The Middle Class: The Engine of Economic Growth
The Center for American Progress has launched a 2012 series of events and publications on the importance of the middle class to our economy. Our series is based on the bedrock progressive principle that a strong middle class is essential for both economic growth and economic stability.
The middle class is our nation’s indispensable workforce. The middle-class consumer creates the incentive to conceive, manufacture, and sell what our economy produces. That demand drives business opportunities and spurs investment. Entrepreneurship and invention also are rooted in the middle class, and the rise in middle-class worker productivity generates much of our nation’s wealth.
The conservative position is less concerned about the middle class. Their counternarrative is that rising inequality is just fine for America since the gains for those in the top 1 percent will eventually “trickle down” to the 99 percent. But that’s not what’s happened over the past few decades. In fact, just the reverse occurred. The economic recovery of 2000 to 2007 didn’t benefit middle-class America. Over that time period gross domestic product grew by nearly 18 percent, yet median household income fell by 0.6 percent.
Today’s top-heavy economy is neither good for our country nor our economy. That’s why we need a renewed focus on strengthening the middle class.
This series will feature a baker’s dozen of events, ranging across our nation’s economic, social, and political landscapes.
Recent Events
A Millionaire’s Tax and the Economy (CAP Action)
February 29, 2012, 10:30am – 11:15am
For our nascent economic recovery to be sustainable, we must ensure all Americans once again pay their fair share. It was tax breaks for the wealthy at the beginning of the 21st century that led to our current budget deficit problems. And today, our tax system permits ultra-high income earners to pay a lower tax rate than a truck driver or a janitor. Those trickle-down economics are partly to blame for the depth of the recent recession—the worst downturn since the Great Depression.
A new bill by Sen. Sheldon Whitehouse (D-RI), the Paying a Fair Share Act, would end a tax policy that often asks middle-class workers to pay higher tax rates than millionaires. Please join Sen. Whitehouse, National Economic Council Deputy Director Jason Furman, and Michael Ettlinger, Center for American Progress Action Fund Vice President for Economic Policy, for a candid conversation on these important issues. The discussion will be moderated by Center for American Progress Action Fund President and CEO Tom Perriello.
Why Nations Fail
March 23, 2012, 9:30am – 10:30am
Please join the Center for American Progress in a discussion with economist and winner of the 2005 John Bates Clark Medal, Daron Acemoglu, as he presents findings from his new book, Why Nations Fail: The Origins of Power, Prosperity, and Poverty. Acemoglu and co-author James Robinson conclude that manmade political and economic institutions that foster a strong middle class create powerful forces for economic growth and national success. They encourage investment because of well-enforced property rights. They harness the power of markets through better allocation of resources. They promote the entry of more efficient firms, and they make it easier for new businesses to get financing. These factors in turn generate broad-based civic participation in economic and social life.
Copies of Why Nations Fail will be available for purchase at the event.
Rebuilding the Middle Class
February 1, 2012, 9:00am – 10:30am
In the State of the Union address, President Barack Obama challenged Congress to pursue policies that recognize that a strong middle class is the key driver of economic growth. He stressed that the United States will not have an economy that works until it has one that works for all Americans.
Join us for a conversation with Senator Tom Harkin (D-IA), chairman of the Health, Education, Labor, & Pensions Committee, as he reflects on what he's learned from the series of HELP Committee hearings and events on the decline of the middle class, and outlines a policy agenda that puts the middle class first. In the coming months, Senator Harkin plans to introduce sweeping legislation that will rebuild America's middle class through investments in areas like education and workforce training, our nation's infrastructure, and manufacturing jobs, as well as securing pensions and ensuring college is affordable.
Senator Harkin's remarks will be followed by a panel of distinguished economists and policy analysts exploring how the middle class is a key engine of economic growth.
This is the second in a year-long series of events and publications on the importance of the middle class to our economy.
The Rise and Consequences of Inequality
January 12, 2012, 10:00am – 11:00am
On December 6 President Barack Obama said that the kind of inequality that we have in America today, higher than at any time since the Great Depression, "hurts us all." He went on to outline how growing inequality and a shrinking middle class are at the root of our economic problems. These trends mean less stable consumption, unsustainable debt, a concentration of power in the hands of the few, and the unraveling of the American Dream that portrays the United States as a land of opportunity for anyone who works hard and plays by the rules. In short, an economy that doesn't work for all of us, isn't working.
Join us for a conversation with Dr. Alan Krueger, chairman of the President’s Council of Economic Advisers, about how inequality threatens both the middle class and the economy at large.
Featured Content
The American Middle Class, Income Inequality, and the Strength of Our Economy:
Heather Boushey and Adam S. Hersh discuss ways that the strength of the middle class and the level of societal inequality both affect economic growth and stability.
The Federal Tax Code and Income Inequality:
Michael Linden examines how our tax code has grown less effective at dampening income inequality, and how various proposals to reform the code would affect inequality.
Harkin Bill a Big Step Forward for Our Middle Class:
David Madland details why the Rebuild America Act is a crucial and comprehensive piece of legislation for restoring broad-based prosperity and sustained economic growth.
Ties that Bind:
David Madland and Nick Bunker explain why rebuilding the American middle class is an important step toward rebuilding America’s infrastructure.
The Origins of Prosperity:
Daron Acemoglu and his co-author spoke at the Center for American Progress last week about why nations fail.
Assessing Inequality, Mobility, and Opportunity:
CAP Senior Economist Heather Boushey testifies before the Senate Committee on the Budget.
A Sweet 16 to Build a Strong Middle Class:
Karla Walter presents 16 ideas for the middle class that aren’t part of the national debate but should be.
The Top 10 Middle-Class Acts of Congress:
Congress would do well to reflect on passage of key middle-class legislation as it considers how to strengthen our economy, writes Nick Bunker.
President Obama’s Bridge to a Better Economy:
Michael Ettlinger details the two policy threads that define the president’s approach toward immediate but also sustainable economic recovery in 2012.
The Endangered Middle Class: Is the American Dream Slipping out of Reach for American Families?:
CAP Senior Economist Heather Boushey testifies before the Senate Committee on Health, Education, Labor, and Pensions.
The Middle Class Grows the Economy, Not the Rich:
David Madland shows how a strong middle class is the key to higher GDP—not giving more money to the wealthy and hoping it trickles down.
Labor Market:
Heather Boushey argues for work-life policies in The New York Times's "Room for Debate."
A Strong Middle Class Is Key to Getting Our Economy Moving:
Michael Ettlinger explains why a growing and prosperous middle class was and is the prerequisite to strong and sustainable economic growth.
Economic Inequality Is Not Sustainable:
Heather Boushey examines why growing income inequality helped boost the wealth of the few and how reversing course is imperative to our nation’s economic well-being.
The Middle Class Is Key to a Better-Educated Nation:
Examining test scores in all 50 states, David Madland and Nick Bunker find that a stronger American middle class is associated with higher levels of academic achievement.
Middle-Class Societies Invest More in Public Education:
David Madland and Nick Bunker argue that strengthening our middle class will be good for our educational system and for our economy.
Economy:
David Madland explains how a strong middle class is the key to economic growth in Democracy Journal.