Third World America

by Arianna Huffington

  Many thanks also to Jeff Swafford and Patty Elvey, who kept the rest of my life humming. And thanks to the great team at Crown, including Tricia Wygal, art director Whitney Cookman, who designed the powerful cover, and Rachel Rokicki in publicity and Meredith McGinnis in marketing, who were responsible for bringing the book to the world.

  Finally, deep thanks to my daughters, Christina and Isabella, and my sister, Agapi—always an incredible source of love and support. This book is dedicated to the millions of middle-class Americans fighting to keep the American Dream alive.

  NOTES

  Preface

  1 The Italian journalist Luigi Barzini: Luigi Barzini, The Europeans (New York: Penguin, 1983), 14, 234.

  2 “America,” Winston Churchill reportedly said: William Antholis, “The Good, the Bad, and the Ugly: EU-U.S. Cooperation on Climate Change,” 19 Jun. 2009, www.brookings.edu.

  PART 1: THIRD WORLD AMERICA

  1 “The middle class has been …”: Barack Obama, remarks by the president and vice president at Middle Class Task Force Meeting, 25 Jan. 2010, www.whitehouse.gov.

  2 During the 2008 campaign: David Plouffe, interviewed by the author in Washington, D.C., 31 Oct. 2009.

  3 According to Plouffe, Obama and his team: David Plouffe, The Audacity to Win (New York: Viking, 2009), 9.

  4 Just how bad things have: Elizabeth Warren, “America Without a Middle Class,” 3 Dec. 2009, www.huffingtonpost.com.

  5 In April 2010, the shot heard: Joshua Gallu and Christine Harper, “Goldman Sachs Sued by SEC for Fraud Tied to CDOs,” 16 Apr. 2010, www.bloomberg.com.

  6 In November 2008, as the initial: David Brooks, “The Formerly Middle Class,” 18 Nov. 2010, www.nytimes.com.

  7 In a 2010 strategy paper: “From Recession to Recovery to Renewal,” 20 Apr. 2010, www.brookings.edu.

  8 At least forty-five states: Center on Budget and Policy Priorities, “An Update on State Budget Cuts,” 19 Apr. 2010, www.cbpp.org.

  9 According to a report by: Ibid.

  10 America’s states faced: Center on Budget and Policy Priorities, “Recession Continues to Batter State Budgets; State Responses Could Slow Recovery,” 25 Feb. 2010, www.cbpp.org.

  11 These are massive numbers: Brady Dennis, “AIG Plans Millions More in Bonuses,” 11 Jul. 2010, www.washingtonpost.com.

  12 $12.9 billion of which: Christine Harper, “Taxpayers Help Goldman Reach Height of Profit in New Skyscraper,” 21 Dec. 2008, www.bloomberg.com.

  13 Toss in the $45 billion: Shahien Nasiripour, “Bank of America TARP Repayment Premature, Analyst Says,” 4 Dec. 2010, www.huffingtonpost.com.

  14 and the $45 billion: Malden Read, “Citigroup: TARP Loans Near $45 billion Mark,” Associated Press, 12 May 2009.

  15 California is eliminating CalWORKS: Judy Lin, “Schwarzenegger Lays Out Bleak California Budget,” Associated Press, 14 May 2010.

  16 Minnesota has eliminated a program: Center on Budget and Policy Priorities, “An Update on State Budget Cuts,” 19 Apr. 2010, www.cbpp.org.

  17 Perhaps the reason can: Center for Labor Market Studies, Northeastern University, “Labor Underutilization Problems of U.S. Workers Across Household Income Groups at the End of the Great Recession,” Feb. 2010, www.clms.neu.edu.

  18 These numbers, according to: Robert Frank, “High Unemployment? Not for the Affluent,” 12 Feb. 2010, www.wsj.com.

  19 “These are the kinds …”: Bob Herbert, “The Worst of the Pain,” 9 Feb. 2010, www.nytimes.com.

  20 In the last chapter of: Michael Herr, Dispatches, 5th ed. (New York: Knopf, 2009), 201.

  21 And Tom Wolfe: Tom Wolfe, “The Birth of ‘The New Journalism’: Eyewitness Report by Tom Wolfe,” New York magazine, 14 Feb. 1972, 38.

