There is no denying now, especially with the current state of our economy, that the middle class of the United States has been hurting financially. The amount of foreclosures and bankruptcy reports should act as testaments to such a claim. In fact, an attack on the middle class has existed for quite sometime now. Therefore, the sole purpose of this post is to provide information on how the middle class has been attacked by several previous administrations and to suggest a resolution to our current problem. Also, as a conclusion, this post will layout what Obama has done—or will do—for the devastated middle class.
From 1940 to 1980, almost thirty five percent of working people were unionized and received a living wage, health insurance and pension benefits. Nearly seventy percent of the workforce could raise a family back then only from a single paycheck. People who were disabled knew that they could live on Social Security payments and the elderly were able to retire peacefully. The gap between the rich and poor gradually shrunk. Unfortunately, that is not the case today. The middle class is working long hours for a low wage. In other words, the minimum wage is not a living wage. Workers are now expected to pay for their own health insurance and their own retirement. Pensions are disappearing and there are continued talks of privatizing Social Security. All of this is happening because we currently live in a world where corporate CEO’s place profits before people. Corporate CEO’s have handed American jobs to foreign countries under free trade agreements in return for cheap labor. The wealthiest elite have great control in America. America is a country founded on personal freedom and economic opportunity for all, and to be considered otherwise is undemocratic. In America, economic power should be vested in the middle; however, throughout the past three decades, three conservative Republicans, one conservative Democrat and several self-interested politicians made sure that economic power would remain in the realm of the privileged. The conservatives of today’s world have made it their mantra to create a corporate kingdom that would only serve the needs of billionaire CEO’s who have little or no allegiance to the USA, its citizens, or the concept of democracy. This is how the middle class is being attacked and how democracy loses its ideological function in America.
A middle class will always work to create a democracy. Thomas Jefferson tried his best to advocate this concept. Even Franklin Delano Roosevelt understood the importance of a middle class in a democratic nation. FDR was responsible for creating a strong and vibrant middle class through his New Deal coalition. However, after 1981, Reagan, Bush Sr., Clinton and Bush Jr. have attacked the middle class by favoring and accepting policies that have helped place millions of dollars in the pockets of the wealthiest elite of the country. For nearly three decades the middle class has been abused by conservative economic policies and it is time that the people of America resurrect the middle class from its deathbed. An immediate return to New Deal liberal programs, as well as a government—whose soul purpose is to promote the general welfare of society—that can reset the rules of the game of business through the implementation of rational tariffs and antitrust laws, will help restore the middle class and democracy in America.
There are several definitions that are used to define the term “middle class.” Even so, only one is needed to understand the concept. People who are defined as being middle class are those who are considered intermediate between the classes of higher and lower social rank or standing. Middle class people are characterized as being average working people, neither rich nor poor but fully literate and well informed about politics and international affairs. A middle class stimulates the economy because they make up the majority of the consumers in America. Therefore, a healthy and vibrant middle class is important. An attack on the middle class is an attack on the economy as well. The U.S. has witnessed a strong middle class during the 1930’s, when FDR was President. With his New Deal movement, FDR was responsible for creating the Golden Age of the middle class that started from 1940 and lasted up until 1980. FDR, along with the Founding Fathers of America, understood that a middle class and a democracy go hand in hand.
Like a DNA strand, democracy and a middle class are inextricably intertwined. In other words, there cannot be one without the other. Our Founders “created a form of government where We the People rule. They declared that all people, and not just the elite, have the right to “life, liberty, and [happiness]. They believed that democracy and a middle class were the “natural state of man.”’ (Hartmann, 7) A democracy requires that its citizens are able to achieve the American Dream. A citizen should have a well-paying job, health insurance, Social Security, and pension benefits to enjoy a peaceful and secure life. Democracy requires an educated middle class that can achieve success and be able to support their families. Also, a democracy depends on the people of America, particularly the middle class, to play the referee in the game of big business and to protect labor and the public good. However, with the conditions we live in today, the American Dream is truly just a dream. The middle class is now threatened by the CEO’s of major corporations who reap the benefits of their workers and look abroad in foreign countries for cheap labor. Thom Hartmann, a bestselling author and talk radio host, claims that without a dynamic middle class, “democracy cannot exist; instead, it becomes a caricature of itself. There are leaders and elections and all the forms, but they’re only for show. The game is now rigged.” (Hartmann, 10) An attack on the middle class and on democracy occurred in 1981, the same time Ronald Reagan became the President of the United States.
Before Reagan came into office, life in America was completely different. Health care was given to nearly all working Americans, unions were stronger than ever, people had free time after work, and industrialists respected and cared for their workers well-being. All of this was reflected in the income differential. In 1979, “the average CEO earned thirty times his average employees’ wage.” (Economic Policy Institute) Life for the middle class was pleasant and democracy was at work; however, all of this changed when Reagan’s policies favored the plutocrats of America. Reagan introduced trickle-down economics, or supply-side economics, which transformed society so that the wealthy can receive more money in order to use that money to build more factories and hire more people. Thus, the money would “trickle down” to the workers. In order to make this work, Reagan slashed top marginal income tax rates on millionaires and billionaires from 70 percent to 50 percent. (Hartmann, 17) By doing this, Reagan dropped the United States into the greatest debt ever during those times. Even though trickle-down economics did provide several jobs, most of them were in foreign countries. The wealthy did not invest the money they saved from Reagan’s tax cuts in the creation of factories. Instead, they invested abroad in foreign countries where labor was cheaper. CEO’s moved their corporations to foreign areas where assembling their manufactured good was cheaper than doing it at home. This economical strategy is called outsourcing.
Outsourcing and downsizing—the concept of mass layoffs to boost a CEO’s bonus —were not introduced in America’s vocabulary before Reagan took office. Many progressive analysts and conservatives believe that Reagan’s soul purpose was to attack the middle class. Mark Ames, a writer for The Exile, wrote:
"Reagan was put in power with the express purpose of destroying the middle class and ending any hope that the sons and daughters of the poor might rise to the middle class through education and hard work. The destruction of the middle class is his real and lasting legacy." (EPI)
Reagan also deregulated the health-care industry, which in turn made it impossible for the middle class to afford health insurance. Hospitals were then interested in profits, so they raised their rates. Drug companies could also raise their prices as high as they wanted, since they bought off their competitors with the help of Reaganomics. Pharmaceutical companies are now the most profitable businesses in the United States. (Hartmann, 61) By deregulating domestic markets and by shrinking the government, Reagan, whether he wanted to or not, attacked the middle class.
George H.W. Bush was also responsible for continuing the attack on the middle class. Bush Sr. pushed for fast-track trade authority for the president, which allows the president to negotiate trade agreements that Congress can approve or disapprove but cannot amend or filibuster. (wiki) Even though Bush Sr. admonished Reagan’s supply-side economics and referred to Reagan’s tax proposals as “voodoo economics” in 1980, he was highly criticized in 1988 for supporting conservatives who were willing to continue the Reagan revolution. Bush Sr. was seen as a failure in this regard. (wiki) In addition, his administration held excessive discussions with Canada and Mexico in forming the North American Free Trade Agreement (NAFTA), which has completely damaged the middle class.
