"Inequality and Budget Deficits: Why Is Only the Latter an Emergency?" is a cross-post from Jared Bernstein's On the Economy blog.
I just read two sweeping reports on the state of income inequality in the U.S. (the second link focuses on state-level inequality) and other advanced economies. Perhaps it’s because I’ve been so ensconced in fiscal cliff discussions, but I was struck by how much more alarmed policymakers are by the budget deficit than by the inequality situation. There are reasons for that tilt—some good, some bad—but based on magnitudes of the problem, it’s far from clear that our current sole policy focus is warranted.