Re: Middle class decimated under GW

> "But the boom of the 2000s resulted in an almost-imperceptible 1.6%
> increase for the typical family."
>

> Elizabeth Warren
> December 3, 2009 10:00 AM
> America Without a Middle Class
> Can you imagine an America without a strong middle class? If you can,
> would it still be America as we know it?
> Today, one in five Americans is unemployed, underemployed or just
> plain out of work. One in nine families can't make the minimum
> payment on their credit cards. One in eight mortgages is in default
> or foreclosure. One in eight Americans is on food stamps. More than
> 120,000 families are filing for bankruptcy every month. The economic
> crisis has wiped more than $5 trillion from pensions and savings, has
> left family balance sheets upside down, and threatens to put ten
> million homeowners out on the street.
> Families have survived the ups and downs of economic booms and busts
> for a long time, but the fall-behind during the busts has gotten
> worse while the surge-ahead during the booms has stalled out. In the
> boom of the 1960s, for example, median family income jumped by 33%
> (adjusted for inflation). But the boom of the 2000s resulted in an
> almost-imperceptible 1.6% increase for the typical family. While Wall
> Street executives and others who owned lots of stock celebrated how
> good the recovery was for them, middle class families were left
> empty-handed.
> The crisis facing the middle class started more than a generation ago.
> Even as productivity rose, the wages of the average fully-employed
> male have been flat since the 1970s.
> [images, see uRL]
> But core expenses kept going up. By the early 2000s, families were
> spending twice as much (adjusted for inflation) on mortgages than they
> did a generation ago -- for a house that was, on average, only ten
> percent bigger and 25 years older. They also had to pay twice as much
> to hang on to their health insurance.
> To cope, millions of families put a second parent into the workforce.
> But higher housing and medical costs combined with new expenses for
> child care, the costs of a second car to get to work and higher taxes
> combined to squeeze families even harder. Even with two incomes, they
> tightened their belts. Families today spend less than they did a
> generation ago on food, clothing, furniture, appliances, and other
> flexible purchases -- but it hasn't been enough to save them. Today's
> families have spent all their income, have spent all their savings,
> and have gone into debt to pay for college, to cover serious medical
> problems, and just to stay afloat a little while longer.
> [images, see uRL]
> Through it all, families never asked for a handout from anyone,
> especially Washington. They were left to go on their own, working
> harder, squeezing nickels, and taking care of themselves. But their
> economic boats have been taking on water for years, and now the crisis
> has swamped millions of middle class families.
> The contrast with the big banks could not be sharper. While the middle
> class has been caught in an economic vise, the financial industry that
> was supposed to serve them has prospered at their expense. Consumer
> banking -- selling debt to middle class families -- has been a gold
> mine. Boring banking has given way to creative banking, and the
> industry has generated tens of billions of dollars annually in fees
> made possible by deceptive and dangerous terms buried in the fine
> print of opaque, incomprehensible, and largely unregulated contracts.
> And when various forms of this creative banking triggered economic
> crisis, the banks went to Washington for a handout. All the while, top
> executives kept their jobs and retained their bonuses. Even though the
> tax dollars that supported the bailout came largely from middle class
> families -- from people already working hard to make ends meet -- the
> beneficiaries of those tax dollars are now lobbying Congress to
> preserve the rules that had let those huge banks feast off the middle
> class.
> Pundits talk about "populist rage" as a way to trivialize the anger
> and fear coursing through the middle class. But they have it wrong.
> Families understand with crystalline clarity that the rules they have
> played by are not the same rules that govern Wall Street. They
> understand that no American family is "too big to fail." They
> recognize that business models have shifted and that big banks are
> pulling out all the stops to squeeze families and boost revenues.
> They understand that their economic security is under assault and
> that leaving consumer debt effectively unregulated does not work.
> Families are ready for change. According to polls, large majorities of
> Americans have welcomed the Obama Administration's proposal for a new
> Consumer Financial Protection Agency (CFPA). The CFPA would be
> answerable to consumers -- not to banks and not to Wall Street. The
> agency would have the power to end tricks-and-traps pricing and to
> start leveling the playing field so that consumers have the tools
> they need to compare prices and manage their money. The response of
> the big banks has been to swing into action against the Agency,
> fighting with all their lobbying might to keep business-as-usual.
> They are pulling out all the stops to kill the agency before it is
> born. And if those practices crush millions more families, who cares
> -- so long as the profits stay high and the bonuses keep coming.
> America today has plenty of rich and super-rich. But it has far more
> families who did all the right things, but who still have no real
> security. Going to college and finding a good job no longer guarantee
> economic safety. Paying for a child's education and setting aside
> enough for a decent retirement have become distant dreams. Tens of
> millions of once-secure middle class families now live paycheck to
> paycheck, watching as their debts pile up and worrying about whether
> a pink slip or a bad diagnosis will send them hurtling over an
> economic cliff.
> America without a strong middle class? Unthinkable, but the once-solid
> foundation is shaking.

> Elizabeth Warren is the Leo Gottlieb Professor of Law at Harvard and
> is currently the Chair of the Congressional Oversight Panel.