Raise a glass to the longest economic expansion in modern American history. A full decade has passed since the end of the last recession, in June 2009, and the economy continues to grow. As of Monday, the current expansion surpassed the previous record for uninterrupted growth, set between 1991 and 2001. But this time around, no one is accusing Americans of irrational exuberance: These good times don’t feel particularly good. Economic growth over the past decade has been slow and fragile, and most of the benefits have been claimed by a small minority of the population. The sense of disappointment is more than a feeling. Through the first quarter of 2019, the nation’s gross domestic product had increased by 25 percent during the current expansion. Between 1991 and 2001, economic output expanded by 42 percent. Between 1982 and 1990, output increased 38 percent. And between 1961 and 1969, output grew by 52 percent.
The distribution of the gains is even less satisfying. Truck drivers still earned, on average, slightly less in 2018 than in 2009, after adjusting for inflation. Executive compensation, by contrast, went up, up and away. Chief executives of companies in the S&P 500 stock index — a list that includes most of the nation’s largest corporations — made an average of $14.5 million in 2018, increasing by $5.2 million in the past decade, according to data compiled by the A.F.L.-C.I.O. The wealthy have also reaped most of the gains from rising stock prices. The least affluent 70 percent of American households had less wealth at the end of 2018 than at the beginning of 2007, according to the Federal Reserve. The top 30 percent of households saw at least some increase, but the big gains were heavily concentrated at the very top, in the hands of a small proportion of extraordinarily wealthy families. This inequality of prosperity has become a defining issue in the nation’s politics. President Trump ran on the promise that he would restructure the economy to revive employment in mining and manufacturing. Democrats vying to run against the president in 2020 are offering their own prescriptions for economic revival — and speaking of the plight of American workers in language usually reserved for recessions.
That rhetoric contrasts with the slow but steady improvement in economic conditions over the past decade. The unemployment rate is bumping along at the lowest levels since the 1960s; wages have started to rise more quickly, particularly for low-wage workers. But the fact that it took so long to get here is a big problem for many American families. While unemployment is low, the slow pace of the recovery means that the average rate of unemployment in a given month during the past decade was a full percentage point higher than during the 1991-2001 expansion and almost two points higher than between 1961 and 1969. There is also reason to worry that America has squandered the opportunity for a more prosperous future. During periods of economic growth, governments can take advantage of swelling tax revenues to improve infrastructure, invest in education and fund research. Companies can plow profits into new products and markets. But over the past decade, both public and private sectors have largely refrained from investing. The government has handed out tax cuts while companies have handed out dividends and repurchased shares. In effect, they’ve chosen to distribute profits among already wealthy Americans rather than develop the intellectual capital and equipment that could increase growth in the decades ahead, as investments in public universities, highways, fundamental scientific research and satellite networks did in the past.
Another result of the Trump administration’s tax cut is that federal deficits, which usually shrink during periods of economic growth, are on the rise. That leaves less room for the government to respond to a downturn by cutting taxes or by increasing spending. And the Fed cannot easily ride to the rescue: It has kept rates low to extend this fragile expansion, leaving little room to cut rates. The end of an expansion, like the death of a star, is visible only after it happens. It is possible the economy will continue to grow for years, giving policymakers a chance to do better; long-lived expansions have become increasingly common across the developed world. It’s also possible that the analysts predicting a recession next year — there are always analysts predicting a recession next year — will turn out to be right. So enjoy this lackluster expansion while it lasts. What comes next may well be worse.
Donald Trump promised to champion “the little guy,” those “forgotten” Americans who struggle to make ends meet. Unlike other Republican presidents, these voters are an important part of his base. “The composition of the Republican party has shifted significantly over the last decade to non-college whites,” observed Public Opinion Strategies, a leading Republican polling firm. That has accelerated under Trump. The president is feeding them rhetorical red meat, and he sides with much of this constituency on social issues. But on economic policies — the stuff that helps make ends meet — Trump has forgotten these folks. It starts with his tax cut, weighted overwhelmingly to benefit corporations and wealthy individuals like Donald J. Trump. The administration and congressional tax writers insisted it would generate an economic boom that would trickle down and create a surge in wages for working class citizens.
