Why Obama’s ‘Middle-Class Economics’ Sounds Familiar

21 Jan 2015 | Author: | No comments yet »

Barack Obama is shattering the competiveness of the US economy.

If it wasn’t for the fact the speaker was clean shaven, didn’t have long straggly hair, and didn’t tell any lewd jokes, it could have been Russell Brand delivering the State of the Union address to Congress this week. Six years ago this month, the newly elected President Obama declared in a speech that “the strength of our economy can be measured directly by the strength of our middle class.” By that direct measure, the economy is weaker today than it was then – despite accelerating economic growth, tumbling unemployment and rising stock prices.Facing a hostile Republican Congress in his last best chance to substantially improve the American standard of living, President Obama thought surprisingly small for a man with grand ambitions.

EVEN primary school children in the remotest parts of our country are aware of the importance of a strong, prosperous United States to the well-being of Jamaica. He speaks on “Bloomberg Surveillance.” (Source: Bloomberg) It comes from “bloomberg view.” the capital gains tax rate boosted the after-tax income of the top 1%. i am reading “the wall street journal” this morning. This, year seven, was finally the year in which a strengthening U.S. economy enabled the President to say that he was climbing from the wreckage of the Great Recession to build better futures for working- and middle-class families. As our most important trading partner, the greatest source of remittances sent from the large number of Jamaicans living there, and our biggest tourist market, we have a vested interest in the progress and advancement made by the US.

Biden is optimistic Republicans and Democrats can work together to make “this recovery good for everyone.” Vice President Joe Biden said Wednesday that Republican lawmakers will be motivated to work with Democrats on efforts to bolster middle-class families because the GOP wants to prove they can govern. That is the best wrong track number so far since his reelection in 2012. it still means that most people are not sure about his direction and about the country’s. americans seem to be against taxing the rich for the sake of taxing the rich. It was a stem-winder of a moment in Boston, but as Obama launched into his remembrance of things past inside the House chamber Tuesday night, he delivered his signature line with a wary air. Falling unemployment and steady job creation gave rise to Obama’s good mood even as he focused on the painful fact that, for three decades, Americans have been walking up a down escalator, their wages flat or slipping even as costs rose.

From 2010 to 2013, middle-class families sold off assets and spent down what little savings they had, in order to pay off debt and compensate for stagnating wages, according to calculations by New York University economist Edward N. To the extent that the public recognizes the need for greater government revenue, for relief for middle and lower income americans, there is support for increasing taxes on the wealthy. It was as if the president wanted to acknowledge, at least for that moment, that so much of what was once his distinguishing message had been repeated so often, it was now something of a cliché. It’s now up to us to choose who we want to be over the next fifteen years, and for decades to come,” he said. * The US economy is growing and creating jobs at the fastest pace since 1999. The list of worker-friendly economic goals Obama recited Tuesday night, then, was ambitious enough to taunt his enemies: a higher federal minimum wage, a week of paid sick leave, subsidized childcare, a tax plan that would raise taxes for the rich and fees on banks, free community college education, investment in infrastructure, paid apprenticeships to train workers, authority to strike new trade deals, even sending astronauts to Mars.

Biden echoed the president’s pitch to the middle class, calling for tax increases on wealthy families and tax breaks for working families who haven’t felt the effects of the economic recovery. Over the past five years, US businesses have created more than 11 million new jobs * Every three weeks, the US brings online as much solar power as it did in all of 2008. Its taxes on entrepreneurs are rising all the time, and one of the highest and most punitive corporate tax regimes in the world is driving American companies abroad. The president, the Congress and the country were only two-and-a-half months removed from a midterm election that delivered the Senate to Republican control and increased the GOP majority in the House. “Pundits,” Obama said in his address, “pointed out more than once that my presidency hasn’t delivered” on the promise of a unified America. While he sketched proposals to invest in infrastructure, including expanded broadband access, he fell short on ramping up investments in basic research; on a commitment to cleaning up an anti-competitive corporate tax code, and on any hope of forward movement on immigration reform.

One investment bank, KBW, baldly told clients on Tuesday that it views a bank tax “as political posturing and not a serious policy proposal.” Conservative and libertarian thinktank Generation Opportunity scoffed that the community college plan would involve raising “taxes on 529 savings plans to fund his unaffordable government policies” which would in turn hurt middle-class families. It’s a funny thing the United States does to itself ever since the passage of the 22nd Amendment to the Constitution — the one that limits presidents to two elected terms.

