Obama Calls Income Gap ‘Wrong’ — After Widening It
Obamanomics: The president has been decrying the growing gap between rich and poor in the U.S. to help sell his retread tax-and-spend proposals. But those policies have already produced record levels of income inequality.
In his speech in Illinois last week, and at events since, Obama described income inequality in the starkest terms. “This growing inequality is morally wrong,” he said, and “undermines the very essence of America.”
To be sure, income inequality is a standard trope for liberals, who always use it to advocate more wealth redistribution.
And Obama’s latest focus neatly coincides with his plans to push for more federal spending and taxes on the “rich” in coming budget battles.
But what Obama conveniently leaves out of his sermons is that income inequality has grown faster on his watch than any time in the past two decades, at least.
Research by University of California economist Emmanuel Saez shows that since the Obama recovery started in June 2009, the average income of the top 1% grew 11.2% in real terms through 2011.
The bottom 99%, in contrast, saw their incomes shrink by 0.4%.
As a result, 121% of the gains in real income during Obama’s recovery have gone to the top 1%. By comparison, the top 1% captured 65% of income gains during the Bush expansion of 2002-07, and 45% of the gains under Clinton’s expansion in the 1990s.
The Census Bureau’s official measure of income inequality — called the Gini index — shows similar results. During the Bush years, the index was flat overall — finishing in 2008 exactly where it started in 2001.
It’s gone up each year since Obama has been president and now stands at all-time highs.
It’s worth underscoring that the growing income gap under Obama isn’t the result of the rich getting fabulously richer. Nor is it any sort of indictment of “trickle down” economics.
Instead, it is the direct result of Obama’s historically weak economic recovery, which has left the rest of the country falling behind while the wealthy have managed to make gains.
Census data show, for example, that the poorest 20% of families saw their real average income continue to fall each year from 2009 to 2011 — the last year for which the Census has data — while the top 20% recouped losses suffered in the recession.
The evidence of decline among the nation’s most vulnerable shows up elsewhere. There are 2.7 million more people in poverty than there were in 2009. And 14 million more are on food stamps today than in 2009. And after four years of economic recovery, there are still 4.3 million long-term unemployed.
Meanwhile, researchers have found that high-paying jobs lost during the recession are being replaced, if at all, largely by low-paying jobs in the Obama recovery.
All this is in stark contrast to previous economic recoveries, which generally saw at least some income gains across the Census Bureau’s income groupings.
Despite this record, Obama’s answer is simply to increase the dose of the very same treatments — more government spending, more taxes, more intrusions into the marketplace in the name of “shared prosperity” — that hobbled the recovery and produced the very misery he now claims he can fix.
In other words, Obama is selling snake oil. And that’s what’s morally wrong.