Middle-Class Squeeze

by Thomas J. Billitteri, March 6, 2009

Is more government aid needed?

Millions of families who once enjoyed the American dream of home ownership and upward financial mobility are sliding down the economic ladder – some into poverty. Many have been forced to seek government help for the first time. The plunging fortunes of working families are pushing the U.S.. economy deeper into recession as plummeting demand for goods and services creates a downward economic spiral. A consumption binge and growing consumer debt beginning in the 1990s contributed to the middle-class squeeze, but the bigger culprits were exploding prices for necessities such as housing, medical care and college tuition, cuts in employer-funded benefits and, some say, government policies that favored the wealthy. President Barack Obama has promised major aid for the middle class, and some economists are calling for new programs – most notably national health coverage – to assist working Americans.

* Is a stable middle class a thing of the past?
* Is overconsumption at the root of the middle class’ problems?
* Are aggressive new government programs needed to bolster the middle class?

To read the Overview of this week’s report, click here.
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Overview from the issue on Middle-Class Squeeze (March 6, 2009)

By Thomas J. Billitteri

Cindy Dreeszen, 41, and her husband may have seemed like unlikely visitors to the Interfaith food pantry last month in affluent Morris County, N.J.., 25 miles from New York City. Both have steady jobs and a combined income of about $55,000 a year. But with “the cost of everything going up and up” and a second baby due, the couple was looking for free groceries.

“I didn’t think we’d even be allowed to come here,” Ms. Dreeszen told The New York Times. “This is totally something that I never expected to happen, to have to resort to this.”

Countless middle-class Americans are thinking similar thoughts these days as they ponder their suddenly fragile futures.

Millions of families who once enjoyed the American dream of upward mobility and financial security are sliding rapidly down the economic ladder – some into poverty. Many are losing their homes along with their jobs, and telling their children to rethink college. And while today’s economic crisis has made life for middle-class households worse, the problems aren’t new. Pressure on the middle-class has been building for years and is likely to persist long after the current recession – now 14 months old – is over.

The middle class “is in crisis and decline,” says sociologist Kevin Leicht, director of the Institute for Inequality Studies at the University of Iowa.

“Between wages that have been stagnant [in inflation-adjusted terms] since the middle of the 1970s and government policies that are weighted exclusively in the direction of the wealthy, the only thing that has been holding up most of the American middle class is access to cheap and easy credit.”

No official definition of the “middle class” exists. But most Americans – except perhaps the very richest and poorest – consider themselves in that broad category, a fact not lost on Washington policy makers.

Indeed, President Barack Obama announced a 10-year budget on Feb. 28 that takes direct aim at the challenges facing America’s middle class and the growing concentration of wealth at the top of the income scale. Key elements of the plan include shifting more costs to the wealthiest Americans and overhauling health care to make it more affordable.

In further recognition of the importance of the middle-class, Obama has named Vice President Joseph R. Biden to chair a new White House Task Force on Middle Class Working Families. It will examine everything from access to college and child- and elder-care issues to business development and the role of labor unions in the economy.

“Talking about the middle class is the closest that American politicians and maybe Americans are willing to go to emphasize the fact that we have growing inequality in this country,” says Jacob Hacker, a political scientist at the University of California, Berkeley, and a leading social-policy expert. “A very small proportion of the population is getting fabulously rich, and the rest of Americans are getting modestly richer or not much richer at all.”

What’s at stake goes far beyond economics and family finances, though, experts say. “A large middle class, especially one that is politically active, tends to be a kind of anchor that keeps your country from swinging back and forth,” says sociologist Teresa Sullivan, provost and executive vice president for academic affairs at the University of Michigan and co-author of The Fragile Middle Class: Americans in Debt. What’s more, she says, “there are typical values that middle-class families acquire and pass on to their children,” and those values “tend to be very good for democracy.”

Right now, though, the middle class is under threat.

In a study of middle-class households, Demos, a liberal think tank in New York, estimated that 4 million families lost their financial security between 2000 and 2006, raising the total to 23 million. Driving the increase, Demos said, were declines in financial assets, then-rising housing costs and a growing lack of health insurance.

