How Obamanomics Promotes Inequality
Stephen Moore /
BRENDAN SMIALOWSKI/AFP/Getty Images/Newscom
The great Obama contradiction on the economy is this: he takes credit for the improved economy, but openly admits that in this recovery almost all of the gains have gone to the very rich.
Here is the disturbing passage from Obama’s State of the Union speech that I refer to:
“What I believe unites the people of this nation…is the notion that if you work hard and take responsibility, you can get ahead.
“That belief has suffered some serious blows… Today, after four years of economic growth, corporate profits and stock prices have rarely been higher, and those at the top have never done better. But average wages have barely budged. Inequality has deepened. Upward mobility has stalled. The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by – let alone get ahead. And too many still aren’t working at all.”
What a downer. This is hardly morning in America stuff. Obama likes to ridicule “trickle down economics” but under Obamanomics, almost nothing has even trickled down to the poor. He’s brutally honest in admitting that this has been effectively a non-recovery for a whole large segment of American society. It’s not clear how Democrats think they can leverage that message of futility to their political advantage in November.
An alarming Fox News poll this week found that more than half of Americans still think the recession is still with us. Ironically, those who have seen the least progress tend to be single women, the young, Blacks, and Hispanics. These were the very groups that voted in 2012 in large majorities to reelect Mr. Obama.
But whose fault is it that inequality has widened and the middle class has lost ground? Sorry – there’s no blaming this half-baked recovery on George W. Bush or Ronald Reagan or the Republican House or bad weather. The recovery is weak and the middle class has lost $2,000 in income because Obamanomics failed to create a rising tide that lifts all boats. In other words, his poll-tested focus on inequality and a struggling middle class is an indictment of his own policies. Debt, stimulus, Obamacare, welfare expansions, green energy, and higher tax rates were all supposed to lift the middle class and poor from this funk. This was supposed to be a shared prosperity and we have gotten just the opposite.
This middle class malaise is a departure from the previous recoveries that began under Reagan in 1982 and the early 1990s expansion under Clinton. In both of these booms the middle class enjoyed strong gains in income and job opportunities. Census Bureau data reveal that from 1982 through 2005 real middle income families gained about 25 to 30 percent in income. Upward income mobility was the hallmark of the 1980s and 1990s. To be fair, the stall out began in the 2000s under George W. Bush but has become a crisis under Barack Obama.
This is because almost all of Obama’s economic strategies have obsessed over “sharing the wealth,” rather than creating it. But history proves that growth is the best antidote to poverty. What exactly are the growth policies that Obama is pursuing? Raising the minimum wage? Extending unemployment benefits? More shovel ready infrastructure projects financed with debt? These may temporarily help the poor put food on the table, but they won’t ignite robust growth that reaches all households and helps lift those at the bottom into the middle class.
Obamanomics has produced the weakest and most unbalanced recovery in fifty years. Obama’s own words in his State of the Union address only highlighted the stunning failure. His solution last night was full speed ahead on Obamacare, debt spending, renewable energy and Robin Hood redistribution schemes. This will only put the middle class in an even deeper hole — and Obama’s own words and record prove it.