Tags: America's Forum | Steve Cortes | Federal Reserve | Regulation | Middle Class

Steve Cortes: Fed, Obama Regulation Keeping Middle Class Down

By    |   Friday, 20 February 2015 02:27 PM


The Federal Reserve's easing program and the Obama administration's regulatory regime are doing no favors for the middle class, Steve Cortes, founder of Veracruz research firm, told Newsmax TV.

While Wal-Mart just announced a pay increase for its hourly workers, "most of America, particularly middle class earners, are not," he told the network's "America's Forum" show. Corporations aren't to blame, Cortes said.

"There are two things going on: one is the Fed," he said.

"Federal Reserve policy has really punished middle class folks. They don't tend to own a whole lot of stocks, so they're not enjoying the S&P 500 at all-time highs. Or if they do, it's in their retirement account, it doesn't affect their day to day living right now."

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So what is the impact of Fed easing on the middle class?

"It punishes savers, who are earning little to nothing on your savings accounts, particularly for older folks who are on fixed incomes," Cortes said. "This has really been a crushing policy to them."

Then there's the second part, which is "even more damning — regulation," Cortes said.

"Regulation and taxation out of Washington are crushing entrepreneurship. . . . We've had more businesses closing than opening."

Most middle class people work their way up the income ladder through entrepreneurship, he said.

"It's the American way of entrepreneurial capitalism that has become much more difficult with increasingly meddlesome regulation and extremely high taxation."

As for Wal-Mart, it has decided that all of its U.S. workers will earn at least $9 an hour by April and at least $10 by next February.

The company "is doing reasonably well, it's not doing gangbusters," Cortes said. "It felt that its employees deserved a raise, so it was smart economics. I hope it wasn't responding to politics."

The idea that Wal-Mart should be "villainized" for its wage policy "is kind of absurd," Cortes said.

"This is a great American brand, a great American success story. And interestingly too, the CEO mentioned that not only did he, but most of the executive ranks of Wal-Mart, started in the hourly fashion. This is a great American success story."

On the oil front, there is a downside to the commodity's 52 percent price drop since late June, Cortes said. "It's about demand and particularly demand outside of the United States," he said.

"The reason oil is crumbling — and most commodities by the way — this isn't really a supply issue, it's a demand issue. Almost all commodities are crumbling because of emerging market demand. China is very weak. So on the whole, it's bad news for the global economy."

China's economy grew 7.4 percent last year, the slowest rate in 24 years.

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The Federal Reserve's easing program and the Obama administration's regulatory regime are doing no favors for the middle class, Steve Cortes, founder of Veracruz research firm, told Newsmax TV.
Steve Cortes, Federal Reserve, Regulation, Middle Class
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2015-27-20
Friday, 20 February 2015 02:27 PM
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