Contempt can take many forms, but one of the most vicious is ignorance. It suggests that the reality of a large group of persons is unworthy of reflection. Unsurprisingly, as this nation takes on more and more of the characteristics of a plutocracy, we see this contempt-as-ignorance exhibited in more and more fora. The latest installment occurred in the course of a much-touted September 12th dialogue between the former Democratic Party operative and now TV personality George Stephanopoulos and the Republican Presidential Candidate Mitt Romney. Context is important:GEORGE STEPHANOPOULOS: But his [Martin Feldstein’s] study, which you’ve cited, says it [Romney’s tax proposal] can only work if you take away those deductions for everyone earning more than $100,000. MITT ROMNEY: Well, it doesn’t necessarily show the same growth that we’re anticipating. And I haven’t seen his precise study. But I can tell you that we can lower our rates– GEORGE STEPHANOPOULOS: Well, you cited the study, though. MITT ROMNEY: Well, I said that there are five different studies that point out that we can get to a balanced budget without raising taxes on middle income people. Let me tell you, George, the fundamentals of my tax policy are these. Number one, reduce tax burdens on middle-income people. So no one can say my plan is going to raise taxes on middle-income people, because principle number one is keep the burden down on middle-income taxpayers. GEORGE STEPHANOPOULOS: Is $100,000 middle income? MITT ROMNEY: No, middle income is $200,000 to $250,000 and less. So number one, don’t reduce– or excuse me, don’t raise taxes on middle-income people, lower them.
Let’s grant George Stephanopoulos and Mitt Romney the benefit of the doubt, and assume that they mean household instead of individual income. According to the Tax Policy Center, the median income of an American family in 2011, i.e. the earnings of the family in the exact middle, the 50th percentile of the distribution, is $42,372 (this is cash income, excluding non-wage benefits).
$100,000 would place a family just above the 90th percentile and $250,000 would put one at the 94th percentile. So, in fact the back-and-forth between Stephanopoulos and Romney really is a discussion about whether the latter’s tax policy proposals are of concern to the upper 6% or 10% of the income distribution.
Ah, but perhaps the Tax Policy Center has calculated the numbers in a biased way? Happily, we can garner another perspective by examining the 2012 edition of the annual report compiled by the Council of Economic Advisors, what is called the Economic Report of the President. There, in Appendix B-33, one will find a data series on Median Money Income in 2010. Calculated upon a broader and more inclusive basis, it shows that 2010 median income for a household was $60,395 – still substantially less than $250,000.
This chart reveals another trend that speaks to the ignorance and complacency exhibited above. It shows that household income peaked at $64,518 in 2007. This means that the income of the median American household has fallen 6.4% since the peak of the housing bubble and as yet shows no sign of stopping. This decline in American household income is both fascinating and disturbing because, according to the authoritative National Bureau of Economic Research, the recession that began in December 2007 ended in June 2009. If the U.S. Gross Domestic Product has been rising for all but the first four months of the time that the Obama Administration has been in power, and the median household income is continuing to decline, then the revenues associated with the economic revival must be going somewhere. The answer isn’t too surprising. Corporate profits have hit new highs this summer.