The day after his second inauguration, the New York Times and the Washington Post blared about Obama’s speech heralding a new vision and agenda for equality in America. But apparently the Left is happy with just words. Official U.S. government data shows that inequality is rising sharply under President Obama. It was stable under Bush. But Obamanomics has brought back exactly the rich getting richer and the poor getting poorer . Obama proclaimed in that second Inaugural Address, “our country cannot succeed when a shrinking few do very well and a growing many barely make it.” But that is exactly what is happening under Obama’s economy. Investor’s Business Daily editorialized on January 23, “that’s precisely what’s happened over the past four years, as Obama’s economic policies left the majority of Americans falling behind while the wealthy few got further ahead.” The official measure of income inequality is the “Gini Index,” published by the Census Bureau. That index has risen every year Obama has been President, meaning inequality has increased. But the index was flat during the eight years Bush was President, meaning inequality was not increasing then. Under Reagan, the rich got richer and the poor got richer . After Reaganomics took hold in 1983, incomes for every quintile, from the top 20% to the bottom 20%, rose. The poverty rate also declined for every year thereafter while Reagan was President. But President Obama is following exactly the opposite of every policy of Reaganomics, so he is getting basically the opposite results. The incomes of the top 20% have still been rising under Obama. But the incomes of everyone else, the bottom 80%, have been falling! Since President Obama entered office in January 2009, real median household income, representing the income for the middle class, has declined by about $4,500, or 8%. That’s the equivalent of the middle class losing one month’s income every year. Moreover, if you start from when the recession ended, in June 2009, the middle class has lost more in income during the Obama recovery than during the Bush recession! Real median household income declined by 2.6% during the recession from December 2007 to June 2009. It has declined by twice that since then! The Obama economy has not been creating jobs. So the demand for labor has fallen, which translates into declining real wages and incomes, after inflation. As a result, even where jobs have been created, “higher paying jobs lost during the recession are being replaced by lower paying jobs in the Obama recovery, which hurts the middle class,” as Investors Business Daily explained it on April 25. The foundation for job creation and rising real wages and incomes is capital investment, which finances the opening of new businesses, and the expansion of existing ones. That capital investment increases the productivity of workers, by providing them with more advanced tools and equipment to work with, and increases the demand for workers, bidding up their wages to the level of their increased productivity. But Obama has been steadily increasing taxes on investment, and waging an economic and rhetorical war on “the rich,” who are precisely the ones who have the most capital to invest. So capital investment has been declining, which means that job creation has been lagging, which means reduced demand for labor, which means declining real wages and incomes. President Obama said in his second Inaugural, and features at the opening of his 2014 budget proposal, “A growing economy that creates good, middle class jobs — that must be the North Star that guides our efforts.” Those pretty sounding words are enough to satisfy the Left, and apparently today’s middle class. Because Obama now has a record growing on five years, and his policies are not creating anything like that. The real incomes of the poor have been declining precipitously too. As IBD added on April 25, “Since Obama took office, the average income of the poorest 20% of households fell nearly 8% to levels last seen in the Reagan era.” The poor can afford losing this income and Obama’s rising gas prices the least. The high cost of gas is keeping the poor stuck in ghettoes unable to move to even look for jobs. Just the opposite of Reaganomics, under Obamanomics the poverty rate has increased every year. The poverty rate has increased from 12% in 2008 to 16.1% today, higher than when the War on Poverty started in the 1960s. That represents an increase in the poverty rate under President Obama of more than one third! The Census Bureau reports more Americans in poverty today than ever before in the more than 50 years that Census has been tracking poverty. Now the Pew Research Center reported late last month, based on Census Bureau data, that from 2009 to 2011 under President Obama the net worth of the richest 7% of Americans increased by nearly $700,000 on average, or 28%. But the net worth of everyone else in America declined by 4% on average. Again, the rich getting richer, and the poor getting poorer. The result under President Obama is a greater concentration of wealth , with the share of wealth held by the top 7% increasing from 56% in 2009 to 63% in 2011. When Barack Obama was running for President in 2008, he told us his economic policies would “foster economic growth from the bottom up and not just the top down.” He claimed he had “an immediate rescue plan for the middle class.” He promised to replace the “tired, worn-out, trickle down ideologies we’ve been seeing for so many years.” But he has not delivered on any of those fine sounding words. Instead he has delivered just the opposite, a declining middle class, and soaring poverty. But the Left is happy to settle for just the pretty words. Photo: UPI
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Obama’s Rising Inequality
