Describing the social and economic costs of growing income inequality, economist Robert Frank explained in yesterday’ New York Times that while the first three decades after World War II were a time of broadly shared prosperity, income gains over the next three decades went almost entirely to the very wealthy. You can see the striking contrast in the graph below.
BEYOND THE NUMBERS
Bill Galston of the Brookings Institution and Maya MacGuineas of the New America Foundation offered a plan last week to reduce federal deficits and push down debt held by the public to 60 percent of gross domestic product by 2020. The plan explicitly recognizes that it would be unrealistic to hold federal revenues and outlays to the averages of recent decades, a topic on which we’ve recently written. We commend Galston and MacGuineas for proposing reasonably specific tax increases and spending cuts rather than relying largely on mechanical formulas that avoid making the hard choices.
We’ve updated our chart and table on how the change in income distribution between 1979 and 2007 affected different income groups to reflect a slightly different methodology. Below are the revised figures.
UPDATE, SEPTEMBER 30: We’ve revised some of the figures in this post. Click here for the updated numbers.
In yesterday’s New York Times, Richard Thaler, one of the nation’s top economists, neatly refuted the arguments for borrowing tens of billions of dollars each year to keep President Bush’s tax cuts flowing to the most affluent 2 percent of people in the country. He then posed a central question: “whether we want a society in which the rich take an ever-increasing share of the pie, or prefer to return to conditions that allow all classes to anticipate an increasing standard of living.”
A major component of the “Pledge to America” legislative blueprint, which House Republicans issued this morning, is an earlier proposal from House Minority Leader John Boehner to cut domestic funding substantially.
Proponents of extending President Bush’s costly tax cuts for people making over $250,000, which the non-partisan Congressional Budget Office (CBO) has rated the worst of all options under consideration for boosting a weak economy, are resorting to increasingly dubious claims to buttress a weak case. Two examples are in today’s papers:
In the current debate over federal taxes, all eyes are focused on what to do about President Bush’s expiring tax cuts for high-income people. Proponents of these tax cuts, mainly but not solely Republicans, argue that letting the cuts expire on time amounts to a tax increase — and, with the economy still very weak, now is not the time to raise taxes on anyone, wealthy or otherwise.
What do you call parents who work at very low-wage jobs to support their families — say, a single mother raising two children and working at a nursing home, or a construction laborer trying to support his wife and children? Until recently, policymakers have called them welfare-reform success stories: people who have chosen work over welfare. Now, however, there is a risk that it is becoming fashionable to call them “freeloaders” for whom the Internal Revenue is a “sugar daddy” dispensing tax benefits.
The Senate will vote tomorrow on an amendment to small business legislation that would seriously weaken an essential element of the new health reform law — the requirement that individuals obtain health insurance or pay a penalty — and eliminate preventive care funding aimed at reducing the onset of chronic diseases and improving overall health.