Obama’s Growing Income Inequality
In a December 4 speech President Obama called increasing economic opportunity the driving force of his past five years and vowed to devote much of his remaining time in office to economic inequality, “the defining issue of our time.” It was a theme of the Mandela funeral. The Pope, Time’s “Man of the Year”, is chiming in. The end of federal unemployment extensions ups the ante. The theme of inequality is not new to Obama who chided Joe the Plumber to “spread it around” in 2008 and opined “you didn’t build that” to a small business audience in 2012. This is not a change of direction so much as a change of emphasis.
First some updated data
- Over four years after the official end of the recession in 2009, unemployment is stuck around 7% – 21% for teenagers; 6.2% for whites; 12.5% for African Americans; 8.7% for Hispanics; 5.3% for Asians. Worse, the workforce participation rate (including those who have dropped out) remains at 63%, the lowest in decades.
- During the Obama presidency the median family income has declined from an average of about $55,000 during the George W presidency to about $51,000 now.
- With a strong stock market and rebounding real estate prices, American household net worth has returned to record levels over $77 trillion. Yet, in 1911 the wealth of the top 7% of households averaged $3.2 million while for the bottom 93% it averaged about $134,000, and the differential continues to diverge.
- While overall incomes have risen over decades, the bottom 20% of households has stayed relatively stable at about 4% of national income, the middle class has received a smaller portion, and the upper earners have soared to the point that the top 1% now get 20% of national income.
Economic growth and the distribution of wealth are worthy subjects.
So, President Obama still gives lofty speeches. What are his December 4 solutions: a vague “growth agenda”; a simplified tax code to close corporate loopholes; more federal spending on education – pre-school, k-12; technical schools, colleges; an increased minimum wage which will not cost jobs or be passed through to consumers; increased government stimulus spending in urban “Promise Zones”; more food stamps; protection of Social Security; expansion of unions; immigration reform to bring workers out of the shadows; and, of course, Obamacare. Nothing new. Nothing of substance that has a chance of passing Congress. Most which would not do any good. A lot of soundbites that have carried him politically for a fantasy decade.
And what might the real answers be? A couple simple themes:
- Really let the private sector grow the economy. Corporate and personal tax reform to eliminate preferences and lower rates; expansive energy policy with fracking, pipelines, and nuclear; banking reform to help small businesses get financing; Medicare and Social Security reform to curb deficits and regain America’s AAA bond rating; start over on healthcare reform.
- On equality, Rick Santorum had the simple answer for the individual on how to get out of poverty – get a high school degree; get a job, any job; and get married before you have kids. He might have added, be willing to move to places like North Dakota where jobs are plentiful.
The painful irony is that the strata of society which most needs an economic revival has twice elected a president historically unqualified to do the job. It isn’t about wanting to help people, it is about knowing how.
This week’s video is a “Flash Mob” Christmas presentation by the USAF Band and Chorus at the National Air and Space Museum. The Pentagon’s “Politically Correct Police” are apparently falling a bit behind.