The Wall Street bail out has preserved the wealth of the nation’s wealthiest. At the same time, the vast array of federal subsidies for welfare, housing, health care, food stamps and other benefits has sheltered the nation’s poor from the ensuing economic catastrophe.
The middle class is bleeding to death as it supports both, and there is no end in sight.
Unemployment continues to soar. Mortgage defaults have extended beyond the subprime market into the ranks of the formerly credit worthy but newly unemployed middle class.
There will be no turn around anytime soon. Manufacturers now report that the drop in factory orders will reduce already anemic U.S. manufacturing by 12% this year, far worse than the 8% drop forecast only three months ago.
America desperately needs jobs: to create taxpayers, reduce unemployment and welfare, create a demand for American goods and services and more jobs, and begin to make a dent in a federal deficit that has mortgaged the future of the nation’s young people.
But there is no real focused and funded effort to create those jobs. The so-called stimulus bill has had no effect on unemployment, and the administration is reduced to making spurious claims about millions of new jobs that no one can document.
What is going on? The shorthand answer is that the rescue of Wall Street has effectively bankrupted the federal government, and there is no money left to fund infrastructure or revitalize American manufacturing to the level required to put America back to work.
But the more important understanding is that both major political parties have failed. The historic Republican and Democratic Parties are equally dead and gone, and the United States is now effectively governed by an alliance of the old Republican guardians of corporate profit and the new Democrats whose careers and lives have been in the interconnected educational, financial and political institutions of urban America.
Neither has any real interest in the great middle class of suburban America. Each has been captured by interest groups of the right or left and both have been subverted by Wall Street.
This has been coming for a long time.
While equally self righteous social conservatives and social liberals duked it out in the headlines and on talk shows, a sea change in the American economy went largely un-noticed.
After rising in every decade and every generation since the 1830’s, and creating the surplus and investment which sustained the creation of a vast and prosperous middle class, wages began to fall in the U.S. in the mid 1970s. They are falling now at the fastest rate in fourteen years, with no end in sight.
The Reagan administration, with substantial support from Democrats in Congress locked into place an economic model that elevates corporate profit above almost every human need, the so-called “trickle down” economics.
The innate disposition of corporate owners and investors to depress wages in order to increase profits became the policy of the U.S. government. This led to the elimination of good paying jobs, the decline of U.S. manufacturing and the transformation of the United States from a nation of producers into a nation of consumers.
As corporate profits rose, those who benefited of course began to spend more to protect their advantages, and the lobbing of succeeding congresses and administrations by these interests became a growth industry.
No industry spent more and more lavishly than the finance industry: in the decade between 1998 and 2008, more than $3.2 billion to lobby the federal government, apart from campaign contributions.