News, notes, and observations from the James River Valley in northern South Dakota with special attention to reviewing the performance of the media--old and new. E-Mail to MinneKota@gmail.com

Wednesday, June 1, 2011

Attacks on middle class insure failure of America

Former Labor Secretary Robert Reich gives a detailed explanation of why our economy is faltering and why it will continue to do so unless the policies which have destroyed the middle class for the last thirty years are reversed.  His analysis, which is a summary of testimony he has presented to a Senate committee, makes clear why the anti-labor policies and actions of politicians such as Gov. Walker of Wisconsin can result only in the further decline of the American economy.

Reich explains the basic causes of the economic downturn:

  1. "The pay of well-connected graduates of prestigious colleges and MBA programs has soared. But the pay and benefits of most other workers has either flattened or dropped. And the ensuing division has also made most middle-class American families less economically secure."
  2. The government " slashed public goods and investments -- whacking school budgets, increasing the cost of public higher education, reducing job training, cutting public transportation and allowing bridges, ports and highways to corrode."
  3. The government "shredded safety nets -- reducing aid to jobless families with children, tightening eligibility for food stamps, and cutting unemployment insurance so much that by 2007 only 40 percent of the unemployed were covered. It halved the top income tax rate from the range of 70 to 90 percent that prevailed during the Great Prosperity to 28 to 35 percent; allowed many of the nation's rich to treat their income as capital gains subject to no more than 15 percent tax; and shrunk inheritance taxes that affected only the top-most 1.5 percent of earners. Yet at the same time, America boosted sales and payroll taxes, both of which took a bigger chunk out of the pay the middle class and the poor than of the well off

Reich explains how the middle class coped with these changes in the policies working against it:


  1. "Women move into paid work...But the vast majority of women who migrated into paid work did so in order to prop up family incomes as households were hit by the stagnant or declining wages of male workers."
  2. "Everyone works longer hours."
  3. These factors did not suffice and made people "Draw down savings and borrow to the hilt." 
 The circumstances of the fall of the middle class are, of course, created by political decisions.  With the GOP devoted to the subjection of the middle class and the creation of a plutocracy, those policies which obsessed about the size rather the performance of the government and operated on trickle-down economics will keep the U.S. plunging downward as long as they prevail. 

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