Eroding middle class falls to 51%, survey finds

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**Frazzled**

OK you're President. Without pulling the "its all X party's fault!!!":
1. Is this bad?
2. What would you do about it?
http://www.latimes.com/news/local/la-me-0823-middle-class-20120823,0,6206289.story

Eroding middle class falls to 51%, survey finds
The core American belief that a large sector of the public enjoys economic and social mobility is not necessarily true anymore, a Pew study says.
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A new study released by the Pew Research Center shows that between 2000 and 2010, median middle-class wealth dropped 28 percent.

By Rebecca Trounson, Los Angeles Times

August 23, 2012, 12:49 a.m.
The idea of a large, stable middle class is central to America's sense of itself. But the U.S. middle class has been steadily shrinking, dropping from 61% of all adults 40 years ago to a bare majority now, a new study finds.

This middle tier of American society also has slipped downward in terms of its income and wealth in the last decade, according to the report released Wednesday by the Pew Research Center. And it has lost a share of its traditional faith in the future.

"The notion that we are a society with a large middle class, with lots of economic and social mobility and a belief that each generation does better than the next — these are among the core tenets of what it means to be an American," said Paul Taylor, the Pew Research Center's executive vice president.
The new study combines an analysis of recent government data with a public opinion survey to paint a picture of the nation's middle class, defined as those with annual household incomes in 2010 between $39,000 and $118,000 for a family of three.

By this definition, Pew found that at the beginning of the decade, the middle class included 51% of all adults, down from 61% in 1971.

The well-being of the middle class is a central theme of the presidential election, with President Obama and Mitt Romney each making repeated visits to battleground states claiming to have the superior approach.

The president is campaigning on a pledge to allow the George W. Bush-era tax rates on the wealthiest Americans to expire at the end of the year as scheduled. Romney wants to extend the lower rates across the board. Romney has also proposed additional cuts.

The Pew study found that some of the shrinkage in the middle class came from people moving into the upper-income tier, which represented 20% of the nation's adults in 2011, up from 14% in 1971. The lower-income group rose to 29% of all adults, up from 25%.

But the money only went in one direction, Taylor said. Over the same period, only the upper-income group increased its share of the nation's overall household income and now accounts for 46% of that total, up from 29% in 1971. The middle class garnered 45% of the total, down from 62% four decades ago. The lower-income group took in 9%, down from 10%.

Since 2000, the median income for America's middle class has fallen from $72,956 to $69,487, the researchers found. But net worth plummeted over that period, with the median declining by 28%, erasing two decades of gains.

Overall, the middle class is now smaller, poorer and more pessimistic than previously, the researchers found.

Although the recession ended, at least technically, in 2009, its effects linger. The report found that middle-class Americans said they continue to struggle, with most reporting that they have had to cut spending in the last year. Fewer than a decade ago said they expected hard work to bring them success.

And 85% of middle-class Americans said it was harder now than a decade ago to maintain their middle-class lifestyles.

Of those who felt that way, 62% said "a lot" of the blame lay with Congress. About 54% blamed banks and financial institutions, 47% said the same about large corporations. More people placed blame with the previous Bush administration (44%) than did with the administration of President Obama (34%).

Only 8% said "a lot" of the blame for the tough times of the middle class lay with the middle class itself.

The study found that while some minority groups, including blacks and Latinos, have had a tougher time overall during the recent recession, people in those groups tended to have more upbeat economic assessments than whites and older adults — groups that generally fared better in the tough economy.

For example, while 75% of white members of the middle class said it was harder today than 10 years ago to get ahead, roughly 6 in 10 middle-class Latinos and blacks said the same. Pew noted that views on advancement are often correlated with political partisanship and that blacks and Latinos are more likely than whites to be Democrats and supporters of Obama.

The Pew survey found that neither presidential candidate has closed the deal with the middle class, but more lean to Obama than to Romney. About half of the adults who identified themselves as middle class said they believed Obama's election to a second term would help the middle class, compared to 42% who said that Romney's election would do so.

The survey is based on an analysis of data from the Census Bureau and the Federal Reserve, along with a Pew survey in July of about 2,500 adults, including 1,287 who identified themselves as middle class.

rebecca.trounson@latimes.com

**TheHammer**

Easy:

Reverse many free trade and globalization schemes.
Tax the wealthy and corporations to keep firms smaller.
Reduce the size of the military and reinvest that money into education and infrastructure.
Enact public works projects to get people employed.

The largest problem facing our economy is that we are all, individually, so much more productive than ever before in history. Since we can all create so many more goods and services it literally takes fewer people to take care of everyone's needs, so the surplus value of that productivity goes to the owners of capital while they continue to strangle ever more productivity out of the working classes.

