Rep. Paul Ryan’s budget shop has put out an extensive response to the CBO study on increased income inequality in the U.S. I had groped for answers myself, but the Ryan doc — which I’m reading through now — does a much more thorough job explaining the role the changing beneficiaries of government transfers (the welfare state ain’t just for the poor and destitute anymore) and tax policy (the regressive payroll tax have seen rate increases, while progressive income tax rates have, on average, gone down) have played in exacerbating income inequality.
There’s a lot of other good stuff in there, too, that helps put the idea of increasing inequality in context. My favorite bit? The fact that most OECD countries have seen inequality increase. Two that have seen greater equality? Turkey and Greece!