The middle class is shrinking. Those in power have run up enormous debts on public credit while shoveling most of the money into private pockets. The corporations that have benefitted from this borrowing binge, meanwhile, leverage the global trade system to transfer their profits beyond the reach of national governments.

Meanwhile, we have been told lies by Democrats and by Republicans, divided into artificial camps and led into debates that are either irrelevant or so dramatically scripted that we fail to realize every choice leads to the same result: the dismantling of the social framework that defined and sustained the opportunity of the last century. National mobilization of resources has given way to radical individualism under a narrative that, in the wealthiest nation in the world, we must always expect less.

In this tumultuous time, we search for a way forward - a new Square Deal for the American people.

Sunday, October 16, 2011

Haves and Have Nots -- or, a Tale of Cash and Credit

America is divided by income.  I see it when I get together with some of my oldest friends.  We have dinner and some drinks.  We talk and laugh. 

My friends are pretty smart.  They have jobs, and they work harder than I do for longer hours.  They don't make a lot of money, though, so when the bill comes, you might expect me to say that they sigh and ask if I can lend them some money.  That would fit with the dominant conservative view of low-income Americans as lazy, stupid, and dependent. 

But that doesn't happen.  Out of their pockets come massive wads of $20 bills.  I open my wallet and find a few singles.  I end up paying the check on my credit card and collecting up their cash, like I'm at an ATM.

That's no surprise.  Higher-income people don't have much need for cash.  It's common for a few of my friends to have as much as $500 in their pockets when I have less than $5.  But it'd be a mistake to think that means I'm not doing well.  Behind my empty wallet lies a vast future earning potential, while their wads of bills are backstops to the next payday.  If one of their cars breaks, they may need to wait a week to fix it.  I have a range of choices from a tow to a rental car.  I have less cash but more buying power.

Yet are we really so far apart?  True, I make more in a few months than some of them make in a year, especially adding in the value of generous health insurance, sick and vacation leave, education reimbursement, and other benefits that my job includes and theirs do not.  But I rarely have any case.  My paychecks are siphoned off to a dozen bills, from credit cards to mortgages. 

Should one of my friends lose his job, he and his family might pay their current expenses from a combination of unemployment insurance and public assistance.  If I lose mine, my family couldn't afford to keep the place where we live.

Oh, I'm doing plenty about this situation.  My wife and I live far below our means.  We have no cash because we're making significant extra payments to our debts.  But it takes time because there is a lot to repay, because the graduate degrees and certifications that underwrite my high-paying job cost plenty, and they had to be paid in advance.

Most upper-middle class earners aren't as aware of their predicament.  Many live above their means, their debts increasing day by day.  A sudden change in income would be even more devastating to them than it would to me.   

I've seen it happen to a lot of people.  Savings get consumed first, then the retirement funds disappear.  After that, families start tapping credit lines.  This approach would be fine if it went along with some drastic cuts, but that's not what happens.  Families keep spending freely under the guise of credit until, all at once, their lives collapse into ruin.  Or a new job does come along, and an even greater part of each paycheck goes just to breaking even.  We put ourselves on a pedestal, but many of us who think we are doing well are facing situations far more serious than the people we ridicule.

So when a friend who has nearly run out of $20 bills asks me if I might be able to cover the cost of a new timing belt or radiator until the next payday, I don't ask him whether he's working hard enough.  I pull out my credit card and nod at his promises to repay me soon, unconcerned whether he does or not.  That's a couch I may be able to sleep on if things come to it.

There but for the grace of God go we all.

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