Too many people are claiming the government isn’t helping middle class people like them, when I have no idea what they mean by the term "middle class."
In the early republic, people divided society into three groups - the poor who they thought were failures, the rich who they distrusted as parasites, and the middling like themselves.
When I was growing up, after the Lynds had described Middletown, we had a more nuanced view. If pushed, we would have said middle class meant a set of values about the virtue of hard work and preparing for the future. If we used any one criteria to distinguish between our neighbors, it was their expectations for their children. There were people who weren’t poor who didn’t expect their kids to go to college, and there were the well-to-do, many of them salesmen, whose teenagers were undisciplined - we knew neither was middle class.
By this criteria, Barak Obama and Joe Biden are middle class, while Sarah Palin and John McCain are not.
However, even when I was a child, advertisers were promoting a different definition. Middle class was the possession of certain items like a home and car. Where I was a child in the 1950's, many middle class people still preferred to rent a house rather than take on the debt of a mortgage, but that changed by the 1960's.
Unfortunately, when advertisers define middle class, one never quite achieves the goal. Life becomes an eternal adolescence when one must prove one self by one’s goods.
By this standard, all the candidates for president and vice-president in the last election were middle class, and Palin and McCain were more successful than their rivals.
Statisticians and the economists who interpret their numbers have reduced middle class to set income levels or averages or percentiles. Values don’t matter. A mobster is as middle class as a preacher if he reports the same numbers to the IRS.
Now the economy is in crisis, and people shift from one definition to another.
I read about one family in Memphis that was using the food kitchen where the wife had volunteered before she lost her job as a shift manager at a fast-food outlet.
Only when I read about them, my childhood definitions said, "no, you’re not middle class." Several years before, she and her truck driver husband had gotten so far into debt they declared bankruptcy, and now, here they were again, in trouble.
I sympathized with her reaction when her employer told her they were eliminating her position, but she was welcome to continue doing the same work for half the pay. I would have walked too. But, I wouldn’t have stayed home. I would have gone out and accepted the same job, at the lower wage, from some one else. My pride would have limits when I had a family to feed.
She said her teen-age son had just gotten a part-time job, but they didn’t expect him to contribute to the household expenses. She told the reporter "she'd rather he learn how to manage his own finances."
No, not middle class, even if her husband’s income qualified and they had a car and a mortgage on their house.
They were the reason food stamps were created: they were facing a temporary crises and needed help. However, their definition of helping the middle class meant preventing them from needing the food kitchen. Saving for a potential crisis was never part of their view of the world.
More recently, The New York Times and CBS News surveyed people who supported the Tea Party Movement and found they were better off than the ones who appeared at rallies. If they’re anything like the ones who send my employer their newsletters, they are the ones who benefited from the Bush tax cuts and the inflated housing and financial markets and now have problems.
They consider themselves middle class, because they haven’t achieved their goals of wealth, and now see them snatched away. When I was a child, we would have put them in that hazy group of the well-to-do who lived too recklessly, the ones who attracted Jay Gatsby.
The de-inflation of housing and stock values, no matter how slow, is still a loss. People don’t care that the decline is being managed by the government to prevent wide-scale disaster. They only know, they personally are losing status, and the government isn’t preventing that.
It can’t. Managed loss and crisis intervention are what the government can offer right now, and neither can soften the psychological effects for people who strayed from my childhood view of middle class from losing their image of themselves as making it.
When the definition of middle class becomes "not as well off as I want to be," then no one is ever satisfied unless government leaders, like Alan Greenspan, provide an illusion. When the economy crashes, our leaders have to deal in the realities that destroy illusions.
But those who live in the material view of middle class still have adolescent demands for immediate satisfaction, not utilitarian help.
They don’t want to hear that facing the consequences of decades of industrial policy that eliminated working class jobs in this country is a different problem, with a solution that requires policies and political will that will take time to take effect.
They want it now, and if it can’t happen, then the government isn’t doing enough to help them, the middle class.
Notes:
Bengali, Shashank. "Amid Recession, Memphis Becomes America's Hunger Capital," McClatchy Newspapers, 26 March 2010.
Zernike, Kate and Megan Thee-Brenan. "Poll Finds Tea Party Backers Wealthier and More Educated," The New York Times 14 April 2010.
Sunday, April 18, 2010
Sunday, April 11, 2010
Tax Code
Each year when I do my taxes, I get a refresher course in the ways our tax code has contributed to our current economic mess.
I’ll skip my shrinking, meager W-4 for Schedule B where I must list all the interest I earned on savings accounts as it was reported by banks to the federal government. When I first deposited money with my local bank in 1999, it was paying 4.17% interest. That fell in September, 2001, to 3.69%, then dropped to 2.75% the next month. It’s been hovering around 1% since 2004 and last month fell to its all time low, .75%.
