HOW THESE FIGURES WERE DETERMINEDCurrent military” includes Dept. of Defense ($653 billion), the military portion from other departments ($150 billion), and an additional $162 billion to supplement the Budget’s misleading and vast underestimate of only $38 billion for the “war on terror.” “Past military” represents veterans’ benefits plus 80% of the interest on the debt.*
This is what they want you to believe!
These figures are from an analysis of detailed tables in the “Analytical Perspectives” book of the Budget of the United States Government, Fiscal Year 2009. The figures are federal funds, which do not include trust funds — such as Social Security — that are raised and spent separately from income taxes. What you pay (or don’t pay) by April 15, 2008, goes to the federal funds portion of the budget. The government practice of combining trust and federal funds began during the Vietnam War, thus making the human needs portion of the budget seem larger and the military portion smaller.
*Analysts differ on how much of the debt stems from the military; other groups estimate 50% to 60%. We use 80% because we believe if there had been no military spending most (if not all) of the national debt would have been eliminated. For further explanation, please see box at bottom of page.
*Analysts differ on how much of the debt stems from the military; other groups estimate 50% to 60%. We use 80% because we believe if there had been no military spending most (if not all) of the national debt would have been eliminated. For further explanation, please see box at bottom of page.
* I recommend you look at the charts at the link to see how this is broken down and how we compare to the world. Look over to the left to see the true breakdown. I am sick of the lies!
James Joiner
Gardner Ma
11 comments:
Please look at where your tax dollars are really going aside from the bail outs. I have to run to the VA and I will be back!
Oh, it hurts my head to look, Jim.
So this is what a nation of peace looks like?
Karen
you know we are being lied to in every single instance and the truth is being hidden from us. I don't know how far you delved into that but just looking at the two pie graphs is stunning. It is incomprehensible to me that 54% of our total Budget goes to the military and you know it will get much worse until...
Wease
It really sucks! 54% of our budget can you imagine? I'm sick of the games and the lies! Did you look at the link? Did you see Bush the peace lover compared to Russia, China, and the rest of the world? AAARRRGGGHHH!
At it will remain as long as the Government is able to fear monger and convince Americans that unless we spend $1 trillion a year (on total military) then someone or something will come and kill us.
Robert Scheer wrote a piece about the Nuclear Submarine to fight Al Qaeda's Navy (tongue in cheek).
The point was that BushCo is spending trillions of dollars on hight tech never tested weapons systems under the guise of fighting the war on terror.
America really doesn't face a significant threat. There is no mobilized force right now capable of invading and subjugating the United States.
The largest Militaries are likely Russia and China.
Politicians, mostly Republican but also some Democrats have people convinced that unless we don't spend a bunch of money on 'defense' then we're all going to die.
It's a crock of shit. I am all for a strong National Defense.
But the operative word is Defense. And a compulsory service where every man, woman, and child once a month does drills in their community on defense and planning in case of a natural disaster or an attack, would make us much safer than building a bungled anti-missile defense system in Europe that has never been tested and by most accounts will never work.
Reality is that we are less safe now than we were after 9/11 because our military is bogged down in Iraq.
IF Russia or China decided to launch a full scale attack of the U.S. or any other country for that matter, we would not be able to defend ourselves as well as we could if Bush hadn't squandered our military in Iraq.
Beyond on that is the stark reality that the $3 trillion wasted in Iraq is enough money to fix the roads and bridges in the U.S., get the U.S. off oil, fix our water systems, provide healthcare, and put our kids through college.
What did we get for spending $3 trillionon Iraq?? Higher gas prices and an extra $5 Trillion added to the national debt that will have to be paid off by our kids and grand kids.
Even I was taken aback that 54% of our Budget is spent on the military. That is 16% higher than the Government states. The rest is hidden. How much is really hidden? You know this is just beginning and will get horrifically worse as this war crap spreads and it will soon.
Looks like this time around China and Russia are going to bankrupt us unless Bush gets these wars started first and the scum has HAARP and other high tech weapons that can't be countered then he will cancel our debt.
It pisses me off that he is willing to take a chance with our lives and country. And what about the state of the friggen planet after. AAARRRGGGHHH!
Here is the result of your article Jim:
The Wealth Divide:
The Growing Gap in the United States
Between the Rich and the Rest
An Interview with Edward Wolff
Edward Wolff is a professor of economics at New York University. He is the author of Top Heavy: The Increasing Inequality of Wealth in America and What Can Be Done About It, as well as many other books and articles on economic and tax policy. He is managing editor of the Review of Income and Wealth.
In the United States, the richest 1 percent of households owns 38 percent of all wealth. Multinational Monitor: What is wealth?
