The 1%We Know What We Will Do To You This Summer

The Occupy Wall Street movement no longer occupies Wall Street, but the issue of class conflict has captured a growing share of the national consciousness. A new Pew Research Center survey of 2,048 adults finds that about two-thirds of the public (66%) believes there are “very strong” or “strong” conflicts between the rich and the poor—an increase of 19 percentage points since 2009.

Not only have perceptions of class conflict grown more prevalent; so, too, has the belief that these disputes are intense. According to the new survey, three-in-ten Americans (30%) say there are “very strong conflicts” between poor people and rich people. That is double the proportion that offered a similar view in July 2009 and the largest share expressing this opinion since the question was first asked in 1987.

As a result, in the public’s evaluations of divisions within American society, conflicts between rich and poor now rank ahead of three other potential sources of group tension—between immigrants and the native born; between blacks and whites; and between young and old. Back in 2009, more survey respondents said there were strong conflicts between immigrants and the native born than said the same about the rich and the poor.

"Rising Share of Americans See Conflict Between Rich and Poor
by Rich Morin

With his re-election campaign in full swing, President Obama faces a series of challenges in the upcoming year: namely a 9.1% unemployment rate and an electorate pessimistic about the country’s current track. Many Americans—with outspoken Tea Party activists at the fore—are calling for smaller government and a decrease in federally backed services. Yet most of the Americans hostile to these programs have at some point relied on them and even valued them. Why? Suzanne Mettler argues that it’s largely because most Americans have no idea that they’re receiving these services. They know they pay taxes, but they don’t realize that they’re also benefiting every single day: from the hidden subsidies, little-known programs, and substantial tax breaks that make up the “submerged state.”

In recent decades, federal policymakers have increasingly shunned the outright disbursing of benefits to individuals and families and favored instead less visible and more indirect incentives and subsidies, from tax breaks to payments for services to private companies. These submerged policies, Mettler shows, obscure the role of government and exaggerate that of the market. As a result, citizens are unaware of the benefits they receive, nor do they realize that the policies of the submerged state bestow their largest benefits on the most affluent Americans, exacerbating inequality. Mettler analyzes three Obama reforms—student aid, tax relief, and health care—to reveal the submerged state and its consequences, demonstrating how structurally difficult it is to enact policy reforms and even to obtain public recognition for achieving them. She concludes with recommendations for reform to help bring government policies back to the surface and encourage citizens to reclaim their voice in the political process.

The Submerged State: How Invisible Government Policies Undermine American Democracy by Suzanne Mettler

In 2010, average real income per family grew by 2.3% but the gains were very uneven. Top 1% incomes grew by 11.6% while bottom 99% incomes grew only by 0.2%. Hence, the top 1% captured 93% of the income gains in the first year of recovery. Such an uneven recovery can help explain the recent public demonstrations against inequality. It is likely that this uneven recovery has continued in 2011 as the stock market has continued to recover. National Accounts statistics show that corporate profits and dividends distributed have grown strongly in 2011 while wage and salary accruals have only grown only modestly. Unemployment and non-employment have remained high in 2011.

This suggests that the Great Recession will only depress top income shares temporarily and will not undo any of the dramatic increase in top income shares that has taken place since the 1970s. Indeed, excluding realized capital gains, the top decile share in 2010 is equal to 46.3%, higher than in 2007.

"Striking it Richer: The Evolution of Top Incomes in the United States(Updated with 2009 and 2010 estimates)" by Emmanuel Saez
March 2, 2012