  22 So, in 1845, he wrote: Benjamin Disraeli, Sybil, or the Two Nations (London: Macmillan, 1895), 74.

  23 Forty years ago, top executives: Kenneth Dodge, “Make CEOs Help the Little Guy,” Pittsburgh Post-Gazette, 7 Feb. 2010, www.post-gazette.com.

  24 Between 2007 and 2008, more than: Derek Douglas and Almas Sayeed, “An Ever Increasing Divide,” Center for American Progress, 1 Sep. 2006, www.americanprogress.org.

  25 In 2005, households: Ibid.

  26 In 2007, the top 10 percent: Henry Blodget, “The Rich Get Richer and the Poor Get … Fired,” 13 Aug. 2010, www.businessinsider.com.

  27 Between 2000 and 2008, the poverty rate: “The Suburbanization of Poverty: Trends in Metropolitan America, 2000 to 2008,” 20 Jan. 2010, www.brookings.edu.

  28 Almost one hundred million Americans: Matt Miller, “The Upside of Downward Mobility,” 29 Dec. 2010, www.money.cnn.com.

  29 The percentage of Americans: Economic Mobility Project, “Getting Ahead or Losing Ground: Economic Mobility in America,” Feb. 2010, www.economicmobility.org.

  30 If you were born: Ibid.

  31 In a study of economic mobility: Isabel Sawhill and John E. Morton, “Economic Mobility: Is the American Dream Alive and Well?” May 2007, www.economicmobility.org.

  32 Since the recession began: Darlene Superville, “Obama: Jobs Bill Will Help Small Business Owners,” 13 Mar. 2010, www.huffingtonpost.com.

  33 Over 2 million of those: Christopher Rugaber, “Millions of Jobs That Were Cut Won’t Likely Return,” 13 May 2010, www.bostonglobe.com.

  34 We lost 1.2 million: Diana Furchtgott-Roth, Irwin Stelzer, and John Weicher, “Hudson Institute Economic Report,” 8 Jan. 2010, www.hudson.org.

  35 In 1950, manufacturing accounted: Richard Florida, “How the Crash Will Reshape America,” Mar. 2009, www.theatlantic.com.

  36 Indeed, one-third of all: Richard McCormack, “The Plight of American Manufacturing,” 21 Dec. 2009, www.prospect.org.

  37 According to Thomas Philippon: Thomas Philippon, “The Future of the Financial Industry,” 16 Oct. 2008, www.sternfinance.blogspot.com.

  38 As MIT professor Simon Johnson recounted: Simon Johnson, “The Quiet Coup,” May 2009, www.theatlantic.com.

  39 That’s right—over 40: Ibid.

  40 James Kwak, coauthor of: James Kwak, “ ‘13 Bankers’ in 4 Pictures: Why Wall Street Profits Are Out of Whack,” 15 Apr. 2010, www.huffingtonpost.com.

  41 According to New York Times columnist Paul Krugman: Paul Krugman, “Don’t Cry for Wall Street,” 22 Apr. 2010, www.nytimes.com.

  42 But the data points: Sandra Pianalto, Federal Reserve Bank of Cleveland, “Forecasting in Uncertain Times,” 18 May 2010, www.clevelandfed.org.

  43 Her conclusion: “Many people …”: Ibid.

  44 At a D.C. jobs fair: Laura Bassett, “D.C. Career Fair for Older Workers Attracts Thousands,” 12 May 2010, www.huffingtonpost.com.

  45 According to BusinessWeek: Mike Dorning, “College Grads Flood U.S. Labor Market with Diminished Prospects,” 19 May 2010, www.businessweek.com.

  46 And many workers who have managed: Laura Bassett, “Same Job, Less Pay: Employees Learn to Swallow Their Demotions,” 7 May 2010, www.huffingtonpost.com.

  47 Adding insult to injury, a growing number: Peter S. Goodman, “Cuts to Child Care Subsidy Thwart More Job Seekers,” 23 May 2010, www.nytimes.com.

  48 And kids were left scrambling: Heather Hollingsworth, “Cash-Strapped Districts Cutting Summer School,” Associated Press, 23 May 2010.

