The Top One Percent
By David Henderson
I think the average quality of letters to the Wall Street Journal is medium to low, but today’s lead letter is quite good. The author writes to elaborate on a point made by Daniel Henninger in a column that I had somehow missed. Henninger’s column is titled, “The Obama Rosetta Stone.” Henninger had written:
Turn immediately to page 11 [of the federal budget.] There sits a chart called Figure 9. This is the Rosetta Stone to the presidential mind of Barack Obama. Memorize Figure 9, and you will never be confused. Not happy, perhaps, but not confused.
The chart, he goes on to note, is taken from economists Pikkety and Saez.
As described in Mr. Obama’s budget, these two economists have shown that by the end of 2004, the top 1% of taxpayers “took home” more than 22% of total national income. This trend, Fig. 9 notes, began during the Reagan presidency, skyrocketed through the Clinton years, dipped after George Bush beat Al Gore, then marched upward. Widening its own definition of money-grubbers, the budget says the top 10% of households “held” 70% of total wealth.
Alan Reynolds of the Cato Institute criticized the Piketty-Saez study on these pages in October 2007. Whatever its merits, their “Top 1%” chart has become a totemic obsession in progressive policy circles.
Moreover, notes Henninger, there is a disturbing tone to the budget language. The Obama budget writers write:
“While middle-class families have been playing by the rules, living up to their responsibilities as neighbors and citizens, those at the commanding heights of our economy have not.”
In other words, making a lot of money and paying a higher percent of one’s income in taxes than lower income groups pay is not, according to the Obama administration, “playing by the rules.”
In response to Henninger’s column, Steve Walde of Easton, Connecticut makes some telling additional points. One highlight:
But consider that 1980 was about the time when large percentages of college-educated women began to enter the workforce. Many of these professional women would go on to marry other professionals. This in effect created a doubling of “household” income for many families.
My working wife and I often find ourselves in this 1% bracket, but if we were to divorce we would never come close. It’s ironic that the left decries the income disparity between men and women, but in the instance when women earn equal pay it is used to inflame class warfare.