Why Does the Wealth Gap Between Congress and Voters Matter?

By Derek Thompson

The typical elected representative is nine-times wealthier than the typical voter. Is that a bad thing?

Screen Shot 2011-12-27 at 11.54.54 AM.png

Washington Post

The blockbuster story of the morning is a Washington Post/New York Times double-header on the exploding wealth gap between us and Washington. Between 1984 and 2009, the bottom of the recession, the wealth of the typical American family (not counting home equity) declined slightly. But the median net worth of a congressperson more than doubled to $725,000 over the same period. Another look at the gap: Since 2004 the median net worth of a member of Congress grew by 15%. For everyone else, wealth dropped 8%.

It all adds up to this: Today, the typical member of Congress is worth more than nine times the typical voter that puts him or her in Washington. You will not be surprised to know that Congress is a part of the 1%. You might be surprised to know how many are a part of the 0.1%.


One response to this story is: It explains everything! The wealth gap explains why congresspeople seem so terribly disconnected from the plight of the populous. It explains why Congress is so polarized about trying to help the unemployed while creating hiring conditions for profitable businesses. It explains why arguments to lower taxes on the wealthy hold so much sway on Capitol Hill. It explains why anti-regulation, laissez-faire policies have won backing only years after a credit crash caused, or at least exacerbated, by poor regulation set off the Great Recession.

But another response to the wealth gap might be: It explains nothing. Washington's wealth has nothing to do with Washington's policies. Congress isn't disconnected from our economic problems. It's simply evenly divided between two parties with very different ideas about how to solve them. Polarization isn't a story about rising income inequality. It's a story about rising filibuster usage and procedural rules that allow the minority to block everything but a super-majority.

I find myself leaning ever-so-slightly toward to the second explanation. Income inequality is an important trend. But I'm not convinced that it explains Washington. In the Washington Post story, Peter Whoriskey writes: "The growing disparity between the representatives and the represented means that there is a greater distance between the economic experience of Americans and those of lawmakers." But how meaningful is a shared economic experience between Americans and lawmakers? If politicians were poorer, for example, why do we think they would be better politicians?

The evidence that wealthy people are more likely to be anti-welfare (to pick a public policy example) is spotty at best. You can't say Republicans' wealth makes them less likely to support higher spending on the poor, because congressional Democrats are actually richer. Moreover, various studies find that the super-rich just as likely to be a part of either party. When it comes to the policies we support, net worth isn't destiny.

Research shows that if there is a relationship between wealth and support for welfare, it's a complicated relationship. A 2001 research paper by Karl Ove Moene and Michael Wallerstein found that rising income inequality increases support for welfare, but not all welfare. Support for policies that target the employed (e.g.: tax breaks) grow with income inequality. Support for policies that support the jobless (e.g.: unemployment benefits) don't.

Another study that I recall reading (but cannot find a link to) reached the similar conclusion that lower-middle-class families were among the least likely to support welfare for jobless, out of concern that the redistributive money spigot was unfairly passing right by them. The upshot: There's not much reason to think a Congress composed of lower-middle-class families would be much more generous to the poor than the one we have.

The income inequality that matters the most might not be who's in Congress but who's contacting Congress. The wealthy donate more, and more often. They have the opportunity to befriend electeds. They often throw parties. They always vote.

The study, titled "Wealthy Americans, Philanthropy and the Common Good," by Northwestern University's Benjamin I. Page, Fay Lomax Cook,
and Rachel Moskowitz, asked 83 people, mostly from the Chicago area and
with a mean net worth of $14 million, about their contact with members
of Congress and other government officials.

The study indicated that wealthy Americans are far more likely to be active in politics than less-affluent citizens. Nearly all of the
respondents voted in the 2008 election, compared to just 64 percent of all registered voters in the electorate as a whole.

The study also found that 21 percent of respondents had "bundled" contributions -- solicited money from networks of friends and co-workers -- to a party, candidate, or political cause.

There is a strong line of argument that congresspeople with greater investment wealth and more investment experience might be more swayed by banking lobbyists to keep regulations and taxes on the investment community low. This is a formidable argument, because it plays into the idea that the company a politician keeps moves his thinking more than his net worth number. But consider this: a less well-off congressperson has less independent wealth to dip in for his/her campaign, which means he relies more on campaign donations, a huge portion of which are likely to come from Wall Street. Does wealth marry Congress to special interests, or does it help to insulate them? For me, it's an open question.

As fascinating as the headline figures in today's report are, it's less clear to me what we should think about them -- or whether we should care at all. Income inequality is a trend worth talking about and caring about. I'm not sure what we should do about Washington getting richer, or that we should care in the first place.

This article available online at:

http://www.theatlantic.com/business/archive/2011/12/why-does-the-wealth-gap-between-congress-and-voters-matter/250546/