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.
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It is really too bad that the American people chose Obama for another four years. The Republican platform of opening up federal lands for drilling and repealing Obamacare would have given the economy a much needed boost. Also, the attitude most small business owners have toward Obama is really negative- they were waiting for a pro-business candidate to start hiring again.
Now I am one month away from homeless. The last time this country had a "good run" in the economic/jobs section was Ronald Regan's term.......since then things have fallen fairly hard and fast.
Osama and the rest of the "country" need to listen to what the AVERAGE Americans are saying. The Governments version of AVERAGE American is someone who make over 400k a year, owns at least one home, at least 4 cars,and contributes heavily to political funds.
While the Pres does not really have as much power as everyone thinks, lead by example.
Remember, "the fish stinks from the head"
More class warfare, how about the class called hard working Americans instead of divisively BS politics? The Divider in Chief still playing games and polarizing this country in every way he can think of while still seeking to further destroy our financial and economic future.
Wanting to Increase the debt, spending more and spreading the wealth until he runs out of other people's money.
Doesn't really bode well.
He has a second term to finish destroying AMERICA. I hope somebody will please impeach him so he cannot finish us off. He is just plain sickening to watch on tv or to hear his voice is scary. I am middle class have been all my life, but always been able to live comfortable, but that is coming to an end. He thinks there is only one class and that is Obama and Moochelle class. I would like to see the amount that he and Moochelle has spent on their fun and extravagant life style that we the tax payers has had to pay for. It would be a staggering amount. Can we as a nation survive another four years?
1. As long as the tax code is complicated, I'll ALWAYS pay less in taxes as a percentage than someone making "Middle Income". I spend money on good tax planning, something the middle class does not. 39% top bracket? HA! I'll never pay that much after my write off's, depreciation, paper losses etc etc. etc. And, the best part, it's 100% LEGAL. You know what scares me? A FLAT tax.
2. Because inflation WILL be kicking up due to all the $$$ we've borrowed (especially the past 4 years), the people that will be hit hardest are those whose incomes aren't keeping pace. Me, I own ASSETS like Buildings, Partnerships, and my Business. Those assets go UP in value when inflation hits. PLUS, you know all that money I borrowed to buy these assets? As inflation goes up, the real cost to pay off these debts goes down. I can pay them off with money that is worth "less". Plus, my cash flow will be increasing . HA HA HA!
3. Health Care Reform. Now, as a business owner I can simply cut out the HUGE expense of Health Insurance for my workers, now that the Government will be paying it, AND, it won't affect them negatively, as they will be getting subsidies from Uncle Sam to pay for it. Now it's the Middle Class Taxpayers subsidizing the cost of HealthCare for my workers, not me. Do you know how much money I'll save (and put in my pocket) each month! Yay!
I could go on and on. If you are a supporter of our President, you are really stupid to think he actually can save the middle class, as his policies are doing the EXACT Opposite.
Saving the middle class are u joking??? hbama-o-rama is turning the middle class in to the poor and raising the poor. He raised the tax on everyone. He is riding the middle class in to the land of the poor.
Impeach him today!!!!
I wish! Considering my check just got smaller I don't see any saving cause now I'm having to tighten that budget belt even more. My insurance went up, my taxes went up but my pay sure as crap didn't. we used to be able to go out to eat at a good place every other week, now we barely go every 6 weeks. With Dr. bills out the wazzo and I sure as heck don't qualify for the government to help me with anything, even though I've worked for the last 22 years paying my dues and taxes. And before anyone starts their rambling, no I don't have huge cc bills and my mtg is less than I was paying for rent last year. the utilities and gas and yearly insurance hikes have taken a major toll.
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