Newly released IRS data analyzed by Emmanuel Saez -- winner of the prestigious John Bates Clark award given to the best economist under the age of 40 -- and Thomas Piketty tell us what we already knew -- during the last economic expansion, presided over by George W. Bush, the rich got a lot richer while everybody else made minimal gains.
Two-thirds of the nation's total income gains from 2002 to 2007 flowed to the top 1 percent of U.S. households, and that top 1 percent held a larger share of income in 2007 than at any time since 1928... During those years, the Piketty-Saez data also show, the inflation-adjusted income of the top 1 percent of households grew more than ten times faster than the income of the bottom 90 percent of households... The last time such a large share of the income gain during an expansion went to the top 1 percent of households -- and such a small share went to the bottom 90 percent of households -- was in the 1920s.
But, hey, you know what? That's old news. In a new Wall Street Journal article, "Income Gap Shrinks in Slump at the Expense of the Wealthy," reporters Bob Davis and Robert Frank cite additional Piketty and Saez data to show that the disparity in income gains is falling fast.
In 2007, the top 1 percent of U.S. families accounted for 23.5 percent of all personal income in the U.S.... The top 1 percent's share appears to be falling fast. Mr. Saez and other economists expect income going to the top 1 percent of taxpayers -- currently, those with about $400,000 a year -- will drop to somewhere between 15 percent and 19 percent of all income by 2010.
Unfortunately, however, that doesn't mean that the bottom tier is necessarily moving on up. A brand new report from the U.S. Census Bureau, "Income, Poverty, and Health Insurance Coverage in thee United States: 2008," tells us that the number of uninsured Americans rose from 45.7 million to 46.3 million in 2008 and the poverty rate rose from 12.5 percent to 13.2 percent.
So in 2008, the rich got less rich, while the poor got even poorer. Which just goes to show that a falling tide lowers all boats -- with one difference: the boats belonging to the rich probably still float, while the poor have smashed into the rocks.