Grim Lies About Economy Are the Real "War on the Middle Class

Michael Medved
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Posted: Nov 21, 2007 9:22 AM
Grim Lies About Economy Are the Real "War on the Middle Class

Lou Dobbs, the carefully coiffed Cassandra of CNN, regularly proclaims the death of the American dream.

In “The War on the Middle Class,” his best-selling rant from 2006, the Harvard-educated, multi-millionaire broadcaster declared that “our political, business and academic elites are waging an outright war on Americans, and I doubt the middle class can survive the continued assault by forces unleashed over the past few years if they go on unchecked…In my opinion we are on the verge of not only losing our government of the people, for people, and by the people, but also standing idly by while the American Dream becomes a national nightmare for all of us….Middle class working men and women and their families have been devastated.”

As it happened, I read these words in Las Vegas, Nevada, during a bloggers convention I had been compelled to attend. On a weeknight in early November (not a particularly busy season for Sin City) every major hotel had been booked and overbooked—so much so that the Hilton failed to provide me with the room I had reserved in advance. Masses of my fellow Americans (most of them “middle class working men and women”) jammed the casino floors day and night, depositing their hard-earned cash into cunning machines devised to induce gambling addiction.

Statistics from the local tourist authorities indicate that more than 40 million visitors will crowd Las Vegas in the course of 2007. While some foreigners manage to make the trip, the tourists are 87% American, with an average age of 48, and socio-economic status that is solidly, undeniably middle class. Only 24% of all visitors boast household income above $100,000 a year; 46% never graduated from college, 15% are non-white. Nevertheless, Las Vegas thrill-seekers spent an average of $662 on their hotel packages, $261 on food and drink, $141 on shows and shopping, and a startling $652 (in net losses) on what the local businesses so tenderly call “gaming.”

On the other side of the country, the nation’s other gambling Mecca, Atlantic City, drew 33 million pilgrims, with an even more modest median household income of $51,000. Only 60% of these devotees stayed overnight at the sea shore resort, yet they still managed to average gaming losses of $406 per trip.

Given the steadily increasing popularity of such amusements (for better or worse) in countless card parlors, Indian casinos and race tracks across the country, and a clientele that overwhelming identifies itself as “middle class,” it seems difficult it seems to credit the Dobbsian declarations that such families have been “devastated” and now find themselves engaged in an increasingly futile struggle for the survival in the midst of “a national nightmare for all of us.”

Nevertheless, leading candidates for President take up the claim that malevolent forces oppress embitter the lives of ordinary Americans. Most famously, the fabulously wealthy trial lawyer John Edwards regularly warns: “Over the last twenty years, American incomes have grown apart…The result is Two Americans, one struggling to get by and another that has everything it could want…I believe we cannot go on as two Americas – one favored, the other forgotten. I want to live in an America where we value work as well as wealth.” Stressing similar themes, Senator Hillary Rodham Clinton (graduate of Wellesley and Yale) campaigned in Iowa in a bus labeled “The Middle Class Express,” telling her eager audiences that “America’s middle class is under siege and ready for a change. People are working harder and longer for less and less… For six long years, it’s like America’s middle class and working families have been invisible to our president. He’s looked right through them.”

Such rhetoric inevitably plays a role in every campaign season and yet the idea of the sinking, suffering middle class, victimized by callous of not downright hostile corporate forces, has take on a stubborn life of its own. This self-pitying and paralyzing notion has, in fact, managed to survive all statistical evidence to the contrary, regular attempts at logical rebuttal, numerous shifts in the business cycle and political leadership, and the real-life, personal experience of tens of millions of actual middle class Americans.

REPORTS OF PUBLIC GLOOM CONFLICT WITH PROCLAMATIONS OF PRIVATE HAPPINESS

Nearly all books, articles and stump-speeches that bemoan the dire state of ordinary Americans feature polling data meant to convey the overwhelming anxiety and insecurity of working Americans. One typical example appeared on the front page of USA TODAY just two days before Thanksgiving (November 20, 2007) under the headline: POLL PAINTS LOUSY ECONOMIC PICTURE. The subhead cheerfully offered “78% Say Conditions Are Getting Worse” while the graph featured a caption simply describing its “Pessimistic Outlook.” After all, the Gallup Poll reported in Sue Kirchoff’s article found that only 20% of respondents reported themselves “satisfied with the direction of the country….The poll numbers indicate that although the unemployment rate in October was a low 4.7%, conditions feel increasingly lousy.” A mere 13% thought that “economic conditions are getting better” while an overwhelming 78% believe they are “getting worse.”

