Res earc her Published by CQ Press, a Division of SAGE CQ www.cqresearcher.com Income Inequality Is the gap between rich and poor getting wider?

recent Census Bureau report brought a flurry of press attention to the widening gap between rich and poor. The gap in is widening A — and is now bigger than in India, noted the New York Daily News. Indeed, most analysts agree incomes of the very rich have been pulling away from all others in recent decades. The average pretax income for the bottom 90 percent of house - holds is almost $900 below what it was in 1979, while the average pretax income for the top 1 percent is $700,000 higher. Having a A homeless woman asks for money amid the affluence of New York City, where the gap between rich and poor wealthy class with very large amounts of disposable money is is said to be greater than in India. valuable — not harmful — to society, some argue. But others say the recent winner-take-all economy helped trigger the massive re - cession, leaving most people with stagnant incomes. Meanwhile, I Republicans argue that Bush-era tax cuts on top earnings should N THIS REPORT S be extended to stimulate the economy, while many Democrats THE ISSUES ...... 991 I back extensions only for lower earners. BACKGROUND ...... 998 D CHRONOLOGY ...... 999 E CURRENT SITUATION ...... 1004 CQ Researcher • Dec. 3, 2010 • www.cqresearcher.com AT ISSUE ...... 1005 Volume 20, Number 42 • Pages 989-1012 OUTLOOK ...... 1007 RECIPIENT OF SOCIETY OF PROFESSIONAL JOURNALISTS AWARD FOR EXCELLENCE N AMERICAN BAR ASSOCIATION SILVER GAVEL AWARD BIBLIOGRAPHY ...... 1010 THE NEXT STEP ...... 1011 INCOME INEQUALITY CQ Re search er

Dec. 3, 2010 THE ISSUES SIDEBARS AND GRAPHICS Volume 20, Number 42

• Is income inequality Richest Americans Have MANAGING EDITOR: Thomas J. Colin [email protected] 991 growing in the United 992 Biggest Share of Income States? The rich control 18 percent ASSISTANT MANAGING EDITORS: Kathy Koch of Americans’ total income. [email protected] • Does increasing econom - Thomas J. Billitteri, [email protected] ic inequality harm society? • Should the government 993 Tax Rates Drop for ASSOCIATE EDITOR: Kenneth Jost act to limit inequality? Highest Earners STAFF WRITERS: Marcia Clemmitt, Peter Katel Taxes for richest Americans dropped to 17 percent. CONTRIBUTING WRITERS: Roland Flamini, BACKGROUND Sarah Glazer, Alan Greenblatt, Reed Karaim, Barbara Mantel, Patrick Marshall, All That Glitters 996 Rich Got Richer While Tom Price, Jennifer Weeks 998 Corruption and income in - Poor Lagged DESIGN /P RODUCTION EDITOR: Olu B. Davis equality reached new America’s top 1 percent earned an average of $1.3 million in ASSISTANT EDITOR: Darrell Dela Rosa heights during the Gilded 2007. Age. FACT-CHECKING: Eugene J. Gabler, 997 Bleak Futures Await Those Michelle Harris Inequality Rises with Limited Education INTERN: Maggie Clark 1000 An increase starting in “You need to target kids around 1980 took econo - who are coming out of mists by surprise. prison for the first time.”

Winners Take All Chronology 1004 Some scholars blame the 999 Key events since 1868. A Division of SAGE competitive U.S. economy PRESIDENT AND PUBLISHER: for income disparities. Is Upward Mobility Still John A. Jenkins 1000 Possible? Research suggests it’s becom - DIRECTOR, REFERENCE SOLUTIONS: CURRENT SITUATION ing more difficult. Todd Baldwin Policies Debated 1002 Courts Open Door to Big- Copyright © 2010 CQ Press, a Division of SAGE. 1004 Income inequality simmers Money Political Donors SAGE reserves all copyright and other rights herein, Do the rich wield more po - unless pre vi ous ly spec i fied in writing. No part of this beneath many of the litical power than the poor? hottest election-year publication may be reproduced electronically or economic debates. otherwise, without prior written permission. Un- 1005 At Issue au tho rized re pro duc tion or trans mis sion of SAGE copy - Should tax cuts on high right ed material is a violation of federal law car ry ing Ambivalent Public? earnings be extended? 1006 Polls suggest there is sup - civil fines of up to $100,000. port for propping up CQ Press is a registered trademark of Congressional lower-income people. FOR FURTHER RESEARCH Quarterly Inc. CQ Researcher (ISSN 1056-2036) is printed on acid- For More Information 1009 free paper. Pub lished weekly, except; (Jan. wk. 1) OUTLOOK Organizations to contact. (May wk. 4) (July wks. 1, 2) (Aug. wks. 2, 3) (Nov. wk. 4) and (Dec. wks. 4, 5), by CQ Press, a division Progressive Era Redux? Bibliography of SAGE Publications. Annual full-service subscriptions 1010 Selected sources used. 1007 In the early 20th century, start at $803. For pricing, call 1-800-834-9020. To pur - the nation came together to chase a CQ Researcher report in print or electronic The Next Step rein in rampant inequality. 1011 Additional articles . format (PDF), visit www. cqpress.com or call 866-427- 7737. Single reports start at $15. Bulk purchase dis - Citing CQ Researcher counts and electronic-rights licensing are also avail - 1011 Sample bibliography formats. able. Pe ri od i cals post age paid at Wash ing ton, D.C., and ad di tion al mailing of fic es. POST MAST ER: Send ad dress chang es to CQ Re search er , 2300 N St., N.W., Suite 800, Wash ing ton, DC 20037. Cover: Getty Images/Spencer Platt

990 CQ Researcher Income Inequality BY MARCIA CLEMMITT

Citigroup, the financial - THE ISSUES services conglomerate, con - curs. As of 2006, “the richest Census Bureau report 10 percent of Americans ac - released in September count for 43 percent of in - A brought a brief flurry come, and 57 percent of net of press attention to rising in - worth,” based on Federal Re - come inequality in America. serve data, says a Citigroup “The gap between rich and analysis. The United States, poor in New York is getting Canada, Australia and the worse,” noted the New York United Kingdom “have seen Daily News. In 2009, 18.7 per - the rich take an increasing share cent of New York City’s pop - of income and over the ulation lived in poverty, and last 20 years, to the extent that the median household income the rich now dominate income, fell to $50,033, from $51,116 wealth and spending.” The in 2008, even as the combined — the worth of the city’s 58 richest value of one’s assets such as w e

residents rose by $19 billion. N real estate and stocks, minus c M

As a result, the earnings gap one’s debts — “continues to be d i

among New Yorkers “is now v even more aggressively skewed” a 4 larger than the gap in India D than income, it said . / s

and the African nation of e But having an economic g a

Burkina Faso,” Joel Berg, ex - m class with very large amounts I

y

ecutive director of the New t of disposable money is valu - t e

York City Coalition Against G able — not harmful — to so - Hunger, told the paper. 1 A Ferrari complements the on ciety, some argue. That’s be - The finding that income display along Rodeo Drive in Beverly Hills, Calif. Experts cause only the very richest inequality is increasing is agree the rich are pulling away from other Americans, but not all think it’s a problem. Some say investments by can make the investments vital generally accepted by ana - the wealthy stimulate the economy by building to building businesses and dri - lysts across the political spec - businesses and driving demand for labor, but ving demand for labor, wrote trum, with the exception of others say the result has been a severe recession and George Reisman, a professor libertarian commentators, stagnant incomes for most Americans. emeritus of economics at who argue that no existing data set Center on Budget and Policy Priori - Pepperdine University, in Malibu, Calif. accurately depicts how money is dis - ties (CBPP) a liberal-leaning think “In a market economy, the wealth of tributed. What provokes debate in all tank. 2 the rich . . . is overwhelmingly invest - quarters, however, is whether steep After-tax incomes also have risen ed in means of production, that is, in income inequality in an industrialized more for the highest earners, says CBPP. factories, machinery and equipment, nation is something to worry about and, From 1979 to 2007, the average after- farms, mines, stores, and the like.” 5 if it is, what policies would address it tax income of the top 1 percent of Other analysts question that propo - effectively. earners “nearly quadrupled, from sition. “We’ve had a natural experi - The main story is that the very rich $347,000 to over $1.3 million,” a 281- ment recently with what can happen have been pulling away from all others percent increase, based on data from to the economy” when the richest peo - in income over the past three decades, the nonpartisan Congressional Budget ple make extraordinary gains com - most analysts agree. Office. Over the same period, the after - pared to others, says Yale University “The average pretax income for the tax income of the middle fifth of the political scientist Jacob S. Hacker. “We’ve bottom 90 percent of households is population rose from $44,100 to had a winner-takes-all economy for a almost $900 below what it was in $55,300, or 25 percent, while the bot - while, and it’s provided limited bene - 1979, while the average pretax income tom fifth saw its average after-tax in - fits,” leaving the country with a severe for the top 1 percent is over $700,000 come grow from $15,300 to $17,600, recession and virtually stagnant in - above its 1979 level,” according to the or 16 percent. 3 comes for most people.

www.cqresearcher.com Dec. 3, 2010 991 INCOME INEQUALITY

marginal tax rate on the highest earn - Richest Americans Have Biggest Share of Income ers, that’s a bad idea, said Sen. Joseph The top 1 percent of income earners in the United States control Lieberman of Connecticut, a former nearly 18 percent of Americans’ total income, the world’s highest Democrat who became an indepen - dent during a tough reelection cam - such concentration. In 1949, however, the top American earners paign a few years ago. “To me, these lagged behind those of several other countries, including Indonesia, are the people we need to be pro - Germany and the United Kingdom. tecting — their income to spend and invest to spur growth and job creation. Share of Earnings of Top 1% Income Earners in The fact is that the top 3 percent of Select Countries, 1949 and 2005 . . . earners account for 25 percent of 6 Indonesia the consumption in our economy.” But history casts doubt on whether Argentina holding down taxes on the highest Ireland earnings boosts the economy, said Netherlands Cenk Uygur, a journalist and political India commentator on the Internet and the Sirius Satellite Radio show “The Young Germany Turks.” “From 1925 to 1931, the high - United Kingdom est marginal tax rate was as low as Australia it has almost ever been — between United States 24-25 percent. And between 2003- 2010, the highest marginal tax rate Canada was also at one of its lowest points Singapore — 35 percent,” he said. “So what hap - New Zealand pened . . . ? The Great Depression and the Great Recession.” 7 Switzerland The current high-profile debate over France whether Social Security benefits must Norway be cut to keep future federal bud - Japan gets in balance is skewed by lack of 1949 attention to growing income inequality, Finland 2005 argued Robert Kuttner, founder and Sweden co-editor of the liberal magazine The Spain American Prospect. Social Security is Portugal funded by payroll taxes on earnings beneath a certain cap — around Italy $107,000 in 2010. In other words, China people who earn above $107,000 0% 5 10 15 20 only pay Social Security tax on that Share of Total Earnings of Top 1% $107,000. Thus, lower-earning people Source: Anthony B. Atkinson, et al. , “Top Incomes in the Long Run of History,” pay a much higher percentage of National Bureau of Economic Research, January 2010 their income to sustain the system than high earners, he said. “If you Simmering debates over rising in - ed States each additional increment of want to get Social Security well into come inequality in America — not to an individual’s income is taxed at a the black for the indefinite future, the mention the solvency of Social Secu - different rate in a so-called “marginal” easiest way is to restore wage rity and the growing federal deficit — tax scheme; marginal income tax rates growth” among low earners, which lie behind many of this year’s policy on higher earnings are generally high - would boost Social Security’s take. In - and political battles. er — known as a “progressive” taxa - stead, recent earnings growth has gone At the heart of the debates is the tion scheme. And while many liberals almost entirely to people whose in - system of taxing income: In the Unit - this year have called for raising the comes are high above the cap and

