Chronicles

A Magazine of American Culture

Vol. 22, No. 5, May 1998

WIPING OUT THE MIDDLE CLASS

By Bob Djurdjevic

General Section: VITAL SIGNS; Sub-section: ECONOMICS

Dawn is 25. Marty is 27. Dawn works as a preschool teacher at a local private Christian school. Marty is a laborer at a retail distribution center. This Phoenix, Arizona couple with a small child bring home about $30,000 per year. Yet they could not afford to buy Christmas presents this year.

Now, not putting more cash into some merchant's pockets is no great loss. But keeping a young family constantly on a tread mill without a respite is an American tragedy of the 1990s. Especially when, as if adding insult to injury, we see the billionaires like Ted Turner get a tax break for donating $1 billion to the United Nation, while the middle class Americans like Dawn and Marty often have to resort to buying even milk and bread on credit.

Nor is this some sort of a regional (Arizona) phenomenon. Here is, for example, an excerpt from a letter which this writer received from a newspaper editor in the nation's capital:

"In Washington, for example, the level of income required to achieve a 'middle class' standard of living - e.g., a single family home in a decent neighborhood, enough money to raise at least two children responsibly, etc. - is about $80,000 annually. Hardly a 'middle class' wage... If I recall correctly, government statistics define a 'middle class' family income as $34,000 or so.... Meanwhile, the 'plutocrats' are moving into garish $600,000-million-plus homes with more square footage than a small English castle, driving two or three $50,000 luxury cars and keeping their kids out of the dead-end public schools."

Clearly, the rich are getting richer and the poor are getting poorer. Phoenix, Washington, DC, and many other American cities have their own "Great American Divide" stories, but nowhere is the desecration of the American Dream more visible than in the "financial capital of the world," Gotham City - host both to Wall Street and the United Nations.

As Bill Clinton and his entourage used a South Bronx neighborhood in New York for a pre-Christmas confidence-boosting photo-op in early December; as Wall Street celebrated another "bull" market year; as the economists hailed the supposed strength of the U.S. economy, especially in contrast to the Asian crisis, the Washington-based Center on Budget and Policy Priorities (COBPP) released a devastating report. Income inequality has been growing in 48 of the 50 states. Only in Alaska and North Dakota has the gap between the incomes of the richest and the poorest residents narrowed over the past 20 years. Nor did the so-called "middle class" fare much better. The incomes of MIDDLE income families DROPPED by 22 percent during the same period.

"Robust economic growth in recent years has done little to turn around the long-term trend toward increasing inequality," said Kathy Larin, co-author of the report and a policy analyst at the Center on Budget and Policy Priorities. And guess where the Great American Divide, which separates the rich and the poor, is widest? New York.

The 10 states where the gap is greatest between the incomes of the HIGHEST-income and LOWEST -income families with children is the greatest are (in declining order) - New York, Louisiana, New Mexico, Arizona, Connecticut, California, Florida, Kentucky, Alabama, and West Virginia, the COBPP report said.

New York is also leading the nation in terms of the gap between HIGH-income and MIDDLE-income families with children. During the past two decades, the gap widened the most rapidly in New York, Indiana, Arizona, California, Georgia, Connecticut, West Virginia, Texas, Pennsylvania, and Tennessee (again, the top 10 in order of the highest-to-lower discrepancies). In other words, New York is America's "plutocracy capital."

The latest census data merely confirm the earlier trends. In an August 1997 report, for example, the same Washington-based research organization noted that, the wealthiest ONE percent of Americans received as much after-tax income in 1994 as the bottom 35 percent of the population - COMBINED. And that the top 20 percent of the population had nearly as much income as the bottom 80 percent.

Between 1977 and 1994 - the first and last years for which COBPP had issued such statistics - the share of the national after-tax income received by the top one percent of the population rose substantially. In 1977, the bottom 35 percent of the population had nearly twice as much after-tax income as the top one percent, the analysis found. By 1994, these two groups had essentially the same amount of income.

The COBPP analysis shows that in 1994, the 2.6 million wealthiest Americans (top one percent of the population) had as much after-tax income as the 88 million with the lowest incomes (bottom 35 percent of Americans). Similarly, the 52 million Americans with the highest income (top fifth) received 49 percent of the nation's after-tax income, nearly as much as the other 206 million Americans.

"Income has become much more concentrated among a relative handful of the wealthiest Americans," noted Isaac Shapiro, a senior fellow at the COBPP and co-author of the report. Shapiro said that the average after-tax income of the top one percent of families equaled $374,000 in 1994, or 15 times the average after-tax income for the middle fifth of families, which stood at $25,650.

