By Jorge Reyes
On Wednesday like many of you I watched President Obama's State of the Union Address of 2010.
With great expectancy I tried to make sense of all the promises he made, promises similar to the ones he made as candidate. He talked about the healthcare mess, terrorism, lobbyist reform, among others. One resounding theme was his tackling of the thorny issue of jobs, jobs, jobs. But as we all know, promises and reality are often at war with one another, and despite his best efforts to explain the current state of our economic malaise, I'm afraid that Obama fell short.
Most of the economic problems we now face are not new, especially to working families. These problems have been accumulating for many decades, simmering just below the surface of our conspicuous consumption.
How did we get to this economic mess? That's a problematic question many have tried to answer, to no satisfactory answer. What does seem conclusive is that since the 1970's productivity hasn't risen at the same level as real wages, leaving most middle class workers behind. Again, to the vast number of people who know what I'm talking about none of this is new. To aggravate this problem, tax laws rewritten to benefit a small percentage of Americans caused a one-sided shift in capital accumulation benefiting the rich. The changes to these tax laws and deregulation were subtle, leaving the rich far richer and that healthy middle class sector which has always been the backbone of our economy poorer. Much poorer.
Some of us grew up with the belief that capitalism would continue to provide us with riches far beyond our dreams. All of us were under the impression that we would be employed for most of our lives earning livable wages. More, we taught our children that they'd be better off than we were. And that with enough hard work and dedication throughout our lives, we'd be able to retire with enough means to be financially stable for the rest of our remaining days.
Let's face it, we all bought into this dream. But this dream, like every idyllic dream, had a dark side. In fact, it had a much darker side; a side that hit us in the face in September 2008 when the economic meltdown took a dive for the worse affecting and dragging down many of us to the edge of financial precipice. Jobs were lost. Homes were closed to foreclosures. For the first time perhaps, more and more Americans were in desperate need for social safety programs. The middle class became, in fact, a homeless class. If and when people reentered the workforce they started their new careers at entry-level jobs, or at salaries far less than their previous jobs.
But then something miraculous happened: while many of us were hit hard, another group of people, the super rich, asked for a handout and got it.
What Obama didn't explain to the nation was this: how this economic turmoil got started by those who asked for the handout, how it was a gradual process decades' old in the making caused mostly by tax policies benefiting them, the rich, with deregulation of financial markets, hubris and greed; yes, Wall Street hubris and greed; and how he intends to make sure that this rampant greed doesn't happen again. After all, during his first term in office Obama did what was the simplest thing of all: pour money into a dysfunctional system to the tune of an estimated $4.0 trillion dollars. Oh yes, while he did it, he admonished the super rich and greedy for their greed and avarice while berating himself for being forced to do it. You have to admit, it made for great drama. Unfortunately, it didn't address fundamental issues that affect us all as a nation. Not only how to prevent something similar from happening again, but how to make sure that middle class America isn't dragged down again into it.
The question now becomes: where do we go from here? And, if despite the government's bailout the financial system continues to operate in the same irresponsible ways as in the past, what does that mean for the future and health of our nation for both rich and poor alike?
In Miami-Dade County, where I live, I've spoken to many families whose homes have been foreclosured upon. Some of these families have legitimately lost their jobs. Others simply were just unable to keep up with their high mortgage payments, especially if they lived in a house that is worth less than they paid for. Interesting enough, about a dozen of these families purchased their homes with predatory and subprime mortgage lenders and they are, by far, victims preyed upon by a truly predatory system, pardon the redundancy. These outrageously unregulated mortgages were tagged on with high interest payments, high pre-penalties and other high hidden fees, which balloned already high monthly mortgage payments. (In one instance pre-penalty fees was $30,000 just to get out of the toxic mortgage.) As expected, these mortgages defaulted.
The economic nightmare isn't over and I'm afraid that President Obama needs to do more to educate all of us about specific plans to get us out of this mess. While he's at it, he should continue to speak with the vision and moral authority he had as a candidate for the presidency. If his populist theme is lost in his economic package, he's lost as president and he'll take us further down the precipice, too, or as George W. Bush said in 2008, “This sucker could go down.”
Being a pragmatist, I can only add to that: “only time will tell.”
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