Whenever I get my bank statement I say thank you Mr. Greenspan for making money so cheap and using your power at the Federal Reserve to implement your view that savings were bad for the economy. With the rates I’ve been paid for the last decade, why would anyone save? And why does the federal government still want to tax my tiny earnings at the full income rates? Unearned capital gains on hedge fund returns are treated more gently.
Then I get to Schedule A which allows me to itemize deductions. I do the formula for medical and dental expenses, and actually now have enough to report. That’s not because I’m sicker, but because I no longer have employer paid health insurance, and deductibles and co-pays have risen.
Back when I was finishing graduate school in the early 1970's, I was paying $2.25 a month for birth control pills. I’m now paying $38.00 a month for my portion of the $56.07 paid by my insurance company for the hormone replacement that uses the same chemicals. They claim it retails for $59.60.
That constantly changing W-4 never increased that much. My highest income was less than 5 times what I made as a beginning college instructor, but the retail price of my drugs is 26 times what it was then. The fact I actually pay only 16 times more is not much consolation when my income in now only twice what it was then.
Thanks Congress for never having the guts to stand up to lobbyists.
When I complete Schedule B I realize my total is now less than the standard deduction because I now own my house. The people who benefit most are those who pay the highest interest on their mortgages. Those who pay no principal make out the best, and those are the mortgages that caused the first problems with the housing market. But, when the banks were offering those deals and the government was subsidizing the mortgage payment, why would anyone do anything more responsible? It only cost money.
If Congress wanted to encourage home ownership, there are other ways they could create this deduction that benefitted people who lived in their houses for years rather than those who moved every few. But, of course, the person who stays in a house generates no income for the mortgage lenders, and so becomes a drag on the economy.
Last year I noticed Schedule L which allows me to add some of my real estate taxes to my standard deduction. But the limit is $500. If I were able to itemize my expenses, I could deduct the whole $614.15.
To get to the final total on Schedule L, I have to wade through the section that lets me deduct the sales tax on a new vehicle up to $49,500 in value. The more I spent, the more I deduct. The more I spent, the more likely it was I bought an SUV or other vehicle that consumes more gas than my 10 year old Hundayi. Again, the fiscally conservative receives less than those who contribute to our environmental and energy problems, because their spending creates jobs and we do not.
When I got done several years ago, I discovered if I had declared zero dependents and used standard deductions, I ended owing taxes. That hadn’t been the case the year before, but politicians had started manipulating the deduction schedules to give people more money each week which could then be spent on houses and cars they couldn’t otherwise afford. At the end of the year, no one remembers the benefits, only faces the bill and curses the government and taxes.
My solution, encouraged by the tax code, was to play accounting games. I took money out of that savings account that’s paying such low interest and moved it to an IRA that pays less than I made in 1999. That sleight of hand movement of money that’s been sitting there from the time when I had a higher income, earns me a refund. Why would I save money, Mr Greenspan? To buy a refund.
So here I am, getting ready to mail a tax return that benefits those who invest in gas guzzling cars and bad mortgages, that punishes savers and people who stabilize communities by staying in their homes, that teaches tax avoidance and creates unnecessary frustration, and think no wonder we’re in the fix we’re in.
I’d say, if you want to do something serious about the economy, fix the tax code. But then I think, this Congress would only make it worse.
I’ll skip my shrinking, meager W-4 for Schedule B where I must list all the interest I earned on savings accounts as it was reported by banks to the federal government. When I first deposited money with my local bank in 1999, it was paying 4.17% interest. That fell in September, 2001, to 3.69%, then dropped to 2.75% the next month. It’s been hovering around 1% since 2004 and last month fell to its all time low, .75%.
Whenever I get my bank statement I say thank you Mr. Greenspan for making money so cheap and using your power at the Federal Reserve to implement your view that savings were bad for the economy. With the rates I’ve been paid for the last decade, why would anyone save? And why does the federal government still want to tax my tiny earnings at the full income rates? Unearned capital gains on hedge fund returns are treated more gently.
Then I get to Schedule A which allows me to itemize deductions. I do the formula for medical and dental expenses, and actually now have enough to report. That’s not because I’m sicker, but because I no longer have employer paid health insurance, and deductibles and co-pays have risen.
Back when I was finishing graduate school in the early 1970's, I was paying $2.25 a month for birth control pills. I’m now paying $38.00 a month for my portion of the $56.07 paid by my insurance company for the hormone replacement that uses the same chemicals. They claim it retails for $59.60.
That constantly changing W-4 never increased that much. My highest income was less than 5 times what I made as a beginning college instructor, but the retail price of my drugs is 26 times what it was then. The fact I actually pay only 16 times more is not much consolation when my income in now only twice what it was then.
