Until now, the top 1% has appropriated to itself the benefits of the country’s economic growth, while the middle class stagnated. While making the tax code more regressive, they wealthy have also cut programs that helped people out of poverty and into the middle class. In part they rich were enabled by the American middle classes’ dreams of moving up. Particularly during the booms, entering the top 10% seemed just one stock pick or house flip away for many people, so with a little luck that low-upper bracket could soon be theirs. Since the first government programs cut helped move poor people into the middle class, cutting them did not hurt already middle class Americans. There was always a racial and ethnic component to shutting down entry into the middle class that the politicians subtly played off of.
That was the old class warfare. It unfolded so slowly that for years it just seemed coincidence that the rich always won and the middle class always lost. Even then, the middle class was at least running in place and not losing ground, it just wasn’t gaining. The rich were getting more, but the middle class remained stable and reasonably secure in their ability to remain in the middle class, and they had reasonable confidence that their children and grandchildren would also enjoy middle class status. That is what made it a class – a status that could be maintained for your lifetime and passed along to your descendants.
Now everything that defined the middle class is being dismantled. In America, you are middle class if you have a white collar job requiring a college education, or a union blue collar job, own your own home, are secure in retirement and able to pass along at least a little something to your kids. It’s pretty much what most of us grew up expecting.
With the Ryan budget, and the radical actions Republicans governors are taking in the various states, the GOP is destroying the foundations of middle class security and its ability to ensure that middle class children can become middle class adults. Starting with the land grant colleges of the nineteenth century, public schools, the GI Bills and student aid, the state and federal governments have built the middle class through access to education. When I attended the University of California, a world class education cost $750 a quarter in in-state tuition. My father was the first in his family to attend college and the GI Bill paid for it. I hesitate to think of the state of education and student aid in ten years, when my kids are ready for college, if Paul Ryan has his way.
The Ryan budget put a fear into me, for the very first time in my life, that in retirement I could go broke from medical bills. This is a real fear for those of us on the downside of the baby boom who are not grandfathered into Medicare as we know it. It is also a fear for those in Medicare, or soon to be, because they would be one line of legislation away from being swept into fending for themselves in the insurance market – where insurers will not fall all over themselves to offer good coverage at reasonable prices to eighty-year old diabetic cardiac patients.
It is so much more than the “safety net” that is currently being lost. The continued fallout from the housing bubble/mortgage crisis is going to end the 30 year mortgage for good. Along with the bottomless cup of coffee, the 30 year mortgage is one of America’s great contributions to civilization. The 30 year mortgage exists because of Federal support and regulation. The 30 year mortgage turned America into a nation of homeowners. It also turned every home into a piggy bank where each mortgage payment represented a deposit, and this increasing equity provided an emergency fund, a college fund, retirement savings and the ability to pass something along to the next generation. Think what losing all of that will mean to what we now think of as the middle class.
Without home-ownership, retirement security and college education, what then is left of the middle class?
The effect of all these changes cumulatively ending the middle class as we know it is not an accident. As they say about software – this is not a bug, but a feature. In some of my next posts I will look at why changing the nature of America’s class structure (what we lulled ourselves into thinking was a practically classless society because the middle class seemed to embrace almost everyone) is not a byproduct of what is happening, but the purpose of what they are doing.
The cumulative effect of all of these changes is not simply that millions will be moved out of the middle class, it is the end of the middle class as we have known it all of our lives. There simply will not be a middle class – there will be haves and have not’s. It will not be the America we want or knew.