Middle class woe

May 01, 2012

the American middle class has been battered by the loss of well-paying jobs for the 70 percent of the workforce without a college degree and failed by would-be protectors in government and private institutions, said panelists at the 35th Anniversary Forum of the Harvard Institute for Learning in Retirement on Friday.

Former Pennsylvania Gov. Ed Rendell, whose forthcoming book “A Nation of Wusses” criticizes politicians of both parties for failing to act in the country’s best interest, pointed to elected officials and corporate leaders who can’t see beyond the next election or quarterly earnings report.

“Nobody is looking at what happens 15 or 20 years down the road,” he said. And regardless of political persuasion everyone has a stake in the future: “We can’t have a good economy if income continues to go down.”

Frank Levy, an MIT urban studies and economics professor, outlined how the middle class has suffered declines since the 1970s as a result of trends ranging from globalization to rising tuition costs.

“Roughly speaking, the society, including the government and individuals, has made a lot of promises about payments to make in future that we can no longer make,” he said.

The middle class has been hurt by the failure of policymakers to plan and account for a sharp rise in health care costs and the widespread job losses tied to the housing collapse.

The question, Levy said, is: “How are we going to distribute the losses? How much will be absorbed by lower incomes and how much will be absorbed in the present versus the future?”

New York Times columnist Joe Nocera assigned another aspect of diminished incomes to the zeal corporate leaders since the 1980s have had for downsizing to boost profits, and the shift from pensions to mutual funds for retirees. Nocera disavowed the conclusion of his 1995 book, “A Piece of the Action,” which painted a rosy picture of transition from a “country full of people who had money in the bank to a country of people who invested in the stock market.”

But as wages flattened with the decline of U.S. manufacturing, he said, “This shift has turned out to be terrible for the people who have to save for their own .”

It transferred risk from the institution to the individual, putting more pressure on the middle class, said Nocera, whose latest book, “All the Devils Are Here,” is about the hidden history of the financial crisis.

The best way to help middle-income residents in the United States would be to address the housing crisis, Nocera said. “We have no housing policy. Most people’s equity is tied up in their house and the country has not decided what to do with Fannie and Freddie.”

“Is it all the Republicans’ fault?” asked moderator Paul Solman, PBS business and economics correspondent and Harvard M.B.A. ’79, in introducing Rendell, a leading Democrat.

“Yes,” Rendell said, to widespread laughter at the nearly full First Parish church in Cambridge.

Rendell said the best thing that could happen to corporate America would be to get rid of quarterly earnings reports that put shareholders’ returns ahead of visionary and wise business management.

There was agreement among the panelists that U.S. corporations should pay more taxes.

Levy noted that the United States is in the bottom third of corporate taxes paid in the world.

Nocera said that tax reform would free up a lot of corporate money for better purposes.

“You would generate more revenue and make the corporations more efficient because GE wouldn’t have a 1,000-person tax office to find loopholes,” Nocera said. “But the reason it will never happen is this is how Congress lives and dies. They generate their own revenues by saving those loopholes or creating new ones.”

The panelists agreed that skyrocketing tuition is hitting the middle class hardest.

“If you’re poor, you can get grants and the rich pay full price,” said Nocera, using the example of the California public college system that now charges in-state students $30,000. “If you’re middle class you can’t afford it.

“The state of California has taken this jewel and said we’re not going to cut back on our prison system but we’re going to cut back on our university system and balancing its budget on the backs of the middle class.”

Nocera concluded, however, “The middle class is under siege but it’s not quite as hopeless as people like me portray it.”

Explore further: Narcissistic CEOs and financial performance

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User comments : 13

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AWaB
2 / 5 (4) May 01, 2012
Another article that has an excellent beginning and a ridiculous ending. Most jobs are provided by small businesses. Something like 70% of U.S. workers are employed by companies with less than 100 employees, at least that's what I recall from some stats I've seen recently. So how does taxing GE more help? Redistribution of money. I get it, thanks Socialists. This tax and spend policy is just as ludicrous as allowing the banks to operate unregulated.

There is a certain amount of regulation that is required to keep the people who run corporations honest and there is a certain amount of taxation required to maintain infrastructure and a few other government plans. What happens when we aren't at the right levels? We have housing bubbles and insane government debt. Reduce spending and reinstate some of the banking regulations and we'll do just fine. A more simple tax code would probably work wonders for the U.S. economy, too.
kochevnik
1.8 / 5 (5) May 01, 2012
The key is to eliminate the usury of Jewish debt-based banking and instigate long term Islamic investment banking for critical infrastructure and institutions.
Burnerjack
5 / 5 (2) May 01, 2012
As far as small business goes, it would appear that more and more are using illegals at drastically reduced and unfair wages. What this does is displace fairly paid workers (often resulting in greater overall tax burden through public assistance). The result is an illegal with little money so he/she cannot generate much economic activity beyond subsistance levels. The displaced, formally paid worker is also left with little more than subsistance levels of income so he/she also cannot generate much economic activity. The result is a short term gain for business which is ultimately unsustainable due to the economic "Dickensian Death spiral".
As far as tax revenue goes, the entire "Loophole" structure is based on preferencial treatment that is so systemic as to be written into the code from the start. That quest for preferencial treatment and it's carcinogenic political effect is what is keeping REAL spending cuts (as opposed to cuts it proposed spending increases) from taking affect.
Burnerjack
5 / 5 (2) May 01, 2012
Real tax reform would come in the form of a new, simplified tax code removing most if not all loopholes, a cap on present expenditures, and an arbitrary 10% (or some other amount)across the board. The institution of government agencies assuming other agency's funding by being allotted the proceeds of whistleblowing would go along way to toppling the "protected class" of government agencies and (mis)management. One last reform would be absolutely game changing would be 1) No tax may be used in any way other than the intended purpose. and 2) Every tax would have a MANDITORY sunset clause. If the tax in question is still required, it would have to be resubmitted. This would induce a fluidic nature that would allow the code to change with the times.
skytimelapse
4.4 / 5 (7) May 01, 2012
So how does taxing GE more help? Redistribution of money. I get it, thanks Socialists.

