It’s easy to get fixated on the day-to-day give-and-take of politics and lose sight of the underlying realities that drive a campaign. So let’s take a step or two back and try to refocus on the big picture, shall we?
The dominant reality driving the campaign of 2012 — and probably 2016 and 2020 as well — is this, as laid out in a new Pew report on the American middle class:
As the 2012 presidential candidates prepare their closing arguments to America’s middle class, they are courting a group that has endured a lost decade for economic well-being. Since 2000, the middle class has shrunk in size, fallen backward in income and wealth, and shed some — but by no means all — of its characteristic faith in the future….
Fully 85% of self-described middle-class adults say it is more difficult now than it was a decade ago for middle-class people to maintain their standard of living. Of those who feel this way, 62% say “a lot” of the blame lies with Congress, while 54% say the same about banks and financial institutions, 47% about large corporations, 44% about the Bush administration, 39% about foreign competition and 34% about the Obama administration. Just 8% blame the middle class itself a lot.
The easy inclination is to blame the problems of the middle class on the economic crisis of 2008 and its continuing aftermath. And as one of the charts above documents, that calamity has indeed devastated the net worth of America’s middle class. Wealth that was tied up in the stock market has more than recovered what was lost in 2007 and 2008; wealth that was tied up largely in housing has not recovered and will not recover at any point in the foreseeable future. And many in the middle class had leveraged that now-vanished wealth to support themselves in a style which they will never enjoy again.
However, the other chart demonstrates the real problem. Income for the middle-class — defined by Pew as adults with an income of two-thirds to twice the national median income — had stagnated for a decade, long before the Wall Street crisis. In 1971, 61 percent of Americans fell into the middle class as it is defined by Pew. Today it has shrunk to 51 percent, and shows every sign of continuing to shrink.
As Pew puts it:
The hollowing of the middle has been accompanied by a dispersion of the population into the economic tiers both above and below. The upper-income tier rose to 20% of adults in 2011, up from 14% in 1971; the lower-income tier rose to 29%, up from 25%.
However, over the same period, only the upper-income tier increased its share in the nation’s household income pie. It now takes in 46%, up from 29% four decades ago. The middle tier now takes in 45%, down from 62% four decades ago. The lower tier takes in 9%, down from 10% four decades ago.
The 2012 campaign poses several important questions to American voters. Although cast as policy choices such as how to handle entitlements and how to change tax policy, they are really just symptoms of more fundamental questions:
Are these changes caused or merely exacerbated by government policy, which would suggest that a change of policy could reverse them? Or are they instead driven by larger tectonic shifts in which government plays a very small role?
Should government attempt in any way to compensate for these profound changes, such as the massive upward shift of income and the loss of economic security for those below? Or does government have no legitimate role to play?
How does the shrinking of the middle class and the ongoing shift of both wealth and power alter our understanding of America? For those who can attain it, the American dream is more rewarding than it has ever been. But the number of winning tickets is getting smaller and smaller.
In politics, questions are rarely if ever posed to the public in such as fashion. But these are the things that we’re really debating in this campaign, and the answers matter a great deal.
– Jay Bookman