The Brookings Institution, the leftist think tank, is wailing and gnashing its teeth over its finding that in many metro areas, "income inequality," their favorite bogeyman, is being "driven by declining incomes" among their poorest residents. The problem isn't so much that the rich are getting richer as it is that the poor are getting poorer. As a result, "Inequality is higher today in most metropolitan areas than in 2007."
Well golly gee, I wonder who has controlled U.S. economic policy while this calamity has occurred? Brookings predictably failed to call out President Obama or even his administration by name, instead blaming "a federal government hamstrung by partisan gridlock and budget constraints." At the Associated Press, aka the Administration's Press, Josh Boak's Thursday coverage at least mentioned the president's name, but failed to note the role that the subpar economic growth since the recession's official end in mid-2009 caused by his policies has played.
As readers will see, Boak's ultimate objective appears to have been to incoherently lobby for "increasing tax cuts for low-income workers" (bolds are mine):
The income gap in major U.S. cities goes beyond the trend of rising paychecks for those at the top: Pay has plummeted for those at the bottom.
Many of the poorest households still earn just a fraction of what they made before the Great Recession began in late 2007. Even as the recovery gained momentum in 2014 with otherwise robust job growth, (*) incomes for the bottom 20 percent slid in New York City, New Orleans, Cincinnati, Washington and St. Louis, according to an analysis of Census data released Thursday by the Brookings Institution, a Washington think tank.
Consider Cincinnati, home to such major companies as Procter & Gamble and Macy's that are associated with middle class prosperity. Its bottom 20 percent earned just $10,454 in 2014. After inflation, that's 3 percent less than what they earned in 2013 - and 25 percent below their incomes when the recession started eight years ago.
Cincinnati's top 5 percent of earners made at least $164,410 in 2014, a figure that has increased since 2013, though it remains 7 percent below pre-recession levels.
... The findings also complicate plans by presidential candidates to combat inequality because it's unclear how tweaking tax rates on the wealthy - the Democrats largely favor increases, the Republicans cuts - will boost pre-tax incomes for the poorest. Congressional Republicans have discussed increasing tax cuts for low-income workers without children as a way to address the absence of wage growth. It's a plan, President Barack Obama said in his State of the Union address Tuesday night, that "we can all support."
(*) — This is rubbish. Economic growth in 2014 was a mediocre 2.4 percent, and job growth has not been at all "robust" in comparison to what was seen during the mid-1980s or the late-1990s, and certainly has not been what we needed to see after the deep recession.
So in Metro Cincinnati, on balance, everyone is poorer, at least in terms of cash income, though I should note that in Hamilton County, whose county seat is Cincinnati, 126,000 residents (Table 3 at link) — over 15 percent of the county's population of 806,000 (in 2014) — were receiving food stamps in August 2015.
The problem with the idea of "increasing tax cuts for low-income workers" that Boak conveniently ignored is that low-income Americans as a group pay almost no income tax. Quite a few end up getting paid by the tax system through the Earned Income Credit. You can't get an income-tax cut if you're not paying income taxes in the first place. You can only get additional income subsidies.
The overriding cause of plummeting incomes has been that the economy's growth after the recession has represented "the worst economic recovery ever." It needed to be especially robust to make up for the damage done during the recession caused by the decades-in-the-making Democratic Party policy- and Democratic Party crony-driven housing and mortgage-lending implosion. Instead, the Obama administration has given us trillions of dollars in Keynesianism-on-steroids deficits and taken more steps than one can hope to identify in a post like this to hold the economy back. As a result, as the press has often written during Republican or conservative presidential administrations — but won't dare write during left-dominated regimes — the poor and minorities (who are unfortunately disproportionately represented among the poor) have been hardest hit.
Cross-posted at BizzyBlog.com.