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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If you put your money in the market 4 years ago it`s up 67.4%.People have nobody to blame but
themselves.This isn`t rocket science.The Dow was down 37% with Bush.The common man can
simply buy DIA which tracks the Dow.If you didn`t prosper like I did doing this blame yourself.
Save the middle class? He has been waging full scale war against the middle class for four straight years. 43% of the middle classes wealth has disappeared since he took office.
So to answer your question, YES, if he RESIGNS immediately. He has mortgaged your children's and grand children's future. He has increased unemployment from 7.2% to 10%+ back to 7.8%. He has increased the debt from 10.2 trillion to well over 16.4 trillion, and it will hit 21 trillion before he leaves office. The man is hell bent on giving the poor that refuse to earna living, everything they want, and he has given the bill to the middle class...
In 4 more years I expect the middle class to shrink in half and the 47% to grow to 65%. Socialism makes the rich poorer, eliminates the middle class, and the poor destitute.
End Obamanomics and maybe America's middle class can survive.
our government can't even calulate the minimum wage,it was 2.00 dollars in 1973 at 5 persent infalation compounded is about $14.81,sounds like congress is in violation of minumin wage law it carries a $5,000 fine i guest all of congress should pay the fine.
The vast fortunes made by the world’s richest 100 billionaires is driving up inequality and hindering the world’s ability to tackle poverty.
The charity said the accumulation of wealth and income on an unprecedented scale, often at the expense of secure jobs and decent wages for the poorest.
Ban that Fraud Street Ponzi Scheme.
How dare business owners use other peoples money to expand their companies. Since they are so smart and independent and don't need anyones help to prosper and grow their business(s), why is it that they are always seeking everyone elses money? HYPOCRITES!
If you are all so smart, independent and proficient,.... DO IT ON YOUR OWN! Expand your business(s) with your OWN money and stop BEGGING for everyone elses money. GREEDY AND FRAUDULENT SCUMBAGS!
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