Occupy Wall Street protesters march through the streets of lower Manhattan… (Carolyn Cole, Los Angeles…)
Occupy Wall Street and its coast-to-coast spinoffs captured the headlines in 2011, but the economic debate it helped trigger should reverberate deep into 2012.
That's the debate over the future of the American middle class. Rarely has its economic plight been an explicit issue in a presidential election, but candidates on both sides of the partisan divide are poised to make it the centerpiece of their campaigns in the coming year.
President Obama, delivering a theme-setting speech December 6 in Osawatomie, Kan., called the coming campaign "a make-or-break moment for the middle class." Mitt Romney, the once and possibly future Republican front-runner, consistently identifies the middle class as the chief victim of Obama's economic policies.
Yet so far the lionization of the middle class has been largely rhetorical. The year just past was one in which the stagnation of income and wealth for the great majority of Americans continued — indeed, bit so deep that it helped fuel the Occupy movement taking as its constituency the "99%," those left behind by the continued gravitation of economic bounty toward the top 1% of U.S. taxpayers.
With the coming election, however, the year ahead offers voters, business leaders and politicians an opportunity for a joint debate over the fundamentals of capitalism in America. As the president put it in Kansas: "What's at stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home, secure their retirement."
Those four goals have been undermined since the 1970s by the unequal distribution of the wealth created largely by the American worker's boundless gains in productivity. Until the crash of 2008, which still inflicts an unaccustomed level of pain on the middle class and the working class, the crippling of American upward mobility was a phenomenon little noticed or swept under the rug. In the last year it has come out of hiding, a position it is likely to keep occupying over the next ten months.
That's encouraging, because you can't discuss income inequality without touching upon many of the other fundamental issues confronting the U.S. economy: how many jobs we create, and of what quality; how we should support the elderly, the young and the sick; and how we should invest in the future through infrastructure construction and improved access to higher education.
That all ties in to the dimming economic hopes of America's youth — the college-educated and unskilled alike — which have perhaps the most profound long-term consequences for the nation's economic health. If young people don't get good jobs with good prospects, they put off marriage, they don't buy homes, they don't shop for appliances and furniture. In short, they reinforce the stagnation of the consumer economy.
Today's economy may be far from the worst to confront an incumbent president and his challenger — signs of recovery, albeit still weak, have emerged in recent months — but seldom has a campaign begun with so many basic policy questions unresolved.
The "uncomfortably long" list of uncertainties outlined at a recent economic outlook conference by Richard Curtin, director of the University of Michigan's consumer survey, includes whether Washington's impasse over taxes and spending will be broken, whether tax cuts for the middle and working classes will be continued and the Bush tax cuts allowed to expire for the wealthy, and whether pump-priming to create jobs or deficit reduction and resulting austerity will be paramount. If voters don't demand that the presidential contenders address these questions, we will have wasted the opportunity of our lifetimes.
There isn't any question that income inequality has increased over the last three decades or so, despite a conservative campaign to discredit the notion. A straightforward description of the trend was issued in October by the bipartisan Congressional Budget Office, which determined that for the highest-income 1% of the population, average after-tax household income almost quadrupled from 1979 to 2007, while income for the 60% of Americans in the middle of the scale grew by just over one-third. (Both figures are adjusted for inflation; in 2007, that middle group comprised households with earnings between about $15,000 and $70,000.) As a consequence of this trend, the CBO says, the share of after-tax household income collected by the top 20% of income earners grew to 53% in 2007 from 43% in 1979. Everyone else fell.