It was former President Bill Clinton, considered by many a conservative Democrat, who signed NAFTA, thereby causing a harmful blow toward the middle class of America. NAFTA, according to Jorge Castaneda, is “an accord among magnates and potentates: an agreement for the rich and powerful in the United States, Mexico, and Canada, an agreement effectively excluding ordinary people in all three societies.” (Faux, 2) With NAFTA, the transnational elite possess the power of governing their land. Citizens in America are now competing with other people in Canada and Mexico for jobs. Jeff Faux, president of the Economic Policy Institute, states in his book: “Thanks to NAFTA, we now have a domestic economy that spans the continent and includes Canada and Mexico, two other sovereign countries whose economies are commonly linked to ours.” (Faux, 6) This agreement has lowered wages for American workers and has created record trade deficits. Clinton also signed the Telecommunications Act of 1996 and the General Agreement on Tariffs and Trade (GATT), which has been replaced by the World Trade Organization (WTO), further reducing the power of the people to regulate business and media. When Clinton decided to enter the U.S. into the WTO, tariffs and trade restrictions were eliminated thus allowing multinational corporations, instead of sovereign nations, to write the rules of international business. (Hartmann, 20) Even though Clinton had done so much for the middle class during his presidency, his decision to sign NAFTA and the GATT has and is currently affecting the middle class.
Middle class people are suffering from policies created years ago by their presidential leaders; the same leaders who claimed to understand the importance of a middle class in a democratic country. George W. Bush, our previous president, has also contributed to the attack against the middle class. For instance, during his first term, Bush Jr. implemented three tax cuts, which were claimed by his conservative specialists to increase economic recovery and job creation. However, his opposition pointed out that the creation of jobs has failed to materialize. The tax cuts were argued to have favored the wealthy and special interests. (wiki) Opposition has pointed out that the tax cuts have placed the United States into a historic debt. Bush’s bill is set for more than $4,000 billion, on top of Reagan’s and Bush Sr.’s $3 trillion debt (approximate numbers). (Hartmann, 20) Also, Bush has signed the Central American Free Trade Agreement (CAFTA), a free trade agreement similar to NAFTA, which encompasses the U.S. and certain Central American countries. Public Citizen, an advocacy group created by Ralph Nader, opposes this agreement on the grounds that CAFTA is another failed “neoliberal” model as was NAFTA. Public Citizen states that CAFTA serves to “push ahead the corporate globalization model that has caused the 'race to the bottom' in labor and environmental standards and promotes privatization and deregulation of key public services.” (Public Citizen Website and Wiki) Bush Jr. has made the same mistake Clinton committed during his presidency, thus intensifying the blow toward the devastated middle class.
In addition, Bush was able to attack the one institution that the middle class in America needs in order to thrive—education. Through his No Child Left Behind Act, Bush made it possible for 36 percent of California’s schools to lose government funding. (Hartmann, 56) Under the act, Bush listed thirty-seven ways a school could fail in meeting certain new standards that were also listed in the new law. Schools that made the list lost their government funding. In other words, the schools that needed the most funding got the least. The act has closed several schools throughout America and has sought out to do the opposite of what it claims in its title. The Bush administration also wanted to privatize K-12 education, along with Social Security.
Bush’s attack on the middle class does not stop there. Ever since Alan Greenspan decided to throw interest rates into negative territory to help George W. Bush get reelected in 2003-2004, the American public has been in great debt. Many Americans “with adjustable-rate or interest-only mortgages are being wiped out as interest rates rise back up into normal territory.” (Hartmann, 20) In fact, MSNBC.com has reported that “Nationwide, 649,917 homes received at least one foreclosure-related filing in the first three months of the year, up 112 percent from 306,722 during the same period last year.” (MSNBC.com) If anybody believes that America is economically stable and secure, they have to reconsider. America’s democracy and economy is threatened because there has been an attack on the middle class for nearly three decades. Our government has been sold to the CEO’s of wealthy corporations who call the shots. The middle class cannot even find help from their own senators and representatives because the majority of both have given into the rewards that big business offers.
Most Republicans and Democrats that reside in the Congressional branch of the United States and several politicians have sold out to corporate and wealthy interests. The conservatives who have vowed to support wealthy corporations—or the ‘cons’ as described by Hartmann—have taken over the Republican Party and American politics. Many Republicans are more interested in the interests of major corporations, rather than the needs of the people they represent. For instance, in 2005, Maryland lawmakers passed a bill that forced companies “with more than 10,000 employees to spend at least 8 percent of their payroll on health care benefits—or put the money directly into the state’s health program for the poor.” (Sirota, 166) This bill was targeted for Wal-Mart, which provides a minimal amount of benefits for their employees. Maryland’s governor Bob Ehrlich (R) held a meeting with Wal-Mart’s top executives and vetoed the bill. The reason behind his decision to veto was that Wal-Mart provided Ehrlich’s political campaign with financial contributions. (Sirota) So, instead of doing what was right for the employees of Maryland, Ehrlich decided to veto the bill for his benefit.
Surprisingly, the Democratic Party also swung to the right. As Hartmann states, “Democrats were caught in the awkward position of needing to embrace the same corporate donors as the con-led Republicans, although they weren’t anywhere near as successful as the cons because they hadn’t (and haven’t) so fully sold out to corporate interests.” (Hartmann, 203) Even though some Democrats do oppose Bush and his policies, other “middle of the road” Democrats have converted. For instance, the Democratic Leadership Council (DLC) has been funded by corporations such as Enron, Texaco, and Philip Morris. (Sirota, 288) Not surprisingly, this was the group that encouraged Democrats to embrace corporate-written trade deals. (Sirota, 289) Jeff Faux shares a similar view on this matter. He believes that America’s bi-partisan government favors the privileged, while neglecting the rest of us to an unregulated global market. (Faux, 3) Also, Lou Dobbs from CNN agrees that Congress and the will of the people lie on separate tracks. He states: “When our representatives are actually in session, they're constantly at odds with the will of the people.” (Dobbs) Overall, even our own politicians are embracing big businesses, thus aggrandizing the attack on the middle class and democracy.
So how do we fix this problem that has nearly destroyed the vitality of the middle class and the heart of a democracy? There are many critics who have mentioned the problems of our current society and have contributed ideas on how to salvage the economy. However, there have not been a lot of suggestions on how to revive a middle class. Many political analysts have discussed the threats that have devastated the middle class, the negative and positive aspects of our economy, and the credibility of America as a democratic nation. This is a good thing, but America has to figure out a way to reestablish a powerful middle class; because, the democracy and the economy of this country can only be saved through a strong and vibrant middle class. This post does offer a solution to the problem. We can resurrect the middle class by returning to those programs that once exemplified the New Deal movement created by FDR. Also, government “interference” by setting the rules of business through the use of tariffs, trade policies and antitrust acts is needed to bring back the middle class. FDR was able to do it and we can do it again.
Franklin D. Roosevelt was able to lift a country out of the Great Depression and create a strong economy with a dynamic middle class through his New Deal programs. The New Deal created government services that protected the middle class, the seniors, the sick, the children, and the low-income people. This sounds like something we require now! FDR was able to put money in our pockets through progressive taxation, social security, fair labor laws, the regulation of business, and the vigorous enforcement of antitrust laws. FDR issued the Fair Labor Standards Act, which set a minimum wage, and the National Labor Relations Act, which protected most workers rights through the development of labor unions and gave workers the right to strike. (wiki) FDR furthered the cause of public education through the GI bill. Also, almost every worker received health insurance and pension benefits. During WWII, FDR passed a progressive income tax that barely touched the working class and middle class but took a great percentage of income from those individuals who earned more than two million a year in today’s dollars. (Hartmann, 45) This percentage remained high up until Reagan took over the White House. Progressive taxes did not take money from the people allowing the middle class to spend it on goods that would stimulate the economy and consumer demand. Also, FDR made it possible for people to enjoy the fruits of their labor through the creation of Social Security, a government-run insurance program.
