The CBO has quantified what most of America already knows, the richer got richer while the rest of us are squeezing blood from a financial stone. In a new report, the Congressional Budget Office analyzed after tax household income growth by percentiles for 1995-2007. Guess what they found? The Rich increased their wealth out of the stratosphere in comparison to the rest of us.
The top fifth of the population saw a 10-percentage-point increase in their share of after-tax income, yet most of that growth went to the top 1 percent of the population. All other groups saw their shares decline by 2 to 3 percentage points.
After tax income is the amount left over after Uncle Sam has gotten his cut. After tax income includes government transfers. Government transfers are things like social security checks and unemployment benefits. These CBO reported amounts are not adjusted for inflation. Look at the breakdown in overall income growth:
- 275 percent for the top 1 percent of households,
- 65 percent for the next 19 percent,
- Just under 40 percent for the next 60 percent, and
- 18 percent for the bottom 20 percent.
How did that happen? Labor, or most of us working stiffs wages are repressed while gambling on Wall Street paid off big time:
A shift in the composition of income also contributed to the growing concentration. A decrease in the share of total market income from wages and other labor compen-sation and an increase in the share from capital gains contributed to the increase in market income inequality because capital gains are much more concentrated among higher-income households than is labor income.
Transfer payments used to be a social leveler, but this report shows not as much, despite more people receiving social security than previously.
Social Security benefits accounted for between 55 percent and 60 percent of the value of all transfers in each year of the period, equaling about 6½ percent of market income, on average. Even though average Social Security benefits grew more slowly than average income, the population receiving benefits grew faster than the overall population.
Of course the report discounts bad trade policy, offshore outsourcing, corporate governance and a host of other lobbyist passed legislation we know contribute to the reasons America is turning into a 3rd world nation. Selected studies are quoted and others dismissed in the CBO report to explain these outrageous income inequality statistics. The below news report overviews the CBO results.
ABC News did a great report on the growing American wealth divide. In the interview, Robert Reich implies there is no longer a we Americans anymore, replaced with an us vs. them. In other words, we have a strong class divide as a result of income inequality in the United States.