New York, NY – Today, in the midst of Washington debates on the sequester and a minimum wage increase, national policy center Demos released a new paper that reveals the startling connection between political inequality and economic mobility: As corporations and the donor class wield outsized influence through political spending and civic participation advantages, elected officials are turning away from the economic policies that long guaranteed hardworking Americans the opportunity to join the middle class.
Stacked Deck: How the Dominance of Politics by the Affluent & Business Undermines Economic Mobility in America unites Demos’ original research, polling supported by the Russell Sage Foundation, and recent scholarship from leading academics – including Professors Martin Gilens and Larry Bartels – to definitively show how the increasingly institutionalized power of the donor class in our democracy is undermining economic mobility for those who can’t afford to buy political access and influence.
This report helps connect the dots from the preferences of the donor class to the economic policies that affect us all.
“Wealthy interests are keenly focused on concerns not shared by the rest of the American public, like keeping taxes low on capital gains, and often oppose policies that would foster upward mobility among low-income citizens, such as raising the minimum wage,” write authors David Callahan and J. Mijin Cha. “Even when the wealthy do share the public’s enthusiasm for policies that help Americans get ahead, such as spending on higher education, they often prioritize tax cuts and deficit reduction in ways that squeeze resources available for those very policies.”
Heather McGhee, Vice President of Policy and Outreach, said, “Wealthy Americans are twice as likely as the rest of us to prioritize deficit reduction over job creation, which is no surprise, given how insulated the affluent and large corporations have been from the pain of the Great Recession. What is surprising is how Washington has embraced job-killing austerity -- but this report helps connect the dots from the preferences of the donor class to the economic policies that affect us all.”
Stacked Deck links Larry Bartels’ astonishing finding that “the preferences of people in the bottom third of the income distribution have no apparent impact on the behavior of their elected officials” to America’s retreat from policies to foster upward mobility and lower inequality.
“With more than three-quarters of the American public supporting a minimum wage increase and consensus among economists that it would be good for the economy, why is the real value lower today than in 1968?” posed Senior Policy Analyst Mijin Cha. “Because wealthy and corporate interests would rather keep the wage low. In fact, only 40 percent of the affluent support a minimum wage high enough to keep a working family out of poverty, and when the minimum wage was last raised in 2007, the U.S. Chamber of Commerce, which strongly opposes raising the minimum wage, spent $53 million on lobbying.”
“We see this dynamic even more clearly when we look at the capital gains tax cuts,” said David Callahan, Senior Fellow and editor of PolicyShop. “The small percentage of households that benefit from a low capital gains tax rate happens to overlap almost perfectly with the ‘donor class.’ Even when a majority of Americans believe that wealth should be taxed at the same rate as work, the section of the American public making more than $100,000 year – the top 20 percent – was able to win cut after cut because they make up 85 percent of campaign contributions over $200, and they make up an oversized 26 percent of the voting population.”
To further show how the priorities of the wealthy often shut out policies for upward mobility, Stacked Deck includes case studies on the connection between cuts in higher education funding and corporate tax giveaways in Florida, Pennsylvania, and New Jersey. For example, New Jersey Governor Chris Christie, catering to wealthy and corporate interests, cut higher education funding by $1.6 billion, almost exactly the same amount as he gave away in corporate tax breaks ($1.57 billion).
“Stacked Deck” delves into the civic participation gap between the donor class and lower-income Americans as well as into how the priorities of people of color are disproportionately excluded from debate and policy. “Low-income Americans participated at far lower levels than affluent voters – as much as 30 percentage points less—in the 2008 and 2010 election,” noted Brenda Wright, Vice President for Legal Strategies. “These depressed rates of participation, which are in part a consequence of our antiquated voter registration system, make it even more difficult for the policy preferences of low-income persons to be heard in the public debate.”
Stacked Deck: How the Dominance of Politics by the Affluent & Business Undermines Economic Mobility in America concludes with policy recommendations in four areas essential to achieving progress toward a more balanced society: limiting money in politics, expanding the freedom to vote, making corporations more responsive to the public interest, and reducing economic inequality. This is a foundational Demos paper, articulating our mission of creating an America where we all have an equal say in our democracy and equal chance in our economy.