The Middle-Class Chasm

Maintaining a healthy Middle-Class

What is the middle class?? While there is no clear definition, a rough idea is people making $60,000 to $160,000? (based on my Google search right now), but that amount is based on where you live, since your cost of living will vary from city to city, and state to state.? Rent in a large popular city is huge compared to a smaller city in the midwest.? Maybe the idea of the middle class is that a single earner can support a family.? Then working in a white collar position or in a Manufacturing job could allow you to fall into that category, as long as you are not living in New York City or San Francisco.? Even if you work in those cities, there are always options of a longer commute to allow you to buy a home or lower your rent, along with lower costs of all the other stuff you need.? On the other hand, most people working at a restaurant or a shop, while they work just as hard, likely won’t be in the middle class with a single income.

“Middle class”, so what.? We are not here to label people or judge them.? But, a strong middle class is important for a thriving economy.? The Middle class can afford to buy homes, cars, and generally more stuff, all of which drives the economy.? The middle class is also an indicator of strong US industries that hire and pay these people.? There are many benefits to the middle class thriving.? Think of financially lower income people moving into the financial middle class - what happens?? To reach the middle class, all need the opportunity and a fair playing field.? I will give a few examples that show the benefits of a solid middle class.

First example - lots of stuff in stores.? When people make more money, they buy more stuff such as TV’s, steak, and shoes.? The more people buy these items, the more are produced and the price of these items go lower.? Factory can make 100 of one thing, but if that factory can make 10,000 of the thing, their cost per unit goes down, and that savings usually is passed on to consumers.? Plus, other companies want to get in on that popular trend of TV/steak/shoes, and they make the products a little better or with more features to compete for the buyers, and the products get better and cost less.? I think I saw a coupon at Costco for a combo TV/steak/shoes blow-out sale.? (just kidding ! )? For you, the middle class consumer, the store shelves are full of good products that you want, and you can afford them.

Second example - health.? Middle class people have jobs, so they also have health insurance.? They can afford it, and they likely get health insurance automatically thru their job.? They get health advice, low cost medicine, and they go to the doctor when there is a problem.? The result is that more people are healthy in society.? These people can continue their lives, they don’t miss work, and they keep buying all that stuff above.? Ongoing demand for health services in turn makes the Health industry create more services? (since they can make money), there are services for everyone, and the industry continues inventing new cures.? (I am leaving out the “... and it gets cheaper” since health service costs clearly keep increasing? —? but they should go down)?

Third example - financial security.? With more income, the middle class people have more financial buffer.? If there is a little emergency, like a car repair or a water heater problem, fixing it is super inconvenient, but the middle class can afford it, and that fix turns out to be no big deal.? With more middle class people being financially healthy, you get similar benefits in society to more people being physically healthy (that we just discussed).? Problems happen, financial or health, you take care of it, and move on.? For both the health and financial examples, we cannot dismiss the BIG issues that happen to all of us that are life changing or may be disastrous, but the smaller problems are easily resolved.

Next? —? what if the middle class shrinks?? Which is what has been happening the last 40+ years.? Using the examples above, we can see big impacts on you, whichever class you are in.? I will bring in examples of what happens to the upper class, and how we will all feel sympathy for them.? The rich upper class don’t get away with no impact? —? just not as much.

• Buying stuff - less people buy stuff, so there are fewer choices and less quality for everyone, including the rich upper class.
• Health - more people are sick or injured without getting help.? They make more people sick, including the upper class, since their sick maid or gardener is breathing on them.? “C’mon you guys, stop breathing on me when you are cleaning my house!”? And sick people cannot work effectively.
• Financial security - you cannot afford that minor repair, so you skip paying a bill, you don’t buy that other planned thing, or suffer without the fix.? These start piling up and problems get worse.? For the upper class, they get closer with that one little emergency, that pushes them down to the middle class.? For everyone else, a couple of these financial-busters, and you lose your car, become homeless, or impact your life.

Eventually, as the middle class shrinks, you see a bigger divide between rich and poor, like an earthquake creating chasm in the ground? —? on which side will you end up?

Trump’s planned policies push us in that direction.? Let’s look at just a few of the policies and the impacts.

• Big tax cut - most benefits will go to the upper class? (like the tax cut from his first term).? With less tax revenue, the government will cut other costs, with a prime target being the support system used by middle and? lower class people, such as medicare, social security, health insurance from the American Care Act (Obamacare), public hospital funding, food stamps, National Park maintenance, road repair (with federal funding), K-12 school support.? This affects lower and middle class more than upper class, since the Upper’s just buy what they need.
• Tariff increases - prices go up, creates inflation, big hardship on everyone - except the Upper’s.? They will just by what they need? (with the savings from the Big Tax cut)
• Less regulation and gutting the EPA - this is basically Trump’s policy.? Let’s just talk about companies getting less regulated, they dump more pollutants, air and water quality go down —? bigger impact on lower class people that live closer to those locations than others.? Those affected lower class people get sicker and experience more disease, and the financial hardship that goes with that.

I am a fiscally conservative Democrat, and I don’t like seeing lots of money give-aways, but I still see it from both Democratic and Republican parties.? But, I want to see Government programs that assist lower and middle income people - to make everything more fair.? Trump’s agenda simply takes a weed-whacker to any fairness programs, and mostly benefits the rich upper class, and harms the lower and middle class.

Will Trump follow through on these financial policies?? For Secretary of Treasury, the top financial job in DC, he just nominated for Sec of Treasury, Scott Bessent, a true Wall Street guy? (better than the other obedient Do-anything-for-my-leader” choice).? My thought is that Bessent will convince Trump to NOT mess with their money.? By “Their money” I refer to the rich upper class money they have in assets, stocks, and companies.? Certain policies create financial problems for the country, and could crash the stock market - which will adversely affect the Upper’s money - and everyone else.? Trump may be cautious in his more extreme financial plans, and Bessent may provide this guard rail in this presidential term.

Why did the lower and middle income people vote for Trump, even when his stated policies will hurt them?? There are endless reasons, from Trump campaign lies to weak Democrat messaging. Every podcast and political pundit describes a different set of reasons, and they likely all contributed to the election result.? The main issue is lack of understanding of the issues and policies by the voters, a difficult topic to comprehend.? My hope is that articles like mine build some level of understanding, and voters start asking questions.??

As a country, we need the middle class to survive and thrive and increase.? This will assure a successful America that continues to be the envy of the world.? Will Trump strangle the middle class with his benefit-the-rich plans?? This is a risky move and we will see results by this time next year.