Thanks Congress for never having the guts to stand up to lobbyists.
When I complete Schedule B I realize my total is now less than the standard deduction because I now own my house. The people who benefit most are those who pay the highest interest on their mortgages. Those who pay no principal make out the best, and those are the mortgages that caused the first problems with the housing market. But, when the banks were offering those deals and the government was subsidizing the mortgage payment, why would anyone do anything more responsible? It only cost money.
If Congress wanted to encourage home ownership, there are other ways they could create this deduction that benefitted people who lived in their houses for years rather than those who moved every few. But, of course, the person who stays in a house generates no income for the mortgage lenders, and so becomes a drag on the economy.
Last year I noticed Schedule L which allows me to add some of my real estate taxes to my standard deduction. But the limit is $500. If I were able to itemize my expenses, I could deduct the whole $614.15.
To get to the final total on Schedule L, I have to wade through the section that lets me deduct the sales tax on a new vehicle up to $49,500 in value. The more I spent, the more I deduct. The more I spent, the more likely it was I bought an SUV or other vehicle that consumes more gas than my 10 year old Hundayi. Again, the fiscally conservative receives less than those who contribute to our environmental and energy problems, because their spending creates jobs and we do not.
When I got done several years ago, I discovered if I had declared zero dependents and used standard deductions, I ended owing taxes. That hadn’t been the case the year before, but politicians had started manipulating the deduction schedules to give people more money each week which could then be spent on houses and cars they couldn’t otherwise afford. At the end of the year, no one remembers the benefits, only faces the bill and curses the government and taxes.
My solution, encouraged by the tax code, was to play accounting games. I took money out of that savings account that’s paying such low interest and moved it to an IRA that pays less than I made in 1999. That sleight of hand movement of money that’s been sitting there from the time when I had a higher income, earns me a refund. Why would I save money, Mr Greenspan? To buy a refund.
So here I am, getting ready to mail a tax return that benefits those who invest in gas guzzling cars and bad mortgages, that punishes savers and people who stabilize communities by staying in their homes, that teaches tax avoidance and creates unnecessary frustration, and think no wonder we’re in the fix we’re in.
I’d say, if you want to do something serious about the economy, fix the tax code. But then I think, this Congress would only make it worse.
Monday, April 05, 2010
Economics and Biology
Supply and demand is in conflict with the bell curve. The one argues demand will bring into existence supply; the other posits there are limits on supply. Gresham’s law suggests in those situations where demand outpaces supply, not only will poorer quality supply appear, but it will attack that which is genuine so it alone can flourish.
The laws of Mendel show that, if there were such a thing as a good/evil gene, then one quarter of the population would be saintly, one fourth would be devils, and the rest of us would be middling, neither one nor the other, but willing to follow the bidding of whoever was in power.
If you want good men, and the demand exceeds 25%, you’re not going to get them, no matter how hard you recruit. They simply do not exist. But, it you persist in your demand, the larger population of lesser people will put themselves forth as good, and persecute those who might expose them by comparison.
The Roman Catholic church put artificial restraints on the population of priests by demanding celibacy. Metaphorically, the ability to be a man of faith requires a different gene than the one to be asexual, but when the one trait is used as a filter to define the other, the available supply shrinks.
For centuries the two requirements for the priesthood were not a problem, although folklore and pornography are filled with stories of bawdy friars. Sometime in the last century, either the demand for priests increased with population growth, or supply declined as young men saw other opportunities to escape poverty than joining the church, and the reports of bad priests began to increase.
After Vatican II, two more factors influenced the composition of the pool from whom priests were drawn. More left the church or didn’t enter, and allegiance to a conservative ideology like that reinforced by the current pope became more important. The already skewed gene pool was further altered by social factors.
The badness we’re seeing now that’s shocking isn’t the reports of men who molested young boys, but the blindness of the church hierarchy, which was probably always filled with a combination of the good, the mendacious, and the mediocre. Now it seems the good have disappeared, and only the ambitious survive, men who don’t understand the feelings of ordinary people towards the predatory sexual problems of a few fathers and see only their personal survival, and that of the institution that supports them, as important.
We’re seeing the same dynamic in politics. Campaigns have always been ugly, and the noble few. However, since Richard Nixon’s senate campaign against Helen Gahagan Douglas in 1950, attacks grounded in ideology, not simple partisanship, have so increased in viciousness one wonders who would become a politician.
The answer isn’t nobody, but judging from the headlines, it’s the vain, the ambitious and the greedy who fill the vacuum left when honorable men are driven from the public square by men like Rush Limbaugh.
