Submitted by Jen Jones on Tue, 08/10/2010 - 11:30am
What was once a white picket fence is now a potential foreclosure; what used to be some measure of Social Security is now using retirement just to get by; what would have been the expectation of (and ability to) send your kids -- all of them -- to college, is now in question, along with all of the other trappings of a now-fleeting American Dream.
Like so many insights and incomes in these tough economic times, the middle class is shrinking—short-changed by everything from the fiendish financial industry to a hobbled housing market.
According to Arianna Huffington's new book, "Third World America", our country’s middle class is facing an onslaught from all sides, including several surprising facts average American’s should remain mindful of—and attempt to prepare for—as they forge ahead into a new reality:
Increases in Income Inequality
In the middle of this decade, the bottom 20 percent of household earners made an average income of $10,655 while households in the top 20 percent made almost $160,000. This disparity of 1,500 percent is the biggest gap between “haves” and “have-nots” on record.
States Cut Services
Between redirected bank bailouts and state budget shortfalls, Americans can expect severe shortages in state-supported services. "According to a report by the Center on Budget and Policy Priorities, at least twenty-nine states have made cuts to public health programs, twenty-four states have cut programs for the elderly and disabled, twenty-nine states have cut aid to K–12 education, and thirty-nine states have cut assistance to public colleges and universities. America’s states faced a cumulative budget gap of $166 billion for fiscal 2010. Total shortfalls through fiscal 2011 are estimated at $380 billion—and could be even higher depending on what happens to unemployment. These are massive numbers. But when you remember that we spent $182 billion to bail out AIG ($12.9 billion of which went straight to Goldman Sachs), you realize that this amount alone would be more than enough to close the 2010 budget gap in every state in the Union. Toss in the $45 billion we gave to now-making-a-profit Bank of America and the $45 billion we gave to now-making-a-profit Citigroup, and we would be well on the way to ensuring that no state’s vital services are cut through 2011." -Arianna Huffington, Third World America
Corporate Tax Evasion
Unfortunately, average Americans are paying much more in taxes each year than their corporate counterparts. "According to the White House, in 2004, the last year data on this was compiled, U.S. corporations paid roughly $16 billion in taxes on $700 billion in foreign active earnings— putting their tax rate at a paltry 2.3 percent.
Infrastructure in Ruins
Think dilapidated roads and potholes can’t be deadly? "In studying car crashes across the country, the Transportation Construction coalition determined that badly maintained or managed roads are responsible for $217 billion in car crashes annually – far more than headline-grabbing alcohol-related accidents ($130 billion) and speed-related pile-ups ($97 billion)", Huffington writes in Third World America. And of the 42,000 road fatalities each year, more than half (53%) are at least partially due to poor road conditions.
Failing Grades for Education
Unlike previous decades, America’s educational system is leaving more and more children behind. Arianna explains in Third World America, all across the country, more and more students are failing with no end in sight: “In Alabama, only 20 percent of eighth graders are proficient in math. In California, it’s just 23 percent. In New York, it’s 34 percent."
Foreclosures in Full Force
“Barry Bosworth and Rosanna Smart of the Brookings Institution found that the catastrophic collapse of the 2008 sub-prime mortgage market resulted in the disappearance of $13 trillion in American household wealth between mid-2007 and March 2009... on average, U.S. households lost one quarter of their wealth in that period," cites Huffington. As a result, Third World America characterizes the housing crisis as “Katrina for the middle class,” with more and more Americans pumping money they don’t have into underwater mortgages and lost assets.
Sickening Health Care Costs
"The vast majority of people who file for bankruptcy are middle-class folks who can’t pay their bills because they’ve lost their jobs or been hit with high medical bills. In fact, a 2009 study by researchers at Harvard and Ohio University showed that health-care problems were the root cause of 62 percent of all personal bankruptcies in America in 2007. When the same researchers did this study across five states in 2001, health-care problems caused only 50 percent of bankruptcy filings. According to the American Bankruptcy Institute, America had 1.4 million personal bankruptcies in 2009, a 32 percent increase over the previous year. Put another way: Every thirty seconds, someone in this country files for bankruptcy in the wake of a serious illness." - Arianna Huffington, Third World America.
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