Dawn is 25. Marty is 27. Dawn works as a preschool teacher at a local private Christian school. Marty is a laborer at a retail distribution center. This Phoenix, Arizona, couple with a small child bring home about $30,000 per year. Yet they could not afford to buy Christmas presents this year.

Now, not putting more cash into some merchant’s pockets is no great loss. But keeping a young family constantly on a treadmill without a respite is an American tragedy of the 1990’s. Especially when, as if adding insult to injury, we see billionaires like Ted Turner get a tax break for donating $1 billion to the United Nations, while middle-class Americans like Dawn and Marty often have to resort to buying even milk and bread on credit.

Nor is this some sort of a regional phenomenon. Here is, for example, an excerpt from a letter I received from a newspaper editor in the nation’s capital: “In Washington, the level of income required to achieve a ‘middle-class’ standard of living—e.g., a single family home in a decent neighborhood, enough money to raise at least two children responsibly, etc.—is about $80,000 annually, hardly a ‘middle-class’ wage. If I recall correctly, government statistics define a ‘middle-class’ family income as $34,000 or so Meanwhile, the ‘plutocrats’ are moving into garish $600,000-million-plus homes with more square footage than a small English castle, driving two or three $50,000 luxury cars, and keeping their kids out of the dead-end public schools.”

Clearly, the rich are getting richer, the poor poorer. Phoenix, Washington, and many other American cities have their own “Great American Divide” stories, but nowhere is the desecration of the American Dream more visible than in the “financial capital of the world,” Gotham City—host both to Wall Street and the United Nations.

As Bill Clinton and his entourage used a South Bronx neighborhood in New York for a pre-Christmas photo-op in early December; as Wall Street celebrated another “bull” market year; as the economists hailed the supposed strength of the American economy, especially in contrast to the Asian crisis, the Washington-based Center on Budget and Policy Priorities (COBPP) released a devastating report. Income inequality has been growing in 48 of the 50 states. Only in Alaska and North Dakota has the gap between the incomes of the richest and the poorest residents narrowed over the past 20 years.

Between the late 1970’s and the mid- I990’s, the incomes of upper-income families with children increased in every state. On average, incomes of the richest fifth of families increased by 30 percent after adjusting for inflation. In sharp contrast, incomes of the poorest fifth of families with children decreased in 44 of the 50 states for an overall decline of 44 percent. Nor did the so-called “middle class” fare much better. The incomes of middle-income families dropped by 22 percent during the same period.

“Robust economic growth in recent years has done little to turn around the long-term trend toward increasing inequality,” said Kathy Larin, co-author of the report and a policy analyst at COBPP. And guess where the Great American Divide, which separates the rich and the poor, is widest? New York.

The ten states where the gap is greatest between the incomes of the highest-income and lowest-income families with children are (in declining order) New York, Louisiana, New Mexico, Arizona, Connecticut, California, Florida, Kentucky, Alabama, and West Virginia, the COBPP report said. New York is also leading the nation in terms of the gap between high-income and middle-income families with children. During the past two decades, the gap widened most rapidly in New York, Indiana, Arizona, California, Georgia, Connecticut, West Virginia, Texas, Pennsylvania, and Tennessee. In other words. New York is America’s “plutocracy capital.”

The latest census data merely confirm the earlier trends. In an August 1997 report, for example, the same Washington-based research organization noted that the wealthiest one percent of Americans received as much after-tax income in 1994 as the bottom 35 percent of the population—combined. The top 20 percent of the population had nearly as much income as the bottom 80 percent.

Between 1977 and 1994—the first and last years for which COBPP issued such statistics—the share of the national after-tax income received by the top one percent of the population rose substantially. In 1977, the bottom 35 percent of the population had nearly twice as much after-tax income as the top one percent. By 1994, these two groups had essentially the same amount of income. “Income has become much more concentrated among a relative handful of the wealthiest Americans,” noted Isaac Shapiro, a senior fellow at COBPP and co-author of the report. The average after-tax income of the top one percent of families equaled $374,000 in 1994, or 15 times the average after-tax income for the middle fifth of families, which stood at $25,650.

In fact, the COBPP studies understate the width of the Great American Divide. The census data used for its report did not include capital gains income as family income, for example, understating the incomes of the top fifth of families who receive most of the capital gains income. The census data also did not reflect earnings above $100,000 for any one job, further understating the incomes of the American elite.

On the other hand, partly offsetting those factors was a corresponding omission from the data of welfare benefits, such as food stamps, which poor families may receive. In all, however, the COBPP said its report “understates income disparities between the top and middle fifth, and, to a lesser degree, those between the top and bottom fifth.” In other words, the United States is even more of a plutocracy than these alarming numbers suggest. And the disparities between the rich and the poor are approaching those in some other countries before their elites were sent to the dustbin of history by the common folk upset over “taxation without representation.”

“It’s a few years down the line, but our class disparity and age disparity (wealth, privileges, and tax break for the non-poor elderly, which is about 40 percent of the elderly) will split the population not just along class lines but also along generational lines,” writes a college professor in Pennsylvania. “It’s gonna get ugly in about 20 years, maybe sooner.” It may happen sooner—when the Baby Boomers start cashing en masse their retirement checks. Many will discover that this money is gone, since by then the Wall Street Hoover will have sucked it out of the pension funds.

When will that happen? Probably within the next ten years. So, if you’re a Baby Boomer counting on spending your old age in an easy chair funded by a big business pension, consider an early retirement. Then follow it up with some sort of Golden Age entrepreneurial venture, the new Golden Parachute of America’s dwindling middle class.