When Republicans talk income inequality ….

Delving into anonymous tax data compiled by the IRS, economist Emmanuel Saez has updated U.S. income-distribution statistics through 2013. What he found will not surprise you.

As the New York Times reports it:

“… the economic recovery so far has only boosted the incomes of the rich, and it has yielded no improvement for the bottom 99 percent of the distribution. After adjusting for inflation, the average income for the richest 1 percent (excluding capital gains) has risen from $871,100 in 2009 to $968,000 over 2012 and 2013. By contrast, for the remaining 99 percent, average incomes fell by a few dollars from $44,000 to $43,900.

“That is, so far all of the gains of the recovery have gone to the top 1 percent.”

Note that the data reported above exclude capital gains, the profits earned from the sale of investments in stocks, real estate, etc. For example, it doesn’t reflect the fact that the Dow Jones has jumped from 6,600 in March 2009 to more than 17,000 today. As Saez notes, including capital gains in the data would tilt the distribution even further toward the top 1 percent.

Note also that since the end of 2008, the national economy has grown by 9.2 percent, yet the lower 99 percent has seen almost no benefits from that growth in GDP. It has all flowed upward.

The phenomenon has become so obvious and undeniable that we’re now hearing it broached from unfamiliar quarters.

Listen to U.S. Sen. Ted Cruz, on Fox News:

Ted Cruz

“… the facts are we’re facing right now a divided America when it comes to the economy. It’s true that the top 1 percent are doing great under Barack Obama. Today, the top 1 percent earn a higher share of our national income than any year since 1928. The sad reality is, with big government, under the Obama administration, the rich and powerful, those who walked the corridor of power in the Obama administration, have gotten fat and happy.”

What Cruz lacks in logic he attempts to cover through sheer brazenness. His suggestion that the 1 percent to whom all these benefits are flowing are largely Obama’s buddies is particularly rich, and betrays the intellectual contempt that he feels for the audience that he is attempting to fool.

And then there’s that world-renowned champion of the downtrodden 47 percent, Mitt Romney. As he put it the other day:

“Under President Obama, the rich have gotten richer, income inequality has gotten worse and there are more people in poverty in American than ever before.”

Yes, that’s the same Mitt Romney who three years ago dismissed any talk of income inequality as “class warfare” and “the bitter politics of envy.” So clearly, something fundamental has changed. The elephant in the room has grown so large that it is no longer plausible to pretend that it does not exist. The strategy now appears to be to blame the elephant’s existence on those who pointed it out in the first place, such as President Obama. (I’m sure that eventually we’ll see the same thing attempted on climate change, but I digress.)

So let’s inject a little reality into the situation, shall we?

6a00d83451b33869e201a51157297d970c-500wi

That chart tells us several things.

— It tells us that the more egalitarian America of the mid- to late-20th century, the America that many of us knew growing up, has disappeared.

— It tells us that income and wealth concentration now exceeds the previous peak of 1928, right before the Depression.

— It tells us that Cruz and Romney are wrong to suggest that the trend began in 2009, when that socialist Barack Obama was inaugurated as president and began making all his rich and powerful friends even more rich and powerful. It can be traced back to circa 1980, when Obama was a 19-year-old college student.

— It tells us that the trend accelerated in the eight-year term of Ronald Reagan (1981-89), and also continued unabated through the two-term presidency of George W. Bush. I’m not directly blaming the trend on those men or their policies, because it clearly has more fundamental causes. But it does strongly suggest that income inequality has causes other than high taxation and government regulation.

Nonetheless, that remains the GOP’s story and they’re sticking to it. Before they were willing to acknowledge income inequality as a problem, their preferred economic strategy was more tax cuts for the wealthy and “less regulation”. After acknowledging inequality as a problem, their preferred economic strategy remains exactly the same. Nothing has changed. It’s the political moonwalk, creating the impression of forward movement while staying exactly where you’ve always been.

Over the weekend, Cruz, Marco Rubio and Rand Paul all appeared before a group of wealthy conservative donors organized by the Koch brothers. During a panel discussion, all three presidential contenders acknowledged income inequality as a major issue, and all three argued that if we just cut taxes on those persecuted, bedraggled “producers” sitting in their audience — people already benefiting from the highest corporate after-tax profits in American history — the wealth would begin to trickle down to the working folks.

Admittedly, they did not use the discredited term “trickle down,” but that was certainly the essence of their message. Nor did they even try to explain why things had changed, why this time would be the magic time, the time that their oft-tried experiment would finally work and the chart above would begin to reverse itself.

Tellingly, when they were asked whether the minimum wage ought to be raised to make up for inflation, none of the three was willing to support the existence of a minimum wage in the first place.