992 CQ Researcher thus hasn’t helped at all to shore up Social Security, he wrote. 8 Tax Rates Drop for Highest Earners As economists, lawmakers and the The average income of the top 400 American households increased public debate whether economic in - from $71 million in 1992 to $357 million in 2007 — a 403 percent equality should be an important public- rise — while the effective tax rate dropped from 26 percent to policy agenda item, here are some 17 percent. By comparison, the bottom 90 percent of earners saw questions being asked: their income rise from about $29,000 to about $33,000 — a modest Is income inequality growing in 14 percent increase. the United States? In recent years, many analysts have Income and Tax Rates of 400 Highest-Income come to agree that income inequali - American Households, 1992-2007 ty is rising, mostly because incomes of the top earners have skyrocketed. Average income Effective However, some say that studies that in 2009 dollars tax rate find very high inequality are based on (in millions) incomplete or misleading data. 1992 $71.5 26.4% In comparisons that include peo - 1995 $71.6 29.9 ple’s spending, for example, the ef - 1998 $125.0 22.0 fective income gap between the rich and poor is narrower, say some econ - 2001 $158.8 22.8 omists. Contrary to what some other 2004 $196.2 18.2 studies find, “poor households sys - 2007 $356.7 16.6 tematically pay less than richer house - Source: David Cay Johnston, “Tax Rates for Top 400 Earners Fall as Income Soars, holds for identical goods . . . in part IRS Data,” Tax.com, February 2010 because they shop in cheaper stores and in part because they pay less for years ago,” so actual per-person earn - crease in inequality after 1993 in the the same goods even in the same store,” ings growth for middle-class people is bottom 99 percent of the population, most likely by buying things on sale, considerably higher than other studies and the remaining increase . . . can wrote University of Chicago professor suggest, he said. 10 be entirely explained by the behavior of economics and business Christian The most recent statistics that indi - of incomes in the top 1 percent.” 12 Broda, U.S. Department of Agriculture cate poverty is rising don’t depict long- Many other commentators, however, economist Ephraim Leibtag and Co - term poverty but recession-related job including some conservatives, stress that lumbia University professor of Japan - loss, argued Atlanta-based, nationally the income gap that opened between ese economy David E. Weinstein. As syndicated libertarian radio host and 1980 and 2000 is indeed very wide. a result, poorer people effectively have commentator Neal Boortz. ”If you’re “Income inequality is real; it’s been higher-value incomes, something that out of work, you have no income. rising for more than 25 years,” said Pres - most research fails to acknowledge, Snap! You’re living in poverty. It doesn’t ident George W. Bush in 2007. Fur - they argue. When the differential spend - matter what your net worth actually thermore, the gap is serious enough to ing is taken into account, poverty rates is” or if you “own $3 million homes warrant careful watching, said Bush. 13 turn out to be “less than half of the free and clear.” 11 This “growth in wage inequality is official numbers.” 9 “The evidence is incontrovertible one of the most spectacular and con - Income studies generally examine that American income inequality has sequential developments of our time,” “households,” not individuals, and changes increased . . . since the 1970s,” said partly because most people have ex - in household size over the years mean Robert J. Gordon, a professor of eco - pected that economic development and that supposed inequality problems are nomics at Northwestern University. modernization would create more much lower than many estimate, wrote Nevertheless, its rise “has been exag - economically equitable societies, said Stephen J. Rose, a research professor at gerated” since the most recent increase David B. Grusky, director of Stanford the Center on consists entirely of a tiny group of University’s Center for the Study of Education and the Workforce. “Ameri - very high earners pulling far ahead of Poverty and Inequality, and Kim A. cans today are more likely to live in sin - everyone else. Analysis of census and Weeden, an associate professor of so - gle-adult households than they were 30 tax data reveals that “there was no in - ciology at Cornell University. 14

www.cqresearcher.com Dec. 3, 2010 993 INCOME INEQUALITY

“Data from both . . . income tax re - While “it’s true that the share of na - “rents” — to some people who don’t turns and . . . W-2 records tell a sim - tional income going to the richest 20 deserve so much, argues Grusky, at ple and similar story” to the tale of in - percent of households” has risen, and Stanford’s Center for the Study of Pover - equality told by analysis of census figures, “families in the lowest fifth saw their ty and Inequality. For example, some which is often criticized — to some ex - piece of the pie fall,” income statistics top executives win extremely high pay - tent correctly — for including data on don’t tell the whole story of Ameri - days not because they lead their com - too few people, said Gary Burtless, a cans’ living standards, which provide panies to prosper beyond expecta - senior fellow at the center-left Brook - evidence that rising income inequali - tions but due to various “sweetheart ings Institution think tank. “The relative ty is highly compatible with a system deals” and the machinations of cor - incomes and the relative wages of top that produces a better life for all, wrote porate governing boards who approve income recipients have been increasing W. Michael Cox, director of the O’Neil outsize CEO payments because they’re much faster than the incomes and wages Center for Global Markets and Free - personally beholden to the executives, of people further down in the distrib - dom at Southern Methodist Universi - he argues. ution.” W-2 records show that an earn - ty and senior fellow at the Federal Re - International studies conducted over er in the top .01 percent of the income serve Bank of Dallas, and Richard Alm, the past decade by the Organization distribution made 46 times as much as an economics writer. Today, large ma - for Economic Co-operation and De - the country’s median wage earner in jorities of Americans enjoy the con - velopment have “found no evidence 1990, but 81 times as much in 2005, venience of once-unheard-of consumer that inequality may be conducive to for example. 15 goods like cars and clothes dryers while growth in OECD countries, as some most are employed in “clean, well-lit, had suggested,” said OECD Secretary- Does increasing economic in - and air-conditioned environment[s],” General Angel Gurria. “On the con - equality harm society? unlike in the past, they said. 17 trary, our work shows that greater in - Most analysts agree that a certain Furthermore, “a far more direct equality stifles upward mobility between amount of income inequality is valu - measure of American families’ eco - generations, making it harder for tal - able because it gives people incen - nomic status [rather than tax or cen - ented and hard-working people to get tives to work hard and try out new sus data] — household consumption the rewards they deserve. And the re - business ideas, in hopes of reaping — indicates that the gap between rich sulting inequality of opportunities . . . big rewards. However, many are skep - and poor is far less than most assume, inevitably impacts economic perfor - tical that current U.S. inequality levels and that the abstract, income-based mance as a whole.” 19 are risk free or contribute much to way in which we measure the so- Some fear that having too much in - building the economy. called poverty rate no longer applies come concentrated at the top compro - Some international data suggest to our society,” they said. In 2006, mises the ability of a democracy to give that countries with more extreme in - while the income ratio between the equal political voice to all citizens. come inequality experience faster eco - highest- and lowest-earning quintiles In international studies, nations with nomic growth overall, said Brook - was 15 to one, the spending ratio was wider income inequality often have po - ings’ Burtless. From 1990 to 2000, only four to one, demonstrating the litical structures in which fewer people economic growth in the G-7 coun - similarity in living standards. Lower - have an equal voice and there is less tries — Canada, France, Germany, income families can spend more than government accountability, said Nancy Italy, Japan, the United Kingdom and many believe because they “have ac - Bermeo, a professor of comparative pol - the United States, whose top finance cess to various sources of spending itics at Oxford University, in England. 20 officials have met regularly since money that doesn’t fall under taxable “The ability of citizens to influence 1976 — was fastest in the United income,” including “sales of property public policy is the ‘bottom line’ of States and the United Kingdom, the like homes and cars and securities that democratic government,” but in recent countries that also “experienced the are not subject to capital gains taxes, decades in the United States the abili - fastest growth in inequality,” he said. insurance policies redeemed,” and “the ty to influence policy has skewed to - While not constituting conclusive drawing down of bank accounts,” they ward the most affluent people, whose evidence, this fact is at least “con - pointed out. 18 priorities often don’t coincide with those sistent with the view that the rapid But markets that produce income of people who earn less, said Martin rise in U.S. inequality has contributed inequalities at the present scale are in Gilens, an associate professor of pol - to the relatively good performance fact failed markets, inefficient because itics at . 21 of American output and employment they provide unreasonably high lev - Based on survey data from 1981 since the late 1970s.” 16 els of return — what economists dub to 2002, on issues where “Americans

994 CQ Researcher with different income levels differ in Should the government act to by offering to work for very low their policy preferences, actual poli - limit inequality? wages, then “firms can discriminate on cy outcomes strongly reflect the pref - Not surprisingly, those who argue that the basis of something other than pro - erences of the most affluent but bear income inequality boosts the economy ductivity,” he argued. 28 virtually no relationship to the pref - strongly oppose government actions in - With no minimum wage set, a “his - erences of poor or middle-income tended to limit its growth or redistribute torically disadvantaged” jobseeker, such Americans.” So stark is this finding incomes. Meanwhile, analysts who argue as “Crackhead Carl, a middle-aged that it may “call into question the very that inequality is risky don’t necessarily African-American male who was just democratic character of our society,” agree about policies to address it. released from jail,” could win a job according to Gilens . 22 “Democrats are right about one thing: over “Tad Vanderbilt Rockefeller, a With money concentrated at the I can afford to pay more in taxes,” said flaxen-haired white teenager from an top, “there may be a demand for pri - Harvard economics professor N. Gre - affluent suburb” — even from a racially vate jets and yachts, but you need a gory Mankiw. “My income is not in the biased employer — simply by accepting healthy middle-income group” to drive same league as superstar actors and a rock-bottom wage, said Carden But the massive consumption that promotes hedge fund managers, but I have been with a minimum wage in place, Carl real economic growth, said Kemal very lucky. . . . I don’t have trouble could offer a racially biased employer Dervis, director of the global econo - making ends meet,” and “indeed, I could no incentive to hire him rather than Tad, my and development division at the go so far as to say I am almost com - he explained. 29 Brookings Institution. 23 pletely sated. . . . Nonetheless,” neither Many scholars say that if greater Furthermore, “when we see income high earnings nor large inherited es - economic equity is the goal, it’s hard inequality rising, we ought to start look - tates should be subject to higher taxes to imagine it coming about without ing for bubbles” — fast-rising prices because such taxes would sap the in - government action. in some investment sector like the In - centive of top professionals to work “What are the pathways to create ternet stock bubble of the 1990s and hard, Mankiw said. 26 a more equal society? Taxation, edu - the housing bubble of the 2000s, said Mankiw noted that he is “regularly cation and health care,” says Dan Ariely, Mark Thoma, a professor of econom - offered opportunities to earn extra a professor of behavioral economics at ics at the University of Oregon. Such money,” but if Bush-era tax rates were Duke University. investment bubbles aren’t sustainable raised, the resulting gains for him and “There’s nothing anti-capitalist because they ultimately price things for his children — who will inherit the about saying that the sharp edges of beyond their value and out of reach money down the line — would be too should be softened by gov - of too many buyers, and their collapse small to provide an incentive for him ernment,” says Yale’s Hacker. A quick leads to heavy losses and, often, eco - to take those extra jobs, he wrote. The look around the globe “shows that nomic recessions. 24 same would hold true for other “high- capitalism is consistent with a lot of Rising inequality also played anoth - income taxpayers whose services you different ways of organizing the econ - er role in sparking the financial-market enjoy,” like movie actors, pop singers, omy,” including some with high taxes crash and recession, according to Uni - blockbuster novelists, top surgeons, and and strict regulations. The wide varia - versity of Chicago professor of finance orthodontists, Mankiw argued. “As they tion in income-inequality ratios in coun - Raghuram Rajan. Because policy mak - face higher tax rates, their services will tries with market economies show that ers have few tools available for direct - be in shorter supply. . . . Don’t let any - high U.S. ratios aren’t simply the in - ly raising incomes, Washington took the one fool you into thinking that when evitable product of a market economy, dangerous step of subsidizing large the government taxes the rich, only the he says. numbers of high-risk mortgage loans rich bear the burden.” 27 In 2008, the ratio between the pay — such as no-down-payment loans — Attempts to put a floor under the of the average CEO and the average work - to people who may have had limited lowest income, such as a minimum er was 319 to one in the United States ability to pay, out of concern that the wage, also harm society, said Art Car - but only 11 to one in Japan, 12 to one “American dream” might be slipping den, an assistant professor of eco - in Germany, and 47 to one in Mexico, away from many people as inequality nomics and business at Rhodes Col - suggesting that the U.S. distribution is increased, he said. Those actions helped lege in Memphis. A higher minimum out of line with those in other market create the swelling bubble of mortgage wage is “likely to exacerbate rather economies, including some that are debt that exploded when some people than mitigate social inequalities” be - doing fairly well economically, such as began defaulting on their risky loans, cause when potential hires aren’t per - Germany, according to the progressive said Rajan. 25 mitted to compete intensely for jobs Institute for Policy Studies. 30

