As the fiscal cliff negotiations reach their final hour, a strange new trend has emerged: people are going on TV and saying, with a straight face, that making $250,000 a year doesn't make you rich. Until the last couple weeks, President Obama and Democrats were insisting that the government should allow the Bush tax cuts expire on those individuals with income over $250,000 a year. Now that marker is reportedly between $450,000 and $550,000. There is lots of debate over whether this is good policy for shrinking the budget deficit. But there should be no debate over whether $250,000 makes you rich — even in playgrounds for rich people like New York City.
Sen. Chuck Schumer said last year, "In the eyes of many, it is hard to ask households making $250,000 or $300,000 a year — in large parts of the country, that kind of income does not get you a big home or lots of vacations or anything else that is associated with wealth." The New York Democrat did not amend that comment when asked about it Sunday morning on This Week, but said raising taxes on income over $250,000 was necessary to bring in enough revenue. CNBC's Larry Kudlow tweeted last week, "As Senators work on a deal, hope they realize that $250K is not rich and not a millionaire." On Meet the Press Sunday, Tom Brokaw said the fiscal cliff debate required a new definition of middle class:
I think this deal will probably get done around the middle class tax cut. It’s at what level. Is it $400,000 or $250,000 or some other number, which is going to be critically important? A lot of people don’t realize in the large urban and suburban areas of America, $250,000 doesn’t make you rich. You’ve got two kids in college at $60,000. If you’re a boomer, you may have a dependent parent of some kind you’re spending another $20-25,000 on. So we have to have the definition of what is the middle class.
Man, I can't imagine living in the kind of large urban area of Tom Brokaw's dreams. Sike, I live in New York City, just like Tom Brokaw. After careful observation, having been both a $10-an-hour intern and a salaried yuppie, I must regretfully inform Mr. Brokaw that even in New York, $250,000 a year is still rich. But don't take my word for it — actual numbers about Brokaw's neighbors prove this. The median household income in New York City is just over $50,000. If you earn four times the median household income, you still wouldn't hit $250,000 a year.
But, like, that's all skewed by really poor people and students, right? Something around $250,000 is what a large plurality of New Yorkers make, right? No. According to a report by the New York City comptroller in May 2012, less than 4 percent of New Yorkers make more than $200,000 a year. There is more income inequality in New York, but it's not nearly as warped as Brokaw and Schumer imply. Here's a chart from the comptroller's report, with emphasis added:
Now, I don't mean to imply that Mr. Brokaw isn't a man of the people. Even in hardened New York City, he has a soft spot for the little guy, an awareness of income inequality, as he explained to New York in 2011:
New York: Do you give money to panhandlers?
Brokaw: Occasionally, but never to those in expensive down jackets, new boots, and designer jeans.
Perhaps since then he's decided the cost of panhandling is higher in New York, too.