Middle Class Crucial to America’s on-going Success

               

                In order to make an informed decision concerning if the middle class is, or is not, crucial to the on-going and overall success of America; first we must have a basic understanding of all the social classes in America. Webster’s Dictionary provides most of the following definitions.

                Poverty: lack of money or material possessions, poor.

                Poverty Line: a level of personal or family income below which one is classified as poor according to government standards.

                Lower Class: a social class occupying a position below the middle class and having the lowest status in a society.

Middle Class: a social class holding a position between the upper class and the lower class.

Upper Class: a social class occupying a position above the middle class and having the highest status in society.

Wealth: Prosperity, abundance of possessions or resources, affluence, riches, abundant supply, fortune, property, substance, worth.

Elite: The choice part, a superior group.

So, just how important is the middle class to the on-going and continuous success of America? We can’t be too important because the middle class is slowly disappearing in today’s society. If you take into consideration how we are treated by our government, our leaders, and corporate America, one would think that the middle class has become nothing more than an annoying dull throbbing pain in the sides of the wealthy, the elite, and the top 1 percent. This top few are forced to tolerate this almost unbearable inconvenience of having to deal with we who are considered middle class. They are forced to accept the realization that they do need us to do the work, and spend our trillions of dollars, as consumers, on their product and services, which in turn, grows their wealth. But since the middle class is rapidly disappearing, and no one seems to care, then our importance in the on-going success of America must be greatly exaggerated.

The following question must be asked, “If the middle class is in any way important to the on-going success of America, then why would we be allowed to disappear?” Common sense should tell us, no matter what political party we may support, a prosperous, healthy, and growing middle class would equate to a prosperous, healthy, and growing economy. This would be a winning situation for everyone.

I must be wrong because no one in our government or corporate America seems to be concerned, and is doing nothing to stop the slow, but inevitable disappearance of the middle class. We get a lot of lip service out of Washington about saving the middle class, but that’s it, no action. One could easily perceive that the demise of the middle class is a long drawn out calculated plan formulated and implemented by some unknown group, committee, or organization. The goal of their plan could be to control the masses and destroy the America that we all know and love. The reasons behind such despicable, selfish, and self-serving actions, could be very basic and simple, an addiction to greed, and the love of power.

Is the middle class important to our government?

The answer to this question seems to be, “yes,” according to the following information.

The following tax revenue information (Historical Federal Receipts) was found on taxpolicycenter.com and compiled by the Urban Institute and Brookings Institution.  2008: $2.5 trillion. 2009: $2.1 trillion. 2010: $2.1 trillion. 2011: $2.3 trillion. 2012: $2.4 trillion. 2013 estimated: $2.7 trillion. 2014 estimated: $3 trillion.

The Urban Institute is a non-partisan Washington D.C. based American think tank that carries out economic and social policy research, collects data, evaluates social programs, educates the public on key domestic issues, and provides advice and technical assistance to developing governments abroad. The Brookings Institution is also an American think tank in Washington D.C. One of Washington’s oldest thinks tanks, Brookings conducts research and education in the social sciences, primarily in economics, metropolitan policy, governance, foreign policy, and global economy and development. The Bookings Institution is ranked the most influential think tank in the world.

Other sources provide the following tax revenue information as a second opinion for accuracy.  Useconomy.about.com went to the White House Office of Management and budget, “table 1.1, summary of receipts and outlays” for the following tax revenue numbers: 2008: $2.5 trillion. 2009: $2.1 trillion. LAtimes.com reported 2010 tax revenue was $2.3 trillion, and 2011 was $2.4 trillion. Heritage.com reported that tax revenues for 2011 were $2.3 trillion. The IRS Data Book tax revenue information released for 2012 was $2.5 trillion. ESmonitor.com states that 2013 estimated tax revenues will be $2.7 trillion. Useconomy.about.com: The U.S. government total revenue for 2014 is estimated at $3.034 trillion.