Until we accept that not everyone is going to be a computer programmer, but that everyone also deserves a respectful life we won't get anything done.

Automatically Appended Next Post:
Also, universal healthcare and subsidizing education would go a long way towards helping the existing middle class not file bankruptcy.

**Easy E**

Yes, it is bad because the Middle Class is also where the bulk of "demand" comes for a retail focused economy like the US economy.

Fraz, you don't want to know what I would do about it.

**Frazzled**

If you eliminate the military budget entirely you still have a budget deficit.

Are you going to tax foreign corporations? What tax rate are you going to use?

**Amaya**

How much of this effect is social and not economic? My parent's generation was more driven by the desire for monetary success than it appears mine is. A lot of people are more interested in doing something they love or making a positive impact on the world than simply making money. A lot of people don't really care about breaking into the middle class as long as they can enjoy their live and have enough money to take care of themselves and their family.

**Testify**

"The core American belief that a large sector of the public enjoys economic and social mobility is not necessarily true anymore"

Has this ever been true? Social mobility in the USA has been far lower than in Europe for a very long while, comparable to Russia.

**Frazzled**

Whats ironical is that if everyone were middle class worldwide, there would be massive consumer demand, thus increasing the need for manufacturing and jobs.

**Amaya**

A lot of consumer demand is consumption of useless crap. An economy should not be reliant on selling low quality plastic crap.

**Frazzled**

What an economy should be based on is not relevant.

**Amaya**

It is very relevant because the moment you have a cultural revolution of any significant amount that realizes "We don't need this garbage" you're going to have sectors reliant on selling those products suffer leading to loss of jobs and an overall negative impact on the economy.

Relying on selling garbage to brainwashed consumerist zombies is a bad decision.

**Horst**

Woo!

I'm in the middle class!

Makes me feel good about myself. I got mine. Everyone else can screw off. Now THATS an american attitude.

**hotsauceman1**

I lock all the doors in the senate and house. Turn up the heat, only porta poties, no baths or deodorant and only gruel to eat until they come up with a solution that doesnt just include "Thx thee wealthy" or "No taxes at all"

**Amaya**

hotsauceman1 wrote:
I lock all the doors in the senate and house. Turn up the heat, only porta poties, no baths or deodorant and only gruel to eat until they come up with a solution that doesnt just include "Thx thee wealthy" or "No taxes at all"

Why do you expect Congress to be competent at managing the economy?

**TheHammer**

I don't care about deficits, Frazzled. What I'm talking about will create growth which will, in turn, increase revenue.

It's strange, the response by anyone on the right to any marginally leftist proposal to lower the deficit is always met with a "well that won't eliminate the deficit!", as though any one thing could ever do that.

Amaya is getting an important truth: capitalism is a system predicated upon infinite growth in a world of very finite resources. It's unsustainable.

**Amaya**

It is technically sustainable, but it can not always be growing. There will be ups and downs.

**Frazzled**

TheHammer wrote:
I don't care about deficits, Frazzled. What I'm talking about will create growth which will, in turn, increase revenue.

It's strange, the response by anyone on the right to any marginally leftist proposal to lower the deficit is always met with a "well that won't eliminate the deficit!", as though any one thing could ever do that.

Amaya is getting an important truth: capitalism is a system predicated upon infinite growth in a world of very finite resources. It's unsustainable.

People who don't like math don't care about deficits.
Argentina didn't care about deficits. Greece didn't care about deficits. Spain didn't care about deficits.
We're already at a debt to GDP level at the same as WWII. interest expense is already at 6% of total federal expenditures.

You can't just say: I say universal healthcare and education for all! We'll just cut military spending and raise taxes. I'm for healthcare and education as well. But you can't make them magically appear. Raise taxes and your economy tanks (see the CBO warning of this week).

**TheHammer**

You talk about math and yet you don't actually understand how numbers work.

Have you ever lived abroad? It's pretty fun, you should try it! Americans talk about how horrible taxed people are in Europe, but it's really not that bad. In Sweden, for instance, the amount paid for taxes were high, but I knew exactly what that amount was. In the US I pay federal, local, state, sales tax, use fees, and lots of other things. And then I also have to pay for things that the government doesn't provide, so that means more tolls and more money spent on transportation, education, healthcare, and all other sorts of things.

So, yes, it is easy to just say everyone should get healthcare and education. We could provide these to everyone and end up costing less, as a society, than we do now while providing better care because that is how math actually really works.

