By MORRIS PEARL
215,000 American are dead from COVID-19, at least 25 million people are unemployed, and permanent job losses are increasing. The economic damage is most severe amongst low-income workers, Black workers and women, and that devastation could continue for years to come without government intervention. The number of poor Americans has grown by 8 million, with no additional stimulus spending in sight. At the same time, billionaires have gained nearly $1 trillion since the start of the pandemic.
As a result of all this, our country is at a crossroads. With just moments until the final election county, we have to make a choice between two wildly different ways forward: we can stay on our current track and let rampant inequality continue to rise, or we can combat inequality and commit to a just recovery that leaves no one behind, starting by taxing rich folks like me.
If we do stay on our current economic path and allow this inequality to continue, the results will be catastrophic. Inequality leads to worse public health outcomes, destabilizes democracy and hurts economic growth. Countless Americans facing financial ruin as a result of the pandemic will become trapped in crushing cycles of debt, especially after the Trump administration made it easier for predatory payday lenders to take advantage of the most vulnerable.
But widespread unemployment and growing debt will hurt more than just those suffering directly. The American economy relies chiefly on consumer spending. If there aren’t enough consumers with a bit of extra income, then spending will go down dramatically, meaning that companies – and even investors in those companies – will start doing a lot worse. This will lead to fewer jobs and, consequently, fewer consumers, creating a vicious cycle that will send our whole economy into a disastrous tailspin. Our massive inequality gap (exacerbated by our tax code) isn’t just morally wrong – even rich folks like me can see that it’s fiscally irresponsible too.
The pandemic has also caused budget shortfalls for state and local governments across the country, even as many officials naively resist tax hikes on the wealthy to compensate. This will cause millions to lose access to a slew of critical services like Medicaid, unemployment insurance, food assistance and voting materials, just as the need for them spikes.
So right now, we’re staring down the barrel of the gun at unprecedented economic damage, increasingly harmful inequality, a Congress unwilling to act, and state governments without the resources to help. But this is not the path we have to choose.
Instead, I envision a recovery that will boost spending on public services by raising taxes on rich people like me, closing egregious tax loopholes and getting serious about combating frequent tax avoidance among the 1%. These legislative fixes will help close the wealth gap and will ensure that the bottom half gets the help it desperately needs.
We can force our lawmakers to enact an economic recovery that prioritizes undoing our accelerating inequality not just from the last seven months but from over the last many decades. The top 1% currently owns 40% of all wealth in the country – and wealth continues to concentrate at the top – but we can enact progressive tax policies that bring forth a new middle class accessible to all Americans, not just a handful of wealthy people.
We can choose a recovery where our government invests in American workers and jobs rather than capitulating to short sighted investors and donors, in order to preserve our consumer-driven economy. When the $600 a week unemployment benefits ended in August, incomes dropped and consumer spending stalled, proving we cannot have a robust recovery without financial support for every-day Americans.
Those writing our tax laws have long rigged our economic system in favor of the wealthy, and it has resulted in a deeply unjust society. But just as the tax code has helped create that injustice, so too can it help dismantle it. It all starts with taxing the rich.
Morris Pearl is a former managing director at Blackrock, Inc., and is now chair of the Patriotic Millionaires.