In this commentary, Ryan goes back to the CBO study on income inequality and finds this to be horrified by:
Government transfers and federal taxes both help to even out the income distribution. Transfers boost income the most for lower-income households, while taxes claim a larger share of income as people's income rises.Here's how Ryan interprets that (a hint: he thinks it's a bad thing):
In 2007, federal taxes and transfers reduced the dispersion of income by 20 percent, but that equalizing effect was larger in 1979. The share of transfer payments to the lowest-income households declined.
One underreported conclusion from the CBO study is that shifts in government transfer payments have contributed to increasing inequality over time. Government transfer payments remain progressive, of course, but the equalizing effect of transfers and taxes on household income was smaller in 2007 than it was in 1979.(Continue reading below the fold)
This is mainly because the distribution of government transfers has moved away from lower-income households. For instance, in 1979, households in the lowest income quintile received 54 percent of all transfer payments. In 2007, those households received just 36 percent of transfers.
Could it be, Rep. Ryan, that transfer payments like Social Security in particular are shifting away from lower-income households because there aren't as many lower income households? Because it works the way the CBO says, and "transfers boost income the most for lower-income households"? For example, here's this from the National Bureau of Economic Research on elderly poverty. Check out what's happened to the poverty rate among the elderly since 1979. The poverty is the darker line. The one that keeps falling as the other line, Social Security expenditures, rises.
This shift reflects a growth in programs that focus on the elderly population and are not for the most part income-adjusted, such as Social Security and Medicare. In other words, the structure of some of our largest entitlement programs has decreased the share of government transfer payments going to lower-income households and increased the share going to wealthier seniors.In Ryan's world 80 percent of seniors are wealthy. That will be news to probably 75 percent of seniors. And they got that way because Social Security and Medicare have helped them out of poverty. So Social Security and Medicare have to be adjusted so that more seniors are forced into poverty. That, Ryan says, is "promoting the natural rights and the inherent dignity of the individual."