We Have the Means to Fund Reparations. Where Is the Political Will?

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Our research points to a multigenerational legacy of white supremacy in asset building and wealth concentration — a history that includes the African slave trade, Jim Crow and systematic discrimination in wealth-building opportunities right on up to the present.

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Between 1983 and 2016, the median net worth for Black Americans actually went down by 50 percent. Paired with a growing Latinx population that also lags far behind whites in household wealth, the U.S.’s overall median wealth trended downward over those decades, even as median white wealth increased.

These trends go hand-in-hand with the rigging of the overall economy. Over the last 30 years, the wealthiest 20 percent of households have captured almost 97.4 percent of all increases in wealth, leaving only scraps for the rest.

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As Ta-Nehisi Coates wrote in his groundbreaking case for reparations in The Atlantic, reparations are “the price we must pay to see ourselves squarely.”

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Historical Precedent

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A major reason for the growing wealth divide isn’t that white people “worked harder.” It’s that the government worked harder for them.

In 1988, President Ronald Reagan formally apologized for the U.S. internment of Japanese Americans during World War II and, under the Civil Liberties Act, paid $20,000 in reparations each to over 800,000 victims. Over $1.1 billion was initially allocated, with additional appropriations later.

In 1995, Florida provided restitution for a violent 1923 pogrom against Black residents of Rosewood, Florida, which included compensation and university scholarships for Rosewood descendants.

At the international level, Germany has paid over $89 billion in reparations to victims of the Holocaust. German officials continue to meet with groups of survivors and their advocates to revisit guidelines and ensure that survivors receive the benefits.

There’s no reason to believe a similarly viable program couldn’t be designed for Americans living with the ongoing effects of slavery, violence and discrimination. (Or, we should add, genocide. We believe there’s a similarly compelling case for reparations to America’s First Nations that deserves its own treatment.)

Understanding White Affirmative Action

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In 1965, a century after the Emancipation Proclamation, African Americans were still largely excluded from programs that helped build middle-class wealth. In the decades following World War II, the U.S. made unprecedented public investments to subsidize debt-free college education and low-cost mortgages. These wealth-building measures benefited millions of households — nearly all of whom were white, and virtually none of whom were Black.

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During these same years, people of color faced overt discrimination in mortgage lending and separate-and-unequal school systems throughout the United States. Barred from traditional forms of credit, African Americans were pushed into wealth-stripping scams like “contract for deed mortgages,” where a missed payment would lead to eviction and loss of all equity.

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Since then, subsequent generations of white families have been able to help their children buy homes and go to college through what sociologists call the “intergenerational transmission of advantage,” while Black families lacked the financial stability to do the same.

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Who Pays?

Still, prosperity is hardly shared uniformly by white Americans. Many white people, with little in the bank to show for their racial advantage, may not support the concept of reparations. If they never owned slaves — and neither did their ancestors — why should they, as taxpayers, have to pay?

The key point is that unpaid labor by millions of people of African heritage was a foundation of the social wealth in the United States. Immigrants with European heritage directly and indirectly benefited from this foundation of social wealth and white supremacy, even if they never had anything to do with slavery.

But that doesn’t mean all white people would bear equal responsibility for paying out.

Indeed, the reparations discussion today is taking place in the context of four decades of growing inequality. {snip}

Today, the wealthiest 400 billionaires in the U.S. have as much wealth as the entire African American population and over a quarter of all Latinx households combined. These same trends have eroded economic security for millions of white households, too.

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{snip} With that in mind, we propose several concrete mechanisms to fund a national Reparations Trust Fund.

The first is a graduated tax on wealth and inherited assets.

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A progressive tax on inheritances over $10 million, meanwhile, would also generate substantial revenue, almost entirely from extremely wealthy families that have benefited from generations of white advantage in wealth building.

Second, we propose hefty penalties on wealthy individuals and corporations that hide their wealth offshore or in complicated trusts to avoid taxation. {snip}

A third source of financing would be to redesign existing wealth-building subsidies. The current U.S. tax code provides over $600 billion a year in tax subsidies — such as homeownership subsidies and retirement savings programs — that are skewed dramatically to the wealthiest households. Shifting these expenditures toward wealth-building programs for low-wealth people, particularly those of color, would have a monumental impact.

