The Inequality President

The rich have done fine under Obamanomics, not so the middle class

President Obama made his fourth or fifth, or maybe it’s the seventh or eighth, pivot to the economy on Wednesday, and a revealing speech it was. We counted four mentions of “growth” but “inequality” got five. This goes a long way to explaining why Mr. Obama is still bemoaning the state of the economy five years into his Presidency.

The President summed up his economic priorities close to the top of his hour-long address. “This growing inequality isn’t just morally wrong; it’s bad economics,” he told his Galesburg, Illinois audience. “When middle-class families have less to spend, businesses have fewer customers. When wealth concentrates at the very top, it can inflate unstable bubbles that threaten the economy. When the rungs on the ladder of opportunity grow farther apart, it undermines the very essence of this country.”

Then the heart of the matter: “That’s why reversing these trends must be Washington’s highest priority. It’s certainly my highest priority.”

Which is the problem. For four and a half years, Mr. Obama has focused his policies on reducing inequality rather than increasing growth. The predictable result has been more inequality and less growth. As even Mr. Obama conceded in his speech, the rich have done well in the last few years thanks to a rising stock market, but the middle class and poor have not. The President called his speech “A Better Bargain for the Middle Class,” but no President has done worse by the middle class in modern times.

By now the lackluster growth figures are well known. The recovery that began four years ago has been one of the weakest on record, averaging a little more than 2%. And it has not gained speed. Growth in the fourth quarter of 2012 was 0.4%. It rose to a still anemic 1.8% in the first quarter but most economists are predicting even slower growth in the second quarter.

We hope the predictions of a faster growth in the second half will be right, but the Obama Treasury and Federal Reserve have been predicting for four years that takeoff was just around the corner. Stocks are doing great, and housing prices are rising, but job growth remains lackluster. What has never arrived is the 3%-4% growth spurt during typical expansions.

The official excuse is that recoveries coming out of recessions caused by financial crises are always slow. But then why have we been told every few months for five years that faster growth would soon be coming? Perhaps readers recall former Treasury Secretary Tim Geithner’s famous 2010 op-ed, “Welcome to the Recovery.” Mr. Obama wants it both ways: Take credit for recovering from recession, but blame that recession ad infinitum for the slow pace of the recovery.

What about the middle class that is the focus of Mr. Obama’s rhetoric? Each month the consultants at Sentier Research crunch the numbers from the Census Bureau’s Current Population Survey and estimate the trend in median annual household income adjusted for inflation. In its May 2013 report, Sentier put the figure at $51,500, essentially unchanged from $51,671 a year earlier.

And that’s the good news. The bad news is that median real household income is $2,718, or 5%, lower than the $54,218 median in June 2009 when the recession officially ended. Median incomes typically fall during recessions. But the striking fact of the Obama economy is that median real household income has fallen even during the recovery.

While the declines have stabilized over the last two years, incomes are still far below the previous peak located by Sentier of $56,280 in January 2008. No wonder Mr. Obama is now turning once again to his familiar political narrative assailing inequality and blaming everyone else for it. He wants to change the subject from the results on his watch.

The core problem has been Mr. Obama’s focus on spreading the wealth rather than creating it. ObamaCare will soon hook more Americans on government subsidies, but its mandates and taxes have hurt job creation, especially at small businesses. Mr. Obama’s record tax increases have grabbed a bigger chunk of affluent incomes, but they created uncertainty for business throughout 2012 and have dampened growth so far this year.

The food stamp and disability rolls have exploded, which reduces inequality but also reduces the incentive to work and rise on the economic ladder. This has contributed to a plunge in the share of Americans who are working—the labor participation rate—to 63.5% in June from 65.7% in June 2009. And don’t forget the Fed’s extraordinary monetary policy, which has done well by the rich who have assets but left the thrifty middle class and retirees earning pennies on their savings.

Mr. Obama would have done far better by the poor, the middle class and the wealthy if he had focused on growing the economy first. The difference between the Obama 2% recovery and the Reagan-Clinton 3%-4% growth rates is rising incomes for nearly everybody.

House Republicans have put a check on Mr. Obama’s most destructive economic policies, but the President could do more to help growth if he crossed party lines to pass tax reform the way Reagan did in his second term, or to work out a budget deal as Bill Clinton did in his fifth year.

Mr. Obama’s only pro-growth proposal is immigration reform, and we’re not sure he wants even that to pass. Judging by the partisan tenor of his Wednesday speech, he may be setting it up to use as a campaign wedge in 2014. If only Mr. Obama understood that before a government can redistribute wealth, the private economy has to create it.

