Too bad for Mitt Romney. Turns out income inequality — that thing he claims has no place in our political debate, or anywhere outside of “quiet rooms” — will be a central theme of President Obama’s re-election message. We know this because one of his top economic advisers essentially claimed as much in a public address at a top DC think tank on Thursday morning.
And the data he brought to the table suggests Democrats will have an easy time making their case.
“[W]e can’t go back to the type of policies that exacerbated the rise in inequality and threatened economic mobility in the first place if we want an economy that builds the middle class,” said Alan Krueger, chairman of President Obama’s Council of Economic Advisers. “This means that we must adequately regulate excess risk-taking and corrupt practices in financial markets. It also means that we can’t go back to tax policies that didn’t generate faster economic growth or jobs, but rather increased inequality. Instead of going backwards, we should adhere to principles like the Buffett Rule, which states that those making more than $1 million should not pay a lower share of their income in taxes than middle class families. We should also end unnecessary tax cuts for the wealthy, and return the estate tax to what it was in 2009.”
The GOP wants essentially the opposite policies — to take things further than George W. Bush was able to. And that’s why they want to keep inequality issues out of the sphere of legitimate political debate. But the problems are very real, as Krueger explained.
Below are adaptations of two charts Krueger used in his presentation.
Thirty years ago, the U.S. underwent a shift — from an economy that grew in a way that lifted all segments of society, to an economy that gives heavy preference to the wealthy. That’s the broad story of the last three decades, but as Krueger pointed out, policy has a role to play. The trend abated temporarily in the 1990s, when the country returned to an era of fairly uniform income growth distribution. That all changed for most people, and their lost income has instead trickled up the ladder.
As Krueger said, “We were growing together for the first three decades after World War II, but for the last three decades we have been growing apart…. I should point out that the pattern in the post-1970s period is not monolithic…. [T]he period from 1992 to 2000 was an exception, when strong economic growth and the policies of the Clinton Administration led all quintiles to grow together again. Indeed, all income groups experienced their fastest income growth in years…. If in the first decade of the 2000s the income of the median household had grown at the same rate as it did in the 1990s, middle class households would have an extra $8,900 a year to spend on their mortgages, rent, cars, food, and clothing, or to add to their savings.”
Just don’t repeat that unless you’re in a quiet room.
Brian Beutler
Brian Beutler is TPM's senior congressional reporter. Since 2009, he's led coverage of health care reform, Wall Street reform, taxes, the GOP budget, the government shutdown fight, and the debt limit fight. He can be reached at brian@talkingpointsmemo.com.
It would be nice if you provided data for MEDIAN INCOME (AT PURCHASING POWER EQUITY) PER HOUR WORKED. That might be even more depressing... but it's really the number that best measures the health of society - how many hours does "the guy or gal in the middle" have to work for a basket of stuff?
Being a union steward thru this period,70's - 90's I knew better than most, that wages and benefits were stagnet, but was helpless to do any thing about it. Most of the people I worked with, either fell for the trickel down theory, or though that the union was no longer nessasary. They would tell you that they worked for a good company. They didn't understand, that it was the union that made it good. Now see where we are.
This whole situation is worse than the graph looks, because it doesnt take into account the effect of a rising number of two earner households. Even in the 80's, there were still a decent number of single breadwinners left left. That number grew smaller and smaller, so the income figures are more and more inflated toward the right side of the graph. I'm not entirely sure of this figure, but I seem to remember that something like half or one third of families still had a single earner in 1979. Today, that number is closer to 1 in 10. Yet the household income is less than 10% higher. Even if there was zero income growth per worker, the household income should have risen by over 50% just because there are 3 times as many households with twice as many breadwinners. Unless these charts are adjusted for the number of earners in a household, their grossly understating the income stagnation of the last 30 years.
mdfouru The term switched from individual income to HOUSEHOLD income. And even with THAT things got worse for the middle class.
Nice job, Brian. That's a powerful chart.
I hope President Obama ponders it. And President Geitner.
Nice job, Brian. That's a powerful chart.
Another stupid comment by Romney will no doubt comeback to hurt him the general election.
Romney's quiet rooms are right next door to Dick Cheney's undisclosed location.
It appears the only thing that trickled down was our incomes.
dale0987654321 It's too bad Mittens didn't trickle down his mother's thigh.
Oh, come on, give the guy a break. Is it too much to ask that he and his quorum of boardroom patriarchs should have some peace and quiet while they figure out how to rob the middle class?
