Republicans Redistribute Wealth Better than Democrats

When President Obama ran for office in 2008 he mentioned that he intended to make income redistribution a major focus of his presidency.

Democrats claim that only their candidates are qualified to redistribute wealth from the rich to the poor. They characterize their adversaries, the Republican Party, as the party of the selfishly wealthy. Republican policies, Democrats say, are designed to seize wealth from the working class and poor and funnel it to the richest so the wealthiest few can hoard it. Consequently, they predict that under Republicans the working class and poor become worse off.  In other words, Republican policies have the affect of allowing the rich to get richer while the poor get poorer. 

An Obama supporter, on the other hand, would predict that Obama’s administration would improve the economic well-being of the middle class and poor. The rich would have less money under Obama, since he would redistribute it to the poor. Since Obama and his party dominated the Federal Government for two entire years and had the means, motive and opportunity to pass any bill to promote their redistribution goal, it is fair to say Obama’s tenure can be used to fairly appraise the efficacy of redistribution policies.

If wealth were seized by Obama and redistributed to the working class and poor, one could measure this redistribution through standard national measures including  wage growth, median income, labor force participation, unemployment, and growth in wealth, and see improvement in all these measures. These measures can then be compared to the results of the policies of Ronald Reagan, the Republican president who allegedly acted to help the rich keep more of their money.

Reagan lowered the tax rate of the wealthiest Americans from 70% to a shameless 28%. Democrats predicted this tax cut would cause of loss of income tax revenue that would force drastic cuts in essential safety net programs. 

Five years into Obama’s policies a comparison can be made between the effects of Obama’s and Reagan’s policies on income redistribution. First, we can consider wage growth. Social Security uses a standard measure called the national wage indexing series. Its data show that during the first four years of Reagan’s first term the national average wage index rose from 13,773 in 1981 to 16,135 in 1984, an increase of 17%. By comparison, during the first four years of the Obama’s first term the wage index went from 40,711 to 44,321 an increase of 9%. So it’s accurate to say that the national average wage increase rose almost twice as much under Reagan than under Obama.   

Also, by the end of Reagan’s eight years it rose 46%. Since the median income of Americans has declined to where the average working family now earns as much as they did in 1996, it’s fairly safe to say we won’t see an increase of 46% by the end of Obama’s second term, largely because the Affordable Care Act will suppress salaries due to shorter work weeks and worker layoffs. This is happening already. This oversight by the architects of the Affordable Care Act is astonishing, since President Obama and his party perceive corporate greed as the most powerful motivator of the private economy. They should have predicted that if healthcare coverage is based on hours worked, employers would seek to reduce costs by lowering the number of hours their employees work. 

Now look it labor force participation. In March of 2014 the LFPR was 63.2%, the lowest it has been since Jimmy Carter was president. Reagan’s policies increased Carter’s low LFPR to nearly 67% by 1989. But Obama reversed this improvement, and it has declined back to under 63.

A precipitous drop in the LFPR occurred in 2009 right when Obama took office. It could be argued that this was not Obama’s fault, that he inherited this situation. But Reagan inherited an LFPR that was even worse, and the data show that Obama’s  policies did not improve the LFPR while Reagan’s policies did.

Take a look at take home pay: in 2002 under Republican President George W. Bush the lowest income tax rate was reduced one-third, from fifteen percent to ten percent. The second lowest rate was reduced from 27.5% to 15%. Democrats in Congress protested, and many voted against this income tax reduction.  In other words, they wanted the lowest wage earners to take home less of their hard-earned money. 

Another measure is job growth. Under Ronald Reagan’s policies 22 million net new jobs were created in eight years. This, after inheriting an economy that was in many measures far worse than that inherited by President Obama. Studies also predict that ObamaCare may cost the nation up to 2.6 million jobs.

Democrats love to preach that Republicans are the party of the rich, yet Obama’s own record shows that Democrats have far outperformed Republicans at widening the gap between the rich and poor. Under Obama’s policies this gap has moved in both directions: while he made the richer more wealthy he simultaneously lowered the wealth of the middle class and poor. In 2011 USA Today reported that the typical U.S. family got poorer in the past 10 years. A recent report by OXFAM found that since the recession of 2009 the gap between the rich and poor has grown faster in the U.S. than in any developed country of the world. The top one percent captured 95% of the post-recession growth in wealth, while 90 percent of Americans became poorer.

The wealthiest households are doing much better since they benefitted from the boom in stock market values, thanks to President Obama’s insertion of four trillion dollars of money borrowed from future middle class and poor taxpayers.

And one must remember that more persons are in poverty today, food stamp use is at an all-time high, teenage unemployment is the highest since WWII, and black unemployment has risen. When Reagan lowered income taxes, one result was that in eight years the revenues going to Washington nearly doubled. This meant more money for people programs.

And while Reagan’s eight years were followed by prosperity and economic growth, the long-term effects of Obama’s policies are not promising. The unprecedented rise in the national debt will have to be serviced by annual interest payments that will take away money from safety net programs. The QE3 program, which has yet to be fully outlined in detail, created four trillion of more debt for the Treasury Dept.  This is also unprecedented and was done without consent of Congress. Future generations will have to live with these burdens. 

So not only are current citizens doing worse under Obama, but after he leaves they will continue to suffer. 

The most astounding aspect of this analysis, from a campaign year perspective, is that the U.S. news media remain deaf and dumb to these facts.

That Republicans create jobs and elevate the working class is still being proven today. Of the U.S. states experiencing the most job growth in the Obama economy the great majority are run by Republican governors.

