I saw this from the WSJ
The Presidential race is boiling down to one dominant issue: which
party's policies will do more to help the financially stressed American
middle class. President Obama's campaign theme is that Mitt Romney and
the Republicans cater to the rich, while Mr. Obama cares about
struggling families.
He may care, but he sure hasn't done much for them. New income data
from the Census Bureau, tabulated by former Census income specialists at
the nonpartisan economic consulting firm Sentier Research, reveal that
the three-and-a-half years of the Obama Presidency have done enormous
harm to middle-class households.
In
January 2009, the month President Obama entered the Oval Office and
shortly before he signed his stimulus spending bill, median household
income was $54,983. By June 2012, it had tumbled to $50,964, adjusted
for inflation. (See the chart nearby.) That's $4,019 in lost real
income, a little less than a month's income every year.Unfair, you say, because Mr. Obama inherited a recession? Well, even
if you start the analysis when the recession ended in June 2009, the
numbers are dismal. Three years after the economy hit its trough, median
household income is down $2,544, or nearly 5%.
In January 2009, the month President Obama entered the Oval Office and
shortly before he signed his stimulus spending bill, median household
income was $54,983. By June 2012, it had tumbled to $50,964, adjusted
for inflation. (See the chart nearby.) That's $4,019 in lost real
income, a little less than a month's income every year.Add the authors: "The overall decline since June 2009 was larger than
the 2.6 percent decline that occurred" during the recession from
December 2007 to June 2009. For household income, in other words, the
Obama recovery has been worse than the Bush recession.
It's true that the Bush years overall were also not great for
household incomes. According to Sentier's analysis, real median
household income is down about 8% from $55,470 in 2000 before the
dot-com bubble burst. Some of this decline is due to the continuation of
a trend of smaller family size, lower fertility rates and more
Americans living alone. But some was also due to the subpar economic
growth across the 2000s.
That slow growth trend has become worse since the latest recession,
and this is where Mr. Obama is implicated. The President portrays the
financial decline of American families on his watch as part of a
decades-long trend. He's wrong. Real income for middle-income households
rose by roughly 30% from 1983 to 2005, according to the Congressional
Budget Office. The political left likes to blame the ebbing of union
power. But nongovernment unionization fell dramatically in the 1980s and
'90s, and incomes rose.
So what does explain falling real incomes? Slow growth, yes, but
another culprit has been rising prices—especially for food, gasoline,
medical procedures and college tuition—that have eroded worker
purchasing power. The Federal Reserve claims this is no problem because
"core inflation" has been relatively contained. But core inflation
excludes food and energy prices, which are two of the biggest components
of consumer budgets.
The big pay freeze is also the bitter
fruit of public schools that have failed to teach the basic skills and
knowledge needed to succeed in a competitive global economy. Rising
health-care costs have also forced employers to take money that used to
go into higher wages to pay higher premiums.
A key driver of higher wages in the 1980s and 1990s was a surge of
capital investment in computers, plant and equipment, which made
Americans workers more productive. When Mr. Obama pledges to raise taxes
on investment income (capital gains, dividends and small-business
profits), he is making it costlier to innovate and modernize. That plays
out over time into slower gains in productivity and wages.
Consider the toll from America's corporate tax rate, which is the
highest in the industrial world. A 2011 study by economists at the
American Enterprise Institute found that because of the capital flight
from the U.S. as a result of this high rate, "every additional dollar of
tax revenue [from the corporate tax] leads to a $4 decrease in
aggregate real wages." American workers would be the biggest
beneficiaries of tax reform.
The new income data reveal other eye-opening trends. The group that
has suffered the most during the Obama Presidency has been black
Americans, whose real incomes have fallen by more than 11%.
Mr. Obama also likes to say that government workers like teachers are
hurting and the private economy is doing "just fine." But the data
indicate that over the past three years households with government
workers saw their incomes decline less than households with private
workers. The public-private pay gap is now wider than ever ($77,998
government versus $63,800).
Every age group has seen a decline in income—except the elderly.
Those between the ages of 65 and 75 saw an average 6.5% gain in income,
though most are not working and collect Medicare and Social Security.
The last time incomes fell this fast was during the late 1970s under
Jimmy Carter, and it's no coincidence that economic policies then and
now are so similar. If Mr. Obama succeeds in convincing voters that he
really is the tribune of the middle class, it will be the political
conjurer's trick of the century.
