Climbing the Social Ladder, Or Not...
Marco Rubio, candidate for Senate in Florida, is a rising star of the conservative movement and the darling of tea party activists. At the annual meeting of the Conservative Political Action Conference (CPAC) in February, he said ours is "the only economy in the world where poor people with a better idea and a strong work ethic can compete and succeed against rich people in the marketplace and competition." This is a popular theme with conservatives and free market ideologues. Rubio claims that America "is the only society in history where your future is not determined by where you were born." The facts are not on his side.
Social mobility across generations is actually greater in Denmark, Austria, Norway, Finland, Canada, Sweden, Germany, Spain, and France than it is in the United States, according to a study on the subject. Among the world's most developed economies, social mobility is worse only in Italy and the UK.
The similarity between a fathers' and sons' income in the US is the same as the similarity in their heights! If you come from a family that is already poor, completely eliminating such, "family baggage," is estimated it to take as many as five or six generations.
Unlike height, income and wealth are of course not genetic. The strong link between intergenerational economic outlook for individuals in the US is the result of public policy decisions. Conservatives and liberals alike would like it to be the case that in America a good idea and hard work are enough to get ahead. The difference is that conservative economic policies make it less likely that an individual will be able to improve their financial situation. For instance, reinstating a responsible tax on the intergenerational transfer of wealth would go a long way to making Rubio's egalitarian vision more true.
Whither the CFPA?
The fate of the Consumer Financial Protection Agency (CFPA) is hanging in the balance of negotiations led by Senator Chris Dodd (D-CT). As chair of the Senate Banking Committee, he is responsible for drafting the Senate version of financial regulation reform. He spent the month of February trying to craft a compromise that might garner enough Republican support to actually become law.
The CFPA has become the focal point of Dodd's negotiations. The most recent proposal is for a watered down version of the CFPA housed in the Federal Reserve. Even this weak form of consumer protection might be too much for Republicans to stomach, and Democrats aren't exactly excited about it either.
UFE supports a strong CFPA because, to paraphrase an illustrative example from Elizabeth Warren, we regulate toasters to protect consumers from electronics that could start a fire, but we don't presently protect consumers from risky financial products that can bring the economy to the brink of collapse and necessitate taxpayer bailouts of the financial sector. That's not right.
Consumers deserve reasonable protection from the often predatory products sold to them. Consumer protection must apply not just to banks but also to nonbank institutions such as payday lenders and check cashing outlets whose outrageous rates target the poor and help to perpetuate cycles of poverty for entire communities.
We have more to say on this topic, but limited space in E-News. You can read the full version of this article on our website.
Also, for more on what Elizabeth Warren has to say about the need for financial reform, watch this clip from The Daily Show.
Exploiting the Unemployed for the Sake of the Rich
If you take a look at the Senate today, it seems to be operating more like an elementary school lunchroom than a legislative branch of government. Senators are bartering for bills much like third graders trading Jello-O Snack Packs for Oreos, but the stakes are a little bigger than merely swapping sweets some Senators are trying to make trade-offs with people's livelihoods.
In a series of comments throughout the month of February, Senators Kyl and Grassley made clear their willingness to hold up unemployment benefits for struggling Americans as a bargaining chip to permanently weaken the federal estate tax, and further enrich America's wealthiest families.
Not only were they willing to essentially hold unemployed Americans hostage in efforts to make the rich even richer, an outrage in and of itself, but the 'trade-off' being offered to Democrats would wind up costing more than $200 billion over the next ten years a move that looks more like lunchroom bullying than bipartisan compromise. And one that adds insult to injury for those hardest hit by this crisis.
Congress did eventually agree to a temporary extenstion of unemployment benefits, but the battle was hard fought and revealed an all-too ready willingness, on the parts of some, to exploit those in need in order to gain the upper hand.
AFET's Principles for a Fair Estate Tax
Americans for a Fair Estate Tax (AFET) is a coalition of dozens of progressive labor, faith-based, and social-justice groups (including UFE!) that has fought to defeat efforts to repeal or cut the estate tax for years. They recently completed a great set of principles to use in working for a stronger estate tax, outlining the kind of strong estate tax the coalition wants to achieve. These principles will be distributed to all members of Congress and used as discussion points when AFET members meet with members of Congress.
The principles state:
We call on Congress and the President to take the following steps when addressing the estate tax:
Exempt no more than the first $2 million ($4 million for married couples) of assets in an estate.
Set a tax rate of no less than 45 percent for the taxable portion of estates, with an additional 10 percent tax on the taxable portion exceeding $10 million.
Restore a credit for state estate and inheritance taxes.
Simplify the estate tax by reunifying the gift and estate tax, and allow for portability of estate tax exemptions between spouses.
These principles not only allow AFET to support future or existing proposals that promote a stronger estate tax than the 2009 law (like Rep. McDermott's Sensible Estate Tax Act, HR 2032, long supported by UFE), but they provide a counterweight to legislators, such as Senator Kyl, who want an estate tax that is even weaker than the 2009 law.
At some point this year, Congress will address all the expiring Bush tax cuts, including the estate tax (which has yet to be restored in 2010). With these new principles, AFET and UFE will be in a stronger position to win a better estate tax.
To sign your organization on to the AFET principles document, email Gary Therkildsen at email@example.com.
Fifteen Years Toward a Fair Economy
Our fifteenth anniversary seems like a good reason to toot our own
horn a little bit. All year long we'll be highlighting some of our
most notable successes from fifteen years of organizing for a more
It's easy to forget how likely permanent repeal of the estate tax was when we began
our decade long campaign to preserve it. Even the most adamant anti-
tax Senators are no longer pushing for full
repeal. That's a big change from where we started out and a big
victory for estate tax supporters. It wouldn't be the case without the
sustained efforts and leadership from thousands of members of United
for a Fair Economy and Responsible Wealth. But don't just take our word for it. Read this 2002 article from The
Nation that trumpets our role in preserving the estate tax.
Back then we were fighting just to prevent permanent repeal. Now we're working with our coalition partners to enact the strongest estate tax possible. We've come a long way over the years but, as you've read in this month's newsletter, there's still more work ahead. We're greatful you've helped us get here, and we're glad to have you moving forward with us.
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UFE in Action
El Estado del Sueño 2010
The Spanish-language version of
UFE's State of the Dream 2010
is now available. Please
spread the word and be sure
to visit EconomíaJusta.org
or FairEconomy.org to download
your FREE COPY of the report!