Option C
Fight for an Economic Overhaul
Mr./Ms. President,
America used to be seen as the land of opportunity and the land of equality. It
would be difficult to call it that now. During the past two years ten million
jobs have been created, the federal deficit has been halved, and inflation has
averaged less than three percent a year. But one important statistic has not
improved: that of income inequality. According to Census Bureau figures the gap
between those at the top of the wage scale and those at the bottom has been
increasing. Since 1968 the average income of the bottom 20 percent of earners
rose only .8 percent -- from $7,702 to $7,762 -- while the average income of
the top 20 percent rose 44 percent -- from $73,754 to $105,945.
The gap stopped growing between 1987 and 1992, but it shot up again between
1992 and 1994 -- the same two years that produced the rosy figures cited above.
So even when the economy as a whole improved, the income gap continued to
worsen; it is now the widest it has been since the Second World War. This is
not a problem that you can leave alone, hoping it will suddenly disappear: as
the workplace becomes increasingly dependent on mechanization and computer
technology, more and more lower-skilled workers will become unnecessary. And
the people who are being paid a pittance or who are laid off will not be the
only ones affected. Who will buy all the products American companies are
producing? The 20 percent of workers whose wages aren't declining?
If you decide that something substantive needs to be done about this situation,
here are some steps you can take.
The most obvious way to narrow the gap between the rich and poor is to create
new jobs, which would increase competition and put upward pressure on wages. In
order to do this we need to increase consumer demand by cutting taxes, as is
suggested in Option 2. To finance this you would have to revisit your recent
Executive Decision, in which you decided to go ahead with balancing the budget
despite the negative effects it might have on the economy. (Click here to
review this decision).
Cutting taxes across the board will only increase the income gap -- not to
mention empty our country's coffers. Why not ask those at the top of the scale,
whose wages and wealth have been growing steadily since the 1970s, to pay
slightly more in taxes? You could institute a tax on wealth (i.e. stocks,
luxury items, and savings accounts), modeled after ones in Europe, in which
those with incomes over $100,000 would have to pay a small tax (starting at
about .05% in a graduated system) on their holdings. Pensions, annuities, and
household items would not be taxed. Another method would be to increase the tax
on luxury items that only the wealthy buy -- such as expensive cars or
antiques. While this would raise most citizens' taxes very little, it would
bring in billions of dollars a year that could be invested in training programs
for workers who are being left behind by technology.
Many economists agree that one of the main causes of the widening income gap
is the increasing use of technology in the workplace, which has resulted in
many high-paying jobs for a small group, while the manufacturing jobs that once
supported much of the country are disappearing -- victims either of
mechanization or cheaper overseas labor. What about establishing training
programs that people could attend after graduating from high school? And for
those workers already in the workplace we could follow up on an idea that Bill
Clinton proposed in 1992: each company must invest 1.5% of its payroll in
continuing education or training for its workers. This would result in a
better-educated workforce -- better equipped to compete for jobs in today's
global market.
Perhaps the most important part of this program would be to initiate
legislation encouraging better treatment of workers. Since most companies' main
interest is the bottom line, they will keep wages stagnant as long as possible.
Likewise, as long as they have to provide health-coverage for their full-time
employees, they will be tempted to hire more temporary workers. Universal
health-care coverage would help solve many of the thorniest problems
confronting your Administration, and it is of the utmost concern to many of
your voters. Changing the labor laws to make it easier for workers to join
unions (and penalizing those companies that replace striking workers with
permanent ones) would give workers more power to combat downsizing and cuts in
pay and benefits. It is not a coincidence that the income gap began to grow
just as unions began their most precipitous decline in membership, in the late
1960s and the early 1970s. Attack the problem from the other side also: reward
those companies that treat their workers well with tax breaks and investment
credits.
If you want to travel farther down this road, there's a lot more you could do:
end tax breaks for companies which shut down domestic operations to move
abroad; invest in the country's infrastructure as other countries have done to
spur economic growth; provide tuition credits to help poorer families send
their children to college. The most important thing, though, is for you to
realize that the income gap is an issue of great importance to America's
future, one that will not disappear with the changing economy or through minor
tax cuts. The problem can only be solved by giving workers a voice and by
making sure that everyone pays their fair share.
Click 