  49 As the Los Angeles Times’s Don Lee put it: Don Lee, “Consumer Spending Trend Is a Shaky Foundation for Economic Recovery,” 16 May 2010, www.latimes.com.

  50 According to the Federal Reserve: Board of Governors of the Federal Reserve System, “H.8 Assets and Liabilities of Commercial Banks in the United States,” 23 Jun. 2010, www.research.stlouisfed.org.

  51 Senator Sheldon Whitehouse’s amendment: “Senate Rejects Credit Card Interest Rate Measure,” Associated Press, 19 May 2010.

  52 Or how about payday lending: Gary Rivlin, “The Payday Lenders Confront Their Mortality,” 17 May 2010, www.huffingtonpost.com.

  53 It was killed without a vote: Kay Hagan, “Republicans Object to Considering Hagan Payday Lending Amendment,” 18 May 201
0, www.hagan.senate.gov.

  54 Then there is the Merkley-Levin amendment: Simon Johnson, “Focus on This: Merkley-Levin Did Not Get a Vote,” 21 May 2010, www.huffingtonpost.com.

  55 A recent study by Duha Tore Altindag and Naci H. Mocan: Duha Tore Altindag and Naci H. Mocan, “Joblessness and Perceptions About the Effectiveness of Democracy,” National Bureau of Economic Research, working paper no. 15994, May 2010, www.nber.org.

  56 especially since one out of every six: Molly Line, “Job Hunt: Blue Collar Workers Struggle Most,” 23 Mar. 2010, www.foxnews.com.

  57 Andrew Sum, director of the: Ibid.

  58 Economist Jeff Madrick doesn’t think so: Jeff Madrick, “Should We Still Make Things?” 11 Mar. 2009, www.dissentmagazine.org.

  59 According to the Hackett Group: Patrick Thibodeau, “Survey: One in Four IT Jobs Moving Offshore,” 9 Dec. 2010, www.computerworld.com.

  60 Linda Levine of the Congressional Research Service: Linda Levine, “Offshoring (a.k.a. Offshore Outsourcing) and Job Insecurity Among U.S. Workers,” 2 May 2005, www.fpc.state.gov.

  61 And in a 2006 study: Booz Allen Hamilton, “The Globalization of White-Collar Work: The Facts and Fallout of Next-Generation Offshoring,” 2006, www.booz.com.

  62 Accenture now employs: Julia Hanna, “How Many U.S. Jobs are ‘Offshorable’?” Harvard Business School, 1 Dec. 2008, www.hbswk.hbs.edu.

  63 A June 2008 Harvard Business School study: Ibid.

  64 Even more troubling: Booz Allen Hamilton, “The Globalization of White-Collar Work: The Facts and Fallout of Next-Generation Offshoring,” 2006, www.booz.com.

  65 “The financial sector,” wrote Martin Wolf: Martin Wolf, “The Challenge of Halting the Financial Doomsday Machine,” 20 Apr. 2010, www.ft.com.

  66 By 2020, interest alone: David Brooks, “The Ecstasy of Fiscal Policy,” 1 Apr. 2010, www.nytimes.com.

  67 That same year, five segments: Douglas W. Elmendorf, “The Economic and Budget Outlook,” Congressional Budget Office, 13 May 2010, www.cbo.gov.

  68 A recent report: John Mauldin, “The Future of the Global Public Debt Explosion,” 2 May 2010, www.businessinsider.com.

  69 For instance, in Greece: Bank for International Settlements, “The Future of Public Debt Prospects and Implications,” Mar. 2010, www.bis.org.

  70 “While fiscal problems need …”: Ibid.

  71 As Mauldin says: John Mauldin, “The Future of the Global Public Debt Explosion,” 2 May 2010, www.businessinsider.com.

  72 Mauldin goes on to: Ibid.

  73 Princeton economist Alan Blinder: Alan Blinder, “Opening Remarks and Consequences of Current Fiscal Trajectory,” 8 Oct. 2009, www.americanprogress.org.

  74 Historian Arnold Toynbee believed that: Arnold Toynbee, A Study of History (New York: Oxford University Press, 1946), 273.

