The New Americans: Young, Stressed and Almost Broke

We’re reading so much propaganda about how well we are doing economically. True if you own a lot of stock or are in the top 5% of wealth and earning, you are indeed kicking butt. But if you are in that massive 70% of working Americans whose earnings – in terms of real discretionary buying power – is the same or lower than it was for this demographic 40 years ago… or you are in an even economic segment… the economy truly sucks. What is super-amazing is how badly college students are faring, both while in school and once they graduate (if they do graduate).

Betsy DeVos – the mega-billionaire who, as Trump’s woefully undereducated Secretary of Education is dedicated to cutting the federal government’s role in education at every level – has rather dramatically sided with lenders and big business and fought against relieving students from debt accrued with fraudulent and now bankrupt for-profit post-secondary schools. Squeezing college students is one of her specialties. DeVos has had a lot of help along the way with other federal agencies dedicated to supporting her vision.

Screw students! Support those who have ripped them off and enable even further enhanced predatory lending practices. The Consumer Financial Protection Bureau is rather dramatically misnamed, since consumers are now expendable. Big financial businesses rule! Try this one on for size: “The resignation of the government's chief student loan watchdog could not have come at a worse time, and demonstrates the Trump administration's unwillingness to protect borrowers, advocates say.

“Seth Frotman, student loan ombudsman at the Consumer Financial Protection Bureau, resigned on Monday [8/27]. In a letter to Mick Mulvaney, acting director of the CFPB, Frotman said he was leaving due to sweeping changes at the bureau, including the abandonment of enforcement and the protection of bad actors from scrutiny. ‘You have used the bureau to serve the wishes of the most powerful financial companies in America,’ Frotman wrote. The letter was obtained by NPR.

“The Consumer Financial Protection Bureau did not immediately respond to a request for comment. Frotman also could not be reached for comment.

“Frotman's absence underscores the current vulnerability of the country's millions of student loan borrowers, said Barmak Nassirian, director of federal relations at the American Association of State Colleges and Universities.” CNCB.com, August 27^th.

For those who have graduated or otherwise left college, the burden of student debt has risen from bad to intolerable in a relatively short time. Think of it this way. If you are a college grad with even average levels of student debt, just about everything your parents did if they graduated from college – from getting married to buying their first house – is of necessity placed on hold. Sometimes for a decade or more.

And trust me, this is a consumer-stifling drag on the entire American economy, something that is pushing young grads away from the capitalist system that seems to own them toward a modern view of socialism – the Bernie Sanders vision of America. Facing further job loss and wage-suppression from a combination of artificially intelligent automation and a new gig economy with no retirement, vacation, healthcare benefits, student debt has become part of a lots of straws breaking a lot of camels’ backs.

Writing for Bloomberg Opinion (reproduced in the August 26^th Los Angeles Times), former advisor to the president of the Dallas Federal Reserve, Danielle DiMartino Booth explains: “As of the fourth quarter, student loans represented 10.5% of a record $13.1 trillion in U.S. household debt, up from 3.3% at the start of 2003…

“Student loans are now the second-largest category of household debt in America, topping $1.4 trillion and trailing only mortgages at $9 trillion. And while the management consulting firm Korn Ferry puts the average starting salary for a 2018 college graduate at $50,390, up 2.8% from 2017, the just-released July consumer price index report shows the inflation rate rose 2.9% over the last 12 months.

“Does the phrase ‘treading water’ come to mind?... A recent report by Bloom Economic Research breaks out the demographic challenges that have resulted from the 176% increase in student loan debt in the decade through 2017… In the years of dramatic loosening of mortgage credit standards leading up to the housing crisis, many families tapped readily available home equity to finance pricier higher educations for their children than they would have otherwise been able to afford.

“After the bust, this avenue was blocked, leaving only the higher education inflation it had fueled.
From 2007 through 2017, the CPI rose 21%. Over that same period, college tuition costs jumped 63%, school housing surged 51%, and the price of textbooks rose 88%. These troubling growth rates wipe away any mystery behind today’s staggering levels of student loan debt, which has almost tripled from the 2007 starting point of $545 billion…

“The outer birth-year band for millennials is 1981, meaning millennials are starting to be closer to 40 than they are to 30 [when they “begin life” as their parents did]. While home ownership has picked up, it’s been held back for a decade by stagnant wage growth coupled with onerous debt burdens.

