of Obama's administration.

It was his administration's first priority.

On February 5, 2009, the Senate approved changes to the TARP that prohibited firms receiving TARP funds from paying bonuses to their 25 highest-paid employees. The measure was proposed by Christopher Dodd of Connecticut as an amendment to the $900 billion economic stimulus act then waiting to be passed.[22]

On February 10, 2009, the newly confirmed Secretary of the Treasury Timothy Geithner outlined his plan to use the remaining $300 billion or so in TARP funds. He intended to direct $50 billion towards foreclosure mitigation and use the rest to help fund private investors to buy toxic assets from banks. Nevertheless, this highly anticipated speech coincided with a nearly 5 percent drop in the S&P 500 and was criticized for lacking details.[23]

On March 23, 2009, Geithner announced a Public-Private Investment Program (P-PIP) to buy toxic assets from banks' balance sheets. The major stock market indexes in the United States rallied on the day of the announcement rising by over six percent with the shares of bank stocks leading the way.[24] P-PIP has two primary programs. The Legacy Loans Program will attempt to buy residential loans from bank's balance sheets. The Federal Deposit Insurance Corporation (FDIC) will provide non-recourse loan guarantees for up to 85 percent of the purchase price of legacy loans. Private sector asset managers and the U.S. Treasury will provide the remaining assets. The second program is called the legacy securities program, which will buy residential mortgage backed securities (RMBS) that were originally rated AAA and commercial mortgage-backed securities (CMBS) and asset-backed securities (ABS) which are rated AAA. The funds will come in many instances in equal parts from the U.S. Treasury's TARP monies, private investors, and from loans from the Federal Reserve's Term Asset-Backed Securities Loan Facility (TALF). The initial size of the Public Private Investment Partnership is projected to be $500 billion.[25] Economist and Nobel Prize winner Paul Krugman has been very critical of this program arguing the non-recourse loans lead to a hidden subsidy that will be split by asset managers, banks' shareholders and creditors.[26] Banking analyst Meredith Whitney argues that banks will not sell bad assets at fair market values because they are reluctant to take asset write downs.[27] Economist Linus Wilson, a frequent commenter on TARP related issues, also points to excessive misinformation and erroneous analysis surrounding the U.S. toxic asset auction plan.[28] Removing toxic assets would also reduce the volatility of banks' stock prices. This lost volatility will hurt the stock price of distressed banks. Therefore, such banks will only sell toxic assets at above market prices.[29]

On April 19, 2009, the Obama administration outlined the conversion of Banks Bailouts to Equity Share.[30]

http://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program#Timeline_of_changes_to_the_initial_program

[marble falls]

14. Au contraire .....

https://en.wikipedia.org/wiki/Bailout

1991 - Executive Life Insurance Company, by states assessing other insurers
1998 - Long-Term Capital Management, by banks and investment houses, not government (see LTCM page).
2003 - Parmalat
2008 - The Bear Stearns Companies, Inc.
2008 - Fannie Mae and Freddie Mac
2008 - The Goldman Sachs Group, Inc. bailed out by the federal government and Berkshire Hathaway
2008 - Morgan Stanley bailed out by The Bank of Tokyo-Mitsubishi UFJ
2008-2009 - American International Group, Inc. multiple times
2008 - Emergency Economic Stabilization Act of 2008[16]
2008 - 2008 United Kingdom bank rescue package
2008 - Citigroup Inc.
2008 - General Motors Corporation and Chrysler LLC- though not technically a bailout, a bridge loan was given to the auto manufacturers by the U.S. government, this is referred to by most as a bailout

US TARP and related programs

In 2008-9 the U.S. Treasury and the Federal Reserve System bailed out numerous very large banks and insurance companies, as well as General Motors and Chrysler. Congress at the urgent request of President George W. Bush passed the Troubled Asset Relief Program or "TARP", funded at $700 billion. The banks have largely repaid the money and the net cost of TARP may eventually be in the range of $30 billion.[18] The bailout of Fannie Mae and Freddy Mac, which insure mortgages, totals $135 billion by October 2010, and could be much higher, depending on the future of the housing and mortgage markets.[19]

The issue of federal bailouts of the banks and big corporations became a major issue of the 2010 elections, with the Tea Party movement in particular focusing its attack on bailouts.[20]

[Safetykitten]

17. You try to tell them the truth, but they don't listen.

[grahamhgreen]

11. Sorry, no, here's what Obama was saying in 2008:

September 24, 2008, 8:55 pm
Obama and McCain Issue Joint Statement on the Economy
By JEFF ZELENY

Updated CLEARWATER, Fla. – The presidential candidates tonight released a joint statement as they prepared to interrupt their schedules for a series of meetings on Capitol Hill and with President Bush.

The statement from Senators Barack Obama and John McCain reads:

The American people are facing a moment of economic crisis. No matter how this began, we all have a responsibility to work through it and restore confidence in our economy. The jobs, savings, and prosperity of the American people are at stake.

Now is a time to come together – Democrats and Republicans – in a spirit of cooperation for the sake of the American people. The plan that has been submitted to Congress by the Bush Administration is flawed, but the effort to protect the American economy must not fail.

This is a time to rise above politics for the good of the country. We cannot risk an economic catastrophe. Now is our chance to come together to prove that Washington is once again capable of leading this country. http://thecaucus.blogs.nytimes.com/2008/09/24/obama-debate-should-go-on/?_r=0

[Safetykitten]

18. "We cannot risk an economic catastrophe"...uh I think he made one, when he gave out the cash to the

banks.

[davidn3600]

13. Obama has protected Wall Street since day 1

Meanwhile he did nothing as the police brutalized Occupy Wall Street protesters.

And he's done NOTHING to help people outside the upper class elite.

[deutsey]

4. K&R

[durablend]

5. MISSION ACCOMPLISHED!

And the rich are STILL bitching that they're not making enough.

[rurallib]

7. mark to return to

[grahamhgreen]

10. Ummm, aren't you supposed to be watching youtube videos of Syria?

[Uncle Joe]

12. Kicked and recommended.

Thanks for the thread, marble falls.

[liberal_at_heart]

15. K&R

[kenny blankenship]

16. This should be the week's top story and the focus in DC

Instead we are all talking about how we can fuck up even worse in the Middle East, and commemorating the Day Freedom Died with displays of jingoist nationalism, designed to goad us into more foolishness abroad.

[Barack_America]

19. Stop buying their shitty products!

You don't need them and it's the only thing they care about.

[hfojvt]

20. interesting that they say 19% is the highest in decades

I had them at 22% in 2006 http://www.koch2congress.com/5.html

But they are using households and I was using tax filers (which unfortunately probably includes a lot of teenagers.)

Not sure why they do not include things like FICA. I mean, the fact that John McCain gets $22,104 in social security benefits is kinda significant since that is more money than many people, often including myself, make at their jobs.