Columbia University researchers project that poverty rates in the United States could soon reach their highest levels in half a century. Yet as my colleagues and I track in a new report for the Institute for Policy Studies, the wealth of America’s billionaires actually increased by nearly 10% over just three weeks as the COVID-19 crisis took hold.
Extreme wealth inequality, in short, is America’s “preexisting condition.” And unless we act intentionally — with ambitious public policies aimed at reversing inequality — the pandemic recovery will supercharge our existing inequalities of income, wealth and opportunity.
We’ve seen this happen before, in the recovery from the 2008 economic meltdown — which, for most Americans, was never complete. Indeed, most US households went into this pandemic with a lingering economic hangover from the 2008 crash. Only the top 20% of US households had fully recovered the wealth they had prior to the Great Recession.
By contrast, my colleagues and I found that the Forbes 400 — the wealthiest 400 billionaires in the United States — had fully recovered their wealth within three years. Within a decade, their wealth had increased over 80%.
We see that pattern repeating now on a shockingly compressed timeline.
Already, the combined wealth of US billionaires is higher than a year ago, according to our study. At least eight of these billionaires have added another $1 billion to their wealth during the pandemic.
Among these “pandemic profiteers” are Zoom CEO Eric Yuan and Steve Ballmer, former CEO of Microsoft, which owns Skype and Teams. Both Yuan and Ballmer are profiting off the boom in videoconferencing.
But no one has benefited as handsomely as Jeff Bezos of Amazon, who has seen his wealth skyrocket by $25 billion since January 1 as homebound customers lean heavily on online shopping, grocery delivery and streaming. This wealth surge for one individual — greater than the entire GDP of Honduras — is unprecedented in the history of modern markets.
In short, while the majority of Americans lurch toward a recession worse than the crash of a decade ago, a tiny number of billionaires is set to make out like bandits.
Complicating matters, billionaires’ extraordinary wealth gives them extraordinary influence over the political process, which they’ve used to slash their tax bills astoundingly over the last few decades. According to our data, the taxes paid by America’s billionaires, measured as a percentage of their wealth, decreased by a stunning 79% between 1980 and 2018.
Given all this, it’s not surprising that policy responses in times of crisis tend to reflect the priorities of the wealthiest first. Last time, in 2008, we bailed out the banks on Wall Street, but not the homeowners and small businesses on Main Street.
This time, in the $2.2 trillion stimulus that Congress passed, ordinary households got a one-time $1,200 check. People earning over $1 million, however, could receive an average tax windfall of $1.6 million, according to analysis released by two congressmen.
It doesn’t have to be this way.
Instead, Congress should design stimulus bills to put more money in the pockets of ordinary people. An initial six-month universal basic income of $1,500 a month per adult, for households with incomes under $70,000, would reduce economic stress and destitution and boost struggling local communities.
Money distributed to working people is much likelier to get spent quickly, as people flock to grocery stores and gas stations and other local businesses to meet their immediate needs. Bailouts to the rich and corporate giants, by contrast, may end up getting spent on stock buybacks or funneled offshore instead.
To help pay for our recovery, Congress should levy a 10% millionaire surtax on incomes over $2 million, which would generate about $635 billion over the next 10 years, according to the Tax Policy Center. Other measures should include a wealth tax and a progressive inheritance tax.
Meanwhile, we should guard against profiteering and windfall profits by ensuring vigorous congressional oversight of the stimulus funds already passed and by levying an excess profits tax, as we have during times of war.
Finally, the frontline workers who deliver the packages, groceries, meals and care for those of us staying at home deserve health care coverage, decent wages and workplace rights and protections — to protect their wealth and health.
Extreme inequality may be America’s pre-existing condition. But with the right actions now, we can exit this pandemic on a pathway to a more decent and equitable society.