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Corporate-Occupied Government: A 'Redistribution Machine' for the Wealthy

'Redistributing Up': New Reuters series explores expanding US inequality

Jacob Chamberlain

The income inequality gap has vastly expanded over the past 20 years thanks largely in part to federal policies, which have decreased large chunks of revenue through unprecedented tax cuts for the wealthy and redistributed what's left of that revenue away from public services and federally managed infrastructure programs to private contracts with multibillion dollar corporations—particularly defense contractors, weapons manufacturers, and security technology firms.

This, according to a new series by Reuters, called The Unequal State of America.

In the first article of the series, published Tuesday, Reuters traces the ways in which the federal government has acted as a wealth redistribution machine, not towards those in need, but upwards towards the already wealthy. According to the report, an analysis of decennial Census data, the federal government has "emerged as one of the most potent factors driving income inequality in the United States - especially in the nation's capital."

The report cites public policy decisions, government 'outsourcing' of projects to private firms, weakened unions, a shift in labor demand from low-skill jobs to high-skill professions and, most broadly, sweeping tax cuts, particularly during the Bush administration, that largely benefit top income earners and the corporations, lobbying firms, and law firms they work for.

"A cadre of Washington professionals advanced their careers by pushing through personal income-tax cuts during the administration of President George W. Bush that redistributed nearly 2 trillion dollars nationally over the past decade, mostly to high earners," the report states.

As a result of these policies, Reuters reports:

  • Inequality has increased in 49 of 50 states since 1989.

  • The poverty rate increased in 43 states, most sharply in Nevada, ravaged by the housing bust, and in Indiana, which saw a rise in low-paying jobs.

  • Twenty-eight states saw all three metrics of socioeconomic well-being worsen. There, inequality and poverty rose and median income fell.

  • In all 50 states, the richest 20 percent of households made far greater income gains than any other quintile - up 12 percent nationally.

  • Income for the median household - in the very middle - fell in 28 states, with Michigan and Connecticut leading the way.

  • The five largest increases in inequality all were in New England: Connecticut first, followed by Massachusetts, New Hampshire, Rhode Island and Vermont. The decline in manufacturing jobs hit New England's poor and middle hard, while the highly educated benefited from expansion in the biotech and finance industries.

  • The only state that didn't see a rise in inequality: Mississippi, which had an insignificant dip. The Magnolia State was one of the few to post a drop in poverty and a rise in income, but it still ranks worst in the nation on both counts.

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