Big Government programs never seem to have any definite objectives. There are no victory conditions, no exit strategies, no test a program could fail that would result in its termination. This is one of the many reasons it is obscene for socialists to appropriate the language of business and “investment” to peddle their schemes. Investment is voluntary, and every investor envisions some level of failure that | Read More
Against the backdrop of sluggish growth and high unemployment, one bright spot has been declining crime rates, with levels in the United States now about half what they were 20 years ago. This gradual decline holds true even in the perennially high-risk demographic of young men, suggesting it isn’t merely a knock-on effect of an aging population. That’s the good news. The bad news is that current government policies may reverse this downward trend. To understand how this might happen, consider the crime surge of the ’60s and ’70s, which came on the heels of a long period of declining crime. The zeitgeist of the ‘60s undoubtedly played a role, with its easy drugs and sex (increasing illegitimacy rates) and its move toward lax prison sentences. But the Great Society programs from this period surely played a part as well, by disrupting the family. The effects didn’t manifest themselves overnight, of course, but by the late 1980s, Yale sociologist Elijah Anderson was merely stating the obvious when he noted that it had become increasingly common among the poor “for a young woman to have children out of wedlock — significantly, with the help of a regular welfare check.” Decades of data show unequivocally that the children of these single-parent households are at far greater risk of entering a life of crime. The absentee fathers in this equation are also at higher risk, with the poverty programs rendering the men economically dispensable, inciting in them what George Gilder described as a combination “of resignation and rage, escapism and violence, short horizons and promiscuous sexuality.” None of these effects are well calibrated to reduce crime, much less encourage strong communities and human flourishing. The evidence for this was clear enough that President Bill Clinton signed a bipartisan effort at welfare reform in 1996. Unfortunately, much of that reform is being unraveled. History suggests the long-term effect will be greater family breakdown followed by rising crime rates among the members of these broken homes. What’s doubly frustrating is that many of the pastors, priests and other religious leaders who are properly incensed about the conditions in lower income communities are among the very ones supporting the Great Society programs that subtly but powerfully undermine the family and the close-knit communities that support them. There’s more. Take another glance at the ’60s and ’70s, and guess what else may have exacerbated crime: inflation. David Hackett Fischer argued for the link in his Oxford University Press book The Great Wave , where he traces a correlation between crime and inflation dating back several centuries. In the same vein, a working paper at Auburn University’s Department of Economics finds that, controlling for various other factors such as the unemployment rate, inflation has accounted for about 15 percent of the uptick in crime during the various inflationary spikes since World War II. Now, a common driver of price inflation is the rapid expansion of the money supply. In an oft-repeated pattern limned in the sardonically entitled 2009 work This Time Is Different , a national government aggressively prints money (or debases its coinage) to service its mounting ambitions and obligations, thereby watering down the value of what it owes and the money already in circulation. Many fear that our government is heading down just this path. Already it has begun buying back part of its debt with dollars created out of thin air. These efforts at “quantitative easing” have been relatively modest so far and excused on the grounds that the Fed must counteract the contracting effects of the financial crisis. But with Washington piling on debt like a Las Vegas hobo with a pocketful of credit cards and a month to live, the worry is that unrestrained monetary inflation is just around the corner, a move that would drive price inflation to levels unseen since the 1970s. So while pacifying the poor with lavish welfare outlays, and juicing the economy with an artificial sugar high of binge borrowing, may encourage modest economic growth and hold down crime rates in the short term, history suggests that the long-term effects will be very different — increased family breakdown, aggressive inflationary policy to tame runaway debt and, with these, rising crime. There’s an ugly irony in all this: The welfare state eventually funds its humanitarian largesse through an invisible and legally sanctioned theft (aggressive inflation); this theft hits the poor hardest of all; and this, in turn, encourages theft among the populace — a paternalistic society that proves the old adage, like father like son . Jonathan Witt is a Research Fellow at the Acton Institute.
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Crime and the Nanny State
Drudge has linked to several articles this morning reporting on the record number of people below the poverty line in the country. The latest numbers from the Census Bureau show that 50 million people, including 20% of children in the country, are living below the poverty line. The poverty rate is at its highest levels since the ‘60s. The amazing thing about all these articles | Read More
Obama and Pelosi: We’ve found out what’s in Obamacare, alas. Newscom “With Obama-care entrenched, Democrats feel free to gripe,” read the headline in Politico . And gripe is the word. Senator Maria Cantwell of Washington gripes that the administration won’t subsidize Americans “just above the poverty level.” Senator Bill Nelson of Florida gripes that the administration “negotiated away” funding for insurance co-ops. Senator Ben Cardin of Maryland gripes that Obama-care doesn’t address the national crisis in pediatric dentistry.
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Plan B for Obamacare
