[Congressional Record Volume 141, Number 171 (Wednesday, November 1, 1995)]
[Extensions of Remarks]
[Pages E2084-E2085]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           INCOME INEQUALITY

                                 ______


                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                      Wednesday, November 1, 1995

  Mr. HAMILTON. Mr. Speaker, I am inserting my Washington Report for 
Wednesday, November 1, 1995 into the Congressional Record:

                      Income Inequality In America

       Over the past several years it has become clear that we 
     have an economy in which income inequality has been 
     worsening--the rich in America have been getting richer and 
     the poor have been getting poorer. The figures are worrisome, 
     but what is even more worrisome is that the current budget 
     proposals moving through Congress would aggravate this trend.


                           growing inequality

       Certainly there is nothing wrong with some people making 
     more than others based upon different levels of work and 
     skill. But in recent years the U.S. has become one of the 
     most, if not the most, economically stratified of all the 
     industrialized nations. The gap between the rich and the poor 
     in the U.S. is well above that in Canada and Britain and 
     twice as bad as in Germany.
       After years of little change, income inequality since the 
     1970s has gotten progressively worse. Those in the bottom 
     fifth have seen no improvement at all; indeed their real 
     family income is slightly lower than it was 25 years ago. A 
     recent study found that a larger proportion of children in 
     the U.S. are poor than in the other industrialized nations. 
     Meanwhile, people at the top have done very well. More than 
     three-quarters of the additional income generated during the 
     1980s went to the top 20% of families. The top fifth now 
     receives half of total household income, a record high. 
     Twenty years ago, for example, a corporate CEO's income was 
     35 times greater than his average worker's income; today it 
     is 150 times greater.
       Many factors may have been involved in this trend of 
     growing income inequality--technology in the workplace, 
     lagging productivity, changing labor markets, international 
     trade, the 1980s tax cuts for well-to-do Americans, and the 
     rise in the stock market--and we can debate which of these 
     factors are the most important. But what is beyond debate is 
     whether this basic shift has occurred.


                       gingrich budget proposals

       Yet against this backdrop the budget plan put forward by 
     House Speaker Newt Gingrich would make this trend worse--
     giving more to the rich and taking away more from moderate-
     income Americans.
       The majority of the Gingrich tax cuts would go to families 
     making over $100,000 a year. His tax plan, for example, makes 
     deep cuts in capital gains taxes for the well-to-do. At the 
     same time, 50% of his spending cuts for individuals would 
     come from programs for the bottom fifth. Deep cuts are made 
     in health and nursing home care for the elderly; student 
     loans and veterans benefits are scaled back; and reductions 
     in the Earned Income Tax Credit mean a tax increase that 
     hurts low-income workers.
       Particularly worrisome is that Speaker Gingrich wants to 
     cut deeply not just health but also education and training 
     programs--the very programs that mean greater opportunity and 
     help those on the lower rungs of society get a leg up and 
     improve their future job and income prospects. Most 
     economists would agree that what we should be doing now is 
     increasing programs for youth job 

[[Page E 2085]]
     training, student loans, school-to-work transition, vocational and 
     adult education, and the like--but these are targeted for 
     deep cuts by Speaker Gingrich.


                       Looking At Overall Impact

       Certainly some aspects of the Speaker's budget package are 
     reasonable. Reducing the deficit and bringing the budget into 
     balance is clearly a good idea, and several of the specific 
     items in his overall package make sense, such as selling off 
     unneeded government assets and trimming congressional 
     pensions.
       I also don't want to suggest that we should be anti-rich or 
     that we should protect every program for the poor. Various 
     federal programs, no matter how well intentioned, have not 
     worked, and we need to recognize that they need to be dropped 
     or overhauled.
       Taken one by one, some of the Gingrich proposals do make 
     sense and can be supported. But we need to look at the 
     overall impact of his budget and tax policies taken as an 
     entirety. The clear impact is to give more to those who 
     already have a lot and to take away from struggling 
     Americans. That simply doesn't make sense. It calls into 
     question the basic fairness of government policy and 
     aggravates one of the most worrisome trends in recent 
     decades--the growing income inequality between rich and poor.


                    Concerns About Income Inequality

       This trend of worsening income inequality is a concern for 
     several reasons.
       First, it is divisive. When the gap between rich and poor 
     grows too wide and increasing numbers of people feel that 
     America is no longer a land of opportunity for them, the 
     social fabric of the country is at risk. Those at the bottom 
     may begin to feel they have less of a stake in our society's 
     continuance. Some have called the growing income inequality 
     the greatest threat to America's well-being. Second, it 
     hinders economic growth. As those less well-off get poorer 
     and fall father behind, that reduces their access to 
     education and training and their opportunities for 
     improvement. And that in the end means that the nation as a 
     whole is worse off because growth of the U.S. economy is held 
     back by a less qualified workforce. I frequently hear from 
     Hoosier businesses that inadequately trained and educated 
     workers are a major impediment to growth and increased 
     profits. Third, abandoning those less well-off just isn't 
     what America should be about. One of the things that 
     impressed me most about the Pope's recent visit to the U.S. 
     was his challenge to Americans to be more concerned about the 
     poor. He wanted to know if America is becoming less sensitive 
     and less caring toward the poor, the weak, and the needy--in 
     short, less fair.


                               Conclusion

       President Clinton has vowed to veto the Gingrich proposals 
     in their current form, so there is some hope that they can be 
     moderated and the burdens and benefits shared more fairly. 
     Our government should help upper-income people do better but 
     it should also help lower- and moderate-income people do 
     better too. Our nation's strength does not lie just in the 
     top 1% or 5% or 10% of Americans but in the top 100% of 
     Americans. Every American should have an equal chance at the 
     starting line. We need to ensure the traditional American 
     promise that hard work will be rewarded, opportunity will be 
     promoted for all, and mobility to move up the ladder will be 
     sustained. That is what is right for America and its future.

                          ____________________