Yes, Class Warfare is Being Waged in America. The Working Class is Losing.

As politicians debate the future of American economic policy, we continually hear the accusation of "class warfare." This, of course, mostly comes from the Right, and is accompanied by a strong defense of tax cuts for the wealthy, and offsetting "entitlement" cuts for the poor.

There is indeed a class war in America. Yet it is the working class that is shouldering the burdens of the battle, while the wealthy reap the benefits. As Warren Buffet famously said, "[t]here’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning." 

At the forefront of the battle is taxation. Tax rates have been falling in this country for more than thirty years. The benefits have overwhelmingly gone to the richest individuals and corporate entities.

Take, for instance, corporate taxes. While the corporate tax rate has remained unchanged at 35%, the number of available deductions, reductions, etc., have left corporate tax revenue at an all-time low. The Center on Budget and Policy Priorities (CBPP) found that corporate tax revenue has fallen from 4.7% to 1.9% of the GDP since the 1950's. Thus, corporate taxes account for just 10.7% of federal revenues, compared to 29.8% during the 1950's. Meanwhile, corporate profits' percentage of the GDP has increased. 

Next, let's look at taxes and income for individuals. The top fraction of the top 1%, for instance, have been doing increasingly well in recent years. Matt Yglesis and Think Progress reported that, according to data released by the IRS, between 1995 and 2007, the 400 richest Americans' effective tax rates declined from 29.93% to 16.62% while their combined incomes increased from $6 billion to $30 billion. During the same period, the average rate of taxation dropped from 9.3% to 9.9%. Yet, unlike the ultra-wealthy, most workers have had to deal with thirty years of wage stagnation.

Not only have tax rates for the wealthy plummeted. The wealthiest Americans enjoy a larger share of the national income. As Mother Jones' Kevin Drum explained, 

If you look at the raw CBO figures [June 2010 Report], they show that a full tenth of the national income has shifted since 1979 to the top 1% of the country. The bottom quintiles have each given up a bit more than two percentage points each, and that adds up to 10% of all earnings. That 10% has flowed almost entirely to the very tippy top of the income ladder.

The effect of the Bush-Era tax cuts on our nation's economy is also clear. The CBO reported that, between 2001 and 2005, Bush's tax legislation led to a $539 billion increase in the deficit, and that federal revenues dropped from 20.9% of the GDP to 16.8%. The tax cuts are, in fact, the worst culprit for our soaring deficit. And how is Washington attempting to deal with the deficit? By cutting programs for the poor, of course. 

Yes, there is class warfare, and it is being waged against the working class. We are in the midst of an unprecedented redistribution of wealth from the bottom to the top. Couple this with wage stagnation, rising cost of living and the undercutting of employment protections, and an era of neo-feudalism is dawning.

These policies also allude to a more nefarious objective: a concerted effort by the moneyed elite to manufacture economic crises that will necessitate a considerable reduction in government spending (i.e., social programs), no matter which party is in power. We are at the tipping point this very moment. 

Clearly our politicians are willing to redistribute wealth. Efforts must be made, however, to ensure that the inequitable trends favoring the ultra-wealthy are reversed. An electoral strategy is insufficient. We have an extremely powerful, yet under-utilized, weapon at hand: civil disobedience. A multi-faceted approach is essential to achieving any gains, no matter how small. 

The bottom line is this: unless we make considerable efforts to reverse the trends of our current economic policies, the vast majority of Americans' standard of living will continue to deteriorate, while the disparity in wealth between the working class and wealthy will exacerbate and solidify. The class war will be lost. 

We've seen the effect that current economic policies have had on our communities: exploding poverty numbers, millions of foreclosed homes, millions of displaced workers. This isn't an unexpected downturn, but a deliberate plan to consolidate wealth and power into the hands of the very few. We still have an opportunity to reverse course. But time is running out.