Election '08 a battle of the haves vs. have-nots

I keep hearing the war in Iraq will be the deciding factor in the 2008 elections. I also hear health-care issues will carry the day. Or maybe it will be the hatred of the current president, or the dissatisfaction with Congress.

Don't believe any of it. These issues don't really get to the core of why people are so eager for change.

Certainly there are many issues swirling around, but they all grow from one central issue: the growing gap between the haves and have-nots.

There has always been a gap between those at the top of the economic ladder and those at the bottom. This isn't a bad thing, nor is it necessarily bad when the gap between them grows. The rich spur innovation and invest in new ventures that create jobs, American capitalism at its best.

But it becomes a big problem when those people at the bottom don't share in the bounty, and see their financial situation erode. This has been the case over the last several years, with wages growing slower than inflation, especially when you count in the exploding costs of health care, energy and housing, and the growing tab for the war.

For instance, personal income in 2005 rose 9 percent over prior year, a very healthy increase, according to Internal Revenue Service data. But for the bottom 90 percent of Americans, they actually saw their incomes decrease slightly over the same period, by .6 percent. That's because most of that 90 percent depend on wages for much of their income, and wages fell 1.8 percent for men, and 1.3 percent for women in 2005.

The effects of this income erosion for those at the bottom of the ladder have been hidden for several years. Supply-siders have done a good job convincing Americans that tax cuts for the rich will trickle down to everyone. But what Americans are just now finding out is the stuff trickling down on them doesn't smell much like prosperity.

The erosion has also been obscured by the easy access to credit most Americans have, which has allowed them to basically borrow themselves a better living standard. But as the housing market tanks, this credit is starting to dry up, and the new bankruptcy law means people can't just write off their debts and start over freshly.

With the gap between rich and poor approaching 1929 levels, the stage has been set for a revolt that will demand some of that wealth be redirected downward.

And for perhaps the first time since 1932, there is a stark choice for voters. The Republican candidates for president want to continue on the path that has caused the wealth gap to widen, while the Democrats want to take steps to help those at the bottom, starting with health care.

Understand, I'm not arguing about whether it is right or fair for those at the bottom to take wealth from those at the top. There is great logic in the theory that we shouldn't "coddle" the poor, that they should pull themselves up by their own bootstraps.

As King Louis XVI of France might have said upon reflection: That's great in theory, but it's not worth losing your head over. History shows many countries where the uncoddled poor force the rich to hand over their money when they feel left out of the economy.

Those at the top of the economic ladder eventually come to realize that sharing a bit of their wealth with the masses is good for business. For instance, solving the current health-care problem will help American businesses compete against international competitors, which is why so many big corporations are jumping on the Democratic bandwagon.

Unfortunately, many on the right get too caught up in conservative orthodoxy to recognize a good deal when they see it.

And that's where we stand now. We have the diehards on the right who cling to the idea that tax cuts will solve all problems, and the masses who are growing ever skeptical of their claims. This would be a good time for the wealth gap to be narrowed, to allow the rest of the country to enjoy the benefits of economic growth.

If the Republicans manage to pull off a win in 2008, it will just push that day of reckoning out further. Hopefully, no one will lose their heads when it finally arrives.

• Kirk Caraway is editor of http://nevadapolitics.com and also writes a blog on national issues at http://kirkcaraway.com.