Washington Is Too Rich for Our Own Good

The U.S. Census Bureau report showing that seven of the nation’s 10 highest-income counties are suburbs of Washington has raised a considerable ruckus.

“Our gilded District is a case study in how federal spending often finds its way to the well-connected rather than the people it’s supposed to help,” wrote Ross Douthat in the New York Times. “The American economy has gotten more deeply invested in influence-peddling -- broadly construed,” added Matt Yglesias in Slate. “This is driving the Washington area to the top of the charts.”

I find the news as depressing as anyone. I also worry that the news media, amid the fulmination, continue to miss the story behind the story. The Washington region may have the highest concentration of college graduates and some of the richest counties in the U.S. But according to the Census Bureau’s recent report on poverty, the city of Washington itself also has a higher rate of income inequality (measured by the Gini Index (GINI)) than any state.

Like the tale of the wealthy counties, the report on poverty continues a trend that should embarrass both political parties. America’s poor are getting poorer, with poverty rates remaining stubbornly above 15 percent. The poverty rate among black Americans is a staggering 27 percent. At the same time, the buying power of the middle class has been steadily slipping. Let the Census Bureau tell the rest of the story:

Photographer: Elizabeth Lippman/Bloomberg

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Photographer: Elizabeth Lippman/Bloomberg

“Median household income was $50,054 in 2011, 1.5 percent lower in real terms than the 2010 median, 8.1 percent lower than the 2007 (the year before the most recent recession) median ($54,489), and 8.9 percent lower than the median household income peak ($54,932) that occurred in 1999.”

No Tears

Yet the rich aren’t getting richer. The income of the highest earners has been shrinking far faster than the income of the middle class, and (although here the figures lag a bit) an estimated 30 percent of those who were in the top income quintile in 2004 were out of it by 2007.

I am not asking that we shed tears for the top quintile, which, despite stagnant incomes, increased its share of national income by 1.6 percent in 2011. My point is different: As we emerge, supposedly, from recession, only the federal government and those seeking to influence it seem to be doing better. That’s a terrible policy outcome.

The growing concentration of wealth in and around Washington isn’t President Barack Obama’s fault. What we are seeing today is the culmination of a long trend, abetted by both parties, of concentrating ever more power -- and thus more of those seeking to influence it -- in the federal government. (Or maybe not the culmination: Perhaps the Washington area will boast 10 of the 10 wealthiest counties in the near future.)

Washington is a company town. When I was growing up there, we actually called it “the federal city” in school. Today, about 29 percent of earners in the area are government employees. As to the rest, the great majority of high earners who live in the area are there because the government is there. Were the nation’s capital in Mississippi, the state would probably be the nation’s richest rather than the poorest.

Still, at least some of blame is to be directed at the practices of the federal government itself. Whatever the outcome of the contentious debate over whether federal workers are paid more than similarly situated private workers (and the smart money seems to say, “Yes, but not by as much as people think”), it is inarguable that the federal government attracts an astonishing number of highly paid workers to one place. In turn, the private sector sends in its squads of well-compensated lawyers, lobbyists and consultants, and the result is news stories about high-income Washington suburbs at a time when the nation is suffering.

No Trust

The problem with the amount of money earned in and around Washington is the mistrust it naturally causes. People are skeptical that their votes can affect policy outcomes in any serious way. The game looks fixed.

Suzanne Collins sets her best-selling post-apocalyptic novel “The Hunger Games” in a country called Panem. In Panem, the capital flourishes, absurdly wealthy, while most of the “Districts,” as the states are called, struggle with want. I am skeptical that the economic system portrayed in “The Hunger Games” could actually produce the advanced technology the book features, but the larger model -- a wealthy region stripping resources from its suffering outlands -- is not unprecedented. We’re not Panem, and we’re not headed there, but I would never have imagined that the U.S. would produce a capital wealthier than any of the states it purportedly serves.

Yet I am skeptical that this situation will reverse itself anytime soon. The federal government’s fiscal 2012 budget is $3.8 trillion, and the regulations the government issues probably affect a figure at least as large. With a government that size, it is only natural that those who have resources will try to influence both its politics and its policy. Because the government isn’t likely to get smaller any time soon, we might hit that 10-of-10 figure after all.

(Stephen L. Carter is a Bloomberg View columnist and a professor of law at Yale University. He is the author of “The Violence of Peace: America’s Wars in the Age of Obama,” and his most recent novel is “The Impeachment of Abraham Lincoln.” The opinions expressed are his own.)

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Today’s highlights: the editors on the dangers of China-bashing in U.S. politics and on the Wheatley review of Libor; Jonathan Alter on fixing campaign finance; William Pesek on bringing the Olympics to Japan; Jonathan Weil on giving banks public grades as cities do with restaurants; Steven Greenhut on Chicago’s challenge to California on unions; Lawrence Sheets on the folly of ignoring Georgia’s elections.

To contact the writer of this article: Stephen L. Carter at stephen.carter@yale.edu or @StepCarter on Twitter.

To contact the editor responsible for this article: Michael Newman at mnewman43@bloomberg.net.

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