The income gap: you're getting poorer, and the rich are getting richer

Two articles about income inequality in the US, getting worse every year, especially under Bush:

1. Growing Gulf Between Rich and Rest of US -- by Holly Sklar

Guess which country the CIA World Factbook describes when it says, "Since 1975, practically all the gains in household income have gone to the top 20% of households."

If you guessed the United States, you're right. The United States has rising levels of poverty and inequality not found in other rich democracies. It also has less mobility out of poverty.

Since 2000, America's billionaire club has gained 76 more members while the typical household has lost income and the poverty count has grown by more than 5 million people.

Poverty and inequality take a daily toll seldom seen on television. "The infant mortality rate in the United States compares with that in Malaysia -- a country with a quarter the income." says the 2005 Human Development Report. "Infant death rates are higher for [black] children in Washington, D.C., than for children in Kerala, India."

Income and wealth in America are increasingly concentrated at the very top -- the realm of the Forbes 400. You could have banked $1 million a day every day for the last two years and still have far to go to make the new Forbes list of the 400 richest Americans. It took a minimum of $900 million to get on the Forbes 400 this year. That's up $150 million from 2004.

"Surging real estate and oil prices drove up several fortunes and helped pave the way for 33 new members," Forbes notes.

Middle-class households, meanwhile, are a medical crisis or outsourced job away from bankruptcy.

With 374 billionaires, the Forbes 400 will soon be billionaires only.

Bill Gates remains No. 1 on the Forbes 400 with $51 billion. Low-paid Wal-Mart workers can find Walton family heirs in five of the top 10 spots; another Wal-Mart heir ranks No. 116. Former Bechtel president Stephen Bechtel Jr. and his son, CEO Riley Bechtel, tie for No. 109 on the Forbes 400 with $2.4 billion apiece. The politically powerful Bechtel has gotten a no-bid contract for hurricane reconstruction despite a pattern of cost overruns and shoddy work from Iraq to Boston's leaky "Big Dig" tunnel/highway project.

The Forbes 400 is a group so small they could have watched this year's Sugar Bowl from the private boxes of the Superdome.

Yet combined Forbes 400 wealth totals more than $1.1 trillion -- an amount greater than the gross domestic product of Spain or Canada, the world's eighth- and ninth-largest economies.

The number of Americans in poverty is a group so large it would take the combined populations of Louisiana, Mississippi, Alabama and Texas, plus Arkansas to match it. That's according to the Census Bureau's latest count of 37 million people below the poverty line.

Millions more Americans can't afford adequate health care, housing, child care, food, transportation and other basic expenses above the official poverty thresholds, which are set too low. The poverty threshold for a single person under age 65 was just $9,827 in 2004. For a two-adult, two-child family, it was just $19,157.

By contrast, the Economic Policy Institute's Basic Family Budget Calculator says the national median basic needs budget (including taxes and tax credits) for a two-parent, two-child family was $39,984 in 2004. It was $38,136 in New Orleans and $33,636 in Biloxi, Mississippi.

America is becoming a downwardly mobile society instead of an upwardly mobile society. Median household income fell for the fifth year in a row to $44,389 in 2004 -- down from $46,129 in 1999, adjusting for inflation. The Bush administration is using hurricane "recovery" to camouflage policies that will deepen inequality and poverty. They are bringing windfall profits to companies like Bechtel while suspending regulations that shore up wages for workers.

More tax cuts are in the pipeline for wealthy Americans who can afford the $17,000 watch, $160,000 coat and $10 million helicopter on the Forbes Cost of Living Extremely Well Index.

More budget cuts are in the pipeline for Medicaid, Food Stamps and other safety nets for Americans whose wages don't even cover the cost of necessities.

Without a change in course, the gulf between the rich and the rest of America will continue to widen, weakening our economy and our democracy. The American Dream will be history instead of poverty.

(Holly Sklar is co-author of "Raise the Floor: Wages and Policies That Work for All Of Us" (www.raisethefloor.org). She can be reached at hsklar@aol.com.)  


2. UN Hits Back at US in Report Saying Parts of America are as Poor as Third World -- by Paul Vallely

Parts of the United States are as poor as the Third World, according to a shocking United Nations report on global inequality.

Claims that the New Orleans floods have laid bare a growing racial and economic divide in the US have, until now, been rejected by the American political establishment as emotional rhetoric. But yesterday's UN report provides statistical proof that for many - well beyond those affected by the aftermath of Hurricane Katrina - the great American Dream is an ongoing nightmare.

The document constitutes a stinging attack on US policies at home and abroad in a fightback against moves by Washington to undermine next week's UN 60th anniversary conference which will be the biggest gathering of world leaders in history.

The annual Human Development Report normally concerns itself with the Third World, but the 2005 edition scrutinizes inequalities in health provision inside the US as part of a survey of how inequality worldwide is retarding the eradication of poverty. It reveals that the infant mortality rate has been rising in the US for the past five years - and is now the same as Malaysia. America's black children are twice as likely as whites to die before their first birthday.

