Tag Archives: Middle class

Ignoring the Issues That Matter, Part 2

What are the most important challenges and issues facing America—and why do politicians and pundits ignore them? We  concludes our review this vital topic.

Consistently, the most important challenges facing the American people are covered inadequately  by most media sources. Yesterday, we examined inaccurate coverage of national defense. Today’s report looks at Social Security, Medicare, health care, education, and the problems facing the middle class. 

SOCIAL SECURITY AND MEDICARE. Social Security and Medicare are frequently and mistakenly called “entitlements,” lumping them in with a variety of assistance programs.  That is incorrect.  Working Americans pay for these benefits throughout their working lives, and depend on them when they reach their senior years. But all those dollars taken from paychecks are not put into an account with the workers name on them.  They are simply mingled with all other government income. And, both programs are going broke.

A Time Money report reports: “How worried should you be over Social Security’s future? According to the most recent Annual Report of the Board of the Social Security Trustees…After 2019, Treasury will start spending down the fund; its reserves are estimated to be depleted by 2035.”

Much the same can be said about Medicare. Modern Health Care reports that  “The Medicare trust fund will be insolvent by 2028, according to the 2016 Medicare trustees’ report released [in 2016].”

The fiscal health of both of those programs are vital, but far too many politicians are frightened of doing anything to remedy the problem.

MIDDLE CLASS DESPERATION. As the New York Analysis of Policy and Government recently reported, middle income Americans are losing ground. In December, 2015, Pew Social Trends reported “…middle-income Americans have fallen further behind financially in the new century. In 2014, the median income of these households was 4% less than in 2000. Moreover, because of the housing market crisis and the Great Recession of 2007-09, their median wealth (assets minus debts) fell by 28% from 2001 to 2013.” Pew Social Trends also reported that “From 2000 to 2014 the share of adults living in middle-income households fell in 203 of the 229 U.S. metropolitan areas examined in a new Pew Research Center analysis of government data. The decrease in the middle-class share was often substantial, measuring 6 percentage points or more in 53 metropolitan areas, compared with a 4-point drop nationally.”

THE HEALTH CARE CRISIS. America’s health care system was demonstrably superior to those of other nations, but it did have flaws. Obamacare, advertised as a means to address those flaws, actually made matters worse. Examples:

  1. Lost plans. Sen. Ben Sasse released a report about Obamacare’s effects on competition among insurers, concluding that outcomes have worsened for most Americans, in terms of choice of insurers and plans. Over the past year, the number of insurers offering plans in exchanges has dropped by nearly 6%.Many states have lost more than 80% of their insurers: Alabama went from 23 to 3, Arkansas went from 24 to 4, and Wyoming from 21 to 1, just to name a few. Only New York did not lose over half of its insurers, going from 28 to 15 insurers, a 46% decline.
  2. Higher premiums. report by the Kaiser Family Foundation and the Health Research & Educational Trust found that, since 2008, average employer family premiums have climbed a total of $4,865. From 2015 to 2016 the most popular exchange family plan, Family Silver, saw a 10% average increase in its premiums. In some states, premiums rose by nearly 40%.In 2015 the average annual family premium was $17,545 per year, and the average premium for a single policy was $6,251. Young men were particularly hard-hit. Average premiums rose by 49% from 2013 to 2014, the year Obamacare was supposed to go into effect.
  3. Higher deductibles. The New York Times, long a cheerleader for Obamacare, reported that many people can’t afford to use the health insurance that they have purchased because of the deductibles .New York Times reporter Robert Pear wrote that the median deductible in Miami was $5,000 in 2015. It was $5,500 in Jackson, Miss., and $4,000 in Phoenix. One Chicago family of four paid $1,200 monthly for coverage yet had an annual deductible of $12,700.
  4. High costs. The Office of the Actuary of the Center for Medicare and Medicaid Services has projected that Obamacare will result in an additional $274 billion in administrative costs alone over the period of 2014 through 2022.

Obamacare is collapsing in a whirlpool of skyrocketing premium costs, vanishing choices, and deductibles so high as to make the coverage more an illusion than a reality.

EDUCATION. Despite spending more pupil than just about every other nation, America’s students have fallen behind their international peers. U.S. employers find that far too many are ill-prepared for the job market. Their lack of knowledge in the basics of science, math, American history and civics bode ill for the future.  The nation stands to lose much if not all of its leadership in technology, economy, and the very essence of its being within just a few short years.  Yet there is little movement to address this fundamental threat to the nations’ future.

There are solutions

None of these issues are insolvable.  In fact, some are readily correctable.

  • The nation’s electrical grid can be protected for less than $10 billion.
  • President Reagan faced a similar defense challenge when he took office. His increased spending on national defense actually discouraged America’s main adversary at the time, the Soviet Union, and commenced several decades of relative peace and prosperity between superpowers. The same can be done again.
  • The policies that have slashed middle class jobs, including favorable treatment for China, tax policies that encouraged corporations to take jobs overseas, and Obamacare policies that actually reward companies for replacing full time jobs with part-time positions are solvable through legislation.
  • Federal spending on anti-poverty programs that have failed to reduce poverty could be redirected to Social Security and Medicare.
  • The authority to determine school curriculum can be removed from the self-interested government bureaucrats, teachers’ unions, and the educational hierarchy and put back to where it belongs—in the hands of parents, organized into appropriate formats.

