The NY Times Magazine published a number of articles related to poverty in America. I found “The Inequality Conundrum” by Roger Lowenstein, particularly interesting and worth noting in this blog.

The author, trying to understand the growing income inequality of today, takes a look back and notes that most economic policy debates – since Hamilton versus Jefferson and now between Bush versus the Democrats – boiled down to this tension: how can you promote equality without killing off the genie of American prosperity?

Good question. But there’s an inherent flaw in this bifurcated view of economic prosperity because it assumes that the “genie” is the only producer of wealth while “equality” merely consumes it.

Also, this view does not take into account of how federal fiscal policies tip the scales of economic prosperity towards the wealthy.

For example, take CFED’s recent findings on federal asset-building policies that for every federal dollar spent on programs to help low-income families build assets, the federal government gave up –meaning they did not collect in taxes– $582 dollars through preferential tax rates, deductions, exemptions and credits that mostly benefit high-income families. In terms of income brackets, the report noted that 45% of all subsidies in the largest asset-building policies —the mortgage interest deduction, the property tax deduction, and preferential rates on capital gains and dividends— went to the top 1% of households, while the bottom 60% of households divided up a bit less than 3% of the tax benefits.

Indeed, low- and moderate-income families are not receiving the same economic opportunities and financial incentives to build wealth. Such lopsided policies can only produce (and re-produce) the lopsided income and wealth distribution we see in America today:

Between 1979 and 2005, the top five percent of American families saw their real incomes increase 81 percent. Over the same period, the lowest-income fifth saw their real incomes decline 1 percent. [source: inequality.org]

Income inequality may look outright egalitarian when compared with the wealth disparity in America. Consider this:

the richest one percent of U.S. households now owns 34.3 percent of the nation’s private wealth, more than the combined wealth of the bottom 90 percent. [source: inequality.org]

Without a full and honest accounting on how government policies create and maintain such income and wealth disparities, we may never get a real and clear picture of poverty in America.