Wednesday, January 29, 2014

The State of the Union

I must confess, I did not watch the President's State of the Union (SOTU) speech last night.  Nor, of course, did I watch any of the three Republican responses.  But I did watch a few shows yesterday which presented some data and possible talking points of the SOTU, plus I watched a few shows this morning which presented reactions to the speech.

First, two interesting facts. 

Unemployment began rising in 2008, then rose quickly through 2009 into 2010, topping at just over 10%.  It has declined slowly since, falling below 7% in December 2013 for the first time in 6 years.

See link below

The stock market declined steeply beginning in October 2008, reaching its low point of the recession of 6547.05 in early 2009.  It is currently trading a bit over 15700. 

See link below

Clearly, these are only two measurements of the economy.  But, at first glance, one might say fairly conclusively that our country is better off today than in January 2009 when Obama took office.  Yet, and despite his re-election just 14 months ago, his approval ratings are below 50%, and he seems to be given very little credit for overseeing the recovery to date.

Another measurement I just thought of might be housing starts.  Here is a link.  Again, dismal numbers at the peak of the recession, slow but gaining recovery, especially in the last 18 months.

Not only is there a lack of respect for the recovery, but a majority of Americans feel the country is on the wrong track.  So, what explains the disconnect between our seemingly improving economy and people's perceptions?

An easy answer might be that people are not feeling the advantages of the recovery.  Wages are certainly not increasing.  In the private sector, profits seem to be flowing upwards, to either executive pay or to improve profits.  In the public sector, unions continue to be on the decline in terms of membership and influence, resulting in layoffs and give backs.  Even pensions, promises to workers made by local, state and federal governments, are being subjected to possible reductions and eliminations.  So, simply stated, people do not feel a part of the recovery because their buying power has, at best, stayed the same, but more often has decreased.  The good news here is that if you looked at your IRA statements for 2013, you should see at least 20%, perhaps as much as 40% increases in the value of your investments.  Good for the future but no help today, of course.

So, if there are signs of recovery but everyday Americans aren't feeling it what is going on?

As you know, it is my belief that our current form of capitalism is not working to the advantage of middle class Americans.  I believe that it started in the 1980's with Reagan's famous trickle down economic theories, continued with Bush 1, flourished under Clinton via large scale trade agreements and the now famous repeal of the Glass-Steagall Act, continued under Bush 2 and his doubling down on corporate tax breaks, then finally peaked with the Supreme Court's 2010 ruling that granted individual rights to corporations.  

One thing that I heard both Dems and the GOP say today is that we must provide more jobs that pay a living wage to more middle class Americans.  Considering that we have so many people employed in retail and service industries, I don't see an easy solution.  Raising the minimum wage will only help a small percentage of workers unless the rate increases to $12 per hour.  To me, the minimum wage isn't the problem, it is all those people who work 40 hours a week and earn between $9-12 per hour and are expected to shelter, feed and provide opportunity for their family, not to mention participate in the economy.

The minimum wage issue is a distraction to the real problems facing middle class Americans who can't earn enough money to move up the economic ladder, especially in the face of all the multi-million dollar salaries going to those in the financial, entertainment and health care industries.

I've said it before and I'll say it again, income inequality is a serious issue in this country.  As long as we allow those on top to prosper at the expense of the rest, allow our political discourse to be driven by those with the most money, allow our votes to be bought by the promise of short term rewards over the longer term, as long as we, the people, continue to hue and cry over those in Washington but vote in alarmingly low percentages, we will not begin to broach any serious changes to improve the lot of the middle class.

The State of the Union? 

$$$ before people 

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