America’s Middle Class Crisis

[Vi-Jay 218]

America’s Middle Class Crisis: The Sobering Facts

By Peter Gorenstein | Daily Ticker – Wed, May 4, 2011 10:19 AM EDT

Two recessions, a couple of market crashes, and stubbornly high unemployment are all wreaking havoc on America's middle class.

In the accompanying interview, The Daily Ticker's Aaron Task discusses the state of the middle class with Sherle Schwenninger, director of economic growth and American strategy programs at the New America Foundation. Schwenninger's recent report "The American Middle Class Under Stress" has some stunning facts that highlight the struggles the average American is having getting a decent-paying job and keeping up with rising cost of living.

Here are just some of the sobering facts:

-- There are 8.5 million people receiving unemployment insurance and over 40 million receiving food stamps.

-- At the current pace of job creation, the economy won't return to full employment until 2018.

-- Middle-income jobs are disappearing from the economy. The share of middle-income jobs in the United States has fallen from 52% in 1980 to 42% in 2010.

-- Middle-income jobs have been replaced by low-income jobs, which now make up 41% of total employment.

-- 17 million Americans with college degrees are doing jobs that require less than the skill levels associated with a bachelor's degree.

-- Over the past year, nominal wages grew only 1.7% while all consumer prices, including food and energy, increased by 2.7%.

-- Wages and salaries have fallen from 60% of personal income in 1980 to 51% in 2010. Government transfers have risen from 11.7% of personal income in 1980 to 18.4% in 2010, a post-war high.

The bottom line is simple says Schwenninger: The middle class is shrinking, which threatens the social composition and stability of the world's biggest economy. "I worry that we're becoming a barbell society - a lot of money wealth and power at the top, increasing hollowness at the center, which I think provides the stability and the heart and soul of the society... and then too many people in fear of falling down."

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Ya think?

Duh!

[Mr. Big Dog 10,747]

Edited May 8, 2011 by Mr. Big Dog

[Vi-Jay 218]

From Wiki:

Today, "trickle-down economics" is most closely identified with the economic policies known as Reaganomics or supply-side economics. Originally, there was a great deal of support for tax reform; there was a dual problem that loopholes and tax shelters create a bureaucracy (private sector and public sector) and that relevant taxes are thus evaded. During Ronald Reagan's presidency, the Democratic Party-controlled House, at the urging of President Reagan, cut the marginal tax rate on the highest-income tax bracket from 70% to 28%.

A major feature of these policies was the reduction of tax rates on capital gains, corporate income, and higher individual incomes, along with the reduction or elimination of various excise taxes. David Stockman, who as Reagan's budget director championed these cuts at first but then became skeptical of them, told journalist William Greider that the term "supply-side economics" was used to promote a trickle-down idea.[5]

"It's kind of hard to sell 'trickle down,' so the supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' theory."[6]

David Stockman, Ronald Reagan's budget director

Pointing fingers is too easy.

Edited May 8, 2011 by Vi-Jay

[peejay 327]

Yet, that nitwit Obama is more worried about keeping Hispanic illegal aliens employed than he is the American middle class. Lately he has several meetings with various illegal alien cheerleading groups to formulate ways to circumvent immigration and employment laws to keep them here. Meanwhile American unemployment rises.

[Vi-Jay 218]

Yet, that nitwit Obama is more worried about keeping Hispanic illegal aliens employed than he is the American middle class. Lately he has several meetings with various illegal alien cheerleading groups to formulate ways to circumvent immigration and employment laws to keep them here. Meanwhile American unemployment rises.

Hispanic illegal aliens = Democrat voters.

It's a race to see which party will "solve" the voting issue, I mean illegal alien issue.

Edited May 9, 2011 by Vi-Jay

[Mr. Big Dog 10,747]

Pointing fingers is too easy.

It's called Reagonomics for a reason.