Some critics say that World War II was the stimulus that took America out of the Depression. However, spending money on military equipment, like what Bush Jr. did, does not stimulate the economy. In fact, building roads, bridges, public facilities, domestic consumer industries, etc. stimulates the economy more because money flows within the economy. For instance, FDR created the Public Works Administration (PWA) which hired skilled construction workers to build the Triborough Bridge in New York City, which is now called the Robert F. Kennedy bridge. This program, created by the government, paid its workers a living wage, which in turn helped stimulate the economy. To sum it up, Roosevelt’s “economic stimulus programs put money in the pockets of the people, and their purchases created consumer demand, which led entrepreneurs to start businesses to meet that demand, which meant they had to hire workers, who were well paid because 35 percent of America was unionized.” (Hartmann, 47) FDR acted to control the game of business. Roosevelt protected the middle class by regulating the stock market, breaking large electrical conglomerates, ensuring people to place their savings in banks, and fighting for an expansion of antitrust legislation. (Hartmann, 47) FDR campaigned relentlessly on a platform of government involvement in the marketplace, also referred to as Keynesian economics, to restore both democracy and the middle class.
Economic New Deal liberalism can save the middle class and democracy in contemporary America. Bush has to pass a progressive income tax cut. Progressive taxation has a long history that dates back to Thomas Jefferson. Jefferson once wrote that “taxes should be proportioned to what may be annually spared by the individual.” (Hartmann, 47) Instead of passing tax cuts that favor the wealthy of this country, Bush should consider progressive taxation to put money back in the pockets of the middle class and low-income people. Progressive taxation may also decrease Bush’s, and now Obama’s, debt. Restoring and reforming the estate tax is also a good idea. An estate tax is definitely needed in a time where poverty and budget deficits continue to rise. A 2002 poll showed that Americans strongly suggest that the estate tax should be reformed rather than repealed. (Sirota, 48) We can use these taxes to help pay pack the Social Security system.
Americans should fight for a single-player national health care system and oppose any talks of privatizing Social Security. More people are uninsured or underinsured in America now more than ever. If an injury or accident occurs, a person can go bankrupt from trying to pay the medical bills. Health care is a right that every individual should have. Bernie Sanders, currently an independent senator of Vermont, wrote a lengthy document to the Speaker of the House in 2004 addressing the issues that are affecting the middle class, the corruption of big business and the problems surrounding health care. He also suggested that America needs a single-player national health care system and stated that America has turned into “a system geared toward profit-making for the insurance companies and for the pharmaceutical industry rather than providing cost-effective quality care to all of our people.” (Bernie Sanders) If health care insurance companies were regulated by the government, every American would be able to afford health care. Medical and pharmaceutical bills are so expensive because these companies are interested in profit; therefore they raise their prices and rates. This is the reason why health care insurance programs and companies should be regulated. Also, Social Security is one of the strongest pillars of the New Deal movement and should not be privatized or co-opted. Social Security continues to provide money for the disabled and assures that Americans will have savings for retirement.
Most importantly, an American cannot climb up to the middle class, if he/she receives the current minimum wage. The current federal minimum wage for covered nonexempt employees is $6.55, which is not a living wage. (U.S. Department of Labor) Many middle class people have been working an average of eighty hours per week and a majority of them have some difficulty in paying their bills. Conservatives have argued that if the minimum wage increases, several small businesses will go under and people will lose jobs. However, this is not true and a good example is when Santa Fe, New Mexico raised its minimum wage to $9.50. A report shows that when the increase occurred, more than one thousand jobs were added to the work force and the unemployment rate decreased. (Hartmann, 187) America has the money to make this happen, but it is a matter of how the money is used. Also, conservatives are wrong when they claim that we have to choose between low prices or high wages. If the prices on products did increase, the people of America would be able to purchase those products because their wages would have increased as well. A union study showed that a one cent increase on the price of a pair of socks would increase an employee’s income by $1,800 annually. This study used Wal-Mart as their example. Overall, the reality of this is that an increase in the minimum wage would sprout an increase in prices, but also an increase in employment and consumer demand. Our economy has been handing money to the corporations it cherishes, rather than to the people who make the economy work. So, the U.S. has to transform the minimum wage into a living wage in order to rebuild the middle class. FDR did it and we can do it again.
America also needs stronger and better regulated unions. A union provides a person with the leverage to demand benefits in his/her workplace. Hartmann states that “unions are designed to give workers a voice in decisions that affect their jobs . . . [and] unions create a middle class by allowing you and me to ask for wages and the benefits we need to become or remain middle class.” (Hartmann, 189) Unions have a democratic quality in that they allow workers to have a say in his/her workplace. Conservatives have been bashing unions for a long time now, and we must not let them win. Unions were created for a reason and that is to protect the worker of America. Overall, unions help us fight for a living wage and bring democracy to America. Also, unions help promote a middle class. FDR knew that and so should we.
Most importantly, we need a government that can set the rules of business through the use of rational tariffs, trade policies and antitrust laws. America’s trade deficit is constantly increasing. In 2005, we imported $700 billion more in goods than we exported. (Hartmann, 21) The deficit has been increasing ever since then. Our involvement in NAFTA and the WTO has only made things worse as well. After airplanes, our number one export is agricultural products, which is very disappointing. Other countries take our dollars we gave them for the things we bought and they do not want to buy anything back from us because we no longer manufacture goods. Instead, they put their money to good use. They buy “our remaining manufacturing companies, our ports, our banks, our forests, our landmark buildings and our real estate.” (Hartmann, 21) For example, Chrysler, John Hancock Insurance, Wells Fargo Bank, and the Helmsley Building in New York are all gone. Also, America’s sound industry is almost entirely foreign owned. Conservatives with their “free” trade policies have sold off America to the highest bidder and claim that this is a good thing. They say that foreign owned companies create American jobs; however, foreign owned industries in America operate for a purpose to take their profits back home. On the other hand, American industries use their profits to invest within the country therefore recycling money throughout the economy as it gets taxed every time. These taxes are later used to build roads, bridges, other domestic consumer factories etc. Overall, the profits circulate throughout our economy creating more jobs, consumer demand, and higher wages. We must not stand by and watch our nation serve the needs and interests of an elite group of wealthy CEO’s.
Americans must also stay away from conservatives who believe that a middle class will blossom under a market freed from government restrictions. A marketplace cannot exist without government because the government sets the rules of business. Also, conservatives who want a “small government” really want a different government—one that serves the wealthy. In fact, a “conservative government” is not a “smaller government.” For instance, under George W. Bush “inflation-adjusted government spending is as high as it was during World War II, at almost twenty thousand per person per year.” (Hartmann, 33) What conservatives really want is a smaller government so they can step in and privatize previous governmental function in order to make a profit from things that used to be nonprofit. We cannot allow corporations to decide how much to pay for labor, and when, how and where to trade. We also have to stay away from conservatives who say that “free” trade creates better-paying American jobs. This is a lie. For instance, “free” trade deals like the China Pact in 2000 has lowered Ohio’s real median wage for three consecutive years. (Sirota, 63) Overall, “trade deals that allow companies to freely search the world for the cheapest labor have driven down Americans’ wages.” (Sirota, 67) This is why we need a government that is free from the control of corporate CEO’s and greedy politicians. We need a government that can regulate the game of business through rational tariffs and antitrust laws.