Like nearly all such surveys, this Gallup study (conducted among 1,014 adults November 11-14) concentrated on overall assessments of economic conditions, giving people the chance to recycle the conclusions they’ve heard on television, read in newspapers, or discussed at the lunch room at work or kitchen tables at home. On the other hand, whenever pollsters ask Americans to rate their own status or prospects, rather than considering the situation for the nation at large, they get vastly more encouraging and optimistic results.

For instance, Investor’s Business Daily reported on an IBD/TIPP poll conducted just a week before the angst-ridden Gallup Survey (November 2-9, with a sample size of 924) that showed that fewer than one in five Americans considered themselves disadvantaged or victimized in economic terms. The researchers asked the question: “All things considered, do you consider yourself to be part of America’s haves or part of America’s have-nots?” Only 19% described themselves as “have-nots” – placing themselves in the luckless segment of John Edwards’ “Two Americas.” An amazing 75% of the overall sample saw themselves as “haves” – including 83.5% of those with relatively modest household incomes of $50,000 to $75,000, and even 60% of those who earn below $30,000 a year. Even among self-identified Democrats, whose leaders make a fetish of bemoaning the grim fate of the working man, partisans described themselves as “haves” rather than “have-nots” by an overwhelming ratio of 68% to 27% (compared to 82% to 12% among Republicans).

Moreover, the IBD/TIPP survey gave the lie to the common notion that middle class Americans see themselves falling further and further behind in their quest for the American dream. In a 1988 Gallup survey with similar demographics, only 59% described themselves as “haves,” but after nineteen years of steady economic progress that number had soared to 75%.

Other surveys show similar satisfaction and optimism whenever Americans consider their own specific circumstances, as opposed to evaluating the state of the nation. Between July 10 and 16th, 2007, the Harris Poll interviewed 1,010 U.S. adults and asked, “On the whole, are you very satisfied, fairly satisfied, not very satisfied, or not at all satisfied with you life you lead?” A staggering 94% considered themselves satisfied (with a majority—fully 56% -- choosing the highest rating, “very satisfied.”) Only 6% considered themselves “not satisfied” with a mere “2%” picking “Not at all satisfied,” despite media rhetoric about the “devastated middle class” and our “national nightmare.”

More striking still, crushing majorities saw no evidence at all that their personal conditions had suffered in recent years. Asked the question, “If you compare your present situation with five years ago, would you say it has improved, stayed about the same or gotten worse?” fully 82% said it had improved or held steady (a majority- 54%- reporting improvement). Only 17% saw their situations worsen, despite all the alarmist reports about the state of the nation at large.

Similarly, in response to the question “In the course of the next five years, do you expect your personal situation to improve, to stay about the same or to get worse?” people overwhelming expected a sunny future. Sixty-two percent anticipated improvement, with only 7% expecting their conditions to “get worse.” – an optimistic ratio of nine-to-one.

The consistent and powerful contrast between public despair and private confidence remains one of the most perplexing elements of prevailing opinion. In survey after survey, the same citizens who expect great things for themselves and their families remain convinced that the nation’s headed in the wrong direction with an economy that gets inexorably worse.

We display a distinctively American tendency to view ourselves as dwelling on isolated islands of intimate success and good fortune, while surrounded by dreary seas of generalized misery. Like the fictional citizens of Garrison Keillor’s legendary Lake Woebegone, we assume that we enjoy the privilege of circumstances in which “all the women are strong, all the men are good looking, and all the children are above average.”

Every American can speak most authoritatively about his or her own life, so it’s profoundly significant when 75% of us consider ourselves “haves.” We know much less about our neighbors, or the residents of other cities, and least of all about the abstraction called the generalized “state of the nation.” How can ordinary citizens comment meaningfully about the economic well-being or family suffering of some 300,000,000 souls? Instead of reporting impressions digested from personal experience of even the stories of friends, we naturally rely on messages from mass media. Those accounts in turn stress dysfunction and negativity: there’s no real news business in the United States, but rather a bad news business.

In this sense, most Americans see no contradiction in reporting their own satisfaction and progress at the same time that they perceive general decline and decay. Crediting the idea that “big business and big government are unchecked in their attacks on the common good” (Dobbs) may allow credulous observers to feel sophisticated, knowing, and appropriately cynical, even while they celebrate their own positive progress. In a media saturated nation, no one wants to appear to be a simple-minded Pollyanna, a starry-eyed America-booster or, worst of all, a malleable dupe. Expressing regret and indignation over the presumed prevailing misery while acknowledging your personal success may also alleviate any sense of guilt by indicating compassion, even solidarity, for the less fortunate.

