Obama's Middle Class Trap
Middle class families are trapped by President Obama’s economic policies. The jaws of the trap consist of our $19 trillion national debt on one claw, and the impending return of inflation on the other, with middle class families stuck in the middle.
The likelihood of the trap snapping shut dramatically increases as inflation-driven costs rise. This is yet another reason why I am concerned about the recent decision by multiple states, from New York to California, to raise their state minimum wages to $15 per hour. This drastic increase of 40 to 100 percent poses a severe threat of wage-driven inflation, which will significantly increase costs for middle class families across our country.
When inflation rises faster than overall economic growth, it creates “stagflation.” In response to a stagflation problem in the 1970s, the Federal Reserve had to significantly increase interest rates. However, this approach is not feasible in the current economic climate. If interest rates are raised to even half the level used in the 1970s, our debt services payments could increase by $1 trillion per year. This would spring the middle class trap and suffocate the families inside.
To cover such a massive budget impact, the federal government will be forced to take unprecedented measures: historic tax increases and massive draconian spending cuts. Our friends across the aisle will resort to their usual rhetoric and suggest that raising taxes on the wealthiest Americans will be sufficient to cover this budget deficit. In reality, however, there are not nearly enough Americans in the highest tax brackets to cover these increased debt payments. When this liberal policy fails, its supporters will begin targeting the largest source of tax revenue: the middle class.
Not only will middle class families be forced to give the federal government more of their hard-earned money, they will see significant cuts to critical programs and services like Social Security, Medicare, Medicaid, housing, transportation, and public assistance in order to meet these debt obligations. That is not right.
The only viable solution to defuse Obama’s middle class trap is to adopt fair, proactive policies that will responsibly reduce government spending, stimulate economic growth, and create new job opportunities across America. That is why we have worked tirelessly to support American manufacturing and domestic energy production, both of which present great opportunities to create jobs for middle class families. That is why we are working to fix our broken tax code by creating a fair and competitive tax system for the 21st Century. That is also why we only support trade that includes rules-based frameworks that create lower competitive markets, on which United States job creators can blossom again.
We care about protecting workers, caring for families, and ensuring economic opportunity for all Americans. That is why we are focused on developing and implementing real solutions, not hollow political rhetoric, that empowers working families to break out of the “trap” created by Obama’s misguided policies. Please join us in this effort.