A version of this article appeared July 25, 2013, on page A12 in the U.S. edition of The Wall Street Journal, with the headline: The Inequality President.

http://online.wsj.com/article/SB10001424127887323610704578626142861572144.html?mod=WSJ_Opinion_LEADTop

Advertisements

30 thoughts on “The Inequality President

  1. Normita thanks for the new thread. Immigration will be a big issue in the next election. Boehner is waffling, so is Ryan. Everyone knows that if the House passes anything, the Senate will take that bill and put in Amnesty. This is being discussed openly. But the Senate Bill is unconstitutional. It imposes taxes on the new Americans. Only the House can initiate a tax bill. That is why Reid has not put it to the House. The liberal workaround is to get the House to pass any kind of immigration bill, and then in conference it will be modified to mimic the Senate Bill. That is why nothing should pass in the House. Boehner knows this. McCain knows this. Rubio knows this. And potus is using this as a wedge issue to further divide the country and get the Hispanic vote. The Senate Bill includes a large sum of money going to La Raza (have you ever dealt with these people?) to get this, enforce the bill. Insane…..

  2. There is a lot of subtle truth in this commentary. I am still perplexed why the low interest rates on most middle class CDs and savings accounts was not a bigger issue during the last election. Retirees should not have to put their money in risky stocks to get a decent interest on their savings.

    This is what we get when we elect a president based on an ability to campaign.

  3. Hi villagers. Lots of stuff in the news, nothing really worth writing about. All the same stuff.

    I have been having some real fun with my grand daughter this week. We put a red sun dress on her yesterday that just made your heart stop. I go to the bed in the morning because her mother has left and she is crying. She takes one look at me and starts smiling.

  4. Enjoy these special moments. Babies look like angels between 6 months and 12. They develop personalities early with their preferences to certain toys, people, level of activity and music. Both of my kids grew fast so clothes only lasted a few weeks or months during that first year. Does she have the book “Pat the Bunny”? My kids had that one memorized early and loved to do the activities. Their next two favorites were Green Eggs and Ham and Goodnight Moon.

    Let me pose a question. Under Obamacare the goal is to have everyone insured which ultimately means when they go to a doctor they have to show their insurance card and a picture ID. Since a picture ID is necessary to validate your insurance why shouldn’t a picture ID be used for voting as well? What is the big deal?

  5. For the past two months I was involved in working with our alumni association on our coming reunion this weekend in Tampa. Lots of solicitation, writing and daily grind of promoting the event. We leave for Tampa tomorrow for a five-day stint. When we did this in Tampa 10 years ago, it was very exciting. The president is such an engaging person and one can’t help but be as enthusiastic.

  6. Good luck this weekend Normita. Have fun.

    I’m in Minnesota visiting Dad. It has been an adjustment since Mom’s death but he is coping well. Every day is a challenge.

    Mary, I hope the fires are not around you. Stay safe.

  7. Hello Everyone,

    I’ve missed everybody we have been so busy with the this court mess again, so i haven’t been posting but i really miss everyone.

    Mary i bet the baby is a doll and so pretty in her little red sundress, yes like Taylor enjoy these moments they are the best!

    Taylor i’m glad you doing ok and your Dad is adjusting i know it must be very hard!

    Normita enjoy your trip and be safe!

    Also i wanted to post a HAPPY BIRTHDAY TO GO and i hope you have many more to come!

    I love you all and i will check-in again soon keep us in your prayers please!

    Teri and The Village Kids

  8. Good Morning, Villagers…sunshine abounds, highs in the upper 80’s!

    It’s been quite sometime since I last posted…this must be my year for medical challenges…I’ve been fighting an infection and the medicine makes me even sicker. I’m just now getting my life back….hopefully, I’ve seen the end of this.

    I hope everyone’s well…I have a lot of catching up to do. I haven’t forgotten my Village….Enjoy your day….

  9. Karel, hope you are on the mend. You must have forgotten to renew your warranty this year. The ebb will change and you’ll be craving a walk soon.

    Teri, have you see the Suburu commercial that features the mother with a little boy that doesn’t like to keep his clothes on? In one scene he is throwing them out the car window while they are driving over a bridge. She outsmarts him and has a filing cabinet in the car with neatly folded outfits for just such occasions. Reminded me of the stories of your naked bandit.

    Hope all is well with the villagers.

  10. Morning villagers. Hope everything is well with everyone, including you Karel. Nothing much happening with us. Baby has gone home. Miss her cries in the morning.

    World politics is in horrible disarray. Can you believe that Biden is starting a presidential run? Who would give him money? And Christie has really turned into a closet progressive. I guess he was told by the money brokers that to get presidential money he needs to change his hat. Such a whore! I like Rand Paul.

