The good news is the country has made substantial economic progress in the last six years since President Bush left office. Instead of losing 800,000 jobs a month as we were during the final months of the Bush administration, we are now creating some 250,000 jobs a month and have seen steady job growth over the last 58 months.
Instead of having a record-breaking $1.4 trillion deficit as we did when President Bush left office in January 2009, the federal deficit has been cut by more than two-thirds. Today the 10-year deficit projection is now $5.5 trillion lower than what the projections were back in 2010.
Six years ago the world’s financial system, as we all remember, was on the verge of collapse. Today that is not the case. In fact, some might suggest that Wall Street is doing too well.
While we can take some satisfaction as to what has been accomplished in the last 6 years, one would be very naive not to appreciate there is also a lot of very bad news in our economy, especially for working families.
Most significantly, the simple truth of the matter is the 40-year decline of the American middle class continues. Real unemployment is not 5.6 percent – including those people who have given up looking for work or people who are working part time when they want to work full time – it is over 11 percent. Youth unemployment – something we almost never talk about in this country – is a horrendous 17 percent, and African-American youth unemployment is over 30 percent. It is totally unacceptable.
Real median family income has declined by nearly $5,000 since 1999. All over this country – in Vermont and in every other State in this country – we have people working longer hours for lower wages. We have husbands and wives working 50, 60 hours a week just to pay the bills. Incredibly, despite huge increases in productivity, in technology, and all of the global economy we hear so much about, the median male worker now earns $783 less than he did 42 years ago. Let me repeat that. That American male worker right in the middle of the economy now earns, after inflation adjusted for wages, $783 less than he did 42 years ago. The female worker right in the middle of the economy now makes $1,300 less than she made in 2007.
When you ask why people are angry, why people are stressed, why people are frustrated, that is exactly why. Further, this country continues to have, shamefully, the highest rate of childhood poverty of any major country on Earth, and 40 million Americans still have zero health insurance.
In the midst of this tragic decline of the American middle class, there is, however, another reality. The wealthiest people and the largest corporations are doing phenomenally well. The result: The United States today has more income and wealth inequality than at any time since the Great Depression. Today the top one-tenth of 1 percent own almost as much wealth as the bottom 90 percent. Let me repeat that because that truly is a startling fact. Today the top one-tenth of 1 percent – which is what this chart talks about – owns almost as much wealth as the bottom 90 percent.
Today one family – the Walton family, owners of Walmart – owns more wealth than the bottom 40 percent of the American people, some 120 million Americans.
I don’t believe most of our people think this is what the American economy should be about. In fact, this is not an economy for a democracy. This is what oligarchy is all about. One-tenth of 1 percent owning almost as much wealth as the bottom 90 percent, 1 family owning the equivalent of what 131 million Americans own, that is wealth. In terms of income – which is what we make every year – what we have seen in the last number of years since the Wall Street crash is virtually all new income is going to the top 1 percent.
Last year – just as one example – the top 25 hedge fund managers earned more income than 425,000 public school teachers. Does anybody believe that makes sense? Twenty-five hedge fund managers making more income than 425,000 public school teachers. That gap between the very rich and everybody else is growing wider and wider and wider.
The fact is that over the past 40 years, we have witnessed an enormous transfer of wealth from the middle class to the top 1 percent. In other words, what we are seeing in our economy is the Robin Hood principle in reverse. We are taking from the poor and the working families and transferring that income and wealth to the very wealthy.
From 1985 to 2013 the share of the nation’s wealth going to the middle class has gone down from 36 percent to less than 23 percent. If the middle class had simply maintained the same share of our nation’s wealth as it did 30 years ago, it would have $10.27 trillion more in cumulative wealth than it does today. Almost $11 trillion would have stayed with the middle class but has disappeared since 1985.
But while the middle class continues to shrink, while millions of Americans are working longer hours for low wages, while young people cannot afford to go to college or leave school deeply in debt, while too many kids in this country go hungry, we have seen, since 2009, that the top 1 percent has experienced an $11.5 trillion increase in its wealth. So the top 1 percent in recent years sees an $11.5 trillion increase in wealth, while in roughly the same period the middle class sees a $10.7 trillion decrease in wealth.
This $11.5 trillion transfer of wealth from the middle class to the top 1 percent over a five-year period is one of the largest such transfers of wealth in our country’s history. Here is my point. This is not just a moral issue, although it is a profound moral issue – and Pope Francis, by the way, deserves a lot of credit for talking about this issue all over the world. Are we satisfied as a nation when so few have so much and so many have so little? Are we satisfied with the proliferation of millionaires and billionaires, at the same time as we have millions of children living in poverty? Is that what America is supposed to be about? That is the moral component of this debate.