More to the point, those that care too much about deficits tend to not understand math at all because they think we can cut our way out of debt without ever acknowledging the severe and horrible impact this would have on our economy. Fact is that we have been cutting government for the last 4 years and it's not getting us out of debt at all, all it's doing is hurting the middle class and hurting economic growth and making the problem worse.

**Frazzled**

TheHammer wrote:
You talk about math and yet you don't actually understand how numbers work.

Have you ever lived abroad? It's pretty fun, you should try it! Americans talk about how horrible taxed people are in Europe, but it's really not that bad. In Sweden, for instance, the amount paid for taxes were high, but I knew exactly what that amount was. In the US I pay federal, local, state, sales tax, use fees, and lots of other things. And then I also have to pay for things that the government doesn't provide, so that means more tolls and more money spent on transportation, education, healthcare, and all other sorts of things.

So, yes, it is easy to just say everyone should get healthcare and education. We could provide these to everyone and end up costing less, as a society, than we do now while providing better care because that is how math actually really works.

More to the point, those that care too much about deficits tend to not understand math at all because they think we can cut our way out of debt without ever acknowledging the severe and horrible impact this would have on our economy. Fact is that we have been cutting government for the last 4 years and it's not getting us out of debt at all, all it's doing is hurting the middle class and hurting economic growth and making the problem worse.

Sweden is heavily subsidized by the hydrocarbon industry and has a population smaller than the average Texas football stadium. Thats doesn't compute with a real economy.
So what tax rate are you going to have? Are you going to tax foreign products - or just give them a nice competitive advantage?

EDIT: I've been remiss. Give more detail to your plan as there are actually points I agree with as well. I'll start.
-We have serious structural problems in the economy not solved by raising or lowering taxes. We need commissions to be created to study them and put forth solutions. Act on those solutions.
-Taxes. Simplify the tax code. 3-4 brackets with little or no deductions. Everyone pays some tax but the higher brackets pay substantially higher rates (meh Kennedy level or something).
Eliminate tax loopholes. Eliminate personal corporations. Eliminate corporations. Only permit partnerships or a new legal entity like MLPs, but MLPs do not have legal standing as "a person."
-Trade free trade with countries with similar labor and environment laws as the US. Other agreements expire in 2014 otherwise.
-Healthcare. Look at top five systems and ours. Cherry pick the best and implement. This will eleiminate Obamacare, Medicade,a nd Medicare.
-Education. Same to same with a focus on revamping the technical/trade school side. If Germany can do it, we can do it better.
-Federal Government. Cut half the employees on day one. Overall the EPA and every other agency. Zero based budgeting. total budget excluding above and capex not to exceed 2004 levels.
-Long Term infrastructre spending. Yep. Increase 20% annually until reaches the higher of Germany/France/China/UK average spending. Focused on physical transport, utilities, and electrical grid with an eye to converting to electrical based economy by 2040.

**TheHammer**

I always forget that the United States is a barren wasteland with no natural resources, and that economics of scale is just a total fabrication :(

**whembly**

1. Is this bad?
2. What would you do about it?

1. Not necessarily... if this was during the tech bubble of the early 2000s... then, yeah, that'd be bad. I think this survey is indicative of how bad the economy has been as a whole (the new Great Recession).
2. The devil is in the details... but do the following.
a) engage Congress to make Bush's* tax cut permanent... BUT, remove all tax deductions on individual income taxes. (find a smart dude to see of this sort of thing can be done in corporate tax). Remember, we're sitting on a ton of $$$ because businesses and investors are facing so much uncertainty... so, getting them to "move" that pile of $$$ puts it back in the economy (and add revenues to gov).

b) Go hog wild with kitchen sink on energy policy. (off shore drilling, keystone project, legitimate green initiatives, nuke, everything)

that's to start...

I've got c) thru z)... but, don't have time to dive in now.

*I suspect I'm going to spark a debate by using that hated word "Bush"

**Testify**

TheHammer wrote:
I always forget that the United States is a barren wasteland with no natural resources, and that economics of scale is just a total fabrication :(

American GDP per capita is the highest of any normal country (i.e. without a very small population and a huge amount of resources). Stop whinging.

**whembly**

TheHammer wrote:
act is that we have been cutting government for the last 4 years and it's not getting us out of debt at all, all it's doing is hurting the middle class and hurting economic growth and making the problem worse.

Ummm... care the back that up?

And it's not just Obamacare... both (R) and (D) are spending money that we don't have!

