The difference between the Census Bureau and CBO data comes down to the complicated (and ultimately subjective) way in which “income” is defined. The Census Bureau data relies on a definition of income that is pre-tax but post-transfer cash income. But it also excludes the non-cash benefits that go to many of the poor, such as food stamps, Medicaid, CHIP (children’s Medicaid) and housing subsidies.
By contrast, the CBO numbers measure after-tax, after-transfer income. It also includes non-cash transfers. Those benefits may not be fungible, but they do have value. And they vindicate my core point: “The richer have outpaced the poorer in growing their incomes, just as runners will outpace joggers who will, in turn, outpace walkers.” What mattered, I said, was that “the walking man walks.”
My column also noted that President Obama erred when he said the top 10% take half of aggregate income; in fact, it’s the top 20% who take half the income, according to Census Bureau data. Mr. Krugman takes issue with this, too, saying the Census Bureau figures are pretty much worthless when it comes to quantifying the aggregate incomes of the very rich. Much better, he says, is data from a controversial study by two left-wing French economists, Emmanuel Saez and Thomas Piketty, which is in line with President Obama’s contention.