Income rise weakens Trump case for radical reform

September 13, 2016

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

The jump in U.S. household income in 2015 weakens White House hopeful Donald Trump’s case for radical reform. Coming alongside census data showing the poverty rate dropped to its lowest level since the 2008 financial crisis, the evidence that President Barack Obama’s programs are working could help Hillary Clinton’s case for incremental change.

The U.S. Census Bureau report issued Tuesday showed median household income posting its first increase since 2007, up 5.2 percent from last year to $56,516. Even better, it was distributed across regions and ethnic groups. Hispanics logged the largest boost of 6.1 percent. Households in all regions of the country also saw increases, with the West having the largest at 6.4 percent.

The poverty rate in 2015 was 13.5 percent, representing a 1.2 percentage point drop from 2014 – the largest annual decrease since 1999. All age groups saw a fall, including children and the elderly. Poverty rates for African-Americans and Hispanics also went down.

Trump has tried to appeal to poorer Americans and ethnic minorities by arguing that the Obama administration has made their economic situations worse. What the country needs, he says, is a radical overhaul of economic policy. He wants to rewrite the tax code, halt new federal regulations and deport millions of illegal immigrants. Policy experts estimate his plans could add trillions to the national debt but could also boost growth.

Clinton, on the other hand, proposes milder medicine. She wants to increase taxes on the wealthy, cut red tape for small businesses and invest $275 billion over five years in infrastructure, and generally continue using the incremental policy template Obama advocated.

Trump may focus on less-comforting data points. For one thing, median incomes have yet to exceed the high hit in 1999, and census data also showed inequality, another political aggravator, remained relatively unchanged. Forty-nine percent of U.S. voters are still pessimistic about the future, compared to 24 percent who are optimistic, according to a Pew poll in August. Even so, more real income growth is a tangible benefit to U.S. voters, and to the Clinton campaign.

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