04-14-2012, 01:48 PM
Obama’s class warfare rhetoric is recklessly short
| Obama’s class warfare rhetoric is recklessly short-sighted |
Posted April 12, 2012 at 1:35 pm by Meredith Jessup
Earlier this week, President Obama repeated an all-too-familiar talking point in an attempt to justify increasing taxes on the wealthiest Americans. “What drags our entire economy down is when the benefits of economic growth and productivity go only to the few, which is what’s been happening for over a decade now,” he said, “and [the] gap between those at the very, very top and everybody else keeps growing wider and wider and wider and wider.”
In essence, President Obama believes that the living standards of middle-class Americans have remained stagnant while wealthier Americans have grabbed up all the money in recent years. It’s time to raise their taxes and spread the wealth around — after all, that would be the “fair” thing to do, right? Wrong.
Philosophical arguments aside, Obama’s off base here not just for his flawed redistributionist philosophy, but because his ideas rely on the very incomplete research of two economists, Thomas Piketty and Emmanuel Saez. According to them, median American incomes rose just 3.2% from 1979 through 2007 (adjusted for inflation). What’s wrong with this? It’s just plain wrong, according to a new study from economist Richard Burkhauser and other researchers at Cornell University.
Thus, the Cornell study concludes:
Income inequality increased in the United States not because the rich got richer, the poor got poorer and the middle class stagnated, but because the rich got richer at a faster rate than the middle and poorer quintiles and this mostly occurred in the 1980s. .. the apparent failure of the median American to benefit from economic growth can largely be explained by the use of an income measure for this purpose which does not fully capture what is actually happening to the resources available to middle class individuals.“The inequality and stagnation alarmists were wrong. And so, therefore, is the economic rationale of the president’s class-warfare economic policies,” Pethokoukis concludes. “Not that economics ever had much to do with them anyway.”
In the end, the data used by the Obama administration to justify their radical tax agenda are fundamentally flawed and, as a result, the president is blind to what has actually been happening with the resources available to middle class individuals. When you take it all into account rather than selectively picking and choosing which statistics to look at, middle class Americans are found to have made substantial gains over the last three decades.
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