It hasn’t happened. A recent study by the nonpartisan Congressional Research Service found “ordinary workers had very little growth in wages” last year. This affirmed early projections by the Congressional Budget Office. Most of those small gains will be wiped out by big tariffs that Trump has slapped on imports, particularly from China. These disproportionately fall on working- and middle-class families who spend a much larger share of their disposable income on affected goods. The conservative-leaning Tax Foundation has estimated these levies will cost the average middle and lower-middle income family $146 a year. That’s chump change to the affluent, but not to a family making $50,000 a year.
The Trump health care policies have hit workers hard, though some of the more onerous initiatives have been thwarted by Congress. Obamacare’s health insurance subsides and protections for people with pre-existing conditions primarily affect those not poor enough to qualify for Medicaid or old enough to be eligible for Medicare. Trump repeatedly insists, as recently as last weekend, that he always sought to protect coverage for those with pre-existing conditions. That’s not true. He is suing to overturn the entire Affordable Health Care Act — and the only major Republican alternative would dilute protection for those with pre-existing conditions. The president’s de-regulatory policies, while saving a few jobs, hurt many of those without means.
There are numerous examples, many overturning Obama policies; a few will illustrate. Take for-profit colleges. The Obama administration cracked down on schemes in which as many as 800,000 working- and middle-class students were promised unrealistic career prospects while running up huge bills; many were defrauded, all had unaffordable debts. The rules shut down some of these scams. Under Trump these rules are either being rolled back or simply not enforced, says James Kvall, president of the Institute for College Access and Success, which does research on higher education affordability. “They are going to leave hundreds of thousands of students with debt that they will be unable to pay.”
We Need Answers!
Since Trump & his party have shown no inclination towards trying to fix things, our focus shifts to the Dems in examining if their proposals can repair the structural flaws inherent in our uneven economic system. We have rampant income/wealth inequality that has defined our modern capitalist system which needs addressed, not ignored. What Dems should aspire to is building a solid economic foundation where citizens from all abilities & backgrounds can rise up through their own efforts, not just survive on government handouts. The investments our government does make to those in need should help facilitate them leading productive lives, providing the means to achieve upward mobility & allowing the benefits of economic growth to be directed/shared more among the working class.
So while the GOP is accusing Dems of proposing socialism, what the Dems should strive for is not a socialist structure, but rather a more equitable society where millions of workers have a legitimate opportunity to work towards earning their own way. We might be in an economic recovery by definition, but it’s been no recovery for about half the working families. I do believe in free market capitalism, which is certainly preferable to the traditional definition of socialism, but when the disparities among the people have become so glaring, some sort of smart intervention is required. To what form that takes, it’s why we need to listen closely to the candidates & their proposals. Here are excerpts pulled from nytimes.com/2019/07/01/
What I’m seeing are three fairly distinct claims. First, that the party is endangering its electoral prospects. Second, that the party is being fiscally or economically irresponsible. Third, that Democrats are unfairly proposing to redistribute income from those who create wealth to those who don’t. So you should know that the first claim is probably wrong, the second is definitely wrong, and the third ignores the extent to which we already do a lot of redistribution in this country — with Republican voters some of the biggest beneficiaries. On the politics: Politicians and pundits alike tend to have a lot more contact with the wealthy than with ordinary voters, and often seem to imagine that the priorities of the 1 percent — keeping top tax rates low, cutting “entitlements” — actually resonate with the general public. But polling overwhelmingly shows the opposite: Voters want to raise taxes on the rich and expand government social programs.
In moving to the left on taxes and spending, then, Democrats are actually moving toward voters’ preferences, not away from them. Yes, Republicans will try to demonize their proposals, but they would do that in any case. Remember, they called Barack Obama, with his incrementalist policies and willingness to consider Medicare cuts, a socialist, too. In fact, the best argument against “Medicare for All” skeptics like me, who worry how voters will react to proposals to eliminate private insurance, is that Republicans will scream about a government takeover of health care — and Fox News viewers will believe them — whatever you do. On fiscal and economic responsibility: Nobody who endorsed the 2017 tax cut has any right to criticize Democratic proposals to spend more on things like child care. That tax cut, after all, appears likely to add around $2 trillion to federal debt — with around a third of that going to foreigners. Meanwhile, the promised surge in business investment is nowhere to be seen.