Cnsnews.com, June 20, 2010, by Terence P. Jeffrey, had the following to say, “Middle Class American’s, not the rich, or the poor, pay the majority of annual tax revenues taken in by the federal government according to data released by a new Congressional Budget Office study.” The article says, “Middle class households that earned between $34,300 and $141,900 paid 50.5 percent of all federal tax revenue in 2007.  According to a CBO study released Thursday, households that earned $34, 300 and $352, 900, paid 66.7 percent of all federal taxes.

 

Usgovinfo.about.com. by Tom Murse, August 10, 2010, gives us a look at individual tax rates and shares by income in 2007, which is the most recent data available from the IRS. The top 25 percent of American’s who earned at least $66,532 paid 86.6 percent of the nation’s income tax. The top 50 percent of American’s who earned at least $32,879 paid 97.1 percent of the nation’s income tax.

 

Manhattan-institute.org. August 2012, the U.S. Tax System asked, “Who Really Pays?” This question is answered by Stephen Moore, Senior Economics Writer who in on the Wall Street Journal Editorial Board.  “The top 25 percent, which is 68 percent of national income, pays 85 percent of federal taxes. The top 10 percent, which is 48 percent of national income, pays 71 percent of federal taxes.”

 

Ntu.org. National Taxpayer Union supplied the following information. Their source was the IRS. 2008: AGI threshold (Adjusted Gross Income) the top 25 percent with income of at least $67,280 paid 86.34 percent of income tax. The top 50 percent with income of at least $33,048 paid 97.30 percent of income tax. 2009: The top 25 percent with income of at least $66,193 paid 87.3 percent of income tax. The top 50 percent with income of at least $32,396 paid 97.75 percent of income tax.

 

Marc Davis reports on investopedia.com. August 31, 2011:  According to statistic provided by the IRS, which was updated in 2010: The top 10 percent, ranked by AGI of at least $113,799, paid 69.94 percent of federal income tax. The top 25 percent, ranked by AGI of at least $67,280 paid 86.34 percent of federal income tax. The top 50 percent, ranked by AGI of at least $33,048 paid 97.3 percent of federal income tax.

 

Robert Longley states in an article on Usgovinfo.about.com. “Taxpayers who rank in the top 50 percent of taxpayers by income pay virtually all individual income taxes. In all the years since 1990, taxpayers in this group have paid over 94 percent of all individual income taxes. In 2000, 2001, and 2002, this group paid 96 percent of the total.

 

Larry Doyle is a Wall Street veteran who shares his views and instincts on the market, the economy, and all things financial. He had an article September 2012, in senseoncents.com. His graph shows that the middle percentiles collectively pay approximately 65 percent to 67 percent of income taxes in 2008.

 The US Census Bureau’s population growth clock says that the population of the USA is 317 million. If we speculate that middle class numbers do not include corporate America, the top 10 percent, and the ones who do not pay taxes, the American middle class is approximately, and very conservatively, 75 percent of our population at 238 million tax paying citizens in the income range of $32,000 to approximately $200,000. It does not take an economical genius to understand that 75 percent of the above $11.4 trillion tax dollars that flowed into Washington in the last five years (2008 – 2012), $8.5 trillion is from the middle class. If the projected tax revenues for 2013 and 2014 are accurate ($5.7 trillion combined), this will be another $4.27 trillion in tax dollars from we who are considered middle class. If the middle class is allowed to disappear, so goes the bulk of the tax dollars that is flowing into Washington annually.

 

 Christopher S. Rugaber of the Associated Press had an article in the Courier-Journal, January 22, 2014. The title of this article is, “Spending likely to drive growth.” In the first paragraph the article states, “Washington—Hopes are rising that consumers will drive stronger growth in 2014 after they stepped up spending at the end of last year in the United States and Europe.” Our government is depending on the middle class consumers to continue to spend our trillions of dollars on goods and services in 2014. Why? Because the middle class in America is the economy. 

I think it’s safe to say that our government needs and depends on the tax revenues generated from the middle class.

Is the middle class important to corporate America?

 

The answer to this question also seems to be, “yes,” according to the following information.

