This presidential season Americans have been treated to the usual outrageous campaign promises and extraordinary candidate alibis about past transgressions, but those pale in comparison to claims about gains in family incomes served up by the Obama administration last week.
According to the Census Bureau, average annual household incomes leaped a whopping $2798 or 5.2 percent in 2015. Democrats offer that as proof the country is on the right track and Americans should vote for Hillary Clinton.
Those numbers can’t be correct if GDP grew only 2.6 percent and households receive through wages, interest, dividends and other sources about 75 percent of national income — 85 percent if we add in government payments like Social Security.
The extra cash had to appear out of thin air or U.S. borrowing from foreigners jumped much more than the increase in the sale of assets indicate.
I am not a conspiracy theorist but the household income report smacks of political manipulation, or incompetence among government number crunchers.
Part of the problem is that the Census Bureau reported household incomes fell $809 in 2014 — an equally silly finding given that GDP advanced 2.4 percent.
Even if we take the numbers at face value, the Census report tells us why most voters are unhappy.
Since the financial crisis, household incomes are down $907 and since 1999, down $1393. Simply, family incomes have their ups and downs but the trend has been downhill as the economy has mustered only 1.8 percent annual GDP growth in this century.
Incomes for the top 25 percent of households have been advancing but for ordinary folks, economic conditions have been getting worse much more rapidly than the averages indicated. Particularly hard hit have been rural areas and states heavily dependent on the declining manufacturing sector.
Globalization has destroyed too many jobs, because free trade agreements have opened U.S. workers to competition from imports while mercantilist nations like China, Japan and Germany have found ways to shut out competitive American products. And technologies, from automated checkouts at the drugstore to robots in warehouses, are gradually eliminating many ordinary jobs and driving down wages.
For Americans well versed in technology and finance or with degrees from elite universities, the economy is great, but for the rest it’s a slow sink into primeval mud, or worse.
Mrs. Clinton would have us believe all our problems stem from economic injustice — the rich don’t pay enough taxes and stingy corporate leaders thumb down wages and are unfair to women.
She promises to raise their taxes to subsidize paid maternity leave and day care, expand Obamacare, lower the age threshold for Medicare, offer free tuition at state universities, and more.
The top 20 percent of earners already pay 84 percent of all income taxes, and unless anyone believes marginal rates tax rates of 60 percent or more won’t inspire high earners to work less, find ways to move income off shore or emigrate to saner places like Ireland or the U.K., we are likely already pressing the limits of social benefits the government can finance without boosting taxes on the beleaguered and ever sinking middle class.
The only genuine solution is to get the economy growing more robustly as it did during the Reagan-Clinton years — about 3.4 percent — or borrow from foreigners until a burgeoning national debt leaves the country as bankrupt as Greece.
Donald Trump could not resist the campaign temptation to offer his own package of maternity leave and day care subsidies and he has yet to identify an entitlement he doesn’t like, but at least his overall program is focused on revving up growth and not punishing success.
The United States is still a well spring of innovation — thanks to our great network of engineering colleges and commercial research labs — but getting the country growing requires investments to transform that intellectual property into jobs and a business friendly environment to better do it.
Cutting not raising taxes, stripping away unnecessary and unproductive government regulations and assuring U.S. businesses the opportunity to compete fairly on global markets through better trade deals are the answer. We simply are hearing more about those opportunities from Mr. Trump than Mrs. Clinton — who is too busy obsessing about injustice to realize America’s untapped potential.
Exaggerated promises abound from both candidates but the choice between Donald Trump and Hillary Clinton is really about optimism and confidence in America and a dreary pessimism that the world is endlessly unfair.
• Peter Morici is an economist and business professor at the University of Maryland, and a national columnist.