Only in the USA, the Affluent are called “Middle Class” !

By Kollengode S Venkataraman           e-mail:

In the recent election cycle, politicians of every stripe and persuasion talked about protecting the “Middle Class” even as the country is buried in a huge mountain of public debt accumulated over the last 20 to 30 years. And this happening with the leadership alternating between Democrats and Republicans both in the Congress and the White House. Now we have reached a stage of the whole nation falling off what every talking head calls a fiscal cliff, something that responsible people of all persuasions have been warning us for decades.

There is only one way to solve this national problem that we created for ourselves with our eyes wide open: Everybody needs to take some hit — higher taxes for people earning more, higher corporate and capital gains tax, keeping the estate tax as it is, higher eligibility requirements and means testing for Medicare, maybe even for Social Security. And the inevitable reduced service and/or more out-of-pocket expenses for healthcare for everyone. Another item for serious consideration will be a higher gasoline tax.

The defense expenditure for the nation is definitely bloated and un­sustainable. The annual US defense expenditure is more than the combined military expenditure of the next ten large countries. Out of the ten, except for China and Russia, countries such as France, Japan, England, Germany, Italy, Spain, Saudi Arabia are our allies with military treaties to come to our defence, if attacked. So, it is obvious that military expenditure too should be trimmed if we are serious about addressing our debt problem. But defense expenditures and outlays are the most sacred cows in the US Congress. 

It is strange that not many in the Congress seem to care that powerful nations are weakened first by profligacy from within, and only then from external threats.  The situation has reached such a ridiculous stage that in one of the Congressional rtestimonies, I remember hearing a UG general in military uniform attesting that our economic situation poses a bigger threat that external militaries.

In this context, one phrase we heard over and over again in the political discourse and campaign rhetoric in the past election cycle is tax cuts for the “Middle Class,” defined as families with annual incomes of $250,000 as the upper limit.

It is likely that the household income of the overwhelming majority of readers of this article such as yourself is well below this threshold; maybe under $120,000 per year. You are likely to be living in a desirable ZIP code in a good school district leading a comfortable lifestyle.

But it is another matter that you have been living under the perpetual anxiety of losing job in the corporation where you work — the same company you have been with for the last 20 years, getting regular raises, promotions, and bonuses.

So, it is no surprise that you never cared to know the income distribution in families in this great country.

After repeatedly hearing that families with $250,000 household income are defined as “Middle Class,” in all possibility, by now you might have developed a massive inferiority complex with your $120,000 annual house­hold income. In social discourse, you may even refer to yourself as “Lower Middle Class.”  Today’s marketing gurus and political media consultants know that by repeating a statement over and over again, they can make any idea gain currency and credibility. This is pitiful.

However, the US Census Bureau has done a wonderful job in gathering household income data. The latest year for which the information is available is for the year 2009.

The graph below shows the distribution of household income for Ameri­can households.

We can see in this graph that of the 118 million households in the nation, only 4% have incomes over $200,000. Only slightly more than 8% of the households has income more than $150,000.

To put things in perspective, the median household income for the nation is $50,000. That is, 50% of the homes have income less than $50,000, and 50% have incomes more than $50,000.

So, if $250,000 annual household income is “Middle Class,” then what do you call households with, say, $125,000 household income? Lower Middle Class? After all, they make only 50% of the so-called “Middle Class” in­comes. And what do we call homes with $60,000 in family incomes? The Working Poor? Remember, the median household income is $50,000.

I know people with graduate degrees stuck in white-collar office jobs paying only $35,000. What do we call them? White Collar Poor?

I am amazed at our skewed perception of ourselves.

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