The Middle Class Fell as Washington Rigged the Economy

Sad that the Middle Class is bearing the brunt of this economy.

 

The Middle Class – Its Rise & Decline

After World War II, American became the world’s first truly middle class nation. In the 30 years following the war, the real income of all American families, including the poor and near poor, doubled. The nation, by every economic measure, was becoming more equal. All that has changed.

For the past 30 years, the trend toward economic inequality has rolled back the post-World War II progress which had moved the nation toward a more equitable distribution of income and wealth. In the past ten years, the inflation-adjusted income of the median household fell 4.8 percent, the worst drop in at least half a century. And for many there is no income – more than 70 percent of Americans know someone who has lost a job. College graduates can’t find jobs. Americans are losing purchasing power and their net worth is falling. The value of their homes is shrinking. Their retirement security has eroded. Medical and educational costs are rising faster than the cost of living index. In 2009, 16.7 percent of the American population – 50.7 million people – was without health insurance, the highest since this record has been kept. One in four homes is now under water and over 4.2 million home loans are in or near foreclosure. Last year, there was an 11.6 percent increase in families consolidating and moving in together.

In contrast, the wealthiest ten percent of countrymen hold over 60 percent of total family assets. America’s richest one percent now hold more wealth than America’s entire bottom 90 percent. The last 20 years have witnessed the most colossal amassing of huge fortunes in U.S. history. The nation now boasts more than 400 of billionaires.

Washington Rigged the Economy

Since 1946, the effective federal tax for the richest Americans has fallen by 60 percent. Those benefiting the most from our economy in income and wealth are simply not paying in, in proportion to what they are taking out. Nevertheless, the top priority of Republicans in Washington has been tax cuts for the wealthy and for corporate and financial entities. Their Herculean efforts to restore the Bush income tax cuts for the wealthiest Americans and to repeal an estate tax affecting only the wealthiest two percent underscore the intensity of the ongoing class warfare and linkage between political polarization and economic inequality.

We seem to have degenerated into a form of social Darwinism. The prevailing national economic strategy of Washington has been to make business more profitable and less accountable and to reward the owners, investors and other wealthier Americans, at the expense of the great majority of workers and U.S. households. Workers have fewer countervailing protections. Their representation in Washington has been sold out. Organized labor’s economic clout to win higher wages and benefits is withering away. Businesses and wealthy individuals contribute billions to influence elections, outspending labor unions many times over.

The soaring compensation of senior corporate executives, the increasing number of American millionaires and billionaires, the material excesses of our public and private elites – taken together – have very few precedents in American history. It is reminiscent of the last stages of other great empires. Many of the nation’s elites, including its elected leaders, are unwilling to broach the subjects of inequality and class warfare – the very real struggle for a piece of the American pie. They appear to be asleep to – or purposely ignoring – these realities.

The absence of effective social and economic countervailing forces to address the ominous rise in inequality is increasingly a cause for alarm. Washington can no longer ignore the challenge to spread more equitably the benefits of economic growth – now enjoyed by those at the top – without undermining the economy that supports it. But where is the national debate? How do we hammer out new policies to alleviate the growing economic imbalances in our republic and thereby stem the social unrest that threatens the public landscape? The need is grave and immediate that we re-establish the economic opportunity and prospects for upward mobility that have for 200 years sustained the American dream and served as the bedrock for a stable democratic nation.

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