“The macroeconomic ramifications are well-documented. Baby boomers house a record level of their millennial offspring who can’t afford to leave home. Birth rates have fallen to a 30-year low as marriage is put off.

“Clearly, reform of some kind must address the issue of student debt, which is not to say debt relief or outright forgiveness. Institutions of higher learning in this country must take some of the responsibility for the current state of affairs in the nation’s most populous demographic group.”

Add to this mix that bankruptcy laws were amended in 2005 to make it close to impossible for debt-laden former students to find bankruptcy relief. With easy credit, college tuitions skyrocketed, and the pressure to get higher education exploded. It is estimated that 59% of millennials have some college education. Less expensive online education is gaining traction, and you are watching as young folks are often skipping college altogether as a costly waste of time. Tech companies are even beginning to hire kids out of high school for engineering jobs.

We are going to have to redesign how we fund education at every level, from the ground up… or the United States of America will be further less competitive with the rest of the world. College is free in so many countries (major universities in places like Singapore and Germany), first rate studies that train some very impressive graduates. In the United States, the Trump administration is simply siding with those who want to make such educational vectors more expensive. We are going the other way… Making America Less every day.

I’m Peter Dekom, and if you think this cadre of financially-impaired college grads are going to grow into conservative Republicans, you are probably living in a state where recreational marijuana is legal and have become a very good customer of that substance.

The Weakest Economy with the Best Statistics

To listen to Donald Trump and the GOP, you’d think the economy is the “best ever.” Even people whose own economic lives are not great read those numbers and think, “Well, at least most of America is doing better even if I am not.” But most of America is hardly doing well. Those wonderful numbers are based on averages and looking at the economy as a whole. But it doesn’t take a rocket-scientist to understand that the wealthiest segment of our economy is making so much more money that they pull the averages way up and make the economy as a whole look great.

But this is not true for most Americans. Most of us do not make our living trading on the stock market. And the unemployment numbers are so empty that if you have a low-paying, part-time job or ply the gig economy without benefits, you count as employed. Even as 70% of Americans make no more in real buying power than they did 40 years ago. For more, see my August 14^th blog, Real Dollars: Stagnation!. We even have a new category of employment now, the “working poor.”

Medical costs (thanks to Trump’s chiseling away at the Affordable Care Act – see my August 29^th blog, The Explosive Legacy of O’Bomb-a-Care), the prices of food, housing and fuel are soaring. We have the greatest income inequality in the entire developed world, and all those wonderful statistics are a reflection of that anomaly, not of a great economy shared by all.

Indeed, for most Americans, even a small unexpected bill, just a few hundred dollars, can collapse their ability to pay bills. Martin Mavis, speaking on talknetwork.com (10/25/17) explains: “[Most – 80% of] Americans are living paycheck to paycheck. This is understandable when you’re young. You’re just starting out. You got a lot of debt. You don’t have much in the way of assets or savings. But these days even people in their 40s, 50s, and 60s, and in retirement are living paycheck to paycheck. Often just living off their retirement funds, their Social Security check and other similar fixed income revenue sources…

“The big deal is major financial disruptions are coming. For example, let me give you a very concrete example. We know that pension funds are going broke nationwide and that’s because almost every state has promised far too much in terms of payouts to retirees. So, they have these obligations to retirees and the obligations cannot be met. The obligations were based on wildly optimistic assumptions of stock market’s going up forever. They did not take into account any downturns, market crashes or corrections.” Even Social Security is running out of money as a Republican-dominated Congress is trying to figure out how to cut both Medicare and Social Security benefits… all at a time when most Americans have little or no retirement savings. 

Nothing brings home how tough our economy is like looking beyond the below 70% earnings number. “Despite a strong economy, about 40% of U.S. families struggled to meet at least one of their basic needs last year, including paying for food, healthcare, housing or utilities.

“That’s according to an Urban Institute survey of nearly 7,600 adults that found that the difficulties were most prevalent among adults with lower incomes or health issues. But it also revealed that people from all walks of life were running into similar hardships.

