On Income Inequality, GOP Is Terminally Tone Deaf

The GOP would be unwise to dismiss the "Occupy" movement.

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The electoral fate of politicians around the world may come down to this: is it class warfare or income inequality?

A report by the Organization for Economic Cooperation and Development shows that the income gap is widening in OECD (developed) countries, with the United States among those with the biggest divides between the rich and poor. Overall among the OECD nations, the average income of the wealthiest tenth of the population is about nine times that of the poorest tenth, according to the report. That’s a ten percent increase in the gap since the mid-1980s. In the United States, the gap is wider, with the richest enjoying 14 times the income of the poorest.

[Read about 7 groups with reason to protest.]

Said OECD Secretary-General Angel Gurria in a statement:

The social contract is starting to unravel in many countries. This study dispels the assumptions that the benefits of economic growth will automatically trickle down to the disadvantaged and that the greater inequality fosters greater social mobility.

Whether that argument will sway voters in the United States is a legitimate question. Despite middle-class complaints about being underpaid and overtaxed, Americans still tend to support policies such as a cut in or elimination of the estate tax (which opponents derisively call the "death tax"). The tax is on massive estates, and is meant to prevent the wealthy from merely keeping the cash in the family—a Paris Hilton tax, as proponents describe it. But Americans are aspirational, and often disparage the tax even though they most likely will never have to pay it themselves.

[Read the U.S. News debate on the flat tax.]

Still, there are signs that the American public is tired of watching Wall Street executives and other wealthy groups hang onto their money while the middle class is getting squeezed and benefits are being trimmed for the neediest. The debacles of corporate America in recent years have fueled that frustration, which is now being displayed in the "Occupy" movements around the country. True, some of the protesters appear to be semi-professional malcontents, but it would be a huge mistake for candidates to ignore the very real anger and resentment of a much wider swath of people who feel betrayed by the system.

[ Check out political cartoons about the "Occupy" movement.]

Republicans recently jumped on Sen. Chuck Schumer of New York, assailing the Democrat for suggesting fellow Democrats should embrace the "Occupy" movement and the anger at Wall Street. The GOP slammed Schumer—legitimately—for taking campaign cash from Wall Street while counseling his party to run against the excesses of corporate America. But they went too far when they accused Schumer of criticizing "job creators" in New York. This is not how many Americans see the role of Wall Street right now, unless the new jobs created are for regulators or prison guards. Conservatives might think corporate America is being unfairly vilified. Economically, that is an intellectually consistent, conservative argument. Politically, it is tone-deafness to a terminal degree.