Gap between rich and poor: What should it be?

For much of my life I've heard a the argument that the gap between the rich and the poor in the US (and around the world) is getting too large.

I've always wondered what that meant. Unless we accept a communist-like society (true communism, not totalitarian socialism), there will always be a gap. The questions becomes how big should that gap be.

The news has recently come out that the income gap is shrinking in the US for the first time in years. But not because of growth in the low- or medium-income households, but because of shrinking incomes at the top. But is that truly a good thing? In this case, no. I think even many people who make the argument about a smaller income gap would say that shrinking at the top without growing the bottom is not good for the nation, even if it would make some feel better.

Of course, the same argument could be made about growing the bottom at the expense of the top. Would rich Americans stand by and let government policy erode their wealth? Unlikely, and with money comes power and the ability to influence the political process more easily than other Americans. So it also might not be sustainable.

But perpetually growing the top may not be sustainable either. How long will the poor continue to watch the fat grow fatter without rising up as a political force to be reckoned with?

One writer even says that this shrinking top tier is bad for everyone, because they pay most of the income taxes. I know that many Americans believe that rich Americans get out of paying taxes, but on the whole, it's just not true. According to IRS estimates, percentage of income taxes coming from the top 5% of earners (which according to the US Census Bureau is households making more than $167,000 per year in 2005) is growing year over year. So they may be getting wealthier (until 2009), but they are also shouldering more and more of the tax burden.

Another interesting fact: a 1999 Harvard study indicated that a large gap between the rich and poor in a poor country retarded growth, while a large gap in developed countries encouraged total economic growth.

Again I ask the question (and not rhetorically), what should the gap be? How do we define it? It's easy to play the populist game (I'm looking at you Mr. Edwards) and tell poor people that all their problems are created by greedy corporations and individuals. But as a society, is this gap something we want to actively manage?

So next time you hear someone say the gap between rich and poor is too large, ask them that simple question: What should the gap be? Let me know if you get a good answer.

Health Care: Sucking up resources and time

The health care reform debate could end up becoming one of the biggest time sucks in U.S. political history. President Obama has made this his first major foray into domestic policy, and it could end up sinking his presidency or making his legacy.

But the question that is not being asked that should be is this: Why is this part of the domestic policy agenda? Why is this more important than the other domestic problems facing the nation?

You might be saying: Well, Adam, it's the most important. I would argue that it is not in the top 5 domestic issues, and this is an awful time to implement it. Here's why this health care idea is such a bad idea.

The timing of this is awful
We are in the worst recession in almost a century, with double-digit jobless rates, and some states hemorrhaging cash so fast that they're shutting down essential services. And we're going to add $1 trillion to the federal deficit over the next 10 years? Obama has propagated the lie that his proposed solutions will bring down health care costs, yet his own budget office contradicts that.

The proposals don't fix the problems
The biggest problem in health care are rising costs, not access to care. And the current proposals due little to curb that. Unless we can bring insurance agencies under control and institute tort reform, all of these proposals are unlikely to really solve the problems and could cripple our nation.

There are more pressing issues
Let me list just a few that I would address well before health care: homelessness, joblessness, state budget problems, education, child hunger, the recession (which is not solved by the stimulus package). Are these as sexy? Probably not, but I believe strongly they're more important. And you could also add financial regulation to the list, since the federal government has done little to correct the issues that helped create this fiscal crisis.

It mystifies me that liberals are ignoring these issues to focus on health care. What about hungry children in the US? That's less important than health care? If we put all of this money into health care, will we have money to solve other problems? Not without major tax hikes and/or cuts in other programs.

Let's take education as an example. Yes, it was part of the stimulus program, but schools across the country are still laying off teachers, cutting programs, all while class sizes swell to scrary levels. Some districts in Arizona and California will average 40-50 high school students per class. And we're focused on health care? How about educating impoverished kids and helping them brake the cycle of poverty? Health care reform won't do that.

Final Thoughts
Please, President Obama and members of Congress, please drop this and focus on the bigger problems. Is health care reform needed? Absolutely, but let's put it in its proper context and fix the bigger priorities first. Please.