At the same time, there’s a very good case for arguing that Democratic proposals would have economic as well as humanitarian benefits. Support for child care, for example, would free more women to enter the paid work force — where they would pay taxes that would offset some of the cost. And the children benefiting from that support would eventually become healthier, more productive adults. In other words, while progressive Democrats are mainly arguing for greater social justice, they can also make a much better case than conservatives ever could that their proposals would help the economy and at least partly pay for themselves. Last but not least, if your view is that the progressive agenda is morally wrong, that people shouldn’t receive more in government benefits than they pay in taxes, you should be aware how many Americans are already “takers,” “moochers,” whatever. In fact, we’re talking about a vast swath of the heartland that includes just about every state that voted for Donald Trump.
Record-Setting Duration for the Current Economic Recovery?
That means nothing to the millions of families under financial duress who still haven’t recovered from the Great Recession. And for the many living paycheck-to-paycheck who don’t have the money to pay bills when an unexpected expense comes up, this has not been a real recovery or great economy, since the benefits of growth have eluded them & gone to the top. To help this vulnerable population whose economic status are stuck in place, this is largely what the next presidential election will be all about. And believe me when I say the Trumpian status quo won’t do, as explained in these excerpts from washingtonpost.com/business/
But this expansion has been weaker and its benefits distributed far more unevenly than in previous growth cycles, leaving many Americans in a vulnerable position. This is a “two-tier recovery,” said Matthew Mish, head of credit strategy at the investment bank UBS. About 60 percent of Americans have benefited financially, he said, while 40 percent have not. The 40 percent — which Mish calls the “lower tier” — have seen paltry or volatile wage growth, rising expenses for housing, health care and education, and increased levels of personal debt. They tend not to own homes or many stocks.
In discussions with 30 Americans unable to pay all of their bills, a clear pattern emerged: Most were able to eke by until they faced an unexpected crisis such as a job loss, cancer, car trouble or storm damage. The extra expense caused them to get behind on their bills, and they never fully rebounded. Economists fear such precarious financial situations put many Americans at risk if there is even a mild setback in the economy, potentially setting up the next recession to be worse than anything in recent history except the Great Recession. “So many Americans are living paycheck to paycheck,” said Signe-Mary McKernan, vice president of the Center on Labor, Human Services and Population at the Urban Institute. “We are headed toward a political crisis, if not an economic one.”
Their vulnerability is due to a confluence of factors. First, the average American family has yet to recover fully from the 2008 financial crisis, the Federal Reserve found, leaving half the nation with a diminished cushion to handle surprise expenses — or the next downturn. The bottom half has less wealth today, after adjusting for inflation, than it did in 1989, according to Fed data through March of this year. While wage growth has accelerated in recent months, especially for the lowest-paid workers, families who have struggled for years have a ways to go to return to solid footing. Half of U.S. jobs pay less than $18.58 an hour and more than a third pay less than $15, which makes it difficult to save or invest for a better future.
Trump and his team argue that a strong economy is lifting more and more Americans up financially, including blue-collar workers, the formerly incarcerated and minorities. In contrast, Democrats are calling for major expansions of government programs to address inequality. How to help the economically vulnerable is likely to be a key debate in the 2020 race. “Just because folks on Wall Street think things are fine doesn’t mean most Americans feel like things are fine,” said Ray Boshara, director of the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis. “When every day is a rainy day for millions of families, things are not fine.” To get by, Americans have borrowed heavily in recent years. Total U.S. household debt is now $13.7 trillion, surpassing the 2008 peak in dollar terms, according to the Federal Reserve Bank of New York. The surge in debt this time around is for cars and college, not mortgages.