Free-traders view tariffs as a harmful interference with the laws of a free market, and if anyone reintroduces the concept of imposing tariffs, they are accused of being a protectionist. However, the outsourcing of American jobs and “free” trade deals such as NAFTA and the WTO, which its purpose is to abolish all trade restrictions, has called forth the desperate need for tariffs. Therefore, rational tariffs have to be implemented by our government to construct “financial barriers against companies who try to reap a financial reward for eliminating U.S. jobs and exploiting desperate, low wage workers in developing countries.” (Sirota, 58) What this post means by “rational” are those tariffs that repeal trade pacts that do not have wage protections. Throughout its history the U.S. has issued several tariffs and the most recent, the steel tariff of 2002, proved to be a success. Ever since the tariff was lifted due to complaints from the WTO, conservatives and foreign members of the free market, steel prices began to rise. This tariff law also helped several workers and industries in the states of Pennsylvania and West Virginia. (wiki) With the conditions of today’s market, as Faux puts it, “protectionism may well become the policy of necessity.” (Faux, 199)
Tariffs are needed in order to protect middle class people from working long hours to compete with slave labor. If the labor of a manufactured product in America costs $10 and in China $1, then a $9 tariff, or less, should be imposed when it is being imported. What sense would it make for a U.S. business to relocate in China for cheap labor if the good being made will face a tariff. Even though tariffs will encounter opposition from the “free” market, including the WTO, their existence in the U.S. economy is necessary. Overall, our government can set the rules of business in such a way that working people can receive a living wage and that domestic industries can be protected from foreign competition. All this can be done through the implementation of tariffs and antitrust acts.
Antitrust acts have been known to regulate corporations by prohibiting unfair business practices. In fact, the purpose of the various antitrust acts and laws is “to ensure that the U.S. economy can reach equilibrium without being restrained, hampered, or obstructed by the undue influence of large companies or groups of companies engaging in anticompetitive behavior.” For example, the Sherman Antitrust of 1890 was the first United States Antitrust law to limit illegal cartels and monopolies. These acts protect the middle class from the effects cause by power hungry multinational corporations. Thus, more are needed in our time.
With a call for protectionist policies and a return to the tenets of the New Deal Movement, one has to wonder whether our current president, Barack Obama, is leading toward the right direction in helping to lessen the burden that has been placed on the middle class since the Reagan years. Obama has created a task force with Vice President Biden in charge which is primarily established to assist the middle class in economically troubling times like these. Obama has also called for a $800 billion-plus economic stimulus plan that will help the middle class. Here is what Obama has done so far:
Taxes: President Barack Obama has proposed to overhaul the tax code in order to lower taxes for the poor and the middle class. His plan will mean approximately $80 billion in tax cuts. Plus, Obama and Biden have promised to cut income taxes by $1,000 for working families, and to eliminate income taxes for seniors making les than $50,000 a year. (BarackObama.com)
Outsourcing (Free Trade): Just recently Obama overhauled a tax code which allows companies to pay less tax by creating a job in India than if you create one in the United States. Many have found this to be counterproductive, however, it is Obama’s attempt to discourage outsourcing to other countries, which has been hurting the middle class for quite sometime now. (NYT)
Antitrust Acts and Laws: “In his September 2007 statement to the American Antitrust Institute (AAI), President-elect Obama noted that “antitrust is the American way to make capitalism work for consumers.”’ In addition Barack Obama campaigned for “Reinvigorating antitrust enforcement by stepping up review of merger activity and taking effective action to stop or restructure those mergers that are likely to harm consumers, while quickly clearing those that will not.” (Enotes)
Jobs: The creation of new jobs is pretty much the crux of the stimulus package. Currently, with unemployment rising, Obama and Biden have found new and innovative work opportunities for middle class families. For example, President Obama last week announced “more than $20 billion for investment in a cleaner, greener economy, including $500 million for green job training.” (Environment News Service)
Health Care: Back in the beginning of 2008, Obama called for a universal health care system. He finds that every citizen should be able to receive health care no matter what condition our economy is in. In his budget, “Obama has already proposed an additional $634 billion—nearly three-quarters of a trillion dollars—in health care spending over the next few years.” (Reason Online)
Labor Unions: During the beginning of his term, Obama signed executive orders aimed at strengthening labor unions. He was also quoted as saying “I don’t see organized labor as part of the problem. To me, it’s part of the solution.” However, there has been some opposition to his policies toward labor unions as of late. Obama has recently rescinded a rule that requires Labor Unions to disclose receipts of expenditures and for the purchase and sale of union assets. This is seen by a few as an attack to the common worker. Even so, Obama is pro-union. (The Wall Street Journal)
With all of these policies under the new administration coming into play, it seems as though most of Obama’s actions seem to resemble those of FDR. However, we must be aware that the first few years of a new President’s career is mostly theater, thus we have to wait to see if Obama is truly adamant in what he says about the middle class. For now, Obama seems to be helping the middle class, and deviating away from those hurtful policies practiced and created by previous administrations. I am for Obama, but I do not care to be biased. I understand that there are several people who oppose the things he has done for the middle class stating that its counter productive or socialist, but what I do care for is for some protection for the middle class. And, Obama is promising just that. Will we see a second Golden Age for the middle class in the future? Only time will tell I guess.
Sources:
1) Hartmann, Thom. Screwed The Undeclared War Against the Middle Class - And What We Can Do about It (BK Currents). New York: Berrett-Koehler, 2007.
2) "CEO-to-worker pay imbalance grows." Economic Policy Institute. 09 May 2009 <http://www.epi.org/economic_snapshots/entry/webfeatures_snapshots_20060621/>.
3) "Fast track (trade) -." Wikipedia, the free encyclopedia. 09 May 2009 . <http://en.wikipedia.org/wiki/Fast_track_(trade)>.
4) "George H. W. Bush -." Wikipedia, the free encyclopedia. 09 May 2009. <http://en.wikipedia.org/wiki/George_H._W,_Bush>.
5) Faux, Jeff. The Global Class War How America's Bipartisan Elite Lost Our Future - and What It Will Take to Win It Back. New York: Wiley, 2006.
6) Domestic policy of the George W. Bush administration -." Wikipedia, the free encyclopedia. 09 May 2009.
7) "Dominican Republic – Central America Free Trade Agreement -." Wikipedia, the free encyclopedia. 09 May 2009 .
8) "Home foreclosure rate continues ugly climb - Real estate- msnbc.com." Breaking News, Weather, Business, Health, Entertainment, Sports, Politics, Travel, Science, Technology, Local, US & World News- msnbc.com. 09 May 2009 .
9) Sirota, David. Hostile takeover how big money & corruption conquered our government--and how we take it back. New York: Three Rivers P, 2007.
10) "CNN's Lou Dobbs Beats Election War Drums for Bigger Government." Welcome to the Business & Media Institute. 09 May 2009.
