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The Haves and The Rest

Will moderate-income households see (and vote) their self-interest this fall?

To be an American is to embrace money as the truest measure of virtue. That’s why the most progressive Post-Keynesian economists, like their more empowered Chicago-school arithmeticians, have a hard time with the small but growing new trend of de-growth and limits-to-growth and environmental economists, among whom are physicists whose numbers say that this, all of this, whether it’s green-powered or coal-fired, can’t go on. What progressives talk about is the same as what conservatives say concerns them—not whether to grow but how to grow, and whether the proceeds should be shared or hoarded.

The newly released numbers about household incomes in Western New York are going to trump the growth/no-growth discussion with the who’s-getting-what discussion. They show, once again, that seven out of 10 families make less than the state median income of about $50,000 a year, and that a small number—well under two percent—of area households report incomes over $200,000 a year.

That’s what we mean when we say “income polarization,” that rather bloodless phrase for the consequences of public policies on international trade, education policy, agriculture, energy, and financial regulation that have resulted in the proceeds from financial assets being valued above the rewards of most kinds of work. Until the financialization of European economies started happening a few years ago, we used to be able to say that income polarization in the Euro Zone—while it certainly exists—was buffered by progressive taxes and broadly popular social programs that don’t exist here. French aristocrats do indeed still live large, but the French middle class pays next to nothing for college. Scandinavian municipal finance would leave an American mayor or county executive speechless, because education and universal healthcare are right there in the local tax package with garbage pickup, sewage treatment, and police protection. Immigrants from across the planet flock to Europe, as they flock here, to get richer, healthier, more freedom, more education. But the paths to riches are so different as to be unrecognizable. Nobody who knows arithmetic can call the Danes, the Germans, the Italians, or even the post-Communist Poles anything but well-off, even though their level of taxation is higher, the comprehensiveness of their social programs is exponentially greater, and the power of corrupting financial institutions is smaller.

For the time being, the dominant framework around here, where just over 1.2 million people enjoy a metropolitan gross domestic output o over $45 billion, is this: that we are a poor, over-taxed region that is being held back from stupendous growth by a smothering government. White folks in the suburbs, no matter how badly screwed they were by the financial speculators of 2008, tend to believe this, while also believing that poor people in the city eat all their tax dollars. Do not ever, ever bother mentioning Canada, much less Europe, to these voters.

Self-knowledge and empowerment

With the election of Kathy Hochul in 2011, that paradigm seemed to shift. An almost entirely suburban and rural district voted 43 percent for a Democrat whose own message, and whose allies’ messaging too, addressed the economic distress of households that increasingly require what used to be called “trade adjustment assistance.” When ex-Goldman Sachs CEO Henry Paulson acted, as secretary of the treasury, to send Goldman Sachs and other Wall Street firms over $700 billion of public funds, the very people who voted for Kathy Hochul in 2011, many of whom supported Carl Paladino for governor the previous year, must have sensed that until they sent somebody to Washington to protect their piece of the taxpayer pie, only the Wall Streeters would get a slice.

Protest against Albany in 2010, when Paladino received huge support in the Buffalo media market, was consistent with the old politics of resentment practiced here. Both the Center for Economic and Policy Studies and now the Rockefeller Institute have profiled how Albany shovels billions of New York City’s money into Western New York, but still, anti-New York City (anti-Semitic?) politicians here demonize the region’s sugar daddy as somehow taking what is rightfully ours.

Hochul’s election showed that the aggrieved rural and suburban voters may be awakening to their economic self-interest. It cannot be lost on suburban voters in Erie County that it was among them, and not just in the poorest sections of Buffalo, that Food Stamp eligibility spiked. Ditto places like pretty-much lily-white Orleans County, where 23 percent of the kids are on Food Stamps, or Livingston and Wyoming counties, where Food Stamp eligibility rose 41 percent and 38 percent respectively since Goldman Sachs, et al., got the big welfare checks.

