Elsewhere in this week's issue, you'll find David Cay Johnston's eye-opening look at America's tax system. It's a subject that the beleaguered workers here at News Hits have been giving a lot of thought to lately.

It's a given that life isn't fair, and we don't expect that to ever change. What we keeping hoping, though, is that it might become a little less unfair. It is not an impossible dream. All it will take for that to happen is the collective will to reverse a trend that's been going on for more than three decades.

Nobel Prize-winning economist and New York Times columnist Paul Krugman calls it the "Great Divergence," and dates its beginning to 1979, just before the beginning of the Reagan era.

He described the concept this way in a 2007 blog: "Since the late 1970s, the America I knew has unraveled. We're no longer a middle-class society, in which the benefits of economic growth are widely shared: between 1979 and 2005 the real income of the median household rose only 13 percent, but the income of the richest 0.1 percent of Americans rose 296 percent."

No matter how you slice the nation's economic pie, the statistics show that the rich — especially the very rich — are hogging more of it.

A recently updated study by sociologist G. William Domhoff, author of the book Who Rules America?, offers a look at wealth in America from 1922 to 2007. In 1922, the richest 1 percent controlled 36.7 percent of the nation's wealth; the bottom 99 percent had 63.3 percent. In 1929, when the Great Depression began, the very rich controlled more than 44 percent of the country's wealth.

Following the reforms ushered in following the Great Depression and the long period of economic expansion following World War II, the disparity between the very rich and the rest of us had shrunk considerably by 1976, when the economic elite held just less than 20 percent of the country's wealth.

By 2007, the numbers weren't all that different from those in 1922, with the top 1 percent again controlling more than one-third of all the nation's wealth.

What happened?

Citing both tax cuts for the wealthy and the "defeat of labor unions," Domhoff reports that, between 1983 and 2004, fully 42 percent of the wealth created by the American economy during that 21-year period went to the top 1 percent. And a "whopping" 94 percent of went to the top 20 percent, which of course means that the bottom 80 percent received only 6 percent of all the new financial wealth generated in the United States during the '80, '90s and early 2000s."

There are many more such statistics. We'll stop with one we've mentioned before. It comes from David Stockman. The former supply-side apostle and director of the Office of Management and Budget in the Reagan administration said during an appearance on 60 Minutes, "In 1985, the top 5 percent of the households — the wealthiest 5 percent — had net worth of $8 trillion — which is a lot. Today, after serial bubble after serial bubble, the top 5 percent have net worth of $40 trillion. The top 5 percent have gained more wealth than the whole human race had created prior to 1980."

Stockman now advocates a special 15 percent surtax on the wealthiest Americans to help pay down the deficit.

But the Republicans in Congress last year beat back an attempt by the Obama administration to allow Bush-era tax breaks to expire for those making more than $250,000 a year. Obama, facing the threat of a cut-off by Congress of long-term unemployment benefits, struck a costly compromise with the right.

As Krugman reported, "the price of that deal, let's remember, was a two-year extension of the Bush tax cuts, at an immediate cost of $363 billion, and a potential cost that's much larger — because it's now looking increasingly likely that those irresponsible tax cuts will be made permanent."

In a withering column denouncing the $38 billion in spending cuts Obama agreed to last week, Krugman wrote that the president "is conspicuously failing to mount any kind of challenge to the philosophy now dominating Washington discussion — a philosophy that says the poor must accept big cuts in Medicaid and food stamps; the middle class must accept big cuts in Medicare (actually dismantling the whole program); and corporations and the rich must accept big cuts in the taxes they have to pay. Shared sacrifice!"

That same sort of sham is under way in Michigan as well, where Gov. Rick Snyder is proposing a massive 86 percent cut in business taxes. To compensate for that loss in revenue, he wants to slash funding for public schools and universities — pushing higher education even more out of reach for middle-income earners and below — and raising taxes on the elderly and the state's poorest families. The latter would be done by elimination of the Earned Income Tax Credit, which helps offset taxes paid by low-income working families. According to the Michigan League for Human Services, "An estimated 14,000 children will be pushed into poverty as a result."

Writing in the current edition of Vanity Fair, Joseph E. Stiglitz — another Nobel Prize-winning economist — railed against a system where "1 percent of the people take nearly a quarter of the nation's income."

"The more divided a society becomes in terms of wealth, the more reluctant the wealthy become to spend money on common needs. The rich don't need to rely on government parks or education or medical care or personal security — they can buy all these things themselves.

"The top 1 percent may complain about the kind of government we have in America, but in truth they like it just fine: too gridlocked to re-distribute, too divided to do anything but lower taxes."

Stiglitz then turned his eye to the revolts in the Middle East, where a handful of people control the "lion's share of the wealth." Noting that in "important ways, our country has become like one of these distant, troubled places," he notes:

"As we gaze out at the popular fervor in the streets, one question to ask ourselves is this: "When will it come to America?"

Good question.

News Hits is written by Curt Guyette. Contact the column at 313-202-8004 or NewsHits@metrotimes.com.

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