Economics

How Obama distorted inequality statistics in his ‘60 Minutes’ interview

Some more weirdness — and I am being charitable here — from President Obama’s  “60 Minutes” interview, this time about income inequality. First Obama said this (bold for emphasis):

Our economy is in a transition of the sort that America’s gone through maybe every 70-75 years. We went from an agriculture economy to an information, to an industrial economy during Teddy Roosevelt’s period. We’ve now gone from an industrial to a knowledge-based, innovation society. And, you know, there are a lot of disruptions. And the middle class in America has really taken it on the chin, during this period. They haven’t seen their wages go up, they haven’t seen their incomes go up. You know, women went into the workforce to try to keep family incomes up. But then that wasn’t enough; they ended up getting into debt. And they’re not seeing enough prospects for a future where their kids are gonna do better than they are.

Then he said this:

Now we can have a discussion about potentially reforming some of those deductions, but you can’t get away from the basic concept that either we have a system in which the people who have benefited the most from this new economy — by a magnitude of 200%-300% increases in their income. Either they’re doing a little bit more or they’re not.

Clearly what Obama is referring to in the second quote is the recent Congressional Budget Office study which found that between 1979 and 2007, after-tax income grew by 275 percent for the top 1 percent of households. But Obama also claims middle-class incomes have not gone up. But that is not what the CBO study found:

For the 60 percent of the population in the middle of the income scale (the 21st through 80th percentiles), the growth in average real after-tax household income was just under 40 percent.

Last time I checked, 40 percent is not zero percent. Obama must have mixed up his talking points. Liberals keep perpetuating the myth that middle-class wages and incomes have been flat since the 1970s which is not the case. But by pointing out a) the big increase in incomes for the rich, and b) supposed middle-class stagnation, it allows them to make the case that “the rich stole all the money” and that we need to reverse 30 years of lower taxes and lighter regulation.  But as I detail at some length here, that is simply not the case.

 

 

2 thoughts on “How Obama distorted inequality statistics in his ‘60 Minutes’ interview

  1. In 1970, a Mustang convertable carried a base price of $3,025. In 2012, that Mustang convertable (re-engineered to look like the earlier models, ironically) carries an MSRP of $22,310 to $40,310; this represents a 637 to 1232 % increase in cost. Even if incomes rose 43%, it doesn’t compare with our real ability to purchase.

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