A dramatic study released today shows income inequality in the United States is on a furious upward trajectory: since the late 1970s, the top one percent of earners more than doubled their share of the nation’s income. From 1979 to 2007, average inflation-adjusted after-tax income grew by 275 percent—and the top one-fifth now receives more income than the other four-fifths of the population. Meanwhile, people in the middle three-fifths of the population saw their shares of after-tax income decline by two or three percentage points.
The study’s results are dramatic, though certainly have been studied and noted before. But what adds juice is who conducted the study—it was released today in the heat of the Occupy Wall Street movement by the non-partisan Congressional Budget Office, after years of work. The study was requested by Senators Max Baucus and Charles Grassley in 2006.
And this morning, there’s a perfect stage for these findings: Doug Elmendorf, the head of the CBO, is testifying again before the Congressional supercommittee on deficit reduction, which is trying to find $1.2 trillion in cuts while possibly tackling the increasingly lopsided tax code, which the CBO found was a key contributor to the upward shift in incomes.
The last time Elmendorf testified, he urged the supercommittee to focus on growing the economy now and cutting the deficit later. Many Democrats and union groups are urging the committee to focus on growing the economy and creating jobs now, as well. But Republicans on the panel weren’t receptive to Elmendorf’s message last time—“deficit reduction is a jobs plan,” Representative Jeb Hensarling claimed that day.
Now, Elmendorf’s office has released this thorough, nonpartisan debunking of the idea that income inequality isn’t a real problem. Will Elmendorf trumpet its findings, and will Democrats bring it up? How will Republicans get around it? And ultimately, will these sobering facts push the supercommittee to minimize cuts harmful to middle-class Americans, ignore the calls from Wall Street for deep cuts and also make the tax code more equitable?
I am heading over to the hearing room now, and will report on twitter (@gzornick) and in this space later today. I’m not convinced at all that Hensarling and Club for Growth’s favorite Senator, Pat Toomey, will suddenly see the light, but they will likely at least face some uncomfortable truths.