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More “haves” and more “have nots”


House budget would hasten the demise of North Carolina’s middle class

Most Americans take it for granted that the United States has always been and always will be a broadly “middle class” nation. It’s as if we just assume that there’s something in the national DNA that makes this a natural state of affairs.

The truth of the matter, of course, is much more complex. Neither the mere absence of royalty and rigid social classes nor the mere presence of a market economy is enough to guarantee widely-shared prosperity and a broadly egalitarian society. In America – and especially in the South – the middle class has flourished only intermittently. Indeed, it’s easy to forget how far North Carolina has come in the last 70 or 80 years.

Where we came from

In the early parts of the 20th Century, North Carolina was an officially segregated society that featured grinding poverty for a huge proportion of its population – black and white alike. Though a sizable chunk of the population was increasingly well-off, a huge proportion still lacked an adequate diet, indoor plumbing and other essential utilities. Formal education past the first few grades was, for many, still a luxury.

So, what happened? How did we rise above this state of affairs?

The answer, of course, is that some smart [2] and visionary [3] public (and private) sector leaders decided to do something about the situation. Together with national leaders, they intentionally attacked poverty and worked to construct the infrastructure that would make a true middle class society possible. They built a world class university system, better public schools, water and sewer systems, systems of public health and safety, a better social safety net and the public amenities that made North Carolina the kind of place in which people and businesses could grow and thrive. And they levied the taxes to pay for it all.

Were all of their efforts successful? Of course not. Some anti-poverty programs were more successful than others. Progress in public education was uneven. Much economic and physical growth came at the expense of lost open space and poorer air and water quality. The tax system grew obsolete [4].

Still, all in all, these efforts were clearly worth the effort. By the latter decades of the 20th Century, more North Carolinians were clearly much better off than they had ever been before. Poverty was on the decline and the middle class was growing. By investing in public structures and systems – especially universal education – North Carolina had provided a ticket to the middle class for millions of people.

Where we are

In recent decades, unfortunately, things have changed for the worse. With the rise of a loud and well-funded anti-government propaganda machine on the far right, the public commitment to the systems and structures that promote widely-shared prosperity has waned. Public officials, who once brought great passion to finding new ways to grow the middle class, now offer only tepid and sheepish defenses of past successes and new ideas for improvement.

In a state in which even many Republicans once proudly supported a sure and steady growth in public investments, all passion now seems to lie with the anti-tax advocates – a fact made all the more remarkable by the fact that state taxes have already fallen to the lowest levels in decades [5].

The result, not surprisingly, has been middle class stagnation. At the same time that North Carolina has gradually retreated from its past commitment to growing and improving essential public structures and services like education, poverty is again on the rise and middle class is more fragile than ever.

Where once the vast majority of household incomes were concentrated in a gradually expanding middle, now, the two fastest growing groups are the poor and the super-rich.

Making matters worse

All of this brings us, of course, to 2011 and the debate this week over the budget bill advanced by House Republicans [6]. The budget that will be debated and passed this week is, in many ways, the coup de grace in the gradual process that has overtaken and slowed North Carolina’s progress in expanding its middle class.

At the very moment in which world economic developments and an array of other challenges posed by scarce resources, a degraded environment, and changing demographics were already making things tough enough, conservatives have seized the initiative and are pushing for a radical plan that will lop of several years worth of progress in one fell swoop,

As Alexandra Sirota of the North Carolina Budget and Tax Center wrote eloquently last week [7]:

“The numbers are shocking enough when considered in light of the cumulative decline in state investments in public schools, community colleges and universities, courts, health services and clean air and water , all of which support our state’s well-being. This year’s House Budget proposal would represent the single-largest year-over-year decline in state investments in decades at a time when demand for services continues to increase and the economic recovery remains fragile.

The proposed cuts in the House budget erode already-dwindling opportunities for individuals and families to work their way towards a better quality of life. Increased tuition at community colleges and universities, less access to affordable, quality child care, and less support for educators at every level will make it more difficult for families to stay in or reach the middle class.

And that is without considering the impact that this budget will have on jobs. There will be significant job loss as a result of cuts to public education ($1.3 billion cut), environmental protection ($91.4 million cut), and health and human services ($462 million cut). Estimates put the potential direct job loss at more than 20,000; thousands more jobs will likely be lost as the impact of these job cuts ripples through the economy.

It is the role of state government to support economic growth and the well-being of all North Carolinians in all communities. The proposed House budget walks away from this responsibility. Instead, it asks each of us to become consumers in a fee-for-service, “vending machine” government that cannot adequately support the kind of community benefits that foster innovation, entrepreneurship, and the job creation needed….

The proposal the House leadership has put forward weakens the social contract among the people of North Carolina—ignoring centuries of evidence that investing in public structures can and does support a more prosperous future for the people of this state. Taking the path set by the House budget would be devastating beyond the next two years, likely moving the state backwards and failing to put us on sound footing to face future challenges. It represents a disregard for the great things that we have accomplished in our state. (Emphasis supplied).

In other words…

The budget debate that is being fully joined this week and that will continue through the end of next month (and possibly beyond) is likely to be a seminal moment in modern North Carolina history. If the budget is actually implemented in its present form or something close to it, it will represent a moment of significant retreat – a point in time that a poorer, less healthy and more economically divided North Carolina will be able to look back on in 2021 or 2031 with great regret.

Let’s hope it doesn’t come to that and that it doesn’t take 10 or 20 more years of stagnation for us to remember the truth that a thriving, middle class society doesn’t happen by accident.