Addressing structural wealth inequality has to start in the ‘wealthy states’ that promote it
Since the start of this mass death event that’s on pace to kill a half-million of our fellow Americans before the end of this month our government has consistently failed to get ahead of the virus.
For decades we have ploughed trillions of dollars, much of it borrowed money, into our military and security state apparatus so as to be able to fight wars abroad on two fronts.
Of course, who does the media seek out after thousands of marauding Trump white supremacists almost seize the U.S. Capitol to disrupt the Electoral College and the peaceful transition of power? The vary bi-partisan array of generals and intelligence experts who didn’t see it coming.
Despite our armed vigilance against enemies abroad, we were easily upended from within by the lack of disposable masks or enough mutual regard for one and another to embrace basic public health protocols so people we didn’t know, or even family members might live.
Even as we get the daily briefings from Gov. Cuomo and Gov. Murphy, the awful truth is that we are in unchartered territory despite the Governors’ certitude that ‘a return to pre-pandemic normal’ is just on the other side of the next mountain of death.
The media fixates on each iteration of in-person dining and how long the bars can be open for the Super Bowl but rarely asks the tough questions like how our states and nation will handle the reality that several million of the tens of millions of Americans infected by a virus that is still mutating will likely be disabled and requiring long term care.
At the same time, millions of American families teeter on the edge of the economic abyss of eviction or foreclosure having gone through whatever savings they had, while the millionaires in Washington postured for partisan advantage.
Not calculated in the aggregate data crunched by policy makers is the long-term impact on the future lifetime earnings for a generation of students who were cut off from in person instruction during the pandemic. A Pew Research Center survey found that one in five households with homebound students told researchers it was “very or somewhat likely” their children would not be unable to complete their schoolwork because they lacked a reliable internet connection.
Here in the New York/New Jersey region, a year into the pandemic, both Gov. Cuomo and Gov. Murphy have said repeatedly that the pandemic has been most devastating for low- income communities of color where the lack of access to health care insured chronic untreated diseases had established a foothold for decades before COVID came calling.
Across the country, public health experts have flagged the same connection between race, poverty and the prevalence of the highly contagious and deadly virus. As it turns out, this is the same demographic cohort that is the backbone of the essential workforce that’s borne the brunt of the pandemic yet even now some members of Congress would deny them a raise from the current $7.25 an hour federal minimum wage to $15 an hour.
Credit President Biden with opting to go big as he finalizes his $1.9 trillion COVID relief package to try and this hydra headed dragon of a crisis.
Biden was ‘in the room’ in 2009 when he and President Obama came into office amidst the Wall Street meltdown that cost millions of Americans their jobs, life savings, retirement accounts and their homes. The recovery plan they fashioned bailed out Wall Street and assured liquidity at the top at the expense of too Main Streets and Martin Luther King Boulevards that never saw a recovery.
Far too many of our elected officials were caught by surprise by the recent images of thousands of cars lined up to get a bag of groceries during the pandemic.
As early as 2009, Dr. Stephanie Hoopes, the national director of the United Way’s ALICE project had started to document the prevalence of households in places like Morris County that struggled to make ends meet but were not on the radar because they were not living below the actual poverty line which failed to take into account the cost of essentials like childcare or telecommunications.
This cohort United Way researchers would come to describe as ALICE, asset limited, income constrained but employed.
“ALICE is your childcare worker, the cashier at your supermarket, the gas attendant, the salesperson at your big box store, your waitress, a home health aide, an office clerk,” describes the projects webpage. “ALICE cannot always pay the bills, has little or nothing in savings, and is forced to make tough choices such as deciding between quality childcare or paying the rent.”
By 2018, a decade after the Great Recession, 37 percent of New Jersey’s households were either living below poverty or struggling below the poverty line.
Nationally, that same year, the United Way reported that of the 121 million households in the United States, 42 percent (51 million) “could not afford basic necessities of housing, childcare, food, transportation, health care, a smartphone plan, and taxes.”
That was before the pandemic.
Since 2018, millions of Americans have lost their jobs and millions more battled a life-threatening disease with potential long-term health consequences that are still not fully understood.
“ALICE families increased during the Great Recession and never really recovered ten years after, so I would expect that things are even worse with the Coronavirus recession,” said Hoopes during a recent phone interview. “We are seeing an unequal impact of the recession on low wage jobs, with women and minorities being hit harder than folks with a salary and higher wages.”
According to Hoopes, much of the ALICE cohort finds itself caught up as essential workers forced to work overtime out of their home “at a greater risk to themselves but also for their families” to catching COVID.
“These are the same households that have fewer resources to rebound in terms of attending to their own health or of being able to be able to miss work if they have to quarantine, care for a sick family member or homeschool children,” Hoopes said. “Then there’s the second category of ALICE workers who are not essential workers who have lost their jobs or had their hours cut way back. Those folks are suffering in different ways and the crisis has escalated much more quickly for them.”