Ignoring the Issues That Matter

What are the most important challenges and issues facing America—and why do politicians and pundits ignore them? The New York Analysis of Policy & Government reviews this vital topic in this two-part review.

The nation needs to distinguish between issues that count, and those of far lesser importance. Inevitably, this will produce rage in advocates of those causes deemed comparatively inconsequential.

The United States faces numerous challenges. Many of the fundamental underpinnings of America’s economy, national security, health, preparation for future generations, and even the very existence of the country’s cultural and ideological underpinnings are threatened as never before.

During recent years, The U.S. endured an armed force weakened by years of disinvestment, wishful thinking replaced blunt realism in foreign affairs, an attempt to improve the nation’s health insurance system failed, the middle class was deeply wounded, public education deteriorated, and the population became more divided than at any time since the Civil War.

Serious attempts to address any of these crises are substantially hampered by the national debt of about $20 trillion, (half of which was accumulated in just the past eight years) the influence of special interests which ignore the harm they have wrought, and a determined effort by many educational, media and political figures to, as Barack Obama promised, “fundamentally change” America.

The former president was never seriously questioned as to what he sought to change America into.  Those agreeing with his political views fail to explain how the government-dominated economic system he sought to bring about, and in the case of health care, actually did establish, would succeed in the U.S. after failing in almost every other nation in which it has been tried.  Countries as diverse as the former Soviet Union and modern-day Venezuela have tried and failed.  Some point to Europe, but the nations of that continent essentially established their government-heavy economic systems by relying on Washington to take over most of their defense spending. Even China, ostensibly a Communist regime, employs a form of capitalism, and, not incidentally, relies heavily on the American consumer to keep its economy moving.

As profound and existential threats to America remain unaddressed, much of our national conversation pretends they don’t exist and focuses instead on issues of, at best, secondary importance—or no importance at all. Much of the blame for the failure to successfully confront, or even acknowledge, the nation’s real challenges falls on the traditional media. In its fevered attempt to assist progressive candidates, America’s premiere news sources have chosen to gloss over the extraordinary problems that plague the nation.

These are the under-emphasized issues that should be the centerpiece of national attention:

NATIONAL SECURITY AND FOREIGN AFFAIRS. The national discussion about foreign affairs and defense planning has borne little relation to reality, probably because the actual facts are sufficiently distressing to make pundits and politicians alike worry that an honest narrative, and an accurate description of the costs that need to be afforded to ensure America’s safety, are sufficiently unpleasant that audiences and constituents alike would turn away.

Bluntly: Russia, China, and Iran constitute a singular and unified threat against the west.  Their geographical size and population make them the largest foe the United States has ever encountered. Russia, for the first time in history, has a greater nuclear arsenal than the U.S. China will soon have a larger navy. As a unit, they are America’s equal in technology, conventional and strategic military strength, and industrial capacity.

Their belligerent goals are manifestly clear through their actions in Ukraine, the South China Sea, the Middle East, and their dramatic armaments buildup. As America slashed its defense budget, these nations hiked theirs.  Washington, over the past eight years, gave peace a chance; it didn’t work.

Rather than confront the facts and take the necessary steps to protect the nation, politicians see more benefit on spending for more popular domestic programs. Reporters and analysts allow that irresponsibility to continue, citing irrelevant statistics such as comparisons of how much larger Washington’s budget is than Moscow, China, and Tehran.  But that comparison is inaccurate. Those axis powers don’t have to worry about paying a profit to private companies to the extent the U.S. does, nor do they disclose all their spending, or include many personnel costs. Since they constitute a contiguous land mass, they also don’t have to worry about extensive lines of supply, as the Pentagon does.

A related issue:  America’s electrical grid is very vulnerable to attack by an electromagnetic pulse (EMP) that could be triggered by a single well-placed nuclear blast, (North Korea has implied its ability and willingness to do this) or even a naturally occurring solar event, such as that which occurred in the 1850’s.

The Report concludes tomorrow with a look at Social Security, Medicare, Public Education, and Healthcare.

What Destroyed America’s Middle Class Part 2

The New York Analysis of Policy & Government concludes its review of the policies and trends that have severely harmed America’s middle class

A substantial portion of the downturn in the middle class has been the loss of steady, well-paying jobs in the manufacturing sector.

According to the Alliance for American Manufacturing “Over 63,000 factories have closed since 2001, and 5.1 million manufacturing jobs have been lost since 2000. President Bill Clinton dramatic alteration in trade relations with China bears a great deal of responsibility for the manufacturing employment exodus. His “U.S.-China Relations Act of 2000” granted permanent normal trade relations with China…It is reasonable to ask why Clinton advocated a measure that clearly would harm industrial workers.”

