-- Michael Zweig is a professor of economics and director of the Center for Study of Working Class Life at the State University of New York at Stony Brook. Click on www.sunysb.edu/workingclass/ The opinions expressed here are his own. --
By Michael Zweig
NEW YORK (Reuters.com) -- Treasury Secretary Henry Paulson and Federal Reserve Board Chair Ben Bernanke have been in Washington demanding immediate relief for Wall Street, repeatedly emphasizing claims of impending doom for the United States and the entire globe if we do not accede to their rescue plan.
Their behavior is today’s equivalent of Condoleezza Rice’s infamous evocation of a mushroom cloud as she played her part in frightening Americans in the pre-election (2002) stampede to war in Iraq. Now, as then, the same people who did nothing to protect the country despite many explicit warnings are demanding unlimited authority to dig us deeper into the hole.
The Wall Street debacle has had the added effect of diverting Congressional, media, and public attention from the continuing mortgage foreclosure crisis, which is far from over. In the months leading up to the crashing end of the sub-prime mortgage frenzy in April 2007, increasing numbers of these mortgages were issued, with a two-year period until the terms reset. This means that in the coming eight months we will see an accelerating rate of resets and over a million more homeowners facing foreclosure.
This coming tsunami of grief is only one aspect of the widespread economic distress working people are experiencing throughout the country. In a study about to be released by the Center for Study of Working Class Life at the State University of New York at Stony Brook, we report that economically distressed working class people account for 20.9 percent of all households in the U.S., nearly double the poverty rate, based on U.S. Census data.
They are cashiers, home health care workers, truck drivers, janitors, retail salespeople, secretaries, and many other people we see and rely on every day. They are people whose income is so low they cannot rise above the lowest twenty-five percent of housing stock for a family of their size in the community where they live without spending more than the government standard of thirty percent of income for housing. In short, they are over sixty million people in nearly twenty-three million households with eighteen million kids who can’t afford to pay for the basic necessities of housing, food, medical care, and transportation.
We must not allow the financial drama now gripping the country to obscure and push aside the need working people have for real and immediate relief. Congress should act to forestall the foreclosures and to increase income support programs like food stamps, housing subsidies, unemployment compensation, and the Earned Income Tax Credit. They should send money to the states to relieve their budget deficits and restore cuts to Medicaid and other state-based programs for economically distressed people. And while they are throwing hundreds of billions of dollars at Wall Street, they can well afford $110 billion to send an average $2,000 check to each of the fifty-five million households earning less than $50,000 a year, half of the country.
We need to recognize and alleviate the crisis in working America. .