Tag Archives: world war II

Jubilee for the middle class

The American middle class is dying off in huge numbers. It has been going on for more than a decade, but we are facing a catastrophe of biblical proportions. I have a plan to stop it and to save those left.

Hyperbole? You decide.

Formerly known as the middle classWhen someone speaks for the middle class, most often they continue to use a post-World War II snapshot. Average salary. Average house. Average everything. Most Americans believe they are a member. Because of the enormous changes in concentration of wealth, they are wrong. More Americans than they realize are actually poor by prime time standards. More are joining them every day. But this piece is not about the poor.

Lcurve.com took the most recent census figures (it has gotten worse since then) and plotted it on a football field (sports metaphors are the best way to communicate complicated issues in terms that sound good, but seldom do more than confuse things further). If median income were used, the stack of money earned at the fifty yard line would equal a stack of $100 bills, 1.6 inches high (median household income ranging from $61,000 in Maryland to $31,000 in West Virginia  – 1.6  inches is about the size of your big toe, OK, a boy’s big toe). At the five yard line, the stack of $100 bills is 4″ high. At the one foot line, the stack of $100 bills is 40 inches tall, or 3-feet, 4 inches. At the one inch line, the stack is over 30 miles high.

The middle class now lives somewhere between the five and the ten yard line. At one time, and in my lifetime, they owned half the field.

There are many advocates for the poor – I am among them, but they can do without me for the day. Admittedly, the working poor are suffering something terrible and are too busy working three jobs to advocate for themselves and only have Joe Biden. The rich? They hire hire lobbyists. Today, I’m focusing on the middle class.  The faux alter ego of the rich… and the poor. The people who are portrayed on television commercials during prime time. Beautiful, healthy, making-it- in-America kind of people who bought in to the American work ethic, performed to it, and subsequently have more to lose and yet further to fall. They are the poster children for the American dream.

Formerly known as the middle classThese are the people who look as if they made it – good education, ambition, hard work and a couple of good decisions landed them with a good job and on a career path. They had the audacity of hope ten years ago. They bought into the ownership society. They believed. They purchased more home than they needed because they knew it would grow in value along with their wages. They had good credit and used it. They consumed and charged some of it on their single-digit-rate credit cards. They pay huge amounts of income, property and sales taxes. Buy or lease the new cars. Send their kids to private schools in new uniforms. And go out to dinner.

Where are they today? They are holding on by their nails (no longer professionally manicured). They are being squeezed to death. Those who didn’t get laid off are working longer hours, many for less pay. The raises and the bonuses, known as the big hits, didn’t happen as hoped and planned, unless they are on Wall Street.  The AMT (Alternative Minimum Tax) has hit them hard. Very hard, an annual battering. Their property taxes skyrocketed because they bought their houses before the prices fell, but after the reassessments. Some have extended families who are out of work or under-employed. They have had to help out. Their health insurance has gone up, along with their co-pays and their need for care. Their equity lines have been cut , and not-so-coincidentally, so too have their credit card limits. For the first time in modern history, consumers are paying against their credit card debt before paying their mortgage payments – a feeble attempt at false liquidity at the risk of the most basic of human needs – housing.

One by one, they were either a day late paying their credit card bill, or a dollar short on guessing their new lower credit limits. The late charge, or over-limit fee hit their Equifax report and their 3% Chase card with the $30,000 balance, and $35,000 credit limit overnight turned into a 33% card with a $30,000 limit. Their monthly payments went up by a thousand dollars and with it all their “disposable income.” Suddenly, all the other cards matched the 33% rate. They cut back immediately, but it wasn’t enough. They cashed out their retirement. Got rid of their extra car. Postponed their health needs. Then the collectors started calling. They never knew they were living on the edge. The precipice was looming.

I’m not making this up. Our middle class – those making $100,000 to $250,000 a year are suffocating – their financial livelihood is being squeezed out of them, and with it their contribution to consumerism. Almost all of the air is going to the bank (a euphemism for “the company store”). They have exhausted their savings, have no equity, no credit, less than zero leftover money, and are losing it. Sure, many have been able to hold on to that one nice car and that wonderful home with the for-sale sign in the front yard. But their “comfortable” life is only in the living room. Disposable income provides economic freedom – it is gone.

I realize that creating sympathy for those on the five yard line is almost impossible. These are the people that we all need to take us out of the recession. They are the customers of those who are still working. They are, or were , the employers of the working poor. These are the people who pay the taxes that keep our government working. Ironically, they are the only class who are still vaguely in touch with those on the one foot line, who otherwise, would (pick one or more: have no friends at all; no one to betray, or no one to aspire to them).

