Income Inequality In DC – The Home Of Cronies, Contractors And Corruption


It’s hard to have, or listen to, a debate with a progressive without hearing about income inequality, and how the only thing we need to solve the problem is more progressive politicians. Something they don’t talk much about is how income inequality is worse in Washington, DC than just about anyplace else, or how the political class is getting richer by the moment on the backs of hard working taxpayers.

Daniel Mitchell linked to this Reuters piece on Christmas Eve, and I’ve had that tab open ever since because I didn’t want to forget to bring it to your attention. What we’re seeing in DC is trickle up economics, where our money goes to enrich the corrupt cronies and contractors that feed like gluttons off the public trough. Oh, and don’t forget about the army of lawyers and lobbyists who are living high on the hog thanks to this massive government. Here are a few excerpts:

In the town that launched the War on Poverty 48 years ago, the poor are getting poorer despite the government’s help. And the rich are getting richer because of it.

The top 5 percent of households in Washington, D.C., made more than $500,000 on average last year, while the bottom 20 percent earned less than $9,500 – a ratio of 54 to 1.

That gap is up from 39 to 1 two decades ago. It’s wider than in any of the 50 states and all but two major cities. This at a time when income inequality in the United States as a whole has risen to levels last seen in the years before the Great Depression. …..

The federal government does redistribute wealth down to struggling Americans. But in the years since President Lyndon Johnson took aim at poverty in his first State of the Union address, there has been an increasingly strong crosscurrent: The government is redistributing wealth up, too – especially in the nation’s capital.

The beneficiaries are not the billionaire financiers and celebrities who have come to personify income inequality in the 21st century. Yet the Washington elite are just as much part of the trend, having influenced laws and decisions that alter the entire country’s distribution of income. ….

Two decades of record federal spending and expanding regulation have fostered a growing upper class of federal contractors, lobbyists and lawyers in the District of Columbia area. The federal government funneled $83.5 billion their way in defense and other work in 2010 – an increase of more than 300 percent since 1989, even after adjusting for inflation. Private industry poured more than $3 billion into lobbying to influence the government, nearly double what it spent a decade ago.

Like spokes on a wheel, the high-rise offices of this elite radiate out from Capitol Hill along major arteries deep into suburban Maryland and Virginia. The latest Census figures placed 10 of the capital’s surrounding counties in the top 20 nationwide for median household income – up from six in 1990. …

The outsourcing boom has been particularly dramatic in the Washington region. Direct spending by the federal government accounts for 40 percent of the area’s $425 billion-a-year economy. The government spends more on private-sector procurement here than in any other metropolitan area or state – up 300 percent since 1990.

Roughly 15 cents of every dollar from the entire federal procurement budget stays in or around the government’s hometown, said Stephen S. Fuller, director of the Center for Regional Analysis at George Mason University. Last year, that was about $80 billion out of $536 billion in procurement spending, he said. The 15 percent share is far greater than the region’s 2 percent portion of the U.S. population.

“We’re seeing an enormous transfer of wealth from taxpayers to the Washington economy,” said Fuller.

The federal largess kicked off a gold rush to the capital region. ….

The ranks of Washington-area workers with incomes above $100,000 rose to 22 percent of the workforce, up from 14 percent in 1990, adjusted for inflation, a Reuters analysis of Census data found. The share making less than $40,000 stayed flat, while the middle hollowed out to 41 percent from 49 percent.

Executives, lawyers and high-tech workers are among the occupations that increased most in both numbers and average income. At the bottom, one of the fastest-growing areas is personal services, such as hairdressers and childcare workers. …

Nearly 13,000 lobbyists registered with the government last year and reported $3.3 billion in fees, or about $260,000 per lobbyist. That’s 22 percent more lobbyists and 37 percent more inflation-adjusted revenue per lobbyist than in 1998, according to a Reuters analysis of data from the nonpartisan Center for Responsive Politics. …

Times are flush for Washington lawyers as well. The number of attorneys in the area has risen 44 percent, twice the national rate, to 41,000 since 1999. Their average income, adjusted for inflation, rose 35 percent to $156,000.

Read the whole thing. The poor and working class aren’t doing so well. Entry level jobs are hard to come by, and have mostly been outsourced by the Washington elite to temp agencies. The article goes on a bit too much about tax cuts for the wealthy, which isn’t the reason people in the United States are poor. As Mitchell pointed out:

As I have noted many times, the “poor are getting poorer” because of “the government’s help.”

Mitchell concluded:

Yes, there are too many paper-pushers on the government payroll, and of course they get far too much compensation.

But what about unofficial government workforce of over-paid contractors? And all the lobbyists, consultants, and cronyists that exist only because we have a bloated federal government?

Our nation is being seriously damaged by this corrupt system, and I fear that the outcome will be Argentinian-style decline. (Read More)

I’m thinking it could be worse than Argentina.

Donald Douglas wrote a related piece today on the problems with Big Government. He linked a piece by Fareed Zakaria which correctly diagnoses the problem, but the solution Zakaria comes up with is more infrastructure spending. Wouldn’t that just enrich the fat cats in DC who are already doing pretty well sucking off the government teet? Not to mention the failed stimulus which was supposed to have invested in infrastructure, as Douglas highlighted.

Every now and then we see a new story on some collapsed bridge tragedy or massive urban flooding from busted water mains or broken levees, and on cue progressives start wagging their fingers about how we’ve got to start spending on infrastructure. I don’t research this area but my regular reading on the politics of the stimulus isn’t very reassuring. The administration’s push for “investments” was mostly about the Democrat politics of job creation, and that didn’t turn out so well. Conn Carroll has a good example, “$787 Billion in Stimulus, Zero Jobs “Created or Saved”.” And while Zakaria’s obsessed with government spending as “investmnent,” there’s little in the record of the last couple years that recommends doubling-down on it. See Romina Boccia, “New Stimulus Plan Same as the Old: Spend, Spend, Spend.” And notice while Zakaria minimizes the corruption inherent in “infrastructure” spending as possibly “inefficient and ineffective,” the facts of the past few years are devastating to his case. See Veronique de Rugy, “Stimulus Cronyism.” And Michelle Malkin, “Obama’s $50 Billion Union Infrastructure Boondoggle.” (Read More)

But this is the government people voted for. This is Obama’s America, where the well connected rich get richer, and the poor get poorer and the middle class wonders what the hell happened.

Don’t you just love the way the left calls for more class warfare while railing against successful, hard working entrepreneurs and ignoring the corruption and cronyism practiced by the ones they put into office?

Oh, and looking at the chart above, if all of the Democrats’ progressive policies were so fantastic, why didn’t income inequality decline nationally, and why didn’t median income rise after four years of the Obama presidency? He had two full years of his party controlling the House and the Senate, and they still control the Senate. He’s been implementing his policies through regulation and administrative fiat all along. So, again, why aren’t poverty and inequality on the decline? The only thing declining nationally is the income of most Americans, and of course, the country as a whole is on the decline. We’re resembling The Hunger Games more every day – where the people of the District live high on the hog and the rest struggle to get by while feeding the beast.