11) "National Labor Relations Act -." Wikipedia, the free encyclopedia. 09 May 2009 .
12) "DemConWatch:: Universal Health Care, Thank You Bernie Sanders." DemConWatch. 09 May 2009 .
13) "U.S. Department of Labor - Find It By Topic - Wages - Minimum Wage." The U.S. Department of Labor Home Page. 09 May 2009 .
14) "2002 United States steel tariff -." Wikipedia, the free encyclopedia. 09 May 2009 .
15) "| Economy." Organizing for America | BarackObama.com. 09 May 2009 . ttp://www.barackobama.com/issues/economy/>.
16) "The New York Times Log In." The New York Times - Breaking News, World News & Multimedia. 09 May 2009 .
17) "President Obama's Centrist Antitrust Enforcement." Law.com - Legal News, Legal Technology, In-House Counsel, Small Firms. 09 May 2009 .
18) "Green Jobs Key to Obama Administration's Middle Class Task Force." Environment News Service. 09 May 2009.
19) "Obama's Health Care Quackery: Countries with universal health coverage are economically worse off than the U.S. -." Reason Magazine. 09 May 2009 .
20) "Obama Tries to Stop Union Disclosure - WSJ.com." Business News & Financial News - The Wall Street Journal - WSJ.com. 09 May 2009 .
From 1940 to 1980, almost thirty five percent of working people were unionized and received a living wage, health insurance and pension benefits. Nearly seventy percent of the workforce could raise a family back then only from a single paycheck. People who were disabled knew that they could live on Social Security payments and the elderly were able to retire peacefully. The gap between the rich and poor gradually shrunk. Unfortunately, that is not the case today. The middle class is working long hours for a low wage. In other words, the minimum wage is not a living wage. Workers are now expected to pay for their own health insurance and their own retirement. Pensions are disappearing and there are continued talks of privatizing Social Security. All of this is happening because we currently live in a world where corporate CEO’s place profits before people. Corporate CEO’s have handed American jobs to foreign countries under free trade agreements in return for cheap labor. The wealthiest elite have great control in America. America is a country founded on personal freedom and economic opportunity for all, and to be considered otherwise is undemocratic. In America, economic power should be vested in the middle; however, throughout the past three decades, three conservative Republicans, one conservative Democrat and several self-interested politicians made sure that economic power would remain in the realm of the privileged. The conservatives of today’s world have made it their mantra to create a corporate kingdom that would only serve the needs of billionaire CEO’s who have little or no allegiance to the USA, its citizens, or the concept of democracy. This is how the middle class is being attacked and how democracy loses its ideological function in America.
A middle class will always work to create a democracy. Thomas Jefferson tried his best to advocate this concept. Even Franklin Delano Roosevelt understood the importance of a middle class in a democratic nation. FDR was responsible for creating a strong and vibrant middle class through his New Deal coalition. However, after 1981, Reagan, Bush Sr., Clinton and Bush Jr. have attacked the middle class by favoring and accepting policies that have helped place millions of dollars in the pockets of the wealthiest elite of the country. For nearly three decades the middle class has been abused by conservative economic policies and it is time that the people of America resurrect the middle class from its deathbed. An immediate return to New Deal liberal programs, as well as a government—whose soul purpose is to promote the general welfare of society—that can reset the rules of the game of business through the implementation of rational tariffs and antitrust laws, will help restore the middle class and democracy in America.
There are several definitions that are used to define the term “middle class.” Even so, only one is needed to understand the concept. People who are defined as being middle class are those who are considered intermediate between the classes of higher and lower social rank or standing. Middle class people are characterized as being average working people, neither rich nor poor but fully literate and well informed about politics and international affairs. A middle class stimulates the economy because they make up the majority of the consumers in America. Therefore, a healthy and vibrant middle class is important. An attack on the middle class is an attack on the economy as well. The U.S. has witnessed a strong middle class during the 1930’s, when FDR was President. With his New Deal movement, FDR was responsible for creating the Golden Age of the middle class that started from 1940 and lasted up until 1980. FDR, along with the Founding Fathers of America, understood that a middle class and a democracy go hand in hand.
Like a DNA strand, democracy and a middle class are inextricably intertwined. In other words, there cannot be one without the other. Our Founders “created a form of government where We the People rule. They declared that all people, and not just the elite, have the right to “life, liberty, and [happiness]. They believed that democracy and a middle class were the “natural state of man.”’ (Hartmann, 7) A democracy requires that its citizens are able to achieve the American Dream. A citizen should have a well-paying job, health insurance, Social Security, and pension benefits to enjoy a peaceful and secure life. Democracy requires an educated middle class that can achieve success and be able to support their families. Also, a democracy depends on the people of America, particularly the middle class, to play the referee in the game of big business and to protect labor and the public good. However, with the conditions we live in today, the American Dream is truly just a dream. The middle class is now threatened by the CEO’s of major corporations who reap the benefits of their workers and look abroad in foreign countries for cheap labor. Thom Hartmann, a bestselling author and talk radio host, claims that without a dynamic middle class, “democracy cannot exist; instead, it becomes a caricature of itself. There are leaders and elections and all the forms, but they’re only for show. The game is now rigged.” (Hartmann, 10) An attack on the middle class and on democracy occurred in 1981, the same time Ronald Reagan became the President of the United States.
Before Reagan came into office, life in America was completely different. Health care was given to nearly all working Americans, unions were stronger than ever, people had free time after work, and industrialists respected and cared for their workers well-being. All of this was reflected in the income differential. In 1979, “the average CEO earned thirty times his average employees’ wage.” (Economic Policy Institute) Life for the middle class was pleasant and democracy was at work; however, all of this changed when Reagan’s policies favored the plutocrats of America. Reagan introduced trickle-down economics, or supply-side economics, which transformed society so that the wealthy can receive more money in order to use that money to build more factories and hire more people. Thus, the money would “trickle down” to the workers. In order to make this work, Reagan slashed top marginal income tax rates on millionaires and billionaires from 70 percent to 50 percent. (Hartmann, 17) By doing this, Reagan dropped the United States into the greatest debt ever during those times. Even though trickle-down economics did provide several jobs, most of them were in foreign countries. The wealthy did not invest the money they saved from Reagan’s tax cuts in the creation of factories. Instead, they invested abroad in foreign countries where labor was cheaper. CEO’s moved their corporations to foreign areas where assembling their manufactured good was cheaper than doing it at home. This economical strategy is called outsourcing.
Outsourcing and downsizing—the concept of mass layoffs to boost a CEO’s bonus —were not introduced in America’s vocabulary before Reagan took office. Many progressive analysts and conservatives believe that Reagan’s soul purpose was to attack the middle class. Mark Ames, a writer for The Exile, wrote:
"Reagan was put in power with the express purpose of destroying the middle class and ending any hope that the sons and daughters of the poor might rise to the middle class through education and hard work. The destruction of the middle class is his real and lasting legacy." (EPI)
Reagan also deregulated the health-care industry, which in turn made it impossible for the middle class to afford health insurance. Hospitals were then interested in profits, so they raised their rates. Drug companies could also raise their prices as high as they wanted, since they bought off their competitors with the help of Reaganomics. Pharmaceutical companies are now the most profitable businesses in the United States. (Hartmann, 61) By deregulating domestic markets and by shrinking the government, Reagan, whether he wanted to or not, attacked the middle class.