Love how any tax increase mentioned on rich companies and it's immediately SOCIALISTS!! RUN FOR THE HILLS!!!
Basically you are saying
"Everyone who does not agree with me about tax reform is socialist. There I said it."
Lurker2358
4 / 5 (4) May 01, 2012
Awab:

GE doesn't even pay taxes. They have that many loopholes.

In fact, I wouldn't be surprised if they are getting a net gain out of the tax code.

Spending cuts?

We've been down this road before.

You could cut our military in half, and social security benefits in half as well, and you'd still only take away about half the deficit.

And then you'd have a million more unemployed and at least 2 million more homeless.

We can't "cut" our way out of the deficit either.

But if something does not change, the interest on the standing debt will soon become the largest item on the following year's budget, probably within about 10 years.

At that point, the shit really hits the fan, because it will be physically, mathematically impossible to ever pay it back.
Lurker2358
2 / 5 (4) May 01, 2012
Wouldn't it be nice if we could all live in a tax-free world, but then again, there'd be no roads or bridges or charity hospitals, or FEMA,e tc.

Fact is, much as I hate it, we need ENORMOUS tax increases in this country, in addition to realistic cuts of pork.

We need enormous tax increases on wealthy individuals, corporations, and luxury items such as yachts, luxury cars, sports cars, sports entertainment and other excessively expensive entertainment. Reasoning here is these don't hurt the poor and middle class. If you can afford to buy a $100 sports ticket, you can afford to pay a tax on it. Same goes for a yacht or a Ferrari or BMW.

We've been needing a balanced budget amendment all of my life, and it's damn near gotten too late.

you think politicians even think about this stuff? They don't. Half the ones who are smart enough to know simply don't care, and the other half actually are not smart enough to realize it. It's sad, but that's our government.
Infinite Fractal Consciousness
not rated yet May 01, 2012
AWaB: GE paid $0.00 in taxes. You paid more in taxes than GE.
TheGhostofOtto1923
1 / 5 (2) May 01, 2012
Fact is, much as I hate it, we need ENORMOUS tax increases in this country, in addition to realistic cuts of pork.
Why dont you move to some islamist country where there is no pork?
Infinite Fractal Consciousness
1 / 5 (2) May 01, 2012
Most of the current deficit would be eliminated if we were not at war, if the Bush tax cuts weren't in place, and if the recession and it's direct effect on tax revenues wasn't occurring. What I'm saying is that the biggest revenue vs spending discrepancies are not permanent, and what's left is manageable and should not be causing hysterics. That said, we need more progressive tax policies and public investment.

Lurker, I agree w/ you on all except the balanced budget amendment. Balancing the budget is important, but not as urgent as revving up the economy, and in times of crisis like this, we need to be able to run a deficit. Interest rates are crazy low and an America with a strong economy can fix its deficit issue quite easily (Clinton did it.)
simplicio
5 / 5 (1) May 01, 2012
Nobody is looking at what happens 15 or 20 years down the road. And regardless of political persuasion everyone has a stake in the future

Yes it is true, like playing a game of chess. Bad players look maybe one move forward, but much better players look two, three and more moves forward and so have better win results. It is same for society benefits - the deeper the planning the better the results.
Vendicar_Decarian
not rated yet May 05, 2012
"AWaB: GE paid $0.00 in taxes. You paid more in taxes than GE." - Fractal

"According to the company release, GEs effective tax rate jumped to 29 percent in 2011. The company paid $2.9 billion in worldwide corporate income tax in 2011, and another $1 billion in other U.S. taxes that year, the release states."

http://news.yahoo...306.html
fully attached
not rated yet May 06, 2012
every new problem is considered something to contend with on its own. does anyone not see that most of our "problems" today, and for the foreseeable future, are only symptoms of what the masses are inured to? money is not a resource, though many are trained to perceive it that way, but an anti-resource that dominates land, resources and life energies. money has a gravity that the larger mass will draw from the smaller amounts.
Lurker mentioned what we wouldnt have without money but i can prove that money actually causes betterment to be too expensive by just asking people to think about it. knowledge, information and even truth cost money, if this is true then people can be priced out of those things.
its funny how there is a whole industry based on this anti-resource which produces nothing but jargon and strife thereby empowering its manipulators to having more resource rights than people that actually do something.