Measuring U.S. Decline: Middle Class Shrinking

According to the U.S. Census Bureau, the middle class household-income-distribution is continuing to shrink, even as the 40-year-long trend toward inequality accelerates (Washington Post and the Census Bureau). The graph to the right (from the excellent post on MyBudget360) illustrates how the mass of the U.S. population is now stuck well over on the poor end of income distribution – definitely not the picture of a healthy middle-class society.

This is actually a lot worse than it sounds since poverty is also rising, judging from the record level of people on food stamps. Thus, the historic rise of the middle class that occurred after World War II by replacing a shrinking class of the underprivileged and heralded the rise of the U.S. to global preeminence is now being reversed by both a shrinking of the middle class as its members slip one by one back into the now expanding class of the underprivileged. The decline of the U.S. as a symbol of a bright global future and the decline of U.S. power can be expected to follow…and indeed both trends are increasingly obvious with the failure of the Neo-Con colonial dreams in Iraq, the rise of an independent Iran, the opening of the Mideast to China, the decline in U.S. prospects in Afghanistan, the ineffectual two-decade U.S. adventure in Somalia, and–most of all–the seemingly terminal illness of the fatally corrupt U.S. financial system.

1SaezTop10PShareThe scope and reality of the current shift of national wealth away from the middle class and into the hands of the overprivileged is indicated by a graph from the invaluable Wearethe99% site depicting the proportion of income by year held by the top 10% of the population. The “Great Compression” years of 1941-1979 stand in stunning contrast to the post-Reagan collapse of the New Deal compromise over the last four decades. The linear trend toward accumulation of national wealth in the hands of the rich is the very picture of a class war arithmetically certain to turn the U.S. into a third world country unless reversed.

How the rich have engineered this financial revolution is really no secret: they took over the government, hiding to a great extent behind Republican smoke about “small government” and rewrote its laws for their own benefit, as Wearethe99%’s graph of the precipitous decline in tax rates for the rich over the last half century illustrates: the effective U.S. tax rate on the richest 400 Americans went from 50% in 1955 to 17% in 2007. The Center on Budget and Policy Priorities provides a revealing analysis. Blaming Reagan for killing the middle class is not just liberal propaganda: “top marginal income tax rates in the United States or the United Kingdom were above 70% in the 1970s before the Reagan and Thatcher revolutions drastically cut them by 40 percentage points within a decade.” [] Cutting tax rates on the rich as their incomes exploded amounted to one of the greatest welfare programs in history. Tax code giveaways carefully designed to favor the rich ice the cake, as shown in a revealing little slideshow from Bankrate.comToday workers support the country, and the rich benefit; that is the law.

None of this should be news to anyone: these are significant not as news but as markers of the wholesale decline of U.S. society. But this of course has nothing to do with class war – i.e., none of the super-rich currently raking in the dough from a booming stock market held up by corporate welfare from the Fed would dream of intentionally milking the 99%.


One comment on “Measuring U.S. Decline: Middle Class Shrinking

  1. Pingback: The State of the Corpora…Ah…Union | Shadowed Forest of World Politics

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