Joe Six-Pack

by digby

…hasn’t had much of a raise in years.

Bob Herbert makes a point today that I expect we’ll be hearing again over the next few months:

We’ve been living for years in a fool’s paradise atop a mountain of debt. The masters of the universe on Wall Street lost all sense of reason, no doubt. But most of us have been living above our means through the magic of easy credit, ever lower taxes, ever rising property values, stock market bubbles and the gift of denial, which we used to assure ourselves that the bills would never come due. We’ve even put our wars on a credit card.

The burden of debt for a typical middle-income family, earning about $45,000 a year, grew by a third in just the few years from 2001 to 2004, according to the Center for American Progress. The reason for this unsustainable added weight was the rising cost of such items as housing, higher education, health care and transportation at a time when wages grew only slightly or not at all.

In other words, work was not enough.

As for the debt burden of the federal government, don’t ask. (But you might want to ask your grandchildren how they plan to pay for the wars in Iraq and Afghanistan.)

With reality now caving in on us — banks and brokerage houses falling like tenpins, a trillion dollars or so in bailout money being added to the nation’s debt burden, families by the hundreds of thousands being driven from their homes by foreclosures — it might make sense to get back to basics. And in the United States, the basic economic component of a sustainable family life is a good job.

What we haven’t paid close enough attention to for many years (a period in which we’ve been oddly obsessed with the financial lives of the rich and famous) is the fact that there haven’t been enough good paying jobs to sustain what most working Americans view as an adequate standard of living. This is a fundamental flaw in the U.S. economic system.

With the latest financial meltdown, there has been widespread outrage over the excessive compensation of top corporate executives. Where has everybody been? The rich have been running the table for the better part of the past 30 or 40 years.

“Income inequality” is one of those phrases we’ve heard a lot about, but haven’t really seen why it matters. Well, this is it. Much of the American middle class, stuck with stagnant wages, inundated with consumer goods and easy credit, is in debt, big time. Popular culture has been celebrating the vast wealth of Britney or Trump, making it look easy and desirable. New goodies with deals at 0% interest, new consumer electronics that you can put on that credit card they just sent you in the mail without even asking. And all at a time when the rich were getting much richer and the average worker’s salary was standing still or going lower.

Nobody cared about income inequality when credit cards and home equity were covering up for the fact that there were no raises. Now, the party’s over and that reality is becoming much more clear. The raises (or property values) that were supposedly coming to cover all that interest aren’t coming after all.

My question is how the “conservatives” are going to convince everyone one more time that the government needs to cut their taxes so they’ll go out and spend money to stimulate the economy. I somehow doubt they will. Maybe this will all blow over and the party will get a second win, but I doubt it. This time people going to pay down debt. And that means the government is going to have to spend directly rather than encouraging citizens to spend mindlessly on new consumer goods if they want to stimulate the economy. That should make for quite the interesting political battle. It challenges every economic trope the conservatives have been spewing all these years.

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