“The findings issued Tuesday [8/28] by the nonprofit research organization highlight the financial strains experienced by many Americans in an otherwise strong economy.

“The average unemployment rate for 2017 was 4.4%, a low that followed years of declines. But having a job doesn’t ensure families will be able to meet their basic needs, said Michael Karpman, one of the study’s authors. Among the households with at least one working adult, more than 30% reported hardship.

“‘Economic growth and low unemployment alone do not ensure everyone can meet their basic needs,’ the authors wrote.

“Food insecurity was the most common challenge: More than 23% of households struggled to feed their family at some point during the year. That was followed by problems paying a family medical bill, reported by about 18%. A similar percentage didn’t seek medical care for a need because of the cost.

“Roughly 13% of families missed a utility bill payment at some point during the year. And 10% of families either didn’t pay the full amount of their rent or mortgage, or paid it late.” Los Angeles Times, August 29^th.

Our economy isn’t bad; it’s a disaster for everyone below the top income levels. That massive tax cut didn’t create new and better jobs! It funneled hefty dividends and stock buy-backs to the richest in the land. And it exploded the national debt which is “everyone” obligation! Meanwhile, our infrastructure is crumbling, and Trump seems to be moving in the direction of privatizing infrastructure, so average Americans will start having to pay the rich owners for the right to use it!

The future doesn’t hold any golden promises either. Artificial intelligence-driven automation is taking the majority of those “re-shored” manufacturing jobs, and Trump’s inane trade war is going to cost most of us a whole pile of money as prices skyrocket. We’re not going to reignite the coal industry, and while a tiny number of workers will get their jobs back in steel and aluminum manufacturing, the offsetting higher costs to the rest of us are nothing short of staggering.

“A 2017 McKinsey Global Institute study of 800 occupations across 46 countries found that by 2030, 800 million people will lose their jobs to automation. That’s one-fifth of the global workforce. A further one-third of the global workforce will need to retrain if they want to keep their current jobs as well. And looking at the effects of automation on American jobs alone, researchers from Oxford University found that ‘47 percent of U.S. workers have a high probability of seeing their jobs automated over the next 20 years.’” FastCompany.com, August 30^th.

With a very few exceptions, one of the hardest hit groups is Trump’s base. They are getting killed economically, but they keep citing the glowing economic statistics that somehow seldom apply to them. They are a captive force, dedicated to voting against their own self-interest. And if you think a nation can continue and survive on this basis, you are going to be in for a very, very rude shock!

I’m Peter Dekom, and what is it about obvious that isn’t?

The Explosive Legacy of O’Bomb-a-Care

Clearly the Democrats do not know how to explain to the masses that the economic numbers they are seeing from Trump reflect averages that are bolstered primarily by the massive income and wealth gains at the top of the food chain, numbers which bring average performance statistics way, way up but do not reflect that, even including tax cuts, 70% of Americans are in the same or worse economic position, in terms of inflation-adjusted buying power, as they were 40 years ago. Stuff costs more, especially the basics: food, clothing, housing, fuel and healthcare. These higher costs have more than sucked up any economic earnings increases enjoyed by most of us. Likewise, those unemployment numbers are heavily populated by part-timers, gig economy players and a mass of underemployed and underpaid workers. Lying with statistics continues.

One of the worst such arenas is the exploding cost of healthcare as the Trump administration has openly campaigned and redesigned the federal program, and more than a few red states have worked to curtail their Affordable Car Act costs looking for exemptions freely granted by Trump, to reduce coverage, increase premiums, co-pays and deductibles, limit coverage for pre-existing conditions and apply lifetime maximum aggregate benefits paid out. Many Republicans are also rather obviously targeting reductions in Social Security and Medicare coverage for the elderly.

But as popular opposition to that 2010 Affordable Care Act (“Obamacare” or the ACA) has pretty much reversed – the program began working beyond expectations until Trump began to disassemble the ACA piece by piece by policy shifts and executive orders (often reversed by the courts) – Republicans are stuck with the fact that only hardcore GOP supporters (no longer including so many GOP moderates or most independent voters who voted Republican) want to repeal the ACA. That Trump’s promise of a better, more affordable replacement for the ACA never materialized is almost never discussed anymore.