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An investment in postsecondary skills Rich Got Richer While Poor Lagged training and education for people who The top 1 percent of American earners took in an average of can’t find jobs in an increasingly tech - $1.3 million after taxes in 2007, nearly a 300 percent increase over nology-based job market would ease in - 1979. By contrast, income for the bottom 20 percent of earners rose come inequality by holding wages for high-skill jobs down a bit as the supply only 16 percent over the same period. of skilled workers came closer to meet - ing the full demand, says Anthony P. Average After-tax Income, 1979 and 2007 Carnevale, a research professor at the (in 2007 dollars) Georgetown University Center on Edu - cation and the Workforce. The 11 mil - Income category 1979 2007 % change $ change lion or so “low-income, dislocated or im - Lowest fifth $15,300 $17,700 16% $2,400 prisoned adults with an immediate ability Second fifth $31,000 $38,000 23% $7,000 to benefit” from new training programs 35 Middle fifth $44,100 $55,300 25% $11,200 “are the low-hanging fruit,” he wrote. Government policy should focus on Fourth fifth $57,700 $77,700 35% $20,000 education rather than any direct means Top fifth $101,700 $198,300 95% $96,600 of redistributing income such as through Top 1 percent $346,600 $1,319,700 281% $973,100 tax policy, wrote University of Chica - Source: Arloc Sherman and Chad Stone, “Income Gaps Between Very Rich and go economists Kevin M. Murphy and Everyone Else More Than Tripled in Last Three Decades, New Data Show,” Center Gary S. Becker, winner of the 1992 on Budget and Policy Priorities, June 2010 Nobel Prize for economics. Taxing high - er incomes is tantamount to taxing col - In the past, strong economic growth of productivity gains in non-farm busi - lege tuition while giving subsidies “for has proven to be compatible with high nesses of 2.9 percent, they said. 32 dropping out of high school,” a strat - tax rates on top earnings, argued Clin - During this period of skyrocketing egy no one would recommend, Mur - ton administration Secretary of Labor productivity, “only the top 10 percent phy and Becker write. Instead, “the Robert Reich, a professor of econom - of the income distribution enjoyed a public should focus attention on how ics at the University of California, Berke - growth rate of total real income . . . to raise the fraction of American youth ley. “Under President Dwight Eisenhower equal to or above the average rate of who complete high school.” 36 (whom no one would have accused of economywide productivity growth.” Not everyone is sure that education being a radical) it was 91 percent. Now Thus, the “no-brainer solution to central funding will help ease inequalities. it’s 36 percent,” the “lowest it’s been in social objectives” including the budget “The last 15 years” have actually more than 80 years.” 31 deficit, Social Security and health care “seen significantly slower job growth The highest earners have benefited is to “raise taxes on the top 1 percent in high-earnings growth sectors than disproportionately from recent work - by a major amount, say from 33 to in the economy at large,” wrote James place productivity gains, so taxing top 50 percent,” Gordon and Dew-Becker K. Galbraith, a professor of govern - earnings higher would seem only fair, recommended. 33 ment, and J. Travis Hale, a graduate suggested Northwestern’s Gordon and “I know many well-educated pro - student, at the University of Texas, Ian Dew-Becker, a doctoral candidate fessionals convinced that nobody works Austin. “So even if large numbers of at . Between 2001 and as hard as they do,” wrote Jonathan young people ‘acquire the skills need - 2004, for example, the U.S. labor force Cohn, senior editor of The New Re - ed to advance,’ there is no evidence produced an “explosion” in productiv - public. . . . But I’ve met many peo - that the economy will provide them ity — over 3 percent a year — high - ple at the bottom of the income lad - with suitable employment. Moreover, er productivity gains than at any other der who work just as hard, for far less investments in education presuppose period since World War II, they wrote. reward. Between 1980 and 2005, the that we know, in advance, what edu - Nevertheless, median family income ac - richest 1 percent of Americans got cation should be for.” For example, tually fell by 3.18 percent from 1999 more than four-fifths of the country’s “students who studied information tech - and 2004, and — for the whole peri - income gains. Does anybody serious - nology in the mid-1990s were lucky; od of rising productivity between 1995 ly believe that the other 99 percent those completing similar degrees in and 2004, — increased annually by only didn’t deserve to take home a much 2000 faced unemployment.” 37 0.9 percent, compared to an annual rate larger share?” 34 Continued on p. 998

996 CQ Researcher Bleak Futures Await Those with Limited Education “You need to target kids who are coming out of prison for the first time.”

eople up to age 30 who only have a high school Meanwhile, the “premium” salaries that go to college-educated diploma or less are in trouble,” potentially facing a people increase income inequality, representing a “market failure” “P lifetime of incomes sagging farther and farther be - in the education system, says David B. Grusky, director of Stan - hind those of people with a college education or technical ford University’s Center for the Study of Poverty and Inequality. training, says Timothy M. Smeeding, a professor of public af - In a rational market, schools “would see rising demand” for fairs and economics at the University of Wisconsin, Madison. post-secondary education and open up more spots, says Grusky. They face a bleak future because most of the “traditional roads” “Any rational market will do that.” If a car manufacturer sees to a middle-class income for people with that level of education, more demand, the company increases production of cars. But such as manufacturing, have dried up. The resulting large over - universities, especially high-status schools like Stanford, are likely supply of workers must fight for jobs with low skill requirements, to continue to limit their spots, despite increasing demand, be - driving down the wages for those positions even further and in - cause by doing so the degrees and certificates their graduates creasing the nation’s income inequality, Smeeding says. obtain will be worth higher salaries in a marketplace where When the recession ends, “it will become clear that there is demand for the degrees outstrips supply, he explains. no work for these people,” except jobs like waiting table or mow - As a result, the salary “return for a college degree is too high ing lawns. “We have to get more people employed or we’ll lose today,” and “the college-educated people are getting a free ride,” a whole generation. We need to get the less-skilled people to Grusky says. “We haven’t had substantial investments” in public high - work before they all turn to crime,” Smeeding says. Worse, among er education for a long time, but making them could help, he says. young men with a high school education or less, 73 percent are Young people coming out of jail and prison, who are over - fathers by age 30. Furthermore, a high school dropout is likely whelmingly urban teenagers, face the worst lifetime income to have 2.7 children, compared to the 1.9-child average for col - gap, says Smeeding. “I told our governor that you need to tar - lege graduates, creating a huge additional economic disadvan - get kids who are coming out of prison for the first time, help tage for children of low-skilled parents. them get jobs. Because if they don’t get a job quickly, within If after 1983 the country had continued to produce bachelor’s a few weeks they’ll be career criminals,” and since three of and associate’s degree holders at the same rate of increase as it four are fathers, helping them is a twofer. did in earlier years, there would be 10 million more such degree The widespread incarceration of young men — mostly African- holders competing for high-skill jobs, and “the income distribution American but also Latino and white men — who have a high would look like it did in 1979,” according to Anthony P. Carnevale, school education or less is driving increased social and economic director of the Georgetown University Center on Education and the inequality in our society that is “sizable . . . enduring” and “inter - Workforce. Instead, high school graduation rates stalled beginning generational,” said sociologists Bruce Western at Harvard and Becky in the mid-1970s and even dropped in some years, curtailing the Pettit at the University of Washington, Seattle. “The social and eco - number of people eligible for post-secondary training, even as the nomic penalties that flow from incarceration are accrued by those rates of high school graduates who went to college rose. who already have the weakest economic opportunities,” and their The workplace income gap between high-skilled and low-skilled prison records impose additional “significant declines in earnings employees relates more to specific occupations, such as engineering, and employment” that affect them and their children. 1 than to education itself, says Carnevale. For example, “you can get a Ironically public-spending trends over the past several decades 13-month certificate in engineering and earn more” than a significant have reinforced these inequality-creating trends, especially at chunk of people with B.A.s, he says. “It’s access to an occupation the state level. For example, 30 years ago, 10 percent of Califor - that makes the difference, and education gets you that access.” nia’s general fund went to higher education and 3 percent to pris - The country needs to produce more people with post-sec - ons. Today, higher education’s share has dropped to 8 percent, ondary education, especially in technical fields, Carnevale says. and nearly 11 percent goes to prisons, so that the state spends “Are we going to be able to do that? It’s doubtful.” Unlike with more on inequality-increasing incarcerations than on inequality- K-12 education, “we tend to see higher education as something reducing education. 2 families do, not as a public good,” and the result is that it’s tough to expand higher-education opportunities and especial - — Marcia Clemmitt ly tough to bridge a spending gap between institutions — “we have huge differentials in spending,” he says. 1 Bruce Western and Becky Pettit, “Incarceration and Social Inequality,” The Obama administration is taking a different and some - Daedalus , summer 2010, p. 8. 2 “Rising Above the Gathering Storm, Revisited: Rapidly Approaching Cate - what more promising tack than previous administrations, un - gory 5,” Members of 2005 Rising Above the Gathering Storm Committee, derstanding that “community colleges and public universities National Academies of Sciences and Engineering and Institute of Medicine, are where the students and the voters are,’ says Carnevale. 2010, www.nap.edu/catalog/12999.html.

www.cqresearcher.com Dec. 3, 2010 997 INCOME INEQUALITY

Continued from p. 996 “It is easy to find a man in almost $100,000 today), aimed at harnessing any line of employment who is twice some of the income of the richest Amer - as efficient as another employee, but it icans for public purposes. 43 BACKGROUND is very rare to find one who is ten times But this time a Supreme Court divid - as efficient,” mused King. “It is common, ed 5-4 struck down the tax a year later. however, to see one man possessing not The Constitution barred Congress from All That Glitters ten times but a thousand times the enacting any so-called “direct” federal tax wealth of his neighbor,” largely due to — a tax based on ownership, such as t the end of the 18th century, the some people’s “greater facility of taking the ownership of property — unless it A young United States was known as advantage of . . . laws and circumstances would be paid proportionately by the the “best poor man’s country” in the world, to acquire property rights” and the fact states according to their population, said with fertile farmland plentiful enough for that “wealth tends to breed wealth,” he the court. Unlike the earlier court, the most people to earn a decent living and wrote. “Is the middle class doomed to 1895 Supreme Court deemed the income little of either extreme poverty or extreme extinction, and shall we soon find the tax such an “ownership” tax. 44 wealth to be found. 38 handful of plutocrats, the modern barons Proponents were not long deterred, A century later, however, with the of wealth, lined up squarely in opposi - however. In 1909, President William industrial age booming, the United tion to the property-less masses?” 41 Howard Taft proposed the 16th Amend - States experienced the first of three The vast sums of heritable wealth ment to the Constitution to allow Con - eras of very high income inequality. amassed by industrialists also posed a gress to enact a tax on income — from The first stretched from around 1870 danger to society if they were simply any source, such as property or wages through the early 1900s and was char - passed on to the next generation, opined — without apportioning the tax among acterized by ostentatious spending by in - steel Andrew Carnegie in his states based on population. By February dustrial titans, even as poverty deepened. 1889 essay “.” “In 1913 the amendment had been ratified Humorist and social critic Mark Twain many cases the bequests are so used by the required 36 out of the 48 states. and essayist and novelist Charles Dud - to become only monuments of . . . The fortunes of the Gilded Age had ley Warner dubbed the period “the Gild - folly.” Far better to establish a charita - largely deflated by 1920, mainly because ed Age” in their 1873 novel satirizing the ble institution that pursues a public good of capital losses related to catastrophic corruption in Washington that accompa - that’s in accordance with the wealth events like World War I rather than Pro - nied what the authors depicted as a mad earners’ own ideas, said Carnegie, whose gressive Era reforms, according to Thomas national scramble after wealth, at the ex - own fortune established universities, li - Piketty, a professor at the Paris School pense of other values. 39 braries, museums, research institutions, of Economics, in France, and Emmanuel Gradually, unease grew about eco - a pension fund for his former employees Saez, a professor of economics at the nomic inequality that might threaten and the think tank Carnegie Endow - University of California, Berkeley. 45 the country’s cherished reputation as ment for International Peace. 42 In the 1920s, however, both the stock a land where all residents had the Leeriness about the rising concen - market and the nation’s top incomes began chance to rise. tration of income and the political cor - soaring again, and income inequality In hopes of demonstrating that ruption it might spawn built support reached another peak in 1929. The crash Americans at all income levels were en - among the middle and upper classes of financial markets late in that year, and joying the fruits of booming industry, for a so-called Progressive Era in pol - the Great Depression that followed, cut University of Wisconsin statistician Will - itics, which brought new regulations this second period of inequality very ford I. King launched the first major for business and the modern-day pro - short, however. A number of factors kept study of U.S. wealth and income dis - gressive federal income tax, which taxes economic inequalities from rising steeply tribution, publishing two books on the higher earners at a higher percentage, again until around 1980, including the subject. King unhappily reported, how - among other changes. loss of capital by the wealthy during the ever, that was steep - Congress had levied an income tax Depression, World War II, and govern - er than he had expected, with the rich - in 1861, to help pay for the Civil War. ment actions to bolster lower earners and est 1 percent of the population taking The tax withstood a court challenge but tax the wealthy more. home about 15 percent of the nation - was eventually repealed when military “The stability in income equality, al income in 1910, giving the wealthi - needs lessened. In 1894, Congress en - where wages rose with national produc - est Americans an income hundreds or acted a second income tax, in the form tivity for a generation after the Second even thousands of times greater than of a 2 percent levy on all incomes over World War, was the result of policies that that of a working-class citizen. 40 $4,000 (the equivalent of around Continued on p. 1000

