Both major parties state that they will not risk a default, and their friends on Wall Street clearly don't want one.
Speaker of the House John Boehner is facing the reality that he cannot rely on the fringe ideologues in the Republican party to take any action. The Democratic base does not want to budge on Medicare, Medicaid and Social Security. Senate Democrats have proposed to stabilize borrowing through sharp cuts at the Pentagon and other government agencies, as well as $2 trillion in new taxes, primarily on families earning more than $1 million year.
Yet here is House Democratic Whip Steny Hoyer (R-Md)'s comment on Friday, July 8:
"I'm hopeful [the Republicans] will stay engaged so that we can... reduce the deficit in a balanced way without putting all of the burden on seniors and the middle class."
The question is: Exactly how much more of a burden does Hoyer believe seniors and the middle class should suffer? And how would that help reduce the deficit?
Let's be clear: The vast majority of Americans have already been slammed by the recession, and more and more become unmoored from the economy daily. What the economy needs is to create jobs, and inflicting greater pain will not create job one.
Even before the recession hit, we saw a growing divide between the "haves" and the "have quite a bit less." In 2007, the top 1% of U.S. households (the super rich) owned 43% of all the nation's financial wealth (total net worth minus the value of one's home), while the bottom 80% of American households collectively owned 7%.
For many working families, it's been a struggle to keep up. From 1979-2005, the bottom fifth of all households saw their average, inflation-adjusted income grow by just $200 during the entire 26-year period. Meanwhile, a small number of households - the top 0.1% of the income scale - saw their average income grow by almost $6 million during the same time.
Grasping for economic security, many American families invested in their homes. In 2007, 62% of all housing assets in the U.S. were owned by the bottom 80% of the population (by income) according to NYU economist Ed Wolff. In contrast, housing accounts for barely a blip in the assets of the super rich.
Since the housing bubble burst, many baby boomers have little or no equity in their homes, according to the Center for Economic and Policy Research. Median households with a person between 55 and 64 years of age ("early boomers") saw their wealth fall by almost 50%, from $315,400 in 2004 to $159,800 in 2009. Should they have to lose even more?
Now more than ever, the 100 million people who rely on Medicare and Medicaid, and the more than 60 million who depend on Social Security, need the support of these programs into which they have contributed over the course of their working lives. For women, the average monthly Social Security check is about $1,000. A significant proportion of retired women have no other source of income, and in their later years exhaust their savings. What else is there to cut?
We could use some equitable sharing of the burden, for sure. Rescinding the tax cuts for the wealthiest 2% for one year would yield $69.5 billion, more than enough to replace all of the proposed Republican budget cuts.
We need to rebuild America, not further dismantle the middle class, or target our seniors. That's where our leaders should lead us.
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