    • The fires seem endless in the West. I hope all the villagers stay safe. One article said $1B has been used fighting the fires. Our daughter is in Big Sky MT and is making her way to SF so I told her to keep her eyes on ears open to the local news.

      They were taking a poll online whether Obama has lost credibility due the NSA and my thought was he had no credibility to begin with. You might enjoy this reporting by the Danes.

      https://youtube.googleapis.com/v/erYpXzE9Pxs%26

  11. Good Morning, Villagers…gray to start, it’s foggy, making way for a partly sunny day, highs around 83 degrees!

    We’re fortunate that the fires in the state aren’t impacting the Bay Area thus far…it’s hard to watch the news, especially with Yosemite now being threatened….those wonderful Sequoias have stood for soooo long….I hope they survive this. The pictures of the fires from space are amazing. I hope the tide turns soon….maybe an early Fall is just what we need!

    I can’t listen to President Obama any longer…don’t believe anything he has to say, the latest NSA revelations make him out to be either naive or lying….both don’t bode well for the country. He has absolutely no credibility and younger people are catching on.

    Taylor…my warranty has been under assault…I’m walking now, feels great to be out and about.

    It’s the little things…Enjoy your day….

  12. These are two books recommended to us after Mom’s death. I’ve started both but have not finished yet:

    Another Country: Navigating the Emotional Terrain of Our Elders
    by Mary Pipher (Author)

    There are more older people in America today than ever before. They are our parents and grandparents, our aunts and uncles and in-laws. They are living longer, but in a culture that has come to worship youth–a culture in which families have dispersed, communities have broken down, and older people are isolated. Meanwhile, adults in two-career families are struggling to divide their time among their kids, their jobs, and their aging parents–searching for the right words to talk about loneliness, forgetfulness, or selling the house.
    Another Country is a field guide to this rough terrain for a generation of baby boomers who are finding themselves unprepared to care for those who have always cared for them. Psychologist and bestselling writer Mary Pipher maps out strategies that help bridge the gaps that separate us from our elders. And with her inimitable combination of respect and realism, she offers us new ways of supporting each other–new ways of sharing our time, our energy, and our love.

    Proof of Heaven: A Neurosurgeon’s Journey into the Afterlife
    by Eben Alexander (Author)

    A SCIENTIST’S CASE FOR THE AFTERLIFE

    Thousands of people have had near-death experiences, but scientists have argued that they are impossible. Dr. Eben Alexander was one of those scientists. A highly trained neurosurgeon, Alexander knew that NDEs feel real, but are simply fantasies produced by brains under extreme stress.

    Then, Dr. Alexander’s own brain was attacked by a rare illness. The part of the brain that controls thought and emotion—and in essence makes us human—shut down completely. For seven days he lay in a coma. Then, as his doctors considered stopping treatment, Alexander’s eyes popped open. He had come back.

    Alexander’s recovery is a medical miracle. But the real miracle of his story lies elsewhere. While his body lay in coma, Alexander journeyed beyond this world and encountered an angelic being who guided him into the deepest realms of super-physical existence. There he met, and spoke with, the Divine source of the universe itself.

    Alexander’s story is not a fantasy. Before he underwent his journey, he could not reconcile his knowledge of neuroscience with any belief in heaven, God, or the soul. Today Alexander is a doctor who believes that true health can be achieved only when we realize that God and the soul are real and that death is not the end of personal existence but only a transition.

    This story would be remarkable no matter who it happened to. That it happened to Dr. Alexander makes it revolutionary. No scientist or person of faith will be able to ignore it. Reading it will change your life.

  13. Thought for the day:

    “Once, on ancient Earth, there was a human boy walking along a beach. There had just been a storm, and starfish had been scattered along the sands. The boy knew the fish would die, so he began to fling the fish to the sea. But every time he threw a starfish, another would wash ashore. “An old Earth man happened along and saw what the child was doing. He called out, ‘Boy, what are you doing?’ ” ‘Saving the starfish!’ replied the boy. ” ‘But your attempts are useless, child! Every time you save one, another one returns, often the same one! You can’t save them all, so why bother trying? Why does it matter, anyway?’ called the old man. “The boy thought about this for a while, a starfish in his hand; he answered, “Well, it matters to this one.” And then he flung the starfish into the welcoming sea.”

