Another legacy of President George W. Bush: massive income inequality
Aug 14th 2009 4:00PM
Updated Dec 4th 2009 1:04PM
George W. Bush left so many memorable things in his wake. Sure, there were those two wars. And then there's that legacy of white-hot hate wielded by wacky multimillionaire talking heads. However, for a legacy that keeps on giving, W's greatest leave-behind is a level of income inequality that outpaces even that of the Roaring '20s that led to the Great Depression.
In 2007, the top .001 percent of American earners took home 6 percent of total U.S. wages -- about twice the figure for 2000, notes Emmanuel Saez, an economics professor at University of California–Berkeley. Saez also found that the top 10 percent of American earners pulled in 49.7 percent of total wages: a level "higher than any other year since 1917 and even surpasses 1928."
What did W have to do with this? He cut $1.3 trillion worth of taxes, 32.6 percent of which went to the top 1 percent of earners. And thanks to $7.8 million in contributions from Ameriquest, a subprime-mortgage company, President Bush pushed his Ownership Society initiative to get poor people into mortgages they could not afford so that Wall Street could engorge itself on borrowing to buy toxic waste.
But truly, W's legacy of income inequality is best reflected in the earnings of his Yale classmate Steve Schwarzman, CEO of the Blackstone Group (BX). Schwarzman's $702.4 million payday last year makes him the highest paid executive in America.
You may recall him as the fellow whose 60th birthday party in February 2007 cost millions, but Schwarzman also hosted a $1.2 million fundraiser for Bush that helped pave the way for China to invest $4 billion in Blackstone prior to its IPO.
By the way, Blackstone's price is down 55 percent from its June 2007 IPO price of $31 a share -- not that that will stop the big bucks from rolling in to Schwarzman. Nor will the $23.7 trillion Wall Street bailout, paid for by the bottom 99 percent, do anything to keep Goldman Sachs Group (GS) from paying itself record bonuses this year. Goldman, incidentally, still gets $52 billion in low-interest loans from the government to finance its trading.