by Tula Connell, Nov 30, 2007

There has been so much bad news about the economy in the past few days, it’s hard to know where to start. But amid the piles of data, two things are clear: Corporations are getting the assistance they need to deal with the nation’s financial crises—and working families are left to fend for themselves.

Big banks got another helping hand from the Bush administration this week when the Federal Reserve announced it would provide them $8 billion in low-interest loans. They also got a longer time period than usual to pay back the loans.

Meanwhile, a small handful of home owners faced with foreclosure—often because they took out subprime loans whose ramifications were not explained to them—are getting some assistance from their mortgage lenders. But this scattershot approach does nothing to help the millions of families who face foreclosure or who will in coming months. No comprehensive Bush administration assistance here.

So, no surprise that four in 10 members of the public surveyed last month by a USA Today/Gallup Poll say they expect a recession in the coming year—and that poll was taken a full month before the latest economic news. Former Treasury Secretary Lawrence Summers agrees the odds favor a recession. This week, the Consumer Confidence Index showed consumer confidence has sunk from 95.2 to 87.3—the fourth monthly slide.

The effects of Bush economic mismanagement have taken a long time to register because of a confusing paradox: The economy, that amorphous entity underpinning our national health, keeps growing. So, like the good “pull-ourselves-up-by-our-bootstraps” Americans that we are, we’ve tended to blame ourselves if we can’t pay the mortgage every month because our health care costs are so high or if we file for bankruptcy because we’ve lost jobs that pay well and can only find work that pays little and offers even less in affordable health care or retirement benefits.

But the facts show otherwise. The economy can be growing overall, while dramatically unequal distribution of that growth means that most individuals or families are struggling to make ends meet. The structural soundness of the nation’s economy is crumbling, and when we fall through the cracks, something bigger is at work than an individual’s inability to balance a checkbook.

Here are few reasons why we need to stop beating up on ourselves and work to change the corporate greed-driven policies of the Bush administration:

• When it comes to the buying power of our paychecks, most of us have been treading water. As Economic Policy Institute President Jared Bernstein puts it, last month, “weekly earnings were up a whole five-spot (that’s $5) since January 2004.”
• The decline in jobs that paid family-supporting wages was more than four times greater between 2000 and 2006 than between 1979 and 1985, according to a new report on job quality from the Center for Economic and Policy Research.
• Princeton economist Alan Blinder estimates between 30 million and 40 million U.S. jobs  are at risk of being sent overseas. His most conservative estimate suggests that 22.2 percent of all U.S. jobs could be offshored at some point in the near future. Using a more aggressive analysis, Blinder said the number rises to 29 percent, according to the Daily Labor Report (subscription required).
• Bush’s tax cuts for the wealthy have helped—the wealthy. Those in the top 1 percent of the income scale received 59.4 percent of all the capital income in 2004, up from 49.1 percent in 2000 and just 37.8 percent in 1979. The increase in the concentration of capital income to the upper 1 percent grew as quickly over the four-year period from 2000 to 2004 as over the preceding 11 years (1989–2000).

All these factors, and a lot more, have resulted in a startling finding: the United States now ranks a pathetic 15th among the world’s richest nations when it comes to after-tax income of the average worker. The ranking by the Organization for Economic Cooperation and Development also found that the richest middle class, if measured in terms of the purchasing power of their income, was Britain (that’s the same nation where, if you believe most of the Republican presidential candidates, the boogey-man socialized health care system is running amok. We wouldn’t want that, now would we?). 

Concentration of wealth in the hands of the few and a proliferation of low-wage, no-benefit jobs for the rest of us is, in addition to all the other structural failures of the economy, such as the massive foreclosures, mean at least 1.4 million home owners will lose their properties to foreclosure in 2008, while the property value of U.S. homes will fall by $1.2 trillion.

In noting that a mere 1 percent of Americans currently hold about half the financial wealth of the entire United States, Washington University sociologist Mark Rank adds that those in the nation’ s bottom 60 percent hold less than 1 percent of that wealth. Meanwhile, some 75 percent of Americans, sometime in their adult lives, now can expect to “experience a year either in poverty or near poverty.” As Institute for Policy Studies Associate Fellow Sam Pizzigati puts it:

If the United States keeps to its present course, Rank predicted last week at an insight-rich national conference on inequality in North Carolina, the nation could “begin to reflect the bifurcation patterns more typical of third-world countries,” with the privileged opting to “physically separate themselves from the middle and bottom.” 

Former Clinton administration economic adviser Gene Sperling hits the nail on the head when he asserts that the strength of our economy

should always be measured by how it is affecting the majority of its people. This is a distinctly American view. In the United States, of all nations, shared growth has defined our economic aspirations since our founding. Our framers’ fundamental critique of European economies was not based on their growth strategies, but rather on the rigid class structures that led to the spoils of growth being more determined by the accident of birth than enterprise, talent and hard work. The American vision (though tragically denied to many initially) has been that growth and upward mobility would ensure a broad middle class that always has room for those willing to work and seek new opportunities. 

In short: The increasing polarization of haves and have nots in this country is not the American way.

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