Eat the Rich

The economic recovery has been helped in large part by the spending of the most affluent. Now, even the rich appear to be tightening their belts.

But the Top 5 percent in income earners — those households earning $210,000 or more — account for about one-third of consumer outlays, including spending on goods and services, interest payments on consumer debt and cash gifts, according to an analysis of Federal Reserve data by Moody’s Analytics. That means the purchasing decisions of the rich have an outsize effect on economic data.

Sam Pizzigati, associate fellow at the Institute for Policy Studies, a left-leaning research center, cautions against simply boosting the spending power of the rich through tax cuts or other measures. “Otherwise, we find ourselves in an ‘Alice in Wonderland’ world,” he said, “and the solution to the hard times that the economy is going through is to help the people that are not going through hard times.” (NYT, 7/17/10)

Liberals must be fuming about this one. Those selfish rich people are derailing the economic recovery because they are not spending enough. Another reason, they’ll say, why wealth must be redistributed. If everyone has the same, then no one group can have undue influence. Of course, one reason the wealthy may not be spending is that they fear taxes are going up. The Times makes certain that they debunk that by quoting “a left-leaning research center” only.