Looking In All The Wrong Places

President Obama seems to think that all of our problems would be solved if we could get the rich, business owners and others in the private sector to pay more in taxes.  After all, "they didn't build that" anyway.

It seems to me that President Obama's focus should be much closer to his current home in Washington, D.C.

For example, the metro Washington, D.C. area has the highest percentage of millionaires in the United States (as a percentage of households).  

This little factoid is in the latest issue of Money magazine (August, 2012 issue, page 65).  San Francisco, Honolulu, Boston and Hartford-New Haven are the next four highest metro areas for percentage of millionaires.  Money also points out that 40% of the world's millionaires live in the United States.

This data is consistent with the recent Bureau of Economic news release on State Personal Income for 2011.  You can see the full report here.

Per capita personal income in the District of Columbia in 2011 was $73,105. For the United States as a whole it is $41,663. Washington, DC is 75% higher than the nation as a whole.

The highest state is Connecticut at $56,889.

This means that the average income in DC is almost $30,000 higher than the nation at large and over $16,000 higher than the highest state.

Since 2000, per capita income in DC has increased at more than twice the rate of the country as a whole. An 81% increase in D.C.- from $40,462 to $73,105- compared to a 37% increase in U.S. per capita income which only saw per capita income increase from $30,319 to $41,663.

Washington, DC has no manufacturing base. It does not grow crops. It has no oil wells or coal mines. It does not produce computer chips or other high tech items. It produces almost nothing that creates value in a traditional economy. Yet, its residents have the highest per capita income in the country! What more is needed to know that something is seriously amiss in our country?

I am not just talking about the pay for government workers. After all, there are plenty of lawyers, lobbyists and lunch places along with everything else in DC. However, almost all of those jobs and wealth would not exist without the massive amount of money that gets shipped to D.C. by the people who are working the factory jobs, tending the crops and mining the coal. People who work hard every day for a fraction of what the people in Washington, DC are making. However, they must pay taxes on that fraction and send it to Washington to support incomes that are almost double what people in my home state of Ohio are earning ($37,791).

In looking at this data I wondered if the urban nature of D.C. could be skewing the data compared to the state data which would combine both rural and urban data. To this end, I did look at some selected Census Department data to compare Washington DC to other large urban cities such as New York City, Los Angeles and Chicago. Census Department data seems to focus on "money income" rather than personal income. Money income excludes capital gains, sales of properties, tax refunds, food stamps, public housing subsidies etc. This data only includes 2006-2010 using 2010 dollars. However, even using this data, Washington, DC's per capita money income far exceeds these other large cities.

Per capita money income in Washington, DC in the Census data was 38% higher than NYC, 55% higher than Chicago and 52% higher than LA.

How has it gotten this way? Big money and special interests. The federal government will spend about $3.8 trillion this year. A very small amount of this is for national defense and the general welfare. 2/3 of it is direct payments to individuals. In 1945, payments to individuals made up less than 3% of federal spending. Washington is largely a gigantic redistribution machine today. Money comes in one end from one group of people and it goes out the other end to another group of people. Money and wealth have been created in Washington because of the bureaucracy to run that machine and all of the lobbyists, lawyers and special interest groups working to get "their share" of money coming out of the other end.

Credit:Ramberg Media Images/Flickr

President Obama seems to be looking in all the wrong places with his plans to "fix" our country. He only seems to be interested in getting more money in rather than looking at the outgo. Instead of trying to take more money from harding working people in places like Albuquerque, Cincinnati, Des Moines, Erie, Grand Junction, Kalamazoo, New Bern, Ocala, Roanoke, Springfield and Wausau he should be focusing first on the voracious spending that emanates from Washington, D.C.

Compare the per capita income amounts for the states for each of these cities with Washington, D.C.

District of Columbia $73,105

New Mexico $34,575
Ohio $37,791
Iowa $40,470
Pennsylvania $42,478
Colorado $44,088
Michigan $36,533
North Carolina $36,164
Florida $39,563
Virginia $45,920
Missouri $38,248
Wisconsin $40,073

These swing states will determine the 2012 Presidential election. It should be clear by now that President Obama has no interest in fixing Washington, D.C. In fact, his solution will most likely feed the beast even more and further expand the income divide between Washington and the rest of the country. Do people in these states and around the country realize how far out of balance it has gotten between Washington and the rest of us?

The place to begin fixing our nation's problem is by begin looking at what we have created in Washington, D.C. There are many things that our federal government can and should be do including national defense, establishing and protecting our system of currency and protecting individual rights. However, its role should not be picking winners and losers. It should be more concerned with serving the general welfare than specials interests.

If you doubt any of this, take a look again at the per capita income levels in Washington, D.C. and the percentage of millionaire households in the metro D.C. area compared to the rest of the country and explain to me how any of this makes sense.

It is ironic that we continually hear about the income and wealth divide between the rich and the poor in our country. However, it is the income and wealth divide between DC and the rest of us that should be getting the attention.