 

Our first step is to look at how much money corporate America spends annually on advertising to get deeper into the pockets of the American middle class masses. Nytimes.com says television advertising is estimated to be $70 billion a year. Online advertising spending topped $100 billion in 2012 according to forbes.com. Extention.org said approximately $10 billion is spent annually on advertising all types of food and beverages to America’s children and youth. The following was found on fiercepharma.com, which details pharmaceutical companies advertising spending in 2012. Eli-Lilly: $433.4 million. Abbott Laboratories: $301.7 million. Merck: $285.5 million. Amgen: $229.3 million. AstraZeneca: $209.4 million.

 

The following is advertising budgets in 2011 for several major corporations provided by Patricia Laya of businessinsider.com. “She says that big corporations know the importance of marketing and they are willing to pay for it.” General Motors: $4.2 billion. Ford: $3.9 billion. Verizon: $2.5 billion. Hewlett Packard: $1 billion. Citigroup: $1.6 billion. Bank of America: $1.9 billion. JP Morgan: $2.4 billion. Walmart: $2.5 billion. AT&T: $2.9 billion. Finance.yahoo.com had the following information. P&G 2011 advertising spending: $2.95 billion. L’Oreal 2011: $1.34 billion. Time Warner 2011: $1.28 billion.

 

 In the end, who pays for the billions of dollars spent on advertising? The cost of advertising is built into the cost of each product or service that corporate America is trying to sell us. Therefore; we American middle class consumers are picking up the tab for the billions of dollars that corporate America spends on advertising annually.

 

Corporate America knows exactly how important the middle class consumer is to their overall and continued success. They know that without our trillions of dollars that we middle class consumers spend on their products and service annually, they go out of business. This should lead all of us to a very simple and fact based conclusion, corporate America needs the middle class, and is willing to invest billions of dollars each year, to get their hands on our trillions of dollars that we middle class consumers spend annually.

 

Lucas Reilly of mentalfloss.com supplied the following information. In 2011, Americans spent $10.7 trillion shopping.  Bloomberg.com report on consumer spending in US by Lorraine Woellert, September 28, 2012  said, “the value of all goods and services bought last month rose 0.5 percent to $11.2 trillion at an annual pace, matching the median estimate of economists surveyed by Bloomberg and the biggest gain since February, according to the Commerce Department’s report.

 

We middle class consumers are inundated with an overload of advertising every waking moment of our lives. This continuous buffet of advertising that we consumers are force fed is nothing more than corporate America trying to get more of our money. They use newspapers, magazines, radio, television, billboards, signs, mailings, online, phone calls, well known professional athletes, celebrities, movie stars, rock stars, semi-retired politicians, animation, humor and drama. They do whatever it takes to make some sort of connection with the American consumer that will trigger us to spend more of our money on their stuff. We can’t even go to a movie today without being forced to sit through a barrage of advertising before we can enjoy the movie.

 

 Due to corporate greed, and escalating competition to get their hands on as much of our trillions of dollars that we consumers spend, it’s getting harder each year for us American consumers to enjoy any holiday. Corporate America looks at every holiday season as another way to manipulate all of us to spend more of our money on their products and services.

 

This is how important our trillions of dollars that we middle class consumers spend annually are to America’s on-going success. It’s worth saying again, without the financial support of the American middle class consumers; America’s economy takes a big dump.

 

Look at consumer debt today. An article by Martin Crutsinger on Huffingtonpost.com, December 7, 2012, says, “U.S. consumer debt hits all-time high: Borrowing rises to $2.7 trillion.” An USNEWS.com report by Meg Handley, March 2012 states, “American’s racked up $48 billion in new credit card debt in 2011.” Not only is our nation drowning in debt, $17 trillion and growing, but we U.S. consumers are also over our heads in debt. So many naïve, trusting, honest, goodhearted, hardworking, and very gullible middle class citizens, are unintentionally allowing themselves to be sucked into the trap (bondage) of debt. Corporate America uses slick, targeted, and well produced, advertising campaigns that are created for one purpose. Their goal is to manipulate, trigger, and entice, us consumers to buy, buy, and then buy some more of what we don’t need. If we can’t afford it, no problem, someone will make it happen. Corporate America will do whatever it takes to continue to prosper, survive, and grow their wealth, at our expense.  

