It is dawning on us that frightening gasoline prices, the demoralizing housing slump, job layoffs, drained savings accounts and higher health costs are not going away.
"Why It’s Worse Than You Think," screamed the headline of a Newsweek story this month. It argues that the Pollyannas who promised a quick recovery in the second half of 2008 were "dead wrong."
"Breaking Point," warns Business Week. It finds many Americans are being forced to contemplate, "Do I put gas in my car or do I pay this utility bill or do I pay the mortgage?"
"High Wire: The Precarious Financial Lives of American Families," a new book by veteran Los Angeles Times reporter Peter Gosselin, posits that a majority of Americans, "from the working poor to the reasonably rich, are in danger of taking steep financial falls from which they have a terrible time recovering."
All but the wealthiest, Gosselin says, "are operating on a high wire, compelled to keep our balance, largely on our own. And we must do so while buffeted by financial forces far beyond our control, sometimes even beyond our knowledge."
He argues that the social fabric is unraveling in America by the spread of a surprisingly popular theory: "Instead of joining together to solve problems that affect the whole society, the heralds of the new approach say, more responsibility should be placed on individuals and families alone."
The idea is that when financial calamity strikes and people see they must bear the consequences alone, they will take steps to protect themselves. Gosselin argues the fallacy of this is that today’s financial reversals are too daunting for most families to overcome alone.
It’s a hard argument to dispute. Ironclad pensions are disappearing. Health insurance evaporates like a breath of wind. Job stability is gone; endemic layoffs are hard to survive. People don’t — or can’t — save enough to handle crises such as job loss. Government safety nets are full of holes. Insurance policies have so many loopholes, many are worthless.
Unions have lost their clout. Families are on their own when it comes to investing, and many find they are not good at it. A college education no longer is the key to success. Social Security as is cannot sustain future generations. Life’s surprises — divorce, serious illness, unexpected babies, tornadoes, fire, hurricanes — still strike, whether or not a family is financially stable. The rich get richer — three-fourths of all income gains from 2002 to 2006 went to those making more than $400,000 a year. Globalization makes our low-tech jobs go away.
The theme of all this grim news is that even as the overall economy has doubled in size and grown in truly amazing, impressive ways during the last quarter-century, America has failed to prevent a huge, dramatic change — the shift of economic risk from government and corporations to the paycheck-to-paycheck middle-class family.
Barack Obama and John McCain will be debating variations of this thesis until November. So far, neither candidate has answered in either broad-enough strokes or sufficient-enough detail how he would make life better for financially stressed families.
Obama’s ideas on economic growth are still unformed; his promises lacking basics. He gives lip service to change but leaves the experts scratching their heads, wondering what he means.
McCain’s economic thoughts seem borrowed from President George W. Bush’s "ownership society," whereby families are on their own, where tax breaks for the well-off are a goal, where the old idea of playing by the rules pays off.
So far their plans are conventional — and tired. Obama suggests tax hikes for those making over $200,000 and higher capital gains taxes. McCain wants to extend Bush’s tax cuts and cut corporate taxes. Obama wants all children insured but not through a mandate; McCain wants the government out of health care. Obama wants more fuel-efficient cars; McCain favors nuclear power.
It’s up to us to demand fresh ideas (and there are plenty out there) from these guys. Soon. Or we’ll be condemning more families to hardship and chaos.
(Scripps Howard columnist Ann McFeatters has covered the White House and national politics since 1986. E-mail amcfeatters(at)hotmail.com.)