While a few Republicans are beginning to realize that their only real recourse with their voters is to fix the ACA not repeal it, the party as a whole is torn apart about what to do about American healthcare. To the delight of Democrats, it is the one huge negative in the GOP platform, an Achilles Heel that they need to exploit. Even lyin’ statistics cannot hide this failure.

“After failing to deliver on their years-long promise to repeal the Affordable Care Act and faced with the sudden popularity of Obamacare’s consumer protections, GOP candidates across the country are struggling for the first time in a decade to put together a cohesive message on healthcare.

“Die-hards still want to repeal the 2010 law, the issue that propelled them to majorities in the House and Senate, but a growing number of Republicans — particularly those facing tough elections — want to quietly admit defeat and move on.

“‘Even to bring it up is picking at the scab,’ said Joe Antos, a health policy expert at the American Enterprise Institute, a conservative think tank. ‘It’s reminding people that they [failed]. The base isn’t that stupid.’

“Other GOP candidates find themselves trying to thread an awkward needle of opposing Obamacare — a law that is still unpopular with core Republican voters — while supporting some of its key provisions. A few Republicans who once called for the repeal of Obamacare are now even embracing it, albeit cautiously… All that makes for a starkly different climate than just two years ago, when GOP candidates could count on opposition to Obamacare as a guaranteed applause line on the stump.

“Once repeal became an actual possibility, the Affordable Care Act — particularly a few individual pieces — became more popular with the public. Forty-eight percent of adults have favorable opinions of the law while 40% have unfavorable views, according to a recent poll by the nonpartisan Kaiser Family Foundation. In April 2016, those were flipped: 49% of adults with unfavorable opinions and 38% favorable…

“Republican candidates for the U.S. Senate have also shifted ground in some cases. State Attys. Gen. Patrick Morrisey of West Virginia and Josh Hawley of Missouri joined a multistate, GOP-backed lawsuit that seeks to end a requirement in the 2010 law that all Americans have insurance. It was a move that helped buoy their conservative bona fides.

“But now as they run for the Senate, they have had to distance themselves somewhat from the effort, particularly after the Trump administration adopted the legal position that not only should the individual mandate go but preexisting conditions protections should too.

“The preexisting conditions provision is by far the most popular part of Obamacare. Both GOP candidates now say they support requiring insurance companies to cover people with preexisting conditions, even as they remain part of the repeal lawsuit.

“Some Republicans are still eager to keep trying to repeal or dismantle the law… Sen. Ted Cruz (R-Texas), who is facing a surprisingly strong challenge from Rep. Beto O’Rouke (D-Texas), wants the GOP to try Obamacare repeal again. Earlier this month, he went to the Senate floor to try to block the District of Columbia from requiring people to have health insurance — a requirement similar to the Obamacare rule the GOP repealed across the country earlier this year.

“The GOP candidate for governor in Maine has pledged to continue incumbent Gov. Paul LePage’s opposition to expanding Medicaid under Obamacare — an expansion that 59% of Maine voters approved in a ballot measure last year. Minnesota’s GOP gubernatorial candidate won his primary by promising to move the state away from its Obamacare insurance exchange but offered few specifics on his alternative.

“And GOP Senate challengers Leah Vukmir in Wisconsin and Marsha Blackburn in Tennessee won their primaries in part by pledging to do more to repeal the law… The result is that even if Republicans do maintain control of both chambers of Congress — seemingly a long shot — any legislative effort to stabilize the health law’s insurance markets is likely to be met with opposition from the conservative end of the Republican party.” Los Angeles Times, August 25^th.

Trump’s efforts have placed American healthcare on life support. Maybe it’s time to apply that strategy to GOP candidates, remembering that the mid-terms are more about local issues than most folks figure. After all, we have the most expensive healthcare system on earth, we are the only developed nation where people can be completely excluded from accessible healthcare, and the only country in the developed world where medical bankruptcy is possible (it is the most common form of bankruptcy in the U.S.).

I’m Peter Dekom, and healthcare is one of the greatest problems that the U.S. government has yet to address appropriately.