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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What more does this country need to see from this president ? Please take a serious moment and put together a honest and meaningful Pros and Cons list of what Obama has done (or not done) for Us and the country as a whole. If your honest and not bias, you can only come to ONE conclusion.
Use spending from the "Defense" budget to start rebuilding national highways and cities. Use the labor market to hire workers to do this.
Those workers in Defense industries can be turned into manufacturers of consumer goods to compete with Chinese manufacturing and would result in taxes on the profits which would increase income for the government while reducing government expenses. Our technology should give us a efficiency edge which would make our production competitive.
Stop using government employment of labor to establish non-competitive government groups to replace non-competitive private industries, thus forcing private industry to regain its competitive edge. This action also would provide additional taxes while eliminating government agencies which are created to be inefficient and loose money, thus again reducing govenment expenses.
Stop passing incomprehensible thousand page laws written by staff and lobbyists which no elected official has read or understands..
Start enforceing existing laws or remove them from the books. This is just for starters.
The jobs Obama has "allegedly" created are very much in question.
Time for change, boot Jimmy Carter II out!
Is Obama really so stupid or is this all part of a master plan, he did promise to " fundamentally change America."
Romney certainly in my first choice, but I will prefer him over an inexperienced community organizer.
R's against D's has become a household sport. to the point of killing the country, no R will work with a D and no D will work with an R. concepts originating within either party are rejected when presented by the other.
unless this seriously changes within BOTH parties we are dead.
"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"
...........Guess what Anthony, it began a little over 20 years ago, there have been numerous articles showing how upper income has increased while middle income has either stagnated or decreased. I am not a DEM, but the new GOP/TP scares me, all they talk about is reducing the TOP tax rate down to 25% and eliminating the capital gains tax, how is that going to help the Middle Class? They have stymied proposed infrastructure bills that would give money to private companies to hire Americans to work on roads, bridges, etc. They are perfectly willing to make Americans suffer so they can make a killing in the November elections. If this continues, this country is doomed.
If people actually accepted that tax sacrifice/spending/etc the budget would come into near balance. So, we'd take some economic recession possibly, but we'd put ourselves in better financial straights as a nation.
And there's areas where we can cut spending and actually not impact growth all that much as well as taxes. The 15% dividends and cap gains tax breaks provide exactly squat when it comes to jobs. Overpsending in the military (overseas and procurement for overseas operations in particular) costs 100s of billions and doesn't go into our domestic economy.
Anthony, what's your experience with the middle class.
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
Let's face it, the radicalization of politics will be the end of the US of A.
If there is no end to the culture wars, there is nothing left but to split up the US and go to some type of Eurozone model.
This is no surprise. No one in washington has had their finger on the pulse for 30 years.
1980 was a disaster, 1987 was a disaster ( banker theives and the government caused this). 1990 some things were looking up at the end it flopped. 2000's was the biggest flop. The idiots in washington were more concerned about other countries by giving our money and jobs away. Hell they couldnt provide for people in New Orleans.
I have seen hundreds of rats crawling around in theDC streets at night, and cockroach's living in the drain pipes, i think they have all moved into the Chrome dome.
You lost me in the first part of your story. The reason Wisconsin saved money was not cutting teachers pay and benefits. The reason they saved money was because they ended the "extortion" the public sector imposed on the people of Wisconsin. They saved $500 million alone by allowing local school boards to shop for health insurance in the free market instead of having to be forced to buy insurance from the state Union's in-house health insurance company.
The deal for 2013 is already done. The current tax law will be extended 12 months in December. Why, because the Senate will flip and the House will stay in Republican hands. Thus, the Senate will be forced to extend the current policy because the democrats have the same political calculus in 2014 as 2012. 23 democrats must defend themselves against 10 republicans this year and a similar group in 2014. These democrats will see themselves losing 7 seats in 2010 and at least 7 seats in 2012. Do you think they want to loose 7 more in 2014?
The ryan budget is just waiting for Senator Ried to become minority leader in 6 months. Then after the new house and Senate are in place the reforming of the tax code will commence. The only thing that can louse this up is the intransgence of A reelected Obama. So I think the American public will avoid that trap and elect a sensible Romney.
Americans are there own worst enemy. In the cash for clunkers program, that could have created jobs for the American auto worker, seventy percent of the vehicles purchased were from foreign mfgs. Our tax dollars that were supposed to stimulate the economy, mainly ended up in Japan.
Every auto worker supports seven other jobs. At the time, the cash for clunkers program was created, the Dems controlled the congress. Yet the republicans cry, that Obama has done nothing to create jobs. Americans made there own bed, so now they can sleep in it.
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