IBD: Babylon on the Potomac

As the president discusses "income inequality," Investor's Business Daily editors put that inequality into sharp perspective:

As of New Year's Eve, Washington's wastrels have overspent $17.2 trillion of your money. In their deficit-spending orgy, many have gotten filthy rich, developing a taste for diamonds.

Last month we noted the latest Census Bureau data reveal that four of the five richest communities in America are now in Washington — not Manhattan or Silicon Valley or any other business hub derided by class warriors as cauldrons of greed.

In fact, the nation's wealthiest denizens live in the Washington suburb of Falls Church, Va., just outside the capital, with $121,250 in median income. ...

Here's another stomach-turning factoid: Beltway contractors based in Democrat Rep. Jim Moran's small Northern Virginia district recently reaped $43 billion in annual federal contracts — roughly as much as the entire state of Texas.

These are the real beneficiaries of President Obama's economic stimulus. All this cash sloshing around Washington has created a permanent class of well-heeled insiders who are even more out of touch with average Americans than the pols of old.

In the past decade, the Beltway added 21,000 households in the nation's top 1%. No other area comes close. Forget Stamford or the Upper East Side, this is where the real One Percenters live.

They're not rapacious Wall Street titans. They're politicians and bureaucrats, contractors and lobbyists, all feeding at the same public trough.

And you're paying their lucrative salaries and benefits. You're funding their lavish lifestyles. ...

What does it say about a nation when its seat of government is also its seat of wealth, when its richest citizens work for government?

It says that nation will soon bankrupt itself.

Americans' Wealth Fell 40% in 3 Years

Economic policy decisions have real consequences. "The recent recession wiped out nearly two decades of Americans’ wealth, according to government data released Monday, with ­middle-class families bearing the brunt of the decline," reports the Washington Post. "The Federal Reserve said the median net worth of families plunged by 39 percent in just three years, from $126,400 in 2007 to $77,300 in 2010. That puts Americans roughly on par with where they were in 1992."

The wealth wipe-out is likely to have a generational trickle-down effect for those hoping for an inheritance, according to Anne Tergesen at the Wall Street Journal:

...for a growing number of boomers, things aren't going according to plan. The postwar generation is living longer—and many are spending their savings along the way. And, of course, many of them also took a hit in 2008.

The result is that, as a group, boomers likely won't be getting as much of an inheritance as they hoped. Even worse, far from receiving a bequest, a growing number are tapping some of their own savings to help their cash-strapped parents make ends meet.

For families, the result is often a lot of scrambling, dashed dreams, and conflict and angst as parents and children try to come to grips with the lean new reality—and divide up a smaller pie.