From MSN Money:
Middle class living on the edge?
By Debora Vrana
The middle class today is less prepared for an economic emergency, such as losing a job or visiting an emergency room, than at any time since the late 1970s, concludes a new study from a political think tank in Washington, D.C., that’s funded by Democrats.
“Middle Class in Turmoil,” produced by the Center for American Progress and the Service Employees International Union, mines data from the Federal Reserve, the U.S. Bureau of Labor Statistics, census records and other sources to paint a picture of increasing peril for those in the middle 60% of income distribution, about $18,000 to $88,000.
Despite a growing economy, a rising stock market and stronger corporate earnings that are helping the rich get richer, the middle class in America is caught in an unprecedented squeeze that makes it increasingly unstable, the study’s authors say.
…
“Families are being forced to live beyond their means, just to pay for the basics, such as housing and health care,” said Christian Weller, a senior economist for the Center for American Progress, which is headed by John Podesta, a former Clinton-administration chief of staff. “They are not only spending their current income but all their future income.”
keywords:
“funded by Democrats”
The Dems want to go after Joe 6 pack to win votes.
There is not a dime of difference between a dem and a republican. They both want to seperate you and I from our money is any fashion they can.
SAS
SAS,
I’d agree with you we have one party–the Republocrats. You know both lie when their lips move.
But there are times when the best propaganda is the truth.
I’ve long been skeptical of Democratic class warfare claims, but this particular one is correct–middle class people ARE less prepared for economic emergency.
What the Democrats don’t want to admit is that their policies–expansion of entitlements, inflation, and a host of government interventions (which the Republicans have supported), have permitted the powerful to profit and consolidate their power.
How did this happen?
1. Too much emphasis on GDP/GNP as a measure of growth. You will hear economists constantly talk about “consumption” as the driver of economic activity, which are amply tracked by economic statistics. It is as if savings are bad, and cause growth to contract. This must be the biggest mistake of all time.
Production is the driver of an economy. You can only consume when you produce–unless someone is willing to fiance your current consumption out of future earnings.
Things get more complicated when money is introducted, but the real income you gain is not money, but the things money can buy.
How does the expansion of entitlements come into play? The govt., if it were honest, would either admit it can’t pay promised benefits, or increase taxes so high, the economy would ground to a halt. But it does neither. Instead, it continues to borrow, and create govt. debt.
This game was about to end, until Nixon took the U.S. dollar off of any semblance of the gold standard. This permits rampant inflation, the expansion of trade deficits, encourages outsourcing of productive capacity, and reduces the income earned by labor, due to increased global competition.
How else does inflation come into play? Grossly simplifying the process, the Fed creates new money when the govt. creates new debt. Those who get the new money first (Govt. employees and contractors, banks (including investment banks), businesses who borrow, etc.), profit at the expense of those who receive money later in the circulation of money.
We need to also take into account the distortions caused by various regulations that end up protecting specialized classes of producers, as well as a host of corporate welfare schemes.
This distorts the flow of productive capacity to where it is needed most, and ultimately creates unemployment.
What has offset this process is the “democratization of credit”–allowing less than stellar credit risks permission to borrow.
The banks figure the govt. will bail them out should an economic crisis occurs. What has really been done is to take systemic risk, and shift it from the buisness sector (where it can be better managed) to either the govt., or the middle class.
What will change it? Nothing. The system is likely to collapse from its internal contradictions. I suspect the coming decline in real estate will bring this crisis much sooner rather than later.
Rob R,
agree.
SAS
The first time I heard this term “middle class squeeze” was in 1988 when Dukakis ran against Bush I. Since then, all I’ve seen is the “middle class” spending ever more mindlessly. I don’t know how they do it. My own family income is well above the amounts these people must be making, according to the statistics, but they’re living much higher off the hog.