998 CQ Researcher Chronology

1860s-1910s 1930s-1960s 2000s U.S. productivity Income and wealth inequality During the Depression, govern - continues to increase, but gains increase to unprecedented lev - ment safety-net programs support go mostly to highest earners. els in the Gilded Age. low earners; in World War II the During the economy’s expansion top income tax rate rises to over from 2002-2007, the top 1 per - 1868 90 percent. cent of earners capture two- Massachusetts-born writer Horatio thirds of income gains. Alger publishes Ragged Dick , the 1932 first of dozens of popular Alger President Herbert Hoover raises top 2003 novels depicting the American income tax rate to 63 percent. Top marginal tax rate is cut to dream of poor boys rising to wealth 35 percent. through talent and hard work. 1935 Supreme Court strikes down a 2006 1889 minimum-wage law. Richest 10 percent of Americans In “The Gospel of Wealth,” indus - account for 57 percent of the na - trialist Andrew Carnegie urges rich 1938 tion’s net worth. people to endow charities rather Fair Labor Standards Act sets federal than passing their money on to minimum wage at 25 cents an hour 2007 their children. and survives a court challenge. Since 1979, the average after-tax in - come for the top 1 percent of earn - 1894 1959 ers nearly quadruples, rising from Congress passes a 2 percent tax on Since 1950, the percentage of $347,000 to more than $1.3 million; incomes over $4,000 (about $100,000 Americans in poverty has dropped after-tax income for the bottom fifth today); the Supreme Court deems it from 32 to 22 percent, and median averages $17,600, up 16 percent unconstitutional a year later. family income has risen 43 percent. from 1979.

1913 • 2008 The Constitution’s 16th Amend - Ratio between the pay of the aver - ment, permitting Congress to enact age CEO and the average worker a federal income tax, is ratified by 1970s-1980s is 319 to one in the United States, the required 36 out of 48 states. Inequality rises as top incomes 11 to one in Japan, 12 to one in soar, high school graduation Germany and 47 to one in Mexico. 1915 rates stagnate and computers In the largest such study to date, and automation squeeze out 2010 University of Wisconsin statistician middle-earning manufacturing Since 1979, the average pretax Willford I. King reports that the and other jobs. income has dropped $900 for the richest 1 percent of Americans get bottom 90 percent of households at least 15 percent of the income. 1973 but risen $700,000 for the top High school graduation rates peak. 1 percent. . . . The nation’s grow - • ing income gap since 1993 is en - 1979 tirely accounted for by soaring in - U.S. manufacturing employment comes for the top 1 percent of 1920s Income in - peaks at 21.4 million workers. earners. . . . Large majorities of equality rises again. The top Americans support raising the mini - marginal income tax rate is at 1981 mum wage and taxing the wealthy an all-time low 25 percent. President Ronald Reagan fires 11,000 more and creating a more equal striking members of the air traffic income structure, such as that in 1929 controllers union, helping to weaken Sweden; Republicans, who oppose Driven by a growing economic the power of organized labor. . . . these actions, nevertheless regain bubble at the top, the stock mar - Reagan persuades Congress to pass control of the House of Represen - ket booms, and then crashes. the largest tax cuts in U.S. history. tatives in the midterm elections.

www.cqresearcher.com Dec. 3, 2010 999 INCOME INEQUALITY

Is Upward Mobility Still Possible? Research suggests it’s becoming more difficult.

he gap between rich and poor may be wider than ever six generations for wealthy families’ economic advantage to in the United States, but the U.S. remains, in the dreams stop influencing the economic status of their children, she re - T of many, a land of equal opportunity — where talent and ported. In Canada, Norway, Finland and Denmark, by contrast, hard work are the tickets to a better future for anyone. Current it takes only three generations “to cancel out the effects of data suggest, however, that the dream may have faded a bit. being born into a wealthy family.” 2 “The U.S. today has a lower rate of intergenerational mo - Being born at the top or the bottom of the income distri - bility than Europe, and that would be a surprise to most Amer - bution affects people much more in the United States than in icans,” says Richard J. Murnane, a professor of education and Canada, said Miles Corak, a professor of economics at Cana - society at the Harvard Graduate School of Education. “The key da’s University of Ottawa. For example, in the United States, reason for this is the difficulty the poor face trying to get the 22 percent of sons born to fathers in the bottom tenth of the education they need” to get into occupations that would allow income distribution remain in the bottom tenth as adults, while them to move ahead, according to Murnane. 18 percent move up only into the next decile; in Canada only “Americans have an optimistic faith in the ability of indi - 16 percent of those born into the bottom decile stay there and viduals to get ahead within a lifetime or from one generation 14 percent move up to the next decile. A similar “stickiness” to the next,” believing this much more strongly than people in holds for the top-earning decile, Corak said. 3 other countries, wrote Julia B. Isaacs, a policy fellow at the Race plays a major role in trapping people at the bottom of Brookings Institution, a center-left think tank. In a survey of the ladder, according to a 2009 report from the Pew Charitable people from 27 countries, for example, only 19 percent of Trusts Economic Mobility Project. About 47 percent of black chil - Americans thought that coming from a rich family was essen - dren born to families in the middle fifth of the income distribution tial or very important to getting ahead, compared to a medi - fall into the bottom fifth as adults, “compared to only 16 percent an of 28 percent in all the other countries. 1 of middle-income white children.” 4 In reality, however, Americans are much less likely to move Some analysts further argue that society has built-in mecha - from one economic level to another than people in many other nisms to keep people from high-earning families from falling out countries, said Isaacs. In a study of eight of the most highly of their spots. For example, in a recent analysis of so-called “lega - industrialized countries, the link between parents’ earnings and cy” college admissions, Richard D. Kahlenberg, a senior fellow at children’s economic attainment was strongest in the United the Century Foundation, a liberal think tank, reports that at selec - States and the United Kingdom, where it takes an average of tive colleges alumni children generally make up 10 to 25 percent

Continued from p. 998 Congress passed another minimum-wage long believed to foster both democracy began in the Great Depression with the law, which has survived legal challenge. and “the emergence of a stable, middle- New Deal and were amplified by both Meanwhile, the National Labor Relations class working population, paid at rates public and private actions after the war,” Act of 1935 — often called the “Wagner which vary only by the range of skills wrote Massachusetts Institute of Tech - Act,” for its sponsor Sen. Robert F. in the workforce.” By contrast, “the very nology professor of urban economics Wagner, D-N.Y. — endorsed the right essence of underdevelopment is not pover - Frank Levy and professor of econom - of workers to unionize, strike and en - ty per se” but a skewed income and ics Peter Temin. 46 gage in collective bargaining with man - wealth distribution with a few very wealthy For example, in the early days of the agement while limiting the means em - people at the top and the vast majority Depression President Herbert Hoover ployers could use to fight unions. 49 of people struggling below. 50 raised marginal tax rates for the highest Nevertheless, in the past three earnings from 25 to 63 percent. Then, decades the United States and to a in 1936, President Franklin D. Roosevelt, Inequality Rises lesser extent other industrialized coun - architect of the New Deal, raised the tries, especially Canada and the Unit - top rate to 79 percent, with the goal of hen the most recent new era ed Kingdom, have seen a rise of eco - narrowing the income distribution. 47 W of rising inequality began, nomic inequality whose cause analysts The first federal minimum wage was around 1980, many were surprised. struggle to understand. enacted in 1933, but the Supreme Court As Galbraith at the University of Texas Initially, suspicion focused on supply- struck it down in the 1935 case Schechter explained, “the very essence” of being a and-demand trends in the workforce Poultry Corp. v. United States. 48 In 1938, “developed” nation lies in industrialization, stemming from increased immigration

1000 CQ Researcher of the student body. Since the proportion of alumni children each Furthermore, “wealth is highly mobile in the United States,” college accepts varies little from year to year, that sug gests “an in - where “most fortunes are earned, rather than inherited,” write formal quota system,” he says. Statistical analysis suggests, he says, Gokhale and Villarreal. On Forbes magazine’s annual list of the that being a legacy boosts a student’s chance of admission to a 400 richest Americans, for example, the vast majority of the 2,218 selective school by about 20 percentage points — say, from a people listed from 1995 to 2003 — 87 percent — made the cut 40-percent to a 60-percent chance — over a non-legacy student for only one or two years during the period, they note, indicat - with a similar transcript and scores. 5 ing that most of the very top earners don’t hold onto their top The existence of such a strong tradition of legacy admissions incomes long, as others climb to take their place. 8 by the most selective colleges — whose graduates also may have a leg up in many job markets — is especially damaging to — Marcia Clemmitt African-American and Hispanic students, for example, who have been underrepresented at America’s most prestigious colleges in 1 Julia B. Isaacs, “International Comparisons of Economic Mobility,” Economic the past and thus will continue to get no legacy boost for sev - Mobility Project, Pew Charitable Trusts, February 2008, www.economicmobility. 6 org/assets/pdfs/EMP_InternationalComparisons_ChapterIII.pdf. eral generations to come, Kahlenberg said. 2 Ibid. Many conservative and libertarian analysts, however, argue 3 Miles Corak, “Chasing the Same Dreams, Climbing Different Ladders,” Eco - that, as with many purported measures of economic inequality, nomic Mobility Project, Pew Charitable Trusts, January 2009, www.pewtrusts.org/ researchers who find low economic mobility in the United States uploadedFiles/wwwpewtrustsorg/Reports/Economic_Mobility/EMP_Chasing %20the%20Same%20Dream_Full%20Report_2010-1-07.pdf. look at the wrong studies and interpret them too narrowly. 4 “Renewing the American Dream: A Road Map to Enhancing Economic Some studies show high mobility, said Jagadeesh Gokhale, Mobility in America,” Economic Mobility Project, Pew Charitable Trusts, No - a senior fellow at the libertarian Cato Institute, and Pamela Vil - vember 2009, www.economicmobility.org. 5 larreal, a graduate student fellow at the conservative National Richard D. Kahlenberg, “10 Myths About Legacy Preferences in College Ad - missions,” The Chronicle of Higher Education , Sept. 22, 2010, http://chronicle.com. Center for Policy Analysis. For example, a study has shown 6 Ibid. that between 1984 and 1994 almost two-thirds of families in 7 Jagadeesh Gokhale and Pamela Villarreal, “Wealth, and the Es - the lowest tenth of the income ladder in 1984 had reached a tate Tax,” NCPA Policy Report No. 289, September 2006, www.ncpa.org/pub/ higher rung 10 years later, they pointed out. Meanwhile, 47 per - st/st289. 8 cent of the families in the top tenth of earners in 1984 had fall - Ibid. en to a lower decile 10 years later. 7

and more women workers. Recent In 2000, the average income of a especially as many medium-skill jobs, analyses find that these suspect trends native-born high school dropout was such as manufacturing, move overseas don’t tell the whole story, however. about 7.4 percent lower than it would in a globalized economy where com - For example, since women first began have been that year had the immi - panies can pay people less to do the entering the workplace in large num - gration that occurred between 1980 same work in less-developed economies. bers, beginning in the 1970s, studies and 2000 never occurred, concluded “The American economy grew rapid - show that they’ve actually outperformed George J. Borjas, a professor of eco - ly and its people ‘grew together’” from men on average when it comes to “mov - nomics and social policy at Harvard. World War II to about 1973, wrote Har - ing out of moderately skilled jobs” and Immigration depressed the incomes of vard economists Claudia Goldin and into higher-level, better-paid occupations, high school graduates by only 2.1 per - Lawrence F. Katz. “Each generation of said journalist Timothy Noah in a re - cent over the two-decade period, how - Americans achieved a level of education cent series of articles in the online mag - ever, Borjas said. 52 It appears that that greatly exceeded that of the previ - azine Slate. That statistic means that only about 5 percent of the overall in - ous one,” and this situation allowed busi - women’s employment isn’t holding work - crease in income inequality observed nesses based on new technologies to ers’ wages down substantially. 51 over the past three decades is due to find enough high-skilled workers. At the Immigration, meanwhile, has had immigration, according to Noah. 53 same time, the emergence of new, larg - some effect in holding down wages A bigger culprit may be what schol - er cohorts of skilled Americans general - for low-skilled workers, but its over - ars call skill-based technological change ly created a demand and supply balance all contribution to inequality is less (SBTC) — technology-driven changes in in the workforce that kept skilled work - than expected. the skills workers need to get good jobs, ers’ salaries from rising too high — and

www.cqresearcher.com Dec. 3, 2010 1001 INCOME INEQUALITY

Courts Open Door to Big-Money Political Donors Do the rich wield more political power than the poor?

