Rising Wealth Inequality and Rising Expenditures on Political Campaigns

Dear Friends,

The U.S. economic system is rigged dramatically in favor of the wealthy and against working people. In earlier posts I explained how federal policies—especially tax policies—have sharply increased the wealth of those already at the top while making life harder for working people.

 

Donald Trump was elected president twice because many voters accepted his claims that he would govern as a populist, defend working people, and fix our rigged economic system. Some of those voters now appear to recognize that his priority has been building more wealth and power for himself and his ultra-wealthy allies. This election cycle has again brought attention to the concentration of wealth at the top and the enormous sums spent on elections. Although I cannot prove a direct causation, the numbers are striking.

 

I reviewed wealth concentration trends dating back to 1990, when the policies of the Reagan and the first Bush administrations were beginning to show their effects. It is also important to note that, during this period, Democrats did little, even when they were in power, to alter the direction set by Reagan-era policies.

 

The data for this chart comes from Federal Reserve Bank research https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/#range:2011.2,2026.2

 

During this period from 1990 to 2026, the Top 0.1% increased its share of wealth by almost 67%, while the Bottom 50% saw its share fall by almost 30%.  Although wealth rose for every group during this period, the Bottom 50% gained only 485%, compared with a staggering 1,289% increase for the Top 0.1%.

 

As the chart shows, the only households whose share of wealth increased were those in the top 1%, and even among the Top 1% those at the very top did significantly better.  Every other group saw its share of wealth decline over this almost four-decade period.

 

Changes in income and estate tax rates obviously played a major role in this immense transfer of wealth from the bottom of the economic ladder to the very top. The top income tax rate

in 1950 was 91%

in 1975 was 70%

in 2025 was 37%

The top estate tax rate

            in 1954 was 77%

            in 1977 was 70%

            in 2025 was 40%

As you can see, from the time of the Eisenhower presidency to now, the maximum income tax rate was decreased by almost 60%, and the maximum estate tax rate was decreased by 48%.

 

Unsurprisingly, the wealthy, with all their extra wealth, have found ways to influence politicians’ votes, especially since the Citizens United decision, ensuring that tax and financial policies continue to work in their favor. Campaign spending from the 1990 through 2024 Presidential election cycles shows a dramatic increase—one that could only be fueled by the ultra-wealthy.

 

 

As you can see from the above chart PAC Spending from the 1992 (Bush 1 v. Clinton) through 2024 (Harris v. Trump) campaigns has increased by an astounding 3,824%.  As a practical matter there are no limits on this type of contributions. Consequently, this increase far exceeds the 444% increase in spending by Presidential campaigns where donations are limited.  

 

Please note that from the 2016 election campaigns to the 2024 election campaigns, the PAC expenditures have increase over $11.5 billion.  That kind of increase can only come from donors who are in the Top 0.1% of wealth category.  These ultra-wealthy contributors have received an extraordinary return on their “donations.”

 

The unusual increase in Presidential Candidate Spending in 2020 also reflects the influence of big money in politics. That campaign included extensive self-funding by ultra-wealthy candidates. For example, Michael Bloomberg’s campaign spent more than $1.1 billion without winning the nomination, and Tom Steyer’s campaign spent almost $350 million without winning the nomination.

 

Until we overturn the Citizens United decision and pass laws to get big money out of politics, we cannot expect to unrig the system, nor will we have a government that improves the lives of working people.

 

Thanks for reading and please comment,

The Unabashed Liberal

Project 2029 - 8 Housing Costs

Dear Friends,

One of the biggest affordability problems for working people is housing.  The general rule is that a household should not spend more than 30% of the household income on housing costs.  Unfortunately, far too many households in the United States must pay more than 30%.  The Harvard University Joint Center for Housing Studies has published a study entitled "Housing Unaffordability Soared to New Highs in 2024".   Just a few of the statistics from that study indicate what a dire problem working people have finding affordable housing.  The study defines cost-burdened households as those where the occupants are paying more than 30% of the household income for housing and defines extreme cost-burdened households as those paying more than 50% of the household income for housing.

In 2024, there were 43.5 million households (33% of all households) that were cost-burdened.  Included within that number were 21.6 million (16% of all households) that were extremely cost-burdened.  In 2024, 20.7 million homeowner households (24% of all homeowners) were cost-burdened, and 22.7 million renter households (49% of all renters) were cost-burdened.  

Of course low income homeowners and renters fare worse than higher income households.  

