Dave Conklin

A Message to Our Leaders from Middle Class America

Both of our Presidential Candidates should hear and understand this message. It is most certainly time for change! Both of these leaders have left middle class America in fear of their inability to manage a crisis situation, and have demonstrated anything but change.

John McCain has continued to emphasize how different he is from Bush, what a maverick he is, and how populist his policies are. Now, in an instant, by supporting the bailout legislation, and thumbing his nose at the Republican alternative, he has thrown it all away.

Barak Obama, looking much like McCain and Bush, quickly abandoned his pledged allegiance to middle class America by supporting the bailout legislation. On October 6, 2008 as America watched Barak Obama on the national news, speaking to a group of his supporters he said, “We need to do what Bill Clinton did in the 1990’s and put people first again.” That comment must have infuriated many middle class Americans, given the current status of our economy that Bill Clinton helped to engineer.

The Clinton Administration and Congress actually planted the seeds for our current economic disaster! Our leaders now act like they have been dealt a bad hand, and don’t have the time to use the sound judgment necessary to craft a bill that addresses the root cause of our economic crisis. A review of the following excerpts from an article that was published by Steven A. Holmes, on September, 30 1999 in the New York Times will show that our leaders have had more than sufficient time to address the issues related to our economic crisis.

Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people.

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.

”From the perspective of many people, including me, this is another thrift industry growing up around us,” said Peter Wallison a resident fellow at the American Enterprise Institute. ”If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”

In review, Steven A. Holmes stated, back in 1999, that this additional risk may not pose any difficulties during flush economic times, but may run into trouble in an economic down turn. So how did “Slick Willy” ensure that we would encounter a huge economic down turn? With the assistance of Congress, he signed a free trade agreement with China that ensures a huge advantage for China manufacturers over U.S. manufacturers. The lack of controls in this agreement, as it is currently written, has resulted in a surefire recipe for disaster.

The U.S. trade deficit with China is the largest, with one country, in U.S. history—$201 billion. That deficit has cost 410,000 U.S. jobs and job opportunities in the past two years alone, according to the Economic Policy Institute. At the same time, China’s workers are denied basic workers’ rights. China’s frequent violations of workers’ rights give that nation an unfair trade advantage that has cost more than 1 million U.S. jobs overall, according to a petition filed with the U.S. Trade Representative by the AFL-CIO and the Industrial Union Council (IUC).

Here are a few things we now know about the U.S. China Free Trade Agreement:

Removal of costly and delaying trade barriers, such as tariffs, quotas and conditions, inherently leads to easier and swifter trade of consumer goods. Unfortunately companies that choose to keep their manufacturing operations in the U.S. do not have a level playing field with those companies who choose to move their manufacturing operations to China or simply purchase their products from Chinese manufacturers. Simply stated, there are no tariffs on the goods manufactured in China, while there are taxes on goods manufactured within the U.S. What that means is that U.S. manufacturers will choose to either move their manufacturing operations to China, or they will choose to purchase Chinese manufactured products. If they fail to do this they will lose business to those manufacturers who have chosen to reduce their costs through these options.

The use of less expensive materials and labor acquired through free trade leads to a lower cost to manufacture goods. Unfortunately the less expensive labor is found in China, not the U.S. What that means is that U.S. manufacturers will utilize more labor from China and less from the U.S. in order to reduce their costs.

The result is either increased profit margins (when sales prices are not lowered), or increased sales caused by lower selling prices, or a combination of both. Unfortunately many U.S. consumers, seeking lower costs, succumb to greed in much the same way as manufacturers seeking higher profits. Both the consumer and the manufacturer are looking at the short-term results and are not considering the effect of lost American jobs to the economy as a whole.

Free trade has caused more U.S. job losses than gains. In a free trade arena, all things are forced to become equal. That includes labor conditions and labor rates. As long as we are willing to accept the same labor conditions and labor rates that the Chinese provide, then we should be comfortable with the U.S. China Free Trade Agreement, as it is currently written. If not, then we should add some controls in the language.

So why would our leaders make such decisions? What advantage could there possibly be to engineer such economic recipes for disaster? Has anyone noticed that many corporate CEO’s and investors are making record breaking salaries, bonuses, and profits, while the average middle class American is struggling to make their mortgage payment, unemployment is soaring to new heights, and the stock market is plummeting at record rates? Imagine being one of those investors or CEO’s who have reaped huge profits at the expense of the middle and lower class Americans. Imagine being able to take that big cash savings to purchase the assets, owned by the average middle class American, for pennies on the dollar. Why would our leaders make these decisions? It certainly feels like the interests of the average middle class American have been sold out in favor of the interests of the wealthy. While Obama and McCain continue to preach that they are going to help the middle class, we continue to watch the numbers of the middle class dwindle as many Americans move from the middle class to the lower class, and as the upper class reaps record profits. When their businesses fail, however, we are expected to bail them out. Yet, when their businesses realize record breaking profit they don’t spread the wealth. CEO’s and investors walk away with millions, even billions and the middle class American is left holding the bag.

Now our leaders are suggesting that, out of desperation, we should act hastily, and sign off on a massive bail out plan for the mortgage industry. The last time I checked, those mortgage institutions took a risk in order to make a profit. Often in business, when the risk pays off, huge profits are made. Has anyone heard the oil companies stepping up to the plate to bail out those who can’t afford to make their mortgage payment? I don’t believe anyone would expect them to. They took the risk to earn those profits. Likewise the middle class American should not be expected to bail out those mortgage companies who willingly took a risk to make a profit.

It’s easy to point fingers at our leadership. So, in all fairness, what would a viable alternative be for the use of $850 billion of our hard earned wages? Everyone realizes that our dependence on foreign oil is a big contributor to the current squeeze on the pockets of the average middle class and lower class American. So why don’t we invest that hard earned cash in a new, revitalized energy infrastructure, to include windmills, solar panels, nuclear power plants, compressed natural gas, geo thermal energy, and more. This would reduce our dependence on foreign oil, create hundreds of thousands of jobs, and put the average middle class American in a better position to afford their house payment, and ultimately the mortgage companies would be greeted with a new pool of low risk mortgage applicants, and they would be put in a better position as their current customers bring their mortgage payments current. This would be a win for all.

How is it that the average middle class American can see these things while our leaders, who are compensated dearly to plan for our future well being, don’t seem to have the ability to see the forest for the trees. Perhaps we need an average middle class American to be the President of the United States as opposed to someone with eloquent speaking skills, or a heroic background.

Written by
Dave Conklin
Average Middle Class American
Florence, Kentucky USA