An Insidious Myth
This sums up the reality of our current economy that Trump & his alternate universe don’t want us to know, as posted here from dailykos.com/stories/2019/7/7/
A major problem with all news polls is that they are operating under a major assumption which is patently false–that of the strong economy. As long as our economy stays strong, we’re told, trump has a path to re-election. But the strong economy is actually just a myth. You can tell it’s a myth by looking at two significant factors. First, according to a 2017 report by employment website CareerBuilder, nearly 80% of American workers (78 percent) say they’re living paycheck to paycheck. In a strong economy that wouldn’t be the case. It’s recommended that people save at least 6 months’ living expenses to get them through a rough patch if needed. But 80% of us don’t have that cushion anymore. Second, according to the Federal Reserve’s latest numbers, the average American household carries $137,063 in debt. In a strong economy, people wouldn’t have to rely on debt to make ends meet. Even worse, once mired in debt it’s nearly impossible to get out again, thanks to predatory lending rates. Which means that predatory lending companies and venture capital firms are doing quite well, thank you. Thanks to trump administration tax cuts, these entities are able to hoard even more of the country’s wealth. The justification for corporate welfare has always been that it’s good for the country. Patriotic Americans are expected to believe that multi-national corporations funded by taxpayer dollars and personal debt is a strong economy, even though 80% of us are only a paycheck away from disaster. And that is the most insidious myth of all.
It’s an Economy where the Rich get Richer, & Everyone Else just Struggles to Hang On
With this having become a system mostly benefiting the top 1% while the rest of us are stuck in the mud, it’s become so blatantly obvious that fact can no longer be refuted or ignored. Yet Trump & his party are trying hard to ignore/deny the problem exists, even to the point they justify gazillionaires becoming gazillionaires as they pay their workers slave wages. As this primary issue has gotten more attention & Americans now realize it’s a very serious problem requiring action, there are some worthwhile changes being floated around out there, including proposing fundamental adjustments to the tax code:
King of Debt
Trump’s tax cuts produced the wrong outcomes: axios.com/stock-buybacks-
Represented as a line graph, historical statistics on the public debt of the United States look like a jagged mountain range. There are peaks where the debt grew to pay for each of the nation’s wars or international conflicts, from the fight for independence to the late Cold War arms race under President Ronald Reagan. The subsequent peace dividends appear as debt-decline valleys. Major increases also occur during the Great Depression of the 1930s and the Great Recession of 2008-2009. What accounts for the current ramp-up in the debt, at a time of relative peace and steady if unspectacular economic expansion? On June 25, the Congressional Budget Office reported that, under the most politically realistic forecast, the debt will hit 105 percent of gross domestic product by 2029, a level not seen since World War II.
Obviously, federal spending exceeds revenue, as it has every fiscal year since 2002. On a deeper level, though, the explanation is that the United States is at war — with itself. It is manifestly not a shooting war such as the one between 1861 and 1865, which drove the federal debt to a then-record of just over 30 percent of GDP. Yet polarized and mutually distrustful Republicans and Democrats are engaged in a Cold Civil War, and have been for years, even before the Trump presidency. The impasse has rendered impossible the compromises and trade-offs — tax increases and spending cuts, or some combination thereof — needed to adjust the existing array of government programs to modern priorities, and to available national resources. Two such deals in centrism’s last heyday, the 1990s, helped create a balanced budget from fiscal 1998 through fiscal 2001, the first and only ones of the past half-century. In more recent years, however, politicians keep the government more or less going via short-term deals (usually increasing outlays on existing programs and priorities) and borrowing, borrowing, borrowing — to the tune of 42 out of every 1,000 dollars the U.S. economy will produce in the current fiscal year, according to the CBO.
Who fired the first shot? Certainly Republicans have demanded tax cuts and Democrats have protected every dollar of Medicare and Social Security, with near-equal ferocity. At the moment, however, Republicans seem especially blameworthy; following President Trump’s lead, they used their 2017-2018 majority in Congress to cut taxes by $1.5 trillion over the next decade, while boosting defense spending and abandoning their supposed interest in entitlement reform. Republicans claimed, as usual, that tax cuts would produce enough new economic growth to offset increased debt. The CBO says that hasn’t happened and probably won’t, but the combination of higher spending and lower taxes over the past year has goosed the economy, so Americans aren’t inclined to worry about deficits. A January Pew Research Center survey found that 48 percent of Americans said reducing the federal deficit should be a top policy priority, down from 72 percent in 2013, at the start of President Barack Obama’s second term. The decline was slightly greater among Republicans.