STANDARD OF LIVING CONTINUES TO RISE FOR EVERY SEGMENT OF SOCIETY

By any and every measure, Americans are right when they assess their own situations in a positive live, but they’re emphatically and entirely wrong when they guess that their neighbors are suffering.

A wealth of data on every aspect of our lives show that we enjoy more choices, more comfort, more leisure, more food, more buying power, bigger houses, better cars and longer lives.

On the most basic level, life expectancy in the USA has risen dramatically and unstoppably. According to numbers from the Department of Health and Human Services, males gained 7.7 extra years of life since 1970 (to a life expectancy of 74.8) while women added 5.4 more years (to 80.1). Despite incessant (and manifestly absurd) claims of worsening living conditions for working Americans, and daily jeremiads about the shortcomings in our health-care system, Americans of all races and classes live longer, healthier lives every year.

Moreover, we enjoy our lives in vastly larger and more comfortable than those occupied by our parents and grandparents. As National Public Radio reported on November 19, 2007: “The average American house size has more than doubled since the 1950’s. ….Consider: back in the 1950’s and ‘60’s, people thought it was normal for a family to have one bathroom, or for two or three growing boys to share a bedroom.” The figures from the National Association of Home Builders show that in 1950 the average new single family home offered only 983 square feet. In 2004 (the most recent year for available statistics) that number stood at 2,349 square feet--- an increase of 240% at the same time our family size dramatically declined.

Though the prevalence of households with children has declined (in part because parents live much longer after their children have left home) the outcomes for those kids continue to improve. A Census Bureau report of January, 2007, showed children decisively better off than a decade earlier. As the New York Times noted: “More are performing at grade level in school, more are taking lessons after class and on weekends and more parents – especially in black households – are imposing limits on television viewing.” This results in vast increases in the number of children who pursue higher education.

In 2007, nearly four times the percentage of fifty year olds have completed four years or more of higher education than in 1967 (31% to 8%). Forty years ago, the majority of fifty year olds (51%) hadn’t even completed high school. Today the number stands at a hugely more encouraging 9%.

Despite the endlessly repeated charge that Americans work longer hours for less and less pay (“Working men and women are working harder than ever simply to keep their jobs, and they are working longer hours at reduced pay with fewer benefits” claims Lou Dobbs) the numbers actually show sharp long term increases in disposable income, purchasing power and leisure time. Economists Mark Aguiar of the Federal Reserve Bank of Boston and Erik Hurst of the University of Chicago examined five decades of time diary surveys administered by research universities and the government. Among their findings (as reported by James Sherk of the Heritage Foundation):

- Since the mid 1960’s, the amount of time that the typical American spends working fell by almost eight hours per week, while the time spent on leisure activities rose by just under seven hours per week. This additional leisure time is equivalent to an extra seven to nine weeks of vacation per year.

- Lower-income Americans have disproportionately benefited from the increase in leisure over the past generation. Less educated and lower-income Americans now work less and enjoy more leisure than Americans with higher incomes. This explains part of why they have lower incomes.

Meanwhile, all Americans spend more time and vastly more money on recreational pursuits. The Census Bureau reports on inflation-adjusted spending on recreation per capita, and sees, with annual expenditures soaring from $854 in 1970 to $2,551 in 2005 (and increase in nearly 300%). Even as a percentage of total consumption, recreation went up dramatically – from 6.5% in 1970 to 8.7% in 2005.

No wonder that the hotels and casinos in Las Vegas fill up in all seasons with middle class and working class visitors. The pricey theme parks in Orlando, Florida (where Disney World has become the world’s most visited tourist attraction) drew 45.1 million visitors in 2007. Average household income (and nearly all these households contained multiple children) was $73,389.

In terms of even more expensive vacations, the percentage of American adults who traveled overseas in a given year has more than tripled since 1970 (12.4% of all adults from 3.7%).

Closer to home, we eat out at an unprecedented rate, regularly patronizing elegant restaurants or shopping center food courts several times each week. The average American household now spends $2,634 on meals away from home—a sharp increase of more than 10% (in inflation-adjusted dollars) in just the three years between 2003 and 2006. As Lou Dobbs himself ruefully admits (in his latest book, INDEPENDENTS DAY, 2007): “Americans are spending as much on meals outside the home as we do for health care- a little over $2,600 per family. We spend almost as much to buy and operate our cars as we do to pay for our homes – about $8,000 a year on each.”

