Income Inequality Rose Most Under President Clinton

Discussion in 'Economy' started by expat_panama, Nov 3, 2011.

  1. expat_panama
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    expat_panama Silver Member

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    By JOHN MERLINE, INVESTOR'S BUSINESS DAILY

    In his weekend radio address, President Obama decried that "over the past three decades, the middle class has lost ground while the wealthiest few have become even wealthier." Although he was trying to leverage the Occupy Wall Street movement, the income gap has been a longstanding concern of his.

    During the 2008 campaign, Obama said, "The project of the next president is figuring out how do you create bottom-up economic growth, as opposed to the trickle-down economic growth that George Bush has been so enamored with."

    But it turns out that the rich actually got poorer under President Bush, and the income gap has been climbing under Obama.

    What's more, the biggest increase in income inequality over the past three decades took place when Democrat Bill Clinton was in the White House.

    The wealthiest 5% of U.S. households saw incomes fall 7% after inflation in Bush's eight years in office, according to an IBD analysis of Census Bureau data. A widely used household income inequality measure, the Gini index, was essentially flat over that span. Another inequality gauge, the Theil index, showed a decline.

    In contrast, the Gini index rose — slightly — in Obama's first two years. Another Census measure of inequality shows it's climbed 5.7% since he took office.

    Meanwhile, during Clinton's eight years, the wealthiest 5% of American households saw their incomes jump 45% vs. 26% under Reagan. The Gini index shot up 6.7% under Clinton, more than any other president since 1980.

    To the extent that income inequality is a problem, it's not clear what can be done to resolve it. Among the contributing factors:

    Economic growth. Strong economic growth, rising stock prices and household income inequality tend to go hand in hand.

    Technology. Tech advances have put a premium on skilled labor, according to a Congressional Budget Office report . Because the pool of skilled workers hasn't grown as much as demand, their wages have climbed faster.

    Free trade and immigration. Cheap labor abroad and an influx in low-skilled immigrants can depress wages at the bottom, according to the CBO.

    Women in the workforce. As the CBO put it, "an increase in the earnings of women could boost inequality by raising the income of couples relative to that of households headed by single people."

    Tax policy changes don't explain the widening income gap. The CBO found that, by one measure, "the federal tax system as a whole is about as progressive in 2007 as it was in 1979."
    [​IMG]

    Read more at Business News - Financial News, Stock Market & Investing News - IBD - Investors.com .
     
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  2. expat_panama
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    expat_panama Silver Member

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  3. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    Those muthafrickin' democrats, obviously we need a repub in the WH to reduce income inequality.
     
  4. expat_panama
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    expat_panama Silver Member

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    huh

    who'd a thunk it.
     
  5. likeabird03
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    likeabird03 Active Member

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    True, I will give you that. But at least incomes for the middle class and poor were also rising during this period unlike now. To be honest, much of the rise in income for the top 5% during the Clinton years was due to in part because the Stock Market was rising so quickly during this time. That would also explain why it reversed under Bush, because the stock market was well below it's 2000 level when Bush left in 2009.
     
    Last edited: Nov 3, 2011
  6. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    I'd say that is true, and I suspect the overall decline of the stock market over the past 3 years has lead to a reduction in income inequality since 2008. Low and middle got hurt over the past 3 years, but not as much as the rich guys. I think we'll see fewer numbers of new millionaires and a drop in average AGI for the top 1%.
     
  7. likeabird03
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    likeabird03 Active Member

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    We have, but I'd be interested to see what the 2011 numbers show. The Stock Market is now only about 15% off its 2007 highs and average wage earners have continued to see their incomes stagnate in an economy where inflation is well above the levels of a couple years ago.
     
  8. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    Yeah, I'm interested too. I'm thinking that the capital gains income has really dropped since 2008, and although the salaries of some high profile CEOs and maybe some of the top celebrities has gone up, I don't think a real big increase in salaries was enough to make a big difference. We'll see.
     
  9. likeabird03
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    likeabird03 Active Member

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    We may be in a period where there's huge gains for the top 1% while the top 5% (those who's income depend more on interest income and dividends) stay about the same.
     
  10. expat_panama
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    expat_panama Silver Member

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    fwiw, the past 3 years have seen stocks soar:
    [​IMG]
    --and inflation's just back to normal; it went up, down and it's now back where it was 4 years ago:
    [​IMG]
    This is the nut of the problem, whether we're talking about income or the change of wealth. Intuitively we know it's the same, but the numbers come from different sources.
     

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