    ¯ Loren Eiseley, The Star Thrower

  14. Hi villagers

    I have not posted for a while, just in my own shell, trying to deal with the realities of the issues facing this nation with such a weak president, and all hell breaking lose everywhere else. I have been truly frightened this last week when I thought that by now we would be bombing Syria. I believe that this will unleash a world war. Now we wait for what Congress will do. It looks like the sane people are now Russia and the British. Putin’s statement that potus claims were “utter nonsense” made a lot of sense to me. There is clear evidence that Sarin gas was used, but who unleashed it is the real question. There is just as much indication that it was Al Queda who did this, as Assad. Al Queda wants us involved in this war, so it is quite probable that they are provoking a response. A couple of weeks ago, when all our embassies were closed, a communication intercept was overheard that they intended to unleash an action “that would change the course of history”. I believe this is what that action was. Putin and China’s non cooperation may have just saved us from a third world war.

    Now we wait for congress. This move was potus not wanting to do this alone. He now wants a chance to either get us behind his bombing and make him a hero for protecting children, or blame congress for letting children die of poisoning. What a coward this man is. This move is all political, no conviction or principles involved here.

    The real fear is now Iran. We have the USS Nimitz carrying nuclear weapons positioning itself for attack. US navy warships do not move to threatening positions without some intelligence supporting the immediate need to do so. potus wants an open-ended referendum from congress. I read this morning that there is every indication that we will have to move to block Iran in the next 6 months.

    A weak nation incites the bullies. Bullies pick on the weak individuals. We are now perceived as weak.

  15. Taylor I will have to read this book by the neurosurgeon. Sounds like quite a turnaround for a man of science. Too bad he had to push the limits to see the truth. remember that before his experience, his words and reputation as a scientist changed people’s minds to believe that God did not exist. I see a lot of that among the elitist educated people. They say that to believe in God is to not believe what science indicates, that we who do are poorly educated. If this scientist truly wants to redeem himself, his life’s crusade should be to undo the damage he created.

    My physics professor, with 35 years of nuclear particle research, says that when most scientists are asked openly “do you believe in God?” publicly they will deny they do, but when asked privately, 51% say they do. It is the peer pressure of such men as this neurosurgeon to avoid ridicule that elicits the public response.

    You need to read his book “Can Life be Merely an Accident”. In that book he establishes just how unbelievable are the sequences of events in the universe, and around us that have allowed life to come about. He backs up his statements with math and physics. You can only conclude that chance had nothing to do with it. His name is Robert L. Piccioni, Ph.D.

  16. Thanks for the book recommendation Mary. I’ve been lazy about reading this summer–I think because I was emotionally drained/

    I don’t believe that Congress will support action in Syria. Civil war is horrible and by nature we want to help but it is impossible to sort out the mess.

    Our daughter made it to San Francisco where she will live 1-2 months. She drove 4000 miles to get there. Two of her friends already flew in to visit and they headed to Napa Valley.

  17. Good morning. Looks like this attack on Syria is still on. I cannot believe that congress is really getting behind this action. The consequences of this action are worse than what happened with Iraq. Chris Mathews said yesterday that the dimocrats have to get behind this action to save potus’ behind. Since when do we kill just to save a president’s reputation? This morning he is saying that he never set a red line. In a speech to the world! This man just lies, lies,lies. And Kerry says, wink, wink, we will not put boots on the ground, but we cannot put that in writing.

  18. We are taking a train trip to Colorado. We thought it a good idea to get on a train, see the sights, read; I am trying to learn how to knit. No stress; we have a sleeper car. We will find out whether we like this or not; leaving today. Horrible heat and humidity here. Good to get away.

    Glad to hear your daughter made it okay to SF. Oh, Napa Valley, with all it’s vineyards and wineries, and the beautiful coast route ever so close. She will enjoy the time here.

  19. Mary, have a great train ride. A friend of mine traveled this summer by train from Chicago to Seattle and enjoyed herself. She called me as they were passing through Red Wing, MN – the town where part of Grumpy old Men was filmed.

    I thought I would never see a day that Boxer, Pelosi, and Feinstein would support military action such as Syria. So strange to announce your attention weeks in advance. The whole thing is so political –if it was based on anything else the strike would have happened weeks or months ago.

  20. Villagers. READ noquarterusa.net posting today ” Obama and Kerry lying about Syrian attack”. It is important that we all read this. I believe this is the truth.

  21. Hi villagers, it’s been a while! Our high school reunion in Tampa went very, very well. The souvenir book that I helped to solicit many ads was indeed beautiful. The previous worries of bad weather did not materialize, except for some thunderstorms for a few afternoons.
    The situation in Syria is really worrisome. Congress has this on their shoulder to decide about our country’s involvement. We’ll see from day to day how this will all go and hope for the best.

  22. Good Morning, Villagers…no fog to speak of, looks like it’s heating up around here, blue skies, highs in the upper 80’s…

    Feeling like my old self now…however, months ago I committed to house/animal/yard sitting…so I’m keeping two households for the next three weeks…I’ve just started and I’m already worn out!!

