News & Views from 465 California Street

Middle Class Meltdown

Clint Reilly
Mar
10
2009

Since the 1970s, the American middle class has been the object of a violent political tug-of-war between Republicans and Democrats.

Each side has had its moments, but I bet that our economic collapse has settled the fight: We could be witnessing a Democratic realignment that may last for 20 years, or until Americans recover and become complacent again.

It is the reversal of a long trend. In sociologist Ben Wattenberg’s seminal 1974 book, The Real Majority, he wrote, “Something has happened in the United States that has never happened before anywhere: the massive majority of the population is now in the middle class.”

He reiterated the point in 1984, as Ronald Reagan’s first term drew to a close. “I believe we live in a nation that has never had it so good,” he wrote.

With such a rise in the standard of living (powered largely by debt) government was viewed as a non-profit foundation for the poor rather than an indispensable protector of the average American. Anti-government sentiment grew on both sides of the aisle.

Central to the Republican appeal was a growing suspicion among middle class Americans that their tax dollars were paying for social programs which almost entirely benefited the disadvantaged – not them.

Politics is about self interest. The Democratic families of the Depression – who were rescued from poverty by Franklin Roosevelt’s New Deal – were unwilling to finance an altruistic social agenda for the downtrodden. They wanted to keep their own money in their own pockets.

Big Government” became an epithet for Great Society programs such as the War on Poverty, Supplemental Nutrition Assistance, Medicaid, Head Start and Job Corps.

But today, job losses, dwindling incomes, home foreclosures and lost health benefits are redefining the status of many middle class families and threatening the lifestyle of a large percentage of Americans.

The grim reality is that economic survival has become a frightening issue in the suburbs as well as the inner city. This time, Concord, Antioch, Dublin, Vallejo, Novato, Vacaville and Pacifica are grimacing – not just the Oakland flatlands and central Los Angeles.

Unemployment has reached 9.4% in San Jose, 9.2% in the East Bay and 10.1% statewide. In the nine-county Bay Area, lenders took back 35,709 homes in 2008 and mailed out 61,347 more notices of default.

As the pillars of laissez faire capitalism crumble, middle class America is returning to the government with open arms, demanding oversight of corporate giants and sensible economic regulation.

Key elements of President Obama’s recovery plan are eerily reminiscent of Lyndon Johnson’s Great Society agenda from the 1960s.

Johnson launched a War on Poverty. Obama’s American Recovery and Reinvestment act is a $787 billion defense of the middle class.

Johnson’s Fair Housing Act is Obama’s massive program to prevent home foreclosures and halt an epidemic of repossessions.

Johnson created a vast employment program for disadvantaged inner city youth. Obama’s program promises to create or save 3.5 million jobs.

Johnson implemented Medicare and Medicaid. Obama proposes $634 billion in new health care spending over the next decade and a complete overhaul of the system.

There are more parallels for primary education, college tuition, child care, early childhood education and impressive commitments to sorely needed infrastructure.

In the 1960s, the Great Society was considered a bold but flawed update on the New Deal that was too focused on the poor at the expense of the middle class.

But if Obama’s experiment succeeds in protecting the hard won gains of America’s middle class majority, it will extend Democratic hegemony over our nation’s politics well into the 21st century.

Comments (8)

  • read many things about what is occuring or what will occur.
    have yet to see or hear anything about the wasteful cost of government. FDR was first pres to travel out of u.s.a. now even our city councils travel. nancy pelosi on an air force jet for her own convience, to and from, cars, travel,plants hanging from street lites,cost of and the needs of government are out of hand. we need less government and more self help. bmb

    Posted by: barbara brooks | March 10th, 2009 at 10:57 am

  • Apparently, the middle class voted for Bush, not just once, but twice. They voted against their own self interests.

    So the middle class did themselves in. That’s my take on it.

    Posted by: Bentham T. | March 10th, 2009 at 11:17 am

  • You are right about the flaws in the Great Society. In the book “The Emerging Republican Majority,” Kevin Phillips wrote that the problem with the Great Society was the shift from taxing the few to the benefit of the many to the taxing of the many of the benefit of a few.

    Posted by: Oliver | March 10th, 2009 at 1:36 pm

  • Clint,

    “No earmarks”—-oink, oink…..Obama

    “Read my lips, no new taxes”… Bush Sr

    “We are not in the business of nation building”…..Bush Jr.

    “I did not have sex….” Clinton

    “I will not send our boys to die in Europe”…..FDR

    They are all the same….liars—- but doing some good and some damage to the Republic. Obama will be no different. I pray he will not get us into a world war like his 6 Democrat predecessors.

    I will look for your column when you will offer yourself and your family to be covered by the President’s health care plan—–or whether you will choose to be in the exempt elite like our politicians.

    Also tell us how the capitalist corporations are funding your retirement.
    Respectfully…………….Hank R

    Posted by: Hank R | March 10th, 2009 at 1:37 pm

  • “Middle class meltdown ” is first class writing and analysis. Do you have an explanation
    as to why we went from traditional one earner families to two and why so many people took on
    debt for spending? Was the middle class just trying to maintain a standard of living that was gradually being reduced through concentration of income in the top brackets?

    .

    Posted by: Richard Tracy | March 10th, 2009 at 2:06 pm

  • Clint,
    I haven’t heard the name Ben Wattenberg in twenty years—you quote him–but I was always suspicious of Ben–he seemed to be an easy observer in/of the Reagan era–but not an advocate for the middle class–did Ben just ride the prevailing poll number’s popularity of RR–did Ben–or for that matter anyone stand up for the middle class– surely the commentators were aware of the declining fortunes of the middle class beginning in the 1970′s–but did anyone rise to their defense?

    Posted by: Tony Gantner | March 10th, 2009 at 3:47 pm

  • Clint- I read your piece in the San Jose Mercury News today. One thing I’m disappointed that you didn’t mention as a prime cause of the middle class disappearing, is manufacturing offshoring and the mostly fixed Chinese yuan to U.S. dollar exchange rate as a cause. Bush’s administration didn’t do anything about this, and to be honest, I don’t see Obama doing anything either. Talk, talk, talk, that’s all we get, while manufacturing job after manufacturing job disappears here never to come back again.

    Canada, Japan, Europe, and other countries are also affected by this, and they do absolutely nothing about it either.

    The whole world is addicted to cheap products from China, yet no one wants to talk about, or address it.

    Poof, there goes another one !!

    Kevin.

    Posted by: Kevin | March 10th, 2009 at 6:03 pm

  • Mr. Reilly,

    Gerald W. Boychuk, NATIONAL HEALTH INSURANCE IN THE U.S. AND CANADA: Race, Territory and the Roots of Difference, Georgetown University Press, suggests that difference in race is one important obstacle to national health insurance in the USA. This agrees with the

    quote next to your photo and name and with several references in the text.” …government was viewed as …”, “Central to the the Republican ….”, “They wanted to

    keep …” , “”Big Government …”", “…too focused on the poor …”

    The Public Health dictum – Identify, contain, eradicate any contagion to prevent spreading – seems wise to me.

    Peter D.

    Posted by: Peter D. | March 12th, 2009 at 10:12 am

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