Condemned to plutocracy? The relentless rise of US inequality

People protest against the SpaceX IPO in New York. Photograph: Sarah Yenesel/EPA View image in fullscreen People protest against the SpaceX IPO in New York. Photograph: Sarah Yenesel/EPA Analysis Condemned to plutocracy? The relentless rise of US inequality Eduardo Porter Elon Musk is a beneficiary of America’s lopsided prosperity – does the country have any appetite for redistribution? As Barack Obama’s presidency was coming to a close, Jason Furman, then chairman of the president’s council of economic advisers, laid out the strides his administration had made to curb the nation’s exorbitant income inequality in “the largest investments in reducing inequality since the Great Society”. Indeed, by the end of 2016, taxes and transfers cut the share of income accruing to the richest 1% of households by just over a fifth, according to estimates from the congressional budget office (CBO), more than under any government since at least Jimmy Carter’s. They raised the slice of income going to the poorest fifth from 3.9% to 7.9%, the highest share since at least 1979. Those were the days. As Elon Musk is anointed the world’s first trillionaire , following the public offering of shares of his internet to AI conglomerate SpaceX, that moment, just 10 years ago, when the government bragged about its efforts to curb America’s lopsided distribution of prosperity, might give us some hope that we are not condemned to plutocracy; social and political forces can stop inequality’s relentless rise. Benjamin Franklin liked to talk of America’s “happy mediocrity” – a country with “few … so miserable as the poor of Europe … few that in Europe would be called rich”. And yet, America’s history of combating inequality is rather grim. Obama’s track record as the United States’s most committed equalizer in over half a century underscores the ultimate lack of interest of the nation’s political coalitions in bringing about a more equitable distribution of the fruits of prosperity. Supposedly a populist champion of the working stiff, Donald Trump’s priorities quickly turned elsewhere. His Tax Cuts and Jobs Act of 2017 offered massive tax cuts to Americans in the upper percentiles of income. By the end of his first presidency, the share of income accruing to the richest 1% of households – after taxes and transfers – had drifted back up to 13.2%, from 12.5% the year Obama left office. The $2.2tn Cares Act that Trump signed into law as a response to the economic shock from the Covid pandemic did improve the lot of the poor. In 2020, the share of national income accruing to the poorest fifth of households reached a multi-decade high of 8.2%. Yet by 2022, under Joe Biden and the last year for which the CBO has crunched data, it had dipped to 7.4%. Redistribution is nowhere to be found on Trump’s priority list. Notwithstanding some shiny goodies targeted at his base – such as tax deductions for tips, overtime and seniors – Trump’s One Big Beautiful Bill Act skewered the working class