Reich: Income Inequality Dooms Recovery

Tuesday, 03 Apr 2012 07:10 AM

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The recovery is going great guns for a tiny slice of upper income Americans, and that means trouble, warns economist and author Robert Reich.

Virtually all of the growth has led to gains among the top 10 percent, and most of that went to the top 1 percent, says Reich, who was labor secretary under President Clinton.

“Over a third of the gains went to 15,600 super-rich households in the top one-tenth of 1 percent,” he writes on his personal blog.

Editor's Note: Did Obama Betray America? Video Reveals Truth

It’s getting worse over time, he says. “The top 1 percent got 45 percent of Clinton-era economic growth, and 65 percent of the economic growth during the Bush era,” Reich asserts.

The problem is, all that wealth doesn’t necessarily mean jobs are being created. And jobs are the driver a broad recovery needs, he maintains, since ordinary incomes and spending are the engine of economic growth.

“Fed Chief Ben Bernanke — who doesn’t have to face voters on Election Day — says the U.S. economy needs to grow faster if it’s to produce enough jobs to bring down unemployment. But he leaves out the critical point,” Reich warns.

“We can’t possibly grow faster if the vast majority of Americans, who are still losing ground, don’t have the money to buy more of the things American workers produce.”

Ben Bernanke likely has a close-up view of the effects of income disparity. Even though Washington, D.C. escaped the brunt of the recession as federal spending ramped up, the money flow didn’t go that far down.

The D.C. Fiscal Policy Institute found that the richest 5 percent of District households have an average income of $473,000, the highest among the 50 largest cities in the United States.

Nevertheless, the poorest fifth of District households have incomes averaging under $10,000. “As a result, income inequality in DC — the gap between rich and poor — is tremendous. It is third highest among the nation’s largest cities,” reports the think tank.

Editor's Note: Did Obama Betray America? Video Reveals Truth

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