Current proposals will worsen inequality and harm those Trump promised to protect—while further enriching the top 1%
President Trump, in his inaugural address and elsewhere, rightly says that over the decades since 1980 American household distributions of income and wealth became strikingly unequal. But if recent budget and legislative proposals from Trump and the House of Representatives come into effect, today’s distributional mess would become visibly worse.
First, I will sketch how the mess happened, then I will propose some ideas about how it might be cleaned up. I will show that even with lucky institutional changes and good policy, it would take several more decades to undo the “American carnage” that the president described.
How We Got Into Today’s Distributional Mess
In an INET-sponsored project at the New School for Social Research, we drew on standard government sources to rescale data on income and wealth distributions to be consistent with national income and financial accounts.1Rescaling allows consistent macro level analysis of distributional shifts. We put together a demand-driven economic growth model to assess possible impacts of Trump-style policies and egalitarian alternatives.