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Tuesday, August 11, 2009

This Time, We Can't Leave the Middle Class Behind

By Jared Bernstein
Chief Economist to Vice President Biden
Posted: August 11, 2009 04:54 PM
Huffington Post

Editorial Note: Jared Bernstein is author of the recent book "Crunch: Why Do I Feel So Squeezed? (And Other Unsolved EconomicMysteries)" and "All Together Now: Common Sense for a Fair Economy." He is the son of Lynne Bernstein, a former PC in LD 26. He writes about what a real recovery would mean to the American middle class and how the distribution of wealth to the top 1% in 2007 was eerily similar to 1928, a year before the Great Depression.

Even before we got to the White House, the President, the Vice President, and the economic team were crafting policies designed to offset the deepest recession since the Great Depression. Back in mid-December of last year, I remember a meeting in Chicago, with the snow swirling outside, as we began to plan the Recovery Act, the financial stabilization plan, and housing relief, all in the context of a budget that would bring down the trillion-plus dollar deficit we were about to inherit as quickly as possible.


I also remember the Vice President talking about the difficulties facing the middle class, struggles that predated the recession. With the campaign fresh in their minds, he and the President recalled that even in supposedly good times, when the economy was expanding and unemployment was low, the families they met on the trail were having far too much trouble making ends meet. Saving for college, paying for health care, keeping up with the mortgage payments... just making their basic budgets balance out at the end of the month seemed awfully hard in an economy that was supposedly solid.

Of course, that solid economy was fading fast; the recession was a year old, unemployment was rising, and helping people get back to work had become our top priority. But the longer-term, structural challenges that have been facing the middle class since long before the recession began were never far from the President's mind, which is why, shortly thereafter, he asked the VP to chair the Middle Class Task Force.

Today, in August of 2009, we're faced with yet another set of realities. After falling at a rate of about 6% from the last quarter of 2008 through the first quarter of this year, a rate of decline we hadn't seen in half a century, the economy contracted at a 1% rate in the second quarter of 2009. Yes, our economy is still ailing, but six months ago, economists worried the recession would descend into depression; now they're asking when recession will become recovery.

Here in the White House, however, recovery means something very specific, and it's different than what economists generally mean when they talk about it. According to the panel that decides when recessions officially begin and end, you don't need job growth or falling unemployment to declare that a recovery is underway. In fact, in the last two recoveries, it took 15 and 19 months, respectively, before the unemployment rate peaked.

That definition doesn't work for us. No jobs, no recovery. Click here for the rest of the story.