Who Does the Government Really Work For?
Nearly five years ago, Congress voted and approved the Troubled Asset Relief Program. The $700 billion “rescue plan” was passed on a second voting attempt in efforts to save Wall Street and the financial system. Shortly thereafter, the Federal Reserve slashed interest rates to historic lows and started quantitative easing. While these actions have stabilized the economy, many Americans feel left behind.
Unsurprisingly, the public believes the government’s economic policies have mostly benefitted major financial institutions, large corporations, and affluent individuals. According to a recent report from the Pew Research Center, almost seven in 10 Americans say banks and financial institutions received the most help from the government following the Great Recession. Sixty-seven percent say corporations received the most help, while 59 percent claim wealthy people did.
The report explains, “Fewer than a third say policies implemented by the government following the recession have helped the poor, middle class, and small businesses. Roughly seven-in-ten say government policies have done little or nothing to help the poor (72 percent), the middle class (71 percent), and small businesses (67 percent).”
There has been little change in these perceptions since Pew Research Center last surveyed Americans, in 2010. Furthermore, the feeling is consistent across different income groups. For example, 79 percent of people in households earning less than $30,000 per year believe government policies have not done much or nothing at all to help the poor, while 70 percent of people in households earning $75,000 or more feel the same way.
Politicians appear unable to agree on anything these days, but Americans on both sides of the aisle tend to agree with the findings. Seventy-three percent of Republicans, 71 percent of Democrats, and 70 percent of independents say post-recession policies have done little or nothing for poor people.
A report released earlier this year found similar conclusions. During the first two years of the economic recovery, the wealthiest households enjoyed the majority of the rebound. The mean net worth of households in the upper 7 percent of the wealth distribution surged 28 percent to $3,173,895 between 2009 and 2011, according to the Pew Research Center and data from the Census Bureau. In comparison, the mean net worth of households in the lower 93 percent declined by 4 percent.
The dividing line between the two sets of households is $836,033. The wide difference is contributed to the fact that upper-income households are more likely to hold stocks and bonds, which have rallied a significant amount over the past several years with the help of the Federal Reserve. Less affluent households typically have the majority of their wealth concentrated in their homes.
The 8 million American households in the top 7 percent witnessed their aggregate wealth increase $5.6 trillion from 2009 through 2011. Meanwhile, the bottom 111 million households experienced a $600 billion decline in estimated aggregate net worth.
During the period of the study, the S&P 500 increased 34 percent and continues to rise even higher. On the other hand, the S&P/Case-Schiller home price index declined by 5 percent and remains well below its glory days of the housing bubble.
Follow Eric on Twitter @Mr_Eric_WSCS