New data from the Census Bureau shows that the tepid recovery is exacerbating income inequality and pushing ordinary Americans into tougher economic circumstances. Here is the Los Angeles Times with more detail:
The median household income, after adjusting for inflation, dropped 1.5% in 2011 from the previous year to $50,054. That is now 8.1% lower than in 2007, when the recession began late that year. […]
The share of people falling below the poverty line—$11,702 for a single person under age 65 and $23,201 for a family of four—had increased steadily since 2006, when the rate was 12.3%. The census report said there were about 46 million poor people in the U.S. last year, essentially the same as in 2010. […]
The latest census report showed that households with incomes in the 20th to 60th percentile saw their share of overall incomes fall last year to 23.8% of total income. Meanwhile, households in the top 20% saw their share of the total pie climb to an all-time high of 50%.
With the all-consuming focus on taxes and “paying your fair share,” one of the things lost in this election is the fact that neither candidate has a concrete plan for improving the short-term economic picture. At most, we can hope that the Obama administration continues to push for more robust income support—through food stamps, unemployment insurance and various tax credits—and that a President Romney would sign massive, across-the-board tax cuts but disregard his promise to cut spending and balance the budget, thus giving us a form of Keynesian stimulus.
Leaving aside the question of whether we should place our main focus on reducing income inequality—as opposed to boosting incomes, even if it leaves the current distribution intact—it’s also true that Obama has managed to position himself on the side of the 99 percent (or 47 percent—choose your number), despite few plans that would turn the page on the past decade of growing inequality.
Democratic rhetoric notwithstanding, Clinton-era tax rates on the rich aren’t high enough to meaningfully reduce the share of after-tax national income collected by the wealthy. And it doesn’t help that the new revenue is going toward deficit reduction, rather than new transfers or benefits for ordinary Americans. Yes, there’s the Affordable Care Act, which uses health insurance subsidies to redistribute a modest share of national income to the least well-off. This has the potential to put a dent in inequality, but its effects will play out in the medium-term.
Conservatives have portrayed this election as a choice between “dependency” or “freedom,” and liberals—including myself—tend to see it in terms of the future of the welfare state. But it might be better to see 2012 as the choice between slamming the gas on income inequality or gently pressing the brakes.
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