George H.W. Bush was also responsible for continuing the attack on the middle class. Bush Sr. pushed for fast-track trade authority for the president, which allows the president to negotiate trade agreements that Congress can approve or disapprove but cannot amend or filibuster. (wiki) Even though Bush Sr. admonished Reagan’s supply-side economics and referred to Reagan’s tax proposals as “voodoo economics” in 1980, he was highly criticized in 1988 for supporting conservatives who were willing to continue the Reagan revolution. Bush Sr. was seen as a failure in this regard. (wiki) In addition, his administration held excessive discussions with Canada and Mexico in forming the North American Free Trade Agreement (NAFTA), which has completely damaged the middle class.
It was former President Bill Clinton, considered by many a conservative Democrat, who signed NAFTA, thereby causing a harmful blow toward the middle class of America. NAFTA, according to Jorge Castaneda, is “an accord among magnates and potentates: an agreement for the rich and powerful in the United States, Mexico, and Canada, an agreement effectively excluding ordinary people in all three societies.” (Faux, 2) With NAFTA, the transnational elite possess the power of governing their land. Citizens in America are now competing with other people in Canada and Mexico for jobs. Jeff Faux, president of the Economic Policy Institute, states in his book: “Thanks to NAFTA, we now have a domestic economy that spans the continent and includes Canada and Mexico, two other sovereign countries whose economies are commonly linked to ours.” (Faux, 6) This agreement has lowered wages for American workers and has created record trade deficits. Clinton also signed the Telecommunications Act of 1996 and the General Agreement on Tariffs and Trade (GATT), which has been replaced by the World Trade Organization (WTO), further reducing the power of the people to regulate business and media. When Clinton decided to enter the U.S. into the WTO, tariffs and trade restrictions were eliminated thus allowing multinational corporations, instead of sovereign nations, to write the rules of international business. (Hartmann, 20) Even though Clinton had done so much for the middle class during his presidency, his decision to sign NAFTA and the GATT has and is currently affecting the middle class.
Middle class people are suffering from policies created years ago by their presidential leaders; the same leaders who claimed to understand the importance of a middle class in a democratic country. George W. Bush, our previous president, has also contributed to the attack against the middle class. For instance, during his first term, Bush Jr. implemented three tax cuts, which were claimed by his conservative specialists to increase economic recovery and job creation. However, his opposition pointed out that the creation of jobs has failed to materialize. The tax cuts were argued to have favored the wealthy and special interests. (wiki) Opposition has pointed out that the tax cuts have placed the United States into a historic debt. Bush’s bill is set for more than $4,000 billion, on top of Reagan’s and Bush Sr.’s $3 trillion debt (approximate numbers). (Hartmann, 20) Also, Bush has signed the Central American Free Trade Agreement (CAFTA), a free trade agreement similar to NAFTA, which encompasses the U.S. and certain Central American countries. Public Citizen, an advocacy group created by Ralph Nader, opposes this agreement on the grounds that CAFTA is another failed “neoliberal” model as was NAFTA. Public Citizen states that CAFTA serves to “push ahead the corporate globalization model that has caused the 'race to the bottom' in labor and environmental standards and promotes privatization and deregulation of key public services.” (Public Citizen Website and Wiki) Bush Jr. has made the same mistake Clinton committed during his presidency, thus intensifying the blow toward the devastated middle class.
In addition, Bush was able to attack the one institution that the middle class in America needs in order to thrive—education. Through his No Child Left Behind Act, Bush made it possible for 36 percent of California’s schools to lose government funding. (Hartmann, 56) Under the act, Bush listed thirty-seven ways a school could fail in meeting certain new standards that were also listed in the new law. Schools that made the list lost their government funding. In other words, the schools that needed the most funding got the least. The act has closed several schools throughout America and has sought out to do the opposite of what it claims in its title. The Bush administration also wanted to privatize K-12 education, along with Social Security.
Bush’s attack on the middle class does not stop there. Ever since Alan Greenspan decided to throw interest rates into negative territory to help George W. Bush get reelected in 2003-2004, the American public has been in great debt. Many Americans “with adjustable-rate or interest-only mortgages are being wiped out as interest rates rise back up into normal territory.” (Hartmann, 20) In fact, MSNBC.com has reported that “Nationwide, 649,917 homes received at least one foreclosure-related filing in the first three months of the year, up 112 percent from 306,722 during the same period last year.” (MSNBC.com) If anybody believes that America is economically stable and secure, they have to reconsider. America’s democracy and economy is threatened because there has been an attack on the middle class for nearly three decades. Our government has been sold to the CEO’s of wealthy corporations who call the shots. The middle class cannot even find help from their own senators and representatives because the majority of both have given into the rewards that big business offers.
Most Republicans and Democrats that reside in the Congressional branch of the United States and several politicians have sold out to corporate and wealthy interests. The conservatives who have vowed to support wealthy corporations—or the ‘cons’ as described by Hartmann—have taken over the Republican Party and American politics. Many Republicans are more interested in the interests of major corporations, rather than the needs of the people they represent. For instance, in 2005, Maryland lawmakers passed a bill that forced companies “with more than 10,000 employees to spend at least 8 percent of their payroll on health care benefits—or put the money directly into the state’s health program for the poor.” (Sirota, 166) This bill was targeted for Wal-Mart, which provides a minimal amount of benefits for their employees. Maryland’s governor Bob Ehrlich (R) held a meeting with Wal-Mart’s top executives and vetoed the bill. The reason behind his decision to veto was that Wal-Mart provided Ehrlich’s political campaign with financial contributions. (Sirota) So, instead of doing what was right for the employees of Maryland, Ehrlich decided to veto the bill for his benefit.
Surprisingly, the Democratic Party also swung to the right. As Hartmann states, “Democrats were caught in the awkward position of needing to embrace the same corporate donors as the con-led Republicans, although they weren’t anywhere near as successful as the cons because they hadn’t (and haven’t) so fully sold out to corporate interests.” (Hartmann, 203) Even though some Democrats do oppose Bush and his policies, other “middle of the road” Democrats have converted. For instance, the Democratic Leadership Council (DLC) has been funded by corporations such as Enron, Texaco, and Philip Morris. (Sirota, 288) Not surprisingly, this was the group that encouraged Democrats to embrace corporate-written trade deals. (Sirota, 289) Jeff Faux shares a similar view on this matter. He believes that America’s bi-partisan government favors the privileged, while neglecting the rest of us to an unregulated global market. (Faux, 3) Also, Lou Dobbs from CNN agrees that Congress and the will of the people lie on separate tracks. He states: “When our representatives are actually in session, they're constantly at odds with the will of the people.” (Dobbs) Overall, even our own politicians are embracing big businesses, thus aggrandizing the attack on the middle class and democracy.
So how do we fix this problem that has nearly destroyed the vitality of the middle class and the heart of a democracy? There are many critics who have mentioned the problems of our current society and have contributed ideas on how to salvage the economy. However, there have not been a lot of suggestions on how to revive a middle class. Many political analysts have discussed the threats that have devastated the middle class, the negative and positive aspects of our economy, and the credibility of America as a democratic nation. This is a good thing, but America has to figure out a way to reestablish a powerful middle class; because, the democracy and the economy of this country can only be saved through a strong and vibrant middle class. This post does offer a solution to the problem. We can resurrect the middle class by returning to those programs that once exemplified the New Deal movement created by FDR. Also, government “interference” by setting the rules of business through the use of tariffs, trade policies and antitrust acts is needed to bring back the middle class. FDR was able to do it and we can do it again.
