Since saving the Great American Middle Class from itself, the economists, Wall Street, and the one percent has become the cause de jure for politicians and pundits these days. I will offer a few prescriptions of my own.
Instead of playing the fruitless game of trying to define “middle class,” I shall propose a few policies that could help average Americans obtain the status of middle class or maintain it. None of these policies is perfect; instead, they are merely suggestions based upon my experience and knowledge.
Some policies that could help rebuild the middle class include:
- Medicare for All (Single-Payer Healthcare). Expand our existing single-payer health care system to cover all Americans. This could eliminate the biggest cause of bankruptcies – medical bills. Nerd Wallet found that 1.7 American households declared bankruptcy because of medical bills in 2014. The website also discovered that 10 million Americans with health insurance were unable to pay for basic necessities, such as food, rent, and heat, due to medical bills. Another 11 million took on credit card debt to pay off medical bills. Since around one in three Americans already receives single payer health insurance in the form of Medicare or Medicaid, it would not be as big of an effort to offer it to all as we think.
- Such an expansion would create jobs because employers would no longer be required to offer health insurance to workers. It would also free many Americans to quit jobs they have taken simply for health insurance. Many people cannot take advantage of higher paying opportunities, go back to school, or start a business because they need the health insurance from the job they hate. Businesses would benefit too because they could reinvest the money they are spending on health insurance in expansion, which could create more jobs. One major benefit is that some companies could abolish “human resources” and spend the money they are wasting on that bureaucracy on their real business.
- Tuition free college. Use tax money to subsidize tuition for all Americans at public universities and community colleges. Since our tax money is already paying for these institutions, making them available to everybody is not a stretch. U.S. Senator Bernie Sanders (I-Vermont) has an excellent plan to do this by using a Robin Hood tax on financial transactions to finance this. I would extend Sanders plan by having it pay for all medical and nursing school tuition for U.S. citizens to address the shortages of doctors and nurses the country is facing according to The Washington Post.
Such a plan would stimulate the economy in three important ways:
- It would eliminate student loan debt, which would give college graduates far more spending power. Instead of paying debt, the graduates would spend their money on things like cars and TV sets or buy houses, increasing consumer spending, which is the engine that drives our economy.
- Effectively increase the income of many middle class families because they would no longer have to save for children’s college tuition. If a family is currently saving $1,000 a month for college, its income would increase by $1,000 a month. This would create more spending and stimulate the economy. Many families would enjoy a better lifestyle and parents would be able to save more for retirement.
- Inject more money into the economy by increasing the earning power of citizens. A study from the Federal Reserve Bank of New York indicates that the average person with a bachelor’s degree will earn $1.2 million more than the average individual with just a high school diploma over the course of a lifetime.
- Income Security or National Disability Insurance. Currently, three in 10 Americans have no savings and 55% of Americans do not have enough money saved to cover more than three months of expenses, Bankrate.com reported. To make matters worse, more than half of Americans have no short-term disability coverage, according to Insurance Journal. This means that those people are at risk for falling into poverty if they become temporarily disabled by illness or an accident. It’s a bad situation because Social Security Disability is set up to cover long-term disability. Some sort of national short-term disability insurance that everybody can take advantage of is needed, especially the self-employed and all those in the fast-growing gig economy. Many of those people are only one or two paychecks away from the food bank.
- Tax-Deferred Savings. Make the first $250,000 that each individual keeps in FDIC insured savings instruments tax-deferred. Couples could keep up to $500,000. This would encourage savings and allow people to have cash they can tap for emergencies. Under the current system, people are forced to turn to investment vehicles, such as IRAs and 401Ks, for retirement savings. That’s a good deal for the investment industry, but a lousy deal for the middle class. Many families have to take a huge tax hit if they need to tap their savings for an emergency. Such a move would encourage savings, help Americans become self-sufficient, and cut many Americans tax bills. It would also mean that a lot of “investment advisors” would have to go back to selling used cars or aluminum siding for a living, but would that be so bad?
These proposals would not solve every problem facing the middle class, but they could improve its situations. More importantly, they could reduce income inequality and prevent the social and political upheaval it can create.
Such solutions might seem drastic, but the situation the American middle class is facing is dire. To address it, we will need to think outside the box and take drastic actions.