n the 2010 campaign season, a single political action commit - ganizations that have sprung up in Washington since the mid- tee (PAC) poured $600,000 into the Nevada Senate race on be - 20th century, mostly representing business and professional I half of the Republican challenger, Sharron Angle, who came groups. Meanwhile, once-powerful labor unions now represent close to unseating Senate Democratic Majority Leader Harry Reid on only about 15 percent of the U.S. workforce, mostly govern - Nov. 2. Big spending by PACs is nothing new in political campaigns, ment workers. “The pluralist dream of balance among com - but the Ending Spending Fund that operated in Nevada represents peting interest groups” is thus “largely discredited,” while “those a new wrinkle — a PAC funded by a single big donor. 1 who are able and willing to invest large sums of money” in Two 2010 court rulings — the Supreme Court’s controversial increasingly professional and expensive lobbying efforts have January decision in the so-called Citizens United case and a “a big advantage,” they argue. 4 March ruling by the U.S. Court of Appeals for the District of Politicians’ increasing need for fundraising has helped lobbies Columbia Circuit in Speechnow.org vs. the Federal Election Com - to increase the power of big-money business interests, wrote mission — cleared the way for outside donors to pour unlim - Hacker and Paul Pierson, a professor of political science at the ited funds into elections, as long as they don’t coordinate with University of California, Berkeley. For example, beginning in political candidates or party committees. 2 Outside donors can the 1970s, television advertising and modern public-opinion now sponsor election advertising, for example, without abiding polling allowed candidates to reach unheard of numbers of by older campaign rules, such as individual-donor spending lim - people with messages shrewdly crafted to tap into voters’ prime its. That opens the door for a PAC like the Ending Spending desires. The ads and the “pricey political consultants” whom Fund, bankrolled by J. Joseph Ricketts, the Omaha-based founder candidates hired to poll and develop campaign strategies greatly of the discount online stock brokerage Ameritrade. 3 increased politicians’ reliance on big-money donors, Hacker and This new avenue for wielding political clout is part of a his - Pierson argue. 5 torical trend over the past several decades that is consolidat - Based on decades of detailed polling data on different in - ing disproportionate political power in the hands of the rich - come groups, it’s clear that “when the opinions of the poor di - est citizens, some scholars argue. verged from those of the well-off, the opinions of the poor “The Founding Fathers believed in political equality, mean - ceased to have any apparent influence: If 90 percent of poor ing that whether one is rich or poor would determine a per - Americans supported a policy change, it was no more likely son’s market power but not their power in the democracy,” to happen than if 10 percent did,” according to political sci - says Jacob S. Hacker, a professor of political science at Yale entist Martin Gilens at Princeton University. 6 University. “I believe we’re falling quite dramatically short of By contrast, when well-off people supported a policy change, this,” as wealthier people have gradually developed institution - it was three times more likely to occur than if they opposed al means like PACs and lobbies to see their favored policies it. Furthermore, the middle class did not fare much better than enacted into law and regulation, and the government has be - the poor when their opinions departed from those of the well- come more friendly to these efforts, he says. off. When median-income people strongly supported a policy “There may exist mechanisms or pathways of influence by change, it had hardly any more chance of occurring than a which a very small set of oligarchs” — rich people who wield change that they strongly opposed, Gilens said. 7 political power — “could, to a far greater extent than their num - The policy preferences of wealthy people tend to diverge bers alone would suggest, have a major impact on policy out - from those of other citizens on various issues, according to Page, comes,” wrote Northwestern University political scientists Ben - who has begun an extensive study of this question. His pre - jamin I. Page and Jeffrey A. Winters. They point to the many liminary work finds that 58.8 percent of the richest Americans “highly professionalized and extremely expensive” lobbying or - — in the top 4 percent of income — identify as Republicans, for thus driving income inequality compared Education. In 1973, the United States demand for skills,” at least among peo - to low-skilled workers — because many had the highest high school graduation ple between the 10th and the 90th people could compete for high-skilled rate among OECD [Organization for percentile of the income distribution, occupations, Katz and Goldin wrote. 54 Economic Co-operation and Develop - says David Autor, an economist at the “Historically, education has been the ment] countries, but the education en - Massachusetts Institute of Technology. primary pathway of upward mobility in gine “stopped in the mid-1970s” as high For example, in the early 1970s, when the United States,” says Richard J. Mur - school graduation rates stalled, he says. the huge Baby Boom generation saw nane, a professor of education and so - Levels of income inequality “de - a rising proportion of its members go ciety at the Harvard Graduate School of pend very strongly on the supply and to college, wages for higher-skilled

1002 CQ Researcher example, compared to 36.1 percent of others. Very high-income Ironically, when Americans become aware that income in - Americans are more likely than others to be liberal or libertar - equality is on the rise, that knowledge actually sways the voting ian on social issues — favoring abortion rights and the right of public away from liberal policies aimed at decreasing inequality, atheists to teach, for example. But they are more likely than according to Nathan J. Kelly, an assistant professor of political others to be conservative on economic issues, not favoring gov - science at the University of Tennessee, Knoxville, and Peter K. ernment efforts to reduce economic inequalities. 8 Enns, an assistant professor of government at Cornell University, In the 2010 midterm elections, high earners showed a strong in Ithaca, N.Y. In the United States, “public opinion moves in a preference for Republican candidates and, presumably, policies, conservative direction in response to income inequality,” among while 58 percent of those earning $30,000 or less and 52 percent both rich and poor Americans, potentially making income in - of those earning between $30,000 and $50,000 voted for Democ - equality a “self-reinforcing” phenomenon, they wrote. 13 ratic candidates, according to a Wall Street Journal analysis. The Re - publican preference strengthened all the way up the income lad - — Marcia Clemmitt der, with 52 percent of those earning between $50,000 and $75,000 voting GOP; 56 percent of the $75,000 to $200,000 earners; and a 1 Amanda Terkel, “The One-Person Funded Super PAC,” Huffington Post blog , whopping 62 percent of those earning over $200,000. 9 Oct. 22, 2010, www.huffingtonpost.com. 2 The cases are Citizens United v. Federal Election Commission , 130 S.Ct. 876 Conservative and libertarian analysts remain skeptical that (2010), www.law.cornell.edu/supct/html/08-205.ZS.html and Speechnow.org, et al. economic clout helps some gain undue political influence. v. Federal Election Commission , No. 08-5223, http://pacer.cadc.uscourts.gov/com While highly educated people wield greater influence, “it is very mon/opinions/201003/08-5223-1236837.pdf. For background, see Kenneth Jost, “Campaign Finance Debates,” CQ Researcher , May 28, 2010, pp. 457-480. difficult to see how income in excess of the threshold necessary 3 Terkel, op. cit. to receive a high-quality education adds much to most people’s 4 Jeffrey A. Winters and Benjamin I. Page, “ in the United States?” pool of political resources,” said Will Wilkinson, a research fellow Perspectives on Politics , December 2009, p. 731. at the libertarian Cato Institute. “Ideologically motivated wealthy 5 Jacob S. Hacker and Paul Pierson, Winner-Take-All Politics: How Washington Americans are limited by the menu of preexisting organizations, Made the Rich Richer — and Turned Its Back on the Middle Class (2010), p. 171. 6 prevailing ideas and the supply of ideologically congenial labor,” Quoted in ibid. , p. 111. 7 Ibid. he argued. “No amount of money can buy you a think tank with 8 Benjamin I. Page and Cari Lynn Hennessy, “What Affluent Americans Want 10 your politics if there is no one with your politics to work in it.” From Politics,” paper delivered to the American Political Science Association, “Capitalism might indeed preclude democracy if capitalism meant annual meeting, Washington, D.C., Sept. 2-5, 2010, www.russellsage.org/sites/all/ files/u4/Page%20%26%20Hennessy%2C%20What%20Affluent%20Americans%20 that rich people really were a permanent class,” wrote Council on Want%20from%20Politics.pdf. Foreign Relations Senior Fellow Amity Shlaes. But “one capitalist 9 “Democratic Coalition Crumbles, Exit Polls Say,” idea (the railroad, say) brutally supplants another (the shipping online , Nov. 3, 2010, http://online.wsj.com/article/SB1000142405274870377 canal),” and “within a few generations . . . this supplanting knocks 8304575590860891293580.html?KEYWORDS=voters+election+2010#project%3 DEXITPOLL101102%26articleTabs%3Dinteractive. 11 some parties out of the top tier and elevates others to it.” 10 Will Wilkinson, “Thinking Clearly About Economic Inequality,” Policy Analysis A focus on the dangers of wealth concentration simply “pro - No. 640 , Cato Institute July 14, 2009, www.cato.org. vides a political justification for encouraging envy,” a state that 11 Amity Shlaes, “An Age of Creative Destruction,” The Wall Street Journal leads to neglect of “family and friends, community involvement” online , Oct. 29, 2010, http://online.wsj.com. 12 Jeffrey M. Jones and Daniel Heil, “The Politics of Envy,” tech-archives.net and “charitable work” and “bolsters an empty materialism,” wrote website, Aug. 21, 2009, http://sci.tech-archive.net. Jeffrey M. Jones, assistant director of ’s Hoover 13 Nathan J. Kelly and Peter K. Enns, “Inequality and the Dynamics of Public Institution, a conservative public-policy research organization, and Opinion: The Self-Reinforcing Link Between Economic Inequality and Mass Daniel Heil, a graduate student at Pepperdine University. 12 Preferences,” American Journal of Political Science , October 2010, p. 855. workers temporarily fell somewhat. to get a [wage] premium for college — gradually evaporated from the work - In the mid-1970s, as high school grads,” and their rising incomes helped place or shifted overseas, explains graduation rates stalled and smaller increase income inequality. Carnevale, at Georgetown’s Center on generational cohorts attained adulthood At the same time, the advent of the Education and the Workforce. With high behind the Baby Boomers, the supply computer age allowed automation of vir - school graduation rates stagnant, a grow - of high-skill workers began to shrink tually any repetitive task so that middle- ing pool of U.S. workers are left to com - compared to the growing demand for skill jobs — like bookkeeping, many pete for low-skilled jobs like security guards them in technology-based industries, manufacturing jobs and even many com - and home-health workers, where the Autor says. At that point, “we began puter programming and sales positions large supply of available workers drives