“In America the middle class has been a lifestyle, a certain way of life,” says Jennifer Wheary, a co-author of the study. “It’s been about being able to have a very moderate existence where you could do things like save for your retirement, put your kids through school, get sick and not worry about getting basic care. And those kinds of things are really imperiled right now.”

In another study, the Pew Research Center found this year that “fewer Americans now than at any time in the past half-century believe they’re moving forward in life.”

Among the findings:

* Nearly two-thirds of Americans said their standard of living was higher than that of their parents at the same age, but more than half said they’d either made no progress in life over the past five years or had fallen backward.

* Median household income rose 41 percent since 1970, but upper-income households outperformed those in the middle tier in both income gains and wealth accumulation. The median net worth of upper-income families rose 123 percent from 1983 to 2004, compared with 29 percent for middle-income families.

* Almost eight in 10 respondents said it was more difficult now for those in the middle class to maintain their standard of living compared with five years ago. In 1986, 65 percent felt that way.

Lane Kenworthy, a sociology and political science professor at the University of Arizona who studies income inequality and poverty, says “the key thing that’s happened” to the middle class over the past three decades “is slow income growth compared to general economic growth.” Moreover, Kenworthy says a bigger and bigger portion of economic growth has accrued to the wealthiest 1 percent, whether the measure is basic wages or total compensation, which includes the value of employee-sponsored and government benefits.

Even the economic boom leading up to today’s recession has proved illusory, new Federal Reserve data show. While median household net worth – assets minus debt – rose nearly 18 percent in the three years ending in late 2007, the increase vanished amid last year’s drastic declines in home and stock prices, according to the Fed’s triennial “Survey of Consumer Finances.” “Adjusting for those declines, Fed officials estimated that the median family was 3.2 percent poorer as of October 2008 than it was at the end of 2004,” The New York Times noted.

A hallmark of middle-class insecurity reflects what Hacker calls “the great risk shift” – the notion that government and business have transferred the burden of providing affordable health care, income security and retirement saving onto the shoulders of working Americans, leaving them financially stretched and vulnerable to economic catastrophe.

“Over the last generation, we have witnessed a massive transfer of economic risk from broad structures of insurance, including those sponsored by the corporate sector as well as by government, onto the fragile balance sheets of American families,” Hacker wrote. “This transformation . . . is the defining feature of the contemporary American economy – as important as the shift from agriculture to industry a century ago.”

The challenge of solving the problems facing the American middle class will confront policy makers for years to come. Some experts say the key is growth in good jobs – those with good pay, good benefits and good, secure futures. Others argue that solving the nation’s health-care crisis is the paramount issue.

One thing is certain, experts say: Leaving the fate of the American middle class to chance is not an option.

“We’re believers in hard work, and we’re increasingly in a situation where the difference between whether or not a middle-class family prospers comes down to luck, says Amelia Warren Tyagi, co-author of The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke. “And that’s an idea that makes us really uncomfortable.”

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In the news: Senate passes D.C. Voting Rights Bill

On February 26, 2009, the Senate passed a bill providing full voting representation in the House of Representatives for residents of the nation's capital, nearly ensuring that the measure will become law.  The measure would increase membership in the House from 435 to 437, adding a seat from the District of Columbia and also one from Utah.  The Western seat was added to help attract Republican support and because officials contended that the state was deprived of an additional congressional district through and undercount in the 2000 Census.  The House has yet to take up the measure this session but is certain to repeat its passage of the bill in previous years.  President Obama has indicated his support for giving the District of Columbia voting representation.

For a more in-depth summary, see an Overview of the issue on "D.C. Voting Rights" (April 11, 2008).

Closing Guantánamo

by Kenneth Jost, February 27, 2009

Can Obama close the detention camp within one year?

President Obama on his second full day in office ordered the closing of the Guantánamo detention camp within a year. The facility at the U.S. Naval Station in Cuba has been controversial ever since President George W. Bush decided in late 2001 to use it to hold suspected enemy combatants captured in Afghanistan and elsewhere. Both Obama and Republican candidate John McCain promised during the presidential campaign to close the facility if elected. But that poses many difficult issues about the camp’s remaining 241 prisoners. The government wants to send many to other countries – with few takers so far – but worries that some may resume hostile activities against the United States. Some may be brought to the U.S. for trial, but those prosecutions would raise a host of uncharted legal issues. Meanwhile, opposition already has surfaced to any plans for housing detainees in the United States. And human-rights advocates worry the Obama administration may continue to back some form of preventive detention for suspected terrorists.

