For about 30 years now the American middle class, (and by “middle class” I mean those of us who make about $45,000 to $75,000 per year), has been taking it on the chin. And for that reason half measures and lukewarm “reform” isn’t going to cut it. So let’s get real just for a moment.
In the heyday of Republican dominance of Washington (2003-2007), Wall Street titans inflated the housing sector into the mother of all bubbles. They securitized bundled mortgage debt knowing the foreclosure rate would be astronomical. They hedged their bets with “credit default swaps,” which they criminally pumped up to a “notional” value of $62 trillion. They sold off thousands of exotic “financial products” to unwitting clients from Iceland to China.
White-collar criminals at the “ratings” agencies, Moody’s and Standard and Poor’s, gave triple-A imprimaturs to this toxic financial sludge. This racketeering took advantage of the quintessential desire on the part of millions of Americans to own their own homes. It was about the most unpatriotic thing one could do to the country. So pervasive was the cheerleading in favor of the pillage commentators like David Brooks, Steven Moore, and others celebrated the onset of a free-market, Republican-dominated “Ownership Society.”
In reality, the schemes, graft, corruption, and criminality unleashed in those years ended up doing far more damage to the United States of American than Al Qaeda ever could. The American middle class has been devastated. Those who haven’t lost their homes find themselves with “upside down” mortgages (when the amount owed exceeds the value of the home), unemployed, and seeing their retirement accounts evaporate. Although the situation would have been far worse had the bailouts and economic stimulus package not been passed these measures did little to shore up the American middle class. The money went to bankers and construction companies.
During the Great Depression President Franklin D. Roosevelt created the Home Ownership Loan Corporation (HOLC) that targeted people not only who were going to lose their homes but those who found themselves with upside down mortgages as well. Thus far the federal government hasn’t lifted a finger to help people with these kinds of mortgages. The Democrats in Congress and the Democratic administration might be on the verge of making that age-old Democratic mistake of only helping those who are in the most need while ignoring the broad middle class. Remember those “Reagan Democrats?”
In the next few months we’ll see whether President Barack Obama has really learned anything from studying the history of the 20th century. The New Deal and Great Society reforms that helped the most people and became the most popular were not those aimed at the destitute, but those that helped the middle class sustain the American dream. The 30-year class war the rich launched against the working people in this country (and reached its apogee during the George W. Bush years), has left the middle class reeling and wounded. Only bold federal action that puts something concrete in the palms of middle-class Americans can begin to turn these dire social conditions around.
President Obama must give middle-class people something they can hold in their hands; something real. No amount of promises of “change,” no matter how well intentioned, will suffice. If we have nothing to show for our efforts organizing to elect Democrats to Congress and to the White House this whole “Hope” endeavor will reek of yet another political con job. In the current context, President Obama can become a failed president in a heartbeat.
Let’s hope that on September 9th when Obama speaks to a joint session of Congress he outlines not only a bold program to provide health care for all Americans, but also a set of equally bold proposals to lift the middle class out of its currently dismal economic condition.
Originally published by the Huffington Post. Reprinted with permission from the author
Follow Joseph A. Palermo on Twitter: www.twitter.com/peeweethemonsteClick here for reuse options!
Copyright 2009 LA Progressive