US income gap growing, say political scientists

By , Staff correspondent of The Christian Science Monitor

A panel of political scientists has told Washington that the gap between rich and poor in America is growing.

The estimated growing income disparity in America, described to the Congressional Joint Economic Committee, is a kind of sociological report card on how America is doing. It comes at a time of economic stress when an irresistible force (the federal government's recently released budget) seems to be hitting an immovable object (the Federal Reserve Board, which continues to keep a tight rein on money policy), causing consternation and distress in the legislature and threatening to warp the social structure.

''The tax changes will increase the disposable income of those around the top of the income distribution and budget changes,'' asserted Dr. Sheldon Danziger, University of Wisconsin research economist. ''It will lower the incomes of those toward the bottom of the distribution. As a result, both poverty and income inequality will increase.''

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Describing ''the inequality crisis,'' Dr. William Ryan of Boston College, asserted that the share of the ''affluent minority'' in America is presently growing faster than the rest of the community. In contrast to the period covering the 1920s up to the 1970s, he said, the income gap is now tending to deepen. In 1929, he said, the most affluent top 20 percent received more than half of all income; by 1969 it was down to 41 percent -- ''a small but significant movement toward greater economic equality.''

But in the '70s, Dr. Ryan said, the nation reversed direction: the well-to-do , he asserted ''are back up to 45 percent of personal income.''

Prof. Edward C. Budd of Pennsylvania State University told the committee that the new tax law ''will make this situation far worse.''

In defending his budget, Mr. Reagan told Congress this week that ''we are putting the false prosperity of overspending, easy credit, depreciating money, and financial excess behind us.'' He asked for perserverance. He projected a deficit of $91.5 billion for fiscal year (FY) 1983 and a steadily declining annual deficit thereafter, which would be down to $53.2 billion in FY 1987.

The current situation shows, according to some analysts, that America has been borrowing to live beyond its means, and that the upper income groups adapt better to subsequent inflation and recession than does the bulk of the nation. Top White House economic adviser and Budget Director David A. Stockman warns Wall Street that there are few acceptable alternatives. Stocks fell in the first reaction to the budget, but the market subsequently rallied in part.

Few recent budgets have met such a dubious reaction. Mr. Reagan's three-way proposal to spend more for arms, less for certain social programs, and to cut income taxes, brought criticism from widely different groups. Now Mr. Reagan is trying to ride the storm.

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