• Should the government continue repatriating Guantánamo detainees to other countries?
• Should Guantánamo detainees be prosecuted in civilian courts?
• Should some Guantánamo detainees be held indefinitely without military or civilian trial?

For a more in-depth summary, see the Overview of this week’s report.
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Overview from the issue on Closing Guantánamo (2/26/2009)

by Kenneth Jost

Mohammed Jawad has spent more than a quarter of his young life in the prison at Guantánamo Bay, Cuba, for an offense he says he didn’t commit.

The government says the Afghani teenager threw a grenade at a U.S. military jeep in Kabul in 2002, wounding two American soldiers and their Afghan interpreter.

Jawad, who was 16 or 17 at the time, claims he was working to clear land mines when the attack occurred and that another youth was responsible. Jawad says he confessed under coercion while in custody in Afghanistan and again at the U.S. detention camp at Guantánamo Bay, Cuba, only after more than a year of abusive interrogation.

Then, in a pair of rulings in October and November, an Army judge threw out the confessions that the prosecution had said were central to the case.. Col. Stephen Henley ruled that Jawad had confessed the first time only after Afghan soldiers threatened to kill him and his family. The statements made in Guantánamo, Henley said, were also coerced.

With a case so badly handled, Jawad would seem to be an obvious candidate for release from the controversial prison camp that President George W. Bush ordered to be established in 2002 for “enemy combatants” captured in the Afghanistan war or elsewhere. In its final week in office, however, the Bush administration on Jan. 13 urged the review panel that acts as an appeals court for the military commission system at Guantánamo to reverse the rulings in Jawad’s case and allow the prosecution to go forward.

After taking office only a week later, President Obama signed an executive order for a review of all pending Guantánamo cases and the closure of the facility – which now houses 241 prisoners – within one year. In Jawad’s case, however, the new administration returned to the military review panel to ask for a 120-day delay before it rules on Jawad’s case. The panel granted the request, over the objections of Jawad’s lawyers.

Obama’s action – on his second full day in office – moved toward fulfilling his repeated campaign pledge to close Guantánamo, known as “Gitmo.” Human rights advocates, who have strongly criticized Guantánamo and the legal rules the Bush administration established for enemy combatant cases, are applauding Obama’s move.

“Today is the beginning of the end of this sorry chapter in our nation’s history,” Elisa Massimino, executive director and CEO of Human Rights First, said after Obama signed the order. “The message this sends to the world could not be clearer: The United States is ready to reclaim its role as a nation committed to human rights and the rule of law.”

Even some former Bush administration officials agree the time has come to close the facility. John Bellinger, who was legal adviser at the State Department and National Security Council during the Bush administration, says he has “very strongly” supported closing this “albatross around our necks.”

“The benefits of Guantánamo have been outweighed by the legacy costs of Guantánamo, and that has been true for some time,” says Charles “Cully” Stimson, former assistant secretary of Defense for detainee affairs and now a senior legal fellow at the conservative Heritage Foundation. The facility has taken “a moral toll” on the U.S. image at home and abroad, he says.

Robert Chesney, a respected national security expert now a visiting professor at the University of Texas Law School in Austin, says Guantánamo reflects a broader failure of policy on how to deal with suspected terrorists captured both within and outside the United States since the Sept. 11, 2001, attacks on the World Trade Center and Pentagon by the Islamic terrorist group al Qaeda.
“For more than seven years, we’ve struggled to define a counterterrorism policy that is effective, that is politically sustainable and simultaneously reflects our core values as Americans,” Chesney remarked as he opened a panel discussion at the school on Feb. 3. “We have not yet succeeded in doing this.”