In fact, the COBPP studies understate the width of The Great American Divide. The census data used for its report did not include capital gains income as family income, for example, understating the incomes of the top fifth of families who receive most of the capital gains income. The Census data did not reflect earnings above $100,000 for any one job, either, further understating the incomes of the American elite.

On the other hand, partly offsetting those factors, was a corresponding omission from the data of welfare benefits, such as food stamps, which poor families may receive. In all, however, the COBPP said its report "UNDERSTATES income disparities between the top and middle fifth, and, to a lesser degree, those between the top and bottom fifth."

In other words, the United States of America is an even greater plutocracy than these alarming numbers suggest. And the disparities between the rich and the poor are approaching those in some other countries before their elites were eventually sent to the dustbin of history by the common folk who rebelled against such "taxation without representation."

"It's a few years down the line but our class disparity and age disparity (wealth, privileges, and tax break for the non-poor elderly which is about 40% of the elderly, you ought to know since you are in Phoenix) will split the population not just along class lines but also along generational lines," the professor opined. "It's gonna get ugly in about 20 years, maybe sooner."

It may happen sooner - when the Baby Boomers start cashing en masse their retirement checks. Many will discover that there is no money there, since by then the Wall Street Hoover will have sucked it out of the pension funds.

When will that happen? Probably within the next ten years. So, if you're a Baby Boomer counting on spending your old age in an easy chair funded by a Big Business pension, consider an early retirement. Then follow it up with some sort of a Golden Age entrepreneurial venture, the new kind of a Golden Parachute of America's dwindling middle class.

---

ATTRIBUTION: Bob Djurdjevic heads up Annex Research (http://www.djurdjevic.com) which analyzes global economic and geopolitical affairs and Truth in Media (http://www.truthinmedia.org).

---

And now, here's a segment of the above column which the Chronicles editor removed.   It deals with Hillary Clinton’s trip to the Ukraine, in November 1997, and it is based on a real life story relayed to this writer by a pilot of a Ukrainian airline:

The Hillary Runway

"The United States of America is an even greater plutocracy than these alarming numbers suggest. And the disparities between the rich and the poor are approaching those in some other countries before their elites were eventually sent to the dustbin of history by the common folk who rebelled against such ‘taxation without representation.’

So far, however, there is no evidence that the New World Order crowd have learned anything at all from history. As Bill Clinton departed Dec. 30 for his 14th consecutive ‘Renaissance Weekend,’ a Hilton Head, SC, annual seaside summit of some 1,500 members of the U.S. government, business and media elite, the President's main preoccupation seemed to have been reconciling the ‘multicultural’ differences between his new dog, Buddy, and his cat, Socks.

‘I am going to have them totally reconciled with each other,’ Clinton declared to reporters aboard Air Force One, according to a NEW YORK TIMES Dec. 31 (1997) report.

Nor is Bill the only Clinton displaying a callous disregard for the people. A commercial jet pilot instructor shared with this writer a fascinating story upon his return from the Ukraine. It was about an incident during Hillary Clinton's November visit to Lvov (a city in western Ukraine, close to the Polish border).

Due to an extreme cold spell in Eastern Europe and Russia, the runway at this regional Ukrainian airport was a sheet of ice the morning the First Lady was due to leave. She was furious. The Lvov airport officials faced four choices:

1. Dump a lot of salt on the runway and wait for the ice to melt

LIKELY DELAY: 1-2 hours

2. Use a specially Russian-designed truck with a jet engine mounted on its back. The engine blows hot air on the runway. This not only melts the ice but actually leaves the runway DRY. ‘Very efficient and creative!’ the U.S. instructor commented.

LIKELY DELAY: 1 hour

3. Spray the entire runway with de-icing fluid (which is normally used only for de-icing the jets).

LIKELY DELAY: 1/2 hour

4. Wait for God to melt the ice.

LIKELY DELAY: Who knows.

The Lvov airport authorities presented the four choices to Her Majesty, Hillary I. The petulant First Lady was so upset about the delay that she demanded that she leave IMMEDIATELY. So the entire Lvov runway was sprayed with the jet de-icing fluid - per alternative 3. Her Majesty, the First Lady, took off in a huff.

But the spraying the ‘Hillary runway’ used up the ENTIRE YEAR'S SUPPLY OF LVOV AIRPORT'S DE-ICING FLUID.  "As a result, the Ukrainian planes now have to be de-iced by using vodka, instead of the de-icing fluid!," joked the Ukrainian pilot.

By the way, the U.S. government has not seen fit to reimburse the Ukrainians for the de-icing of the ‘Hillary runway,’ according to the pilot.

Back to Index of Columns...