By LEROY GOLDMAN
Columnist

Published: Sunday, October 13, 2013 at 4:30 a.m.

Real crisis is plight of the middle class

President Barack Obama has repeatedly made it clear that he will not negotiate with Congress over the necessity to raise the debt ceiling. House Speaker John Boehner has repeatedly said the House will not raise the debt ceiling absent negotiations that reduce government spending and deal with our rising debt.

Both sides are dug in, and you and I are caught in the no man’s land in between. While both sides may cobble together a short-term agreement to avert economic Armageddon, that will only trigger another round of dysfunctional, dangerous infighting before the holiday season.

Although there are some out there in right-wing La-La-Land who dismiss the clear and present danger inherent in default, most Americans know it’s a risk that we dare not run. What most Americans don’t yet know is that there is a worse risk of a different kind of default we are taking and that the collective jackasses who control both ends of Pennsylvania Avenue in Washington know about, but won’t give voice to — defaulting on the middle class.

Default means a failure to act. It means neglect. It means failure to perform a legally required obligation. And that’s been Washington’s default position for years on a threat more ominous and insidious than the one we face right now on the debt ceiling. I’m talking about the death of the American middle class.

In Profit Confidential last month, Michael Lombardi called it “the elephant in the room no one wants to talk about.” He believes the middle class is on the verge of collapse. For the half-century from the end of World War II until the financial crisis that began five years ago, a vibrant middle class was the engine that drove the American economy forward. Its spending fueled the expansion of thousands of businesses, large and small. It created millions of good jobs to meet expanding consumer demand. And it enabled companies to invest in research, development and expansion to make the American economy the envy of the world.

It was a tide that lifted all boats. It’s a tide that Washington, with our acquiescence, has allowed to run out.

Seventy-six percent of all Americans live check to check, and 46 percent have less than $800 in savings. America’s second largest employer, after Wal-Mart, is a temp agency, Kelly Services! With the exception of the wealthy, the incomes of Americans are declining.

The implosion of the housing market has savaged the middle class. The delinquency rate on single-family mortgages earlier this year was 558 percent higher than the delinquency rate in the first quarter of 2005. Homeownership is at it lowest rate in almost 20 years. Median household income has declined by almost 8 percent since 2000. Sixty percent of the jobs lost in the recent recession were good-paying jobs, but almost 60 percent of the jobs created since then have been low-wage jobs. The nation has lost 56,000 manufacturing plants since 2001, and the number of Americans employed in manufacturing has dwindled from 17 million to 12 million.

Almost 50 million Americans live in poverty. About 25 million American adults live with their parents. In 2000, 17 million Americans were on food stamps, while today it’s 47 million.

A recent poll by the Pew Research Center shows a large majority of the American people believe that government policies in response to the recession have done little or nothing to help. Seventy-one percent believe the middle class has not been helped, and 67 percent believe small businesses have not been helped. On the other hand, large majorities believe government policies have helped large banks (69 percent), large corporations (67 percent) and wealthy people (59 percent).

In a recent editorial, the Detroit News stated, “After five years of wealth transfer schemes, the income gap in America is now at its widest since the 1920s, the Gilded Age. It should be evident by now that taking money from the rich to give to government doesn’t make the poor richer.”

All of this is summed up nicely by Harvard economist Michael Porter. He told CNBC’s “Closing Bell” earlier this year, “America used to be a uniquely productive, low-cost place to do business. We had an efficient infrastructure, limited regulation, and we believed in the market. This position has eroded. Regulatory costs have gone up, the legal system is more cumbersome, infrastructure is eroding and the country is falling behind on skills.”

Porter argues that these declines have forced government to make social welfare promises, like health care, that can’t be afforded because of the lackluster performance of the economy. He calls for a sustainable budget compromise, tax reform and energy independence by taking advantage of the shale revolution.

But nobody in Washington will give voice to our real problems, and they’re betting you won’t notice. Washington’s circular firing squad over the shutdown and debt ceiling is all about jockeying for position in the 2014 midterm election — 17 seats in the House and six in the Senate. It’s got precious little to do with the restoration of our economy and saving the middle class.

Since the president won’t negotiate with Congress over the shutdown or the debt limit, he’s had time to broker a powwow with Daniel Snyder, Jerry Jones and Roger Goodell. The White House has just announced that henceforth the Redskins and the Cowboys will be known as the Redpersons and the Cowpersons!

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