    Mary…I look forward to hearing about your train trip…sleeper cars in Europe are wonderful, how are your accommodations? Have a great time…a break is always fun!!

    Normita…good to hear that your trip went well and your book was a success.

    Taylor…your daughter is here when the weather is excellent in S.F….and there’s soooo much going on…I hope she’s having a wonderful time. Books are such a great escape…I hope you find time to pursue your love of reading soon.

    I’m concerned about Syria as well…I really think the American people just don’t trust Obama to get it right…no trust…does the IRS, NSA, Benghazi, Fast and Furious, etc….instill confidence in this administration???!!! When the American people loose trust in such overwhelming numbers…we have a real problem. When a president continues to tell us he didn’t set the “red line”….no, the world did…we can’t believe him and either does the international community. He doesn’t take responsibility for anything and he is now an amateur for all to see…we have lost our prestige as a super power and people like Putin are chomping at the bit to take our place. A very dangerous scenario and Obama’s sheer incompetence is largely responsible for this mess…he’s led from behind and now he wants to get out front. The Middle East has been mishandled from the start….from Libya to Egypt to Syria etc…. Not only can’t Obama seem to get the Congress to work with him….come to any kind of consensus, but now, on the world stage he’s a flip flopping along. I cringe at the thought of three and a half more years of this…

    Enjoy your day…

  23. Do you think it is by design that the Syria vote will occur on 9/11?

    I agree with you Karel. Obama is not someone who has earned our trust so therefore it is hard to support anything he says. I still believe there is someone behind him pulling the strings.

    Thanks for the link to no quarter Mary. It has been been months since I visited his blog. When a WH is willing to blame a video for an event that killed four people in Benghazi can we “trust” them to tell the truth now? I cringe when I see Susan Rice at the table. I think the WH has moved their fog over Kerry.

  24. Hey villagers. We are back here again in Colorado. Mountains are beautiful; we had a thunderstorm yesterday. Did I tell you I just love thunderstorms? We came here on the train. We got on at San Luis Obispo to Sacramento. Train was a little late. The seats on th train are comfortable and roomy. That leg we were in coach. The nice thing about the train is you meet people. We met a couple traveling from Albuquerque on their way to Canada. The variety of people on the train is amazing – families, lots of students going back to school, party groups, lots of tourists who want to see the US . We stayed overnight and a day at Sacramento, toured the state capital. Downtown Sacramento around the capital is really nice. We had lunch outside seated among stately old trees in Bishop Gallegos square!

    The next leg we got a Roomette in the sleeping car. That leg brought us to Colorado. We slept a night on the train. The Roomette is two seats facing each other that converts to a bed, with a bunk bed on top, kind of cramped to sleep in. You can buy a bigger, more comfortable room for more money. But we enjoyed seeing the country, drinking wine, reading. I was knitting. There is an observation deck with docents who come on to explain what you are seeing. And meals in the dining car, nice meals cooked on board. I had salmon for dinner and my husband had steak. People who come on board are very interesting. We met a man from Sacramento on his way to South Dakota, very success ful business man, going to hunt, and claim his share of 250,000 acres of inheritance from his aunt. We had a nice meal with him. We had lunch in the dining car as we traveled through the sierras. The evening meal we had a pleasant conversation with an English tourist retired engineer traveling around the US to see our country. He knew more about our country than most Americans. There were Australians on board doing the same thing. We slept through Utah, but we woke up to a beautiful canyon, sunrise, and a rainbow. The train track is alongside the Colorado River all the way down to Denver. We got off before Denver. What is good about train travel? You get to know your country and it’s people. What is bad about train travel? It is slow going, so you need patience, and some of the people stay on for too long so they get disheveled . I like the travel a day, get off, get back on way. There was a woman on board traveling all the way to Chicago. She said she preferred train travel to airplane travel any day.

  25. Thanks so much for your travelogue. I’m sharing with my friend who traveled earlier this year. On our cruises we had similar experiences when we used open dining, meaning we would share tables with other travelers and a different group each meal.

  26. Good morning. Everyone read the news this morning? Can you believe it? Assad just said, okay with me, I will turn over my WMD, not a problem. They even had Hillary out speaking on this, after a meeting with potus. And Reid called off the senate vote. How convenient, since he did not have the votes to pass anything. Putin must be rolling on the floor, laughing so hard. He helped his buddy potus save face. Do you think Kerry’s remark was accidental, or was this another one of those “you ask the question so I can answer it” moments? Within the hour the Russians were offering to play the go-between.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s