"The rich get richer and the poor get poorer." We all have used those words to express frustration over the economic inequities of this and other modern societies. But for a long period from roughly the end of the Great Depression through the 1960s, the gap between the rich and the poor in the United States was modestly narrowed.
Social programs, collective bargaining and the tax structure all worked to improve the relative lot of the poor until the decade of the 1970s, when the gap began to widen, according to most experts on income distribution in the United States.
Now, because of Reaganomics, which slanted a huge tax cut in favor of the rich while curbing welfare and social services, the disparities between the top and bottom of American society threaten to accelerate in a disturbing way. Although Reagan plainly said it was his intention to do something for the "over-taxed" rich, only recently has his plan been widely perceived by the electorate as "unfair."
As Prof. William Ryan of Boston College put it to a recent hearing of the Joint Economic Committee, "The rich are getting richer while the rest of us--the great vulnerable majority of Americans, consisting of people who work for a living--are all getting poorer."
It's not hard to figure out why: a serious recession has gripped the nation, and the dread word "depression" is back in vogue. Reaganomics, which was supposed to produce a miraculous stimulus for the economy, has merely cut the tax burden for high-income individuals and corporations. Even the nation's top business executives now believe Reagan is taking the nation down a disastrous path.
According to a Washington Post-ABC News poll in January, 52 percent of those asked said they thought Reagan cares most about serving upper-income persons. A year ago, only 23 percent thought so.
"I do believe," Republican Sen. Robert Dole said on a recent television interview, "and I think with some accuracy, there is this perception that somehow the (Reagan) programs are impacting most severely on low-income Americans."
A simple tally by the Wall Street firm of A. Gary Shilling and Co. of "winners" and "losers" under the tax and spending cuts passed last year shows why. The only winners are families with incomes over $47,800. Everybody with incomes of less than $22,900 loses. In between, it's no better than a break-even result.
Here's the way it works out for the fiscal year (1982) that ends in September: [TABLE OMITTED]
What thisd table says is that the top 5 percent of American families--those in that $47,800 income category --get $12 billion this year from the personal tax cut, the "cap" on capital gains taxes at 20 percent, the ability to sock away tax-free money in (IRA and Keogh) retirement accounts, and so on in this fiscal year. They are hit by only $2.8 billion in budget retrenchment.
What's more, the resultant $9.2 billion net benefit will grow in fiscal 1983 and beyond, with the top marginal tax-rate cut from 70 to 50 percent, additional cuts in personal income taxes in 1983 and 1984, and the gradual phasing-out of most inheritance taxes,
To the credit of the "establishment" Senate Republicans he represents, Dole proposes to make Reaganomics somewhat less unfair by re- jiggering the tax program a bit, and by denying the president some of the further cuts in welfare spending he requested in January.
That much is fine, but to redress the balance, major surgery has to be applied to the Reagan program--by the Democrats who share the responsibility for it as well as the GOP. Getting rid of the obnoxious "rent-a-deduction" provision for corporate losers is an obvious necessity. The bloated defense program has to be yanked out of the stratosphere and back to reality.
Without such changes, a collapse threatens the economy, and the poor will indeed get poorer. In just the last decade, according to Ryan, the average American family has lost the equality gains made since the Eisenhower administration. If Reaganomics goes unchecked, he suggests, we'll be going back to the Coolidge era. Remember who came after Coolidge?