Franklin D. Roosevelt was able to lift a country out of the Great Depression and create a strong economy with a dynamic middle class through his New Deal programs. The New Deal created government services that protected the middle class, the seniors, the sick, the children, and the low-income people. This sounds like something we require now! FDR was able to put money in our pockets through progressive taxation, social security, fair labor laws, the regulation of business, and the vigorous enforcement of antitrust laws. FDR issued the Fair Labor Standards Act, which set a minimum wage, and the National Labor Relations Act, which protected most workers rights through the development of labor unions and gave workers the right to strike. (wiki) FDR furthered the cause of public education through the GI bill. Also, almost every worker received health insurance and pension benefits. During WWII, FDR passed a progressive income tax that barely touched the working class and middle class but took a great percentage of income from those individuals who earned more than two million a year in today’s dollars. (Hartmann, 45) This percentage remained high up until Reagan took over the White House. Progressive taxes did not take money from the people allowing the middle class to spend it on goods that would stimulate the economy and consumer demand. Also, FDR made it possible for people to enjoy the fruits of their labor through the creation of Social Security, a government-run insurance program.
Some critics say that World War II was the stimulus that took America out of the Depression. However, spending money on military equipment, like what Bush Jr. did, does not stimulate the economy. In fact, building roads, bridges, public facilities, domestic consumer industries, etc. stimulates the economy more because money flows within the economy. For instance, FDR created the Public Works Administration (PWA) which hired skilled construction workers to build the Triborough Bridge in New York City, which is now called the Robert F. Kennedy bridge. This program, created by the government, paid its workers a living wage, which in turn helped stimulate the economy. To sum it up, Roosevelt’s “economic stimulus programs put money in the pockets of the people, and their purchases created consumer demand, which led entrepreneurs to start businesses to meet that demand, which meant they had to hire workers, who were well paid because 35 percent of America was unionized.” (Hartmann, 47) FDR acted to control the game of business. Roosevelt protected the middle class by regulating the stock market, breaking large electrical conglomerates, ensuring people to place their savings in banks, and fighting for an expansion of antitrust legislation. (Hartmann, 47) FDR campaigned relentlessly on a platform of government involvement in the marketplace, also referred to as Keynesian economics, to restore both democracy and the middle class.
Economic New Deal liberalism can save the middle class and democracy in contemporary America. Bush has to pass a progressive income tax cut. Progressive taxation has a long history that dates back to Thomas Jefferson. Jefferson once wrote that “taxes should be proportioned to what may be annually spared by the individual.” (Hartmann, 47) Instead of passing tax cuts that favor the wealthy of this country, Bush should consider progressive taxation to put money back in the pockets of the middle class and low-income people. Progressive taxation may also decrease Bush’s, and now Obama’s, debt. Restoring and reforming the estate tax is also a good idea. An estate tax is definitely needed in a time where poverty and budget deficits continue to rise. A 2002 poll showed that Americans strongly suggest that the estate tax should be reformed rather than repealed. (Sirota, 48) We can use these taxes to help pay pack the Social Security system.
Americans should fight for a single-player national health care system and oppose any talks of privatizing Social Security. More people are uninsured or underinsured in America now more than ever. If an injury or accident occurs, a person can go bankrupt from trying to pay the medical bills. Health care is a right that every individual should have. Bernie Sanders, currently an independent senator of Vermont, wrote a lengthy document to the Speaker of the House in 2004 addressing the issues that are affecting the middle class, the corruption of big business and the problems surrounding health care. He also suggested that America needs a single-player national health care system and stated that America has turned into “a system geared toward profit-making for the insurance companies and for the pharmaceutical industry rather than providing cost-effective quality care to all of our people.” (Bernie Sanders) If health care insurance companies were regulated by the government, every American would be able to afford health care. Medical and pharmaceutical bills are so expensive because these companies are interested in profit; therefore they raise their prices and rates. This is the reason why health care insurance programs and companies should be regulated. Also, Social Security is one of the strongest pillars of the New Deal movement and should not be privatized or co-opted. Social Security continues to provide money for the disabled and assures that Americans will have savings for retirement.
Most importantly, an American cannot climb up to the middle class, if he/she receives the current minimum wage. The current federal minimum wage for covered nonexempt employees is $6.55, which is not a living wage. (U.S. Department of Labor) Many middle class people have been working an average of eighty hours per week and a majority of them have some difficulty in paying their bills. Conservatives have argued that if the minimum wage increases, several small businesses will go under and people will lose jobs. However, this is not true and a good example is when Santa Fe, New Mexico raised its minimum wage to $9.50. A report shows that when the increase occurred, more than one thousand jobs were added to the work force and the unemployment rate decreased. (Hartmann, 187) America has the money to make this happen, but it is a matter of how the money is used. Also, conservatives are wrong when they claim that we have to choose between low prices or high wages. If the prices on products did increase, the people of America would be able to purchase those products because their wages would have increased as well. A union study showed that a one cent increase on the price of a pair of socks would increase an employee’s income by $1,800 annually. This study used Wal-Mart as their example. Overall, the reality of this is that an increase in the minimum wage would sprout an increase in prices, but also an increase in employment and consumer demand. Our economy has been handing money to the corporations it cherishes, rather than to the people who make the economy work. So, the U.S. has to transform the minimum wage into a living wage in order to rebuild the middle class. FDR did it and we can do it again.
America also needs stronger and better regulated unions. A union provides a person with the leverage to demand benefits in his/her workplace. Hartmann states that “unions are designed to give workers a voice in decisions that affect their jobs . . . [and] unions create a middle class by allowing you and me to ask for wages and the benefits we need to become or remain middle class.” (Hartmann, 189) Unions have a democratic quality in that they allow workers to have a say in his/her workplace. Conservatives have been bashing unions for a long time now, and we must not let them win. Unions were created for a reason and that is to protect the worker of America. Overall, unions help us fight for a living wage and bring democracy to America. Also, unions help promote a middle class. FDR knew that and so should we.
Most importantly, we need a government that can set the rules of business through the use of rational tariffs, trade policies and antitrust laws. America’s trade deficit is constantly increasing. In 2005, we imported $700 billion more in goods than we exported. (Hartmann, 21) The deficit has been increasing ever since then. Our involvement in NAFTA and the WTO has only made things worse as well. After airplanes, our number one export is agricultural products, which is very disappointing. Other countries take our dollars we gave them for the things we bought and they do not want to buy anything back from us because we no longer manufacture goods. Instead, they put their money to good use. They buy “our remaining manufacturing companies, our ports, our banks, our forests, our landmark buildings and our real estate.” (Hartmann, 21) For example, Chrysler, John Hancock Insurance, Wells Fargo Bank, and the Helmsley Building in New York are all gone. Also, America’s sound industry is almost entirely foreign owned. Conservatives with their “free” trade policies have sold off America to the highest bidder and claim that this is a good thing. They say that foreign owned companies create American jobs; however, foreign owned industries in America operate for a purpose to take their profits back home. On the other hand, American industries use their profits to invest within the country therefore recycling money throughout the economy as it gets taxed every time. These taxes are later used to build roads, bridges, other domestic consumer factories etc. Overall, the profits circulate throughout our economy creating more jobs, consumer demand, and higher wages. We must not stand by and watch our nation serve the needs and interests of an elite group of wealthy CEO’s.
