by Dick Morris | December 11, 2013 12:07 am
As he has done before, whenever President Obama is in political trouble, he seeks to rally his base by a particular brand of populism designed to appeal to those who have an impaired memory of his previous diatribes.
But as he rails against income inequality, seeks a raise in the minimum wage and tries to lower the cost of college, we should all remember the policies of this administration, which are causing: income inequality.
Since Obama took office, 85 percent of all income growth has been concentrated in the top one percent of the population. (Under George Bush it was 65 percent, and under Bill Clinton it was 45 percent.)
The bottom 99 percent has stagnated in the Obama years, but the rich have gotten immensely richer.
This trend is a direct result of his quantitative easing program in which the Federal Reserve purchases $85 billion of mortgage backed securities or T-bills each month, giving banks a windfall of cash to use as they wish.
In theory, they are supposed to lend it out, but most find that there are few who would borrow and fewer to whom they ought to lend.
So the banks asked the Fed to pay them 3 percent interest on funds they keep on deposit there. So, without doing anything, banks get up to $2.4 billion each month of cash from the Fed vaults. (Why would a bank lend money to a risky borrower at 6 percent when it can get 3 percent from the Feds?)
This monthly infusion permits bankers to buy back stocks to add them to their stock option compensation, distribute Christmas bonuses or engage in risky trading in derivatives or other speculative investments. Having paid nothing to get the money, they have broad latitude in investing it.
Obama’s zero interest-rate policy has blocked savings and limited investment, which is the only way to spur productivity. If productivity doesn’t grow, incomes don’t except through inflation.
And his zero interest-rate policy makes a mockery of the elderly who have been thrifty and saved their entire working lives in the hopes that their nest egg would afford a modest income on which to retire. Not with zero-percent interest it won’t — unless they invest in risky stocks where it could all be wiped out.
Obama’s refusal to crack down on Chinese currency manipulation also stagnates incomes in this country. With China’s undervalued currency leading to the largest trade surplus in five years, the Obama administration refuses to designate China as a currency manipulator or to bring actions against the policy before the World Trade Organization. It is worth noting that China had no appreciable surplus with the U.S. until it was admitted to the WTO in the first place.
Finally, Obamacare has blighted full-time employment in the U.S. Since January, 152,000 fewer people are working full-time and 400,000 are part-time workers as employers juggle their payrolls to keep the number of full-time workers under the 50-person threshold that would trigger mandatory compliance with Obamacare. Anxious to avoid the requirement that they provide health insurance or face a fine of $2,000 per worker, employers are obliterating the 40-hour week, according to no less a source than the AFL-CIO.
Obama’s populist rhetoric ignores a key fact: While the top fifth and the bottom fifth of the country at any moment have a vast and widening disparity in income, there is great individual upward — and downward — mobility. A 20-year study by the Pew Foundation showed that 60 percent of the bottom fifth moved up over the two decades, with 4 percent making it into the top fifth. It also showed that 60 percent of the top fifth fell out over the period.
The important downward mobility is in Obama’s polling
Obama Causes Income Inequality
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