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Political Focus:

The Middle Class isn’t what it used to be

Since the presidential campaign of 2008, President Obama has maintained the position that the Bush tax cuts should be allowed to expire for households with incomes over $250,000. In an effort to strike a deal with Republicans during the recent Fiscal Cliff crisis, the president raised that number to $450,000.

According to Jonathan Chait of New York Magazine, the president made this concession “to insulate himself against suspicions of raising taxes on the middle class.” This made me wonder if I had Rip Van Winkled my way to an America where the middle class resided economically in the $250,000 to $450,000 range.

Then I pondered what constitutes the middle class and if it even exists anymore. Any UCC student taking Charles Young’s History 203 class in the spring will learn that the middle class was created when the G.I. Bill democratized higher education.

Until that time, only wealthy Americans received a college education, and American society was split into two classes: the wealthy and the working poor. Then in 1944 the G.I. Bill made it possible for thousands of the working poor to get college degrees which led to higher paying jobs, and this created the middle class.

One characteristic of the middle class was the ability of a family of four to own a home on a single income. According to the U.S. Census Bureau, in 1950 the median house value was just under $7,000 and median annual income was roughly $3,500 here in Oregon.

The Census Bureau also reports that in 2010 the median house value was around $150,000 with a median annual income just over $50,000. In 1950 a house cost about two years pay whereas in 2010 the cost is around three.

This disparity is compounded by the fact that family incomes of the 1950s were predominantly single earner whereas today’s incomes are predominantly dual earner. In addition to this disparity, apparently the U.S. median income has been growing too slowly.

A Mother Jones article by Dave Gilson and Carolyn Perot indicates that “if the median household income had kept pace with the economy since 1970, it would now be nearly $92,000, not $50,000.”

Alicia Munnell of The Wall Street Journal points out that according to the U.S. Census Bureau an annual household income of $186,000 puts a family in the 95th percentile. In light of this the president’s $250,000 threshold for the Bush tax cuts was way too high to begin with.

Perhaps the $250,000 represents the president’s opinion of where the middle class should be. If so, all we need to do is get the middle class there and the tax cuts will be in place for those who need and deserve them.

For further reading, check out the U.S. Census Bureau's Current Population Report