These priorities don’t necessarily represent wise economic decisions ---nor does the $426 per year on “alcoholic beverages” or the $319 on “tobacco products and smoking supplies,” or all the hundreds of not thousands a year in gambling losses at Vegas, Atlantic City, Indian casinos, or heavily hyped state lotteries. Obviously, Americans sometimes harm our own best interests with the decisions we make in spending our money: restaurant meals can contribute to obesity, gambling represents a gigantic waste of both time and money, while our refusal to use public transit (to the frustration of countless liberal social planners) only increases consumption of petroleum and raises the prices for everyone.

Nevertheless, the fact that Americans feel free to make even frivolous or self-destructive spending decisions contradicts the portrait of a helpless, choiceless middle class in the grip of powerful, exploitative elites, perversely bent on destroying the very public that makes possible corporate prosperity.

CONTRARY TO BOGUS CLAIMS, ECONOMIC MOBILITY IS ALIVE AND WELL

The press indulges a destructive and dishonest instinct to portray America’s poor, working class and minority citizens as locked into hopeless and permanent misery—despite abundant and undeniable evidence to the contrary.

On November 13, 2007, a Washington Post story by Michael A. Fletcher offered an especially baleful example. When the report appeared in the Seattle Times it bore the alarming headline, “Many Blacks Earn Less Than Parents, Study Finds.” Meanwhile, anyone who took time to read the article (based on three different reports from the Pew Charitable Trusts) encountered the following revelation in paragraph seven: “Over all, four out of five children born into families at the bottom 20 percent of wage earners surpassed their parents income. Broken down by race, nine in 10 whites are better paid than their parents were, compared with three out of four blacks.”

If 75% of low income blacks are better paid than their parents (and another 15% earn the same as their parents), then how could any responsible news outlet utilize the headline “Many Blacks Earn Less Than Parents, Study Finds.”? The answer involves an anomaly in the original study. Only a tiny percentage of black families counted as “solidly middle class” (in the language of the study) in 1968, with inflation-adjusted median income of $55,000. Among children of this small group, a surprising number (45%) did indeed fall to the lowest fifth of the nation’s earners, with a median family income of $23,100. But the disappointing performance of a handful of offspring in a major study did nothing to invalidate the most important conclusion: that 75% of African-American children (and 80% of the overall sample) who began life in poverty ended up with higher incomes (and often dramatically higher incomes) than their parents.

A similar distortion occurred in yet another misleading story featured on the front page of USA TODAY on November 17, 2007. The headline and subhead manipulatively twisted the results of a Pew Research Poll to emphasize despair and discouragement, with the announcement “POLL: BLACKS GROW MORE PESSIMISTIC” and then the bold-faced explanation, “Fewer Than Half Expect Their Lives to Improve.” Actually, by a ratio of two-to-one the African American respondents did expect their lives to improve: with 44% saying “life for blacks will be better in the future” and only 21% guessing it would be worse. With 31% saying life would remain the same, that means 75% who are convinced that circumstances for American blacks will either remain unchanged or improve.

Similarly, the lead sentence in the article (by Marisol Bello) emphasized the negative: “Black Americans are more dissatisfied with their progress than at any time in the past twenty years....” In response to the question, “Are blacks better off than five years ago?” a total of 69% agreed that they were doing either “the same” (49%) or “better” (20%). Meanwhile, the article quoted experts who talked about a “great deal of anxiety, cynicism and pessimism today” while barely noting that the majority of those surveyed in the study say “that blacks who don’t get ahead are mainly responsible for their own situation.”

A much more extensive, revealing and encouraging study by the U.S. Department of the Treasury (of 96,700 tax returns from 1996 and 2005) received vastly less media attention – precisely because it failed to fit the preconceived notion of a stratified, static, unjust economic order. In fact, the Treasury report (dated November 12, 2007) discovered that 58% of filers who found themselves in the poorest income group (the bottom 20%) in 1996, had moved into a higher income category in just 10 years. In fact, after inflation median income of all tax filers increased by a solid 24% in the decade. Two out of three workers had a real income gain since 1996--- contradicting the common charge that the working class has steadily, inevitably lost ground.

In terms of the American dream of steady, reliable advancement, there’s been no nightmarish transformation. The Treasury Department explains: “The basic finding of this analysis is that relative income mobility is approximately the same in the last ten years as it was in the previous decade.” In other words, despite terrorist attacks and war expenditures, and hysterical denunciations of the Bush administration’s alleged devastation of the working class, ordinary Americans retained the same ability to climb the economic ladder that they enjoyed between 1986 and 1995—the last years of the Reagan boom and the opening years of the Clinton expansion.

