But as President Reagan reversed that fiscal policy by raising the share of military spending relative to non-military public spending and cutting taxes for the wealthy, income inequality also rose considerably. As Reagan's twin policies of drastic increases in military spending and equally sweeping tax cuts for the rich were somewhat tempered in the 1990s, growth in income inequality slowed down accordingly. In the 2000s, however, the ominous trends that were left off by President Reagan have been picked up by President George W. Bush: increasing military spending, decreasing taxes for the rich, and (thereby) exacerbating income inequality.
The following are some specific statistics of how redistributive militarism and supply-side fiscal policies have exacerbated income inequality since the late 1970s and early 1980s-making after-tax income gaps wider than pre-tax ones. According to recently released data by the Congressional Budget Office (CBO), since 1979 income gains among high-income households have dwarfed those of middle- and low-income households. Specifically:
The average after-tax income of the top one percent of the population nearly tripled, rising from $314,000 to nearly $868,000-for a total increase of $554,000, or 176 percent. (Figures are adjusted by CBO for inflation.) By contrast, the average after-tax income of the middle fifth of the population rose a relatively modest 21 percent, or $8,500, reaching $48,400 in 2004.
The average after-tax income of the poorest fifth of the population rose just 6 percent, or $800, during this period, reaching $14,700 in 2004.[7]
Legislation enacted since 2001 has provided taxpayers with about $1 trillion in tax cuts over the past six years. These large tax reductions have made the distribution of after-tax income more unequal by further concentrating income at the top of the income range. According to the Urban InstituteBrookings Institution Tax Policy Center, as a result of the tax cuts enacted since 2001, in 2006 households in the bottom fifth of the income spectrum received tax cuts averaging only $20; households in the middle fifth of the income range received tax cuts averaging $740; households in the top one percent received tax cuts averaging $44,200; and households with incomes exceeding $1 million received an average tax cut of $118,000.[8]
2. Parasitic Imperialism Undermines Public Capital-both Physical and Human
Beyond the issue of class and inequality, allocation of a disproportionately large share of public resources to the beneficiaries of war and militarism is also steadily undermining the critical national objective of building and/or maintaining public capital. This includes both physical capital or infrastructure (such as roads, bridges, mass transit, dams, levees, and the like) and human capital such as health, education, nutrition, and so on. If not reversed or rectified, this ominous trend is bound to stint long term productivity growth and socio-economic development. A top heavy military establishment will be unviable in the long run as it tends to undermine the economic base it is supposed to nurture.
In March 2001, the American Society of Civil Engineers (ASCE) issued a "Report Card for America's Infrastructure," grading 12 infrastructure categories at a disappointing D+ overall, and estimating the need for a $1.3 trillion investment to bring conditions to acceptable levels. In September 2003, ASCE released a Progress Report that examined trends and assessed the progress and decline of the nation's infrastructure. The Progress Report, prepared by a panel of 20 eminent civil engineers with expertise in a range of practice specialties, examined 12 major categories of infrastructure. The report concluded: "The condition of our nation's roads, bridges, drinking water systems and other public works have shown little improvement since they were graded an overall D+ in 2001, with some areas sliding toward failing grade."[9]
Neoliberal proponents of laissez faire economics tend to view government spending on public capital as a burden on the economy. Instead of viewing public-sector spending on infrastructure as a long-term investment that will help sustain and promote economic vitality, they view it as an overhead. By focusing on the short-term balance sheets, they seem to lose sight of the indirect, long-term returns to the tax dollars invested in the public capital stock. Yet, evidence shows that neglect of public capital formation can undermine long-term health of an economy in terms of productivity enhancement and sustained growth.
Continued increase in military spending at the expense of non-military public spending has undermined more than physical infrastructure. Perhaps more importantly, it has also undercut public investment in human capital or social infrastructure such as health care, education, nutrition, housing, and the like-investment that would help improve quality of life, human creativity and labor productivity, thereby also helping to bring about long-term socioeconomic vitality. Investment in human capital-anything that improves human capacity and/or labor productivity-is a major source of social health and economic vitality over time.
Sadly, however, public investment in such vitally important areas has been gradually curtailed ever since the arrival of Ronald Reagan in the White House in 1980 in favor of steadily rising military spending. Evidence of this regrettable trend is overwhelming. To cite merely a few examples: "The war priorities have depleted medical and education staffs. . . . Shortages of housing have caused a swelling of the homeless population in every major city. State and city governments across the country have become trained to bend to the needs of the military-giving automatic approvals to its spending without limit. The same officials cannot find money for affordable housing."[10]
The New York Times columnist Bob Herbert recently reported that some 5.5 million young Americans, age 16 to 24, were undereducated, disconnected from society's mainstream, jobless, restless, unhappy, frustrated, angry and sad. Commenting on this report, Professor Seymour Melman of Columbia University wrote: "This population, 5.5 million and growing, is the product of America's national politics that has stripped away as too costly the very things that might rescue this abandoned generation and train it for productive work. But that sort of thing is now treated as too costly. So this abandoned generation is now left to perform as fodder for well-budgeted police SWAT teams."[11]
3. Parasitic Imperialism Undermines National Defense Capabilities against Natural Disasters-the Case of Hurricane Katrina
Neglect of public physical capital, or infrastructure, can prove very costly in terms of vulnerability in the face of natural disasters. This was tragically demonstrated, among many other instances, by the destruction wrought by Hurricane Katrina. In light of the steady cuts in the infrastructural funding for the city of New Orleans, catastrophic consequences of a hurricane of the magnitude of Katrina were both predictable and, indeed, predicted.
Engineering and meteorological experts had frequently warned of impending disasters such as Katrina. Government policy makers in charge of maintaining public infrastructure, however, remained indifferent to those warnings. They seem to have had other priorities and responsibilities: cutting funds from public works projects and social spending and giving them away to the wealthy supporters who had paid for their elections. It is not surprising, then, that many observers and experts have argued that Katrina was as much a policy disaster as it was a natural disaster.
The New Orleans project manager for the Army Corps of Engineers, Alfred Naomi, had warned for years of the need to shore up the levees, but corporate representatives in the White House and the Congress kept cutting back on the funding. Naomi wasn't the only one who had warned of the impending disaster.
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