Obama’s Economy Has Been Tough On Savers And Investors
Ed Morrissey takes a look at a new Rasmussen poll and finds some wide disparities in support between Romney and Obama among America’s seniors and independents. ”Seniors trust Romney more on the economy by thirty-five points, 65/30, with only 5% undecided,” writes Morrissey. ”Independents trust Romney more by twelve, 51/39. Middle-aged voters give Romney a 21-point lead, 56/35, while voters under 40 — not the most reliable voting bloc — favor Obama 58/33. Men give Romney the edge by 13 points — while women only favor Obama by three, 47/44.”
What explains the disparities? Glenn Reynods’ column for USA Today might hold the explanation:
Interest rates on bonds, CDs and money market accounts — staples of the retirement crowd’s portfolio — are at historic lows. (I’m always shocked to see what banks are touting. Really? 0.35% — that is, 35/100 of a percent — on a money market? 0.90% on a CD? Yep.) Stocks are nothing to write home about, still well below their highs of five years ago. As for those real estate investments? Forget about it.
The squeeze is real. Some years ago, when earning say 5% on your money was realistic, a $360,000 portfolio of CDs would produce $18,000 a year in interest — that’s $1500 a month. Couple that with an unexceptional Social Security payment of about the same amount, and that’s $36,000 a year, $3,000 a month. Nothing fancy, but enough to get by.
Now change that 5% to 0.9% and you’re earning $3,240 per year, or about $270 a month. Add that to $1,500 a month in Social Security and you’ve got $1,770 a month to live on; just $21,240 a year. That’s a brutal 41% cut in income. And it is why many senior citizens around the country are being forced to draw down savings to make ends meet.
Keep in mind that, in addition to this decline in income from savings and investments, the Obama administration and Democrats are also proposing to let the Bush tax cuts expire which would mean a dramatically increase in taxes on, you guessed it, income from savings and investments. These are the “tax cuts for the rich” that Democrats have railed about for years, but in this modern economy it’s not just the rich who make money from investments and savings. Plenty, if not most, retirees of all income classes get a substantial amount of income that way.
And not only is that income dwindling and facing substantial tax increases at the hands of Democrats, but this is happening in the context of consumer prices increasing substantially:
For senior citizens, it’s a double squeeze. While incomes for retirees are going down, costs are going up. Gasoline is now roughly double what it was when President Obama took office and, in many places, it’s back up in the neighborhood of $4 a gallon.
According to the Bureau of Labor Statistics, ground beef recently hit a national average of more than $3 a pound, the first time in history it’s reached that level. (When Obama was inaugurated, it was $2.35). Anyone who has spent time in a grocery store knows that this sort of thing is happening on every aisle — coupled with “shrinkage,” as manufacturers reduce the amount of product in a box while keeping the price the same, a way of hiding price increases from (they hope) inattentive consumers. And it’s going to get worse, according to the Department of Agriculture, when this summer’s drought hits food prices in a few months.
To hear Obama and Democrats put it, Republicans want to punish the middle class and reward the rich with tax cuts. But the tax cuts in question aren’t just for the rich. They significantly reduce burdens on retirees, and right now is hardly the time when we can afford to increase those burdens.
Tags: Barack Obama, bush tax cuts, Economy
