Has the middle class caught on to Obama's hustle yet?
Published by: Dan Calabrese
There's one born every minute.
Let's start by defining a hustle. Someone is pulling a hustle on you when they constantly try to convince you they offer something that is actually illusory. The hustle can become a career for them if you keep buying it, but in order for that to happen the hustler has to very skillfully convince you that your lack of reward is because of some sinister outside force working against the hustler. If the hustler can pull this off, he can prevent you from recognizing that the offer itself is empty.
That basically describes Barack Obama's relationship with the American middle class. He talks about them endlessly, and constantly derides his political opponents for supposedly favoring everyone but them. But as the Wall Street Journal points out, Obama's actual policies have done nothing but decimate the very middle class they claim to favor. That's because spreading the wealth, rather than focusing on growth, kills opportunity:
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.
Annualized GDP growth of just 2 percent, which has been the sad hallmark of this administration's economic performance, simply does not create enough jobs, wealth or opportunity to lift the middle class into a better economic situation. Worse: As the Journal points out, because so much of the growth we have experienced has come from the stock market, the sad irony of Obama's policies is that the rich are doing just fine but the middle class are running in place.
The answer to this, liberals will say, is even more redistribution. They will point out that there is money sitting around, and rich people and corporations need to start spending it - hiring people, buying goods, contracting out services, etc. This is the Keynesian "demand side" view of economics - that you can't have demand unless people have money to spend, so the key to growth is to put money in the hands of people who need things, then sit back and watch them spend it.
But the problem with this is that it doesn't create wealth at all. It just attempts to move existing wealth around. The reason corporations sit on cash reserves is that they're looking for ways to invest the cash that will help them grow and become more prosperous. In the Obama economy of 2 percent annualized growth, they don't see it. Obama wants them to hire people just because they have money, but companies don't hire people just because "they can afford it." They hire people because the investment will bring a return. You don't increase wages because of what you think people will spend the money on. You increase wages because the value you directly receive back from the worker results in sufficient return on investment.
That's how you get real growth. That's how you get real wealth creation, and that's when the middle class does well. Democrats are so invested in their class-warfare narrative, they would rather die than admit it's good for the middle class when corporations and rich people do well. They demand that corporations hire, then saddle those who do with additional burdens like ObamaCare and unionization - only to act shocked and befuddled when hiring slows to a crawl or stops.
Yet there is Obama once again, telling the middle class that all they need is more of his "redistributive justice," which is why he is once again vowing to go to war on their behalf against the rich and corporations - the very people who actually could provide the middle class with opportunities if Obama would stop bludgeoning them.
At some point, enough of the middle class will catch on to the hustle that it won't be able to continue, and we will see a shifting of the political grounds. I don't know exactly when that will happen, but I hope it comes before a hustler even more disingenuous than Obama has the chance to take the reins.
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