How to Grow the Economy From the Middle Class Out
“This growing inequality isn’t just morally wrong; it’s bad economics. When middle-class families have less to spend, businesses have fewer customers. When wealth concentrates at the very top, it can inflate unstable bubbles that threaten the economy. When the rungs on the ladder of opportunity grow farther apart, it undermines the very essence of this country.”
– President Barack Obama, July 24, 2013
Yesterday, President Obama kicked off a series of economic speeches focusing on why we need to grow the economy from the middle out by investing in the middle class. He made the case that a thriving middle class is the cause, not the consequence of growth.
Economists agree that rebuilding a thriving middle class will help us rebuild a thriving economy. But to grow the economy from the middle class out means investing in education, infrastructure, energy, and innovation and putting in place policies that provide health security, retirement security, and ladders of opportunity for those living in poverty.
“Repealing Obamacare and cutting spending is not an economic plan. It’s not.”
–President Barack Obama, July 24, 2013
The progressive plan to grow the economy from the middle class out stands in marked contrast to the failed and even dangerous “trickle down” tax cut and draconian austerity spending plans championed by conservatives. Conservatives want to cut even more from education, medical research and infrastructure in order to give even more tax cuts to the rich and huge corporations in the hopes that it trickles down to the rest of us.
Trickle-Down Policies Have Been a Failure
A capitalist economy resembles the game of monopoly – when one person has all the money, the game is over. If the middle class can’t afford to buy what businesses are selling, the economy breaks down. Unfortunately, that’s exactly what has been happening for the better part of the last few decades. As inequality has grown, economic growth has slowed, and the vast majority of Americans have been squeezed or left behind.
- Income inequality in the United States is actually higher than at any other time in modern history since the Great Depression.
- Between 1979 and 2007, the richest top 1% of American households saw their income nearly triple, while middle class incomes remained largely stagnant by comparison.
- The average CEO has gotten a raise of nearly 40% since 2009, but the average American earns less than he or she did in 1999.
- Despite enacting taxes cuts for the rich and for corporations, both Presidents Reagan and George W. Bush saw slower economic growth and job growth during their presidency than President Clinton, who raised taxes in 1993.
- The years following the Bush tax cuts were the worst for job creation since the government began keeping records and the worst for business investment since World War II.
- About 62% of the wealth recovered during this recovery has come in the form of higher stock prices, which overwhelmingly benefits the wealthiest Americans but has done little for the middle class and almost nothing for those living in poverty.
A Commitment to Growing the Economy from the Middle Out
Opportunities for upward mobility in America have gotten harder to find over the past 30 years. That’s a betrayal of the American idea. And that’s why we have to do a lot more to give every American the chance to work their way into the middle class.
- President Barack Obama, July 24, 2013
Instead of wasting time on dozens of votes to take away health care from millions of Americans or threats to shut down the government unless we agree to more failed trickle-down, austerity policies, progressives are committed to policies that will grow the economy from the middle class out.
Middle-Out Economics in Two Sentences: The wealthy are not the job creators. The real job creators are the middle class consumers who buy what businesses large and small are selling.
Middle-Out economics is about growing the economy from the middle class out, not from the top down – a conservative approach that has failed. Progressives are focused on putting the policies in place that will bring this idea – and our economy – to life.
Policies to grow the economy from the middle class out:
- Investments in growing the middle class: Investing in education, infrastructure, energy, and innovation boosts the economy today and helps create the job creators and strong middle class that will fuel economic growth tomorrow.
- Everyone paying their fair share: Tax cuts for the wealthy and huge corporations don’t grow the economy. If the wealthy aren’t paying their fair share, we simply cannot afford to make the investments in the middle we need to in order to grow the economy.
- Minimum wage: Nobody who works full time in America should have to live in poverty. Raising the minimum wage will lift people out of poverty and create more consumers to help fuel the economy.
- Health security: Millions of Americans will soon have access to quality, affordable health care for the first time and the 85 percent of Americans who already have health insurance are seeing new benefits and better coverage as a result of Obamacare.
- Retirement security: We need to strengthen both Social Security and our private retirement system so middle-class Americans can afford to retire and live with dignity, a promise beyond the reach of too many.
- Affordable housing: The housing market is recovering, but we need to implement additional policies and reforms to help those who are still underwater and the millions who can’t get a loan to buy a home today.
A lot more policies to strengthen and grow the middle class are outlined in a recent Center for American Progress paper you can check out HERE.