I am republishing this after a re-write and title change.
Laura Clawson's front page post that looks at how the now CBO Report substantiates the central grievance of the Occupy Wall Street Movement. That the vast majority of income growth has been siphoned off by the top 20%, and the lion's share flowing to the top 5% and especially the top 1% who saw a whopping 275% increase between 1979 and 2007, for an annual increase of 9.8% over the 28 years the CBO study looked at. The middle 20% saw a paltry 40% increase for an annual increase of only 1.1%. The bottom 20% saw a razor thin 18% increase over the 28 years for an annual increase of only 0.64%. Clawson points out how changes in government policies especially tax policies have exacerbated the growing inequality in incomes.
The rich got richer between 1979 and 2007, Congressional Budget Office confirms
One of the most important things this chart shows is the long term trend at work. How every quintile in the bottom 80% is seeing their share of the pie shrink, while the top 20% is seeing their share of the income pie grow dramatically.
TRENDS IN THE DISTRIBUTION OF HOUSEHOLD INCOME BETWEEN 1979 AND 2007 pdf
Over the 1979–2007 period, the overall average federal tax rate fell by a small amount, the composition of federal revenues shifted away from progressive income taxes to less progressive payroll taxes, and income taxes became slightly more concentrated at the higher end of the income scale. The effect of the first two factors outweighed the effect of the third, reducing the extent to which taxes lessened the dispersion of household income.
How is the MSM handling this important story? The WaPo is running this story from Bloomberg.
Nation’s wealthiest 1 percent triple their incomes, according to CBO report
By Brian Faler, Published: October 25 | Updated: Wednesday, October 26, 8:53 AM
Oct. 25 (Bloomberg) -- The nation’s richest citizens almost tripled their incomes between 1979 and 2007 as the inequality of the distribution of wealth in the United States expanded, according to a new government report.
The top 1 percent saw their inflation-adjusted, after-tax earnings grow by 275 percent.
“The precise reasons for the rapid growth in income at the top are not well understood,” the report said. “Researchers have offered several potential rationales, including technical innovations that have changed the labor market for superstars (such as actors, athletes and musicians), changes in the governance and structure of executive compensation, increases in firms’ size and complexity, and the increasing scale of financial-sector activities.”
They identify the increasing financialization of the American economy as an important factor but Bloomberg "analysts" seem somewhat baffled how some of this happened. They completely missed that companies have increased their profits by largely shifting their their high value added manufacturing operations offshore to low low wage countries, where unions are suppressed by state and employer force. Countries that also turn a blind eye to industrial pollution. Companies have found they can shift these manufacturing operations offshore while keeping their prices relatively high, ballooning their profits. They've misnamed this practice "Free Trade".
CBS seemed to pick up on this blame the superstars meme.
CBO: Top 1% getting exponentially richer
The report declines to offer exact reasons for the growing income disparity, but acknowledges they are likely to include: Growing "superstar" salaries for actors, athletes and musicians; Changes in executive compensation; and the growth of firms in general.
This kind of coverage that blames income inequality on widely popular public figures is creating a false sense of who the real culprits are. They're trying to tell us that income inequality the fault of our favorites, who's talent we admire, and not the super-wealthy's unhealthy influence in our government that's tilting the playing field in their favor.