But this is not just a moral issue. It is also a fundamental economic issue. As we know, 70 percent of our economy is based on consumer spending. When working people do not have enough income, enough disposable income, they are unable to go out and buy goods and services that they would like or that they need. The so-called job creators that my Republican friends often refer to are not the CEOs of the large corporations.
The CEOs of large corporations cannot sell their products or services unless people have the income to buy them. Someone can come up with the greatest product in the world, but if people do not have the money, they are not going to sell that product, they are not going to hire workers to produce that product.
The truth is that the real job creators in this country are those millions of people who every single day go out and purchase goods and services, but if they do not have adequate income, the entire economy suffers.
There was a very interesting article in the Wall Street Journal, written by Nick Timiraos and Kris Hudson, talking about how a two-tier economy is reshaping the U.S. marketplace.
What they talk about is: It is a tale of two economies.
Said Glenn Kelman, chief executive of Redfin, a real estate brokerage in Seattle, “There is a high-end market that is absolutely booming. And then there’s everyone in the middle class. They don’t have much hope of wage growth.”
The article continues.
Indeed, such midtier retailers as J.C. Penney, Sears and Target have slumped.
“The consumer has not bounced back with the confidence we were looking for,” Macy’s chief executive Terry Lundgren told investors last fall.
So what we are hearing – basically what this article tells us – is if people’s income is going down, they are not going to Macy’s, they are not going to Target. Those stores are not hiring workers or are getting rid of workers because the middle class does not have the income it needs.
Here is a very important point. Within President Obama’s recent budget – by the way, I think the President’s budget is beginning to move us in the right direction – there was a very interesting projection that unfortunately got very little attention. Here is the point: Over the last 50 years GDP growth in the United States of America averaged about 3.2 percent. What the President’s budget is suggesting is that more or less over the next 10 years we are going to see 3 percent growth, 2.7, 2.5, 2.3. For the rest of the decade, 2.3 percent.
The bottom line is, if we continue along the same type of economic growth we have had over the previous 50 years, unemployment would be substantially lower, people would be paying more taxes, Social Security, among other programs, would be in much stronger shape.
The debate we are going to be having in the Budget Committee – I am the ranking member of the Budget Committee – are two very different philosophies. Our Republican friends believe in more austerity for the middle class and working families. Their goal, over a period of months and years, is to cut Social Security, cut Medicare, cut Medicaid, cut nutrition programs for hungry children, not invest in infrastructure, and then give huge tax breaks for millionaires and billionaires.
In other words, more austerity for the middle class, tax breaks for the wealthy and large corporations. I believe that philosophy is wrong for many reasons, the most important being that if we want to grow the overall economy, if we want to create jobs, we have to put money into the hands of working people. We do not do that by cutting, cutting, cutting, and imposing more austerity on people who already desperately are hurting.
A far more sensible approach is to create the millions of jobs that our country desperately needs by, among other things, investing heavily in our crumbling infrastructure. Last week I introduced legislation that would invest $1 trillion over a 5-year period into rebuilding our crumbling roads and bridges, rail, airports, water systems, wastewater plants.
If we do that, we make our country more productive, safer, and create up to 13 million jobs, putting money into the hands of working people. It not only will improve their lives, but they will then go out and spend their money in their communities, creating further economic growth. That is the direction we should be going.
We also have to raise wages. People cannot survive on the starvation minimum wage imposed at the Federal level of $7.25 an hour. If we raise the minimum wage over a period of years to $15 an hour, we are going to have billions of dollars go into the hands of people who need it the most, improve their lives, allow them to go out and invest in our economy, spend money and create jobs.
We need pay equity for women workers. It is not acceptable that women are making 78 cents to the dollar for men who are doing the same work. We need to address the scandal of overtime right now, where we have so- called supervisors at McDonald’s who work 50, 60 hours a week, but because they are so-called supervisors do not get time and a half.
We need to make college affordable for all of our workers. In a global economy we need the best educated workforce in the world, not the one where people cannot afford a higher education. We need trade policies that benefit working people and not just large multinational corporations, which is why we should defeat the Trans-Pacific Partnership.
So there is a lot of work that needs to be done. But the bottom line is, if we are serious about dealing with the deficit and debt reduction, if we are serious about growing the middle class, we need an agenda which creates jobs, raises wages, makes college affordable, demands that corporate America start investing in this country and not in China.
We need a pro-worker agenda, not an austerity agenda which will strangle the middle class of this country even more than it is hurting today.
This is edited from a speech Sen. Bernie Sanders made Wednesday from the floor of the U.S. Senate.