Monday, August 09, 2010

The poorhouse, explained

The fatal flaw of the tea party movement -- OK, the most fundamental of its myriad fatal flaws -- is that it long ago got what it now clamors for.

And that's what's killing us all. Check that. Not all.

The rich, they're doing fine, despite everything. It's the fast-disappearing middle class and the poor taking it in the shorts.

Despite all the angry rhetoric from the tea-party delusionals, despite all the laissez-faire rhetoric and faux solidarity with "real Americans" coming from millionaire hucksters such as Glenn Beck and Rush Limbaugh, the real problem here, alas, is not that Barack
Hussein Obama is a socialist working hard to turn the United States into a people's republic.

No, the real problem is that America is becoming
less socialist every day -- that the sort of laissez-faire, free-market social Darwinism that lets the rich man grow ever richer, unfettered by the "socialist nanny state," has been wildly successful at redistributing wealth away from the poor and middle class and into the hands of Corporate America and the wealthy.

What the tea-party marionettes clamor for -- the magical shot of "freedom" that supposedly will cure all our ails -- is just more of what we've had for decades, decades during which the American middle-class family has been beaten into a vegetative state.

If you're not familiar with Elizabeth Warren, Harvard law professor and current chair of the Congressional Oversight Panel, stop right now and watch the above video. Want to know what the hell happened to you (and the economic world around you) over the last 40 years? This will explain it all.

Warren tells you how the middle class has come to the brink of extinction, why both you and the missus are busting your butts and still living paycheck-to-paycheck, and why you're just a layoff -- or a serious illness -- away from oblivion.

IN THE VIDEO, she tells you all this on Mar. 8, 2007. A year and a half before the crash.

Things haven't improved since:

THE MSNBC INTERVIEW followed publication of this column of hers last December in The Huffington Post. Read on, if you've guts enough:
Today, one in five Americans is unemployed, underemployed or just plain out of work. One in nine families can't make the minimum payment on their credit cards. One in eight mortgages is in default or foreclosure. One in eight Americans is on food stamps. More than 120,000 families are filing for bankruptcy every month. The economic crisis has wiped more than $5 trillion from pensions and savings, has left family balance sheets upside down, and threatens to put ten million homeowners out on the street.

Families have survived the ups and downs of economic booms and busts for a long time, but the fall-behind during the busts has gotten worse while the surge-ahead during the booms has stalled out. In the boom of the 1960s, for example, median family income jumped by 33% (adjusted for inflation). But the boom of the 2000s resulted in an almost-imperceptible 1.6% increase for the typical family. While Wall Street executives and others who owned lots of stock celebrated how good the recovery was for them, middle class families were left empty-handed.

The crisis facing the middle class started more than a generation ago. Even as productivity rose, the wages of the average fully-employed male have been flat since the 1970s.

But core expenses kept going up. By the early 2000s, families were spending twice as much (adjusted for inflation) on mortgages than they did a generation ago -- for a house that was, on average, only ten percent bigger and 25 years older. They also had to pay twice as much to hang on to their health insurance.

To cope, millions of families put a second parent into the workforce. But higher housing and medical costs combined with new expenses for child care, the costs of a second car to get to work and higher taxes combined to squeeze families even harder. Even with two incomes, they tightened their belts. Families today spend less than they did a generation ago on food, clothing, furniture, appliances, and other flexible purchases -- but it hasn't been enough to save them. Today's families have spent all their income, have spent all their savings, and have gone into debt to pay for college, to cover serious medical problems, and just to stay afloat a little while longer.

Through it all, families never asked for a handout from anyone, especially Washington. They were left to go on their own, working harder, squeezing nickels, and taking care of themselves. But their economic boats have been taking on water for years, and now the crisis has swamped millions of middle class families.

The contrast with the big banks could not be sharper. While the middle class has been caught in an economic vise, the financial industry that was supposed to serve them has prospered at their expense. Consumer banking -- selling debt to middle class families -- has been a gold mine. Boring banking has given way to creative banking, and the industry has generated tens of billions of dollars annually in fees made possible by deceptive and dangerous terms buried in the fine print of opaque, incomprehensible, and largely unregulated contracts.
AND THE CURE for this is supposed to be less regulation? Less government? Fewer taxes on the wealthy? Removing the last of society's unraveling safety nets?

Fighting "socialism" is the answer here? For the love of God, send us a real socialist, not some too-cool, dispassionate poseur like Barack Obama.

You know, like Franklin Roosevelt. Or Harry Truman. Or Dwight Eisenhower, Jack Kennedy and Lyndon Johnson.

Hell, even Richard Nixon.

By tea-party/Limbaugh/Beck standards, all these presidents were raving Bolsheviks. And under their political tutelage, we still had a middle class. We still had hope for America's future.

And now?

During Warren's 2007 lecture at the University of California-Berkeley, she explains that according to Gallup, most people in 1970 judged that it required a high-school diploma and hard work to launch a young person into the middle class. But by 2002, Gallup reported, twice as many Americans thought the moon landing was faked -- staged on a Hollywood sound stage -- as thought
that someone could make it into a middle-class life with just 12 years of schooling.

From the presentation:
"The difference is -- when you look at middle-class families -- if you needed 12 years back in 1970? The taxpayer paid for it. You got it all for free. All you had to do was show up . . . live there and show up.

By the year 2000, if you need a college diploma, you pay for it yourself.

Sure Berkeley and other state-supported schools? I guess that means you guys aren't paying any tuition?

Room, board, books, right? It's not very much -- I guess you borrowed maybe a dollar or two in order to do this?

But notice what that means. It means the launch -- what parents have to do to get that next generation into the middle class -- has shifted from being something that everybody pays for to something that only the families with children are paying for.
WITH THE ADVENT of what is an almost-mandatory two years of preschool for toddlers, Warren noted that -- in little more than a generation -- we've gone from a shot at a middle-class life requiring 12 years of free education to requiring 18 years of schooling, one-third of which parents are on the hook for.

Now imagine what it's like to be poor in America today . . . because we of the former middle class may all be there soon enough.

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