TCS Daily

Rich Man's President? Look Harder

By David Mastio - March 2, 2006 12:00 AM

Last week, the Federal Reserve released their triannual survey of family income. The press seized on the major finding, that average family income declined from 2001 through 2004 and that growth in families' net worth was the slowest in a decade.

Those stats make for an easy morality tale about the Bush administration's callousness towards the poor and solicitude for the rich and the powerful. Emblematic of the coverage was a quote from an economist that ran in USA Today: "The household balance sheet is in good shape, better shape today ... but it's not improved for everybody. It's improved for the people in the top distribution of income and wealth," he said.

But the headlines and the morality tale are the exact opposite of the facts only a few pages inside the Fed report.

The rich didn't get richer; the rich got poorer while most everybody else did ok.

Change in average family income in inflation adjusted 2004 dollars by income

Bottom 20% of families


Next 20%


Next 20%


Next 20%


Next 10%


Top 10%


USA Today's story was rare in noting something positive: "There was some good news in the report. Minorities, who have long lagged behind whites in income, saw healthier gains."

But that rather understates the drama of the statistics. All -- not some, not most, but ALL -- of the decline in family incomes was concentrated among whites.

Change in average family income in inflation adjusted 2004 dollars by race

Non-Hispanic white  -1,200

Non-white or Hispanic 1,600

Well, surely President Bush's free trade policies and tax cuts for the rich gave a disproportionate advantage to those with college educations over the last three years, right? Again, the Fed data say exactly the opposite. The more educated you are, the rougher time you are having.

Change in average family income in inflation adjusted 2004 dollars by education

No HS diploma


HS diploma


Some college


College degree


Oh, and about the changes in net worth, the Fed data are fascinating, too. For some reason the poor are getting a lot richer in President Bush's America than they were in Bill Clinton's.

Change in mean net worth in inflation adjusted 2004 dollars (percent change in parens)




Bottom 20% of Incomes

700 (1.3%)

700 (1.3%)

16,500 (29%)

Top 10 % of Incomes

455,900 (34%)

612,800 (34%)

127,700 (5%)

The really interesting question here isn't what President Bush has done wrong to stifle income growth, it is how a President elected with overwhelming support among whites and a mandate for tax cuts skewed to the rich managed to produce an economy that favors the poor and minorities. Could he be a "compassionate conservative" after all?

David Mastio, formerly a speechwriter for the Bush administration, is the editor of


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