Income Disparity

I recently read a report by the Center on Budget and Policy Priorities that outlines some pretty astonishing information. By looking at data provided by the Congressional Budget Office (CBO) the income gap between the middle fifth of Americans and the top 1% has more than tripled between 1979 and 2007. It may be worth pointing out that the last time this much wealth was concentrated at the top, 1928, the Great Depression followed pretty soon afterwards.

• The top 1 percent’s share of the nation’s total after-tax household income more than doubled, from 7.5 percent to 17.1 percent.
• The share going to the bottom four-fifths (80 percent) of the population declined from 58 percent to 48 percent

An important thing to point out, is this is looking at AFTER-TAX income. So even after taxes are taken out, 17% of the nation’s income goes to just 1% of the people (~3 million people), while the bottom 80% (240 million people) have seen their share of the nation’s total income DECLINE by 10%. That’s a nice reverse spin on the old Robin Hood tale.

If you look at the actual numbers (already adjusted for inflation),  it looks even more disturbing. The top fifth have seen their income almost double, while the next highest fifth only grew by 35%.  And the top 1% has almost tripled. It gets even worse when you consider how it would look if the growth had been even across all levels.

If all groups’ after-tax incomes had grown at the same percentage rate over the 1979-2007 period, middle-income households would have received an additional $13,042 in 2007 and families in the bottom fifth would have received an additional $6,010.

The poverty line in 2007, for a family of 4, was $20,650. Had growth been equitable, the average family would have been $3,000 ABOVE the poverty line instead of $3,000 BELOW it.

So, when I hear that Boehner and Republicans won’t back a deal on raising the debt ceiling just because it would raise taxes on the wealthiest Americans and, instead, want to focus on cutting services to things like Medicare and Medicaid, I’m completely dumbfounded. What kind of twisted version of the universe do you have to live in to think this is a good idea?