Reagan was a fool and our country will suffer indefinately from the problems that thing created. I have only one regret in my life and that is being woman because it makes it so much harder to piss on his grave.
PeggyAnn Niswonger Reagan was a man who became a rich man, and then shed all concern for those who were not rich, and surrounded himself with rich men, and governed for the benefit of his rich associates.
Just like Mitt aims to do.
PeggyAnn Niswonger
Reagan laid the groundwork, but his successors in the GOP leadership have made it far worse than even he could have.
Thirty years ago, hmmm, now what happened thirty years ago...? Oh, yeah! Ronnie Raygun and his voodoo economics!
Romney is the epitome of the 'empty suit.'
A perfect summary of the the disastrous effect that Reaganomics and the GOP have caused all but the 1% since 1981.
The Democrats need -- at long last -- to present this crucial information on the effect of GOP policies to the voters this year.
Leveraged buyouts, like the type Bain conducts, didn't become a major problem in this country either until the late 70's early 80's, when they changed the laws to allow them to buyout companies that had long-term pensions on their books. When they'd force the companies to go into bankruptcy they merely pawned off the pensions onto the taxpayers for remuneration.
Per Wikipedia: "With the passage of the Employee Retirement Income Security Act (ERISA) in 1974, corporate pension funds were prohibited from holding certain risky investments including many investments in privately held companies. In 1978, the US Labor Department relaxed certain of the ERISA restrictions, under the "prudent man rule,"[16] thus allowing corporate pension funds to invest in the asset class and providing a major source of capital available to venture capitalists."
Quiet nights of quiet stars, quiet chords from my guitar
Floating on the silence that surrounds us
Quiet thought and quiet dreams, quiet walks by quiet streams
And a window looking on the mountains of cash I made from Bain.
When I went to a local in-state college in the late 70's, it was $15.00 a credit hour. My son's in-state college education recently ran close to $400.00 a credit hour, and that's not including room and board. So yeah, that's a 30 year difference. I graduated in '81. He can't afford to graduate cause the money, for now, ran out. 30 year continuing disparity...that's about right.
The opening of Al Sharpton's MSNBC show yesterday (1-12-2012) was hilarious. It opened with him whispering in what appeared to be an English style "gentleman's club" quoting Romney verbatim.
Absolute best parody moment in MSNBC history.
Ok, Im guessing......KAOS?
Eustace Tilley 2.0 "Missed by THAT much."
A vote is a magical ticket into the club of the politician for whom you support. Why else would a white lower-middleclass male who has lost his job, lost his pension, and seen his 401k evaporate cast a vote for the well-heeled >$100 million crowd? Even though he is closer to the "welfare queen's" economic status he abandons the reality of his situation for the fantasy of being in the aristocracy & votes against his own interest in the delusion of winning the lottery.
wrightwingnut Well, I see a lot more people playing the lottery these days.
Telling middle-income folks they'd have almost nine thousand bucks extra a year were it not for GOP policies is a very, very strong way to put it.
More of this, please!
Please look at the chart. Notice that from 99 to 2001 it is declining, sharply. Clinton left office at the end of 2000. So how is it fair to talk about continuing his growth/policies by cherry picking the dates to 2 years prior to the end of his term? walterledgett50
thecleverbulldog - And if Obabma hadn't talked all those wall Street firms into selling those worthless mortgage derivatives rated as AAA by the clueless ratings agencies that he bamboozled with his African witch doctor schtick, none of this would have EVER happened to our dear dear economy!!! <clutches pearls>
atliberalthecleverbulldog Good Lord, man, don't you know that the Clinton years were only good? That a full 25% of his 2 terms in office happened in the new century can't be mentioned here. That Bush's term ended in 2009 also can't be mentioned because we have to blame the last 8 - er, 11, years on him!!!
@truth-spin @atliberal thecleverbulldog Mainstreet invests in 401K's. I made alot of money in my 401K in 90's under Clinton. Even if my wages didn't soar. Kinda goes against these GOP mantra about Democrats and Obama being anti-business, In fact the markets right now are doing alot better than unemployment/middleclass pay is...
thecleverbulldog I remember when 20% returns on my 401k mutual funds was an average in 90's.
thecleverbulldog We had a budget surplus in late 90's. IF after 9/11 & invasion of Iraq & Afghanistan. If Bush had ssaid for sacrifice of country. The Bush tax cuts needed to be rescinded for EVERYONE!! That would have been real leadership and this country's national debt would not be as near as high as it is today.
tjirish34thecleverbulldog@atliberal Stock market speculation and dot com bubbles are not business activity unless you are a trader or IB firm. Actual profits for actual companies did not boom in the 90s as stocks did. That's why they HAD to come down.
