By Thomas Magstadt
Deep down we know there's no paradise on earth, but as the children of immigrants who came to this country believing it was a land of milk and honey, we are stalwart. For generations now, it's the middle class that has sustained the dream of "America, the Beautiful" – with a dash of liberty and justice for all. But now the very foundations on which that dream has rested are crumbling. Consider the facts in this recent editorial in the New York Times:
[The] numbers on the loss of personal wealth [since 2007-2008] are staggering and say a lot about why the economic recovery has been so sluggish — and why the government will need to do a lot more to turn things around.
According to a new survey from the Federal Reserve, the median American family’s net worth dropped by nearly 40 percent from 2007 to 2010 — from $126,400 to $77,300 — wiping out 18 years’ worth of accumulated wealth. The crash in house prices accounted for most of that loss. Median family income, which was already edging down in the years before the recession, continued to decline, dropping from $49,600 in 2007 to $45,800 in 2010, about where it was in the mid-1990s.
The middle class was hit the hardest…
The recession "would have been much deeper and the weak recovery much weaker", we are told, but for past government support (for example, payroll tax cuts and extended jobless benefits). Of course, Republicans in Congress opposed these measures. Give the socialist Obama an inch, you see, and he will turn this country into a Marxist dictatorship.
The Times editorial calls for "…more support, including federal spending on education and public-works projects to create jobs, targeted tax credits for hiring, programs to deliver mortgage relief that supports house prices…as well as a renewed commitment to financial regulation to ensure that the system doesn’t melt down again." However, "The Republicans — for reasons of ideology and self-serving election-year politics — are determined to block all of these necessary programs."
In case you haven't heard: Freedom isn't free. Just ask the rich Republicans who seem to think it's fair that millionaires and billionaires get big tax breaks not available to middle class working families. After all, "earned income" is for losers; winners have "capital gains" to keep them warm.
And so what if losers pay a higher rate of tax than winners. Somebody has to pay for all that freedom they…uh, I mean we…enjoy.
There are no two ways about it. When the middle class is in decline, the storied "American way of life" is imperiled. Neither a republic worthy of the name nor a robust market economy can exist without a strong and vibrant middle class. That's not bleeding heart schmaltz; it's a fact that only block-headed fools dare to dispute.
In its latest report, the Federal Reserve published a bleak analysis showing – guess what? – the the impact of the Great Recession hit the middle class the hardest. The 60 percent of American families in the middle of the middle had a larger decline in wealth and income on a percentage basis than the very wealthy or the very poor.
The reasons are fairly obvious. The most important asset for the average middle-class household is, well, the house it's holding (or trying to hold onto), an asset which is worth a frightful fraction of what the owners paid for it in the bank-driven Bubble Era before the Big Meltdown in 2008. The median value of home equity plunged from $110,000 in 2007 to $75,000 in 2010. While the stock market has staged a comeback of sorts, housing prices have barely budged.
Meanwhile, median family income has plummeted. The crash of housing prices accounts for three-quarters of the loss, but it's also clear from this mass of data that the crisis of the middle class cannot be explained in terms of a single cause or fixed with bobby pins and band-aids.
The rot has eaten deeply into the political system as well. We will see the effects of this decay on display in the 2012 election. Casino tycoon and multibillionaire Sheldon Adelson says the money he's prepared to pour into Mitt Romney's bid for the presidency is "limitless". Here's the scenario Steve Bertoni writing in Forbes magazine lays out:
Thanks to the Citizens United decision, there are no curbs on how much Adelson could give the pro-Romney Super PAC, Restoring Our Future. Given that he’s one of the 15 richest people in the world, the Sands chairman could personally bankroll the equivalent of entire presidential campaign–say, $1 billion or so–and not even notice. (The $10 million donation he just made to Romney is equivalent to $40 for an American family with a net worth of $100,000.)
What we are experiencing in this country is an unsustainable state: the rich get everything they want, and they want everything. It's as though the plutocrats have a death wish. Tragically, they alone are in a position to move the machinery of government toward necessary reforms, but they persist in doing the opposite. If the inequality and injustice of the New Derivative Economy does not provoke a popular uprising, the combination of fundamental structural imbalances and corrupt politics will eventually bring the whole degenerate system crashing down.
No mass consumption society can prosper if its middle-class citizens lack the means to consume and the confidence to invest. And no republic can flourish or long survive when the people's elected representatives get in bed with billionaires and bankers, rig elections, sell votes, polarize society for personal gain, and place partisan interests above the public interest.
This article was published at NationofChange at: http://www.nationofchange.org/paradise-lost-sinking-middle-class-1340027521. All rights are reserved.