Elizabeth Warren: "The Middle Class Is Under Terrific Assault"
The Washington Post features an interview today with Elizabeth Warren, who chairs the Congressional Oversight Panel, which makes her your last, best -- maybe only -- hope at getting the TARP money back and ensuring that something will be done to prevent the cascade of systemic financial sector cock-ups that cratered the economy from ever happening again.
It's a wide-ranging interview with reporter Lois Romano, and Warren touches on several areas that should be of enormous interest to you, dear readers. These include her take on how the TARP money basically vanished into thin air ("When Secretary Paulson first put this money out into the banks, he didn't ask, 'What are you going to do with it?' He didn't put any restrictions on it. He didn't put any tabs on where it was going to go; in other words, he didn't ask. And if you don't ask, no one tells.") and what's been done about too-big-to-fail banking institutions ("A year later, the big are bigger than they were.") But I'd like to highlight her take on the way the financial crisis is transforming the middle class for the worse, because this is Warren's primary driver:
ROMANO: Do you agree with Michael Moore's basic premise that capitalism as it is now has destroyed the country's middle class?
WARREN: Well, I believe that the middle class is under terrific assault. And I don't want to play this as a capitalism issue.
When we compare middle-class families today with their parents a generation ago, we have basically flat earnings-a fully employed male today earns on average about $800 less, adjusted for inflation- than a fully employed male earned a generation ago. The only way that houses could increase or families could increase their household income was to put a second earner into the workforce, and, of course that's now flattened out because there aren't any more people to put into the workforce. So you've got, effectively, flat income in this time period with rising core expenses; housing; health insurance; child care; transportation, now that it takes two cars to get everywhere, two jobs to support; and taxes, because you've got two people in the workforce and we have a somewhat progressive taxation system. So that families are spending a lot more on what you describe as the basic nut.
The third leg to the triangle, and that is families, to deal with this, stopped saving and started going into debt.
And the debt side of where families both spend more money and are made much more vulnerable on mortgages, on credit cards, on check overdraft fees, all this side of it, the credit side of it really means that we have a middle class that a generation ago we would have described as solid, secure, dependable. If you could just get into the middle class, you could pretty much count on a fairly comfortable life and all the way through to a comfortable retirement.
That's been hollowed out. Sure, there are people who are going to make it through just fine, but the vulnerability of families in the middle class has just, it has gone up enormously.