So, what’s my plan? My proposal? A middle class bail out that won’t cost the taxpayer a dime.
Premise: those who are already 30 to 90 days behind on their credit cards and owing the exorbitant interest rates are unlikely to make it. Fortunately for the banks, all of these accounts are insured… by AIG. Yes, the company that is 80+% owned by the US government. The insurance that banks have on these accounts returns 70-80% of the balance to them, which is why they add on all the late payments and hidden charges in order to jack up the balance prior to handing the debt to AIG. The banks get it all back and the government ends up picking up the tab.

I propose that we offer a deal to save those middle class patrons who can still be saved. A deal that won’t cost the taxpayers a penny. In return for cutting up their credit cards, getting no new ones, paying on time and not declaring bankruptcy, we (using the rates being charged to banks) would let them pay off their debt at near zero interest rate (the near zero will pay for the servicing). If they renege, the deal goes back to the bank to collect and they don’t get another chance.

For someone who has $100,000 in credit card debt, this will save them $25-$30,000 a year – about the same deal they had before this “greatest economic crisis since the great depression” began. Enough money to pay off their debt in a few years instead of never. To get their mortgage caught up and keep them in their home. Enough for them to get back soon to consuming, paying taxes and saving us all.

What about all that interest that’s being written off, is that a cost to someone? Only on paper. The government now lends money to banks for virtually nothing (it is why the banks have so much to gamble on Wall Street). The banks are charging exorbitant rates for credit cards, but their earnings are only on paper,  as much of it will never be collected. They justify these rates and charges because of the risk of default, but this isn’t new money or new risk. The only thing that changed was the economy. Why should we bail out the banks, give them free money for their bad decisions and not bail out the people, who – should they survive –  pay for the bank bailout? The banks do not deserve the spread and bankruptcy is bad for everyone (except the banks).

This solution is not another big government bailout (even the servicing can be privatized). It is simply extending, for a limited time, the rate we charge banks to a group who had the audacity of belief in the American dream and wants to pay their debt. They bear the costs, are responsible for their decisions, and will give us all a chance to get out of this mess.

One more note – this is fairly progressive. Credit card debt is relative. Credit card jubilee (at least in concept) could be just the thing to get us out of this mess.

Buying Washington with our money

$3.8 billion. That’s how much the people you elected to Congress and the Senate took from finance, insurance and real estate lobbyists in the past 10 years. That’s right, billion.

What did they buy? Protection from regulation that would protect consumers and investors. Protection from laws that would stop the outrageous risks, self-dealing, market making, collusion and investor deception. Protection from paying ordinary taxes on their extraordinary incomes. And protection from failure to the tune of more taxpayer money than, according to The Intelligence Daily,

“… the cost of all US wars (including such events as the American Revolution, the War of 1812, the Civil War, the Spanish American War, World War I, World War II, Korea, Vietnam, Iraq and Afghanistan, the invasion of Panama, the Kosovo War and numerous other small conflicts), the Louisiana Purchase, the New Deal, the Marshall Plan and the NASA Space Program combined.”

With Congress safely in their vest pockets, the financial sector has thrived and is expected this week to announce record bonus payments – “… expected to be 30 to 40 percent higher than 2008’s.” Wall Street and the mega-banks profits have so bloated during this period that, according to Robert Creamer,

“of every 12.5 dollars earned in the United States, one goes to the financial sector, much of which, let us recall, produces nothing.”

What wait, you must be thinking, what about the regulation and reforms we were promised to keep from having to save all the firms too big to fail from failing again? Surely voters won’t stand for more of the same. The tough votes will have to be made, right? We’re going to re-regulate these companies, get transparency, watch them and enforce our laws, right?

Hate to get your hopes up. On December 11, 2009, the House passed H.R. 4173, the Wall Street Reform and Consumer Protection Act of 2009 – according to the DNC, the bill is the  “most sweeping financial regulation since the Great Depression.” DNC Communications Director Brad Woodhouse, said,

“One year after nearly the worst financial collapse in our nation’s history — a collapse brought on by the excessive greed and risk taking of Wall Street and by the anything goes regulatory environment put in place by Republicans — not one Republican in the House thinks that consumers deserve additional protections or that the practices of Wall Street should be curbed.”

The Dems writing the bill, apparently, don’t think so either. The fix was in. To get the 1,300 page bill to a vote, they caved on the enforcement provisions so that the bill falls somewhere between a tediously long suggestion and a PR stunt. Sound tough to voters, but make sure the market sees the secret wink and the nod. Sure, the bill would shuffle the regulators, asks the Treasury to report stuff to Congress, requires a lot more forms to be filled out, and adds some councils and boards. It prohibits a few new things, but also repeals some regulation on the books that could make things worse. Dennis Kucinich (D-OH) voted against the bill, believing the legislation does not go far enough. On his website, Kucinich noted the loopholes in the bill “that sophisticated financial industry insiders will exploit with ease.”

But hey, the Senate just got a hold of it. Don’t expect it to be better, shorter, or even get to a vote until spring, if then.


