Opinion / The Northern Virginia Daily/nvdaily.com
Reader commentary: Save the middle class?
By Bob Lowerre
We have just completed a campaign that featured disagreements. However, both presidential candidates agreed that much needs to be done for the middle class. While their prescriptions for remedies may have differed, they repeatedly expressed their concern for a segment often considered a pillar of the nation.
The facts support their concerns. Indeed, the facts, as they relate to the plight not only of the middle class, but also of most of us, are alarming.
A respected study tracked four items over decades - income taxes, Social Security taxes, medical costs and interest payments. In 1960, these items consumed 24 percent of family budgets. By the 1990s, that figure grew to 46 percent.
In 1980, 70 percent of workers at larger companies (100 or more employees) had health insurance fully paid for by their employers. By the mid-2000s, that number had shrunk to 18 percent.
Another disturbing reality involves private debt. We are properly concerned about rising government debt. However, private debt has risen much more rapidly. The Federal Reserve reports such debt escalated from several hundred billion dollars in 1959 to $12.4 trillion in 2011.
In the last two decades, the incomes of 90 percent of Americans barely crept forward. But incomes of the super rich - the top 1 percent - exploded. This group collected half of the nation's economic growth from 1993-2008. As a part of this scenario, we must glance at the Bush tax cuts. Well over half of them went to the richest 5 percent of households.
People with income over $352,000 annually made $1.35 trillion in 2007. This top 1 percent gathered 2/3 of the gains in U.S. income growth from 2002-07, twice as much as the other 99 percent of us combined.
In 2008, six hedge fund managers each made more than $1 billion. Again with reference to the fabulous top 1 percent, in 1978 their share of total national income was 9 percent; by 2007, it had soared to 23.5 percent.
Between the squeeze and the income assault, the situation of everyone below the elite level is startling. When did this growing disparity begin? Ironically, most observers agree that it started with the stricter regulations proposed by none other than President Richard Nixon. The corporations, the big banks and Wall Street initiated a vast lobbying effort to protect and further their interests. To bring some of their efforts up to date, the so-called Gang of Six was formed, including such familiar names as the U.S. Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers. In one year, the gang pumped $2 billion into lobbying. The Business Roundtable alone poured $143 million into the 2010 congressional campaigns.
The success of these and other similar groups has been remarkable. That success is primarily attributable to acts of Congress. Therefore, both Democrats and Republicans share responsibility for what has occurred. We need not speculate how the richest have won their class war against the rest of us.
All of this, of course, is relevant as we approach the "fiscal cliff." There is almost universal awareness of the deteriorating status of the middle class and other working people. For example, even President George W. Bush said, "The fact is that income inequality is real - it's been rising for more than 25 years."
It is a major reason why non-partisan commissions and most independent economists urge that a solution to the nation's economic ills must include both cuts in government spending and modest tax increases on the truly rich. A major element in the president's successful campaign for re-election reflected this dual approach. Every poll - and every exit poll after the election - shows that a great majority of voters, including a clear majority of Republicans, favor including a tax increase on the wealthy as part of a remedial package.
Given all of the circumstances summarized above, is there any responsible opposition to such a limited tax increase? We must reckon with the Republican leadership in Congress. Their excuse is that a tax increase would blight the job-creating ability of those with incomes over $250,000 annually. Let's look at experience. In the early 1990s, President Clinton engineered a significant tax increase on the well-to-do. There followed one of the greatest eras of prosperity we have known. And if the purported excuse is valid, what became of the great job-creating engine in the years that followed the huge Bush tax cuts enjoyed by those well-heeled "creators"?
It is apparent that the GOP leadership in Washington is perfectly willing to see the United States of America go over the cliff in return for the support of (1) the financial elite they did so much to create, and (2) Grover Norquist.
Bob Lowerre is a retired attorney living in Woodstock.