Friday, March 13, 2015

President Obama and Middle Class Economics

Photo courtesy of Latin Post
I had a friend offer the following question
Serious Question: If the policies that President Obama and his administration are working and improving the entire government, economy, and the lives of Americans (stats can prove), why are the Republicans (some Dems also) so offended and/or against them? I thought that was what was supposed to happen.
Here are a couple of issues with President Obama. 

From the perspective of Free Market Economics Obama is not doing much that is helping the economy. I would argue that President Obama is not much different than GW Jr. Republicans want a small government less interference in capitalism. With all of the "Green" initiatives Obama has pushed has ended up costing us "Small guys" more money. 

1. There is the argument that what we are doing is simply printing more money to prop up the country and the gains that we are experiencing are non-existent. Just Google "Quantitative Easing" According to people over at the Economist, the jury is still out over Quantitative Easing
To carry out QE central banks create money by buying securities, such as government bonds, from banks, with electronic cash that did not exist before. The new money swells the size of bank reserves in the economy by the quantity of assets purchased—hence "quantitative" easing. (The Economist)
When I think of Quantitative Easing, I think about the government creating money out of thin air.  as the article points out the central bans are buying bonds with, electronic money that did not exist before.

2. President Obama has waged a war against conventional energy means. Democrats often argue that the environment is important, however, all of these changes that we are making end up we only improve our situation by less than 5% globally. Personally I would argue that this 5% difference would attribute to about 40% of the high prices we are seeing while there are hardly any increase in wages. 

 











According to the experts:
Declining real household incomes, coupled with increased energy prices, are burdening family budgets for millions of low- and middle-income Americans. Real household incomes have declined across all five income quintiles measured by the Bureau of Labor Statistics since 2001. The largest percentage losses of real average household incomes have occurred in the first and second income quintiles, among households least able to afford higher energy costs for heating, cooling and other necessities. Average real household incomes in these lower-income household groups decreased by 13% and 10%, respectively, from 2001 to 2012 (americaspower.org)

 3. The Administration is touting low unemployment numbers that are not telling the whole story.

I would personally argue that wages have been going down as the jobs that are available are less and less viable. Meaning prior to 2008 one might have been making $50k annually and now a person would struggle to make $40k. A person making said $50k a year might have been able have $5k left at the end of the year now the same person would have to make about $70k in order to be in the same position pre 2008.  My numbers may not line up but, the people at the Pew Research are saying the same thing.

4. There is a decline in the amount of Small Businesses at least according to USNews