RANCHO SANTA FE, Ca., August 13, 2013 — Breaking news: Racism apparently still exists elsewhere in the world while the United States continues to lead in bitter ironies.
Given recent reports of racism in our country, one might have reached a conclusion that we had a monopoly on it. Yet, Oprah Winfrey claims to have experienced it first-hand when, recently in Zurich, Switzerland, she was denied the right to examine a $38,000 handbag.
Almost coincidently, President Obama graced us with a rare press conference in which his opening remarks addressed the plight of the shrinking middle class in America just before he left for his vacation in Martha’s Vineyard.
Given that chain of events, let’s have a real conversation about poverty and our shrinking middle class.
Starting at the top of the food chain, Oprah Winfrey’s estimated earnings of $165 million in 2011 leads Forbes’ current list of Highest Paid Celebrities. While it represents her lowest earning year by far in recent memory, her $2.7 billion net worth should insulate her from joining the 47 million Americans who now live in poverty
Oprah can obviously afford to buy the Tom Ford “Jennifer” crocodile skin bag (for you PETA enthusiasts) she was admiring in Zurich. In fact, she can probably afford to buy Trois Pommes (the store whose clerk committed the sin of saying that Oprah couldn’t afford it) without giving it a second thought.
Conversely, many of our Nation’s poor can’t afford a decent meal and may not know where they will sleep this evening. Certainly, we can assume that The Dolder Grand spa, where Oprah stayed, is out of their reach.
Enter President Obama, who began his press conference Friday by saying, “Over the past few weeks, I’ve been talking about what I believe should be our number-one priority as a country — building a better bargain for the middle class and for Americans who want to work their way into the middle class.”
Then, he quickly changed the subject to national security, only occasionally touching upon the economy when it could be used to politically defend his position on the Affordable Care Act, reinforce his position with respect to immigration, and generally attack the Republican Party for its obstructionist behavior.
Shortly after concluding his press conference, the President departed for his vacation in Martha’s Vineyard. Perhaps he’ll bump into Oprah there.
This comes a few days after his trip to California to appear on The Tonight Show and have dinner with a major campaign supporter who is believed to have bundled over $10 million for the President’s last campaign. He tucked in a trip to Camp Pendleton to deliver a speech to Marines stationed there, which gave the excursion at least some tie to the responsibilities of the Oval Office. Total cost: about $1.8 million for the operation of Air Force One alone.
Then, add the cost of two flights on Marine One, a 20 vehicle motorcade, White House staff and Secret Service, and you could buy a lot of expensive handbags.
Of course, that pales in comparison to the eight-day vacation the President and his family took to Africa just a month before. The estimated taxpayer cost of that adventure was around $100 million dollars.
Should Oprah be able to vacation at a luxury spa and buy the handbag of her choice? Absolutely (…unless you are a strict adherent to the concept of wealth redistribution).
Does the President deserve an occasional vacation? Certainly. Does he also have a responsibility to lead by example? One would hope.
So, let’s examine a few facts about poverty in the United States.
There are approximately 47 million people living in poverty in the United States; nearly one-in-every-six Americans. It represents a number that exceeds the entire population of all but 25 of the other 241 recognized countries in the world.
It’s approximately equal to the total population of Spain. It’s 1.34 times more people than reside in our northern neighbor, Canada. And just in case Oprah is interested, it’s 5.8 times more people than live in all of Switzerland.
Breaking it down, approximately 15 percent of our Nation’s citizens live in poverty. We particularly shine when it comes to our children. Twenty-two percent of our children live in poverty, including 39 percent of our African American children and 34 percent of our Hispanic children.
Speaking of the latter demographics, which no one did during the 2012 Presidential campaign, median income fell 66 percent among Hispanics, 53 percent among African Americans, and 16 percent among Whites during President Obama’s first term.
Correspondingly, median net worth fell 67 percent among Hispanics, 59 percent among African Americans, and 44 percent among Whites during this same period, and as you might suspect, unemployment followed a similarly disproportionate pattern.
You might want to ask why neither the Democratic or Republican Presidential candidates wanted to discuss these numbers during their three debates. Then again, you probably already know.
Obviously, you remember the “War on Women” rhetoric during the campaign. However, were you aware that in 2011, women were 34 percent more likely to be poor than men and that the gender gap had increased 5 percent over the prior year? Of course, free birth control seemed to be a more compelling issue for some people.
The good news is that things could have been worse. You see, our failing Social Security system kept nearly 22 million more people from falling below the poverty level. Otherwise, the number would be closer to 69 million people (leaving only 17 countries with populations greater than the number of our poor).
If our society was to return to the more tradition family model (as some have suggested), the numbers would be even worse. Dual-income families dramatically reduce the number of households that would otherwise qualify as living in poverty.