See http://economix.blogs.nytimes.com/2010/11/23/visua....
Please note the Clinton years were Jan 20 1993 to Jan 20 2001. The Bush years were Jan 20, 2001 to Jan 20, 2009. Feel free to review the data with both in mind.
@truth-spin - You know what? I am all about discussing reality. The IT boom busted shortly b4 Clinton left office. he can own that and the resultant mini-recession. The huge tax cuts (2001 AND 2003), followed by two wars funded by borrowing and a HUGE new Medicare Part D program, also funded with borrowing, can be laid at the doorstep of GWB and are the largest contributors to the deficit, including in 2011 and 2012. Would you care to factually refute that? Cause I have a slew of fancy charts and graphs from the CBO that I would be happy to whip out to make my case.
atliberal The above comment thread was about stock performance and not the budget. As far as deficits go, the wars, Part D and other new programs started by Bush and the GOP Congress (i.e. international AIDS funding, etc) clearly drove spending to outpace revenue. On top of that, reducing the tax rates resulted in fewer dollars coming in, which made the imbalance even worse. And, the economic consequences of the dot com bubble, 9/11 and the housing mess all lowered economic production which in turn also reduced taxes paid.
No need for CBO data with me. I keep a pretty close eye on what they have to say on my own.
@truth-spin - I was responding to your comment refgarding the Clinton years being only good, and everything else being the fault of Bush (though not named, the implication was obvious). Nothing in it indicated specificity to the stock market.
truth-spin "That a full 25% of his 2 terms in office happened in the new century can't be mentioned here."
Liar.
Clinton's years as President ran from January 1993 to January 2001. Even if you erroneously attribute the year 2000 to the new century, you still only get one year plus three weeks in the new century.
And we're supposed to take your analysis of numbers seriously why?
atliberal Well I am not sure we disagree that much then.
spas485 Sorry, right you are. I was counting 2000 as being in the new century.
truth-spin "Sorry, right you are. I was counting 2000 as being in the new century."
And as I pointed out, even granting that common and understandable error, you STILL overestimated.
By double.
spas485 Yup. I suppose I should have said : AND, I was counting 2000...
1/8th of his time, not 1/4th.
What's funny is that somewhere else I was clear to state the exact dates for Clinton and Bush so people could look at a corporate profit chart.
Thanks for sticking with me on it, Spas.
@atliberal I am still convinced that if Gore , winner of the 2000 Presidential election , had been allowed to take his office the IT bust would have been avoided. Gore had planned to FIX the antiquated Federal computer system and the resulting orders would have more than likely saved all except the profligate dot coms. Plus there's no telling how much $ we would have saved at the Federal level via productivity. But the forces of evil prevailed because we good people did nothing.
tjirish34thecleverbulldog The 1990s are the only time in my adult life I have ever felt prosperous.
truth-spinatliberalthecleverbulldog I am sorry truth-spin that you can't read a calendar. The new century and millennium didn't begin until 1/1/2001. Look it up. Clinton's last 20 days were in the new century, not the last two years.
thecleverbulldogwalterledgett50 Because it's as much to do with the political make-up of the whole government... Wasn't that when the Republicans took control of the House? (Genuine question - I'm not American...)
Jonathan Baldwinthecleverbulldogwalterledgett50 Good point!
declining sharply.....wow thats a stretch....if anything it was flat to down a little (about $200), in no way was it down $9800 or down sharply....
Thats the problem with people like you facts refute your "understanding" of issues yet you cling to your ignorance in the hopes that fox, rush or a rightwing hitjob will validate your ignorance. Why are you so angry? and why do you hate everything your parents and grandparents help build?
ptabor I don't think you understand the article, the charts or bull dog's comment.
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brentfindlay http://t.co/M9mTFgDr
Your article is interesting and provocative, but is premised upon a rather significant error in logic which potentially nullifies the entire piece: "Correlation DOES NOT imply Causation." You cite the post WWII manufacturing economy, against which we had no legitimate industrial competitors worldwide. In modern American we no longer make things. Instead, we are a nation of desk clerks and retail sales clerks.
In the interest of intellectual honesty, why not write an article comparing what has occurred since Bill Clinton signed NAFTA and gave China permanent "most favored nation" trade status?
PS: I'm not a Romney supporter.
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