Middle-Class Troubles Acknowledged Big Time!
by Sarah Edwards
Suddenly the President, the chairman of the Federal Reserve bank, and the candidates running for the Presidential primary are very concerned about the middle class! We’re center stage in their attention. With good reason, of course. Prices of food and gasoline are rising, foreclosures are escalating, inflation is looming, the value of the dollar is falling, unemployment is up, consumer credit is tightening.
All of this has been brewing for sometime now, but it must be getting really bad now because all these folks rushing to set forth their version of an emergency program. So we had better pay close attention and be ready to make our voices heard. What do we need to be considering?
Bush has called for an emergency “growth package,” which includes $800-$1600 rebates to tax payers and a new passel of tax incentives for businesses, large and small. The candidates are touting their own emergency measures, vying for whose plan will provide the surest and quickest relief. Most of their plans combine similar versions of rebates and business tax incentive, though some add in a mix of temporary federal to help out the unemployed and those losing their homes on the sub-prime loan market. Some emphasize that bigger tax relief for corporations are what’s needed.
Meanwhile the word is out that the Fed will lower interest rates again at the January meeting, this time perhaps dramatically.
Will any of these approaches actually help the middle class who are struggling, or because are we being addressed so urgently because we’re the bulk of the American populous and our support is needed to shore up a troubled economy that is its own worst enemy?
Analysts and economists, jumping in with their opinions, disagree. Some say, yes , some combination of the above is what we need. Others are doubtful. So once again we’re going to have to pay attention, take note, examine the details of what’s being prosed.
We have no voice in regard to what the Fed will do with interest rates, but we do have influence on how our representatives vote and which candidates will get the nod to run for President this year. Certainly the winners of the 2008 elections will have an enormous impact on economic policies over the next four years.
So we better dig into what’s being proposed and get ready to express ourselves vehemently, especially at the polls. We need weigh such things as:
1. The underlying assumption. All the proposals being set forth are aimed at giving a boost to spending and increasing growth. But there are many who think perpetual growth and continual spending are actually the problem not the solution.
2) Personal tax rebates. These are proposed in the hopes people will rush out and buy things, lifting sales, service providers and manufacturers of consumer goods. But is that what we’ll do with the extra dollars they put in our pockets? Or will the stressed and pressed in the middle-class use their rebates to pay off debts or stash it away in fear of worsening times?
3) Tax incentives for business investment. These are proposed in hopes companies will buy new equipment, forestall employment losses and spur new hiring. But, again, is that what companies will do in an uncertain economic climate and how much of the money saved will go to purchases and employment outside the country?
4) Extending unemployment benefits and stalling loan increases to prevent more foreclosures are designed in hopes of keeping those most hurt by current conditions from going under. Will that be enough?
How do we know? Testifying before the House Budget Committee, Bernanke, head of the Fed, says let’s do a mix all of the above just in case. This kind of mixed bag seems to have helped in 2001. But are circumstances today similar enough to circumstances then or are we in a different kind of pickle?
Let’s not just turn these important issues over the Congress. Let’s think it through. How will these proposals help close the gap between the average middle-class worker’s wage and multi-million dollar CEO benefits? How will these proposals help with the massive debt most families carry? How will be they help us to afford the basics we need such as food, fuel, health insurance, our mortgage, and education for our kids.
As a middle-class person, what would help you most? What would you do with a $800 - $1600 rebate? How about those you know who are struggling or worried about what lies ahead? Let’s think this out. Let’s talk it out. And then, let our voice be heard. Post your thoughts here and elsewhere. Make your convictions known to your representatives and, most of all, at the polls.