By the end of the president's State of the Union speech on Wednesday, we'll know just how serious he is about his post-Massachusetts pivot to making jobs and the middle class his top priority -- or whether the last week of two-fisted rhetoric has been an escalation in tone but not action.
"The middle class has been under assault for a long time," the president said today in announcing a series of new initiatives designed to bolster what he called "the class that made the 20th century the American century." The proposals include an increase in child care tax credits, a cap on student loan payments, and an increase in aid for families caring for aging relatives.
These are all very good ideas, but hardly commensurate with the deep crisis America's middle class is in. To show that he gets the gravity of the plight of working families, Obama will have to put forth, in front of Congress and the nation, an aggressive, comprehensive plan to rescue the middle class.
How will we know he's serious? Luckily, we've seen what it looks like when the president really makes something a priority. Picture the hastily arranged meetings and feverish all-nighters to save Wall Street's banks in the aftermath of the collapse of Lehman Brothers, and the near-collapse of AIG.
When it came to that crisis, the federal government -- first under Bush, then under Obama -- didn't just up the rhetoric on the importance of saving the banks, it took decisive, overwhelming action to save them.
So what is going to be the middle class equivalent of the Lehman collapse that will provoke the same kind of urgency and action from the White House's economic team?
To justify funneling trillions of taxpayer dollars to Wall Street's too-big-to-fail banks, we were told the entire financial system was on the brink -- that it wasn't just about economic stability, it was about national security.
Now Wall Street has been stabilized -- and then some. But Main Street is facing an economic apocalypse no less threatening to the long-term stability of the country.
In explaining why the White House is bringing back Obama's 2008 campaign guru David Plouffe to help engineer the mid-term elections in November, David Axelrod explained: "We are going to evaluate what we need to do to get timely intelligence and early warnings so we don't face situations like we did in Massachusetts."
But we are way past the "early warnings" stage. The middle class is teetering on the brink of collapse just as surely as AIG was last fall -- only this time, it's not just one giant insurance company (and its banking counterparties) facing disaster, it's tens of millions of hard working Americans. This country's middle class is going the way of Lehman Brothers -- disappearing in front of our eyes. A decline that began a decade ago has now become a plummeting free-fall.
Just how bad things have gotten was succinctly -- and bracingly -- summed up by Elizabeth Warren, writing on HuffPost:
One in five Americans is unemployed, underemployed or just plain out of work. One in nine families can't make the minimum payment on their credit cards. One in eight mortgages is in default or foreclosure. One in eight Americans is on food stamps. More than 120,000 families are filing for bankruptcy every month. The economic crisis has wiped more than $5 trillion from pensions and savings.
And the housing crisis is about to undergo a second wave. As Nancy Cook laid it out in Newsweek, the first run of foreclosures was because of subprime loans -- the second run is because of jobs lost. And Obama's loan modification program won't be of any help with this round of foreclosures. "If you're unemployed," as Cook pointed out, "you don't qualify for a loan modification."
Perhaps most indicative of the crumbling of the middle class is the fact that poverty is now becoming a suburban phenomenon. According to a stunning new study by the Brookings Institution, by 2008 the largest and fastest growing poor population was in the suburbs. In the first eight years of the decade, the suburban poor increased 25 percent -- almost five times the rate of those in cities. And by 2008, over 90 million Americans were living on less than twice the poverty line -- which translates to $21,834 for a family of four.
And these figures don't include 2009, a year of massive job losses and foreclosures, so surely things have gotten even worse.
Do we really need any more "early warning signs"?
The stark reality is that America, in the not-too-distant future, could become a country without a middle class. That might seem unimaginable -- but only if you aren't paying attention to the evidence. Of course, over the last decade, we have seen example after example of things that once seemed unimaginable come to pass.
No one could imagine the world's economy being pushed to the precipice by the collapse of Lehman Brothers (although numerous experts had warned about the dangers of a wildly overleveraged financial system). No one could imagine the destruction of an American city caused by the breaching of the levees surrounding it (although there were many, many warnings that it was a very real possibility). And no one could imagine that terrorists would bring down the Twin Towers by flying planes into them (although there was intelligence that they intended to do just that).
In reality, no one taking a hard look at what's happening to America's middle class could say that its disappearance is still unimaginable.
The Bush and Obama administrations bailed out the big banks because it suddenly became imaginable that the financial system might collapse.
Has Obama come to the same realization about America's middle class? Will he throw everything he has at the crisis it's facing -- just as he did for Wall Street? Or do we need to become Brazil first, with the super-rich living behind fortified gates, with guards protecting their children from kidnapping?
Will we heed the warning signs before we see another failure of imagination -- one of epic proportions and catastrophic consequences?