Why Working Americans Are Scared

Conservative apologists are perplexed. They can't seem to understand why Americans are so worried about their economic struggles. After all, unemployment is down from historical highs, we haven't had a quarter of negative economic growth yet, the Dow is still high relative to prior downturns, so what's the problem?

Maybe if they actually listened to just one average American instead of figuring out ways to place the numbers in the right combination to make all look well, they'd get their answer. Hint: it has nothing to do with what they hear on the nightly news.

Ann Shea, 47, an attorney who lives in Butte, said the nation faces hardships that trump patriotism.

"The issue is, we're paying almost five bucks a gallon in gas, we're in a war we shouldn't be in, and the current administration, which is the one McCain will carry on, is just lying to the American people to get what they want," she said. "Obama's not about that."

Indeed, people are incredibly unhappy and worried about their prospects for the future. And it's pretty simple to understand why, if you actually interact with this economy instead of spin numbers about it. Staple items cost more, and wages remain stagnant. Health care is out of reach. Junk mortgages are re-setting and threatening millions with foreclosure. A car is more of a fiscal liability than ever. Suburban housing developments and shopping centers are becoming ghost towns.

In short, risk has shifted entirely in the direction of the worker and the consumer as the rich become more insulated and disconnected. The recovery from the initial Bush recession in 2001-2002 was a recovery solely for the rich and well-connected. Out of seven indicators of economic growth, only corporate profits surged from 2001-2007.

This CBPP chart from April does a great job of describing Republican Party economic policy in a nutshell. The Bush expansion may have featured sluggish wage growth, sluggish GDP growth, sluggish investment growth, and sluggish employment growth, but it also featured a terrific, tax-cut driven surge in corporate profit growth! That makes it a success by anyone's measure, right?

At the same time, the middle class has almost disappeared as stratification between rich and poor has exploded.

In recent years, the statistics regarding income disparity in America have been startling. After-tax annual income for the bottom fifth of American households inched up just 6 percent form 1979 to 2005, according to the Congressional Budget Office. During that time, income for the middle fifth of households grew by a modest 21 percent, with much of that gain caused by women in many households working more hours. Over that same period, income for the top fifth of households jumped by an impressive 80 percent, while income for the top 1 percent more than tripled, soaring by 228 percent.

The highest-earning fifth of households received 51.6 percent of the nation's after-tax income in 2005, meaning that the income of the top fifth exceeded that of the bottom four-fifths. As for the top 1 percent of households, they received more after-tax income than the bottom 40 percent, according to the Congressional Budget Office. A study that Thomas Piketty and Emmanuel Saez did based on federal tax returns found that the top 1 percent of households, averaging $1.1 million in annual income, received nearly 22 percent of all reported income in 2005, up from 9 percent in 1980. That income shift helped create the greatest level of inequality since the Roaring Twenties.

The leading economic indicators cited most often by Republican hacks and Bush apologists often don't capture this dangerous situation, which is why they sound more and more out of touch. They look at the Dow and corporate growth while ignoring the growth in real wages for the middle class. They look at inflation while taking away food and fuel prices, making it look far more stable. They will do anything to preserve those gains for the super-rich and the losses for the shrinking middle class.

If you're a working American, you know all this intuitively, and all this talk about how "there is no recession" and "the fundamentals of the economy are strong" and "it's the Democrats' fault for doomsaying about the economy" just make you angrier. In a superb op-ed for the Los Angeles Times, Peter Gosselin explains how the risk shift has engendered this uneasiness:

Working Americans and their families arrived on the doorstep of the current economic crisis uniquely ill-equipped to cope with its consequences. Rather than having gained a financial protective coating during the period of growth that preceded it, working families up and down the income spectrum were actually nudged further out on an economic limb and therefore were primed for being picked off once problems emerged.

It's not that the growth of the last generation wasn't real; it was. The U.S. economy doubled in size between 1980 and last year. It's not that all of the benefits of the just-past era went to those at the top (although a very substantial chunk did); millions upon millions of Americans prospered right along with the super-rich.

But the prosperity we enjoyed was purchased at a price of diminished security for our families and ourselves. Even as our incomes went up, economic risks -- the costs of being laid off, of suffering a work-stopping illness or of a catastrophe like a house fire -- that were once largely borne on the broad shoulders of business and government were being shifted onto the backs of ordinary families, from the working poor to the reasonably rich.

That means that even before the current crisis struck, families were primed to take steeper financial falls than in the past, ones from which they'd have a harder time recovering. And now that trouble is upon us, they are falling in greater and greater numbers.

What we're really talking about is the unmaking of the New Deal, and it pre-dates this President, going back to failed conservative policies that refused to limit consumption, rein in health care costs or address inequality. Conservatives have used federal laws like ERISA to allow businesses to deny benefits to employees, in contravention of the law itself. They have sat by idly as insurers in the health and homeowner fields made their customers responsible for more and more of the burden of what the insurance is supposed to cover. They have cheered on the shift from defined-benefit plans like pensions to defined-contribution plans like 401 (k) retirement accounts which are subject to the whims of a volatile market. They have shrunk the amount of available federal grants for college education, leading to more borrowing and an entire generation of college students sunk with debt.

Indeed, similar changes have occurred in just about every corner of Americans' financial lives.

Some argue that in the new, globally competitive economy, U.S. business and government simply cannot afford to provide the kinds of protections against financial peril that they used to. Perhaps not. But that doesn't mean that we should automatically shunt the job of bearing these dangers to families alone. And it most assuredly doesn't mean that we should pass along the task without letting people know they've just been assigned the job of bearing a big new load of risk.

But that's essentially what has happened. As a result, working Americans and their families are operating on an economic high wire -- only one or two missteps from a steep financial fall. Little wonder people are so bleak about their prospects now that times are tough.

People know this without seeing the numbers from economists - they feel it in their daily lives, and they acutely understand the notion of their world in peril. Americans not in charge of major corporations are starved for some economic leadership and a glimmer of hope that the government cares about what happens in their lives. That's the choice in this election.