Dear Political Establishment:
It's midterm-election time, so I know this is one of the rare moments you're listening. Here's the deal. None of your jobs are safe, and they won't be until you take a page from Bill Clinton's playbook and figure out that "it's the economy, stupid!" Because it doesn't matter that the bailouts worked or that some eggheads have pronounced the recession over. The average American—which is to say the kind who is not rich—is still reeling from the effects of our nation's monetary near-meltdown. That's why the Democrats are in danger of losing their majorities this year, and that's why the Republicans lost theirs two years ago. You folks can blame whoever you want—previous administrations, China, the liberal elite—but the fact remains that half of Americans no longer believe in the American dream. You must all be so proud. The dream of America was our proudest export, the idea that kept us optimistic during dark days, the fantasy that caused people from all over the world to risk everything to get here, and now we all feel like serfs laboring for feudal lords with names like Goldman Sachs or British Petroleum. Think about it: if that recent ABC news poll is accurate, then there are tens of millions of people who believe that hard work gets you nowhere in this society. Those kinds of numbers cut across party lines. And what's really the most amazing thing to me is that y'all can't figure out why we're so despondent. We need relief ... from you and the only constituents you seem to care about: corporate America. As for what we don't need? How about more of this ...
For years, Americans were told that our spending was what kept the economy afloat. Yeah, we binged on cheap, freely available credit, but I think we might be excused for believing it was the patriotic thing to do. In the wake of September 11, didn't our president plead with us to continue participating in the economy, "to go to Disney World?" And even now, with consumer dept at record highs, we're exhorted to spend. But we can't. We just don't have the money anymore. We're paying bills, cleaning up our credit, and fending off bill collectors. We know now that we were a piggy bank and we were robbed, and we're not going to let you do it again. Sure, we're still the U.S.—we love cars and shiny new Apple products—but tapped out is tapped out. And don't forget, we're saving for the next economic tsunami. As Nate Silver wrote in The New York Times: "The U.S. economy is predominantly driven by consumer spending, which accounts for approximately 70 percent of all economic growth. But if consumers are to continue to drive the economy, they must be in a sound financial position; if they become overburdened with debt, they are not able to maintain their position as the primary driver of economic growth."
Yeah, yeah, yeah, the recession is over, but what explains the skyrocketing price of groceries nowadays? According to Dow Jones, "A jump in commodity prices is set to translate into fewer discounts and even some higher prices for consumers in the food aisle, as manufacturers scramble to shore up profits. As prices for key inputs like wheat and sugar have surged, food companies like General Mills Inc. (GIS) and ConAgra Foods Inc. (CAG) have begun feeling the pinch. Both said this week they expect the intense promotions and price battles that have flooded grocery stores recently to ease in response to commodity price inflation." Great, just what we Americans need going into the holidays. Allegedly, companies don't want to raise their prices because they're afraid of driving away their customers, so instead they're continuing to shrink their packaging. And what do they think shrinking packaging is? It's raising prices—albeit sneakily. Do these companies still think we won't notice? A half gallon of ice cream isn't. Yogurt is smaller, a container of coffee, boxes of cereal, toilet paper, orange juice, you name it—the box, bottle, or can shrinks, and the prices don't. It's dishonest and just contributes to the general distrust between Americans and our food providers. Give us a break.
Gas still costs a lot of money. The price increases may have slowed, but just shy of $3 a gallon is still quite a bit. That's what you politicos don't seem to understand: Any extra spending or consumer confidence comes from what money we have left over after we've paid for the basics. Wal-Mart gets it. Their U.S. CEO, Bill Simon, told investors recently, "If you're not sure we have an item, then our one-stop-shopping promise can't be fulfilled and gas prices are important. But if we have everything shoppers want, as we have in the past, gas prices might work in our favor." There aren't a lot of voting blocs in America that love oil companies—why don't you try annoying them at the pumps instead of us?
