Stephen Moore
President Joe Biden talked incessantly about his “middle class out” economic strategy. Given his record, it would have been more accurate to call it the “middle class down and out” plan. Inflation has eroded away any income gains under Biden’s presidency.
Now Vice President Kamala Harris has her own riff on this theme. Her campaign motto is “Building up the middle class.” It isn’t exactly “Make America Great Again,” but Democrats don’t have a lot of time to come up with anything catchier, given that Harris was reluctantly chosen as the 8th-inning relief pitcher for Old Joe, who had long ago lost his fastball.
But Harris and Biden are, as the old saying goes, “birds of a feather who stick together.” They are running on almost precisely the same agenda as we’ve seen for four years.
The central problem is that the record for most Americans is a lot more meaningful than the message. The irony of this “build the middle class” mantra is that no administration in recent times has done more to tear down the middle class than Biden-Harris.
The chart below, based on the most recent Census Bureau data on incomes and poverty, shows that under President Donald Trump, incomes of the middle class rose faster than under all three previous presidents combined.
(U.S. Census Bureau Data)
The difference between the two administrations is $8,000 per household in Trump’s favor.
In these numbers, I include the COVID-19 year 2020. Excluding the black swan event of the pandemic that year, Trump’s number for income gains would have been well over $6,000.
This same data shows that income gains for minorities and female-headed households were larger under Trump, and poverty rates fell faster under Trump as well.
The reasons for the Biden-Harris administration’s lousy record are that even though incomes grew under both presidencies, inflation erased all the real income gains for workers. In other words, if the price of eggs and bread and rent and gas go up more than your paycheck, you are at best treading water, or for the majority of households, you are using pots and pans to keep the water out of the basement.
Biden and Harris seem to have really believed that inflation would be transitory. They drank the Kool-Aid of a trendy new economic theory called modern monetary theory. This theory posited that the U.S. government could spend and borrow until kingdom come without any collateral damage. But a high school economics student could tell you that handing out free money to stimulate demand for goods and services is likely to raise the price of goods and services. In the end, we learned the hard way that there is no getting around the old law of supply and demand.
Now that the economy is showing signs of cracks in the hill, the only Kamala Harris remedy is trillions more spending and borrowing. Team Kamala thinks the Fed can simply cut interest rates and the pain will go away. Maybe. But more likely, that will only stimulate more spending and make the economy even more vulnerable. What they won’t do is cut excessive government spending and debt — for example, by canceling some $300 billion in failed green energy programs.
The left shouts that Trump is the one who will rekindle inflation with his tax cuts. But that is a hard message to sell given that there was virtually no inflation during Trump’s first term. His average annual inflation rate was 1.9% versus 6% for Biden-Harris.
Trump will continue to argue to the voters that he is the president who will “build out” the middle class, and even though the future is hard to predict, he has history firmly on his side.
Stephen Moore is a visiting senior fellow at the Heritage Foundation and chairman of Unleash Prosperity.
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