If a president wins a second election, and especially after the last congressional midterm, he is (and at this point, they’ve all been “he”) less interested in the approval of voters, and more interested in the judgment of history. Before the final electoral contest, a president could get things done because he had the power of a watchful electorate to hold Washington accountable; afterward, with no one who might be eying a political future paying the chief executive much attention, it was all noble gestures and foreign trips. Rather than mount a full, frontal assault, Obama opted for worthy programs that may take the edge off financial pain for millions while playing well in the 2016 presidential election, particularly if Republicans buck. The cost of modernizing the country’s crumbling infrastructure, a favorite Obama issue, starts at $2.4tn, according to the Council on Foreign Relations. The White House’s plans include new spending on tax breaks aimed at working families, which would be funded through an increase on top capital-gains tax rates and new taxes on many inheritances. “Do you want to continue to help trust-fund babies?” Mr.

And in the months ahead, I’ll criss-cross the country making a case for those ideas.” As the president reeled off his achievements, we had the sense that Americans are better off today than they were in 2008 when he first took office. He would raise the capital-gains rate from 23.8% to 28%, the level when Ronald Reagan left office, for those earning more than half a million d ollars.

A $3,000 tax break for childcare would seem like to run into the same shoals as Obama’s doomed tax proposal to raise fees on high earners again: this Congress cannot agree on taxes. That’s not a pejorative term … The last thing they need is another $210 billion tax cut.” Senate Majority Leader Mitch McConnell (R., Ky.) has said the president’s plan to raise taxes on high-income Americans—$320 billion over 10 years—undercuts hopes for reaching agreement on an overhaul of the tax code.

Jamaicans who followed the address may well be looking at our current Administration and hoping that the scorecard will be as impressive when the time comes for the reckoning. 1. Obama did that by arguing he had done the necessary work to get the economy into recovery, and by making the case, going forward, for building on a policy philosophy he dubbed “middle-class economics.” “Middle-class economics works,” he declared. Since he became President, the rate has been steadily increased from 15pc to a level that is now similar to, or more than, most high-tax European countries including the UK. But since the January 2010 Supreme Court decision that threw open the floodgates on unregulated campaign donations, each successive election has reflected the greater influence of large donors and corporate cash.

Unlike the UK, however, there is no special rate for entrepreneurs, so anyone starting up a business is likely to see a third of the wealth they create confiscated by the government. That’s what middle-class economics is – the idea that this country does best when everyone gets their fair shot, everyone does their fair share, and everyone plays by the same set of rules” – as guaranteed by government. An Al Jazeera America/Monmouth University poll recently showed that 84 percent of those surveyed feel that “average American voters” don’t have enough influence over their elected representatives. These rifts reinforced a sense of structural injustice that fed into the Occupy movement and then, later, a fascination with the work of Thomas Piketty, who Obama himself termed an inspiration. And numbers like that tend to self-replicate, with voters feeling less reason to go to the polls, and politicians feeling less need to appeal to non-voters.

Observers of the Obama years could argue that the kind of diminished influence and Capitol Hill cold shoulder previously reserved for the end of a two-term presidency has been more or less the story since the 2010 midterms handed control of the House back to the GOP. Its network of venture capitalists, and the willingness of Wall Street to fund growing ventures, meant the successful companies could turn into global multi-nationals very quickly.

Some of the blame for the frustration and stagnation goes to Republicans who made it a goal from the earliest days to limit Obama’s power (if not his tenure), sure — but, just as certainly, the administration, too, out of either public miscalculation or private will, tied its hands on a number of presumably popular initiatives. In 2014, for the first time in a generation, the number of businesses closing down in the US was greater than the number starting up – 400,000 new enterprises were created last year, but 470,000 shut down, according to figures from the US Census Bureau.

The rate of start-up has been declining for a decade now, so that while back in 2005 an additional 100,000 new firms were being born every year, now there is a net loss of 70,000 annually, and that number is rising relentlessly every year. Obama was not acknowledging the new political reality, the TV talkers said. “I know how tempting such cynicism may be,” said the president, referring to the punditocracy’s take on the young Obama’s vision of a united country, and a Washington that today looks more divided than ever. “But I still think the cynics are wrong.” Obama recited a litany of snapshots — graduations from military academies, same-sex weddings, towns recovering from disasters, and communities mourning mass shootings and industrial disasters (mentioned, a tad vexingly, as if they were basically one and the same) — to illustrate what he called “the good, and optimistic, and big-hearted generosity of the American people.” But he was, in his closing tone and in his earlier policy pronouncements, also drawing a picture of a Realpolitik that has shifted demonstrably since the callow candidate from Illinois riled up the party faithful in Boston a decade ago. And Obama’s middle-class economics reflects, almost exactly, the Center’s project on middle-out economics, from apprenticeships to tax breaks to student debt relief.