When President Obama ran for office in 2008 he mentioned that he intended to make income redistribution a major focus of his presidency.

Democrats claim that only their candidates are qualified to redistribute wealth from the rich to the poor. They characterize their adversaries, the Republican Party, as the party of the selfishly wealthy. Republican policies, Democrats say, are designed to seize wealth from the working class and poor and funnel it to the richest so the wealthiest few can hoard it. Consequently, they predict that under Republicans the working class and poor become worse off.  In other words, Republican policies have the affect of allowing the rich to get richer while the poor get poorer. 

An Obama supporter, on the other hand, would predict that Obama’s administration would improve the economic well-being of the middle class and poor. The rich would have less money under Obama, since he would redistribute it to the poor. Since Obama and his party dominated the Federal Government for two entire years and had the means, motive and opportunity to pass any bill to promote their redistribution goal, it is fair to say Obama’s tenure can be used to fairly appraise the efficacy of redistribution policies.

If wealth were seized by Obama and redistributed to the working class and poor, one could measure this redistribution through standard national measures including  wage growth, median income, labor force participation, unemployment, and growth in wealth, and see improvement in all these measures. These measures can then be compared to the results of the policies of Ronald Reagan, the Republican president who allegedly acted to help the rich keep more of their money.

Reagan lowered the tax rate of the wealthiest Americans from 70% to a shameless 28%. Democrats predicted this tax cut would cause of loss of income tax revenue that would force drastic cuts in essential safety net programs. 

Five years into Obama’s policies a comparison can be made between the effects of Obama’s and Reagan’s policies on income redistribution. First, we can consider wage growth. Social Security uses a standard measure called the national wage indexing series. Its data show that during the first four years of Reagan’s first term the national average wage index rose from 13,773 in 1981 to 16,135 in 1984, an increase of 17%. By comparison, during the first four years of the Obama’s first term the wage index went from 40,711 to 44,321 an increase of 9%. So it’s accurate to say that the national average wage increase rose almost twice as much under Reagan than under Obama.   

Also, by the end of Reagan’s eight years it rose 46%. Since the median income of Americans has declined to where the average working family now earns as much as they did in 1996, it’s fairly safe to say we won’t see an increase of 46% by the end of Obama’s second term, largely because the Affordable Care Act will suppress salaries due to shorter work weeks and worker layoffs. This is happening already. This oversight by the architects of the Affordable Care Act is astonishing, since President Obama and his party perceive corporate greed as the most powerful motivator of the private economy. They should have predicted that if healthcare coverage is based on hours worked, employers would seek to reduce costs by lowering the number of hours their employees work. 

Now look it labor force participation. In March of 2014 the LFPR was 63.2%, the lowest it has been since Jimmy Carter was president. Reagan’s policies increased Carter’s low LFPR to nearly 67% by 1989. But Obama reversed this improvement, and it has declined back to under 63.

A precipitous drop in the LFPR occurred in 2009 right when Obama took office. It could be argued that this was not Obama’s fault, that he inherited this situation. But Reagan inherited an LFPR that was even worse, and the data show that Obama’s  policies did not improve the LFPR while Reagan’s policies did.

Take a look at take home pay: in 2002 under Republican President George W. Bush the lowest income tax rate was reduced one-third, from fifteen percent to ten percent. The second lowest rate was reduced from 27.5% to 15%. Democrats in Congress protested, and many voted against this income tax reduction.  In other words, they wanted the lowest wage earners to take home less of their hard-earned money. 

Another measure is job growth. Under Ronald Reagan’s policies 22 million net new jobs were created in eight years. This, after inheriting an economy that was in many measures far worse than that inherited by President Obama. Studies also predict that ObamaCare may cost the nation up to 2.6 million jobs.

Democrats love to preach that Republicans are the party of the rich, yet Obama’s own record shows that Democrats have far outperformed Republicans at widening the gap between the rich and poor. Under Obama’s policies this gap has moved in both directions: while he made the richer more wealthy he simultaneously lowered the wealth of the middle class and poor. In 2011 USA Today reported that the typical U.S. family got poorer in the past 10 years. A recent report by OXFAM found that since the recession of 2009 the gap between the rich and poor has grown faster in the U.S. than in any developed country of the world. The top one percent captured 95% of the post-recession growth in wealth, while 90 percent of Americans became poorer.

The wealthiest households are doing much better since they benefitted from the boom in stock market values, thanks to President Obama’s insertion of four trillion dollars of money borrowed from future middle class and poor taxpayers.

And one must remember that more persons are in poverty today, food stamp use is at an all-time high, teenage unemployment is the highest since WWII, and black unemployment has risen. When Reagan lowered income taxes, one result was that in eight years the revenues going to Washington nearly doubled. This meant more money for people programs.

And while Reagan’s eight years were followed by prosperity and economic growth, the long-term effects of Obama’s policies are not promising. The unprecedented rise in the national debt will have to be serviced by annual interest payments that will take away money from safety net programs. The QE3 program, which has yet to be fully outlined in detail, created four trillion of more debt for the Treasury Dept.  This is also unprecedented and was done without consent of Congress. Future generations will have to live with these burdens. 

So not only are current citizens doing worse under Obama, but after he leaves they will continue to suffer. 

The most astounding aspect of this analysis, from a campaign year perspective, is that the U.S. news media remain deaf and dumb to these facts.

That Republicans create jobs and elevate the working class is still being proven today. Of the U.S. states experiencing the most job growth in the Obama economy the great majority are run by Republican governors.