Michael Bargo, Jr., writing in the American Thinker  believes the problem began early in the Clinton presidency, on May 28, 1993, he issued Executive Order 12850, which “illegally shifted the decision-making role [about China’s trade status] to the Secretary of State… Clinton’s Executive Order was issued at a time when the U.S.-China trade deficit was only $18 billion a year. In 2015 the deficit was $367 billion.”

Bargo provides a suggested motive for the odd move: “just as the Clinton Foundation has been linked to relationships Hillary had to her speech payers and donors, Bill Clinton’s decision to send jobs to China by permanently controlling its MFN status has been linked to campaign donations. Boeing Company wanted the EO. Boeing was the parent company of the Loral Corporation, which donated $100,000 to the Democratic National Committee in June, 1994, according to a Washington Post report at the time. A nice reward to Clinton for his MFN status change. The Loral Corporation is a major developer of missile flight control software and at the time they wanted to launch satellites from China. Boeing also owned McDonnell-Douglas which in 1994 made an agreement with China to open a parts factory in Beijing. If this all seems oddly similar to the deals Hillary made with foundation campaign donors, well, that’s because it is.”

There is some slight cause for optimism, though.  AP  reported in May that American industry expanded production last month at the fastest pace in more than three years. President Trump’s emphasis on U.S. manufacturing, and his rejection of extremist environmental policies, particularly regarding coal, are bright spots.

Another factor detrimentally affecting the middle class is America’s high corporate tax rate, which has chased jobs offshore. The Daily Signal  notes that “The U.S. corporate tax rate is the highest in the developed world—by a long shot. At 39.1 percent (35 percent federal rate plus the average of state rates), it remains substantially higher than the Organization for Economic Co-operation and Development average of 25 percent. Combined with the ‘worldwide” tax system’ employed by the U.S. (where companies’ overseas income is taxed when they return it to this country) the excessively high corporate tax rate poses serious problems for the American economy.”

The final nail in the middle class coffin came courtesy of Obamacare.

Alexander Hendrie, writing for The Hill explained that “ObamaCare imposed a long list of taxes that directly hit middle class families. Further, the ACA legislation increased medical costs overall for middle class Americans.  It also harmed middle class-owned businesses. “the 3.8 percent net investment income tax on capital gains and dividends…hits many small businesses organized as pass-through entities that file as individuals, increasing their top federal rate to almost 45 percent.”

Zero Hedge  reports that “Per the Wall Street Journal, since 2007 middle class families have been forced to increase the share of their overall spending on healthcare by nearly 25% while cutting back massively on other necessities to cover the difference.”

This month, The Wall Street Journal reported that “Thanks to the ACA, hiring the 50th full-time employee effectively costs another $70,000 a year on top of the normal salary and benefits. Many business owners have described how this penalty prevents them from hiring and has caused them to reduce work hours to below the full-time threshold…Many businesses, when they do not offer coverage, keep their payrolls just below 50 full-time employees and thereby narrowly escape the ACA’s penalty…. the businesses employing just fewer than 50 often said the ACA caused them to hire less and cut hours below the full-time threshold. The penalty caused payrolls to shrink or prevented them from growing. Nationwide, we estimate the ACA-inspired practice of keeping payrolls below 50 has cost roughly 250,000 jobs. This does not count jobs lost when businesses close … or shrink because of other ACA incentives.”

What Destroyed America’s Middle Class

The New York Analysis of Policy & Government reviews, in two parts, the policies and trends that have severely harmed America’s middle class

At first glance, the U.S. economy seems to be doing quite well. The June report from the Bureau of Labor Statistics  indicated that America’s businesses added 222,000 jobs last month, a four month high. In May, the unemployment rate reached a phenomenal 16 year low. Another encouraging sign, though a small one: The job participation rate ticked slightly upwards as well. Those who had left the labor force entirely jumped back in greater numbers than at any time since 1990.

But dig a bit deeper, and troublesome indicators appear. Average hourly pay growth is anemic, and that backbone of the economy, middle income jobs, remains at seriously depressed levels. This is not the result of any cyclical downturn, or even the lingering effects of the 2007 recession. Rather, it is due to bad policy decisions over the past 18 years, as well as the impact of technology.

Bloomberg News puts in this way:  “A strange thing seems to be happening to the U.S. economy. On surveys, businesspeople and consumers say the future looks bright. But recent economic activity hasn’t appeared very robust…The University of Michigan’s Surveys of Consumers show confidence at the highest levels they’ve been since before the crisis…But again, some hard numbers tell a different story. Retail sales fell in May, and have been relatively lackluster for the entire year. Auto sales are falling as well. Since cars are expensive, long-term purchases, consumers often signal lack of optimism by holding back on the purchase of a new car, choosing instead to drive their old model for a little while longer. So this is another data point that belies rosy consumer confidence numbers. Pending home sales provide a third spot of weakness.”

