Making Sen$e: Income Disparity in America

Posted by AzBlueMeanie:

In case you missed the PBS documentary Making Sen$e last week, you can catch the video replay online. PBS' Making Sen$e: 'Land of the Free, Home of the Poor' | Crooks and Liars:

Making Sen$e correspondent Paul Solman reports on the extreme inequality in the U.S. It's now on par with African dictatorships. In a telling moment after interviewing a recent immigrant from Haiti, where she says the American Dream isn't something she feels she'll ever have, Solman says, "The U.S. looks unequal to a Haitian?"

He then looks into a recent study about wealth in the U.S. "The first constant finding," Solman says. "Most Americans don't realize how unequal our country really is."

Watch the full episode. See more PBS NewsHour.

Jon Perr at Perrspectives.com has a lengthy detail-rich analysis (lots of charts and graphs!) in GOP Decries Class Warfare on the Tragically Rich (excerpts):

Judging from the furious reaction of some of the gilded-class crowd and their Republican protectors, billionaire Warren Buffett struck a nerve with his plea to Congress to "stop coddling the super-rich." Former American Express CEO Harvey Golub and Tea Party sugar daddy Charles Koch were quick to protest respectively "the unfair way taxes are collected" and that "my business and non-profit investments are much more beneficial to societal well-being than sending more money to Washington." Meanwhile, House Majority Leader Eric Cantor attacked President Obama's "efforts to incite class warfare."

Of course, a truism of American politics is that the side decrying the class war is the one winning it. And at a time when the federal tax burden is at its lowest in 60 years and income inequality at its highest level in 80, Republicans would still rather wave the unbloodied shirt of class warfare than ask what America's rich and famous can do for their country.

* * *

On January 9, 2009, the Republican-friendly Wall Street Journal summed it up with an article titled simply, "Bush on Jobs: the Worst Track Record on Record." (The Journal's interactive table quantifies his staggering failure relative to every post-World War II president.) The meager one million jobs created under President Bush didn't merely pale in comparison to the 23 million produced during Bill Clinton's tenure. In September 2009, the Congressional Joint Economic Committee charted Bush's job creation disaster, the worst since Hoover:

As David Leonhardt of the New York Times aptly concluded last year:

Those tax cuts passed in 2001 amid big promises about what they would do for the economy. What followed? The decade with the slowest average annual growth since World War II. Amazingly, that statement is true even if you forget about the Great Recession and simply look at 2001-7.

The data are clear: lower taxes for America's so called job-creators don't mean either faster economic growth or more jobs for Americans.

But while Boehner's job creators didn't create any jobs after the top rate was trimmed to 35% and capital gains and dividends taxes were slashed, they did enjoy an unprecedented windfall courtesy of the United States Treasury.

For Republicans, this predictable result of the Bush tax cuts was a feature, not a bug.

* * *

It's no wonder that between 2001 and 2007- a period during which poverty was rising and average household income had fallen – the 400 richest taxpayers saw their incomes double to an average of $345 million even as their effective tax rate was virtually halved.

As ThinkProgress demonstrated, historically lower tax rates for the richest Americans did not produce either more job creation or faster economic growth. (In fact, the Bush years produced what David Leonhardt of the New York Times rightly labeled as "The decade with the slowest average annual growth since World War II.") But what the conservative cornucopia for the gilded-class does reliably produce is unprecedented income inequality.

A report from the Center on Budget and Policy Priorities (CBPP) found a financial Grand Canyon separating the very rich from everyone else. Over the three decades ending in 2007, 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. During that time, the share of the middle 60% of Americans dropped from 51.1 percent to 43.5 percent; the bottom four-fifths declined from 58 percent to 48 percent. As for the poor, they fell further and further behind, with the lowest quintile's income share sliding to just 4.9%. Expressed in dollar terms, the income gap is staggering:

Between 1979 and 2007, average after-tax incomes for the top 1 percent rose by 281 percent after adjusting for inflation — an increase in income of $973,100 per household — compared to increases of 25 percent ($11,200 per household) for the middle fifth of households and 16 percent ($2,400 per household) for the bottom fifth.

As the New York Times revealed in August 2009, by 2007 the top 1% – the 1.5 million families earning more than $400,000 – reaped 24% of the nation's income. The bottom 90% – the 136 million families below $110,000 – accounted for just 50%.

If you had any lingering doubts about Warren Buffett's admission that "it's my class, the rich class, that's making war, and we're winning," this pair of charts from the New York Times should put them to rest. As the upper-income tax burden fell, income inequality in the U.S. exploded.

Continue reading GOP Decries Class Warfare on the Tragically Rich.