  75 Partisanship pop quiz time: Dwight D. Eisenhower, “The Chance for Peace,” speech before the American Society of Newspaper Editors, 16 Apr. 1953, www.eisenhower.archives.gov.

  76 No, it was that unrepentant lefty: “Civilian Unemployment Rate,” Federal Reserve Bank of St. Louis, 4 Jun. 2010, www.research.stlouisfed.org.

  77 Yet today, while America’s economy: Bureau of Labor Statistics, “Alternative Measures of Labor Underutilization,” Table A-15, 7 May 2010, www.bls.gov.

  78 We hear endless talk: Anne Gearan and Anne Flaherty, “War Cost: Obama Wants $33 Billion More for Afghanistan, Iraq,” 12 Jan. 2010, www.huffingtonpost.com.

  79 Indeed, during his State of the Union speech: Jackie Calmes, “Obama to Seek Spending Freeze to Trim Deficits,” 25 Jan. 2010, www.nytimes.com.

  80 According to defense analyst Lawrence Korb: Lawrence Korb, “Spending Freeze Must Include Defense,” 27 Jan. 2010, www.thinkprogress.org.

  81 In fact, as Katherine McIntire Peters reported: Katherine McIntire Peters, “Defense Budget Portends Difficult Trade-offs,” 12 Aug. 2009, www.govexec.com.

  82 To quote then Illinois: Barack Obama, “Against Going to War with Iraq,” 2 Oct. 2002, www.barackobama.com.

  83 fewer than one hundred members: Joshua Partlow, “In Afghanistan, Taliban Surpasses Al-Qaeda,” 11 Nov. 2009, www.washingtonpost.com.

  84 According to the Los Angeles Times: Doyle McManus, “The Kandahar Gambit,” 4 Apr. 2010, www.latimes.com.

  85 Berkeley professor Ananya Roy: Robert Greenwald, “Rethink Afghanistan,” video, 21 Apr. 2010, www.huffingtonpost.com.

  86 And Representative Barney Frank: Diane Francis, “Knife Military Spending: Kill the Deficit,” 4 Feb. 2010, www.huffingtonpost.com.

  87 For example, according to the NPP: National Priorities Project, “Federal Budget Trade-Offs,” www.nationalpriorities.org.

  PART 2: NIGHTMARE ON MAIN STREET

  1 As Newsweek’s Nancy Cook pointed out: Nancy Cook, “Foreclosures Spread to Middle Class,” 28 Oct. 2009, www.newsweek.com.

  2 “Amongst the novel objects …”: Alexis de Tocqueville, Democracy in America, 8th ed., trans. Henry Reeve (Cambridge: 1848), 1.

  3 “Democratic laws,” he noted: Ibid., 241.

  4 “I know it when I see it”: Jacobellis v. Ohio, 378 U.S. 184 (U.S. Sup. Ct. 1964).

  5 “Is a $30,000-a-year doctor …”: Testimony of Paul Taylor, executive vice president, Pew Research Center, to the Senate Finance Committee, 26 Mar. 2009, www.pewresearch.org.

  6 According to the Pew Research Center: Pew Research Center, “Inside the Middle Class: Bad Times Hit the Good Life,” 9 Apr. 2008, www.pewsocialtrends.org.

  7 But behind this assertion: Ibid.

  8 At the same time, a third of those: Ibid.

  9 For purposes of its research, Pew defined: Ibid.

  10 In dollars and cents, that meant: Ibid.

  11 From 1945 to the 1970s: Claudia Goldin and Lawrence F. Katz, “Long-Run Changes in the Wage Structure: Narrowing, Widening, Polarizing,” 2007, www.brookings.edu.

  12 From factory employees to chief executives: John Cassidy, “Who Killed the Middle Class?” 16 Oct. 1995, www.newyorker.com.

  13 By the end of the 1980s: Paul Krugman, “The Great Wealth Transfer,” Rolling Stone, 30 Nov. 2006.

  14 They had, but rather than Ponce de León: Ibid.

  15 Alfred Marshall, one of the founding fathers: Alfred Marshall, “Some Aspects of Competition: The Address of the President of Economic Science and Statistics of the British Association,” Nature XLII (1890): 497.