Edward Wolff: Wealth is the stuff that people own. The main items are your home, other real estate, any small business you own, liquid assets like savings accounts, CDs and money market funds, bonds, other securities, stocks, and the cash surrender value of any life insurance you have. Those are the total assets someone owns. From that, you subtract debts. The main debt is mortgage debt on your home. Other kinds of debt include consumer loans, auto debt and the like. That difference is referred to as net worth, or just wealth.
MM: Why is it important to think about wealth, as opposed just to income?
Wolff: Wealth provides another dimension of well-being. Two people who have the same income may not be as well off if one person has more wealth. If one person owns his home, for example, and the other person doesn’t, then he is better off.
Wealth — strictly financial savings — provides security to individuals in the event of sickness, job loss or marital separation. Assets provide a kind of safety blanket that people can rely on in case their income gets interrupted.
Wealth is also more directly related to political power. People who have large amounts of wealth can make political contributions. In some cases, they can use that money to run for office themselves, like New York City Mayor Michael Bloomberg.
MM: What are the best sources for information on wealth?
Wolff: The best way of measuring wealth is to use household surveys, where interviewers ask households, from a very detailed form, about the assets they own, and the kinds of debts and other liabilities they have run up. Household surveys provide the main source of information on wealth distribution.
Of these household surveys — there are now about five or six surveys that ask wealth questions in the United States — probably the best source is the Federal Reserve Board’s Survey of Consumer Finances.
They have a special supplement sample that they rely on to provide information about high income households. Wealth turns out to be highly skewed, so that a very small proportion of families owns a very large share of total wealth. Most surveys miss these families. But the Survey of Consumer Finances uses information provided by the Internal Revenue Service to construct a special supplemental sample on high income households, so they can zero in on the high wealth holders.
MM: How do economists measure levels of equality and inequality?
Wolff: The most common measure used, and the most understandable is: what share of total wealth is owned by the richest households, typically the top 1 percent. In the United States, in the last survey year, 1998, the richest 1 percent of households owned 38 percent of all wealth.
This is the most easily understood measure.
There is also another measure called the Gini coefficient. It measures the concentration of wealth at different percentile levels, and does an overall computation. It is an index that goes from zero to one, one being the most unequal. Wealth inequality in the United States has a Gini coefficient of .82, which is pretty close to the maximum level of inequality you can have.
MM: What have been the trends of wealth inequality over the last 25 years?
Wolff: We have had a fairly sharp increase in wealth inequality dating back to 1975 or 1976.
Prior to that, there was a protracted period when wealth inequality fell in this country, going back almost to 1929. So you have this fairly continuous downward trend from 1929, which of course was the peak of the stock market before it crashed, until just about the mid-1970s. Since then, things have really turned around, and the level of wealth inequality today is almost double what it was in the mid-1970s.
Income inequality has also risen. Most people date this rise to the early 1970s, but it hasn’t gone up nearly as dramatically as wealth inequality.
MM: What portion of the wealth is owned by the upper groups?
Wolff: The top 5 percent own more than half of all wealth.
In 1998, they owned 59 percent of all wealth. Or to put it another way, the top 5 percent had more wealth than the remaining 95 percent of the population, collectively.
The top 20 percent owns over 80 percent of all wealth. In 1998, it owned 83 percent of all wealth.
This is a very concentrated distribution.
MM: Where does that leave the bottom tiers?
Wolff: The bottom 20 percent basically have zero wealth. They either have no assets, or their debt equals or exceeds their assets. The bottom 20 percent has typically accumulated no savings.
A household in the middle — the median household — has wealth of about $62,000. $62,000 is not insignificant, but if you consider that the top 1 percent of households’ average wealth is $12.5 million, you can see what a difference there is in the distribution.
MM: What kind of distribution of wealth is there for the different asset components?
Wolff: Things are even more concentrated if you exclude owner-occupied housing. It is nice to own a house and it provides all kinds of benefits, but it is not very liquid. You can’t really dispose of it, because you need some place to live.
The top 1 percent of families hold half of all non-home wealth.
The middle class’s major assets are their home, liquid assets like checking and savings accounts, CDs and money market funds, and pension accounts. For the average family, these assets make up 84 percent of their total wealth.
The richest 10 percent of families own about 85 percent of all outstanding stocks. They own about 85 percent of all financial securities, 90 percent of all business assets. These financial assets and business equity are even more concentrated than total wealth.
MM: What happens when you disaggregate the data by race?
Wolff: There you find something very striking. Most people are aware that African-American families don’t earn as much as white families. The average African-American family has about 60 percent of the income as the average white family. But the disparity of wealth is a lot greater. The average African-American family has only 18 percent of the wealth of the average white family.
MM: Are you able to do a comparable analysis by gender?
