The economy is still the number one issue for the American people and earlier this week President Obama addressed the economy during a speech in Galesburg, Ill.
Among many other tidbits, President Obama pointed to one statistic that conservatives couldn’t seem to wrap their fingers around. The non-partisan fact checking website “PolitiFact” received e-mails from readers who were wondering about the validity of the statement the president made. President Obama stated that “the income of the top 1 percent nearly quadrupled from 1979 to 2007, but the typical family’s incomes barely budged.” During this time, only one Democrat occupied the White House for a full term and that was Bill Clinton. Jimmy Carter finished his last year in 1980 and Ronald Reagan quickly took over the following January. George H.W Bush and George W. Bush, both Republicans, were the other two presidents who occupied the presidency.
PolitiFact recently researched the claim made by the president and cited a survey done by the non-partisan Congressional Budget Office which validated President Obama’s statement.
“The study looked at income trends between 1979 and 2007 for various income levels, including the top 1 percent.
CBO found that over that period, the top 1 percent’s inflation-adjusted, after-tax income rose by a cumulative 275 percent. Over 28 years, that averages to almost a 10 percent increase each year.
That’s not quite quadrupling — a 300 percent increase would have been a quadrupling — but Obama did say “nearly quadrupled,” and we think that qualifies.”
For the other part of President Obama’s statement that the “typical family’s incomes barely budged,” PolitiFact also agreed.
“For the 60 percent of the population in the middle of the income scale — that is, excluding the top one-fifth and the bottom one-fifth of earners — the cumulative growth in inflation-adjusted, after-tax household income was just under 40 percent. That may sound like a healthy increase, but it actually averages to just 1.4 percent per year.
While an income increase of 1.4 percent a year above inflation does mean the middle 60 percent advanced economically during the period studied, the increase was only about one-seventh as fast as it was for the top 1 percent. In this context, we think the description “barely budged” is reasonable.”
After the election of Ronald Reagan in 1980, the American economy adopted the economic theory of “Reaganomics,” or supply-side economics. This theory stats that if the wealthy are given tax breaks and other economic relief, they will be able to create more jobs for workers which will create more wealth in the process. The top tax rate started at 70 percent when Reagan took office in 1980 and by the time he left in January of 1989, the top tax rate had dropped to 28 percent. In this time, the national debt had tripled after Reagan had increased the military budget, put the squeeze on union workers and put the idea of “greed is good” into the minds of “wanna be” millionaires.
President Obama’s record on the economy is mixed, mainly because of the situation he walked into. Not every decision the president has made has been correct, and many times he has backed down too quick to Republican opposition in order for him to look more “presidential.” While the economy is on the right track, it’s moving at a snails pace that nobody is completely happy with.