The conservative trickle-down approach to the economy assumes that maximizing rewards for those at the top is the path to both growth and prosperity for the society as a whole.  If inequality rises, that does not matter, runs the conservative argument, because absolute levels of prosperity will rise for everyone even if the top gains more.

The progressive approach to the economy is radically different.  This approach posits, based on a mass of accumulating evidence, that inequality is not a benign byproduct of growth, but rather a toxic barrier to both middle class prosperity and strong growth in general.  In other words, high levels of inequality interfere with the both the quality and quantity of growth experienced by a society.  Hence the idea that an economic agenda  must concentrate on lifting up the middle class to generate both broadly-shared prosperity and fast growth.  The two goals are inextricably linked and one cannot be attained without the other.

Of course, the progressive agenda may be the correct one, but that does not mean it can be easily sold to the public and politicians.  It would require a serious reorientation of national priorities and considerable investments in areas like education and infrastructure–spending that is likely to meet considerable resistance in the current environment.  Therefore, the question of how to frame the agenda in the political marketplace is key.

One obvious approach is to frame the agenda directly as a means of reducing inequality.  Call this the redistributionist approach.  This approach is not without merit.  Start with awareness of and views about economic inequality.

There is no doubt Americans are aware of rising inequality.  In the Pew Research Center’s 2012 American Values survey, respondents were asked if they agreed that today the rich get richer while the poor get poorer. About three-quarters (76 percent) agreed, while just 23 percent disagreed.  And the public believes it’s not just the poor who are losing ground to the rich—it’s the middle class as well. In the same survey three-quarters (76 percent) also say the gap between the standards of living of the middle class and the rich grew over the last decade, compared to just 16 percent who think it narrowed.

No wonder that a poll from October 2011 conducted by Pulse Opinion Research for The Hill found that two in three Americans believe that the middle class is now shrinking. And in a Democracy Corps post-2010 election survey, the public endorsed the idea that America is no longer a country with a rising middle class by 57-36.  Finally, an October, 2007 poll conducted by political scientists Benjamin Page and Lawrence Jacobs for their book, Class War: What Americans Really Think about Economic Inequality, found 81 percent of the public saying that the gap in wealth between wealthy Americans and the middle class has grown over the last 25 years, compared to just 10 percent who said it has remained the same and 8 percent who said it had gotten smaller.

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With news of record corporate profits and increased bonuses for those at the top of the financial heap — and on-going income stagnation, job loss, and rising poverty for those in the middle and bottom of the ladder—it’s maddening for progressives to hear our political elites continuing to promote austerity as a means for growth.

Just a year and half ago, Occupy Wall Street was all anyone could talk about.  President Obama won a historic second term running on these themes and announced a new era of liberal governance in his recent Inaugural address.  Yet, even with strong evidence out of Europe that austerity is failing, and public opinion polls in the U.S. showing clear opposition to rising inequality, the political class in Washington is collectively trying to convince itself that America can cut its way to prosperity and economic opportunity for the middle class.

What happened?  And why aren’t we seeing more social protests against an economic and political order that sanctions these outcomes?

There are many culprits in this development, chief of which is the intersection of libertarian economic theory with control of one political party that has strong minority voting power in our constitutional system.  The long term decline of the labor movement and the corporate ownership of media provide additional institutional explanations for why there is not more pushback.

But a more painful explanation might be closer to home.

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As income inequality skyrockets, a new report from the Economic Policy Institute finds that the economic downturn and gradual recovery has exacerbated the trend. The wages of the richest Americans are making a dramatic comeback, while the rest of the country has seen its income drop by 1.2 percent since 2007.

The wealthiest earners took a hit in the immediate aftermath of the financial crisis, with wages declining 15.6 percent from 2007 to 2009. But these individuals will quickly recover all their losses, while the bottom 90 percent of Americans continue to see their wages shrink:

As the stock market regained its value in the recovery, one would expect the top 1.0 percent to fare better than other workers—and they have, with annual wages growing 8.2 percent from 2009 to 2011 (the S&P grew 37.4 percent over this period). As the recovery continues and the stock market sustains its growth, the top 1.0 percent of wage earners are likely to quickly recoup all of the ground lost in the downturn.

In contrast, annual wages of the bottom 90 percent of earners eroded by 0.6 percent in the downturn—and by a further 1.2 percent in the 2009–2011 recovery. This is not surprising given the persistently high unemployment over this period. Meanwhile, high-wage earners from the 90th to the 99th percentile enjoyed wage growth in the recovery—and are the only wage earners to have higher wages in 2011 than in 2007.

