Under Obama, Poor, Middle Class Incomes Fall Sharply

Despite repeated promises that he would build prosperity from the bottom up, President Obama has presided over three years of income losses for the middle class, according to the latest household income data from the Census Bureau.

Since 2009, the middle 20% of American households saw their average incomes drop 4%. In 2011 alone, they fell 1.7%. The poorest 20% have fared even worse under Obama, Census data show. Their incomes have dropped more than 7% since 2009, and are now lower than they've been at any time since 1985, after adjusting for inflation.

Meanwhile, the wealthiest have managed to eke out gains in two of the past three years. In 2011, the top 20% saw their average income climb almost 2%, the Census data show.

These results are in direct contrast of what President Obama said his policies would produce when he ran for president in 2008.

At a high profile speech in March of that year at Cooper Union in New York City, for example, Obama said "I've put forward a series of proposals that will foster economic growth from the bottom up.

Later that year, he said the country faced "a choice between more of the same policies that have widened inequality, added to our debt," or policies that "will restore balance to our economy; that will invest in the ingenuity and innovation of our people; that will fuel a bottom-up prosperity.

And in his first budget, released in February 2009, Obama said his policies would bring about "bottom-up growth that empowers hardworking families to climb the ladder of success.

But so far, none of that has happened during Obama's recovery, which started in June 2009 and has produced historically low rates of economic growth.

Instead, only the wealthiest households have managed to eke out income gains, while every other income group has fallen further behind in each of the past three years.

These results are highly unusual in an economic recovery, which typically produces income gains across the board. During the eight-year Reagan boom, for example, incomes at the bottom climbed 14%, while those in the middle climbed 13%, and those at the top 22%.

What's more, despite Obama's promise that he would reduce income inequality, it's increased each year he's been in office, reaching an all-time high after remaining flat during the Bush years.

University of California, Berkeley, economist Emmanuel Saez found that the top 1% captured 93% of the income gains between 2009 and 2010, which is a far higher share than occurred during the 2002-07 Bush expansion.

And the outlook for the middle class is not likely to improve any time soon.

During Obama's recovery, most of the higher-wage jobs lost in the recession are being replaced with lower-wage jobs, according to a study out last month by the National Employment Law Project.

That study found that while 60% of the jobs lost in the recession were midwage, just 22% of those created during the recovery paid as well. In contrast, while 21% of the jobs lost in the recession were low-wage, 58% of those created during Obama's recovery paid low wages.

"The unbalanced recession and recovery have meant that the long-term rise in inequality in the U.S. continues," the study noted.

Yet despite this record, Obama is making the same promises this year as he did in 2008, using almost identical language.

"We've got to choose which direction we want this country to go," Obama said at a rally earlier this year. "Do we want to keep giving those tax breaks to folks like me who don't need them? Or do we want to keep investing in those things that keep our economy growing and keep us secured?

"In this country, prosperity has never trickled down from the wealthy few," he said. "Prosperity has always come from the bottom up.

Left unanswered is why Obama expects his policies to produce different results over the next four years than they did in the previous four.

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