Tuesday, May 3, 2011

Obama’s Economic Policies are Hurting the Middle Class

President Obama and other liberal politicians including Bernie Sanders and Patrick Leahy often talk about the declining middle class in our country.

When President Obama took office, the average price of gas in the U.S. was $1.83 per gallon.  It is more than double that today.  The increase has the same effect as a regressive tax hitting the middle class particularly hard.

When Obama took office, the unemployment rate was just under 7.00%.  Today it is 8.9% and likely to move higher.  Even though the recession ended nearly two years ago in June, 2009, our economy is growing at a rate of only 1.8%.  (Growth should be at least 3.5% if we are to reduce the unemployment rate.) There are now over 15 million people unemployed in the U.S., many of whom have not had a job in over 2 years.  Most of the unemployed are (or were) middle class.  

Most middle class families accumulate wealth by building equity in their homes.  Under the Obama administration, this has not been possible because home values have declined as much as 50% in some states with few signs of recovery.

The profligate spending under the Obama administration has done little to stimulate our economy, but it has stimulated inflation.  After nearly a decade of little or no inflation, we are now facing a significant rise in the rate of inflation showing up in food prices and other staples creating a particularly heavy burden for the middle class.

The purchasing power of the dollar has declined steadily under the Obama administration.  It has declined 17.3% just since June of 2010.  A weak dollar means that any products that we import including oil and foreign made cars will cost more…another “tax” on the middle class.

Obama policies call for advancing alternative energy, but because alternative energy is not economically viable it must be supported with tax subsidies and rate premiums to entice people to convert.  The tax subsidies benefit only those higher income people who can afford these expensive alternatives, and the rate premiums paid by power companies for “net generation” are passed on to all rate payers hitting the middle class particularly hard.

Obama’s policy calling for the expansion of alternative fuels like ethanol require tax subsidies and to the extent that it creates artificial demand for corn, food prices for all corn-based food items are increased.  This is a direct cost of living increase for the middle class.

Obama and other liberal politicians repeatedly lament the decline of the middle class, yet they pursue policies that are creating financial burdens that are reducing the standard of living of every member of the middle class.


  1. Hey Charlie,

    What universe are you living in? Perhaps you recall that the dept (and mortgage crisis) was beginning as Bush was leaving office. In fact, the first steps to deal with it were jointly approved by both presidents. The reality is that greed and incompetence created an entirely unnecessary disaster. Tens of millions of people are still suffering from its consequences. And the Wall Street boys and the economists who are responsible for the disaster are all doing just fine. There's nothing to blame on the Obama administration.

    Ethanol subsidies are perversely favored by both parties. Probably a result of Iowa being a critical presidential election state. Check out this link on redstate.como for how much it mattered to GOP legislators just this past December:

    Paul Fixx

  2. Paul: I did not suggest that the financial crisis was caused by the Obama Administration. I addressed specific policies adopted since he took office that have kept unemployment high and economic growth rates low. The TARP program or "bank bailout" ($750 billion) was, indeed, supported by both Bush and Obama. Those funds have been repaid in full with interest by the banks. The Stimulus program ($850 billion+)initiated by the Obama administration is the failed policy referred to in my article.

    By the way, today's jobs numbers indicate that the unemployment picture is still a long way from showing improvement.

  3. I strongly suspect that neither political party really knows what to do regarding the economy, nor do the experts, although they have opinions and theories. (If you want to really check out their level of confidence, ask them to guarantee the stated results of their anticipated policies, and then require them to put up their family assets resulting in forfeiture if they are wrong.) The problem is simply too large, complex, and interconnected with economies of other nations, over which the US has no control.

    To fix most things in the universe, you have to get them to “sit still” at least for a short period of time, and suspend those outside factors bearing on the problem. This is a dynamic situation. If we as a society actually knew what worked, and could establish a cause and effect relationship with any certainty, we would have done it by now.