Middle Class Loses Ground

The reality is, middle income Americans are losing ground. In December, 2015, Pew Social Trends  reported “…middle-income Americans have fallen further behind financially in the new century. In 2014, the median income of these households was 4% less than in 2000. Moreover, because of the housing market crisis and the Great Recession of 2007-09, their median wealth (assets minus debts) fell by 28% from 2001 to 2013.”

In a subsequent report, Pew Social Trends noted that “The American middle class is losing ground in metropolitan areas across the country, affecting communities from Boston to Seattle and from Dallas to Milwaukee. From 2000 to 2014 the share of adults living in middle-income households fell in 203 of the 229 U.S. metropolitan areas examined in a new Pew Research Center analysis of government data. The decrease in the middle-class share was often substantial, measuring 6 percentage points or more in 53 metropolitan areas, compared with a 4-point drop nationally.”

In a 2011Forbes article, Jenna Goudreau reports:  “Are stable, well-paying middle-class jobs an endangered species? Economists say: Sort of. ‘The idea that one can have a single-earner family, get a good job, keep it for life and have a comfortable living is all but gone,’ says Kevin Hallock, professor of labor economics and director of the Institute for Compensation Studies at Cornell University. ‘Long-term job stability is declining, … Generally, jobs are disappearing where there’s been a technological advance …or a change in the way that organizations function, says Hallock. And not only are old-fashioned assembly line jobs on the decline, several white-collar office positions are also in jeopardy. ‘There has been some long-term decline in middle-income jobs,’ says Harry Holzer, Georgetown University economist and co-author of Where Are All The Good Jobs Going. ‘Specifically, it’s good-paying production and clerical jobs that are disappearing.’ …Because over 20 million people count on clerical work, the vanishing act is a major blow to the middle, but there are other more niche positions that are also on the chopping block. Internet travel sites have essentially erased the need for travel agents, an occupation which declined by 14% and 12,500 jobs in the last five years for which data is available. Similarly, proofreaders—generally highly skilled workers with a four-year college degree—were once vital to publications and communications departments. These positions shriveled by 31%, likely due to advanced software, Holzer says.”

Bipartisan Recognition

The plight of the middle class has been recognized by both those on the right, who agree with President Trump’s drive to protect U.S. manufacturing and stop illegal immigration, and those on the left, who are emphasize the need for ‘living wage’jobs.

In 2016, Common Dreams, a progressive publication, notes: “Our middle-income jobs are disappearing…the evidence shows that living-wage, family-sustaining positions are quickly being replaced by lower-wage and less secure forms of employment. These plentiful low-level jobs have padded the unemployment figures, leaving much of America believing in an overhyped recovery…research is beginning to confirm the permanent nature of middle-income job loss. Based on analysis that one reviewer calls ‘some of the most important work done by economists in the last twenty years,’a National Bureau of Economic Research study found that national employment levels have fallen in U.S. industries that are vulnerable to import competition, without offsetting job gains in other industries. Even the Wall Street Journal admits that ‘many middle-wage occupations, those with average earnings between $32,000 and $53,000, have collapsed.”

The Report concludes tomorrow.

Jobs Report Reflects decline of Middle Class, Part 2

The latest release from the Bureau of Labor Statistics  (BLS) notes that the nation’s labor participation rate remained at 62.7%, a devastatingly low level not seen since 1978.

A 2015 Analysis by Investors.com  “After six-plus years of President Obama’s big-spending, tax-raising policies, middle-class families have seen their incomes decline and more families have fallen into poverty, Census data show… Median family income dropped slightly to $53,657, down from the year before. Every income group suffered losses, with the lowest fifth of households dropping close to 1%. The overall poverty number barely budged. But it climbed by almost 600,000 among blacks in 2014, more than half of whom were under age 18. From 2009 to 2014, real median household income dropped by more than $1,000 — or 2.3% — to $53,657. (And that decline would likely have been steeper if not for a 2013 change in the way the Census does its annual survey.)

Also in 2015, Zerohedge  listed a number of factors indicating the plight of the middle class.  Among the most important:

  • In 2008, the total number of business closures exceeded the total number of businesses being created for the first time ever, and that has continued to happen every single yearsince then.
  • In 2008, 53 percent of all Americans considered themselves to be “middle class”.  But by 2014, only 44 percentof all Americans still considered themselves to be “middle class”.
  • In 2008, 25 percent of all Americans in the 18 to 29-year-old age bracket considered themselves to be “lower class”.  But in 2014, an astounding 49 percentof all Americans in that age range considered themselves to be “lower class”.
  • Traditionally, owning a home has been one of the key indicators that you belong to the middle class.  So what does the fact that the rate of homeownership in America has been falling for seven years in a rowsay about the Obama years?
  • While Barack Obama has been in the White House, the average duration of unemployment in the United States has risen from8 weeks to 32.8 weeks.
  • It is hard to believe, but an astounding53 percent of all American workers make less than $30,000 a year.
  • While Barack Obama has been in the White House, the number of Americans on food stamps has gone from 32 million to46 million.
  • Ten years ago, the number of women in the U.S. that had full-time jobs outnumbered the number of women in the U.S. on food stamps by more than a 2 to 1 margin.  But now the number of women in the U.S. on food stampsactually exceeds the number of women that have full-time jobs.

