EPI at the Entitlements Conference

The following is a statement outlining recommendations of the Economic Policy Institute’s president, Lawrence Mishel, before participating in today’s White House meeting on the economy:

“Over the last 30 years, the United States has seen an unprecedented transfer of income and wealth. Trillions of dollars of income that formerly were shared with all income classes have been captured by the top 1% of Americans, leaving the middle class squeezed and lower income Americans suffering real hardships.

“In fact, since 1979, the share of national income going to the top 1% has more than doubled, thereby allowing them to enjoy more than $1 trillion a year in extra income. It is clear that when the government looks for revenue to redress our fiscal imbalance that it should look first to those who have profited so disproportionately from the nation’s past economic growth. An estate tax (affecting only the wealthiest 5% of Americans),top marginal tax rates, and the taxation of capital gains and dividends can be the primary source of additional revenue needed both for continued public investment and to attain a reasonable deficit level of about 3% of GDP.

“With this historic rise in inequality in mind, it is also clear that Social Security, America’s most important and successful social insurance program, is the wrong place to look for savings. Like Medicare and Medicaid, which have done so much to end poverty among the elderly and ensure basic medical care for the most vulnerable among us, Social Security should be strengthened, not cut. The most serious long-term threat to fiscal balance comes from the rising costs of health care, but that problem is economy-wide and in no way caused by the so-called entitlement programs. Medicare does a better job of controlling costs than private insurance, and the best hope for the future depends on creating the option of a large Medicare-like plan that employers and individuals can choose as an alternative to costly private medical insurance. EPI and the Lewin Group have shown that such a plan could lower the cost of health care by a trillion dollars over 10 years while guaranteeing coverage to every American.”

See also a very good statement from the Democratic Socialists of America.