Ex-Trump official who supports Biden stimulus plan speaks out
New York (CNN Business)Billionaires are minting money during the pandemic, even as millions of Americans join the ranks of the poor.
US billionaires have collectively become $1.1 trillion — nearly 40% — richer since mid-March, according to a report published Tuesday by progressive groups Institute for Policy Studies and Americans for Tax Fairness.
In other words, not only have the uber-wealthy recovered their losses from the spring, many are faring much better than before. That’s in large part because of the sizzling stock market. Elon Musk alone is about $155 billion richer, boosted by Tesla’s skyrocketing market valuation.
Forty-six people joined the ranks of billionaires since March 18, 2020, the week after the World Health Organization declared a global pandemic, according to the report.
Clearly, the pandemic is worsening America’s already troubling inequality crisis. The staggering gains at the top contrast sharply with the financial struggles of those at the bottom, many of whom are on the front lines of the pandemic and have lost their jobs or had wages cut.
America’s 660 billionaires now hold $4.1 trillion in wealth — two thirds more than the amount held by the bottom 50% of the US population, the report found.
Poverty rate climbs sharply
More than 8 million Americans fell into poverty during the final six months of 2020, according to real-time estimates published by economists at the University of Chicago, University of Notre Dame and the Lab for Economic Opportunities.
The US poverty rate declined during the first few months of the pandemic, in large part because of the federal government’s stimulus checks. However, the poverty rate climbed 2.4 percentage points during the second half of the year — nearly double the largest annual increase in poverty since the 1960s, the economists found.
Some groups have suffered more than others. The poverty rate for Black Americans is 5.4 percentage points higher today than in June 2020, translating to 2.4 million people who have fallen into poverty, the economists found.
For those with a high school education or less, the poverty rate has surged to 22.5%, compared to 17% in June.
Florida, Mississippi, Arizona and North Carolina were among the states that suffered the largest increases in poverty rates. The state-level findings “suggest that poverty rose more in states with less effective unemployment insurance systems,” the economists said in the report.
How Biden wants to fight inequality
The wealth and poverty statistics provide further proof of America’s K-shaped economic recovery.
The stock market is at record highs, the housing market is booming and Big Tech is thriving. However, other industries including airlines, restaurants, hotels and movie theaters are still in disarray.
Janet Yellen, President Joe Biden’s newly confirmed Treasury secretary, has acknowledged this problem and suggested it’s nothing new.
“Well before Covid-19 infected a single American, we were living in a K-shaped economy, one where wealth built on wealth while working families fell further and further behind,” Yellen told lawmakers during her confirmation hearing last week.
Biden and Yellen are calling for bold action from Congress to ease inequality. Biden’s $1.9 trillion American Rescue Plan includes $1,400 stimulus checks, $350 billion in state and local aid and enhanced unemployment benefits. The White House is also expected to push for a multi-trillion infrastructure package that would be aimed at further boosting the economy — and could be financed in part by raising taxes on corporations and the wealthy.
Surging housing, stock markets
The pandemic has been a boon to the housing market, with existing home sales hitting a 14-year high in 2020. Home prices, a major source of wealth, hit a record high.
The stock market has played a significant role in the divide between rich and poor.
Even though the US economy has not fully recovered from the pandemic, the S&P 500 is up by 72% from its low point in March. That V-shaped recovery reflects optimism about vaccines, trillions in relief provided by Washington and unprecedented steps from the Federal Reserve that have essentially forced investors to bet on stocks.
Not surprisingly, surging stock prices are especially helpful to the wealthy because they have more skin in the game. As of early 2020, the wealthiest 10% of US households owned 87% of all stocks and mutual funds, according to the Federal Reserve. By contrast, millions of less affluent Americans can’t feel the stock market boom.
Tesla’s (TSLA) skyrocketing share price has lifted Musk’s wealth by more than 600%, according to the wealth report. Other big gainers include Amazon (AMZN) founder and CEO Jeff Bezos, whose wealth has climbed by more than $68 billion during the pandemic. Facebook (FB) co-founder and CEO Mark Zuckerberg is about $37 billion more wealthy than in mid-March.
Inequality isn’t just an American problem.
It will take more than a decade for the world’s poorest to recoup their losses from the pandemic, according to Oxfam International’s annual inequality report released Sunday. By contrast, it took just nine months for the world’s top 1,000 billionaires to recover.
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