CNS  report released in June notes that “for ordinary people, what probably matters most is household income. And if you look at the median household income numbers for the United States, Obamanomics is a failure. According to the Census Bureau’s latest numbers, the average family today has less income (after adjusting for inflation) than when Obama took office.

The American Enterprise Institute studied the problem in its report, “The Obama Economy and the Shrinking Middle Class.”  It noted how the poverty rate has increased: “the number of Americans living in poverty has increased by nearly 7 million during the Obama presidency, and the poverty rate went from 13.2 in 2009 percent to 14.8 percent last year. Further, the number of blacks living in poverty increased by nearly 1.4 million during Obama’s time in office, and the black poverty rate was higher in 2011 at 27.6% than any time since the mid-1990s before falling slightly to 26.2% in 2014. More data: the number of Americans on disability reached a record high during Obama’s second term, with an increase of 1.5 million disabled since Obama took office. There’s also be an increase in income inequality during Obama’s time in office, so there doesn’t seem to be a lot of empirical evidence to suggest that America’s middle and working class have seen an improvement in their economic well-being during Obama’s leadership.”

 

 

Jobs Report Reflects Decline of Middle Class

The December jobs report reflects the left’s disenfranchisement of the American middle class, a result of Mr. Obama’s placing what should be the most important segment of the U.S. population into a far lesser priority. There have been massive increases in programs for the poor, which have failed to alleviate poverty, and the rich have fared well. Fortune Magazine  described the outcome of Obama’s policies: “the über rich have experienced impressive real income growth, while the bottom 99% has seen almost none.”

The Minnesota Post  notes that “corporate profits skyrocketed during the Obama years, but the poverty rate didn’t decline and actually inched upward, both of which probably confound simple notions of whose side Obama is on.”

The practical expression of a presidential administration’s political goals and views is expressed in its budgetary and economic decisions, which are also the means with which an administration rewards friends and punishes the opposition. With the imminent conclusion of the Obama tenure, it is evident that the middle class, which was the portion of the electorate that least supported the current White House or its supporters in the hard left of the Democrat Party, has had a rough eight years.

As the New York Analysis of Policy and Government has noted, Data from The Pew Research Center reported “The American middle class is losing ground in metropolitan areas across the country, affecting communities from Boston to Seattle and from Dallas to Milwaukee. From 2000 to 2014 the share of adults living in middle-income households fell in 203 of the 229 U.S. metropolitan areas examined in a new Pew Research Center analysis of government data. The decrease in the middle-class share was often substantial, measuring 6 percentage points or more in 53 metropolitan areas, compared with a 4-point drop nationally. The shrinking of the middle class at the national level, to the point where it may no longer be the economic majority in the U.S., was documented in an earlier analysis by the Pew Research Center. The changes at the metropolitan level…demonstrate that the national trend is the result of widespread declines in localities all around the country.”

The Stratfor intelligence organization concurs.: “The threat to the United States is the persistent decline in the middle class’ standard of living, a problem that is reshaping the social order that has been in place since World War II and that, if it continues, poses a threat to American power… In the 1950s and 1960s, the median income allowed you to live with a single earner — normally the husband, with the wife typically working as homemaker — and roughly three children. It permitted the purchase of modest tract housing, one late model car and an older one. It allowed a driving vacation somewhere and, with care, some savings as well…  Government programs frequently fail to fulfill even minimal intentions while squandering scarce resources…”

The reason for the past eight years of decline of the U.S. middle class was not the result of a cyclical downturn in business, nor the 2007—2009 recession.  It is the specific result of federal tax and spending practices which ignored the needs of the private sector, particularly small businesses, and redirects federal dollars away from essential needs such as economic growth, defense and infrastructure and towards entitlements (but NOT Social Security of Medicare.)

The most basic indicator of the health of the U.S. middle class is the availability and quality of employment.

The Wall Street Journal notes that “In the mid-1990s and early 2000s, it was common for economists to estimate the U.S. needed 200,000 or even 250,000 jobs every month to keep the rate steady over time.” The Labor Department’s [latest] survey of employers found that the economy created 156,000 new jobs in the last month of 2016, down from the 12-month average of 180,000. Some 12,000 of those were government jobs, including 5,000 for the feds. The numbers were even less inspiring in Labor’s household survey, which found only 63,000 net new jobs in the month. The household survey tends to better capture job growth among small businesses and it is the basis for the monthly unemployment rate, which ticked up to 4.7% from 4.6%.” However, if those who are working only part time because of a lack of full time jobs are counted, a shortage which can be blamed on Obama’s policies, the rate goes up to 9.2 percent. 5.5 million Americans fit into this category in December. Fortune  notes that a significant explanation of the reduced unemployment rate comes “from the large number of Americans who have dropped out of the workforce altogether.”

Among the marginally attached, there were 426,000 discouraged workers in December, down by 237,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available to them. The remaining 1.3 million persons marginally attached to the labor force in December had not searched for work for reasons such as school attendance or family responsibilities.

