1/18/2013 8:45 PM ET|
A 2nd term to save the middle class
Obama steps into his second inaugural with a vow to turn around the decline of America's middle. But that promise is already in peril.
President Barack Obama, who said his "one mandate" in a second term was to help middle class families, takes the oath of office with many barriers to raising most Americans' living standards.
Most Americans started this year with a cut in take-home pay as Congress let a temporary 2-percentage-point reduction in payroll taxes expire. Workers' leverage to gain wage increases will be limited for years by competition from the swollen ranks of jobless Americans as forecasters expect the unemployment rate to remain at or above 7% through 2014.
Even with bright spots such as signs of strength in housing and an energy boom that's lowering fuel costs for manufacturers, forecasters predict a slower expansion as federal tax increases and spending cuts crimp growth and demand for exports drops with a weakening global economy. While the U.S. economy advanced at a 3.1% rate in the third quarter, growth of just 2% is seen this year, according to the median estimate of economists surveyed by Bloomberg.
At the same time, Obama faces united Republican opposition to his agenda and pressure to slash federal spending.
"The president is still fundamentally on the defensive," said Damon Silvers, policy director for the AFL-CIO labor federation. "His fundamental task is to avoid being forced into austerity measures that will hurt the economic recovery or the capacity of our government to serve the people."
Obama was confronted in his first term with an inherited recession that drove down most Americans' incomes. His second term starts with a fight to merely hold the line against the Republican House majority's push to cut benefits in entitlement programs such as Medicare and Social Security that many Americans rely on.
Looming battles over the budget, the legal debt limit and a round of automatic spending cuts scheduled for the end of February restrict Obama's leeway for other priorities, such as boosting infrastructure spending to stimulate economic growth.
The pieces of his economic agenda most likely to raise middle class living standards in the near term are "the parts that look like they're not going anywhere," said Larry Katz, a labor economics professor at Harvard University. These include plans for an infrastructure bank and tax breaks for new hires.
"Left by itself," Katz said, the economic recovery is likely to continue generating "tepid, small improvements" in middle-income workers' living standards "but not enough to really offset the poor performance since the late 1990s."
Middle class U.S. workers -- defined by one measure as households with annual incomes within 50% of the national median, or between about $25,700 and $77,000 -- have faced a four-decade-long erosion of living standards. It was interrupted by a rare period of rising earning power during the fast-growing economy of President Bill Clinton's second term, Katz said.
Real median household income soared to $54,932 in 1999 from $50,661 in 1996 based on constant 2011 dollars, an all-time high since the U.S. Census began reporting the data in 1967.
By contrast, median household income in November 2012 was $51,310 -- $3,850 lower than when Obama took office in January 2009, according to an analysis of census data by Sentier Research, an economic-consulting firm in Annapolis, Md.
In Clinton's second term, gross domestic product grew at an average 4.3% rate and the unemployment rate averaged 4.4%. That created a tight labor market, which provided workers leverage to press for higher wages.
Clinton also won congressional passage of a two-step increase in the minimum wage, which took effect in 1996 and 1997, creating additional upward pressure on pay; the federal minimum wage hasn't gone up since 2009, when the final step of a wage increase signed by President George W. Bush took effect.
The gains of the late-1990s are eclipsed by decades of downward pressure on pay.
Median wages for men between 25 and 64 dropped 19% - - to $34,000 a year -- from 1971 to 2011, after accounting for inflation, according to an analysis by Michael Greenstone, a Massachusetts Institute of Technology economics professor and director of the Hamilton Project, a Washington research group affiliated with the Brookings Institution.
The impact of the decades-long slide in wages was initially cushioned in many families by the increasing number of women who went to work, and later by the home equity that families borrowed against during the run-up in housing prices before the real estate bubble burst.
More from Bloomberg:
VIDEO ON MSN MONEY
Unless we have universal employment and universal healthcare this country WILL continue to go downhill. This means every able bodied human being must work somewhere and be paid a living wage sufficient for his/her age and family needs. This means government regulated business with jobs for paying for life's needs being the priority, NOT profits. This means unhooking robots, machines, and enough computers to create enough jobs for everyone to work. This means socializing the healthcare industry. Capitalism has had 237 years to prove itself in this country and it has failed miserably. It is time to try something else.
Nothing will turn the tide of decay in this country until the manufacturing jobs that were outsourced to Communist China for corporate American avarice are brought back to this country.
Let's keep Americans employed instead of the Communist Chinese.
Let's check the damage done to the middleclass by Obama,
Saved millions of middleclass jobs in the Auto Industry
Record deportation of illegal's, over 400,000 per year
Put 17,000 boarder guards on the mexican boarder, that about 8 for every mile
Reduced healthcare cost with Obamacare
Passed Dodd-Frank so Wall street can't steal another $14 trillion from the middleclass
Ended Iraq war
Killed our #1 enemy Osama Bin Ladin
Recapitalized our Banks at zero cost to tax payers, saving millions of middleclass jobs
Toppled Moammar Gaddafi, with zero lose of American lives
Passed the Lilly Ledbetter act, equal pay for middleclass women
stopped torture at Guantanamo
stopped the illegal wire tapping of American citizens
Increased American oil production by 10%, more middleclass jobs
Passed the dream act
4 straight years of job growth and GDP expansion
Increased veteran support
How much more can America take of this ?
What a bunch of uninformed loons! The liberal misinformation machine is still in full force. Do any of you know that the congress was controlled by the democrats for the last two years of Bush? Did you know that the downfall of the economy was caused by the housing crises and the two of the most liberal senators Barnie Franks and Chris Dodd were the CEO of fanny mae and freddie mac? Did you know that the franks and dodd forced the banks into making "low probability loans" by using Clintons community reinvestment act? Remember Acorn using legal and blackmail to force the banks into making these loans under threat of cutting services and branches of the banks if they did not do it? Franks and Dodd Told the banks if you make these loans with our NEW qualifications the government will still cover them?
Bush tried to stop them and was lambasted right here on NSMBC as a "raciest" who did not want minorities to own homes! Thats right most likley some of you support Dodd and Franks and are not complaining the your "fairness" has once again failed. this time hurting the poor, the middle class and the retired more than any body. You progressivies are as much to blame as anybody!
Before you repeat the lies pass down from the "fair" i hate america crowd think of the concquences of these "fair" policies. Business will do what it has to in order to survive, if that means leaving the country then they will and have left in droves. And new uncomming companies with the newest technology and innovations will not even consider setting up in the US.
Do you want jobs with a future or be controlled by the government!
Lastly ask Greece, Spain, Portugal and the UK how excessive government regulation and control has worked for them. Then throw in a Union control and it always turns out the same colapse , bankruptcy and total failure sooner or later. Wake up sheeple
Chris Van Hollen and Elizabeth Warren in 2016 & 2020!
God bless America!
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The stock market finished an upbeat week on a mixed note. The S&P 500 shed less than a point, ending the week higher by 1.3%, while the Dow Jones Industrial Average (+0.1%) cemented a 1.7% advance for the week. High-beta names underperformed, which weighed on the Nasdaq Composite (-0.3%) and the Russell 2000 (-1.3%).
Equity indices displayed strength in the early going with the S&P 500 tagging the 2,019 level during the opening 30 minutes of the action. However, ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'