Economic Improvement Connects to Conservative Policy
Things are looking up for the middle class, in spite of everything Obama did.
America’s working class was a tremendous focus of the 2016 presidential election. Hillary Clinton took for granted voters in the Rust Belt in particular and chose to focus on bicoastal population centers, in keeping with the Democrat Party’s clear and continued leftist direction. Meanwhile, Donald J. Trump’s populist sloganeering stuck. His promises to “Make America Great Again” and to put “America First” not only resonated but created a firm foundation of an intense voter base.
From 2007 through 2016, the working class was dramatically impacted through a recession that began as a subprime mortgage crisis caused by Democrat policies, with home values tumbling 28% — a drop not seen since the Great Depression of 1929. The widespread foreclosures and the tremendous impact to lending institutions due to bad debt began sinking those whose biggest investment was their home. And, as we all remember, the beginning of massive government spending kicked in with Barack Obama’s “stimulus” of almost $1 trillion and bailouts to rescue companies.
And who bailed out the working class? What “stimulus” made its way into the family budgets of middle America, not just financiers and investment institutions? The unemployment rate spiked to 10% in October 2010 due to six million jobs being eliminated in the previous 12 months, testifying to the fact that the middle class was hurt disproportionately in the recession of 2007-2008.
According to a recent Wall Street Journal (WSJ) review of newly published Census data, real median household income dropped during the Obama presidency with an increase in measurable poverty. Households earned $55,683 in 2009, which tumbled to $54,398 in 2014. Food stamp participation in 2007 was 26.3 million recipients, and that number almost doubled by 2013 with more than 47.6 million Americans enrolled.
Middle-class households are only now seeing their income eclipse 1999-2000 levels. According to a Washington Post analysis on the same Census data, the income of black workers still remains lower than the high reached in the Bill Clinton/George W. Bush years — then it was $41,000, now it’s $39,490. All median household income rose to $59,039 from $54,105 when comparing earnings from two decades ago, 1996 to 2016. In 20 years, an average family had a $5,000 raise during a window of time that energy prices soared, the cost of health care and education exploded, and the value of one’s home was reduced by about a third. Oh, and don’t forget that mandatory government-run health insurance program that was supposed to save each family $2,500 each year but, instead, drove deductibles so high that no one can afford their “affordable” health care.
Compare that $5,000 earnings increase over almost 20 years to a six-year window during the era of President Ronald Reagan: From 1982 to 1988, poverty dropped 2.4% with an increase in real household income of $4,905.
So, when Trump spoke about the need to improve America’s economy after the Obama years with hopes to renegotiate trade deals, prioritize the American worker above illegals, and to repeal and replace ObamaCare, he won. Trump is president today not because of his polished campaign machine or eloquent rhetoric. He inspired workers to see hope down the economic road. He echoed the plans and policies from the Reagan administration.
And, indeed, the U.S. economy, according to Census data, tracked along with the launching of presidential campaign activity beginning in 2015 — perhaps a signal to all of America that the Obama economy would soon meet its end. Furthermore, reforms to food stamp programs permitted by the Republican-controlled Congress freed the hands of states to tie work requirements to benefits, and it clearly worked.
Between 2015 and 2016, according to the WSJ, median income for blacks and Hispanics climbed 5.7% and 4.3%, respectively, with 2.5 million Americans lifted out of poverty by work. The 99 weeks of unemployment benefits came to an end in 2014 with 3.4 million dropping from the program. Social Security Disability rolls also deflated by about 25,000 in 2015 and full-time, year-round workers increased by 2.2 million as many people moved out of part-time jobs between 2015 and 2016.
Americans are indeed “getting richer,” as the WSJ declared in its editorial headline. A recent Gallup poll shows that 64% of Americans think their “standard of living” is improving, the highest percentage since 2007.
Mercatus Center researcher Dan Griswold notes that, in real 2016 dollars, the percentage of Americans earning less than $35,000 has fallen to 30.2% while those earning more than $100,000 has almost tripled to 27.7%.
Now, at a 16-year low in unemployment due to 2.2 million jobs added to the economy, with unquestionable consumer sentiment driving a more favorable economy, any continued growth will come with serious policy changes such as tax reform. That could drive wages even higher.
These figures don’t lie. Americans express more confidence when they’re employed and have hope for more opportunity. With the responsiveness witnessed over the last 24 months to a reduction in government programs and regulations, Congress must act on its promise to restructure the U.S. tax code to incentivize work, savings and investment that creates jobs.