U.S. Economy in near-recession, Middle Class Suffers Most

Once again, the latest economic reports reveal very bad news for the U.S. economy in general, and the middle class in particular.

The Bureau of Economic Analysis (BEA)  reports that America’s real GDP-gross domestic Product—is a barely-above recession 0.8% for the first quarter of 2016.  That’s even less the dismal 1.4% for the last quarter of 2015. Incorporated into that figure is the latest trade deficit of $40.4 billion.

The New York Federal Reserve adds to the gloomy news with its latest Househild Debt and Credit Report, indicating that Americans are falling deeper into debt. “Aggregate household debt balances increased in the first quarter of 2016.  As of March 31, 2016, total household indebtedness was $12.25 trillion, a $136 billion (1.1%) increase from the fourth quarter of 2015… Mortgage balances, the largest component of household debt, increased in the fourth quarter. Mortgage balances shown on consumer credit reports stood at $8.37 trillion, a $120 billion increase from the fourth quarter of 2015.  Balances on home equity lines of credit…dropped by $2 billion, to $485 billion.”

The Bureau of Labor Statistics piles on more worrisome news. “Real average hourly earnings for all employees decreased 0.1 percent from March to April, seasonally adjusted…This result stems from a 0.3-percent increase in average hourly earnings being more than offset by a 0.4-percent increase in the Consumer Price Index for All Urban Consumers…Real average weekly earnings increased 0.2 percent over the month due to the decrease in real average hourly earnings combined with 0.3-percent increase in the average workweek.”

The BLS figure of 0.4% increase in consumer prices doesn’t reveal how bad the inflationary impact truly is, since that figure doesn’t include the vital areas of food and energy. When those items are included, inflation is at 1.1%.

The Obama economic policy is becoming clearer.  There is a substantial tilt towards those on government assistance, employees on the low end of the wage scale, and foreign born workers at the expense of the middle class. According to the BLS  foreign born workers, of which there are 26.3 million in the U.S. labor force, comprising 16.7 percent of the total, have a .5% lower unemployment rate.

The President’s program of increased public assistance and emphasis on job policies that have worked better for foreign born workers has had a detrimental effect on Americans both in the middle and lower income brackets, and the problems could get far worse.

Mr. Obama has attempted to take action, without the permission of Congress, to render illegals eligible for federal benefit programs for which they are not currently eligible, including Social Security, disability, and Medicare, despite the fact that funds are already insufficient to pay for those who have paid into those programs for a lifetime.

According to the Pew Research Center …since 2010, Social Security’s cash expenses have exceeded its cash receipts. Negative cash flow last year was about $74 billion, according to the latest trustees’ report, and this year the gap is projected to be around $84 billion. While the credited interest on all those Treasuries is still more than enough to cover the shortfall, that will only be true until 2020…Social Security’s combined reserves likely will be fully depleted by 2034.”

The President’s priority can be seen in a fact recently reported by the Washington Examiner,  which reported that Mr. Obama’s budget of $17,613 for each of the approximately 75,000 Central American teens expected to illegally cross into the United States this year is $2,841 more than the average annual Social Security retirement benefit.

The overall impact of the Obama economic policy which slights the middle class was analyzed last September by Investors.com

“After six-plus years of President Obama’s … policies, middle-class families have seen their incomes decline and more families have fallen into poverty…The overall poverty number … climbed by almost 600,000 among blacks in 2014…the middle class is, incredibly, worse off than at the end of the Great Recession…From 2009 to 2014, real median household income dropped by more than $1,000 — or 2.3% — to $53,657. (And that decline would likely have been steeper if not for a 2013 change in the way the Census does its annual survey.)”

 

Wrong Decisions from White House Harm Middle Class and U.S. Economy

The U.S. Economy is severely mismanaged, and the impact is being felt most sharply by the middle class.  From high taxes which drive employers to move overseas, to the diversion of funds from crucial needs to nonessential programs, Washington has steered America in the wrong direction.

The U.S. Treasury reports that the federal debt as of May 10 had reached $19,204,514,007,221.38. CNS notes that this catastrophic figure exists despite the fact that FY2016 Taxes set a record through April– $12,679 Per Worker!  Revenue isn’t the problem. Government spending on the wrong priorities is.

Not to be overlooked in the factors affecting the economy is the White House’s environmental policies, emplaced without the consent of Congress. For example, Hot Air  reports that there is “visceral disgust” for Obama’s environmental policies in the Appalachian counties… West Virginia…energy costs are expected to go up 40 percent under Obama’s Clean Power Plan (CPP), which sets to cut greenhouse gas emissions by 32 percent by 2030 from 2005 levels. It’s a regulatory nightmare, a job killer, and a policy that Hillary Clinton plans to continue if she’s elected.”

