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Journalist: nation pays a high cost for income gap

by: TRIBUNE PHOTO: PETER WONG - Journalist and author David Cay Johnston signed his book of essays  he edited, 'Divided: The Perils of Our Growing Inequality,' during a gathering in Salem.Investigative journalist David Cay Johnston is spreading the word about why there is a growing income gap in the United States.

While he is talking at length about its causes, Johnston says the solutions lie outside his competence. But at an appearance last week in Salem, he said: “Nothing will be fixed until we work at it.”

The causes, he said, result from federal policies since the 1980s — promoted by Republicans and Democrats alike — that cut the tax burden on the highest-income households and did little for middle- and low-income families.

“We are creating and institutionalizing a system that takes from the many and gives to the already rich,” he said.

Johnston is making a series of appearances in Oregon, including two in Portland, sponsored by the Oregon Center for Public Policy, the Silverton think tank that monitors economic and tax policies and advocates changes favoring families with low and moderate incomes.

Johnston won the Pulitzer Prize in 2001 for his reporting in The New York Times about loopholes and inequities in the federal tax code. These days he teaches at Syracuse University law school and is wrapping up a term as president of the Investigative Reporters and Editors.

He is the editor of the recently published “Divided: The Perils of Our Growing Inequality,” a book of essays. The book includes a speech by President Barack Obama in 2011 about income inequality.

He has written four other books, including “Free Lunch” and “Perfectly Legal,” both related to taxes and wealth.

According to Johnston, in 1980, the bottom 90 percent earned 65.4 percent of all income in the United States, and the top 10 percent earned 34.6 percent. Thirty years later, the share earned by the 90 percent dropped to just 51.8 percent, and the top 10 percent claimed the other 48.2 percent.

The average income of those in the 90 percent, excluding transfers from government programs, dropped from $36,000 in 2000 to $30,000 in 2011 when adjusted for inflation. Johnston said that level, resulting after two economic downturns, is equivalent to what it was back in 1966.

In many cases, the economic divide has forced both parents to work to sustain a household economically, Johnston said. “We pay a cost for that in society when we have children who are not getting adequate attention because the incomes their parents have are nowhere near adequate to support a family.

“People are treading water or falling down.”

Johnston discussed several factors that have led to income stagnation, among them:

• Union representation of U.S. workers has fallen from a high of 35 percent in 1954 to just 11.3 percent in 2011, and a large share of the latter is in the public sector. Johnston said when union representation accounted for a sizable share of the U.S. workforce, through the 1970s, all workers recouped higher pay and benefits.

• Trade agreements between the United States and other nations, many with lesser protections for workers and the environment, have cost 2.8 million U.S. jobs in manufacturing and other sectors.

• Large businesses have been able to shift profits overseas and incorporate the costs of some of their taxes into consumer prices as a result of federal tax code changes in the past three decades.

• Health care costs in the United States accounted for 17.6 percent of all goods and services produced in the nation in 2010 — a higher share than the economies of Canada, Germany, France and Great Britain. For every dollar spent on health care by 33 advanced nations, the United States spends $2.64,

• The amount allocated to bank bailouts by Congress was $14.7 trillion — equal to the value of goods and services produced by the U.S. economy in 2010. Johnston said the same amount would keep Social Security going for 21 years, Medicare for 32.9 years, and Medicaid for 53.9 years.

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Investigative journalist Johnston makes two appearances in Portland

David Cay Johnston will talk about income inequity at two events in Portland. One will be from 7 to 9 p.m. Thursday (May 8) at the First Unitarian Church, 1034 S.W. 13th Ave. The other will be at 7:30 p.m. May 14 at Powell’s City of Books, 1005 W. Burnside St., to promote “Divided: The Perils of Our Growing Inequality,” a book of essays he edited.