Obama may have seemed like he was looking forward, but most of Tuesday’s address was, like the references to his DNC keynote, about defending the past. But while that third part is largely about getting Congress to sign off on the money to pay for more education, the second part presents Obama with much more of a conundrum: Even if Americans get more education, where, exactly, will they find better jobs?

High school and college graduations are up, the numbers of uninsured are down, and there is “a new consumer watchdog to protect us from predatory lending and abusive credit card practices.” Should the GOP try to mess with that rosy picture, should they try to repeal the Affordable Care Act or defund the Consumer Financial Protection Bureau, the president made it clear in a voice perhaps more certain than in years prior, he was ready to use his veto power. This president’s answer to that, it appears, is mostly improved infrastructure coupled with light industrial policy — targeted support for manufacturing, in particular. When it came to the future, to new policy initiatives like the ones rolled out in a series of public events over the last two weeks, incremental as so many of them might seem, did Obama really think he was talking about areas where he and the GOP could come together to craft new laws? But there will be an Uber or an Airbnb among them, and the fewer new businesses get started, the fewer big new companies will emerge a decade down the line. “When small and medium-sized businesses are dying faster than they’re being born, so is free enterprise. In the long term, there are fundamental obstacles in our policy and financial system that will hinder the financial progress of those who can’t fall back on inherited wealth.

He does that by trying to narrow the difference between the taxes on labor income and capital income, or what you earn by working versus what you earn by investing. This could eventually prove to be the key difference in Obama’s latest middle-class plan, compared to his past plans — a difference in policy and in politics. The reason the likes of Amazon or Starbucks or Netflix have been able to roll out their operations around the world at such speed, and with such verve, is that Wall Street has always been willing to throw unlimited sums of money at enterprises it believes in. The only initiative mentioned (and only obliquely, mind you) by Obama that most would agree has a chance of passage this session is the Trans Pacific Partnership — a massive trade deal known to critics as “NAFTA on steroids” — hardly a core concern of most rank-and-file Americans, but a top priority for big donors hovering over both sides of the aisle.

And then there was the Commander in Chief’s call for a war powers vote on the military campaign against the Islamic State (or ISIL, as the administration typically calls it). For foreign policy, the expected province of lame-duck presidents, a plea for fast-tracking a Leviathan of a trade deal, and a demand that Congress take a stand on the country’s next war. On the domestic front, intricate, small-bore reforms for the next two years, and a threat to veto anything that messes with what was passed in the last six. At 39.1pc, the US now has the world’s third highest rate of corporate taxes (Chad and the United Arab Emirates are higher, in case you were wondering where was a worse place to locate your business).

True, many Democrats could benefit next cycle from siding with Obama on this set of populist, popular initiatives, but many believe those Democrats — and the president — would have done well championing these issues before the last election (or the two before that, for that matter). Tax inversions have become all the rage, with companies such as the British drug-maker Shire targeted for takeovers that were all about tax planning and nothing to do with industrial logic. That, of course, was before either presidential campaign, before the appointment of a Wall Street-friendly cabinet or the long, drawn-out and inevitably unsatisfying debate over health care reform.

It was before the U.S. public realized no one of consequence would ever be prosecuted for tanking the economy or torturing detainees. “I still believe that we are one people,” the president said. One people can probably come together around the hopeful Obama — both of 2004 and of Tuesday’s speech — without having to pull apart over the friction and failures of the times between. The huge new fracking industry has come out of nowhere to make states such as North Dakota suddenly wealthy, and revived manufacturers that were losing out to cheap Asian competitors. But as the UK discovered under Gordon Brown, and as Germany may be discovering right now under Angela Merkel, lots of small and fiddly changes to the tax system over the medium-term over can easily weaken an economy. Sometime around the early 2020s, the US will be facing a crisis of competitiveness – and since it is the powerhouse of the global economy that will be bad for everyone.

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