In their Feb. 5 joint press appearance both Gov. Cuomo and Gov. Murphy came out swinging at Washington, not on behalf of ALICE, but over the $10,000 cap on the federal income tax deduction for local property and state taxes enacted as part of President Trump and GOP’s $1.7 trillion tax cut that proved to be a major windfall for the nation’s biggest corporations and wealthiest families.
It was with a real sense of grievance that both Governors correctly observed that the cap had the result of transferring wealth from higher taxed blue [Democratic] states to red [Republican] states. They argued that this cap on property tax deductions was on top of New York and New Jersey historically sending billions more to Washington than they got back in federal spending.
They argue, that if the nation is to restore its pre-COVID economy, then New York and New Jersey have to be made whole on the SALT tax as well as get a cut of the $350 billion state aid that President Biden has proposed that reflects the impact of the pandemic on the two states.
But how does just restoring that pre- COVID economy square with addressing the nexus of systemic racism and exploding wealth inequality that set the stage for the devastation of the pandemic?
Both New York and New Jersey have their own ways of rigging the economy for the top one percent which also coincidentally are large campaign donors.
As my colleague Peter Woolley, the Director of FDU’s School of Public and Global Affairs, pointed out in a recent op-ed this effort by Democrats like Cuomo and Murphy to reinstate the full property tax deduction for homeowners coincided with millions of Americans being “on the brink of eviction.”
“That limit of $10,000 is relatively recent, a product of the faux Trumpian tax reform of 2017, the gift-of-the-century to America’s global corporate behemoths, Wall Street, and the upper-end of Main Street,” writes Woolley. “But at that upper end of Main Street, where people own properties big enough to be taxed well over $10,000, there is apparently discontent —despite that they also had their top income tax rate reduced by four percentage points (to 35% from 39%).”
The kind of structural change required to spark the broad-based economic expansion requires looking at the old arrangements and subsidies in light of current circumstances. For decades, even as productivity grew and technology proliferated, America’s working class couldn’t catch a break as student and medical debt exploded while wages declined or remained flat.
Should the fabulously house rich be able to build ever larger castles that act as shelter not just for their family but for their income, while so many are homeless or living in unsafe conditions through which something like COVID can run rampant threatening the entire community?
Should New York State continue to let investors hold on to the nickel per $100 dollar transaction that was first imposed by a Republican Governor in 1905 and collected up until the 1980s when a Democratic Governor and New York City Mayor decided to let the investor class keep it?
New York Assemblyman Phil Steck (D-Schnectady) doesn’t think so and has been leading the charge to stop letting the investor class keep the nickel.
“The tax is in sum and substance one quarter of one percent, it’s nothing . . . and according to data from Tax and Finance it was $1.6 billion in June alone,” Steck said during a phone interview. “In the last ten years, we have given up $138 billion. It is the classic race to the bottom. The whole public sector has been starved. It all starts with Reagan and the anti-tax thing and the idea that government is bloated yet huge private corporations have as much bureaucracy as government.”
My advocacy of Steck’s position recently earned me the disapproval of Errol Louis, a Daily News columnist and anchor for NY1 (Charter/Spectrum), who was of the opinion pursing that nickel was a fool’s errand in today’s world where we need to do all we can to placate big wealth lest it leave us.
“But the 1905 law remains on the books, creating an artifact in everybody’s stock market paperwork,” Louis writes. “The tax is still calculated, but 100% of it gets returned.”
“That makes it seem as if a mouth-watering treasure has been handed over to Wall Street players for the last 40 years. It’s a tempting target for activists, labor unions and cash-strapped state lawmakers.”
Louis continues. “A few weeks ago, for example, reporter Bob Hennelly of the Chief-Leader asked Gov. Cuomo about the tax at a news conference. “It’s generated, in the last 10 years, $138 billion, even as the state closed hospitals to communities of color,” Hennelly said, noting that ‘we’re shoveling out this hidden subsidy to Wall Street.’”
“Not so,” counters Louis. “Whatever the merits of not collecting the tax, the digital revolution has scrambled, and nearly obliterated, the remaining connections between Wall Street as a physical place and the multi-trillion-dollar financial transactions of the stock market, which take place on computers that can be sited anywhere in the world.”
The NY1 anchor observed that “most of the billion or so transactions processed by the New York Stock Exchange each day take place on servers located in Mahwah, N.J. It isn’t clear whether New York has the legal authority to tax those transactions.”
The legal analysis I have consulted suggests New York State would prevail if it had the political will to press its case. But that would mean annoying some very deep pockets who’ve been running the table for a long time.
But if New York is too queasy to get its nickel, perhaps it’s time, as some in Congress believe it is, for a national stock transfer tax. Imagine just how many nickels we could have collected toward funding the Green New Deal if it had been in place for GameStop’s casino roller coaster stock market ride.