Pixel Tracker

Tuesday, March 19 , 2019, 1:47 am | Fair 53º

 
 
 

David Sirota: The Treasury Secretary’s Misperceptions About Wealth

By Treasury Secretary Jack Lew's reckoning, being a millionaire does not constitute living high above the ranks of ordinary people. Lew said last week that back when he was in the private sector enjoying six- and seven-figure pay packages, "My own compensation was never in the stratosphere."

Lew made that pronouncement as he sought to defend President Barack Obama's embattled Treasury undersecretary nominee Antonio Weiss from charges that as a financial executive, he is out of touch with the interests of regular people. Lew was seeking to cast his own lot with the ranks of ordinary Americans at a time of growing economic inequality.

But in doing so, Lew shed light on a uniquely American phenomenon — the tendency of extraordinarily rich people to cast themselves as everyday members of the middle class.

Earlier this year, for example, Hillary Clinton made headlines when, in response to a question about her personal fortune, she claimed her family was "dead broke" when they left the White House. That statement followed New York Gov. Andrew Cuomo's top aide casting those making $500,000 a year as merely upper middle class.

According to IRS data, 99 percent of American households make less than $388,000 a year, and 95 percent make less than $167,000 a year. The true middle in terms of income — that is, the cutoff to be in the top 50 percent of earners — is roughly $35,000 a year.

While Lew claims his private-sector compensation was not "in the stratosphere," the data suggest otherwise.

According to New York University records, Lew was usually paid between $700,000 and $800,000 a year as the school's vice president, while also receiving a $440,000 mortgage subsidy. Lew also earned $300,000 a year from Citigroup, with a "guaranteed incentive and retention award of not less than $1 million," according to an employment agreement obtained by Businessweek.

That agreement said that the seven-figure award would be terminated if he left for another job, but with one exception: He would indeed get the cash if he accepted "a full-time high-level position with the United States government or regulatory body." Lew was given a $940,000 bonus from Citigroup in the same week the bank received a $300 billion bailout from the federal government.

Then again, Lew is a pauper compared to Weiss. The Treasury nominee reported more than $15 million in compensation in the last two years at Lazard. Like Lew before him, Weiss would receive a massive payout from his firm if he gets a job in government.

Of course, there remains a bit of a debate about what constitutes "rich" in America. A recent New York Times poll showed 27 percent of Americans believe a family of four can be considered "rich" if its annual income is between $100,000 and $200,000, while another 20 percent say "rich" is defined as making between $200,000 and $300,000 a year.

That said, there appears to be consensus that compensation like that paid to Lew and Weiss constitutes "rich" — two-thirds of the country told the pollsters that making more than $300,000 means a household is wealthy.

While Lew's comments leave him open to charges that he is out of touch with economic reality, he is not alone, as surveys show many Americans also have misconceptions about income distribution.

A recent study by Harvard University and Bangkok's Chulalongkorn University found Americans grossly underestimate the divide between CEO and average worker pay.

Such misperceptions were recently spotlighted by comedian Chris Rock in an interview with New York magazine. Of inequality, he said: "People don't even know [about it]. If poor people knew how rich rich people are, there would be riots in the streets."

David Sirota is a staff writer at PandoDaily and the best-selling author of Hostile Takeover, The Uprising and Back to Our Future: How the 1980s Explain the World We Live In Now. Contact him at .(JavaScript must be enabled to view this email address), follow him on Twitter: @davidsirota, or click here to read previous columns. The opinions expressed are his own.

Support Noozhawk Today!

Our professional journalists work tirelessly to report on local news so you can be more informed and engaged in your community. This quality, local reporting is free for you to read and share, but it's not free to produce.

You count on us to deliver timely, relevant local news, 24/7. Can we count on you to invest in our newsroom and help secure its future?

We provide special member benefits to show how much we appreciate your support.

Email
I would like give...
Great! You're joining as a Red-Tailed Hawk!
  • Ask
  • Vote
  • Investigate
  • Answer

Noozhawk Asks: What’s Your Question?

Welcome to Noozhawk Asks, a new feature in which you ask the questions, you help decide what Noozhawk investigates, and you work with us to find the answers.

Here’s how it works: You share your questions with us in the nearby box. In some cases, we may work with you to find the answers. In others, we may ask you to vote on your top choices to help us narrow the scope. And we’ll be regularly asking you for your feedback on a specific issue or topic.

We also expect to work together with the reader who asked the winning questions to find the answer together. Noozhawk’s objective is to come at questions from a place of curiosity and openness, and we believe a transparent collaboration is the key to achieve it.

The results of our investigation will be published here in this Noozhawk Asks section. Once or twice a month, we plan to do a review of what was asked and answered.

Thanks for asking!

Click Here to Get Started >

Reader Comments

Noozhawk is no longer accepting reader comments on our articles. Click here for the announcement. Readers are instead invited to submit letters to the editor by emailing them to [email protected]. Please provide your full name and community, as well as contact information for verification purposes only.