Americans must also stay away from conservatives who believe that a middle class will blossom under a market freed from government restrictions. A marketplace cannot exist without government because the government sets the rules of business. Also, conservatives who want a “small government” really want a different government—one that serves the wealthy. In fact, a “conservative government” is not a “smaller government.” For instance, under George W. Bush “inflation-adjusted government spending is as high as it was during World War II, at almost twenty thousand per person per year.” (Hartmann, 33) What conservatives really want is a smaller government so they can step in and privatize previous governmental function in order to make a profit from things that used to be nonprofit. We cannot allow corporations to decide how much to pay for labor, and when, how and where to trade. We also have to stay away from conservatives who say that “free” trade creates better-paying American jobs. This is a lie. For instance, “free” trade deals like the China Pact in 2000 has lowered Ohio’s real median wage for three consecutive years. (Sirota, 63) Overall, “trade deals that allow companies to freely search the world for the cheapest labor have driven down Americans’ wages.” (Sirota, 67) This is why we need a government that is free from the control of corporate CEO’s and greedy politicians. We need a government that can regulate the game of business through rational tariffs and antitrust laws.
Free-traders view tariffs as a harmful interference with the laws of a free market, and if anyone reintroduces the concept of imposing tariffs, they are accused of being a protectionist. However, the outsourcing of American jobs and “free” trade deals such as NAFTA and the WTO, which its purpose is to abolish all trade restrictions, has called forth the desperate need for tariffs. Therefore, rational tariffs have to be implemented by our government to construct “financial barriers against companies who try to reap a financial reward for eliminating U.S. jobs and exploiting desperate, low wage workers in developing countries.” (Sirota, 58) What this post means by “rational” are those tariffs that repeal trade pacts that do not have wage protections. Throughout its history the U.S. has issued several tariffs and the most recent, the steel tariff of 2002, proved to be a success. Ever since the tariff was lifted due to complaints from the WTO, conservatives and foreign members of the free market, steel prices began to rise. This tariff law also helped several workers and industries in the states of Pennsylvania and West Virginia. (wiki) With the conditions of today’s market, as Faux puts it, “protectionism may well become the policy of necessity.” (Faux, 199)
Tariffs are needed in order to protect middle class people from working long hours to compete with slave labor. If the labor of a manufactured product in America costs $10 and in China $1, then a $9 tariff, or less, should be imposed when it is being imported. What sense would it make for a U.S. business to relocate in China for cheap labor if the good being made will face a tariff. Even though tariffs will encounter opposition from the “free” market, including the WTO, their existence in the U.S. economy is necessary. Overall, our government can set the rules of business in such a way that working people can receive a living wage and that domestic industries can be protected from foreign competition. All this can be done through the implementation of tariffs and antitrust acts.
Antitrust acts have been known to regulate corporations by prohibiting unfair business practices. In fact, the purpose of the various antitrust acts and laws is “to ensure that the U.S. economy can reach equilibrium without being restrained, hampered, or obstructed by the undue influence of large companies or groups of companies engaging in anticompetitive behavior.” For example, the Sherman Antitrust of 1890 was the first United States Antitrust law to limit illegal cartels and monopolies. These acts protect the middle class from the effects cause by power hungry multinational corporations. Thus, more are needed in our time.
With a call for protectionist policies and a return to the tenets of the New Deal Movement, one has to wonder whether our current president, Barack Obama, is leading toward the right direction in helping to lessen the burden that has been placed on the middle class since the Reagan years. Obama has created a task force with Vice President Biden in charge which is primarily established to assist the middle class in economically troubling times like these. Obama has also called for a $800 billion-plus economic stimulus plan that will help the middle class. Here is what Obama has done so far:
Taxes: President Barack Obama has proposed to overhaul the tax code in order to lower taxes for the poor and the middle class. His plan will mean approximately $80 billion in tax cuts. Plus, Obama and Biden have promised to cut income taxes by $1,000 for working families, and to eliminate income taxes for seniors making les than $50,000 a year. (BarackObama.com)
Outsourcing (Free Trade): Just recently Obama overhauled a tax code which allows companies to pay less tax by creating a job in India than if you create one in the United States. Many have found this to be counterproductive, however, it is Obama’s attempt to discourage outsourcing to other countries, which has been hurting the middle class for quite sometime now. (NYT)
Antitrust Acts and Laws: “In his September 2007 statement to the American Antitrust Institute (AAI), President-elect Obama noted that “antitrust is the American way to make capitalism work for consumers.”’ In addition Barack Obama campaigned for “Reinvigorating antitrust enforcement by stepping up review of merger activity and taking effective action to stop or restructure those mergers that are likely to harm consumers, while quickly clearing those that will not.” (Enotes)
Jobs: The creation of new jobs is pretty much the crux of the stimulus package. Currently, with unemployment rising, Obama and Biden have found new and innovative work opportunities for middle class families. For example, President Obama last week announced “more than $20 billion for investment in a cleaner, greener economy, including $500 million for green job training.” (Environment News Service)
Health Care: Back in the beginning of 2008, Obama called for a universal health care system. He finds that every citizen should be able to receive health care no matter what condition our economy is in. In his budget, “Obama has already proposed an additional $634 billion—nearly three-quarters of a trillion dollars—in health care spending over the next few years.” (Reason Online)
Labor Unions: During the beginning of his term, Obama signed executive orders aimed at strengthening labor unions. He was also quoted as saying “I don’t see organized labor as part of the problem. To me, it’s part of the solution.” However, there has been some opposition to his policies toward labor unions as of late. Obama has recently rescinded a rule that requires Labor Unions to disclose receipts of expenditures and for the purchase and sale of union assets. This is seen by a few as an attack to the common worker. Even so, Obama is pro-union. (The Wall Street Journal)
With all of these policies under the new administration coming into play, it seems as though most of Obama’s actions seem to resemble those of FDR. However, we must be aware that the first few years of a new President’s career is mostly theater, thus we have to wait to see if Obama is truly adamant in what he says about the middle class. For now, Obama seems to be helping the middle class, and deviating away from those hurtful policies practiced and created by previous administrations. I am for Obama, but I do not care to be biased. I understand that there are several people who oppose the things he has done for the middle class stating that its counter productive or socialist, but what I do care for is for some protection for the middle class. And, Obama is promising just that. Will we see a second Golden Age for the middle class in the future? Only time will tell I guess.
Sources:
1) Hartmann, Thom. Screwed The Undeclared War Against the Middle Class - And What We Can Do about It (BK Currents). New York: Berrett-Koehler, 2007.
2) "CEO-to-worker pay imbalance grows." Economic Policy Institute. 09 May 2009 <http://www.epi.org/economic_snapshots/entry/webfeatures_snapshots_20060621/>.
4) "George H. W. Bush -." Wikipedia, the free encyclopedia. 09 May 2009
6) Domestic policy of the George W. Bush administration -." Wikipedia, the free encyclopedia. 09 May 2009
10) "CNN's Lou Dobbs Beats Election War Drums for Bigger Government." Welcome to the Business & Media Institute. 09 May 2009
18) "Green Jobs Key to Obama Administration's Middle Class Task Force." Environment News Service. 09 May 2009
Posts