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Dinosaurs should be extinct

2ijpxr4Try living with them and you’ll trampled or eaten. One of the many notable dinosaurs surviving today is the health insurance industry. They are really big. Have voracious appetites. And their sole purpose is keep you alive just long enough to eat every dollar you have.

Way back in the World War II era (before the internet began recording history), these dinosaurs began roaming the US as result of the wage freeze during the war. Employers saw it as way to scam the freeze and attract employees when employees were scarce. By the end of the war, employees loved these cute little scaly creatures (Yabba-Dabba Do). They didn’t eat much back then, but as we started feeding them, they started growing and got bigger and bigger. They began eating each other and fighting over the food supply – us. Thick skinned, with no known predators, lots of lobbyists and seemingly impervious to regulation, they have continued to grow to their enormous present-day size. They also seem to have a particular love for the food in the South.

Quoting researchers at the Johns Hopkins Bloomberg School of Public Health (Click here for the full report), SouthernStudies.org, says the “Health insurance industry monopolizes the South. According to the report, insurer consolidation also disproportionately disadvantages rural states. In several rural states across the nation the two largest health insurers control at least 80% of the statewide market. In Alabama, for instance, the biggest insurer holds 89% of the statewide market, the highest rate in the nation for a single company. Even more populous states in the South have serious market concentration problems; Virginia’s largest health insurer, for example, controls a 50% share of the statewide market.

The combined market share percentage of the top two insurers in each state in the South:
Alabama – 88
Arkansas – 81
Florida – 45
Georgia – 69
Kentucky – 69
Louisiana – 74
Mississippi – n/a
North Carolina – 73
South Carolina – 75
Tennessee – 62
Texas – 59
Virginia – 61
West Virginia – 54

”In the past 13 years, more than 400 corporate mergers have involved health insurers, and a small number of companies now dominate local markets“ – HCAN

“94 percent of insurance markets in the United States are now highly concentrated, and insurers are thriving in the anti-competitive marketplace, raking in enormous profits and paying out huge CEO salaries“ – The American Medical Association

”Health insurance premiums have skyrocketed, going up more than 87% on average over the past six years“ – The Department of Justice

From blog.AFLCIO.org and quoting a letter to the Department of Justice’s Anti-Trust Division, Richard Kirsch, HCAN national campaign manager, and David Balto, former policy director of the Federal Trade Commission and now senior fellow at the Center for American Progress, writes: “Simply put, the private insurance companies have secured monopolies or tight oligopolies and exercised that power to put profits ahead of patients….There were no actions taken against anticompetitive conduct by health insurers in the last administration, in spite of the fact that cases by state attorneys general have secured massive fines against these insurers. A lack of antitrust enforcement has enabled insurers to acquire dominant positions in almost every metropolitan market.”

Extinct in most of the world, the cost of maintaining these dinosaurs has soared.

According to the National Coalition on Health Care:

  • In 2008, total national health expenditures were expected to rise 6.9 percent — two times the rate of inflation.
  • Total spending was $2.4 TRILLION in 2007, or $7900 per person
  • Total health care spending represented 17 percent of the gross domestic product (GDP) – compared to 10.9 percent of the GDP in Switzerland, 10.7 percent in Germany, 9.7 percent in Canada and 9.5 percent in France.
  • U.S. health care spending is expected to increase at similar levels for the next decade reaching $4.3 TRILLION in 2017, or 20 percent of GDP.
  • The annual premium for an employer health plan covering a family of four averaged nearly $12,700.
  • The annual premium for single coverage averaged over $4,700.
  • Health care spending is 4.3 times the amount spent on national defense.
  • Health insurance cost in the United States have been rising four times faster on average than workers’ earnings since 1999.
  • The average employee contribution to company-provided health insurance has increased more than 120 percent since 2000. Average out-of-pocket costs for deductibles, co-payments for medications, and co-insurance for physician and hospital visits rose 115 percent during the same period.
  • National surveys show that the primary reason people are uninsured is the high cost of health insurance coverage.
  • A recent study by Harvard University researchers found that the average out-of-pocket medical debt for those who filed for bankruptcy was $12,000. The study noted that 68 percent of those who filed for bankruptcy had health insurance. In addition, the study found that 50 percent of all bankruptcy filings were partly the result of medical expenses.Every 30 seconds in the United States someone files for bankruptcy in the aftermath of a serious health problem.
  • A new survey shows that more than 25 percent said that housing problems resulted from medical debt, including the inability to make rent or mortgage payments and the development of bad credit ratings.
  • Retiring elderly couples will need $250,000 – $300,000 in savings just to pay for the most basic medical coverage.
  • The United States spends six times more per capita on the administration of the health care system than its peer Western European nations.

64022626_711ca081eeWe obviously need a dragon slayer. We need to kill these evil beasts off once and for all. We cannot afford to wait. They will eat us all. Write your congressperson. Demand single payer and enforcement of our anti-trust laws. If for no other reason, do it because dinosaur farts contribute to greenhouse gases and some believe brought on the last ice age.