The radical disconnect between Washington’s ruling elites and working-class folks is perhaps best illustrated by President Joe Biden touting his economic record. For most Americans, Bidenomics has been a disaster marked by a cost-of-living crisis. Its true “success” has been in transferring wealth from the average American to Biden’s donor class.
There’s no denying that many Americans’ wages have risen at a brisk pace the last two years, but prices have risen even faster, an astonishing 16%. Forty-year-high inflation has eaten away the real value of incomes and savings—a direct result of the government spending, borrowing and creating too much money out of thin air.
This robbing of purchasing power tends to fall heaviest on low-income earners because their wages and salaries usually adjust to inflation slower than those of high-income earners. Sure enough, since Biden took office, real (meaning inflation-adjusted) incomes for the lowest income quartile and second-lowest income quartiles have fallen 2.5% and 3.0%, respectively.
This totally disproves Biden’s claim that real earnings have risen for the bottom half of Americans. Conversely, those in the highest income decile have seen their real incomes rise about one-third of a percent under Biden, meaning the wages and salaries of the top 10% have slightly outpaced inflation.
And not only are incomes rising slower for working-class folks. Their prices are rising faster too.
The Bidenomics agenda caused inflation, which means prices everywhere rose, and that caused many middle-class households to change their purchasing habits to stretch the family budget. Instead of buying a more expensive cut like filet, the family may opt for ground beef, or even a less expensive meat altogether, like chicken.
But more people choosing relatively less expensive meat increases the demand for that meat, which further drives up the price. Thus, things that were disproportionately bought by lower-income consumers have risen in price not only because of inflation, but because of this substitution effect.
The wealthy political donor class need not worry about such plebian concerns, however. They are busy watching the prices of their assets, like real estate and stocks, rise from inflation. If lower- and middle-income families have savings, they tend to have a relatively large portion as cash in the bank, where it has steadily lost value for the last two and a half years.
The combination of skyrocketing house prices while the value of savings is eroded has decimated would-be homebuyers. Consider that the monthly mortgage payment on a median priced home was under $1,000 when Biden took office, but has now doubled to over $2,000. That’s an extra $12,000 a year for the same house.
Simultaneously, rents have gone through the roof so that many families cannot save enough for the needed down payment on an ever-more-expensive house. Bidenomics has essentially created a two-tier economy with a homeowning class and a perpetual renting class.
But Bidenomics is not merely regressive because of the inflation it causes. Many specific policies promoted by Biden are giveaways to the very groups he demands “must pay their fair share.” Bailing out student loan borrowers disproportionately helps people with higher lifetime earnings, at the expense of taxpayers who never went to college and didn’t borrow to attend college.
Similarly, the vast subsidies for “green” energy products, like electric vehicles, are handouts to the wealthy. Lower- and middle-income families cannot afford $60,000 for an electric vehicle, so the tax breaks that accompany the purchase of the vehicle go almost exclusively to upper-income earners—the political donor class.
The latest White House economic talking points use obscure phrases like “from the middle out and bottom up” to claim that Biden’s policies are helping the average American family. Nothing could be further from the truth. The group primarily benefiting from Biden’s policies are wealthy political donors.
This piece originally appeared in MSN