The Gated Community of the One Percent

Matt Stoller had an interesting post on Naked Capitalism the other day noting that, despite Obama's populist rhetoric about restoring the Middle class, imposing a gimmicky "Buffett Rule" against millionaires and such, the top one percent have actually made out better, in percentage terms, during Obama's "recovery" of 2009-2010 than they did from 2002-07 under Bush.

The comparison, based on a paper by one of the best young economists in the country, Emmanuel Saez (winner of the uber-prestigious Clark medal), is a little unfair, since it stacks the last two years up against a five-year period under Bush, and Obama was clearly inheriting a disaster from his predecessor. But the harsh fact is that there is very little that Obama has done--or more precisely, has been able to do given the ideological paralysis in Washington and his own misguided caution--to stop the growing class divide.

This bit from Saez's paper sums it up: "From 2009 to 2010, average real income per family grew by 2.3% but the gains were very uneven. Top 1% incomes grew by 11.6% while bottom 99% incomes grew only by 0.2%. Hence, the top 1% captured 93% of the income gains in the first year of recovery." It's an astonishing figure: NEARLY ALL the income in the first year of recovery went to the one percent. As Saez dryly concludes: "Such an uneven recovery can possibly explain the recent public demonstrations against inequality."

You think? I call this the "sleeping serpent issue" of this election. The Obama camp yesterday released a video of Romney's more callous and silly remarks from the primary season, including his call to let the mortgage market "hit bottom," but the president is pretty vulnerable on this too.

So I'll sound again my old tocsin: we need new, Saez-sized thinking in Washington that will acknowledge that this administration and this Congress have barely touched the surface of what went wrong in the Great Recession. Unless they do, the upper-income brackets will continue to become a giant gated community inside America, a place so apart from the rest of us that it is looking less and less distinguishable, each passing year, from the palace of King Louis the XVI. Maybe Trayvon Martin was only an early victim.