Entrenched wealth-friendly policies have helped smooth the recovery even more for the super-rich. Even under President Obama, maligned by conservatives as “anti-business,” chief executives have seen their paychecks grow steadily. And as top earners’ total incomes — including wages, capital gains, and other assets — recovered, they also benefited from lower tax rates (only some of which was addressed by the recent deal to avert the so-called “fiscal cliff”).

As the EPI report notes, income inequality shot up in recent decades, paused during the economic downturn, and then began growing again in the recovery. The richest 20 percent currently make eight times more than the bottom 20 percent in nearly every state.

As the back and forth between President Obama and the Republicans continues, cracks have begun to show in the GOP’s steadfast opposition to raising tax rates on the top 2 percent. But Senate Minority Leader Mitch McConnell (R-KY) is not budging, apparently.

Yesterday, he took to the Senate floor to once again berate the President for proposing tax hikes on the wealthy, and for offering inadequately large or specific spending cuts. Despite the country’s crushing need for new revenue, the modest burden President Obama proposes placing on high earners, and the near-historic levels of inequality in the American economy, McConnell dismissed the President’s tax plan as not merely a bad idea, but a “shakedown” of the top two percent:

MCCONNELL: [F]or Democrats, apparently, every dollar in federal spending is sacred. Once secured, it can’t be cut. That’s why we’ve got trillion dollar deficits.

And the truth is, until the President gets specific about cuts, nobody should trust Democrats to put a dime in new revenue toward real deficit reduction — or to stop their shakedown of the taxpayers at the top two percent. As one liberal lawmaker put it last week, that’s just the beginning.

When it comes to deficit deals, the taxpayers need to trust but verify. On cuts, that means specifics.

Watch it:

In a negotiation, generally speaking, the two sides offer specifics on what they want, and then try to haggle their way to an agreement from those two sets of options. The Democrats quite naturally want revenue increases, but not spending cuts. That’s what Republicans want. Yet McConnell, who along with the rest of the GOP leadership has merely released headline numbers for their cuts, is bizarrely demanding that Obama provide the specifics for both sides.

More to the point, between the Budget Control Act and other legislative decisions, spending has already been cut by $1.5 trillion since 2011.

Income inequality has skyrocketed in America over the last few decades, while income and real wages for the middle class have stagnated. Yet Obama’s proposal raises taxes by a mere 0.2 percent to 4.8 percent of additional income from those making more than $250,000 a year.

Median net worth in the United States reached its lowest point since 1969 in 2010, according to a new study by Professor Edward Wolff at New York University. Moreover, according to Wolff’s research, inequality skyrocketed as a consequence of the Great Recession, taking resources away from middle class, minority, and young families while the wealthy made significant gains.

Wolff’s study tracked changes in overall household wealth by race, class, and age from 1962 to 2012. He found that in the past 20 years, average wealth among wealthy families rose substantially whereas the middle class and poor lost out. Indeed, the average family in the bottom 40 percent of Americans had a substantially negative net worth as a consequence of indebtedness:

Over this period [1983 to 2010], the largest gains in relative terms were made by the wealthiest households. The top one percent saw their average wealth (in 2010 dollars) rise by almost seven million dollars or by 71 percent. The remaining part of the top quintile experienced increases from 52 to 101 percent and the fourth quintile by 21 percent, while the middle quintile lost 18 percent and the poorest 40 percent lost 270 percent! By 2010, the average wealth of the bottom 40 percent had fallen to -$10,600.

The most recent and most significant spike in wealth inequality over the course of the period Wolff studied, from 2007 to 2010, was in large part consequence of the collapse in home prices after the housing bubble collapsed. Middle class families often had invested substantially in their homes, taking on significant debt to do so. When home values collapsed, the debt-to-asset ratio for those families skyrocketed, while wealthy families with less debt were comparatively unaffected.

Home price collapse also explained why young, black, and Hispanic families each lost substantial wealth relative to older and whiter families. Such families tended to have more debt and much more, as a percentage of wealth, invested in houses. Hispanic families were the hardest hit — according to Wolff, “the mean net worth in 2010 dollars of Hispanics fell almost in half, and the ratio of this to the mean net worth of white households plummeted from 0.26 to 0.15.”

Wolff analyzes household wealth, rather than annual income, for six reasons, including the fact that “the availability of financial assets can provide liquidity to a family in times of economic stress, such as occasioned by unemployment, sickness, or family break-up.” However, studies of income inequality also support Wolff’s pessimistic account of growing inequality: they’ve found income inequality has risen in almost every state over the last 30 years and that the middle class has just suffered its “worst decade in modern history.” Unfortunately, many of the jobs created since the Recession don’t pay well enough to make up for the collapse.