[Posted by Karl]

Remember that CBO study that helped fuel the issue of income inequality?  Michael Barone reports that House Budget Chairman Paul Ryan has highlighted some of its more inconvenient findings:

Many may find the results of the CBO study surprising. It turns out, Ryan reports, that federal income taxes (including the refundable Earned Income Tax Credit) actually decreased income inequality slightly between 1979 and 2007, while the federal payroll taxes that supposedly fund Social Security and Medicare slightly increased income inequality. That’s despite the fact that income tax rates are lower than in 1979 and payroll taxes higher.

Perhaps even more surprising, federal transfer payments have done much more to increase income inequality than federal taxes. That’s because, in Ryan’s words, “The distribution of government transfers has moved away from households in the lower part of the income scale. For instance, in 1979, households in the lowest income quintile received 54 percent of all transfer payments. In 2007, those households received just 36 percent of transfers.”

The income tax side is probably more surprising; conservatives have noted that “the rich” paid more under the Reagan-Bush tax cuts, but few have connected to the point that the tax cuts decreased income inequality.  We probably did not need a CBO study to remind us — or maybe we did — that the entitlement state is largely in the business of transferring wealth from unwealthy youngsters to seniors comprising the most wealthy generation in the nation’s history.

The left has tended to rationalize their own engine of income inequality based on the continuing nature of programs like Social Security and Medicare; today’s youngsters supposedly benefit when they become tomorrow’s seniors.  However, the days of seniors reaping a windfall is likely drawing to a close as the unsustainability of the national debt becomes ever clearer.  Future generations will suffer over the course of a lifetime without that pot of gold at the end of the rainbow.  But don’t expect the unwashed hipsters of the Occupy movement to stake out their local nursing homes or direct their venom at the 13 Percenters, because their protests really are not about income inequality.  The Occupiers really just want their bailout (without the expectation of repayment, unlike the Big Banks) from the higher education bubble and their Blue Model jobs.

–Karl