Democrats seem plagued with the vain, from FDR, who ran for a third term because he believed the country couldn’t do without him, to the easily flattered John Edwards. For many, including Ted Kennedy and Bill Clinton, the vanity was associated with a refusal to recognize society’s limits on the sexual freedom of married men.
Both parties attract the ambitious who abuse power for personal ends. On the one side, there’s New York’s governor, David Patterson, who asked the state police to intervene in a domestic violence dispute to protect an aide. On the other, there’s Sarah Palin, who wanted the state police to take sides in a divorce dispute of a relative when she was governor.
The Republicans seem to have the current monopoly on men who don’t understand the boundary between personal and public money. There’s John Ensign, who’s being investigated for asking donors to hire the husband of his mistress. There’s Jim Greer in Florida, who’s accused of using party donations to a business he secretly owned. There’s the Republican National Committee that used party funds to pay for an outing at a questionable nightclub and lists alcohol as an office supply.
However, Detroit’s financial problems reveal greedy Republicans are only more visible right now, and Mark Sanford shows the Democrats aren’t the only ones who are self-centered.
Many claim Jimmy Carter was a failure, but, in retrospect, he seems to be one of the few genuinely good men who entered politics. He may have been naive about Washington, but, one suspects that that’s not why he was hounded from office. The good are an offence to the wannabe’s, and the current crop of wannabe’s are an offence to the rest of us.
The laws of Mendel show that, if there were such a thing as a good/evil gene, then one quarter of the population would be saintly, one fourth would be devils, and the rest of us would be middling, neither one nor the other, but willing to follow the bidding of whoever was in power.
If you want good men, and the demand exceeds 25%, you’re not going to get them, no matter how hard you recruit. They simply do not exist. But, it you persist in your demand, the larger population of lesser people will put themselves forth as good, and persecute those who might expose them by comparison.
The Roman Catholic church put artificial restraints on the population of priests by demanding celibacy. Metaphorically, the ability to be a man of faith requires a different gene than the one to be asexual, but when the one trait is used as a filter to define the other, the available supply shrinks.
For centuries the two requirements for the priesthood were not a problem, although folklore and pornography are filled with stories of bawdy friars. Sometime in the last century, either the demand for priests increased with population growth, or supply declined as young men saw other opportunities to escape poverty than joining the church, and the reports of bad priests began to increase.
After Vatican II, two more factors influenced the composition of the pool from whom priests were drawn. More left the church or didn’t enter, and allegiance to a conservative ideology like that reinforced by the current pope became more important. The already skewed gene pool was further altered by social factors.
The badness we’re seeing now that’s shocking isn’t the reports of men who molested young boys, but the blindness of the church hierarchy, which was probably always filled with a combination of the good, the mendacious, and the mediocre. Now it seems the good have disappeared, and only the ambitious survive, men who don’t understand the feelings of ordinary people towards the predatory sexual problems of a few fathers and see only their personal survival, and that of the institution that supports them, as important.
We’re seeing the same dynamic in politics. Campaigns have always been ugly, and the noble few. However, since Richard Nixon’s senate campaign against Helen Gahagan Douglas in 1950, attacks grounded in ideology, not simple partisanship, have so increased in viciousness one wonders who would become a politician.
The answer isn’t nobody, but judging from the headlines, it’s the vain, the ambitious and the greedy who fill the vacuum left when honorable men are driven from the public square by men like Rush Limbaugh.
Democrats seem plagued with the vain, from FDR, who ran for a third term because he believed the country couldn’t do without him, to the easily flattered John Edwards. For many, including Ted Kennedy and Bill Clinton, the vanity was associated with a refusal to recognize society’s limits on the sexual freedom of married men.
Both parties attract the ambitious who abuse power for personal ends. On the one side, there’s New York’s governor, David Patterson, who asked the state police to intervene in a domestic violence dispute to protect an aide. On the other, there’s Sarah Palin, who wanted the state police to take sides in a divorce dispute of a relative when she was governor.
The Republicans seem to have the current monopoly on men who don’t understand the boundary between personal and public money. There’s John Ensign, who’s being investigated for asking donors to hire the husband of his mistress. There’s Jim Greer in Florida, who’s accused of using party donations to a business he secretly owned. There’s the Republican National Committee that used party funds to pay for an outing at a questionable nightclub and lists alcohol as an office supply.
However, Detroit’s financial problems reveal greedy Republicans are only more visible right now, and Mark Sanford shows the Democrats aren’t the only ones who are self-centered.
Many claim Jimmy Carter was a failure, but, in retrospect, he seems to be one of the few genuinely good men who entered politics. He may have been naive about Washington, but, one suspects that that’s not why he was hounded from office. The good are an offence to the wannabe’s, and the current crop of wannabe’s are an offence to the rest of us.
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