www.cqresearcher.com Dec. 3, 2010 1003 INCOME INEQUALITY

down wages further, Carnevale says. very top earners. membership that began just after World In 1973 the majority of people with For one thing, financial-industry ex - War II — when more than one in three a high school education or less were ecutives make up nearly 20 percent of workers was a union member — and in the middle 40 percent of the income the people with salaries in the top 1 continues today, when about one in distribution — solidly middle class, says percent of the U.S. income distribution, nine is, and most union members are Carnevale. “Now that number is below and “it strains credulity to say they are government, not private-sector, workers, 30 percent.” People with B.A.s, by con - . . . the talented tamers of technologi - Hacker says. While unions aren’t blame - trast, have remained in the middle class, cal change” who’ve benefited from skill- less in their own demise, and global - and about a third have moved into the based technological workplace change, ization has realigned markets, over the top 30 percent of incomes, he says. write Yale’s Hacker and University of past few decades Congress, state legis - This workforce “polarization” that California, Berkeley, political scientist Paul latures and successive White Houses drives income inequality is evident in Pierson. The financial crisis demonstrat - dragged their feet on measure after mea - European Union and OECD countries, ed that “plenty of the so-called financial sure that would have strengthened unions’ too, says Autor. innovations that their complex comput - bargaining power, he says. er models helped spawn proved to be The result is the loss of a key po - just fancier (and riskier) ways of . . . litical force that was “broadly repre - Winners Take All benefiting from short-term market swings,” sentative of the middle class” in a way not the true innovation that markets pre - that no other large, politically influ - ther scholars point to a differ - sumably reward. 58 ential organization has been —“a key O ent trend as the key driver of Over the past several decades, wealthy source of voter turnout” and “a coun - income inequality — a “winner-take- business interests have organized into terweight in boardrooms” to represent all” economy in which a few high lobbies, political action committees the interests of middle- and low-wage earners rack up income gains that far (PACs) and think tanks, at the same workers, Hacker says. outstrip those of everyone else. time as the main organizations that once Economic troubles fueled lawmakers’ “There was no increase in inequality represented the working class — labor increasingly business- and wealth-friendly after 1993 in the bottom 99 percent of unions — have shrunk, leaving some policies beginning in the late 1970s, said the population, and the remaining in - business sectors like finance with enor - University of Arizona professor of soci - crease . . . can be entirely explained by mous power to influence government ology and political science Lane Ken - the behavior of incomes in the top 1 per - policies, Hacker and Pierson argue. Fur - worthy. “Stagflation” — slow economic cent,” said Northwestern’s Gordon. 55 thermore, beginning in the 1970s, TV growth combined with rising prices and Unlike in the Gilded Age, it wasn’t ads and pricey opinion-poll surveying high unemployment — “and a surge in investment income but high-rising became a necessity for political cam - imports had turned [Americans’ long- salaries for people like top executives paigns, greatly increasing politicians’ held] optimism [about the economy] to and Hollywood stars that fueled the need for high-dollar contributors and worry,” and the “underlying pessimism” outsized gains at the top, according to increasing those contributors’ influence persisted through the late 1990s, making Piketty and Saez. 56 in Washington, they contend. As a re - policy makers “more willing to entertain Some argue that superstar salaries sult, “government policy has grown much the pleas of business interests,” whatev - simply represent a new, globalized more generous toward the fortunate.” er they might be. 59 market rationally presenting very high “Financial deregulation didn’t just hap - rewards to people whose wares sell to pen, nor did tax policy” that saw cor - tens of millions of people worldwide. porate and inheritance taxes as well as “I think there are people, including my - marginal taxes on high incomes drop sig - CURRENT self at certain times in my career, who nificantly, says Hacker. “The government because of their uniqueness warrant has made and remade markets” by law whatever the market will bear,” said and regulation, and the much smaller in - SITUATION Leo J. Hindery, a managing partner of come differentials that prevail in every the New York City-based private equi - other market-based industrialized econo - ty fund InterMedia Partners. 57 my make clear that U.S. income inequalities Policies Debated But others say that government struc - result from policy choices, he says. tures and policies — not just market For example, not market forces alone lthough few members of Con - forces — have played a large role in but deliberate government policies drove A gress or candidates in the hotly the U.S. shift of income toward the the “precipitous” decline in U.S. union Continued on p. 1006

1004 CQ Researcher At Issue:

Shoyes uld tax cuts on high earnings be extended?

ALAN REYNOLDS CHUCK MARR SENIOR FELLOW , C ATO INSTITUTE DIRECTOR OF FEDERAL TAX POLICY , C EN - TER ON BUDGET AND POLICY PRIORITIES WRITTEN FOR CQ RESEARCHER , NOVEMBER 2010 WRITTEN FOR CQ RESEARCHER , NOVEMBER 2010

n 2001, Congress assembled a time bomb with a 10-year etting President Bush’s tax cuts for incomes over $250,000 ex - fuse. Unless the lame duck Congress acts with atypical ur - pire on schedule at the end of December is the right move i gency, all tax cuts enacted in 2001-2003 will vanish on l from the standpoint of both equity and economic efficiency. Dec. 31. Recent decades have witnessed a stunning shift in incomes If lawmakers fail to defuse the tax time bomb by the end from the middle class to those few at the top. Between 1980 of the year, withholding taxes will increase dramatically. and 2005, about 80 percent of the country’s total income Moreover, if lawmakers and the president can’t agree on a gains went to the top 1 percent of the population, according solution by year’s end, the top tax on dividends would jump to a report by MIT researchers Frank Levy and Peter Temin. from 15 percent to 39.6 percent, ensuring a stock market Moreover, while incomes stagnated for middle-class Americans crash. The estate tax would jump to 55 percent with only a in recent decades, they surged for the wealthy — in stark $1 million exemption. Marginal tax rates would rise by 3-5 contrast to the decades between the mid-1940s and mid-1970s, percentage points across the board. when income growth was widely shared. The average middle- President Obama has appeared eager to hurl himself on income American family had $13,000 less after-tax income in top of this bomb. He threatened economic homicide and po - 2007 than it would have had if incomes of all groups had litical suicidey by threatenineg to veto ans y solution that did not grown at the sname average rate so ince 1979. impose much higher taxes on two-earner couples and small Tax policy is one of the best tools we have to help offset businesses earning more than $250,000. Yet the president has the troubling trend of growing inequality. Unfortunately, Presi - had eight months to enact the tax hikes in his 2011 budget. dent Bush’s tax cuts have had the opposite effect, providing If he couldn’t do it then, he certainly can’t now. Everyone much larger benefits — both in dollar terms and as a percent - knows this is playing with fire. The targets of Obama’s age of income — to people at the very top than to middle- planned tax increases account for a fourth of all consumer and lower-income people. spending, and a greater fraction of entrepreneurship and In fact, people making more than $1 million a year get an investment. average of about $129,000 each year from the Bush tax cuts, ac - Christina Romer, formerly Obama’s top economic adviser, cording to the Urban Institute-Brookings Institution Tax Policy found that a U.S. tax increase amounting to 1 percent of gross Center. The main reason, of course, is the large tax cuts targeted domestic product (GDP) reduces real GDP by nearly 3 per - specifically at high-income households. Extending the tax cuts cent within three years, with employment falling 1.1 percent. for high-income people would only make inequality worse. Harvard economists Alberto Alesina and Silvia Ardagna found (High-income people would still benefit from an extension of that “fiscal adjustments, those based upon spending cuts and the so-called “middle-class” Bush tax cuts, since the first $250,000 no tax increases, are more likely to reduce deficits . . . [and] of their income would be taxed at the lower marginal tax rates.) less likely to create recessions.” Extending the high-end tax cuts doesn’t make sense from an Under the fanciful assumption that Obama’s tax hikes on economic perspective, either. The Congressional Budget Office “the rich” did no damage to the economy, his plan is estimat - (CBO) rated it the least cost-effective of 11 options for boosting ed to raise $35 billion next year. That would cover the budget economic growth and job creation. A far better alternative would deficit for just nine days. This is all risk and no reward. be to extend President Obama’s Making Work Pay tax credit, The White House is now rumored to be willing to com - which is targeted to people who live paycheck-to-paycheck but is promise on legislation that postpones the president’s planned also scheduled to expire at the end of December. This would tax hikes on upper-income families while supposedly making generate two to three times the economic growth and job cre - “permanent” all other Bush tax cuts. That may not be the ation as extending the high-end Bush tax cuts, according to CBO. ideal solution, but it buys time for the new Congress to tackle The right course, then, would be to let the high-end Bush the budget in an economy that is rising slowly rather than tax cuts expire, locking in significant long-term budgetary sav - ings, while temporarily extending the Making Work Pay credit falling no fast. while the economy remains weak.

www.cqresearcher.com Dec. 3, 2010 1005 INCOME INEQUALITY

Continued from p. 1004 out against government mechanisms the underlying question of whether contested 2010 elections have specif - intended to push the income distrib - economic inequalities are worrisome. ically addressed the question of whether ution more in favor of lower earners. “It is usually only left-leaning rich peo - growing economic inequality is bad John Raese, West Virginia’s Republi - ple that care about inequality in the U.S.,” or good, the issue simmers beneath can nominee for the Senate, and Joe said Carol Graham, a senior fellow at many of the hottest election-year de - Miller, the Republican nominee for Sen - the Brookings Institution think tank. 68 bates, including taxes, the minimum ate in Alaska, for example, argued that Nevertheless, some polling suggests wage and the power of unions. the Constitution does not give Congress that the public may be fairly support - In light of the country’s fiscal prob - the power to set a minimum wage for ive of government policies to prop up lems, many Democrats in Congress, the nation but reserves that power for lower incomes, in particular. For ex - along with President Obama, have states. 63 (Similar arguments were made ample, an October poll found 67 per - called for the wealthiest to take on a on the two occasions when Congress cent of respondents favoring an in - greater share of the public burden. In enacted federal minimum-wage laws, in crease in the minimum wage from its a heated debate that remained unre - 1933 and 1938. The Supreme Court current $7.50 an hour to $10 an hour, solved when Congress adjourned its struck down the first law as unconsti - even including a majority — 51 per - main session in the fall to campaign, tutional in 1935, 64 but upheld the 1938 cent — of Republicans. Among people the White House and most Democ - Fair Labor Standards Act in a unani - who identified themselves as belong - rats backed the idea of extending Bush- mous 1941 decision, U.S. v. Darby. 65 ) ing to the Tea Party, however, 50 per - era tax cuts for family earnings under Linda McMahon, the Republican nom - cent opposed the increase and 47 per - $250,000 and letting the cuts expire inee for Senate in Connecticut, opposed cent supported it. 69 for dollars earned above that level. 60 increasing the minimum wage, and Rand Underlying the ambivalence is the “In order to save our children from Paul, Republican nominee for the Senate fact that few Americans accurately a future of debt, we will . . . end the in Kentucky, suggested a very cautious gauge the level of income inequality, tax breaks for the wealthiest 2 percent approach to minimum-wage increases. 66 some researchers say. of Americans,” said Obama. 61 How big a role candidates’ views on The public tends to guess right about But Republicans and some conser - income redistribution played in election lower- and middle-income wages, but vative Democrats argue that high-earn - results isn’t clear, but for these Senate few seem aware of how high the high - ers’ money is the key driver of the hopefuls the results were mixed: Paul est salaries actually are, reports Ben - whole economy. “History shows and won his race; Raese, McMahon and Miller jamin I. Page, a professor of decision good economic theory shows, if you lost, but Miller is contesting his narrow making in Northwestern University’s reduce taxes, you’re going to have more defeat to write-in candidate Republican political science department, and economic activity,” said Republican Min - Sen. Lisa Murkowski, the incumbent. Lawrence R. Jacobs, a professor of po - nesota Gov. Tim Pawlenty, on CBS News’ Meanwhile, four states voted on bal - litical studies at the University of Min - “Face the Nation” on Oct. 31. “If you lot measures in November that would nesota. The average person surveyed don’t extend those Bush tax cuts — all slow the growth of unions, and all the estimated $250,000 to be the annual of them — it’s going to send a very measures were approved. Voters in Ari - income for a heart surgeon and negative signal,” said Pawlenty, who is zona, South Carolina, South Dakota and $500,000 for the CEO of a large cor - reportedly mulling a run for the White Utah approved making a secret vote by poration. The guesses were well off House in 2012. 62 workers the sole allowable means of the mark, especially for CEOs. The av - Most recently, the White House re - determining whether an authorized erage heart surgeon earns over $400,000, portedly favors a plan to temporarily workplace union has been formed, out - while the CEOs of Standard & Poor’s extend the cuts for earnings over lawing an alternative practice that re - 500 companies average over $14 mil - $250,000 while extending the cuts per - quires an employer to recognize that a lion in annual income. 70 manently for earnings under that union has been formed any time a ma - “Even professional economists” amount. With Congress in upheaval jority of workers have signed cards au - generally underestimate current levels following the elections, it’s not clear thorizing union formation. 67 of inequality, says Duke’s Ariely. whether lawmakers will tackle the issue This finding isn’t surprising, says in the final days of the 2010 “lame Michael I. Norton, an associate pro - duck” session, when most newly elect - Ambivalent Public? fessor of business administration at ed members won’t yet be seated. Harvard Business School. “As an av - Conservative candidates campaign - he public, meanwhile, remains both erage person, we don’t really see the ing around the country this fall spoke T confused and ambivalent about very rich or their wealth. It’s in trusts”