[Vi-Jay 218]

Wiki:

Reaganomics (a portmanteau of Reagan and economics attributed to Paul Harvey[1]) refers to the economic policies promoted by the U.S. President Ronald Reagan during the 1980s, also known as supply-side economics and called trickle-down economics by critics. The four pillars of Reagan's economic policy were to:[2]

1.Reduce Growth of Government spending.

2.Reduce Income Tax and Capital Gains Tax.

3.Reduce Government regulation.

4.Control the money supply to reduce inflation.

In his stated intention to increase defense spending while lowering taxes, Reagan's approach was a departure from his immediate predecessors. Reagan enacted lower marginal tax rates in conjunction with simplified income tax codes and continued deregulation. The federal deficit fell from 6% of GDP in 1983 to 3.2% of GDP in 1987.[3] The federal deficit in Reagan's final budget fell to 2.9% of GDP.[2] The rate of growth in federal spending fell from 4% under Jimmy Carter to 2.5% under Ronald Reagan.[2]

William A. Niskanen, one of the architects of Reaganomics, summarizes the policy as "Reagan delivered on each of his four major policy objectives, although not to the extent that he and his supporters had hoped," and notes that the most substantial change was in the tax code, where the top marginal individual income tax rate fell from 70% to 28%, and there was a "major reversal in the tax treatment of business income," with effect of "reducing the tax bias among types of investment but increasing the average effective tax rate on new investment." Roger Porter, another architect of the program, acknowledges that the program was weakened by the many hands that changed the President's calculus, such as Congress.[2][4] The effect was primarily a change in the composition of tax revenue, towards payroll and new investment, and away from higher earners and capital gains on existing investments, with comparatively small effect on overall tax revenue: the changes "reduced the federal revenue share of GDP from 20.2 percent in fiscal 1981 to 19.2 percent in fiscal 1989," a 1% reduction.

and,

Reagan's policies are widely recognized as bringing about the longest peacetime economic expansion in U.S. history, surpassed in duration only by the 1990s expansion that began under George H. W. Bush in 1991.[10][11] During the Reagan administration, the American economy went from a GDP growth of -0.3% in 1980 to 4.1% in 1988 (in constant 2005 dollars),[12

and,

During the Reagan administration, federal receipts grew at an average rate of 8.2% (2.5% attributed to higher Social Security receipts), and federal outlays grew at an annual rate of 7.1%.[27][28] According to a 1996 report of the Joint Economic Committee of the United States Congress, during Reagan's two terms, and through 1993, the top 10% of taxpayers paid an increased share of tax revenue to the Federal government, while the lowest 50% of taxpayers paid a reduced share of the tax revenue.[29]

and,

According to a 1996 study[34] from libertarian think tank Cato Institute:

On 8 of the 10 key economic variables examined, the American economy performed better during the Reagan years than during the pre- and post-Reagan years.

Real median family income grew by $4,000 during the Reagan period after experiencing no growth in the pre-Reagan years; it experienced a loss of almost $1,500 in the post-Reagan years.

Interest rates, inflation, and unemployment fell faster under Reagan than they did immediately before or after his presidency.

The only economic variable that was worse in the Reagan period than in both the pre- and post-Reagan years was the savings rate, which fell rapidly in the 1980s.

Stephen Moore of the Cato Institute stated that "no act in the last quarter century had a more profound impact on the US economy of the eighties and nineties than the Reagan tax cut of 1981." He claims that Reagan's tax cuts, combined with an emphasis on federal monetary policy, deregulation, and expansion of free trade created a sustained economic expansion creating America's greatest sustained wave of prosperity ever. The American economy grew by more than a third in size, producing a $15 trillion increase in American wealth. Every income group, from the richest, middle class and poorest in this country, grew its income (1981–1989). Consumer and investor confidence soared. Cutting federal income taxes, cutting the US government spending budget, cutting useless programs, scaling down the government work force, maintaining low interest rates, and keeping a watchful inflation hedge on the monetary supply was Ronald Reagan's formula for a successful economic turnaround.

