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Life Guard in Chief

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In announcing his Middle Class Task Force, to be headed up by that "Regular Joe" Biden, the president repeatedly used the word "poor."

This was strange.  Historically, there has been a distinction in America between the middle class and the poor.

But of course, that is changing.

Many millions of Americans who were middle class are suddenly poor. Many more are on the way, a tidal wave of misfortune. The president has determined that this must be his first priority, and that is not unreasonable.

But the president just can't call all these Americans poor and get away with it. The news might be unsettling. So he is re-defining the middle class---down.

From the 1830's through the 1970's, in every decade and every generation, the wages of Americans rose--as measured against inflation and the actual costs of living. While taking in tens of millions of immigrants, the people of the United States created the greatest and most broadly shared prosperity the world has ever known.

It was a stunning and unmatched achievement.

As wages rose, wealth was multiplied by savings and investment. By the 1970's, middle class Americans had substantial resources. But beginning in the 1970's and continuing today, with only a brief respite in the 1990's, wages have been falling in the U.S. They are falling now at the fastest rate in fourteen years.

Over that time, American parents have worked ever more hours and taken on enormous personal debt to make ends meet. This has eroded both families and the assets of the middle class--the resources that formerly propelled that expanding prosperity.

With the Wall Street bail out, a colossal part of the remaining assets and resources of the middle class was taken from them, and more and enormous debt was added in its place. This will accelerate the decline of the prosperity of the middle class, as it will have fewer resources with which to build on the present and invest in the future.

The president sees the tidal wave coming and is doing what he can to minimize the damage. But the "Stimulus Package" working its way through the congress is not much of a stimulus, and you wonder why he is so eager to sign it.

As the Washington Post reported, of the $30 billion devoted to highway spending, only $4 billion will be spent in the next two years. Less than $3 billion of the $18.5 billion for renewable energy and less than half the financing for school construction will be spent by 2011. In all, nearly $290 billion in spending is pushed off into 2011 and beyond.

But the legislation does provide for substantial new entitlements--subsidies for the new poor for health care and education--and that addresses the president's priority.

These new subsidies will be well received by the recipients, whose numbers will continue to grow, and will all be in place quickly, well before the 2010 elections for congress and the president's re-election in 2012.

Smart politics, poor policy, because these new subsidies will exacerbate the decline of the middle class.

According to an analysis of the Tax Policy Center, the top two federal tax brackets include about 147,000 families--the rich of America. If each was taxed an additional $1 million--not likely to happen--the $147 billion raised would not pay even for the new entitlements, let alone begin to lift the debt burden placed on Americans by the Wall Street bailout.

Nor will the bills be paid by the more than one half of all American families that pay no federal income taxes, whose numbers will grow.  I wonder how many Americans will not be able to afford to pay their taxes this year.

These new subsidies will be paid for by more debt on the backs of the shrinking, tax-paying middle class.

Compassion dictates that the millions of middle class Americans now being pushed into the ranks of the poor must have some relief--compassion and politics.  But when they bailed out Wall Street, the president and Democrats in congress tied their own hands. There isn't any money left. 

They also tied an anchor around the necks of the middle class.

"The White House Task Force on Working Middle Class Families" is meant by its artful title to suggest a concern for the threatened middle class, and to stake out the turf over which the next elections will be fought. 

But Life-Guard-In-Chief Obama has a choice to make. He can go on saving Wall Street, try to save the Democrats in congress from middle class wrath, or save the American middle class.

By the time of his first State of the Union address, often used by presidents to unveil their own and the nation's agenda, he will make his choice.   
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http://www.publicbankingpa.org

Author of the forthcoming novel "Pursuits of Happiness," a director of the Public Banking Institute and chairman of the Pennsylvania Project. Mike is an international transportation and logisics executive with broad experience in U.S. government (more...)
 

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Hot doggie there's that old thesis/antithesis/... by William Whitten on Thursday, Feb 5, 2009 at 4:04:52 PM