More Nails in the Coffin of the Middle Class: 5 Things That Could Make Life Even Worse for Most Americans
If trickle-down economics were anything other than a cruel deception, the United States’ embattled working class would have many reasons to join Wall Street in singing “Happy Days Are Here Again.” Giant megabanks have been reporting huge profits for 2015’s first quarter, including $5.91 billion at JPMorgan Chase (the largest bank in the country) and $5.8 billion at Wells Fargo. But trickle-down economics doesn’t work, and in working-class America, there isn’t much to celebrate. According to UNICEF, the United States has one of the highest child poverty rates in the developed world—and the fact that 46 million Americans are receiving food stamps (compared to only 17 million in 2000) demonstrates that Wall Street’s profits certainly aren’t trickling down to Main Street. Even when the news seems good on the surface, one needs to read the fine print. The Bureau of Labor Statistics’ official unemployment rate fell to 5.5% in February (the lowest since May 2008), but that figure ignores all of the Americans who have been out of work for so long that the federal government pretends they no longer exist and the fact that many of the jobs being created are low-wage service jobs.
Between the loss of millions of American manufacturing jobs, outsourcing, neoliberal trade agreements, growing inequality, low interest rates (which make it much more difficult to save), and the lingering effects of the economic crash of September 2008, serious damage has been done to the American working and middle classes. And unless the U.S. changes course economically, the worst may be yet to come.
Below are five things that could drive even more nails in the coffin of the American middle class.
1. The Trans Pacific Partnership, a.k.a. “NAFTA on Steroids”: The “Giant Sucking Sound” Could Get Much Louder
1992 presidential hopeful Ross Perot was quite prophetic when, in the early 1990s, he warned that the North American Free Trade Agreement (NAFTA) would result in a “giant sucking sound” of American jobs leaving the country. Perot is a right-wing conservative, but like Henry Ford in the 1930s, he was smart enough to realize that when Americans are making less money, they have less money to spend and pump into the economy. And just as Perot predicted, NAFTA has encouraged outsourcing and has been terrible for American workers. In 1970, 25% of the American workforce was in manufacturing; by 2005, fewer than 10% was—and U.S.-based manufacturing will continue to shrink if the Trans Pacific Partnership (TPP) is passed. Opponents of the 12-country TPP (which has been called “NAFTA on steroids”) range from economic/political trends forecaster Gerald Celente to Massachusetts Sen. Elizabeth Warren to economist Robert Reich, who describes it as a potential “disaster” and has warned that it will “allow American corporations to outsource even more jobs abroad.” Celente (a frequent guest on RT) characterizes TPP as a “multinational takeover” that “takes away sovereign rights of nations, and they become overruled by multinational regulations and laws. The multinationals become the rulers of your country.”
Instead of looking to Sweden, Norway or Germany as economic role models, globalist agreements like NAFTA and the Central American Free Trade Agreement (CAFTA) equate the low pay and atrocious working conditions in developing countries with “productivity.” Reich is absolutely right when he denounces TPP as “a Trojan horse in a global race to the bottom, giving big corporations and Wall Street banks a way to eliminate any and all laws and regulations that get in the way of their profits.” Unfortunately, TPP is being supported by not only far-right Republicans, but also, by neoliberal Democrats in the Obama Administration.
2. Elimination of Jobs Because of New Digital Technologies
The technology sector has become increasingly important to the U.S. economy, but if new technologies put enough Americans out of work, tech may become its own downfall. Robert Reich addressed this problem on his blog in March, noting that a variety of new technologies could result in major job losses in everything from health care to education. New health care apps and diagnostic software, according to Reich, could put an abundance of health care professionals out of work; similarly, new online courses and online textbooks could render many educators jobless. And as Reich warns, “Most of us will have less and less money to buy the dazzling array of products and services spawned by blockbuster technologies because those same technologies will be supplanting our jobs and driving down our pay……The economy toward which we’re hurtling—in which more and more is generated by fewer and fewer people who reap almost all the rewards, leaving the rest of us without enough purchasing power—can’t function.”