The report is bound to incense the Bush administration as it provides ammunition for critics who have claimed that the fiasco following Hurricane Katrina shows that Washington does not care about poor black Americans. But the 370-page document is critical of American policies towards poverty abroad as well as at home. And, in unusually outspoken language, it accuses the US of having "an overdeveloped military strategy and an under-developed strategy for human security".

"There is an urgent need to develop a collective security framework that goes beyond military responses to terrorism," it continues. "Poverty and social breakdown are core components of the global security threat."

The document, which was written by Kevin Watkins, the former head of research at Oxfam, will be seen as round two in the battle between the UN and the US, which regards the world body as an unnecessary constraint on its strategic interests and actions. Last month John Bolton, the new US ambassador to the UN, submitted 750 amendments to the draft declaration for next week's summit to strengthen the UN and review progress towards its Millennium Development Goals to halve world poverty by 2015. The report launched yesterday is a clear challenge to Washington. The Bush administration wants to replace multilateral solutions to international problems with a world order in which the US does as it likes on a bilateral basis.

"This is the UN coming out all guns firing," said one UN insider. "It means that, even if we have a lame duck secretary general after the Volcker report (on the oil-for-food scandal), the rest of the organization is not going to accept the US bilateralist agenda."

The clash on world poverty centers on the US policy of promoting growth and trade liberalization on the assumption that this will trickle down to the poor. But this will not stop children dying, the UN says. Growth alone will not reduce poverty so long as the poor are denied full access to health, education and other social provision. Among the world's poor, infant mortality is falling at less than half of the world average. To tackle that means tackling inequality - a message towards which John Bolton and his fellow US neocons are deeply hostile.

India and China, the UN says, have been very successful in wealth creation but have not enabled the poor to share in the process. A rapid decline in child mortality has therefore not materialized. Indeed, when it comes to reducing infant deaths, India has now been overtaken by Bangladesh, which is only growing a third as fast.

Poverty could be halved in just 17 years in Kenya if the poorest people were enabled to double the amount of economic growth they can achieve at present.

Inequality within countries is as stark as the gaps between countries, the UN says. Poverty is not the only issue here. The death rate for girls in India is now 50% higher than for boys. Gender bias means girls are not given the same food as boys and are not taken to clinics as often when they are ill. Fetal scanning has also reduced the number of girls born.

The only way to eradicate poverty, it says, is to target inequalities. Unless that is done the Millennium Development Goals will never be met. And 41 million children will die unnecessarily over the next 10 years.

For half a century the US has seen a sustained decline in the number of children who die before their fifth birthday. But since 2000 this trend has been reversed.

Although the US leads the world in healthcare spending - per head of population it spends twice what other rich OECD nations spend on average, 13% of its national income - this high level goes disproportionately on the care of white Americans. It has not been targeted to eradicate large disparities in infant death rates based on race, wealth and state of residence.

High levels of spending on personal health care reflect America's cutting-edge medical technology and treatment. But the paradox at the heart of the US health system is that, because of inequalities in health financing, countries that spend substantially less than the US have, on average, a healthier population. A baby boy from one of the top 5% richest families in America will live 25% longer than a boy born in the bottom 5% and the infant mortality rate in the US is the same as Malaysia, which has a quarter of America's income.

Blacks in Washington DC have a higher infant death rate than people in the Indian state of Kerala.

The health of US citizens is influenced by differences in insurance, income, language and education. Black mothers are twice as likely as white mothers to give birth to a low birthweight baby. And their children are more likely to become ill.

The US is the only wealthy country with no universal health insurance system. Its mix of employer-based private insurance and public coverage does not reach all Americans. More than one in six people of working age lack insurance. One in three families living below the poverty line are uninsured. Just 13% of white Americans are uninsured, compared with 21% of blacks and 34% of Hispanic Americans. Being born into an uninsured household increases the probability of death before the age of one by about 50%.

More than a third of the uninsured say that they went without medical care last year because of cost. Uninsured Americans are less likely to have regular outpatient care, so they are more likely to be admitted to hospital for avoidable health problems.

More than 40% of the uninsured do not have a regular place to receive medical treatment. More than a third say that they or someone in their family went without needed medical care, including prescription drugs, in the past year because they lacked the money to pay.

If the gap in health care between black and white Americans was eliminated it would save nearly 85,000 lives a year. Technological improvements in medicine save about 20,000 lives a year.

Child poverty rates in the United States are now more than 20%. Child poverty is a particularly sensitive indicator for income poverty in rich countries. It is defined as living in a family with an income below 50% of the national average.

The US - with Mexico - has the dubious distinction of seeing its child poverty rates increase to more than 20%. In the UK - which at the end of the 1990s had one of the highest child poverty rates in Europe - the rise in child poverty, by contrast, has been reversed through increases in tax credits and benefits.