What Role for the US Government?

By Nancy Alexander

Much of the public is deaf to the claims of President Obama that poverty and unemployment levels would be worse without the injection of stimulus money by his administration which provided tax relief and income support for millions of Americans.
It is not surprising that so many are deaf to this message given that poverty is at its highest level in a half century with 44 million Americans (one in seven) living in poverty, 4 million more than last year.  Vulnerable groups and minorities are especially hard-hit: one in five children live in poverty.  The poverty rate for non-Hispanic whites is 9.4% compared to 25% for both black and hispanic Americans.  Over the last two years, incomes for black households dropped 4.4% compared with 1.6% for white households.
In the US, the wealth distribution became particularly concentrated between 1984 and 2005.  Of all the new financial wealth created by the American economy in that 21-year-period, fully 42% of it went to the top 1%.  A whopping 94% went to the top 20%, which of course means that the bottom 80% received only 6% of all the new financial wealth generated in the United States during the '80s, '90s, and early 2000s. 
Unemployment stands at 9.6%, near an historic high and, at the height of mid-term electioneering, the Obama Administration was just "slapped in the face" with news of significant private sector job losses in September. 
While in terms of recent job loss, men have been harder-hit than women, women suffer from many historical disadvantages, since they often work part-time without benefits and earn less than men.  Indeed, in the US, women earned 59 cents for every dollar earned by a man in 1963, and nearly 50 years later, they are still paid only 77 cents per dollar earned by a man. 
Since most of the benefits of Obama's health care plan have not yet kicked in, there are 51 million uninsured, a record high. 
Harvard professor, Lawrence Katz, exclaims that this is first time in memory that an entire decade has produced no economic growth for the typical American household, as a major imbalance exists between rising returns to capital and stagnant returns to labor.
To many Americans, the Tea Party movement sounds credible when it broadcasts the expensive failures of the administration's programs.  The airwaves are dominated by pundits who describe the US economy as like a race horse that is being ridden by a 600-pound jockey - who represents the heavy weight of the government suppressing the vitality of the economic system.
The public discourse should focus on how the government can address inequality -- an underlying, root cause of economic instability and stagnation.  Over time, the decline in the purchasing power of labor has been offset by encouraging debt accumulation and asset inflation in order to keep consumption rising along with productivity gains.  The decline in purchasing power of workers has contributed to inequality and low growth rates as well as the global financial crisis, which was triggered when millions of homeowners could no longer afford to pay down their mortgages.

For all the noise and publicity that the Tea Party generates, voters have to listen carefully to hear that there was no increase in the ranks of uninsured children or the elderly due to government health programs for those groups and there would be 3 million more families living in poverty were it not for an extension of unemployment benefits. 
Most of the tea partiers squawk about big government; they would just as soon do away with what little safety net exists in the U.S.  Sadly, the lyrics of a famous song apply, people "don't know what they've got 'til it's gone."
By Nancy Alexander