Out in the Country
In this article pulled from yahoo.com/finance/news/rural-
While the economy and the job market have boomed in the post-Financial Crisis period, Americans living in “distressed” zip codes — which are increasingly rural — are struggling to find stability. And their path to progress poses a “catch-22” situation, according to a researcher from the Economic Innovation Group (EIG). “Young people are kind of trapped in debt in distressed communities,” EIG Research Director Kenan Fikri told Yahoo Finance. “And they don’t really have a pathway to get out of their situation and be able to afford moving to a prosperous metropolitan area to try to turn the situation around. So it’s really in a catch-22 that individuals who are trying to advance themselves from these communities end up landing.” An EIG report, originally published in October 2018, looked at around 25,800 zip codes — 99% of the U.S. population — and compared two periods: 2007 to 2011, and 2012 to 2016. One of the primary reasons for the distressed communities being left behind, researchers found, was a lack educational attainment. Yet when residents from these distressed communities tried to bridge that gap by attending college, they ended up burdened by student debt, creating a worse situation financially.
Distress was defined through seven metrics: educational attainment, housing vacancy, unemployment levels, poverty rate, median income, the change in number of jobs, and in business establishments. “It’s really troubling, we did a casual overlay of the [Distressed Communities Index] map with that of where student debt is most burdensome and found that delinquency rates are higher in places where economic opportunity is worse,” Fikri said. Keith Orejel, an assistant professor at Wilmington College who studies rural communities, told Yahoo Finance that the “plight of rural America as much more structural. When one gets down to brass tacks, at the end of the day, rural areas never recovered from the Great Recession.” Orejel added: “If you actually look at the data, it is quite shocking. Urban and metropolitan employment today is well above what it was prior to the Great Recession, whereas total employment in nonmetropolitan areas is still below what it was prior to the Great Recession. And there is clearly just an absence of job opportunities in the countryside that is making these sort of economically unappealing places to live.” Parts of rural America are ‘projected to never fully recover’ While 97% of America’s land mass is rural, only around 20% of the population resides in those areas, according to the U.S. Census. The data also showed that around 65% of the total rural population lives east of the Mississippi River, and nearly half of the people living in rural areas are in the South.
Economic Struggles Affect Real Families
Here is the intro posted from nytimes.com/2019/07/05/
Being middle class in America used to come with a certain amount of leisure and economic security. Today, it involves an endless series of trade-offs and creative workarounds, career reinventions and an inescapable sense of dread. We asked readers to tell us what it’s like, and more than 500 people, with widely varied incomes, submitted responses. They described not just their financial worries, but the texture of daily life. Even those with very good incomes expressed fears of instability. They have seen their wages and bargaining power stagnate, and wealth spiral up to the top, while they struggle to acquire the markers of middle-class life — a college education, health care, the deed to a home.As one reader, Kristin DePue, put it, “There is an extraordinary burden on my generation to fund our own retirement and also afford college costs for our children.” Indeed, “middle-class life is now 30 percent more expensive than it was 20 years ago,” the journalist Alissa Quart writes in “Squeezed: Why Our Families Can’t Afford America.” And yet, for all the talk of “everyday Americans” among the presidential candidates, politicians do not seem to understand what it takes to get through the day, or what would really help. — E. Tammy Kim, contributing opinion writer
Defining the American middle class, which is under duress: bloomberg.com/opinion/
College debt has gotten sky-high & negatively impacted so many lives: businessinsider.com/student-
The federal minimum wage needs to go up. Those working a full-time job should not be mired in poverty: vox.com/2019/7/2/20678821/15-
Consumerism is fine. We just need a system fostering more shared growth throughout the economy so more people have more disposable income, in gaining a greater sense of self-worth & the ability to become consumers beyond the basic monthly bills: theguardian.com/commentisfree/
The Supreme Court has failed us with disastrous decisions on gerrymandering & Citizens United. Voters may have to take matters into their own hands: washingtonpost.com/opinions/
And workers have lacked a voice for far too long: alternet.org/2019/07/how-
Maybe the battle lines really aren’t right vs. left, but it’s Trump & the oligarchs against the people, as the top 1% use the prez to expand their wealth: theguardian.com/
Trump always needs someone else to blame, which in this case it’s the Fed chair for not lowering rates. But that’s an admission by the prez his economy is not so great, since otherwise there’d be no reason to lower rates:
Just Win Baby!
“I’ve known Jeff for 15 years. Terrific guy. He’s a lot of fun to be with. It is even said that he likes beautiful women as much as I do, and many of them are on the younger side. No doubt about it — Jeffrey enjoys his social life.” Donald J. Trump