Wolff: It is hard to separate out husbands and wives. Most assets are jointly held, so it is not really possible to separate which assets are owned by husband and which by wife. Even when things are specifically owned by one spouse or another, the other spouse usually has some residual lien on the assets, as we know from various divorce proceedings. If a pension account is owned by the husband and the family splits up, the wife typically gets some ownership of the pension assets. The same thing is true for an unincorporated business owned by the husband. It really is not that easy to separate out gender ownership in the family.
What we do know is that single women, or single women with children, have much lower levels of wealth than married couples.
MM: How does the U.S. wealth profile compare to other countries?
Wolff: We are much more unequal than any other advanced industrial country.
Perhaps our closest rival in terms of inequality is Great Britain. But where the top percent in this country own 38 percent of all wealth, in Great Britain it is more like 22 or 23 percent.
What is remarkable is that this was not always the case. Up until the early 1970s, the U.S. actually had lower wealth inequality than Great Britain, and even than a country like Sweden. But things have really turned around over the last 25 or 30 years. In fact, a lot of countries have experienced lessening wealth inequality over time. The U.S. is atypical in that inequality has risen so sharply over the last 25 or 30 years.
MM: To what extent is the wealth inequality trend simply reflective of the rising level of income inequality?
Wolff: Part of it reflects underlying increases in income inequality, but the other significant factor is what has happened to the ratio between stock prices and housing prices. The major asset of the middle class is their home. The major assets of the rich are stocks and small business equity. If stock prices increase more quickly than housing prices, then the share of wealth owned by the richest households goes up. This turns out to be almost as important as underlying changes in income inequality. For the last 25 or 30 years, despite the bear market we’ve had over the last two years, stock prices have gone up quite a bit faster than housing prices.
MM: A couple years ago there was a great deal of talk of the democratization of the stock market. Is that reflected in these figures, or was it an illusion?
Wolff: I would say it was more of an illusion. What did happen is that the percentage of households with some ownership of stocks, including mutual funds and pension accounts like 401(k)s, did go up very dramatically over the last 20 years. In 1983, only 32 percent of households had some ownership of stock.
By 2001, the share was 51 percent. So there has been much more widespread stock ownership, in terms of number of families.
But a lot of these families have very small stakes in the stock market. In 2001, only 32 percent of households owned more than $10,000 of stock, and only 25 percent of households owned more than $25,000 worth of stock.
So a lot of these new stock owners have had relatively small holdings of stock. There hasn’t been much dilution in the share of stock owned by the richest 1 or 10 percent. Stock ownership is still heavily concentrated among rich families. The richest 10 percent own 85 percent of all stock.
As a result, the stock market boom of the 1990s disproportionately benefited rich families. There were some gains by middle class families, but their average stock holdings were too small to make much difference in their overall wealth.
MM: Apart from the absolute level of wealth of people at the bottom of the spectrum, why should inequality itself be a matter of concern?
Wolff: I think there are two rationales. The first is basically a moral or ethical position. A lot of people think it is morally bad for there to be wide gaps, wide disparities in well being in a society.
If that is not convincing to a person, the second reason is that inequality is actually harmful to the well-being of a society. There is now a lot of evidence, based on cross-national comparisons of inequality and economic growth, that more unequal societies actually have lower rates of economic growth. The divisiveness that comes out of large disparities in income and wealth, is actually reflected in poorer economic performance of a country.
Typically when countries are more equal, educational achievement and benefits are more equally distributed in the country. In a country like the United States, there are still huge disparities in resources going to education, so quality of schooling and schooling performance are unequal. If you have a society with large concentrations of poor families, average school achievement is usually a lot lower than where you have a much more homogenous middle class population, as you find in most Western European countries. So schooling suffers in this country, and, as a result, you get a labor force that is less well educated on average than in a country like the Netherlands, Germany or even France. So the high level of inequality results in less human capital being developed in this country, which ultimately affects economic performance.
MM: To what extent is inequality addressed through tax policy?
Wolff: One reason we have such high levels of inequality, compared to other advanced industrial countries, is because of our tax and, I would add, our social expenditure system. We have much lower taxes than almost every Western European country. And we have a less progressive tax system than almost every Western European country. As a result, the rich in this country manage to retain a much higher share of their income than they do in other countries, and this enables them to accumulate a much higher amount of wealth than the rich in other countries.
Certainly our tax system has helped to stimulate the rise of inequality in this country.
We have a much lower level of income support for poor families than do Western European countries or Canada. Social policy in Europe, Canada and Japan does a lot more to reduce economic disparities created by the marketplace than we do in this country. We have much higher poverty rates than do other advanced industrialized countries.
MM: Do you favor a wealth tax?