Despite indications of editorial and public support for Obama’s action, Republicans are raising questions and apparently setting the stage to criticize the closure if suspected terrorists are transferred to facilities within the United States. “Most families neither want nor need hundreds of terrorists seeking to kill Americans in their communities,” House GOP Whip Eric Cantor of Virginia said in a statement issued the same day.

Another critic, however, notes that Obama’s executive order did nothing other than promise a review of case files and set a goal of closing the facility. “He hasn’t really done much,” says Andrew McCarthy, legal editor of National Review and chairman of the Center for Law and Counterterrorism at the Foundation for the Defense of Democracies.

McCarthy has backhanded praise for the interim nature of Obama’s move, which he says contrasts with candidate Obama’s “demagogic, overheated rhetoric” during the campaign. “What he has obviously found is that there are very difficult issues, very complex issues that have to be worked through with respect to the detainees,” McCarthy says.

“It was unfortunate that he and people who are like-minded were critical of Guantánamo,” McCarthy adds, “when in point of fact if you didn’t have Guantánamo, you would need to have something like it, whether it was inside the United States or outside.”

In establishing Guantánamo, President Bush said the camp would be used to house “the worst of the worst” suspected terrorists. But the national security and human-rights camps diverge on how to regard the 779 prisoners who have been held at Guantánamo over its seven-year history, some 540 of whom have been released. Among the detainees still being held, Bellinger predicts the Obama administration will find “a lot of bad people left, or at least many in the gray area.”
“We’ve known all along that not everyone held at Guantánamo had any business being held there at all,” counters Sharon Bradford Franklin, senior counsel with the Constitution Project, an advocacy group that seeks to find consensus on constitutional issues.

Outside government, the most extensive study of the Guantánamo detainees appears to have been conducted by Benjamin Wittes, a senior fellow at the Brookings Institution think tank and author of a highly regarded new book on counterterrorism policies, Law and the Long War. Wittes writes that his examination of the information publicly available on the detainees indicated many of them had incriminating ties to al Qaeda. An updated compilation by Wittes available on the Brookings Web site, however, shows that only a small fraction of the prisoners still being held are considered major al Qaeda leaders.

Paradoxically, Obama’s pledge to close Guantánamo appears to be contributing to an increase in tensions in the prison camp. A special Defense Department review team that spent almost two weeks at Guantánamo concluded in February that detainees are being treated humanely in compliance with the provisions of the Geneva Conventions regarding wartime captives. But the report noted a nearly sixfold increase in disciplinary incidents by detainees since September 2008 and tied the increase in part to detainees’ “uncertainty and anxiety about the future.”

Along with Guantánamo, the Obama administration inherits an array of legal proceedings. Obama’s order froze proceedings in the military tribunal system, which thus far has secured three convictions: Ali Hamza Ahmad Suliman al-Bahlul, Osama bin Laden’s alleged media secretary, was found guilty of 35 counts relating to support of terrorism and sentenced to life in prison; Salim Ahmed Hamdan, bin Laden’s former driver, was convicted on reduced charges; and David Hicks, the so-called Australian Taliban, pleaded guilty to one count of providing material support of terrorism. He and Hamdan were essentially sentenced to time served and have since been released. But pending cases in federal courts up to and including the Supreme Court are continuing.

The high court is scheduled to hear a case on April 22 testing whether the government can hold without trial a Qatari native – Ali Saleh Kahlah al-Marri – as an enemy combatant after he was arrested while lawfully residing in the United States on a student visa. In a closely divided ruling, the federal appeals court in Richmond, Va., said yes – but with more judicial scrutiny than proposed by the Bush administration. In one of its first moves, the Obama administration asked for and was granted an extension of time to file the government’s brief with the high court.

In a separate case, the federal appeals court for the District of Columbia is reconsidering whether former Guantánamo detainees can sue government officials for alleged torture and religious discrimination. The Supreme Court sent the case back to the appeals court in December to consider the impact of the justices’ decision in June that Guantánamo detainees can use federal habeas corpus to challenge their confinement.

The pending cases are forcing the Obama administration to make policy decisions sooner than the one-year timetable outlined for closing Guantánamo, according to Chesney. “There will not be as much new time as the administration would like,” Chesney said at the panel discussion.. “The litigation calendar will force them to take positions much faster than that.”

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