Reader Comments 0

632 comments
cancunmark1959
cancunmark1959

I'm still a little curious as to why people consider Ted Cruz to be a potential presidential candidate in 2016, see how his being born in Calgary, Alberta, Canada make him ineligible per Section 1 of Article Two of the United States Constitution and subsequent rulings that basically say that to hold the office you must be born on US soil. 

DeborahinAthens
DeborahinAthens

Less than 40% of workers have access to retirement plans according to stats from the DOL. And most low wage workers that do have access don't contribute because they can't afford to not eat! You live in a fairy tale world! These people do not invest and they do not get the same benefit as a hedge fund manager whose compensation is taxed at 15%. Two years ago, the top five (in compensation--definitely NOT performance) fund managers made over $13 billion in compensation. Last year's stats will be similar, I'm sure. These people DO NOT create jobs!

Doom Classical liberal
Doom Classical liberal

The thoroughly debunked income inequality theme again. 


One more time. 


By starting with a baseline of 2009 Jay uses a graph that probably shows the bottom of high incomes- which plummeted the most after the 2007-08 recession. Therefore, when higher income people naturally have the highest percentage gain after the incomes bottomed out it then presents a statistically misleading picture. Its all about the baseline Jay chose. 


Secondly, the graph that shows the huge increase in top incomes starting in the mid 80s is reflective of the tax law changes beginning in the 80s, specifically the 86 tax reform act, which made an enormous sum of what used to be reported as corporate income tax begin to be reported on individual income tax returns. This is nothing more than tax shifting as numerous companies- even very large companies, began reporting as Subchapter S and other pass through entities. 

JamVet
JamVet

The wealthy make most of their income via capital gains and stock market appreciation.

And the working man does not, D.

And why we have so little economic justice in this new age of perverted capitalism.

The high levels of taxation on human labor are onerous and pernicious.

The much lower levels of taxation on paper money is why the wealthy want very little economic justice.

Stop penalizing the workers.

The men and women who made and continue to make this country.

Many of them, the (very hard) working poor.

Tax wealth, not work.

Doom Classical liberal
Doom Classical liberal

@JamVet


What's up Jam. 


"And the working man does not, D."


The working man makes most of his capital gains and stock market wealth inside of IRAs, 401ks, and other qualified retirement accounts. When Saez does these tax based income inequality studies the enormous gains made by lower and middle class folks do not show up in taxable income based studies. They are statistically invisible. So the entire argument about this growing inequality is easily explainable. And as you may well know 401k and other qualified retirement plans are specifically set up to discriminate against highly compensated employees in favor of the lower end employees. Which is a good thing imo. 


Relax Jam. The good news is that the middle class is doing just fine if you include their statistically invisible gains. 

NWGAL
NWGAL

Doom, I want some of whatever you are drinking. Most of us raided our 401Ks to cover our mortgages after job losses In the depression.

Doom Classical liberal
Doom Classical liberal

For example, it doesn’t reflect the fact that the Dow Jones has jumped from 6,600 in March 2009 to more than 17,000 today.As Saez notes, including capital gains in the data would tilt the distribution even further toward the top 1 percent."


Once again easily explainable. The wealthy make most of their income via capital gains and stock market appreciation. So hence their gains are going to be magnified during boom markets and when we have bear markets their income and income inequality will be much, much lower. It won't matter of course though for the poor and middle class. They don't do better just because rich folks are doing worse. That would just be the typical zero sum fallacy for which the progs are known for. 


Moreover, as I already mentioned, Saez's tax based  income studies do not reflect the enormous but statistically invisible gains made inside of 401ks and other qualified retirement plans- which dramatically favor the middle class and discriminate against highly compensated employees. 

Peachs
Peachs

The Republicans rail on wealth distribution for their entire conception. Now they are backing off and claiming,” maybe the girl is pregnant but it ain’t my baby!” When the Obama economist claimed the mentally challenged in America had to be handled with kid gloves, the right turned red and sweated bullets of indignation.Republicans are like the philandering husband who can tell his wife anything he pleases she believes him and then to add to the mess he calls his neighbor out for treating his wife disgracefully, “ and aren’t you lucky to have me?”

_GodlessHeathen_
_GodlessHeathen_

Armed revolt.  Pitchforks.  Revolution in the air?


Bwaahaha.


As long as the people are doing as well as American's are doing, none of that is going to happen.

JamVet
JamVet

"The money powers prey upon the nation in times of peace and conspire against it in times of adversity. 

The banking powers are more despotic than a monarchy, more insolent than autocracy, more selfish than bureaucracy. 

They denounce as public enemies all who question their methods or throw light upon their crimes. I have two great enemies, the Southern Army in front of me and the bankers in the rear. Of the two, the one at my rear is my greatest foe. 

Corporations have been enthroned, and an era of corruption in high places will follow. 

The money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until the wealth is aggregated in the hands of a few, and the Republic is destroyed".


