FOCUS ON THE MIDDLE CLASS

I’ve harped forever that the key to a robust growing economy is a simple formula. Focus on the middle class. Targeting tax cuts to the wealthy is fool’s gold, and not more than a deceitful ruse. If you want to grow the middle class with tax policies write them to reward creating jobs at the bottom and penalize large salaries at the top of the income charts. Tax cuts for a guy without a job doesn’t encourage anything, and targeting tax cuts for the upper 5% of income earners doesn’t create jobs…it just pads the bank accounts of the wealthy.

Elizabeth Warren (Chair of the Congressional Oversight Panel created to oversee the banking bailouts) wrote this past week about the shrinking middles class. She is well respected and her advice is worth paying attention to. She wrote, “In the boom of the 1960s median family incomes jumped by 33%. But the boom of the 2000s resulted in an almost-imperceptible 1.6% increase for the typical family. Wages of the average fully-employed male have been flat since the 1970s. But core expenses kept going up. By the early 2000s, families were spending twice as much (adjusted for inflation) on mortgages than they did a generation ago. They also had to pay twice as much to hang on to their health insurance. But higher housing and medical costs combined with new expenses for child care, the costs of a second car to get to work and higher taxes combined to squeeze families even harder. Even with two incomes, they tightened their belts. Families today spend less than they did a generation ago on food, clothing, furniture, appliances, and other flexible purchases.”

She goes on to say, “While the middle class has been caught in an economic vise, the financial industry that was supposed to serve them has prospered at their expense. Top executives kept their jobs and retained their bonuses. Even though the tax dollars that supported the bailout came largely from middle class families. Families understand with crystalline clarity that the rules they have played by are not the same rules that govern Wall Street. They understand that no American family is ‘too big to fail.’”

Ms. Warren is a Law Professor at Harvard in addition to serving as Chair of the Congressional Oversight Panel. She is an expert regarding public finance policy and her assessment is spot on. I know lots of us on the left are baffled at the cluelessness of the upper class to recognize that a growing middles class isn’t just good for those in the middle class but, it’s exactly what creates more wealth for the upper crust too. More customers…more business! How much easier can it be to see?

Unfortunately the sin that blinds the wealthy from learning this easy economic lesson is simply GREED. Greed leaves you completely without vision or imagination. Fortunately for us…a democratically organized government that combines the best of capitalism and socialism is the counter balance to blindness by a wealthy minority. A tax policy that will reward the creation of jobs and prohibit vulgar executive compensation can be the best medicine for curing an ailing economy and restoring a middle class that will once again leave us the envy of the world.

Everybody does better…when everybody does better!