3. Union-Busting Continues to Accelerate
One thing non-union members often fail to comprehend is that when unions were really strong in the U.S. back in the 1950s and 1960s, they not only benefited union members themselves, but also, promoted a more positive workplace culture in general. But union membership has plummeted in recent decades in the U.S., where a mere 6.6% of private-sector workers belonged to unions in 2014 (according to the Bureau of Labor Statistics). And if union-bashing Republicans have their way, America’s unions will become even weaker. In 2015, a disturbing precedent has been set in Wisconsin, where Republican Gov. Scott Walker recently signed into law legislation that bans private-sector unions from requiring members to pay union dues. Walker, in the past, claimed that his union-busting tactics were only aimed at public-sector unions, but he obviously has a problem with unions in general—and thanks to Walker and his supporters, Wisconsin has now become a northern “right to work for less” state. The U.S.’ anti-union “right to work” laws are especially common in the Republican-dominated southern states, whereas in northern cities like Chicago, Philadelphia, Pittsburgh and Cleveland, unions have been fighting the “right to work” model. But Walker and his fellow Republicans have managed to create a “right to work” climate in a Democrat-leaning northern state that hasn’t gone GOP in a presidential race since Ronald Reagan’s reelection in 1984.
4. The Privatization of Medicare and Social Security: A Recipe for Disaster
When Medicare came about under the Lyndon Johnson Administration in 1965, a public health insurance program for Americans 65 and older was implemented. In the past, Medicare had more bipartisan support than it does now: as right-wing as he was, President Richard Nixon actually expanded Medicare in 1969 and 1972. But these days, Tea Party extremists in the GOP are going after Medicare with a vengeance, calling for a privatized voucher program that would replace the current Medicare system. Instead of enrolling in traditional Medicare, seniors would use vouchers to purchase private insurance. Health care for older Americans is going to get a lot more expensive if Republicans’ voucher program becomes a disastrous reality, and undermining social security certainly won’t make the lives of seniors any easier either.
Social security was one of the most important reforms that came out of President Franklin Delano Roosevelt’s New Deal during the 1930s, and it has served the U.S. well as a government-operated program. FDR knew how volatile Wall Street could be—the crash of 1929 was a fresh memory when he signed the Social Security Act of 1935 into law—but those who forget the painful lessons of history are condemned to repeat them. During his disastrous presidency, George W. Bush proposed privatizing social security—and the crash of September 2008 (easily the U.S.’ worst financial calamity since 1929) demonstrated that social security was the last thing Wall Street should be allowed to gamble with. Nonetheless, the extreme right continues to show its disdain for the 80-year-old program. The Club for Growth has repeatedly called for privatizing social security, and Republicans in Congress continue to demand social security cuts. As Sen. Elizabeth Warren has warned, GOP cuts to social security could “threaten benefits for millions and put our most vulnerable at risk.”
There is nothing wrong with Americans supplementing their retirement nest egg with a private-sector IRA (be it a Roth, traditional or SEP), but that is something to have in addition to social security—not in place of it. And if Republicans succeed in letting Wall Street play Russian roulette with social security, it will cause enormous hardship for America’s already troubled working class.
5. Savvy Economic Voices Warn: Another Major Banking Crash Is a Strong Possibility
Millions of Americans have yet to recover from the financial meltdown of September 2008, and one can only imagine the type of damage that another event of that magnitude would do to America’s working class. All the celebrating on Wall Street does not mean that the U.S.’ megabanks have become any less bloated or reckless than they were in 2008. Quite the contrary—the bailouts, corporate welfare and lack of financial reform that followed the Panic of 2008 only encouraged the U.S.’ megabanks (including Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Goldman Sachs) to grow much larger. Wells Fargo, for example, had $1.69 trillion in assets in 2014 compared to only $609 billion before 2008. As author Nomi Prins (a former Goldman Sachs/Lehman Brothers employee who has become a fierce critic of Wall Street) notes, JPMorgan Chase now controls 43.8% of the U.S.’ bank trading assets—and she is correct in asserting that at this point, the American financial system has way too much “consolidation” for its own good. Prins recently warned that “we are living with the instability of a system that is supported by central bank maneuvers and the leveraging of them, not by anything organic or independently sustainable.” And Prins is not the only one who is worried: Reich has warned that a repeat of the 2008 fiasco “is not unlikely.”
The banking consolidation that Prins is so critical of would not have come about had it not been for the repeal of the Glass-Steagall Act of 1933, which mandated a strict separation of commercial and investment banking. The repeal of Glass-Steagall helped paved the way for the Panic of 2008, and Elizabeth Warren has been a strong proponent of a “new 21st Century Glass-Steagall Act.” Wall Street banksters are vehemently opposed to that idea and have plenty of lobbying dollars to fight against it. But unless such legislation comes about, Wall Street will remain dangerously volatile—and American workers will continue to be threatened by the possibility of a financial crisis that is as bad as the Panic of 2008 or even worse.