It's been said before, but banks have begun to seem like casinos. In a casino, you know to watch your back—it's an antagonistic relationship from the outset. The house's job is to separate you from as much of your money as possible, and your job is to resist their siren call. Even a child knows that the house always wins. So not many people leave a casino feeling cheated—stupid, maybe, but not cheated. Banks, however, were supposed to provide us with a safe place to put our money and make it easier to spend and/or save it, not devise sneaky, crappy ways to part us from our money. In early August, U.S. District Judge William Alsup ordered Wells Fargo Bank to pay back $203 million in fees it had charged customers in California. "Internal bank memos and emails leave no doubt that, overdraft revenue being a big profit center, the bank's dominant, indeed sole, motive was to maximize the number of overdrafts," Alsup wrote. That policy would "squeeze as much as possible" from customers with overdrafts, in particular from the 4 percent of customers who paid what he called "a whopping 40 percent of its total overdraft and returned-item revenue." In his ruling, Alsup accused Wells Fargo of creating a "snare for the unwary" and pronounced them guilty of "profiteering and price gouging." But it's not as though Wells Fargo is the only bad guy—what they did is standard bank practice. Banks made more than $35 billion in fees last year; it's a revenue stream they've become addicted to. It's funny (funny awful, not funny ha-ha) that we bailed out all kinds of banks and they still can't resist taking as much of our money as they can. Money, by the way, we could be spending on durable goods and services.
I have to fly to Los Angeles in October and I'm guessing I'll pay close to $100 in baggage fees. Don't tell me to carry on my bags. I'm traveling with a toddler, and I could be arrested for abandoning luggage when I'm, in fact, chasing my kid through the airport. I have to check at least a bag and a car seat! Not only does it make me furious to pay for something that should obviously be included in the price of a ticket but it also seriously impedes my budget when I get to L.A. That's what's so confusing to me. Don't these companies realize how short-sighted all this stuff is? The more every industry gouges us, the less we have to spend on any industry. Baggage fees will probably seriously limit the number of Christmas presents people fly with, and there goes consumer spending and confidence and all those other metrics that tell us about the economy. Not to mention that there are some people who would rather walk across our nation than give a dime to an airline. Since Sept. 7, more than 50,000 people have gone to madashellabouthiddenfees.com and signed a petition urging the DOT to "require airlines to make their fees fully and easily accessible to ... consumers." We bailed the airlines out also, right after September 11, and presumably when they're driven close to bankruptcy because we hate them so much, they'll ask us for more money. I wish I could find a business to run that way. I'd be a billionaire by the end of the year.
I don't always agree with Paul Krugman, but I found this column to be so smart and so right on the money that I'm going to quote it at length, and then I want you to go read it if you haven't already: "The rage of the rich has been building ever since Mr. Obama took office. At first, however, it was largely confined to Wall Street. Thus when New York magazine published an article titled 'The Wail of the 1%,' it was talking about financial wheeler-dealers whose firms had been bailed out with taxpayer funds but were furious at suggestions that the price of these bailouts should include temporary limits on bonuses. When the billionaire Stephen Schwarzman compared an Obama proposal to the Nazi invasion of Poland, the proposal in question would have closed a tax loophole that specifically benefits fund managers like him." Look, I get it. The wealthy pay your electoral bills, but you know what? Man up! Rich people aren't the only ones who vote.
According to the Center on Budget and Policy Priorities, "With tax revenue still declining as a result of the recession and budget reserves largely drained, the vast majority of states have made spending cuts that hurt families and reduce necessary services. These cuts, in turn, have deepened states' economic problems because families and businesses have less to spend." And it's not the end of the pain; states are also raising fees—traffic tickets, driver's license renewals, anything to eke out a bit more income. And that's just another way to make sure that people who begin struggling financially never stop. That's why we get mad when folks say the recession is over or encourage us to spend our way to a recovery. There are just too many people trying to get blood out of a stone.
In the end, the poor beleaguered American middle-class electorate is going to have to vote out wave after wave of politicians from both parties for years until they get it (much like fending off wave after wave of brain-hungry undead). At a recent town-hall meeting, President Obama was greeted with a weariness bordering on despair. How's this for an opening comment? "I'm exhausted of defending you, defending your administration, defending the mantle of change that I voted for, and deeply disappointed with where we are right now," a woman said. "I have been told that I voted for a man who said he was going to change things in a meaningful way for the middle class. I'm one of those people, and I'm waiting, sir. I'm waiting. I don't feel it yet." For people who despair when they consider their economic prospects, consider this: Voting is still free (unless you have to drive to the polls). Take advantage.