Democrats like to think of themselves as advocates for the downtrodden. They look out for the proverbial little guy who is menaced by big business, an exploitative free market, and callous conservatives. Thus the folks-formerly-known-as-downtrodden have traditionally voted for the Democratic Party in exchange for promises of government largesse.
Obama stirred similar expectations among supporters during his campaign. The video of an Obama-ite, Peggy Joseph, announcing that Obama would pay for her gas and cover her mortgage was a big hit on youtube. Unfortunately, Obama has so far only managed to hurt the financial prospects for most poor Americans (myself included).
First, the Obama administration backed the “Cash for Clunkers” program. Whatever the environmental or macroeconomic effects of “Cash for Clunkers” (and I would argue that they are harmful), one clear consequence of the program is to raise the cost of purchasing and maintaining a used vehicle. Cars that once would have been resold in the used car market are now removed from supply. Used car parts which once were mailed all over country to make car repairs more affordable are also no longer in supply. The end result is higher prices for used cars and higher repair bills for used cars. Since used cars are owned in disproportion by poorer Americans, the Cash for Clunkers program is essentially a regressive tax on the poor.
Second, on Friday Obama drastically increased the import tariff on Chinese-made tires. We don’t yet know the full effect of the resulting trade war on American exports (though it will undoubtably be bad), but we do know the consequences for poor Americans. The tires that are imported from China have been sold under a number of American brands like Cooper and Goodyear. These Chinese made tires typically fill out the cheapest tier of tires which are marketed to budget conscious consumers. The increased tariff will make these cheap tires significantly more expensive. So not only are used cars more expensive, but the cheap tires that most poor Americans choose are more expensive as well. (It is worth noting as well, that since Obama approved this tariff increase in order to get labor union support for healthcare reform he has given the lie to his campaign promise to change the way Washington works.)
Third, I should mention proposed legislation that could hurt poor Americans. If the House-approved Cap and Trade bill passes the Senate energy prices will skyrocket. Since poor Americans spend a disproportionate amount of their income on utility bills, higher energy prices will act as a regressive tax.
With all this in mind, it is hard for me to believe that low income voters still overwhelmingly approve of Obama’s handling of the Presidency. If I were a Marxist I’d have some choice words about false consciousness!
[Add. 10/6/09] – The verdict on Cash for Clunkers is in. We are poorer as a result.