1006 CQ Researcher and other financial forms “that make that such a focus might leave Ameri - it mostly invisible. People don’t see cans “thinking that the whole thing is very poor people in their lives, either.” OUTLOOK out of our hands.” At the same time, the public gener - The best cure for extreme inequality ally believes that society would be more is education because it creates eco - just if incomes varied a bit less widely, Progressive Era Redux? nomic opportunity, he says. “We says Norton, who, along with Ariely, haven’t been keeping pace with the conducted a recent study asking peo - hether the American economy demand for skilled labor,” and bol - ple how they would like to see income W will continue the trend toward stering technical education and skills distributed in a hypothetical society, if greater inequality or adopt policies to training for more young people could they knew that they would be placed rein in the widening gap is unclear, go a long way toward rebuilding the into that society at some random spot. and lawmakers and the public vary American workforce and the busi - “When you ask people a specific widely in their views of which course nesses that support it, he says. This question about a tax cut or some other is preferable and what policies might issue “may not matter much to busi - proposal, you tend to have a very hos - change things for the better. nesses,” most of which can locate tile debate. So we stepped back and “If you look back at the 1890s — anywhere in the world that a skilled looked at a very broad level” of what ultimately there was a reaction to it, workforce exists, “but it matters great - kind of society people actually desire, there was a cycle” that saw an era of ly to our prosperity.” “and when we did that, people agreed progressive taxation and other mea - The stagnant buying power of a lot,” Norton says. sures to limit the income inequalities middle- and lower-earning Americans When shown unlabeled diagrams that that marked the Gilded Age, says is a severe, growing problem for the actually depicted the income distribu - Northwestern’s Page. “A lot of these re - wealthiest Americans, whether they re - tions of the United States and Sweden forms were undertaken by the upper alize it or not, says Max Fraad Wolff, — where inequality is much lower than middle class” and even some wealthi - an economics writer and commenta - in the United States — fully 92 percent er people, he says. “And there does tor who teaches at the New School of Americans surveyed preferred to live now seem to be something in the air” University Graduate Program in Inter - in the unlabeled country with the that could portend a similar shift to national Affairs. Business leaders may Swedish distribution, says Ariely. Fur - progressive policies, as like bank on the emergence of global mar - thermore, “when you look at the ap - Microsoft founder Bill Gates and in - kets to replace U.S. buying power, but parently differing ideology of Republi - vestor Warren Buffett suggest that the that’s not a winning strategy, he says. cans and Democrats, the differences” in wealthy should devote large portions “What we know is that Americans how members of the two parties an - of their estates to charitable and pub - can sell to Americans,” Wolff says. “In swered the question “are very, very lic purposes, he says. 71 this early phase of modernization [in small,” with 90 percent of Republicans Indeed, in the Progressive Era, “the emerging economies like China and opting for the Swedish distribution, com - economic problems dwarfed those we India] what it means to be modern is pared to 93 percent of Democrats. have today,” but the nation still came to be Americanized,” but “in the early A desire for overall fairness seems together to shape national policies to history of the United States being mod - to be the key motivation for most, says overcome them and to rein in rampant ern meant being Europeanized, too,” he Norton. “When people are asked inequality, says Yale’s Hacker. The same says. “Eventually American pride over - about how they’d redistribute” soci - thing could happen today, Hacker says. took that, and that will happen” to cur - ety’s wealth, “they don’t just give it to “Whatever pessimism I have is not over rently modernizing countries like China, poor, they give it to everybody,” and the scope of the problem but over the too. That makes bolstering the average the main sentiment people express is lack of a widespread recognition” that American’s earning power a critical “the rich just have somewhat too much.” a problem of inequality exists, he says. issue for U.S. businesses, he says. When it comes to “taking that broad “We have really only begun to have vision and boiling it down to policy, this debate. We are where we were on though, that’s very hard to do,” Nor - climate change a few decades ago.” ton acknowledges. “At both the macro Hacker focuses on government Notes and the micro level, people have cer - policies related to unions, taxation and tain ideas about what they want their business regulation as keys to keep - 1 Christina Boyle, “Rich-Poor Gap Grows in lives to be, but very often our deci - ing economic inequalities at a rea - the City,” Daily News [New York], Sept. 29, sions go the other way.” sonable level, but MIT’s Autor worries 2010, p. 5.

www.cqresearcher.com Dec. 3, 2010 1007 INCOME INEQUALITY

2 Ibid. forthcoming in David B. Grusky and Szonja 29 Ibid. 3 Arloc Sherman and Chad Stone, “Income Szelenyi, eds., The Inequality Reader: Con - 30 Sidney Weintraub, “U.S. Tolerance of In - Gaps Between Very Rich and Everyone Else temporary and Foundational Readings in Race, come Inequality,” Issues in International Po - More Than Tripled in Last Three Decades, Class, and Gender , 2nd ed. litical Economy , Center for Strategic and In - New Data Show,” Center on Budget and Pol - 15 Gary Burtless, “Comments on ‘Has U.S. In - ternational Studies, January 2010, www.csis.org . icy Priorities, June 25, 2010, www.cbpp.org . come Inequality Really Increased?’ ” Jan. 11, 2007, 31 Robert Reich, “The Perfect Storm that Threat - 4 Ajay Kapur, Niall Macleod and Narendra www.brookings.edu/views/papers/burtless/2007 ens American Democracy,” Huffington Post blog , Singh, “Revisiting Plutonomy: The Rich Getting 0111.pdf . Oct. 18, 2010, www.huffingtonpost.com . Richer,” Industry Note , Citigroup, March 5, 2006. 16 Gary Burtless, “Has Widening Inequality Pro - 32 Ian Dew-Becker and Robert J. Gordon, 5 George Reisman, “For Society to Thrive, the moted or Retarded U.S. Growth?” Canadian “Where Did the Productivity Growth Go? In - Rich Must Be Left Alone,” Mises Daily blog , Public Policy , January 2003, p. S185, www.irpp. flation Dynamics and the Distribution of In - Ludwig von Mises Institute, March 2, 2006, org/events/archive/jan01/burtless.pdf . come,” paper presented at the Brookings In - http://mises.org . 17 Ibid. stitution panel on economic activity, Sept. 8-9, 6 Sen. Joseph Lieberman, press statement, 18 W. Michael Cox and Richard Alm, “You 2005, www.brookings.edu/es/commentary/jour Sept. 13, 2010, http://lieberman.senate.gov . Are What You Spend,” The New York Times , nals/bpea_macro/forum/200509bpea_gordon.pdf . 7 Ibid. Feb. 10, 2008, www.nytimes.com . 33 Ibid. 8 Robert Kuttner, “What Planet Are Deficit Hawks 19 Angel Girria, remarks delivered at OECD 34 Jonathan Cohn, “Moral Arguments for Living On?” Huffington Post blog , Nov. 14, 2010, conference in Paris, France, Oct. 21, 2008, Soaking the Rich,” online , www.huffingtonpost.com . www.oecd.org . Oct. 17, 2010, www.tnr.com. 9 Christian Broda, Ephraim Leibtag and David 20 “Conference Report: Poverty, Inequality, 35 Anthony P. Carnevale, “Postsecondary Edu - E. Weinstein, “The Role of Prices in Measur - and Democracy,” Network of Democracy Re - cation and Training As We Know it Is Not ing the Poor’s Living Standards,” Journal of search Institutes, Bratislava, Slovakia, April 26- Enough,” paper prepared for a Georgetown Economic Perspectives , spring 2009, http:// 28, 2009, p. 2, www.wmd.org/ndri/ndri.html . University/Urban Institute conference on pover - faculty.chicagobooth.edu/christian.broda/web 21 Martin Gilens, “Inequality and Democratic ty, Jan. 15, 2010, www.urban.org/uploadedpdf/ site/research/unrestricted/z30002092155p%20% Responsiveness,” Public Opinion Quarterly , 2005 412071_postsecondary_education.pdf . 282%29.pdf . (Special Issue), pp. 778-796, http://poq.oxford 36 Gary S. Becker and Kevin M. Murphy, “The 10 Stephen Rose, “Five Myths About the Poor journals.org/content/69/5/778.full . Upside of Income Inequality,” The American: Middle Class,” The Washington Post , Dec. 23, 22 Ibid. A Magazine of Ideas online , The American 2007, www.washingtonpost.com . 23 Quoted in Emily Kaiser, “Special Report: Enterprise Institute, May/June 2007, www.ameri 11 Neal Boortz, “Nine in 10 Politicians Will The Haves, the Have-nots, and the Dream - can.com . Rip This Column,” Atlanta Journal-Constitution less Dead,” Reuters, Oct. 22, 2010, www.reuters. 37 James K. Galbraith and J. Travis Hale, “The online , Sept. 17, 2010, www.ajc.com . com/article/idUSTRE69L0KI20101022 . Evolution of Economic Inequality in the Unit - 12 Robert J. Gordon, ‘Misperceptions About the 24 Quoted in ibid. ed States, 1969-2007,” University of Texas In - Magnitude and Timing of Changes in Ameri - 25 Quoted in David Wessel, “Professor Finds equality Project, Working Paper 57 , Feb. 2, can Income Inequality,” National Bureau of Many Fault Lines in Crisis,” The Wall Street 2009, http://utip.gov.utexas.edu/papers.html . Economic Research, Working Paper 15351 , Sep - Journal , April 22, 2010, http://online.wsg.com . 38 Claudia Goldin and Lawrence F. Katz, “The tember 2009. 26 N. Gregory Mankiw, “I Can Afford Higher Race Between Education and Technology: 13 “Growing Unequal? Income Distribution and Taxes. But They’ll Make Me Work Less,” New The Evolution of U.S. Educational Wage Dif - Poverty in OECD Countries,” Organization for York Times , Oct. 9, 2010, www.nytimes.com . ferentials, 1890 to 2005,” May 2009, www.eco Economic Co-operation and Development, Oc - 27 Ibid. nomics.harvard.edu/faculty/katz/files/Chapter8_ tober 2008, www.oecd.org/els/social/inequality . 28 Art Carden, “The Minimum Wage, Discrimi - NBER_1.pdf . 14 David B. Grusky and Kim A. Weeden, “Is nation, and Inequality,” Mises Daily blog , Ludwig 39 Mark Twain and Charles Dudley Warner, Market Failure Behind the Takeoff in Inequality?” von Mises Institute, Jan. 19, 2009, http://mises.org . The Gilded Age: A Tale of Today (1873). 40 Timothy Noah, “The Great Divergence, Part One,” Slate , Sept. 3, 2010, www.slate.com/id/ About the Author 2266025/entry/2266026 . 41 Staff writer Marcia Clemmitt is a veteran social-policy re - Willford I. King, The Wealth and Income of the People of the United States (1915), p. 60, porter who previously served as editor in chief of Medi - http://books.google.com/books?id=dmFsmjE- cine & Health and staff writer for The Scientist. She has TqIC&pg=PA287&lpg=PA287&dq=%22willford also been a high school math and physics teacher. She +i+king%22+%22the+wealth+and+income+of+ holds a liberal arts and sciences degree from St. John’s the+people+of+the+united+states%22&source= College, Annapolis, and a master’s degree in English from bl&ots=0hVvJxnasb&sig=ilCydUCzxxTa1YW85i Georgetown University. Her recent reports include “Gridlock 40XnS7ZAA&hl=en&ei=Y8HFTK36CMH7lwf in Washington” and “Financial Industry Overhaul.” BhokG&sa=X&oi=book_result&ct=result&resn um=5&ved=0CCAQ6AEwBA#v=onepage&q=ef