JamVet
JamVet

@_GodlessHeathen_ @JamVet 

If that is your attempt at humor, I'd stick with something else, heathen!

(Look it up, it's from someone very famous in the second half of the 19th century!)

Peachs
Peachs

If O is so good for the rich why don't they vote for him.  I mention O in the company of rich friends and I fear for my life. 

Doom Classical liberal
Doom Classical liberal

Bwahahahahahahahahahahahahhahahahahahhaahahhahahahahahahhaaha!!!!!!!!!!!!!!!!!!!!


I just looked at Jay's graph showing the huge upswing in the incomes of the top 1% starting in the mid 80s. Geez. This is so easily explainable it aint even funny. This is nothing more than the tax shifting of incomes that used to be reported on the corporate tax income side now being reported on individual taxes mainly as a result of tax law changes in the 80s and specifically the tax reform act of 1986. Take a look at the enormous rise of Subchapter S and other pass through entities that now report income on individual income returns as opposed to income that used to always be reported as corporate income. 


Matter of fact if I'm not mistaken as an example the Koch brothers have their income reported in this fashion on individual returns as opposed to corporate tax. To name just a few companies that went from reporting corporate income to Subchapter S corps and now report as individual income- Neiman Marcus, Sears, Kmart, Toys R Us, Dunkin Donuts, J. Crew, Georgia Pacific, Hertz, and on and on and on. 


HAHAHAHHAHAHAHHAHAHAHHAHAHAHA!


Dang the progs are stupid. They just eat this nonsense right up!

Doom Classical liberal
Doom Classical liberal

fter adjusting for inflation, the average income for the richest 1 percent (excluding capital gains) has risen from $871,100 in 2009 to $968,000 over 2012 and 2013."


Is there anyone who really can't see through this crap??? Seriously??? 


Millionaires were crushed during the 2007-08 recession and their incomes devastated and those incomes probably bottomed out around 2009. By starting in 2009 they're using a baseline that is substantially lower since high incomes were devastated. So naturally when incomes rise the people who are going to see the largest percentage gain are of course going to be the people who took the worse beating. 



You people fell for this crap???

gotalife
gotalife

Thank you Fed and President Obama for our recovery.

gotalife
gotalife

Fed Upgrades The Economy, But Will Be 'Patient' Raising Rates

Great news.

Recon2/3
Recon2/3

The aging liberal far-left is so obsessed with trickle down that they keep forgetting to change their depends.

Gmare
Gmare

Just so you know, the need for Depends is not a joking matter!

Gmare
Gmare

True, Scooter. I needed them after colon surgery. It was a messy, humiliating experience.

gotalife
gotalife

With  dna exonerating so many Americans, the death penalty should end.


Police and governments can no longer be trusted like our pols and war.

AyeAyeSir
AyeAyeSir

"Gun range's ban on Muslims draws fire"


"In the five months since Jan Morgan banned Muslims from her gun range in Hot Springs, Ark., business has boomed and predictions of a lawsuit brought by federal civil rights enforcers have so far proved inaccurate.

Morgan, who claims keeping Muslims out of her Gun Cave Indoor Firing Range is a matter of public safety and not a constitutional issue, says she made the decision in September after two customers she deemed suspicious visited."


http://www.foxnews.com/us/2015/01/28/gun-range-ban-on-muslims-draws-fire/



She is going about this all wrong and inviting a civil suit.


Solution: Just make it a Gun Range/BBQ Pork Place

Hedley_Lammar
Hedley_Lammar

@Nick_Danger @AyeAyeSir says she made the decision in September after two customers she deemed suspicious visited


One can imaging the high browness of that conversation. Whether with others or just in her head. 

Nick_Danger
Nick_Danger

@AyeAyeSir @HeadleyLamar @Nick_Danger 

Jews and Muslims share the same dietary restrictions concerning pork.

Now that I think on it, I believe the injunction comes from Leviticus, concerning "cloven hooves."  "Real" Christians shouldn't be eating pork, either, I guess...

Nick_Danger
Nick_Danger

@HeadleyLamar @Nick_Danger @AyeAyeSir 

As I recall, they were not Muslim, but she perceived them as brown and foreign.  When she demanded to know their religion, and they asked why she wanted to know, she banned them.

if this is incorrect in any detail, please feel free to correct it.

MiltonMan
MiltonMan

So in the libs mind the Dow being at record highs is a good thing but Jay is telling us it is a bad thing???


Doom Classical liberal
Doom Classical liberal

@HeadleyLamar @Nick_Danger @MiltonMan


Forgot about the mega trillions in 401k and other qualified retirement plans which disproportionately benefit lower and middle classes did ya?  And did you forget that these statistically invisible returns don't show up on tax based income studies? Of course you did. Couldn't figure any of this out as obvious as it is? Of course you couldn't.