07/30/2012 10:50 am ET Updated Sep 29, 2012

America's Contemporary Depression

Indisputably, the American economy is ailing and its citizens are suffering. Beginning with the 2007 recession, most Americans have become increasingly familiar with financial uncertainty, disappointment, and frustration while politicians of both parties have grown adept at packaging blame into sound bites. All but a few insiders and pundits are fed up with the political finger-pointing, and the middle class no longer cares how we got here. They care only about how the nation's leaders are going to create and protect jobs and bring stability to the economy. But the truth is that a return to full employment and stability is not possible unless we acknowledge the problem for what it is and put aside partisan politics to fix it.

So, what is the problem? Nobody wants to say it, but we are riding the unpredictable waves of a Contemporary Depression. It may not look and feel like the Depression of the 1930s because government programs such as unemployment insurance, Medicaid, Medicare, Social Security, food stamps, and other forms of public assistance have made this Contemporary Depression more tolerable and less visible. Losing your job today does not mean immediate hunger or starvation for you and your family, as it would have 80 years ago. You rarely see homeless children begging on the street, as was commonplace then, and retirement, even if delayed, is still possible for most middle-class families in a way it never was for our parents and grandparents. Nonetheless, no amount of masking can fix the economy's structural imbalances -- imbalances that will be irreversibly devastating unless the president and Congress act decisively.

Since the 1930s, government has worked to provide the fiscal incentives for the creation of jobs for the middle class and has worked alongside the private sector to restore public confidence. Yet in this time of crisis, government has not only abandoned its role in the creation of jobs, it is eliminating them. Every day, layoffs of state and local public servants such as teachers, police officers, firefighters, and a myriad of health and human services employees are reported by the media. Such actions nullify any progress that has been made toward resuscitating the economy. In fact, had these jobs not been eliminated, the current unemployment rate of 8.2 percent would be a full percentage point lower. What is more, when you count those working part-time who want full-time work that includes 18 percent of the population. With 23 million people presently unemployed or underemployed, and four job seekers for each vacancy, it is easy to see how personal despair has translated into frustration with our politicians.

More disconcerting, things are not much better for the employed. Many who work full-time today earn less than they did before the 2007 recession began, and to make matters worse, a college degree is no longer a guarantee of a good-paying job. In New York City 50 percent of all security-guard positions paying only $10 per hour without benefits are filled by college-educated individuals. On average, the net worth of American families fell by 40 percent, from $126,400 to $77,300, between 2007 and 2010, with the number of personal bankruptcies reaching 5 million from 2008 to the present 2009. Add to these trends the more than six million homes that are in foreclosure, the 16 million mortgages still under water, the more than 46 million people relying on food stamps, and the fact that poverty is growing fastest in middle-class suburbs. Is it any wonder that one in every three Americans is poor or near poor and calls to the National Suicide Prevention Lifeline increased by 300 percent since 2007? By all accounts, it is a Contemporary Depression.

The devastation behind these grim statistics was avoidable; government has known for several generations how to fix these problems. We have a rich history of presidents who have worked with Congress in a bipartisan manner to confront economic downturns. They did so with a focus on job creation and training aimed at strengthening the nation's labor force. During the Great Depression, Roosevelt put the country to work rebuilding its roads, bridges, cities, and parks. He signed the GI Bill of Rights, providing higher education -- and a path to the middle class -- for millions of returning servicemen. Truman championed the Full Employment Act, promoting "maximum employment, production, and purchasing power." Kennedy committed to retraining workers with the Manpower Development and Training Act. And Nixon delivered the Comprehensive Employment and Training Act, putting hundreds of thousands of citizens in public jobs to prepare them for work in the private sector. Yet today, shamefully, more than one million technical manufacturing jobs go unfilled because our unemployed workforce lacks the requisite skills.

Despite bickering over the details, all in all government-sponsored employment and training programs worked; the unemployment numbers went down, the public's confidence went up, and we became a stronger nation. However, for the past 30 years, the economy has been dominated by a crude and unbridled capitalism to which activist government has taken a back seat. As a result, key sectors of the economy -- such as banking -- have been deregulated despite the painful lessons of the Great Depression, now apparently forgotten. As a result America's middle class is rapidly losing ground, and the American Dream is beginning to look like a nightmare.

In short, Americans need work and they need it now. Faced with almost the same situation in 1931, President Hoover chose to balance the federal budget, rather than use the power of government to invest in the nation. The result was a deepening depression. Sound familiar? In the final analysis, it took an activist government during the Great Depression of the 1930s to put Americans to work and create a middle class. Who would have imagined that an inactive government with shortsighted leadership would permit that middle class to be dismantled by a Contemporary Depression?