Reich on the Two Americas

Robert Reich has yet another excellent post on his blog about the current economic malaise in the US:

America’s two economies are getting wider apart.

The Big Money economy is booming. According to a new Commerce Department report, third-quarter profits of American businesses rose at an annual record-breaking $1.659 trillion – besting even the boom year of 2006 (in nominal dollars). Profits have soared for seven consecutive quarters now, matching or beating their fastest pace in history.

Executive pay is linked to profits, so top pay is soaring as well.

Higher profits are also translating into the nice gains in the stock market, which is a boon to everyone with lots of financial assets.

And Wall Street is back. Bonuses on the Street are expected to rise about 5 percent this year, according to a survey by compensation consultants Johnson Associates Inc.

But nothing is trickling down to the Average Worker economy. Job growth is still anemic. At October’s rate of only 50,000 new private-sector jobs, unemployment won’t get down to pre-recession levels for twenty years. And almost half of October’s new jobs were in temporary help.

Meanwhile, the median wage is barely rising, adjusted for inflation. And the value of the major asset of most Americans – their homes – continues to drop.

At this point Reich explores why the above is happening. Go read the whole post to get the details.

So what is Washington doing about all this?

Making the tax code more progressive so more Americans reap the benefits enjoyed by those at the top? Increasing the bargaining power of American workers? Forcing Wall Street banks to reorganize under bankruptcy mortgage loans that are dragging down the housing market? Expanding early childhood education, hiring more teachers, putting fewer kids into each classroom, and making higher education more affordable – so more working and middle-class kids can become tomorrow’s high-priced “talent”?

No. None of this. In fact, Washington is busily separating the two economies even further.

It’s extending the Bush tax cuts – the lion’s share of which go to the very wealthy; reducing the reach and rate of the estate tax; and giving corporations additional tax breaks for investing in software and equipment. Meanwhile, the states are cutting back on pre-schools, firing teachers, and yanking up tuitions and fees at public universities.

Oh, and yes, Washington is also extending unemployment benefits for the long-term jobless. Which is the least it can do, given that their ranks continue to swell.

Reich hits the nail on the head. Obama is not addressing the real problem. In fact, Obama continues to contribute to the growing problem in the US. And this problem won't go away. The longer it festers, the worse the crisis will be when it finally gets addressed. I literally see blood in the streets the day the accounts come due and real change -- not the phony "change you can believe in" promised by Obama -- comes to America. Better sooner than later. The longer it delays, the worse the catastrophe will be in reining in the rampant greed of the ultra-rich and wresting control of the country back from them into the hands of the bottom 99.9% of the population.