Local leaders explore ramifications of income gap on real people
In a Jan. 21 workshop on the state budget at the 2012 Eastern Washington Legislative Conference in Spokane, three speakers shared their commitment to call for more revenue to support the state budget and prevent poor, low-income and middle-class people from absorbing more cuts to programs that help them.
• Gonzaga University law professor Dan Morrissey offered statistics on the national economy and the growing gap between the wealthy and the rest.
• Marilee Roloff, executive director of Volunteers of America, spoke as head of an agency that relies on state funding for one fourth of its budget.
• Kris Christensen, urban missioner at Holy Trinity Episcopal, told of serving in West Central Spokane, a neighborhood rimmed with wealthy homes along the Spokane River, but otherwise considered one of the poorest neighborhoods in the state.
Some citizens are doing well
Dan began by pointing out that while most citizens are struggling, “some corporate citizens are doing quite well.”
While income inequality has always been a problem, he said, it’s greater than any time since the Great Depression. He attributes the gulf to exorbitant compensation paid top executives.
“In the 1950s and 1960s, the gap was less and the economy grew rapidly, with average incomes increasing about 3 percent. In the 1970s, the surge for corporate executives began, their income tripling, while the average family’s income grew only 15 percent in 30 years. By 2007, the top 10 percent drew 50 percent of the country’s wages and the top 1 percent owned nearly 35 percent of America’s assets and the next 19 percent owned more than 50 percent of assets, so one-fifth controlled 85 percent of U.S. wealth,” he said.
“The Great Recession has put this disturbing situation in the public spotlight,” Dan observed.
“Average Americans have been hurt more severely than the wealthy, with the net worth of the median family dropping 36 percent since 2008, while assets of the top 1 percent have fallen by only 11 percent, widening the gap.”
Inequality draws attention
Recently the income inequality has caught the attention of economists, pundits and bloggers who are now commenting on the injustice, as Americans have been watching protests against oppressive regimes that concentrate wealth in the hands of an elite few, he said, quoting Nobel Prize winning economist Joseph Stiglitz.
“Few gained purchasing power between 1989 and 2005. The average income in Spokane is $38,000, lower than the national average, where the hourly wage was 8 percent lower in 2005 than in 1973, while the national output per hour was 55 percent higher,” Dan said, citing labor lawyer Thomas Georghegan.
By fall 2011, discontent about the unfairness gave rise to populist protest in the Occupy Movement, he said.
Executive pay zoomed in 1980s
Executive pay zoomed in the 1980s because of increased use of incentive pay, backdating, stock options and manipulating the financial system, said Dan, calling the system perverted and extortion.
When power toolmakers Stanley and Black & Decker merged $3.5 billion in assets, they eliminated 3,000 duplicative jobs, but retained both executives, who were paid $30 and $40 million.
When paying health insurance premiums, he suggested people think of the executive making $170 million and promised a $400 million “golden parachute” when he leaves.
The top 1 percent want the wealth and power, Dan said.
“It’s theft,” he repeated. “Scriptures decry it. We rise and fall together if we do not help the many who are poor because consumer demand and purchasing power drive the economy and make it possible for businesses to flourish.”
Dan said there is about $2 trillion sitting idle in corporations’ investments that could be passed on to shareholders or be used to make more jobs and strengthen the economy.
He reminded participants of auto manufacturer Henry Ford’s commitment in the early 1900s to employ more people, so they could earn enough to buy the cars they produced. He believed that the greatest way to use profits is to put them back into the business.
Dan suggested that if corporate executives face lawsuits or have to go before Congress related to their tax benefits, then “maybe we can fulfill the promise that the wealth of America will be put to use for all Americans, not just a privileged few.”
People confront power
Marilee said 2012 is her 26th year of going to Olympia to lobby for children with the Children’s Alliance.
While she is pessimistic when looking at the issues, she is optimistic when she sees ordinary people willing to confront power to restore justice.
Volunteers of America of the Inland Northwest, she said, has a $4 million budget, $1 million of which is from the state for its programs to help 18-year-olds when they age out of foster care, for Crosswalk, housing teens, women, veterans and people who are chronically homeless because of disability, mental health issues or addiction.
