6/13/2012 5:57 PM ET|
Washington vs. the middle class
Wage-earners are about to take it on the chin, again. And our choices in November are a president who has done too little to help the economy and a challenger who wants to do still less.
There's nothing like an election to bring out the worst in our politics. Especially one in the midst of a terrible balance-sheet morass. People are desperate. They're angry. And they're realizing the politicos in Washington just don't get it.
Witness the recent backlash and Republican foaming at the mouth over President Barack Obama's comment on Friday that the private sector, which has created 4.3 million jobs over the past 27 months, was "doing fine" (compared with the public sector, which has lost more than 1 million jobs).
Behind the perceived insensitivity, Obama had a valid point. Government workers are being purged, adding to the unemployment rolls. Yet it seems this is what people want.
You can feel the tide turning as those stung by the globalized economy (manufacturing workers, for example) turn on their brothers and sisters in the tax-fueled economy that is the government payroll. Voters are saying, "How dare they get raises and a good retirement!" instead of asking why the rest of us don't.
Wisconsin's union-busting governor, Scott Walker, made headlines last week by winning his closely watched recall election. Voters supported his actions to cut public worker benefits and collective-bargaining rights. Similar efforts are under way in California; both San Diego and San Jose voted to tighten pay and benefits for public workers.
But this is a scorched-earth approach, focusing on what we can take away from others instead of how to make things better for everyone. We're talking reallocation of resources, not fresh growth or new jobs. Republican presidential hopeful Mitt Romney illustrated this view with his own gaffe, complaining that Obama wants "more firemen, more policemen and more teachers."
In other words, we're inviting our political leaders to rain fire on yet another sector of the already bloodied middle class. The war has already begun, and the middle class is losing. It's about to get much worse as Washington pushes us off a fiscal cliff.
Down, and nearly out
First, consider our current predicament. Here's a list of middle-class miseries that comes courtesy of Gluskin Sheff economist David Rosenberg, who compiled most of it. I added a few items:
- Forty-five million Americans (one in seven) are on food stamps.
- One in seven is unemployed or underemployed.
- The percentage of those out of work defined as long-term unemployed is the highest (42%) since the Great Depression.
- Fifty-four percent of college graduates younger than 25 are unemployed or underemployed.
- Forty-seven percent of Americans receive some form of government assistance.
- Employment-to-population ratio for 25- to 54-year-olds is now 75.7%, lower than when the recession "ended" in June 2009.
- There are 7.7 million fewer full-time workers now than before the recession, and 3.3 million more part-time workers.
- Eight million people have left the labor force since the recession "ended" -- adding those back in would put the unemployment rate at 12% instead of 8.2%.
- The number of unemployed looking for work for at least 27 weeks jumped 310,000 in May, the sharpest increase in a year.
- Just 14% of high-school graduates believe they will have a more successful financial future than their parents.
- The male unemployment rate for ages 16 to 19 is 27%; for ages 20 to 24, it is 13%.
- Because of structural problems such as negative home equity (which keeps people from moving for work) and skills erosion (from long-term unemployment), UBS economists estimate that the economy's natural unemployment rate has increased from 5.7% before the recession to 8.6% now. This acts as a speed limit on potential economic growth.
- Between 2007 and 2010, median family net worth fell nearly 40%, while median inflation-adjusted incomes before taxes fell nearly 8%.
Ugly stuff. And it's about to get a lot worse.
Voting for recession
I wrote in this April column that the country is facing a looming fiscal cliff, and you've certainly heard the phrase since.
Approaching is a collection of tax increases and spending cuts worth, according to Bank of America Merrill Lynch, $720 billion, or roughly 4.6% of the U.S. gross domestic product, if you include things like tax increases to fund the new health-care bill. They include the expiration of the Bush tax cuts, automatic spending cuts agreed to in the last budget deal, and more.
The math is simple: If these things happen, they will slash nearly 5% off the growth rate of an economy expanding at a pitiful 1.9%. And they're all set to happen as the calendar flips to 2013 -- unless Washington does something.
Also in the mix is a debt-ceiling increase, which is needed to avoid a government shutdown unless -- again -- Washington acts. I'm not holding my breath.
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Please stop referring to Scott Walker as a "union busting" governor. He simply gave union members a choice of whether to pay union dues or opt out. The stats I have read said that in WI some 30,000 AFSCME members dropped out in less than a year--and some 7,000 school teachers did as well. The difference was it was their choice and not a condition of their employment.
I am not against unions per se. However, I do object to my union dues being used to support political candidates with whom I do not personally support. If unions only existed to support their members, no one would object to them.
We are in serious trouble in this country because there are too many conflicts of interest that seem to be ruling the day. Congressmen who accept campaign contributions from industry should not be permitted to vote on legislation that will benefit those industries etc.
I had to laugh about the Dimen hearing yesterday. The US taxpayer IS paying for bank mismanagement because they are given money at zero interest compliments of the Fed and look at what this policy has done to seniors and to inflation. No one in the media connects these dots. . .
The government cares about the government. How many politicians are taking pay cuts. These self serving people don't care about the middle class. They will bleed us dry and then blame it on their polical opponents..THEY CAN'T EVEN BALANCE THE BUDGET
I've seen enough of Obozo. I'll vote for for the new guy.
And in Congress, no incumbants, vote em all out and start over.
The bad part for us (middle class) is we are slowly getting smaller in numbers.
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