1008 CQ Researcher ficient&f=false . 42 Andrew Carnegie, The Gospel of Wealth and Other Timely Essays (1901), p. 10, http:// FOR MORE INFORMATION books.google.com/books?id=gAGvb5vIh-AC& printsec=frontcover&dq=%22the+gospel+of+ Cato Institute , 1000 Massachusetts Ave., N.W., Washington, DC 20001-5403 ; (202) 842-0200 ; www.cato.org . Analyzes economic issues from a libertarian point of view. wealth%22&source=bl&ots=DMxn1bs71e&sig= 7CUUj34D-ignVkYztYo05sC0Rf4&hl=en&ei=JM Center on Budget and Policy Priorities , 820 First St., N.E., Suite 510, Washington, TFTPjVMoSBlAeV_cED&sa=X&oi=book_result DC 20002 ; (202) 408-1080 ; www.cbpp.org . Liberal-leaning think tank that analyzes &ct=result&resnum=4&ved=0CCkQ6AEwAw#v economic policy implications for low- and moderate-income families. =onepage&q&f=false . 43 For background, see 16th Amendment to Economic Mobility Project , The Pew Charitable Trusts, 901 E St., N.W., 10th Floor, the Constitution: Federal Income Tax (1913), Washington, DC 20004 ; www.economicmobility.org . Nonpartisan group studying National Archives and Records Administration trends in economic and social mobility. website, www.ourdocuments.gov/doc.php?flash =old&doc=57 . Emmanuel Saez’s website , http://elsa.berkeley.edu/~saez . Analysis by University 44 Pollack v. Farmers’ Loan and Trust Compa - of California, Berkeley, economist supports many arguments about fast-rising in - ny , 157 U.S. 429, www.law.cornell.edu/supct/ come inequality. html/historics/USSC_CR_0157_0429_ZS.html . 45 Thomas Piketty and Emmanuel Saez, “The Ludwig von Mises Institute , 518 West Magnolia Ave., Auburn, AL 36832-4528 ; Evolution of Top Incomes: A Historical and (334) 321-2100 ; http://mises.org . Organization of libertarian economists who argue International Perspective,” Working Paper 11955 , that economic inequalities are both smaller and less troubling than many believe. National Bureau of Economic Research, Jan - uary 2006, http://elsa.berkeley.edu/~saez/ My Budget 360 website , www.mybudget360.com/home . Advertising-supported piketty-saezAEAPP06.pdf . online investment magazine posts data and analysis on economic inequalities. 46 Frank Levy and Peter Temin, “Inequality and Institutions in 20th Century America,” MIT Too Much website , Program on Inequality and the Common Good, Institute for Policy Studies, 1112 16th St., N.W., Suite 600, Washington, DC 20036 ; (202) 234- Industrial Performance Center, Working Paper , 9382 ; http://toomuchonline.org . A liberal think tank’s website posting news and June 27, 2007, www.economics.harvard. edu/ commentary about economic inequality. faculty/katz/files/Chapter8_NBER_1.pdf . 47 Ibid. 48 U.S. Census Bureau , 4600 Silver Hill Road, Washington, DC 20233 ; (301) 763-4636 ; Schechter Poultry Corp. v. United States , 295 www.census.gov . Federal agency publishes periodic reports and analysis on the U.S. 495, www.law.cornell.edu/supct/html/his economy, including income distribution. torics/USSC_CR_0295_0495_ZS.html . 49 Levy and Temin, op. cit. University of Texas Inequality Project , http://utip.gov.utexas.edu. Austin-based 50 James K. Galbraith, “Inequality and Eco - group studying economic inequality around the world. nomic and Political Change,” University of Texas Inequality Project, Working Paper 51 , Sept. 21, 2008, http://utip.gov.utexas.edu/papers.html . 60 For background, see Richard Wolf, “How NOW blog , Oct. 27, 2010, and James Parks, 51 Noah, op. cit. the Tax Cut Debate Affects You,” USA Today , “Corporate-Backed, Anti-Union ‘Secret Ballot’ 52 Ibid. Sept. 21, 2010, www.usatoday.com. Measures Pass in Four States,” AFL-CIO NOW 53 Ibid. 61 Quoted in ibid. blog , Nov. 4, 2010, http://blog.aflcio.org . 54 Goldin and Katz, op. cit. 62 Transcript, “Face the Nation,” CBS News, 68 Quoted in Kaiser, op. cit. 55 Gordon , op. cit. Oct. 31, 2010, www.cbsnews.com/htdocs/pdf/ 69 Arthur Delaney, “Two-Thirds of Americans 56 Piketty and Saez, “The Evolution of Top FTN_103110.pdf . Support Raising Minimum Wage: Poll,” Huff - Incomes,” op. cit. 63 Adam Cohen, “Could the Courts Outlaw the ington Post blog , Oct. 6, 2010, www.huffington 57 Quoted in Louis Uchitelle, “The Richest of Minimum Wage?” Time online /CNN, Oct. 20, post.com . the Rich, Proud of a New Gilded Age,” The 2010, www.time.com . 70 Benjamin I. Page and Lawrence R. Jacobs, New York Times , July 15, 2007, www.nytimes.com . 64 A.L.A. Schechter Poultry Corp. v. United States , “Economic Inequality and the American Pub - 58 Jacob S. Hacker and Paul Pierson, Winner- 295 U.S. 495 (1935). www.law.cornell.edu/supct/ lic,” paper delivered at a conference at the Take-All Politics: How Washington Made the html/historics/USSC_CR_0295_0495_ZS.html . Federal Reserve Bank of Chicago, April 2-3, 2008, Rich Richer — and Turned Its Back on the Mid - 65 U.S. v. Darby , 312 U.S. 100 (1941), http://case http://ctcp.edn.depaul.edu/HGEwebsite/Ab dle Class (2010), p. 46. law.lp.findlaw.com/cgi-bin/getcase.pl?court= stracts/BenjaminPage_Paper.pdf . 59 Lane Kenworthy, “Business Political Ca - us&vol=312&invol=100 . 71 For background see Peter Katel, “Philan - pacity and the Top-heavy Rise in Income In - 66 Cohen, op. cit. thropy in America,” CQ Researcher , Dec. 8, 2006, equality: How Large an Impact?” Politics & 67 For background, see “Anti-Union Ballot pp. 1009-1032. Society , June 2010, p. 255. Measures Target Workers’ Rights,” AFL-CIO

www.cqresearcher.com Dec. 3, 2010 1009 Bibliography Selected Sources

Books Scholars from across the ideological spectrum examine re - search showing that social and economic mobility have been Cox , W. Michael , and Richard Alm , Myths of Rich and Poor: diminishing in the United States compared to other nations, Why We’re Better Off Than We Think , Basic Books , 2000 . despite the widespread belief that Americans have greater Cox, a senior fellow at the Dallas Federal Reserve Bank, equality of opportunity than elsewhere. and Alm, a business reporter, argue that higher living stan - dards for all Americans offset any increases in income in - Lindsey , Brink , “Paul Krugman’s Nostalgianomics: Economic equality that have occurred over the past few decades. Policies, Social Norms, and Income Inequality,” Cato In - stitute , 2009 , www.cato.org/pub_display.php?pub_id=9941 . Hacker , Jacob S. , and Paul Pierson , Winner-Take-All Poli - The libertarian think tank’s vice president for research ar - tics: How Washington Made the Rich Richer — and Turned gues that U.S. income dispersion resulted from technologi - Its Back on the Middle Class , Simon & Schuster , 2010 . cal change that keeps low-skilled workers out of many jobs, Professors of political science at Yale (Hacker) and the Uni - not from economic or social policies and practices like tax versity of California, Berkeley (Pierson), argue that the rates or unionization of labor. widening income gap has not occurred mainly because lower- educated workers don’t have the skills to compete for Norton , Michael I. , and Dan Ariely , “Building a Better jobs in a technological workplace but because the U.S. gov - America — One Wealth Quintile at a Time,” forthcoming , ernment has gradually adopted many policies that support Perspectives in Psychological Science , www.people.hbs. the growth of income and wealth at the top. edu/mnorton/norton%20ariely%20in%20press.pdf . When surveyed about their preferred society, large majorities Articles of Americans across demographic groups and the political spec - trum opt for an income distribution less skewed toward the Kaiser , Emily , “Special Report: The Haves, the Have-nots, top than the current U.S. distribution. and the Dreamless Dead,” Reuters , Oct. 22, 2010 , www.reuters.com/article/idUSTRE69L0KI20101022 . Sherman , Arloc , and Chad Stone , “Income Gaps Between By examining parallels between two eras when economic the Very Rich and Everyone Else More Than Tripled in inequality ran high in the United States — the 1920s and Last Three Decades, New Data Show,” Center on Budget the 2000s — economists struggle to understand why both and Policy Priorities , June 25, 2010 , www.cbpp.org . periods preceded huge crashes of the financial markets and In an examination of tax and wage data from the non - lengthy economic depressions. partisan Congressional Budget Office, analysts from a libera l- leaning think tank report that U.S. income is more concen - Noah , Timothy , “The Great Divergence,” Slate , Septem - trated at the very top of the economic ladder than at any ber 2010 , www.slate.com/id/2267157 /. time since 1928, with the income gap between the richest In a 10-part series, a reporter for the online magazine dis - 1 percent of Americans and the lowest three-fifths more than cusses recent research examining the possible causes and tripling between 1979 and 2007. effects of rising economic inequality. Weintraub , Sidney , “U.S. Tolerance of Income Inequality,” Reports and Studies Issues in International Political Economy , Center for Strategic & International Studies , January 2010 , http:// “Income, Poverty, and Health Insurance Coverage in the csis.org/files/publication/issues201001.pdf . United States: 2009,” Current Population Reports , U.S. A political economist from a bipartisan foreign-policy think Census Bureau , September 2010 , www.census.gov/prod/ tank argues that U.S. citizens and policy makers tolerate and 2009pubs/p60-236.pdf . even promote greater economic inequality than people in This government report finds that the median household many other developed nations consider fair or economical - income did not change from 2008 to 2009 but that the pover - ly efficient. ty rate increased. Wilkinson , Will , “Thinking Clearly About Economic In - Isaacs , Julia B. , Isabel V. Sawhill and Ron Haskins , “Get - equality,” Cato Institute Policy Analysis 640 , July 14, ting Ahead or Losing Ground: Economic Mobility in Amer - 2009 , www.cato.org/pub_display.php?pub_id=10351 . ica,” Economic Mobility Project/Brookings Institution/ Pew A research fellow at the libertarian think tank argues that Charitable Trusts , October 2008 , www. brookings.edu/ income statistics are a misleading measure of economic in - ~/media/Files/rc/reports/2008/02_economic_mobility_saw equality and that dispersion of incomes has little relation to hill/02_economic_mobility_sawhill.pdf . either human welfare or social justice.

1010 CQ Researcher The Next Step: Additional Articles from Current Periodicals

Government Action Silverberg , Kathy , “Some Wealthy Americans Put Their Money Where the Need Is,” Sarasota (Florida) Herald Blumner , Robyn , “Republicans Keep Pushing Class War,” Tribune , Aug. 20, 2010 , p. A10 . Chicago Sun Times , Sept. 19, 2010 , p. A22 . Some wealthy political candidates may view spending on Under Democratic leadership, real incomes have increased campaigns as a way to improve the lot of many Americans. more than under Republicans for both the poor and upper middle class. Threats

Frank , Robert H. , “Income Inequality: Too Big to Ignore,” Abate , Tom , “Middle Class Squeezed Out As U.S. Income The New York Times , Oct. 17, 2010 , p. BU5 . Gap Grows,” The San Francisco Chronicle , Sept. 26, 2010 , Government economists who say we should cast aside ques - p. D1 . tions about inequality often advocate for policies such as tax Working-class incomes have stagnated for so long that or - cuts for the rich, which increase inequality substantially. dinary consumers have lost the buying power to pull the country out of a recession. Story , Louise , “Slicing the Pie,” The New York Times , Aug. 22, 2010 , p. WK5 . Benjamin , Colin , “Are We Asking the Poor and Middle Class Income disparities between the rich and the poor have to Eat Cake?” Michigan Chronicle , Oct. 13, 2010 , p. A6 . widened as government regulations have eased and invest - Many analysts believe that income inequality may have ment bank failures have risen. been the root cause of the country’s most recent recession.

Growth Gruener , Garrett , “Uncle Sam Gets His Sliver,” Los An - geles Times , Sept. 20, 2010 , p. A19 . Coclanis , Peter A. , “We’re Seeing More Inequality,” News & When income inequality gets too far out of balance, the Observer (North Carolina), Aug. 9, 2010 . wealthy end up saving too much. Over the past decade income inequality has increased and the opportunity for upward mobility has dwindled. Large , Jerry , “The Ills Inequality Brings,” Seattle Times , Jan. 14, 2010 , p. B1 . Dodge , Kenneth A. , “Make CEOs Help the Little Guy,” Economic inequality can lead to problems such as teenage Pittsburgh Post-Gazette , Feb. 7, 2010 , p. B1 . pregnancy, youth violence, heart disease and depression. Income inequality in the U.S. has risen to become more than double the level of most European countries. Pearlstein, Steven , “The Costs of Rising Income In - equality,” The Washington Post , Oct. 6, 2010 , p. A13 . Kotkin , Joel , “The End of Upward Mobility?” , Too much inequality appears to reduce global competi - Jan. 26, 2009 , p. 64 . tiveness and long-term growth. The gap between the rich and the poor is growing in the United States. CITING CQ RESEARCHER Tucker , Randy , and Ken McCall , “Income Inequality High - Sample formats for citing these reports in a bibliography est in Montgomery County,” Dayton (Ohio) Daily News , include the ones listed below. Preferred styles and formats Sept. 29, 2010 , p. A5 . vary, so please check with your instructor or professor. In one Ohio county, the top 20 percent of households has grown to earn nearly half of all the income in the region. MLA STYLE Jost, Kenneth. “Rethinking the Death Penalty.” CQ Researcher Political Aspects 16 Nov. 2001: 945-68.

Eggen , Dan , “A Surge in PACs at the Last,” The Wash - APA S TYLE ington Post , Oct. 30, 2010 , p. A4 . Loosened regulations have allowed wealthy individuals to Jost, K. (2001, November 16). Rethinking the death penalty. significantly influence elections. CQ Researcher, 11 , 945-968.

Havelock , John , “The Powerful Make Rules That Benefit CHICAGO STYLE Themselves,” Anchorage Daily News , Sept. 25, 2010 . Jost, Kenneth. “Rethinking the Death Penalty.” CQ Researcher , New campaign-finance rules allow wealthy individuals to November 16, 2001, 945-968. contribute to elections without limit.

www.cqresearcher.com Dec. 3, 2010 1011 In-depth Reports on Issues in the News

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