The Stratfor intelligence organization reported in 2013: “The threat to the United States is the persistent decline in the middle class’ standard of living, a problem that is reshaping the social order that has been in place since World War II and that, if it continues, poses a threat to American power… In the 1950s and 1960s, the median income allowed you to live with a single earner — normally the husband, with the wife typically working as homemaker — and roughly three children. It permitted the purchase of modest tract housing, one late model car and an older one. It allowed a driving vacation somewhere and, with care, some savings as well…  Government programs frequently fail to fulfill even minimal intentions while squandering scarce resources…”

A just released report from the Pew Research Center  reveals that “The American middle class is losing ground in metropolitan areas across the country, affecting communities from Boston to Seattle and from Dallas to Milwaukee. From 2000 to 2014 the share of adults living in middle-income households fell in 203 of the 229 U.S. metropolitan areas examined in a new Pew Research Center analysis of government data. The decrease in the middle-class share was often substantial, measuring 6 percentage points or more in 53 metropolitan areas, compared with a 4-point drop nationally.

“The shrinking of the middle class at the national level, to the point where it may no longer be the economic majority in the U.S., was documented in an earlier analysis by the Pew Research Center. The changes at the metropolitan level, the subject of this in-depth look at the American middle class, demonstrate that the national trend is the result of widespread declines in localities all around the country.”

The reason for the recent decline of the U.S. middle class and the general weakness in the U.S. economy is not the result of a cyclical downturn in business, or the bursting of a bubble.  It is not a reflection of the 2007—2009 recession.  It is the specific result of federal tax and spending practices which ignore the needs of the private sector, and redirects federal dollars away from essential needs such as economic growth, defense and infrastructure and towards entitlements (but NOT Social Security of Medicare.)

In the 1950s, Washington spent significantly on infrastructure, building the interstate highway system. The nation prospered. In the 1980s, President Reagan spent vast sums on the military, and the economy grew stronger. Just as it did in the period before World War II, the dollars spent on defense provided jobs—middle class jobs. The shrinking of programs to build badly needed replacement weapons for the aging equipment in the armed forces depresses the economy, and the shrinking manpower of the military increases unemployment.

The huge increase in entitlements (such as the 41% increase in the Supplemental Nutrition Assistance Program) drains funds from essential needs and provides a drag on economic growth.  If, instead of spending more on entitlements, the Obama Administration had lowered taxes and cut back on regulations, business would have expanded, more jobs would have been created, and the resulting growth would have strengthened the economy.

Big Government Hurts Middle Class

How much interference in their daily lives will Americans tolerate from increasingly powerful government, especially when that interference results in a reduced quality of life?

The Foundation for Economic Education notes:

“Government in America was never supposed to engage in the multitude of activities that it does today. When the United States gained its independence more than 200 years ago, the founding fathers envisioned a national government with explicit and restricted responsibilities. These responsibilities pertained mainly to protecting the security of the nation and ensuring “domestic tranquility,” which meant preserving public safety. Especially in the realm of domestic affairs the founders foresaw very limited government interference in the daily lives of its citizens.”

The Institute for Policy Innovation outlines the challenge:

“We have to put Big Government back within its Constitutional restraints because Big Government has led to the establishment of a Government Class that lives at the expense and off the backs of the productive private sector. And when you allow a ruling class to live better than you but at your expense, you are on the way to losing your freedom. …And what happens when we dare suggest that they should rein in their spending by a couple of pennies out of a dollar? They punish us by releasing illegal immigrant felons from prison, by delaying our flights, by closing government buildings and by threatening us with restricted services. This is not the behavior of public servants. This is the behavior of a Ruling Class, punishing its subjects for questioning its authority. And these are but the first few skirmishes.”

As America’s governments, both on the national and state levels have grown increasingly large, powerful, and intrusive, the middle class has suffered accordingly. As the New York Analysis previously reported, A Pew Research Center review  notes that “Middle-income Americans are no longer the nation’s economic majority…The share of U.S. aggregate household income held by middle-income households has plunged, from 62% in 1970 to 43% in 2014.”  According to the U.S. Census Bureau   In 2014, real median household income was 6.5 percent lower than in 2007…The 2014 poverty rate increased for two groups: people aged 25 and older with at least a bachelor’s degree.

This discloses another reason for the declining fortunate of the middle class:  “Liberals across the country supported the misnamed Affordable Care Act (aka Obamacare). The law’s mandates have made health coverage more expensive for both individuals and businesses…when benefit costs rise, employers cut wages. Empirical research confirms this prediction. “ Research from the Heritage Foundation  concurs.

How have “Progressive” ideas affected average Americans? “The curse of the U.S. economy today is the downward trend in “take-home pay, Heritage  notes.  “In the 50 years since that the war on poverty began, U.S. taxpayers have spent over $22 trillion on anti-poverty programs. Adjusted for inflation, this spending (which does not include Social Security or Medicare) is three times the cost of all U.S. military wars since the American Revolution. Yet progress against poverty, as measured by the U.S. Census Bureau, has been minimal, and in terms of President Johnson’s main goal of reducing the ‘causes’ rather than the mere ‘consequences’ of poverty, the War on Poverty has failed completely.”

Scholar Charles Murray believes that “Aspects of America’s legal system have become lawless, for reasons that are inextricably embedded in the use of law for social agendas.