In Wyoming County, by the latest state numbers on income tax returns, only a little over one-half of one percent of taxpayers reported incomes over $200,000. Seventy-two out of a hundred taxpayers there reported income under $50,000. Almost a third of households in that county, reliably Republican for generations, get their income from transfer payments—Social Security, pensions, Food Stamps, welfare, and such. When President Barack Obama says that he wants to keep the tax cuts for the middle class and let the rates go back up to Bill Clinton’s rates for the 96 Wyoming County households that had income over $200,000, could it be that in 2012 that the rest of Wyoming County will say no?

Maybe. But then there is the problem explaining of Mitt Romney’s money, many tens of millions of which currently reside in the Cayman Islands and in Switzerland.

Prosperity versus gluttony

“Pigs get fat, but hogs get slaughtered.” That old farm saying may have a certain resonance this year in rural, conservative Upstate New York. The exurbanites of Genesee, Livingston, Monroe, Niagara, Orleans, and Wyoming counties will be asked by the Republican messaging apparatus to embrace candidates, including Mitt Romney and Chris Collins, who have almost unimaginable personal wealth that is denominated not in millions, or even in tens of millions, but in hundreds of millions of dollars.

Quantitative difference becomes qualitative at some point. If a retired teacher’s lifetime savings account, or the returns to working a piece of land, a herd of dairy cattle, a convenience-store countertop, or a small-engine repair operation are indistinguishable from having a portfolio of companies with a combined market cap north of $100 million, then a level of cognitive dissonance has settled in upon our neighbors that puts them in a different reality than most of us know. Right now, if my dairy farm was worth $5 million and I died, it would pass to my heirs tax-free. Do people listening to AM radio resentment radio know that the estate tax will never, ever be a part of 98 percent of their lives?

No, many do not. But in 2011, many more than a few in this media market demonstrated a very high level of economic self-awareness when Hochul, labor, and the Democratic Congressional Campaign Committee unapologetically explained that the financial-ownership elite was different from the rest of America—and that the rest of America included even the reasonably well-off, educated, not-very-progressive folks in the McMansion cul-de-sac. The households that can count household income in $1,000 and $10,000 increments rather than in $10,000,000 increments can probably be reminded that under Obamacare, the 23-year-old who has not quite yet landed that awesome Fortune 100 job will have health coverage for another couple of years, but won’t if the multi-, deca- and centi-millionaires repeal that law.

Our conversation, this election season, is going to be the same American talk as ever, with a bit of a twist. We usually ask which one of the two presidential candidates is going to make us rich, and which of the Congressional candidates is going to get the government off our collective back. This time, we’re probably going to ask why $5 out of every $10 of new income has gone to just 15,500 American households in the past three years—households that can afford any health insurance, any college, any iThing, any pump price or tax bill, while the rest of us can only dream of that kind of freedom.

But of course, we will only ask that kind of question if Democrats address these issues, and Democrats have been more lawyerly than bold in doing so. It is almost like reading a theologian’s tract to parse the New York State Department of Taxation and Finance’s claim that income tax rates in New York State are the lowest they’ve been in 58 years. The Republican response is so much simpler: We are the ones, they say, who will cut everybody’s taxes.

The only sensible counter to such claims is arithmetic. For the 70 percent of families in Western New York whose incomes are under $50,000, an income tax cut would yield, oh, dozens of dollars. Keeping the Bush-era tax cuts for millionaires means keeping a tax break worth hundreds of thousands of dollars for them, but also, tax breaks worth between $2,000 and $7,000 a year for households reporting more than $200,000 but less than $1 million in household income. Perhaps someone will ask whether those $2,000 and $3,000 tax breaks have created any jobs since George W. Bush enacted them, along with lawyerly Congressional Democrats and simple-talkin’ Republicans. Like the physicist says: Do the math.

Bruce Fisher is director of the the Center for Economic and Policy Studies at Buffalo State College. His new book is Borderland: Essays from the US-Canada Divide, available at bookstores or at

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