Last Month, the White House’s Council of Economic Advisors released its annual “Economic Report of the President” which reviews the data on the economic “recovery” and purports to be a program of “middle class economics.” Leaving aside the question of why the poor and working classes should not also be particular objects of the president’s attention, the document reflects either a stunning divorce between the president’s advisors and reality or is a cynical propaganda piece.
No one but corporate media commentators could take seriously the report’s spin on the “recovery”—supposedly the result of a “successful multifaceted policy response” on the part of government and the Federal Reserve. Nor could a serious person believe that the centerpiece of the report, slashing of corporate taxes, is really aimed at benefitting the middle class.
Despite the report’s claims about a booming job market, we know that most of those jobs “created” have been low-wage and part-time, that wages in general have either stagnated or declined even as productivity has continued to increase, and that benefits have been slashed or are under continual assault. At the same time, the report decries the historically low labor force participation rate while failing to connect it to the merely statistical decrease in the unemployment rate; for millions have, in fact, simply dropped out of the labor market after failing to find jobs. A government that truly cared about its citizens might show at least a bit of interest in who they are and how they are faring.
Similar comments could be made about the supposed recovery in the housing market, which has been largely driven by big investors buying up thousands of homes at a time to turn them into rental properties—thus becoming parasites on the very people victimized by the collapse of the real estate market in 2008. The report also notes (pp. 30-32) the drop in the share of total wealth of the bottom 90 percent of the economy from 68 percent in 1973 to 53 percent today even as the top 1 percent’s share grew from 7.7 percent to 17.5 percent over the same period.
Not surprisingly, the explosive growth in inequality, especially since 2009 and quantitative easing, is not connected at all in the report to the specific actions of policy makers. But even a country bumpkin like me can see the correlation between the continued slashing of the top income tax rate, topping 90 percent in the 50s and 60s to the paltry 35 percent of today, and the rise in economic inequality. Which makes the report’s main policy proposal, lowering corporate income taxes, all the more perverse, since it will surely drive up income inequality still further and need to be paid for by yet more cutting of social programs that benefit the middle class.
The rationale for this policy? You may have heard it before: “Business tax reform offers the potential to boost productivity by improving the quantity and quality of investment in the United States” (p. 239). In other words, give more money to the already rich, and they will invest it into new production that will bring about economic growth, fuel the creation of jobs, and even (for you liberals out there) bolster tax revenues. How many times are we going to be fooled by this? Supply-side, trickle-down economics didn’t work under Reagan, and didn’t work under Bush with his infamous tax cuts for the wealthy. Yet the same basic concept was trotted out in the face of the 2008 financial crisis, when trillions of dollars were handed over to Wall Street and the big banks even as working people were left to shift for themselves. The claim was, once again, that private financial institutions and individuals would reinvest their newfound unearned wealth into the real economy, driving economic growth and benefiting working people as a happy concomitant. As anyone who knows even a smidgeon of economic history might have been able to predict, however, that did not happen. Instead, the predictable happened: the already-wealthy did not risk their wealth on new production in the real economy, but parked it in paper assets that could be expected to safely increase in value in response to central bank policy as well as through various attacks on working and middle class living standards (e.g., slashing wages and benefits, which straightforwardly boosts profitability).
Meanwhile, the widespread failure of the economy to fulfill its basic function of meeting human needs has real consequences. Child poverty is at its highest levels since the 1950s, with California leading the way with a stunning 27 percent of children living in poverty. Overall, 18 percent of U.S. kids live in poverty, a number that would be far higher, 33 percent, without government interventions such as food stamps and other programs that are under constant threat of cuts. “The Economic Report of the President” issues one lame call to fight poverty by boosting the minimum wage a bit (p. 153), which its authors surely know is politically impossible. Elsewhere in the report, the same tired old argument about trade liberalization is hauled out and dusted off: low-wage manufacturing and off-shoring will create “opportunities” for the poor to lift themselves out of poverty through wage slavery (pp. 311–12).
This is the view of things from the supposedly “liberal” and “leftist” Obama. It is revealing in that it opens a window onto the thinking of a section of the ruling elite, represented politically by the Democrats. Basically, they have adopted the neoliberal and supply-side agenda of the Republicans, but want a few ornamental “progressive” measures to go along with it.
Those who would see the revitalization of Christian culture must break utterly with the whole current political-economic order, its institutions, and its representatives in government. They would measure the performance of the economy not in terms of stock market value or inflation or even the kind of economic “growth” that leaves the majority behind. Rather, they would work to ensure that each human being has the means to provide for themselves and their families by the sweat of their brow, not by the labor of others like the capitalist class, and not by government handouts like a near majority of Americans today. They would work to create a world in which each human being has access to employment, education, a healthy environment, adequate nutrition, healthcare, housing, freedom of speech and religion, and a world free of war. These are the things we should be thinking about when we ask whether our society is headed in the right direction.
 Annie E. Casey Foundation, “Measuring Access to Opportunity: Kids Count Data Snapshot,” http://www.aecf.org/m/resourcedoc/aecf-MeasuringAccesstoOpportunityKC2-2015.pdf.