Automatically Appended Next Post:

Testify wrote:
TheHammer wrote:
I always forget that the United States is a barren wasteland with no natural resources, and that economics of scale is just a total fabrication :(

American GDP per capita is the highest of any normal country (i.e. without a very small population and a huge amount of resources). Stop whinging.

**TheHammer**

And your point is, Testify? That because some ivory tower economic indicators say so people who live in poverty don't exist, or something? What are you even getting at?

Automatically Appended Next Post:

whembly wrote:
TheHammer wrote:
act is that we have been cutting government for the last 4 years and it's not getting us out of debt at all, all it's doing is hurting the middle class and hurting economic growth and making the problem worse.

Ummm... care the back that up?

And it's not just Obamacare... both (R) and (D) are spending money that we don't have!

Easy.
http://tpmdc.talkingpointsmemo.com/2012/06/federal-reserve-economic-data-chart-real-government-spending-obama-recovery.php

Not just that, but the level at which spending has increased in the Federal Government has also been remarkably slow under President Obama.
http://www.forbes.com/sites/rickungar/2012/05/24/who-is-the-smallest-government-spender-since-eisenhower-would-you-believe-its-barack-obama/

Not just that, but if we hadn't been cutting so many government jobs the unemployment rate would be quite a bit lower!
http://blogs.wsj.com/economics/2012/05/08/unemployment-rate-without-government-cuts-7-1/

And, hey, maybe the reason for such an anemic recovery has to do with the drastic level of government cuts we have done!
http://www.washingtonpost.com/blogs/ezra-klein/post/public-sector-austerity-in-one-graph/2012/06/11/gJQAv89NVV_blog.html

And, hey, Obamacare actually saves the government money and helps lower the deficit!
http://articles.philly.com/2012-07-25/news/32849332_1_cbo-analysts-medicaid-expansion-health-care-law

**Testify**

whembly wrote:

So... like... you can REALLY buy stuff living in Qatar and Liechtenstein!

You're not serious?

**dogma**

Frazzled wrote:
Whats ironical is that if everyone were middle class worldwide, there would be massive consumer demand, thus increasing the need for manufacturing and jobs.

Though, given that people generally aspire to prestige, it would also likely reduce the willingness to take many of those jobs.

Frazzled wrote:

Sweden is heavily subsidized by the hydrocarbon industry...

You're thinking of Norway.

Dogma's Response to OP

As for what I would do (ignoring budget constraints):

In the short term public works projects, especially those related to the transportation of people and goods, would be a major priority. The focus would be on fixing existing infrastructure, but there would be room for expansion where necessary. This is, admittedly, a make-work approach to employment, but it does produce a tangible benefit and serves to keep people in the workforce; thus enabling them to acquire some sort of experience. Also, I suspect that many of the people that have dropped out of the middle class of late did so as a result of the housing crash.

In the long term we start encouraging publicly funded universities to cut costs. We do this by telling them that their funding is contingent on a set reduction in tuition costs by a certain deadline, those that fail to reduce those costs would lose federal support unless they could show good evidence that they had no means to cut additional expenses. Secondary education would also need to be addressed, but that's a much more complicated issue for a number of reasons and I'll admit that it boggles me.

To address taxation: reduce the corporate tax rate by an unspecified amount, ideally placing it below tax rates in comparable nations.

Disclaimer: this is all based on what I would push for if elected, not what I think would pass Congress.

**Easy E**

Testify wrote:
I always forget that the United States is a barren wasteland with no natural resources, and that economics of scale is just a total fabrication :(

American GDP per capita is the highest of any normal country (i.e. without a very small population and a huge amount of resources). Stop whinging.

**Frazzled**

dogma wrote:
You're thinking of Norway.

Oops you're right Dogma. heavy eport economy evidently with lots of natural resources (timber and iron ore) and engineered products. Still culd fit everyone in Permian High School's new stadium though.

**Testify**

Easy E wrote:

Wow, the second time toady I needed my not sure if serious GIF....

Where did I leave it this time......

Try saying why you disagree with me rather that posting useless crap.

edit- fething sick of having to clean up other peoples' posts when I quote. They seriously need to sort this stuff out.

**whembly**

Testify wrote:
whembly wrote:

So... like... you can REALLY buy stuff living in Qatar and Liechtenstein!

You're not serious?

Hey... I thought Wiki was all that... isn't it? (/snarking about the WHO wiki chart on best healthcare)

I simply wanted to know if there's an attempt to quantify "purchasing power" in relation to GDP (that link has it).

**KalashnikovMarine**

Personally my first step would be to eliminate corporate and personal income tax (along with payroll taxes and other fun things) for a flat consumption tax. For the full details on that google the Fair Tax.