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Oohhhh, So that's why it's called "Reaganomics".

I sat through 22 Fed-economist half day luncheons/ presentations early-mid 90's. I've been schooled. but, Thanks for reminding me.

Notice the first sentence of the article?

Pointing fingers is not a solution. Anybody have any solution ideas?

Edited May 9, 2011 by Vi-Jay

[Vi-Jay 218]

http://www.youtube.com/watch?v=EHSnXFEzE4E&feature=related

[Mr. Big Dog 10,747]

You really expect a discussion of a wikipedia account of Reagonomics?

[Vi-Jay 218]

You really expect a discussion of a wikipedia account of Reagonomics?

Just keeping the reading easy.

Do you have a dispute? or Just funny pictures?

Edited May 9, 2011 by Vi-Jay

[Mr. Big Dog 10,747]

Just keeping the reading easy.

Do you have a dispute? or Just funny pictures?

Debt to GDP Ratio:

Carter 1977: 35.8%

Carter 1981: 32.5% (-3.3%)

Reagan 1981: 32.5%

Reagan 1985: 43.8% (+11.3%)

Reagan 1985: 43.8%

Reagan 1989: 53.1% (+9.3%)

Impressive view here:

[Vi-Jay 218]

Since you want to compare Presidents...,

This chart is prettier.

I like this one too.

Perhaps you will find a WSJ article more to your liking?

but, Brace yourself. It compares Obama-mama to Reagan. ooopsie.

Here's the link.

Here's a short snippet;

To put this in historical context, consider the nearby table that compares deficits as a share of GDP under Presidents Reagan and Obama. The 1981-82 recession was comparable in severity to the one Mr. Obama inherited and reached similar heights of unemployment. The deficits that resulted from that recession were the source of huge political consternation, with Democrats, the press corps and even some senior Reagan aides insisting that only a huge tax increase could save the country from ruin.

Yet as the table shows, the Reagan deficits never reached more than 6% of GDP, and that happened only in 1983, the first year of economic recovery. As the 1980s expansion continued, the deficits fell, especially as the pace of spending slowed in the latter part of Reagan's second term. Few remember now, but when Ross Perot won 19% of the Presidential vote in 1992 running more or less on the single issue of the deficit, the budget hole was only 4.7% of GDP.

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I wonder if you mind providing the link for the chart you put up?

[Vi-Jay 218]

Never mind 'bout your graph link. I found it.

wikipedia.org

You sir, are indeed a "master-baiter".

and, why are we even talking GDP/Debt ratio? Because you're blaming govt. debt for the dying middle class?

Has nothing to do with the fact that manufacturing jobs have disappeared over the last decade?

It's all 'bout the gov ain't got no more free $!

You just live breathe eat $hit party lines huh?

I have two brothers just like you. 1-Rep-1-Dem. and, they are identical twins.

There is no way in hell an objective conversation can ever take place with someone like that.

I'm out mule. heeehaaaawwww!

Edited May 9, 2011 by Vi-Jay

[Mr. Big Dog 10,747]

and, why are we even talking GDP/Debt ratio?

Because it's the more favorable statistic to look at when talking about Reagonomics. We could look at the debt in numbers and would then have to say that during Reagan's two terms, the national debt tripled from just under one trillion when he took office to just under three trillion when he left.

Because you're blaming govt. debt for the dying middle class?

When and where have I done that?

[Mr. Big Dog 10,747]

he 1981-82 recession was comparable in severity to the one Mr. Obama inherited ...

Really? Severity isn't everything is it? And when you look at the unemployment rates, Reagan didn't look much better at this point either. The WSJ apparently also forgot that the 1981 recession was essentially a forced recession to get inflation under control? You'd have to expect much better from the supposed masters of Wall Street, wouldn't you? No you wouldn't. I, on the other hand, would.

Edited May 9, 2011 by Mr. Big Dog