According to a report from the Congressional Budget Office, the wealthiest 10% of Americans control 60% of the country’s wealth, while the bottom half only manages to hold onto 6%.

Regular reports on increasing wealth inequality in the U.S. often come from left-leaning think tanks. However, this analysis is from a nonpartisan federal agency, whose findings typically challenge both major political parties.

The recent report highlights the importance of Social Security in maintaining the wealth levels of middle-class and working-class Americans. Without considering Social Security, the wealth distribution shifts significantly: the top 10% would hold nearly 70% of the wealth, while the bottom 50% would have just 3%.

Monique Morrissey, a senior economist at the Economic Policy Institute, noted, “For 90% of households, Social Security is the most crucial component of their financial portfolio. Cuts to Social Security would drastically affect them.”

Trump and Harris vow to safeguard struggling Social Security

It is projected that the Social Security fund will be depleted in about ten years. Both leading candidates for the presidency have promised to protect it.

Democrats have accused Republicans of attempting to reduce Social Security benefits by increasing the retirement age, while Republicans argue that President Biden’s excessive spending has endangered the program.

Senator Sheldon Whitehouse, a Democrat from Rhode Island, requested the budget office analysis to shed light on the wealth gap and to emphasize the significance of Social Security for low-income Americans. Whitehouse serves as the chair of the Senate Budget Committee.

According to Whitehouse, “This CBO report reveals that the top 1% of families possess more than four times the wealth of the entire bottom half of the population,” according to a statement made to YSL News.

Presidential candidate Kamala Harris aims to protect Social Security by “ensuring that millionaires and billionaires contribute their fair share in taxes,” as outlined in her campaign materials.

Democrats are looking to generate additional revenue by increasing tax rates on the richest Americans and corporations, in addition to targeting wealthy tax evaders.

The Republican party’s platform for 2024 includes a commitment to “defend and safeguard Social Security and Medicare without any cuts, including no changes to the retirement age.” Candidate Donald Trump argues that economic growth and job creation would naturally increase payroll tax revenues to support Social Security.

American wealth increased fourfold from 1989 to 2022

The latest report indicates that the total wealth of American households nearly quadrupled from $52 trillion in 1989 to $199 trillion in 2022, after adjusting for inflation, as reported by the federal Survey of Consumer Finances.

Although the budget office has previously assessed wealth disparities, this report is unique in that it includes projected Social Security benefits.

Overall, Social Security represents about 20% of the total wealth in America, as per the report. However, this percentage is significantly more crucial for households with lower incomes.

For individuals in the bottom 25%, Social Security benefits contribute to around half of their overall wealth, while for the top 10%, it accounts for just 8% of their wealth.

The report highlights the growing wealth inequality, even when accounting for Social Security:

• The wealthiest 10% held 60% of total wealth in 2022, rising from 56% in 1989.
• The top 1% possessed 27% of the total wealth in 2022, compared to 23% in 1989.
• The bottom 50% maintained 6% of the wealth both in 1989 and 2022.

Mark Zandi, chief economist at Moody’s Analytics, stated, “This analysis makes it clear that wealth in the United States is not only concentrated but is becoming increasingly so. This trend has been developing for two or three generations, and it is concerning.”

Wealth is Increasing for Both the Rich and the Poor

Moreover, a recent report from the budget office reveals that the poorest citizens of the U.S. have also seen an increase in their wealth alongside the wealthiest individuals.

Indeed, family wealth among the lowest-income households grew the fastest from 1989 to 2022.

For families at the 25^th percentile, wealth surged by an impressive 232%, meaning that 75% of households became richer during this period. In contrast, families at the 90^th percentile experienced a 148% growth in wealth during the same timeframe.

“The core question is whether living standards are improving, and the answer is indeed yes,” stated Kyle Pomerleau, a senior fellow at the conservative American Enterprise Institute.

This wealth analysis is based on the 2022 Survey of Consumer Finance, which shows that American households experienced significant wealth increases at record rates throughout the pandemic. Between 2019 and 2022, the median net worth of U.S. families rose by 37% to $192,900 after accounting for inflation, marking the largest increase recorded in the survey’s history. Wealth growth was observed across all income brackets.

“Broad-based economic growth that is shared among the population is beneficial,” remarked Owen Zidar, an economist at Princeton University.

Most Americans Oppose Income Inequality

A majority of Americans believe that economic inequality is excessive within the country, according to a report from Pew Research conducted in 2020. More than 50% of respondents think that wealthy individuals and corporations do not pay their fair share of taxes.

However, the concentration of wealth can also be seen as a narrative of successful entrepreneurship, thriving companies, and innovative products in America, Pomerleau added, “and this is something we should promote in the United States.”

Senator Whitehouse, who requested the report, is leveraging its findings to advocate for increased tax rates for the wealthiest Americans, mirroring the platform of Harris.

In 2017, the then-President Trump enacted legislation that reduced taxes across all income brackets, with the wealthiest benefiting the most, as reported by the nonprofit PolitiFact. These tax cuts are slated to end by the close of 2025.

“Our flawed tax system has allowed a small number of ultra-wealthy individuals to amass over a quarter of our nation’s wealth, jeopardizing the American middle class and weakening local communities,” commented Whitehouse.

Trump has expressed intentions to maintain the tax cuts if he is re-elected. Conversely, Harris has promised to maintain most of the cuts while increasing tax rates for the very rich and large corporations.

Some economists are urging both political parties to consider even higher tax rates. In a recent analysis, researchers concluded that the government could potentially raise $1.8 trillion over a decade by reinstating the tax rates from 1997.

“This would generate trillions and return the tax code to a time characterized by fiscal responsibility and robust economic growth,” remarked Zidar, who contributed to the research.

Pomerleau from the American Enterprise Institute agrees that taxing the rich could enhance revenue and help secure Social Security—but only to a certain extent.

“There’s a limit to the amount of money that can be garnered from high-income households,” he stated.