By Jake Rossen
By Jesse Marx
By Michelle LeBow
By Alleen Brown
By Maggie LaMaack
By CP Staff
By Jesse Marx
CP: It kind of puts the lie to the idea that India and China are going to step forward and buy all these goods that, because of this massive shift in wealth, Americans can’t afford any more.
Johnston: As Warren Buffett has pointed out, we’re basically selling 2 percent of America’s assets each year to foreigners to prop up our consumption. We want a consumer society, but we don’t want people to make enough money to be able to afford to consume. So that’s why we have all this static. The number is in my book somewhere about the percentage of family who’ve gone bankrupt in the last 10 years—it’s one in eight or one in ten or something like that?
IRS data show that from 2000 to 2002, incomes fell in real terms, inflation adjusted terms, across the board. The biggest declines were at the very top; the number of people making $10 million or more fell by about half. But in the middle class income groups, from $25,000 to $100,000, incomes over the two-year period fell by at least 4.5 percent on average. This is the first time this has ever happened for two years in a row. There are two other one-year periods when it happened. All of the statisticians agree that one of them is because of a change in the way they gather data. The other one is from 1953 to 1954, there was a very slight decline overall in incomes. It’s never happened two years in a row.
We don’t have the data yet for 2003, we’ll get it later on this year in May or June, but when it comes out I expect it will likely show that we certainly have not recovered to 2000 and we may still be down. Mr. Bush is going to end his first term with America having about 100,000 fewer jobs than it had when he took office. Because the population has grown we should have added about 7.2 million jobs. So we’re down more than 7 million jobs from where we should be for population growth.