From the Wall Street Journal, The President of Inequality- Policies promoting equality over growth have damaged both.
All of this is especially notable because it follows the most sustained policy focus on reducing inequality in decades. President Obama’s stimulus spending in 2009-2010 was devoted mainly to transfer payments like Medicaid and jobless benefits. Expanding the number of Americans on food stamps and disability payments have been explicit policy goals. ObamaCare is designed to provide “free” health care to millions of Americans by taxing the wealthy and those who already have insurance.
Mr. Obama has also focused on income redistribution to punish the affluent while financing income transfers. So he cornered Republicans in the 2013 fiscal cliff and succeeded in raising the top income tax rate as well as levies on capital gains, dividends and small-business income.
On CBS ‘s “60 Minutes” on Sunday Mr. Obama answered a question about economic anxiety by offering another increase in the minimum wage. But the Nancy PelosiDemocrats raised the minimum wage in three stages to $7.25 an hour in 2009 from $5.15 in 2007. If mandated wages are so beneficial to the American worker, where is the evidence?
The Census data show that every income group that was supposed to benefit from the higher wages is worse off than before the minimum wage was increased. This is because the benefits of mandated wage increases for some workers are dwarfed by the overall negative economic trends of slower growth and reduced opportunity.
Another culprit in this skewed economic recovery has been monetary policy. The Fed’s QE exertions have been explicitly targeted at raising asset prices, such as stocks and real estate, that are disproportionately held by the affluent. Meantime, Americans without such assets have received a pittance on their savings. The White House has been a stalwart supporter of these Fed policies.
Census data like this used to get banner headlines, but these days they barely get media notice. Perhaps it is too embarrassing to point out that the policies flaunted to reduce inequality have presided over so much more of it. Instead, liberals use the fact of flat or falling incomes to call for more of the same policies that have resulted in flat or falling incomes. By making equality a higher priority than economic growth, Mr. Obama has reduced growth and increased inequality.