  16 There is a reason Adam Smith’s: Amartya Sen, “The Economist Manifesto,” 23 Apr. 2010, www.newstatesman.com.

  17 Given how close we were in 2008: David Herszenhorn, “Senate Acts on Credit-Rating Agencies,” 13 May 2010, www.nytimes.com.

  18 “[The Bush] administration made …”: Jo Becker, Sheryl Gay Stolberg, and Stephen Labaton, “White House Philosophy Stoked Mortgage Bonfire,” 20 Dec. 2008, www.nytimes.com.

  19 Even Alan Greenspan: Andrew Clark and Jill Treanor, “Greenspan—I Was Wrong About the Economy. Sort Of,” 24 Oct. 2008, www.guardian.co.uk.

  20 “Wall Street got drunk”: Jo Becker, Sheryl Gay Stolberg, and Stephen Labaton, “White House Philosophy Stoked Mortgage Bonfire,” 20 Dec. 2008, www.nytimes.com.

  21 stubbornly refused to dip below thirty-two million: U.S. Census Bureau, “Table 23. People in Poverty by Nativity: 1993 to 2008,” www.census.gov.

  22 soup kitchen or food bank hit twenty-six million: “Who Are the Hungry?” California Agriculture 48, 7 (Dec. 1994), www.californiaagriculture.ucanr.org.

  23 with more homeless children: National Center on Family Homelessness, “Homeless Children: America’s New Outcasts,” 2009, www.homelesschildrenamerica.org.

  24 In early 1996, after forty thousand AT&T workers: James Cramer, “Let Them Eat Stocks,” New Republic, 29 Apr. 1996, 24–25.

  25 their corporate cronies from Enron and Halliburton: Frank Rich, “All the President’s Enrons,” 5 Jul. 2002, www.nytimes.com.

  26 “From 1980 to around 1987 …”: Claudia Goldin and Lawrence F. Katz, “Long-Run Changes in the Wage Structure: Narrow
ing, Widening, Polarizing,” 2007, www.brookings.edu.

  27 In 1995, the midway point: John Cassidy, “Who Killed the Middle Class?” 16 Oct. 1995, www.newyorker.com.

  28 In contrast, the nation’s top 5 percent: Ibid.

  29 According to a report compiled by Elizabeth Warren: Testimony of Elizabeth Warren, Committee on Banking, Housing and Urban Affairs, U.S. Senate, 25 Jan. 2007, www.banking.senate.gov.

  30 Over the same period, the top 1 percent: Emmanuel Saez, “Striking It Richer: The Evolution of Top Incomes in the United States (Update with 2007 Estimates),” Pathways Magazine, Stanford Center for the Study of Poverty and Inequality, Winter 2008, 6–7.

  31 And according to a report released in May 2010: “The State of Metropolitan America,” 9 May 2010, www.brookings.edu.

  32 Indeed, in a 2008 Pew survey: Pew Research Center, “Inside the Middle Class: Bad Times Hit the Good Life,” 9 Apr. 2008, www.pewsocialtrends.org.

  33 It was, according to Pew: Ibid.

  34 In a revised take on the original Misery Index: Marcus Baram, “The Real Misery Index April 2010: Underemployment Woes Lead to Two-Tier Economy,” 12 May 2010, www.huffingtonpost.com.

  35 One of the most glaring examples: Gretchen Morgenson, “Death of a Loophole, and Swiss Banks Will Mourn,” 26 Mar. 2010, www.nytimes.com.

  36 According to the White House: Office of the Press Secretary, “Leveling the Playing Field: Curbing Tax Havens and Removing Tax Incentives for Shifting Jobs Overseas,” 4 May 2009, www.whitehouse.gov.

  37 In December 2008, the Government Accountability Office: United States Government Accountability Office, “International Taxation: Large U.S. Corporations and Federal Contractors with Subsidiaries in Jurisdictions Listed as Tax Havens or Financial Privacy Jurisdictions,” Dec. 2008, www.gao.gov.

  38 Even more egregiously: Ibid.

  39 It’s as easy as opening up: Michael Brostek, “Cayman Islands: Business Advantages and Tax Minimization Attract U.S. Persons and Enforcement Challenges Exist,” United States Government Accountability Office, 24 Jul. 2010, www.gao.gov.