Thursday, June 09, 2005

George W. Bush and the Ascension of the Hyper-Rich

According to a new report by The New York Times, the rich aren’t just getting richer under the presidency of George W. Bush.

They’re getting hyper-rich.

The people at the top of America's money pyramid have so prospered in recent years that they have pulled far ahead of the rest of the population, an analysis of tax records and other government data by The New York Times shows.

While Bush and partisan Republicans have long argued that the long series of tax cuts enacted by the current administration have benefited the poor and middle class – or at least benefited all levels of income earners equally – it’s becoming increasingly clear that this simply isn’t the case.

President Bush said during the third election debate last October that most of the tax cuts went to low- and middle-income Americans. In fact, most - 53 percent - will go to people with incomes in the top 10 percent over the first 15 years of the cuts, which began in 2001 and would have to be reauthorized in 2010. And more than 15 percent will go just to the top 0.1 percent, those 145,000 taxpayers.

In fact, by analyzing income and tax data, it appears that the higher up the income ladder you climb, the less subject you are to paying taxes in the United States.

Perhaps this phenomenon should be dubbed reverse-progressivism.

And while the top income earners in the United States are paying less in taxes, their wealth is accumulating in a manner that boggles the mind.

From 1950 to 1970, for example, for every additional dollar earned by the bottom 90 percent, those in the top 0.01 percent earned an additional $162, according to the Times analysis. From 1990 to 2002, for every extra dollar earned by those in the bottom 90 percent, each taxpayer at the top brought in an extra $18,000.

One of the chief virtues of living in a capitalistic society is the promise of economic mobility. Among the dangers of rapid wealth accumulation of a tiny percentage of society is the transition from meritocracy to aristocracy as well as the loss of mobility for those born without great fortunes.

But in fact, economic mobility - moving from one income group to another over a lifetime - has actually stopped rising in the United States, researchers say. Some recent studies suggest it has even declined over the last generation.

What will the eight years of the Bush Administration look like from the vantage point of the future? What kind of society are we creating today that future generations will be left to contend with?

Do we really want these years to be seen as the time when ordinary folk struggled to pay off debts and afford basic services like health care as a new class of hyper-rich Americans emerged?


The Sore Loser said...

There's no doubt that the rich are getting richer, but it's not clear that Bush's tax cuts are behind this. First, the rich got a lot richer under Clinton as well. Second, we are often told that today's CEOs make roughly 400 times as much as typical blue collar company workers whereas in the past it as closer to 30 times as much. All of this suggests that tax cuts are only part of the story for why the super rich are becoming hyper rich.

More importantly, I'm not sure that I'd begrudge the rich their wealth so long as everyone was becoming better off. It's too bad the NY Times story said little about how the typical folk were faring. Of coursre they're not faring all that well relative to the rich, but their quality of life may still be improving.

Eric Berlin said...

My point, in part, is that the phenomenon is accelerating under Bush. It's amazing that the hyper-rich are getting tax breaks larger in proportion to everyone else.

Meanwhile, the middle class is getting crushed. I would argue that quality of life -- particularly in terms of the pressures imposed by such things as cost of health care and education -- is declining for the middle class during the '00s.

The Sore Loser said...

Oh, I definitely agree that Bush's tax cuts are partially responsible for the rich becoming so much richer. And it's obscene that, as a percentage of income, millionaires often pay as much or less than working folks.

But the implication in the Times article is that we're dealing with a zero sum game: more money for the rich means less for everyone else. Yet the Times article presented no evidence that the rich are becoming richer AT THE EXPENSE OF the middle class. IT mentions the decline in upward mobility, but that's compatible with everyone becoming better off. You say that the middle class is being crushed. Are you suggesting that most people are significantly worse off than they were four years ago? Perhaps you're right, but I'd like to see some numbers.

Eric Berlin said...

I see the take-away of the article as saying that the Bush tax cuts are helping .1 percent of the population more than everyone else... even the ordinarily rich.

I don't have numbers to back up my Middle Class Squeeze thesis. But it's part of my ongoing observation of this administration and its policies: on bankruptcy reform, health care inaction, taxes, and you can even make the argument on foreign policy (middle class reservists getting shipped off to war) and on social policy (taking away middle class freedoms).

Does the thesis hold together? I'm not sure. But I think it's as good a way to describe the Bush Years as any other.

Al said...

I'm all for the rich getting double triple quadruple rich.

To the extent that middle class people are getting squished, it's largely going to be from paying exorbitant taxes.

Think how much better they'd all be if we just repealed the income tax. And I'd be interested in seeing how you say that this wouldn't help everyone.

Eric Berlin said...

Repealing the income tax would help everyone? Sure it would.

And it would also leave us with no roads to drive on, no schools to educate our kids, no military to defend us and fight the War on Terror, etc. etc. etc.