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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God bless America!
The costs of all this "hope and change" are landing squarely on the back of the middle class.
A strong middle class equals a strong America. We can’t have one without the other. And our current policies are killing both. So don’t listen to Obama’s rhetoric; for it rings hollow. Look at his actions and his policies (and what has been done to cripple the middle class.) It truly leaves one wondering how he can pander as he does to the middle class and keep a straight face while doing it.
Our forefathers fought and died and our people worked hard for us to have the best standard of living in the world and some want to give it to country's that are willing to torture woman and behead their citizens and others.
ObamaCare was promised to lower the cost of health care for nearly everyone. Instead, private medical insurance costs have soared by as much as 59%, and hospital costs are up nearly three times the rate of core inflation. These costs adversely affect the middle class.
2015 electric capacity just cleared $136 per megawatt. That’s over eight times higher than the price for 2012, which was just $16. When these skyrocketing energy costs hit the middle class, it will be devastating
With over 70% of oblowhole care being funded by the middle class, we don't stand a snowballs chance in hell! He's out to destroy America, plain and simple.
"Can a people tax their way to prosperity, can a man stand in a pail and lift himself up by the handle?" Winston Churchill
you know your countries populated by idiots when
its elderly dont know that when the republicans want to cut entitlements they are refering to social security and medicare
or blame out of control spending on the president when all he can do is sign or veto the budget handed to him
or when the rich contribute to political campaigns they are getting much more in return and at the expense of the rest of us
or when fools think that the pittance we give our fellow americans to keep themselves alive is living in the lap of luxury
Obama can void all green card by exc. order.
This would cut down the unemployement rate.
Truman did this after WWII , so the returning servicemen would have a job.
You could except farm workers or highly skilled people.
I can think of no American who has done more to destroy the middle class than Obama. We are becoming a 3rd world nation. I used to think he wanted the USA to become like Mexico. Now, it seems he wants us to become Sudan. He has devastated the self-employed and small businesses.
He was the darling of Wall Street in 2008. He has appointed a Goldman Sachs tax cheat and then a CitiBank loser as Treasury Secretary (incl head of the IRS). He has run cash flow defictis exceeding $ 1 Trillion each year and undunded liabilities (such as Federal penhsions, medicare and SS) have increased over $ 12 Trillion in just the past two years. He has betrayed his oath of office by appointing czarsand with executive orders which are clearly unconstitutional. He has made ceratin that our children will have less propserity than we have enjoyed.
Several reasons why the middle class has been eroding:
#1 - outsourcing of jobs to China, India, and other countries for lower wages. Most of these jobs have been manufacturing.
#2 - technology. Technology has replaced millions of jobs including: manufacturing, medical, and even accounting, and other white collar positions. Those jobs are not coming back.
#3 - supply and demand. If the middle class cannot have job security, if their incomes are not keeping up with the cost of living, they don't have the money to spend on goods and services. In turn that causes orders not to be filled by large and small business alike, therefore, jobs will not be created to fill the demand.
#4 - US tax code provides incentives and tax breaks for companies to offshore the jobs. It also creates a paperwork nightmare for the small business owner who cannot afford to hire Accountants or Tax professionals to ensure they are in compliance.
These are just a few things that come to mind. The downside of BOTH parties is they are not looking out after the best interest of the country (we, the people). Both parties have been sold to the highest bidder, and that's special interest groups.
Government can't be solely responsible for saving any of the classes. However, I would like to see our troops come home from foreign countries and begin work on fixing our infrastructure. Why have our troops in the middle east, when all those countries will do is keep on fighting. They've been fighting for thousands of years, let them keep on doing it, but on their own accord. We need to put our troops back on US soil to help rebuild this country.
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