Homeowner Households
Income level	Rate of cost-burden
Over $75,000	10%
$45,000 to $74,999	31%
$30,000 to $45,000	45%
Less than $30,000	75%
Renter Households
Income level	Rate of cost-burden
Over $75,000	14%
$45,000 to $74,999	49%
$30,000 to $45,000	72%
Less than $30,000	83%

Obviously the lack of affordable housing demonstrated by these figures is huge problem for working people and in the richest country in the world is unacceptable.  Even the currently deeply divided Congress understands that there is a problem and recently passed the 21st Century Road to Housing Act with overwhelming bipartisan support.  Unfortunately, even though the White House supported it, Trump has refused to sign it.

If you are interested in really getting into the weeds, you can find a detailed summary by the Bipartisan Policy Center here.  It provides for a wide variety of changes that are intended to make housing more affordable.  Even if Trump signs it, this bill will not solve the problem, but it will help.

It is not my intention to delineate solutions for the housing affordability crisis we are facing.  I want to be sure that the Democrats make it clear that once they gain control of Congress and the Presidency, they will immediately enact legislation to address the housing crisis and make housing more affordable for working people. Some of the actions taken to reduce housing costs will be in conflict with other goals of Democrats, like balancing reduced regulations with negative impacts of those reductions on the environment and balancing rent controls with investment incentives. Who said governing was easy.

Democrats should not shy away from having the federal government do those things that the private sector cannot do.  Clearly, the private sector is incapable of producing sufficient affordable housing for our country, and the current system of incentives to the private sector has not been successful.

Of course, other parts of Project 2029 that provide more income to working people will help make housing more affordable, but those items alone will not be enough.

Not having sufficient affordable housing is a policy choice.  The Democrats must enact policies that provide working people with the safe, high quality, affordable housing they deserve.

Thanks for reading and please comment,

The Unabashed Liberal

Project 2029 - 7 Post Secondary Education

Dear Friends,

In a prior post, I wrote about the need to provide high quality, free daycare and pre-K through 12 education to all.  That is only the bare minimum.  We must do the same for post secondary education. 

In the United States and generally throughout the world, attaining a bachelor's degree provides a pathway to higher life time earnings as well as a wide variety of non-financial benefits.  Here are two summary statements from a report by Lumina Foundation:  

Despite enrollment and completion rates declining and Americans’ confidence in higher education falling, the economic case for earning a college degree remains solid. College graduates earn about $1 million more on average over the course of their working years than U.S. adults with no college degree...

The results show that additional years of education beyond high school make for a healthier, more civic-minded individual who is more likely to interact with neighbors and family members and find careers that align with their natural talents and interests.

According to a study by the Education Data Initiative (here), the United States has the highest average public college tuition of all other OECD countries at $9,596 in 2022-23 academic year

There are many countries that highly subsidize post secondary education.  For example,

Norway - While public postsecondary education in Norway is tuition-free, student loans are available for living expenses and private tuition costs. 

College students in Norway pay $0.00 for one year of tuition in an average public bachelor’s 

Sweden -Tuition in Sweden is free to EU/EEA citizens, and Sweden’s government spends more on postsecondary education than most other developed countries.

• College students in Sweden pay $0.00 for one year of tuition in an average public bachelor’s program; 

France - While the French government subsidizes public higher education for all, EU/EEA citizens usually receive more in subsidies than non-citizens (apart from a few specific groups, such as long-term residents and refugees).

• For EU/EAA citizens, tuition for the 2024-25 academic year is €175 (equivalent to 182.10 USD at the end of 2024) for a licence (bachelor’s) program; 
• For non-citizens, a smaller share of education costs are subsidized; tuition for 2024-25 is €2,850 (equivalent to 2,966 USD at the end of 2024) at the licence (bachelor) level.

Germany - While Germany offers free tuition at its public universities to EU/EEA students, this does not include living costs or semester contributions (which cover administrative costs, student services, etc.).

• College students in Germany pay $156.70 for one year of fees in an average public bachelor’s program.

While the United States spends more on education than other countries, it does not receive commensurate results.  In this case, I believe the reason is the high cost to families, particularly working families for whom the opportunity is beyond their reach. The following chart from a study by the OECD compares the percentage of the population that has post secondary education delineated by the education of the parents.  As you can see, the United States is in the middle of the pack despite spending much more than other countries.  In addition, the opportunity gap for students whose parents did not have post secondary education remains a stain on a country that claims to provide equal opportunity. 

If we are ever to achieve true equality of opportunity, we must provide affordable educational opportunities to all.  While scholarships are nice, the government must ensure that all students who meet the educational qualifications can attend post secondary educational programs for free.  If a student and/or the family must incur debt to provide this opportunity to the student, we have failed.  The children of working people deserve the opportunity to attain all the benefits that post secondary education provides.  In the richest country in the world it is a policy choice to fail to do so.

Thanks for reading and please comment,

The Unabashed Liberal