For Immediate Release
CBO Report: Rich Get Richer, Poor Get Poorer
Total wealth in the United States doubled between 1989 and 2013, but the wealth of the American family right in the middle of the economy barely budged in that time, according to a new report prepared by the Congressional Budget Office for U.S. Sen. Bernie Sanders (I-Vt.).
“Over the period from 1989 through 2013, family wealth grew at significantly different rates for different segments of the U.S. population,” CBO wrote. “The distribution of wealth among the nation’s families was more unequal in 2013 than it had been in 1989.”
“The reality, as this report makes clear, is that since the 1980s there has been an enormous transfer of wealth from the middle class and the poor to the wealthiest people in this country,” Sanders said. “There is something profoundly wrong when the rich keep getting richer and virtually everyone else gets poorer. That is unacceptable, and that has got to change.”
As of 2013, the top 10 percent of families owned three-quarters of total family wealth in the United States. The average wealth of the top 10 percent was $4 million, but families in the bottom 25 percent were $13,000 in debt on average.
Although CBO did not look at the wealth of the top one-tenth of 1 percent, Emmanuel Saez and Gabriel Zucman found that the top one-tenth of 1 percent now owns almost as much wealth as the bottom 90 percent.
While the top 10 percent of families have vastly increased their share of wealth, the bottom 25 percent has suffered enormously. Since 1989, the amount owed by indebted American families tripled. In 2013, families in the bottom 25 percent were $13,000 in debt, on average, whereas they had virtually no debt in 2001. A total of 15 million families were in debt in 2013, with an average indebtedness of $32,000.
Higher education plays a key role in determining family wealth, according to the report. In 2013, households headed by someone with a college degree had four times more wealth than households headed by an individual with a high school degree.
But student loan debt was largely responsible for the increase in debt among the bottom 25 percent of families. Between 2007 and 2013 “the share of families with student debt increased from 25 percent to 36 percent, and the average amount increased from $24,000 to $36,000,” CBO wrote. The percentage of indebted families with outstanding student debt rose from 56 percent in 2007 to 64 percent in 2013, and their average student loan balances increased from $29,000 to $41,000.
“If we are going to reduce wealth inequality in this country, we must make public colleges and universities tuition-free and substantially lower student loan interest rates so that millions of young people do not leave school with a mountain of debt that burdens them for decades,” Sanders said.
Young and middle-aged Americans have seen the fewest gains of any age group in America. Only families headed by someone over the age of 65 have more wealth today than they did in 1989.
To read the CBO report, click here.