Additionally, those who argue that we have created a welfare society ignore the fact that over 57 percent of those who benefit from government assistance either work themselves or (as in the case of children) live with someone who works. Those families simply cannot find sufficient work at sufficient pay to survive without some form of aid.
Then again, when the Obama Administration issued a directive stating that the traditional Temporary Assistance for Needy Families (TANF) work requirements can be overridden by a Section 1115 waiver authority under the Social Security law (42 U.S.C. 1315), it gutted a Clinton Administration program that had dramatically reduced welfare by requiring people of able-body and able-mind who received government assistance to work. So, an argument can be made that we have allowed the pendulum to swing toward welfare.
Then, there are those who think that taxing the rich or simply raising the minimum wage would solve the problem. Those individuals are encouraged to do the math and to rethink the potential impact on unemployment.
Now, let’s examine the group of individuals who make considerably less than Oprah and the President but fall short of being deemed as living in poverty: the middle class.
The political Parties used to concentrate their rhetoric on the poor and fight the class battle at that level. Over the past decade or two, someone within the Parties apparently realized that the middle class offers a larger base than the poor and, hence, represents more votes.
It also has greater wealth, which means it can contribute more to campaigns.
This probably explains why our current elected officials often open their speeches by emphasizing their commitment to the middle class and use terms like Main Street versus Wall Street, etc. to fortify the fallacy.
The fact is that the middle class is shrinking and has been for over 40 years. From the early 1970s to today, it shrank from approximately 61 percent of our total population to 51 percent.
One of the more significant drivers behind the compression is associated with the relationship between productivity and median income. Since 1973, Gross Domestic Product (GDP) per household has increased around 46 percent (in terms of constant dollars), while median income in the middle class has only risen 15 percent.
The 31 percent differential was retained by those who are categorized as rich (for example: Oprah and the President).
Interestingly enough, Republicans will argue that capitalism suggests that this is as it should be; that money flowing to the rich will be reinvested in the economy to create jobs. To leverage this hypothesis, a capital gains tax advantage has been created to provide a deferential treatment of passive income to encourage its reinvestment.
However, one might ask, “What guarantees that the money will be reinvested?” Is it based upon the premise that greed dictates that no amount of money will ever be enough; that one can never be too rich? After all, handbags are expensive.
More importantly, when was the last time you heard anyone debate how reinvesting the productivity gain more equitably among wage earners might do more to stimulate the economy and grow jobs? The productivity gain is currently redistributed on a 2:1 basis in favor of executives over non-executives (31 percent to 15 percent). What if it were to be distributed 1:1 or 1:2 (executives versus non-executives)?
Either ratio would significantly expand the middle class and narrow the income gap. The question becomes at what point might the associated surge in the demand for products and services be expected to offset any incremental decline in the capital investment or even obviate the need for some of it?
Here’s another question. Why don’t we hear those types of debates? Instead, we only hear “cut taxes” or “make the rich pay their fair share.” When are we going to demand more of our leaders?
A profound capitalist by the name of Henry Ford once said, “There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible.”
We seem to have forgotten his advice.
Today, we outsource the production of our products and services to those who can provide an acceptable quality of goods and services at the lowest cost possible driven by the lowest paid labor we can find in markets that are not necessarily governed by the regulations we impose on our own businesses. Think about that.
We have no cogent economic policy. We have no cogent trade policy. We have no cogent strategic manufacturing or services policy. We have no cogent foreign policy. We have no cogent energy and environmental policy. We have no cogent education policy. We have no cogent social services policy, and we have no cooperation between those who are charged to address these issues.
What we have are speeches filled with platitudes, two dysfunctional political parties, an embattled electorate, a besieged business environment, and a set of “strategies” that can at best be described as ad hoc.
Superficially, the President seems to understand our current challenges. In his press conference, he stated, “…the challenge is we’ve still got too many people out of work, too many long-term unemployed, too much slack in the economy, and we’re not growing as fast as we should.”
The problem is that he had to leave on vacation before he could offer us his solutions.
So in the absence of leadership, this week’s task is to suggest what can be done to correct our Nation’s economic path. What can we do without government assistance to expand industry and stimulate job growth in the United States? What can we do to offer education and training to provide an opportunity for those in poverty to rise to the middle class or beyond? What can we do to decrease the gap between the middle class and the rich without recklessly abandoning the concept of capitalism?
The answers are out there, and you can find them … unless you’re too busy shopping for a handbag in Martha’s Vineyard.
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T.J. O’Hara is an internationally recognized author, speaker and strategic consultant in the private and public sectors, and in 2012, he emerged as the leading independent candidate for the Office of President of the United States.
T.J. will be providing nonpartisan political commentary every Tuesday on The Daily Ledger, one of One America News Network’s featured shows (check local cable listings for the channel in your area or watch online at 8:00 and 11:00 PM Eastern / 5:00 and 8:00 PM Pacific).
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