How Will Inequality Change Under Democrats?

On Monday, San Francisco Federal Reserve Bank President Janet Yellen said U.S. income inequality had risen to such a level that "there are signs that (it) is intensifying resistance to globalization, impairing social cohesion, and could, ultimately, undermine American democracy."

In language rare for a central bank official, Yellen suggested that high priority be given to improving education, tax credits and other aspects of the social safety net, despite the cost in dollars and possible impact on economic efficiency, according to the text of her lecture at the University of California, Irvine.

"Inequality has risen to the point that it seems to me worthwhile for the U.S. to seriously consider taking the risk of making our economy more rewarding for more of the people," Yellen said. [...]

Yellen said inequality is higher in the USA than in other industrial nations and the safety net less generous.

How might that inequality change now that voters have delivered the House (and hopefully the Senate) into Democrats hands?

USA Today believes Democratic leaders in the House will make reducing college costs a top priorty.

The economic experts at CNN Money predict that in the next two years the Democrats are unlikely to make any major tax moves that would increase taxes or otherwise unravel President Bush's tax cuts because there will be an emphasis on pragmatism (and they also believe that President Bush would just veto any repeal of his tax cuts). However, they do think Congress will pass AMT relief for 2007, and "a number of promised tax break extenders excluded from the tax relief bill passed this spring. Key among them are the research and development credit for businesses, a deduction for college tuition and a welfare-to-work credit."

There is one group of people who shouldn't look for any help though - the wealthy - and in particular Dick DeVos and the other 18 families who fought to eliminate the estate tax. Here's what they should expect:

Repeal of the estate tax, a top priority of the Bush administration, doesn't stand a chance with Democrats in control of the House. But the prospects for legislation that would limit the tax to the super-wealthy are much improved, tax analysts say.

Ouch! It appears that DeVos and his wealthy Republican friends lost more than just the election yesterday.