The federal government has a debt of over $18 and a half trillion, Social Security is heading towards insolvency, the nation’s infrastructure remains in poor condition, and the military is significantly underfunded.

While Washington’s spending concentrates on failed poverty programs, (spending on poverty programs has reached its highest level under President Obama) real median income of working Americans has declined.

Why America’s middle class is vanishing

In Part 1 of our review of the plight of America’s middle class, we reviewed the information indicating how middle income families are increasingly scarce. In today’s report, we look at why this is happening. 

Blame for the sharp reduction in America’s middle class has been placed on misguided federal policies.  The Daily Signal opines that “Americans of all income levels would benefit from faster economic growth that raises wages. Unfortunately, wages are being held back by the very policies supported by those criticizing slow wage growth. Liberals across the country supported the misnamed Affordable Care Act (aka Obamacare). The law’s mandates have made health coverage more expensive for both individuals and businesses…when benefit costs rise, employers cut wages. Empirical research confirms this prediction. Ironically, some of the most rigorous evidence for offsetting wage cuts comes from Jonathan Gruber, the Obamacare architect who boasted the health law takes advantage of Americans’ ‘stupidity.”

Resrearch from the Heritage Foundation  concurs. “The curse of the U.S. economy today is the downward trend in “take-home pay.” This is the most crucial economic indicator for most Americans, but when President Obama said in a recent speech at Northwestern that nearly every economic measure shows improvement from five years ago, he conspicuously left this one out.

“Most workers’ pay has not kept up with inflation for at least six years. Even as hiring picked up … Why aren’t wages rising? There are several reasons, including that many jobs today don’t pay as well as the ones lost during the recession. ObamaCare has made health insurance more expensive for businesses…and that takes a bite out of take-home pay. Yet one factor is often overlooked: the tax increase on “the rich” at the beginning of 2013…The overall effect of the 2013 tax hike was not minor. The highest income-tax rate on small business income has risen to almost 42% from 35%. That’s a 20% spike in the small business tax for successful companies. When the government takes more, there is less to plow back into the business or invest elsewhere.

“A comparison with the Reagan years when investment taxes were cut tells the story. From 1983 to 1988, private investment averaged 12% of GDP, one-third faster than the 9% since 2009 under Obama. In the aftermath of the Kennedy, Clinton and George W. Bush capital-gains tax cuts (1998-2006), the investment rate rose sharply and immediately.

“What does investment have to do with stagnant wages? Everything. As Paul Samuelson, the premiere Keynesian economist who sold more economics textbooks than anyone in history, once explained: “What happens to the wage rate when each person works with more capital goods? Because each worker has more capital to work with, his or her marginal product [or productivity] rises. Therefore, the competitive real wage rises as workers become worth more to capitalists and meet with spirited bidding up of their market wage rates.”

“History bears this out. Workers did very well in jobs and rising incomes in the 1960s, 1980s and late 1990s when capital gains and dividend taxes fell.

“The high corporate tax rate is also holding the economy back. Twenty years ago the U.S. rate was about at the international average, but now we are about 15 percentage points above the rate of most of our competitors and nearly three times higher than countries like Ireland. The American Enterprise Institute has found that “a 1% increase in corporate tax rates is associated with nearly a 1% drop in wage rates” because when corporations invest less here at home, worker productivity suffers.”

An American Thinker article suggests that “The U.S. middle class is sinking into government-provided economic quicksand. U.S. living standards have declined ever since 1970…the two-earner family lost ground … Typical U.S. households earned less in 2009 than a decade earlier; median household income is still declining. Even with two earners, many live closer to the poverty line than did families in the ’70s. Middle-class family savings turned into consumer and mortgage debt, which reached 134% of household income at the end of 2007.

“A middle-class key, and a requirement for its upper half, is a degree. For those whose parents couldn’t afford it, “working your way through college” was practicable and so common that it became a cliché, but by 2008, ABC News said, “Soaring Tuition Pushes College Out of Reach.” Not only lower-middle, but also many upper-middle-class parents can’t afford college for their kids. Graduates are often burdened with school loan debt. In short, life has been growing tougher for the middle class, with a recent kick from the ailing economy.

“Considering that, what’s ahead? Middle-class wealth was personal savings, homeownership, and a pension, stemming in most cases from a decent job. Savings are now debt, homes are mortgaged and losing value, and the private-sector pension has devolved into a 401(k) with shrunken assets. Government pensions face shrunken assets, too. Everyone knows that Social Security is in the red (seven years early), and the government is broke. Unemployment is outlasting previous declines (excluding the 1930s), and the current 9.7% rate has been “adjusted” by the government. At Shadowstats, where readjusted numbers are more realistic, unemployment shows close to 21%. Those unemployed add another economic burden for the government (i.e., taxpayers), or for families. …

“When most middle class wealth is built on jobs, no jobs equals no middle class. So will the jobs be back soon? Short answer: No. And the main reason, politicians’ speeches to the contrary being lies, is deliberate government policy.”