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The War 'in' the Middle Class

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The most pressing issue in America today is unemployment and jobs, not debt. Yet, somehow Washington has managed to get distracted and focus on the debt. President Bush's former economic speech writer David Frum said this.

I agree.

Intimately connected with all of this is a debate on who should foot the bill: the rich or the poor and middle class. Some have called this class warfare. I don't see a war on the middle class. The rich aren't getting together behind closed doors and scheming of ways to destroy the middle class. Something else is going on.

If there is a war on the middle class it is one we are waging on ourselves by adhering to ideology and sound bites. I recently read in my hometown paper an opinion piece that said we don't get our way out of debt by spending more. That's certainly true but that is not the point of government spending -- creating jobs is.

One could argue that government spending hasn't worked out too well, but someone else could argue that it staved off even higher unemployment. And it could be further argued that we have a lack of jobs is because the private sector isn't investing their profits -- they are saving their profits to themselves -- which is their right but we have to understand that doing so doesn't stimulate economic growth and create jobs.

All the while, Republicans have been chanting that public investment 'crowds out' private investment. They are missing a major lesson of Macroeconomics 101: public investment doesn't crowd out private investment in the short run; it does so in the long run.

In the wake of the economic collapse of 2008, the rich walked away with million dollar homes all paid for and plenty of reserves while the middle class lost homes.

When we needed someone to spend to get the economy going again, the private sector didn't do it; the private sector was and still is saving profits not investing. If the private sector isn't spending, there is no demand, if there is no demand then the supply stop. If supply stops then people start to lose their jobs. And if people lose their jobs, then there will be less money to buy goods and the cycle will continue downwards. To break this cycle, the government stepped in as a temporary fix.

Without public investment (public spending) the recession would have lasted much longer and unemployment would have been higher. The private sector stopped spending in 2008 when the actions of a few compromised the entire global economy. When the private sector didn't step up and spend, the government stepped in and spent money to reinvigorate the economy.

Trickle down economics is a slogan based in wishful thinking, not middle class experience. There is no way to spin it: the rich are getting richer and the middle class is getting less of a share but not for a lack of working for it.

Polls released this week from Gallup showed that the majority of Americans want a balanced approach to deficit and debt reduction. Tax increases and spending cuts are acceptable to the majority of Americans. But we have an ideologue named Grover Norquist who has pressured members of the GOP to take a pledge to not raise revenues from their current post WWII historic low. Eric Cantor, for example, consistently calls tax hikes 'job killing'; this is just not as true as they would like it to be. The experience of many other comparable countries with higher tax rates shows this, and the experience in the 1990s under Clinton's modest tax increases shows it is not a bad idea here either.

America's debt is affordable right now. Government spending has lead to increased public deficit but we are nowhere near our highest levels as a percentage of GDP (gross domestic product: the market value of all goods and services in the nation), which is the measure that matters since it keeps the measures relative and comparable over the course of time. In terms of debt, we have still not crossed, nor are we going to cross, the worst we have ever been and there is far less spending on the horizon with the expiration of ARRA funds.

US Senate Minority Leader Mitch McConnell (R-KY) and Republicans say that spending is the biggest problem.

Do they have amnesia?

What did House Majority Leader Eric Cantor (R-VA) do in 2003? He voted for an unnecessary war in Iraq that wasn't paid for that has added trillions to our debt. Where was Speaker of the House John Boehner (R-OH) when Bush passed the unfunded Medicare Prescription Drug, Improvement, and Modernization Act of 2003 into law that added hundreds of billions to our deficit? He was sitting smug in the Republican victory. Where were all of the Republicans when they passed the Bush tax cuts that have compromised the middle class? Where were members of the GOP when President Bush encouraged his Treasury Secretary Henry Paulson to request the TARP? They were probably on the golf course with the millionaire friends.

This debt crisis was completely predictable. I published an op-ed in a local Massachusetts newspaper on 20 September 2010 titled "Turn Left, Right? The deficit grows either way".. And on 9 December 2010 another op-ed titled "[the] Deficit will soar again" if we extend the Bush tax cuts. The current budget crisis was a completely predictable situation yet no one in DC did anything to prevent it. Now they just point fingers.

We spend $125 billion more each month than we take in. Is this because of spending or is it revenues? I have written many times that there are ways that local and state governments spend inefficiently but also consider that federal tax rates are currently at post-WWII and international lows. Also consider that government spending is tapering off - the ARRA (AKA, 'The Stimulus') is expiring and more funds won't be appropriated. Now consider that between 2001 and 2008 we raised the debt ceiling 7 times from $5.9 trillion to $11.3 trillion; a $5.4 trillion or 90% increase. As a percent of GDP, increasing the debt ceiling isn't a big deal or anything we can't handle.

However, there is a movement in America that is trying to redefine what it means to be America pushed by ideological stewards who create a history that never was. We have seen this with leaders of this movement, such as Michelle Bachman and Sarah Palin, two figures who consistently botch US history.

This movement of zealots shuns any type of intellectual authority and they cherry-pick information. They have no appreciation for the complex nature in which objective analysis often is inconclusive, and they have no understanding of the limitations of research findings. Sound bites that sway public opinion on economic matters are evidence of good economic policy. Rather than attempting to explain on cable news the complex nature of the situation, they try to score points with simplistic sound bits like "the free market will take care of it" (it being anything and everything) or "I've never seen a tax hike create a job."

I think what we are seeing is greed gone wild and a sense of entitlement. It was people in this upper 2% class who were responsible for the current economic crisis and calamity. Some people exploit a good political system for their own financial gains at the expense of the entire middle class, their fellow countrymen. They can do it and I would not change this political system, but just because someone can do something it doesn't mean they should. And so long as we live in a system of government where a majority of the people make the rules we can say enough is enough.

The middle class is being eviscerated. But I don't think there is a war on the middle class. I think there is a war in the middle class.

Middle class Republicans, Tea Party Patriots - wake up! You're being taken advantage of by people who do more for themselves than they do for others. You're letting your elected Representatives take care of the rich 2% but not you!

There is perhaps nothing more un-American than doing more for ones self than for others. If this is how our Founding Fathers acted, we would still be British. If this is how America's greatest generation acted, Europe would have fallen to the Nazis. The mindset "what's in it for me?" isn't the best America has to offer.

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