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The Road to Reparations

The first political step toward reparations would be for Congress to create a national commission to wrestle with the legacy of slavery and propose a program of reparations and reconciliation.

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The commission could investigate many different forms of reparations. In his book, The Debt: What America Owes to Blacks, Randall Robinson talks about a wide range of ways that reparations could be used, including the funding of cultural institutions, community initiatives, direct cash grants and targeted wealth-building programs.

The commission could also determine eligibility. Scholars like William Darity Jr. argue that eligibility should be tied to those who can demonstrate they have ancestors who suffered from forced migration, exterminationist policies and slavery — not those who came to the U.S. voluntarily. {snip}

A Reparations Trust Fund could also generate funds for specific wealth-building initiatives. Some options include:

Baby Bonds and Stakeholder Funds

Baby bonds, a mechanism to rebalance the historical injustices in family wealth, are federally managed accounts set up at birth for children and endowed by the federal government with assets that will grow over time.

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A recent analysis of a similar proposal by Columbia’s Center on Poverty and Social Policy suggested the policy could reduce the wealth gap between young, white households and young, Black households more than tenfold.

Affordable Housing and Homeownership

Homeownership rates are heavily skewed by race, with 73 percent of white households owning their home in 2018, compared to 42 percent of Black households. Three out of four neighborhoods that were redlined in the 20th century are still low-income, showing the long-term effect of residential segregation policies on cities.

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These loans could be similar to the subsidized home mortgages that built the white middle class after World War II, but targeted to those excluded or preyed upon by predatory lending.

Universal Public Policies

In addition to investments targeting the African American community, broader progressive policies to empower the working and middle classes would also have the impact of reducing the racial wealth divide. These are just a few of the increasingly popular ideas we studied.

Guaranteed Employment and Significantly Raising the Minimum Wage

Black and Latinx workers are twice as likely as white workers to be among the “working poor,” meaning they have a job, but that job doesn’t pay enough to cover basic living expenses.

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Increases in income alone won’t bridge the racial wealth divide, but they would help. Plus, the income from a federal job guarantee would limit the racially disproportionate exposure to predatory finance resulting from low paychecks and unemployment.

Medicare for All

Poor health outcomes are inextricably tied to race in the United States. {snip} Medicare for All removes this burden at the point of delivery.

Postal Banking

About 10 million U.S. families lack bank accounts. People of color are particularly vulnerable to being unbanked, as are rural populations, the very young and the elderly. The postal service is uniquely positioned to provide essential, low-cost financial services to these families, sparing them from exposure to predatory lenders.

Institution-Building Solutions

Many reparations proposals include funds for institutions that educate and commemorate those who struggled against oppression. {snip}

Endowments for Historical and Cultural Institutions

Reparations funds could provide one-time capital endowments to create and sustain museums and exhibits that teach the history of slavery and its aftermath, such as the National Museum of African American History and Culture and the National Museum of the American Indian, both operated by the Smithsonian Institution.

National History Education Programs

Alongside Germany’s reparations to families impacted by the Holocaust, there have been significant investments in education about the history of the Holocaust. The “Facing History and Ourselves” curriculum is now used in thousands of U.S. high schools. A similar investment should be made to disseminate the history of African Americans to all segments of society.

Historical Monuments and Markers

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In the U.S., the National Park Service has a designated site for the Trail of Tears, marking the 1838 forced eviction of the Cherokee from their homelands. Similar markers and exhibits could illuminate other hidden history.

For instance, the recently opened National Memorial for Peace and Justice in Alabama commemorates the 4,400 victims of lynching and mob violence between 1877 and the 1950s. Other historical markers could mark buildings such as the U.S. Capitol (built with enslaved labor), sites of lynchings, and organized pogroms and riots, such as the 1924 attack on a Black business district in Tulsa, Oklahoma.

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Toward a Deep Process

We as a society have yet to address, apologize, and atone for the original sin of slavery, and the continuing legacy of racism in this country. (Nor, we should say again, for the genocide of Native Americans.)

To continue to ignore the legacy of slavery and discrimination requires a debilitating denial — even for white people whose ancestors arrived from other lands in more recent times, and especially for those at the top of the wealth pyramid. {snip}

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