 

Wage stagnation is not helping the average middle class American. CBS.com: “worker’s average hourly earnings in September, 2013 rose a meager 0.1 percent, according to this week’s government employment report.” The report also says, “The reality is that wages and compensation have been stagnant for decades, a consequence of rising income inequality, globalization, declining union membership, widening poverty, uneven K-12 education and a host of other often interrelated factors.”  A report in the Washington Post by Dylan Matthews, and the Economic Policy Institute (EPI), titled “A decade of flat wages,” tells how the middle class is falling. Another report by President Lawrence Mishel and economist Heidi Shierholz says, “Real hourly wages for the people at the middle of the wage distribution were no higher in 2012 than 2000.” A New York Times article by Steven Greenhouse, January 12, 2013 makes several valid points concerning the middle class in America. Mr. Greenhouse talks about income inequality and stagnant wages for millions of workers, “wages have simply flat lined.” Lawrence Katz, an economist at Harvard states, “For the great bulk of workers, labor’s shrinking share in even worse than the statistics show, when one considers that a sizable and growing chunk of overall wages goes to the top 1 percent, senior corporate executives, wall street professionals, Hollywood stars, pop singers, and professional athletes.” Center for Budget and Policy Priorities: “median income for working-age households, headed by someone under 65, slid 12.4 percent from 2000 to 2011, to $55,640. During that time the American economy grew more than 18 percent.”

 

“US income inequality straining economy” This is the title of an article by Christopher S. Rugaber with the Associated Press. This article was in the Courier-Journal (Louisville, KY.) December 22, 2013. Mr. Rugaber states, “Washington: The growing gap between the richest Americans and everyone else isn’t bad just for individuals. It’s hurting the U.S. economy. So says a majority of more than three dozen economists surveyed last week.”

 

The fact is that the American middle class masses are working harder but being forced to get by on less. We are asked to give more as corporate America gives us less. Corporate America is making record profits and hoarding trillions of dollars, as they toss us table scraps. Corporate America needs the middle class. They need our hard work, our attention to detail, our expertise, and our outstanding work ethic; they just don’t want to pay us for it anymore.

 

 If the middle class is crucial to the continuous and on-going success of the USA, our government, and corporate America, as the above information suggests, why are we disappearing? What is the problem? How do we fix it? The big question that all of us that are considered middle class (Democrat and Republican alike) need to ask is, “does our government, our leaders, or corporate America, even want to fix it?” I would say “no.” Why? It’s working for them. Their tunnel vision pursuit of power and their lust for money (greed) will not allow them to think long term. They are oblivious to the devastating consequences that will occur when the middle class transitions into the underclass or lower class. When this happens they lose our trillions of dollars of income taxes and sales taxes annually. Add to their loss our trillions of dollars that the middle class spends year after year on their goods and services. Like the predators that our government, our leaders, and corporate America have become, when the middle class has vanished, they will start feeding on and destroying each other.   

 

Our government and corporate America needs the middle class, there is no question about it. It is also a fact that the middle class needs government and corporate America. Common since should tell us all that if we are going to survive, develop, and advance into our future, and not follow the path of great and powerful civilizations before us that have fallen, failed, and disappeared; we must develop a symbiotic relationship. We need to put aside our petty differences, check our egos at the door, respect one another for what we bring to the table, agree to disagree, start working as a team, and share the wealth knowing that there is enough for everyone if we eliminate greed from the equation. We must get our house in order, and get our nation back on the right path. If we don’t, our differences won’t matter. We will then take our place in history as the late, great, United States of America. Future generation around the world will talk about a paradise lost and the fools that allowed it to happen.

 

The middle class of America is the economy. Fact: Without our financial support, our trillions of dollars in taxes that flow into Washington every year, and without our trillions of dollars that we spend as consumers annually, the economy of the United States of America come to a screeching halt. Why is this so hard for Washington and corporate America to understand? Could it be that they have become so self-absorbed, and are so addicted to power and greed that they simply cannot help themselves?