A report by the non-partisan Congressional Budget Office reached similar conclusions in May, 2007. Covering a fifteen year period, CBO found that low wage households with children had incomes after inflation that were more than one third higher in 2005 than in 1991. Among all families with children, in fact, the poorest fifth had the fastest overall earnings growth—with increases even higher than the richest 20%. The median family with children saw an inflation adjusted 18% rise in earnings from the early 1990’s through 2005 – representing $8,500 in additional purchasing power.

THE MIDDLE CLASS DOESN’T PAY AN UNFAIR SHARE OF TAXES

According to the most recent Congressional Budget Office figures (from tax year 2004), the poorest fifth of the population (with average annual income of $15,400) pays only 4.5% of their income in federal taxes. The middle fifth, with income of $56,200, pays 13.9%. The highest fifth (with reported income of $207,200) coughs up 25.1% -- some 600% of the rate paid by those at the bottom. The richest one percent of taxpayers (earning lavish salaries of $1,259,700) pay even more: 31.1% of overall income to the federal government.

With these higher tax rates, high income tax payers shoulder a hugely disproportionate share of the overall tax burden. The CBO figures indicated that the top 10% of all taxpayers (those earning more than $87,300) paid 70.8% of all income taxes. A quarter century ago, before the Reagan and Bush tax cuts that allegedly favored the rich, this top 10% paid much less of the overall burden--- only 48.1%.

In other words, conspiracists who rail against the “War on the Middle Class” are flat-out wrong when they suggest that part of that assault involves a bigger share of the tax burden. “While corporations are paying lower taxes than ever before, and tax breaks for the wealthy are expanded,” Lou Dobbs falsely fulminates, “the middle class is forced to shoulder ever more of the tax burden…”

Actually, the middle fifth of the income scale paid 10.7% of the nation’s income tax in 1979 (under Jimmy Carter) but only 4.7% in 2004 (after two rounds of Bush tax cuts). This contrasts with the nation’s top 1% of wage earners: whose share of the overall tax bill more than doubled (from 18.3% in 1979 to a startling 36.7% in 2004).

TRUTH, HAPPINESS AND THE CHANCES FOR SUCCESS

Rejecting the self-pitying lies about middle class oppression and powerlessness isn’t just a matter of defeating demagoguery for the sake of the political health of the country; grasping the essential truths about today’s American economy also represents a prerequisite for personal contentment and future advancement.

Professor Arthur Brooks of Syracuse University cites a fascinating question asked by the General Social Survey, with respondents given the chance to agree or disagree with the following statement: “The way things are in America, people like me and my family have a good chance of improving our standard of living.” An encouraging two-thirds of the population agreed with that statement, and this group was “44% more likely than the others to say they were ‘very happy,’ 40% less likely to say that they felt ‘no good at all’ at times, and 20% less likely to say that they felt like failures. In other words, those who don’t believe in economic mobility – for themselves or for others –are not as happy as those who do.”

This happiness matters not only in a personal and familial sense (greatly increasing the chances, for instance, of marital stability) but also brings economic consequences. As Jim Holt argued in the New York Times Magazine (January 21, 2007), a wealth of psychological data suggests that pessimism produces poor commercial outcomes, whereas optimism helps to insure success. He writes: “In a recently published study, researchers in the Netherlands, found that optimistic people – those who assented to statements like ‘I often feel that life is full of promises’ – tend to live longer than pessimists. Perhaps, it has been speculated, optimism confers a survival advantage by helping people cope with adversity.”

In other words, politicians and pundits who rail endlessly (and dishonestly) about “The Two Americas” or “The War on the Middle Class” may end up doing serious damage to the prospects of precisely those hard-working folks they claim to want to help. Misleading whining about falling living standards and the end of economic mobility may serve as a self-fulfilling prophecy for those who embrace the underlying message of powerlessness and self-pity. If you buy the idea that corporate exploiters and corrupt politicians have poisoned your life and stolen your ability to create a better life for your family, you’ve obviously damaged your own ability to get ahead.

Meanwhile, the demagogues and deceivers try to advance their own well-paid careers with increasingly shrill expressions of their gloomy and desperate messages. Fortunately, hard-working Americans in the real middle class are too smart, and too busy counting their blessings and opportunities, to make the mistake of believing them.