There are also pieces of the state budget in the budgets of Catholic Charities and Lutheran Community Services.
VOA cannot count on private donations alone, she said.
VOA joined 36 agencies, signing a Thanksgiving letter saying “We stand for the poor” and challenging proposed state budget cuts.
Poor have taken most cuts
“Of the $8 to 10 billion in cuts that have been made in recent years, the poor have taken most of the hits,” Marilee said.
Cuts to General Assistance for the Unemployable—now called the Disability Lifeline—for people with multiple mental and physical disabilities put people on the streets.
“We complain about people on the street panhandling or we put them in jail and the cost is many times more than current programs,” she said.
Similarly, children not on Apple Health Care go to the emergency room for health care, often having waited until their condition is worse.
“We all pay for that,” she said.
“We need to talk about revenue,” she said. “You—participants at the conference—have more influence than I do, because I am paid by an agency receiving funding. You will be taken seriously.”
She urges people to develop a relationship with their representatives and to go to Olympia to meet with them.
Small church feeds hungry
Kris said that while 30 to 40 attend Sunday worship at Holy Trinity, which began in 1895, 80 to 100 regularly come to its community dinner on Wednesdays. The meal is possible because of financial and volunteer support from St. Stephen’s, St. David’s and St. John’s Episcopal churches.
While it used to be that about 40 came early in the month and more later, now about 80 to 100 come every week. With donations declining, the dinner program seeks to find sources to reclaim food that would otherwise be thrown away.
The church, with a budget of $60,000 to maintain three century-old buildings and her half-time salary, has just $300 in its discretionary fund.
Serve neighbors by partnering
“We do what we do by partnering with other Episcopal churches, West Central churches—St. Joseph Catholic, Salem Lutheran and St. Paul United Methodist—and Our Place Community Ministry, which is supported by grants and private donations, not state funding,” she said.
“For the first time in years, Our Place is running out of food consistently because demand is up,” she said.
Kris was discouraged last fall when Governor Christine Gregoire challenged churches to step up. She wrote the governor, saying that churches are already serving and did not need to be convinced to care for those in need, especially when many members are unemployed and have less ability to donate.
She told of a Russian-speaking naturalized citizen who has a cognitive problem and had his GAU payment cut from about $400 to $190. He has to pay $390 a month in rent. Kris knew his landlord and worked with him to keep the man sheltered while he awaited social security disability.
“I rustled folks in the diocese for money to supplement his rent, and Our Place kept his utilities on,” Kris said. “We know that once someone loses shelter, it costs more to get the person into shelter, but not everyone has connections to stay sheltered.
“I think of how many people there are like the man we helped. The poor are taking big hits, losing TANF and subsidized child care,” she said.
Speakers call for more revenue
Participants then discussed the need for raising revenue.
Dan said that if taxes are raised even modestly on the wealthy, it will go a long way.
“In the 1990s before President Bush’s tax cuts, the economy was prosperous,” he said.
He said it’s not just about Democrats or Republicans, but about corruption of both. He hopes the American people’s sense of injustice will be stirred by the inequity.
Funding for politics is corrupted
Dan had considered running for Congress, but when he went to Washington, D.C., to find out about funding sources, he found favoritism to incumbency. A Democratic funding source would not give him funds, but would fund Rep. Cathy McMorris Rogers, because she had done things for them.
Several ideas are offered
Kris said that there are multiple suggestions for raising revenue, including raising half a cent on sales tax. There are also efforts to question the constitutionality of requiring a two-thirds vote by the legislature to raise taxes.
“The more options that are on the ballot, the less likely it is that any will pass,” Kris said.
Benefits for poor build economy
Benefits paid to the poor, she pointed out, go immediately back into the economy. When someone pays rent, the landlord can pay for the mortgage.
Questions raised on exemptions
Marilee shared items on a four-page list of tax exemptions in Washington—such as for private jets, cosmetic surgery, fertilizer and hair removal.
She said if 200 people from one legislative district called their legislators to say they would pay higher taxes, they would be heard. She urges people to write letters, make phone calls and visit, rather than just relying on emails.
Copyright © February 2012 - The Fig Tree