Wolff: I’ve proposed a separate tax on wealth, which actually exists in a dozen European countries. This has helped to lessen inequality in European countries. It is also, I think, a fairer tax. If you think about taxes that reflect a family’s ability to pay, a family’s ability to pay is a reflection of their income, but also of their wealth holdings. A broader kind of tax of this nature, would not only produce more tax revenue, which we desperately need, but it would be a fairer tax, and also help to reduce the level of inequality in this country.
MM: In broad outlines, how would you structure such a tax?
Wolff: I would model it after the Swiss system, which I think is a pretty fair system. It would be a progressive tax. In the United States, the first $250,000 of wealth would be exempt from the tax. That would exclude 80 percent of all families. The tax would increase at increments, starting out at .2 percent from about $250,000 to $500,000. The marginal rate would go up to .4 percent from $500,000 to $1 million, and then to .6 percent from a $1 million to $5 million, and then to .8 thereafter.
It would not be a very severe tax. In fact, the loading charges on most mutual funds are typically of the order of 1 or 2 percent. It would not be an onerous tax, but it could raise about $60 billion annually. Eighty percent of families would pay nothing, and 95 percent of families would pay less than $1,000. It would really only affect very rich families.
MM: Do you recommend non-tax approaches to deal with inequality as well?
Wolff: I think we have to provide a much broader safety net in this country.
There are lots of things that we should do to strengthen our income support system. We can expand the Earned Income Tax Credit, which is now a fairly substantial aid to poor families, but which can be improved.
The minimum wage has fallen by about 35 percent in real terms since its peak in 1968. We should think about restoring the minimum wage to where it used to be. That would help a lot of low-income families.
The unemployment insurance system is in a real mess; only about one third of unemployed persons actually get unemployment benefits, either because they don’t qualify or because they exhaust their benefits after six months. Typically the replacement rate is about 35 or 40 percent. In the Netherlands, the replacement rate is 80 percent. Our unemployment insurance system is much less generous than in other industrialized countries and can certainly be shored up.
Of course, the welfare system is in a total state of disrepair, since it provides very restrictive coverage. Even before the switchover from AFDC to TANF with the 1996 welfare reform bill, real welfare payments had declined by about 50 percent between 1975 and 1996. So we had already experienced an enormous erosion in welfare benefits, even before we adopted this new system.
We are much more unequal than any other advanced industrial country.
You have this fairly continuous downward trend from 1929, until just about the mid-1970s. Since then, things have really turned around, and the level of wealth inequality today is almost double what it was in the mid-1970s.
If you think about taxes that reflect a family's ability to pay, a family's ability to pay is a reflection of their income, but also of their wealth holdings. A wealth tax would not only produce more tax revenue, which we desperately need, but it would be a fairer tax, and also help to reduce the level of inequality in this country. The stock market boom of the 1990s disproportionately benefited rich families. There were some gains by middle class families, but their average stock holdings were too small to make much difference in their overall wealth.
Larry:
You know this is true but it has been worsened on pirpose and the truth does not matter!
MM: How do economists measure levels of equality and inequality?
Wolff: The most common measure used, and the most understandable is: what share of total wealth is owned by the richest households, typically the top 1 percent. In the United States, in the last survey year, 1998, the richest 1 percent of households owned 38 percent of all wealth.
This is the most easily understood measure.
There is also another measure called the Gini coefficient. It measures the concentration of wealth at different percentile levels, and does an overall computation. It is an index that goes from zero to one, one being the most unequal. Wealth inequality in the United States has a Gini coefficient of .82, which is pretty close to the maximum level of inequality you can have.
MM: What have been the trends of wealth inequality over the last 25 years?
Wolff: We have had a fairly sharp increase in wealth inequality dating back to 1975 or 1976.
Prior to that, there was a protracted period when wealth inequality fell in this country, going back almost to 1929. So you have this fairly continuous downward trend from 1929, which of course was the peak of the stock market before it crashed, until just about the mid-1970s. Since then, things have really turned around, and the level of wealth inequality today is almost double what it was in the mid-1970s.
Income inequality has also risen. Most people date this rise to the early 1970s, but it hasn’t gone up nearly as dramatically as wealth inequality.
You know what stinks? Bush's goal has been to widen the gap between the haves and have nots and he is almost done. It is now wider than ever and I could never get anyone to realize the well established Doctrine he is following and that everything here and around the world is not because ove ineptitude alne but has been done on purpose.
The shit is preparing to hit the fan because of economics, the environment, and created world conditions. The average American and people of the world will be left on their own while the affluent will be okay. The Government and military along with the affluent will be abe to start over. What they do not seem to figure into this is if mutual destruction is not the ultimate goal somebody has to be able to live here.
Great job, Jim. You really debunked the BS!
Thanks Tom! We have to somehow make a difference!
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