Rejoinder

I should point out one small problem I have with Glaeser's general argument. When you decrease the number of people who pay taxes at all, you increase the number of people who are willing to tax high-income individuals. Although the earned income tax credit was championed by none other than Milton Friedman, there is an element of public choice theory that of course has been borne out in reality. Without getting in to all of that, the general point still stands, which is that government is terrible at the equitable distribution of wealth because politicians have no incentive to actually respond to poor people. 

If they are no longer poor, they will not vote for Democrats! The Republicans don't get their votes anyhow. Government has always responded to those who have enough money and influence to ask it for money. The poor do not hire K St. lobbyists. 

Finally. I have one more thing to ad about this despicable bailout. You are now poorer by $800b not just because you paid taxes into that pool, but more because they pulled that money out of thin air. Today there are suddenly $800b more dollars. That makes every dollar you own worth $800b less all of the dollars in circulation. Not only is your stock account down, your house worth less etc, but now the politicians have decided that your dollars themselves should be each worth a little less.  Congratulations.