If facts still mattered in our political discourse, this study would probably matter a lot. The limousine liberals of the left, including the Air Force One liberal Barack Obama, talk an awful lot about how income inequality is terrible and getting worse. According to a study published by the left-leaning Brookings Institution, though, income inequality was actually getting better from 2000-2010.
Some crucial findings of the new study may come as a surprise, especially to people who believe incomes of the poor and middle class have stagnated since the turn of the century while incomes at the top have soared. The CBO’s latest numbers show the opposite is true. Since 2000 pre-tax and after-tax incomes have improved among Americans in the bottom 90% of the income distribution. Among Americans in the top 1% of the distribution, real incomes sank (see Chart 1).
To be sure, the pre- and post-tax incomes of the top 1% improved in 2010 compared with 2009 while incomes in the bottom 90% of households remained essentially flat. Thus, almost all the net income gains in 2010 went to people at the very top. 2010 was the first year of the current recovery, and a disproportionate share of income gain in the early recovery was concentrated on the well-to-do. Income reports published by the IRS suggest this trend continued in 2011 and 2012, when the most affluent taxpayers continued to enjoy big income gains.
I’m sure the president and his party will find a way to blame this on Bush. Even though the study also finds that the top 1% actually suffered larger financial losses during the Great Recession.