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Forbes on FOX Tells Us The "Great News" About America's Shrinking Middle Class: Let Them Eat DVD's and Tax Cuts!

Reported by Ellen - June 6, 2005 -

David Asman, grinning like a car salesman touting "low, low prices" gave the teaser for a Forbes on FOX segment yesterday saying "America's middle class. Now government stats are showing that it is shrinking and that is GREAT news for all our bottom lines!"

As usual, the conservatives outnumbered the moderates on the panel (not including Asman, who made no attempt to hide his convictions).

Mike Ozanian, Senior Editor said, "Great news! Because the reason for it is people are going from the middle class to the upper class.

David Asman: Ah, bleeding up instead of down!

MO: Wealth, in this country for the average person is increased better than 10% a year the last 10 years, three times the rate of inflation. People that were living in $200,000 homes ten years ago are now living in homes worth $600,000. What better way to measure success in America? (Comment: How about by wages, cost of gas, health insurance, jobs with benefits, etc?)

David Asman: So the middle class is getting smaller because the upper class is getting bigger.

A chart saying "MOVIN' ON UP!" appearedon the screen, showing the number of low income people down 1%, middle income down 5.5%, high income up 6.6% (source census bureau 1975-2003)

Mike Maiello, Staff Writer, was one of the two panelists who didn't think the trend was so positive. He said, "People are working harder and they're falling behind."

Steve Forbes, the editor in chief, said that "The middle class is under pressure because of rising prices and rising taxes (what about shrinking raises, shrinking jobs and shrinking benefits?). But the middle class is still strong once we get this inflation under control, real incomes will start to pop up again, when gas prices go down (Comment: And when is THAT going to happen?) - if we really want to help the middle class go to my hobby horse, enact the flat tax.

Asman: If not the flat tax, at least make those tax cuts permanent.

Lea Goldman, Staff Writer, said the middle class is "looking at some serious warning signs, specifically the number of Americans going uninsured is on the rise, the number of employers cutting benefits is on the rise which is a frightening statistic. Tuition is out of control... Going to college has now, for this era, become indentured servitude. All these signs are flashing like Times Square billboards that the middle class is in trouble."

Dennis Kneale, Managing Editor, said "the death of the middle class is vastly overstated." He says to look at it not by income but by spending. With a new twist on "Let them eat cake," Kneale reported that the lower class can afford to buy DVD players and get cable television. "They're living a middle class life," he said with a smug grin.

Maiello said life is about more than a DVD player (while the panel whooped it up with laughter), that the top one percent of asset owners own a third of the assets available and half of the stocks not owned by institutions.

Ozanian jumped back in to say it's a good sign that the gap is widening because that only happens during an expansion. "If you want the type of welfare state that Lea thinks we should have (she never said that) look at what it's done to Europe where they have 12% unemployment and economies that are in terrible shape (how's their national deficit, though? And the Euro doesn't seem to be suffering in comparison to our dollar)

Goldman said the middle class is looking at a precipice. "Those DVD players, those play stations? They're financed by debt and when those interest rates go up and those gas prices go up, it's not pretty."

Forbes insisted the picture IS pretty. "Household balance sheets have never been stronger, even lower middle class people, their housing prices are going up." (Comment: So it's harder for young people starting out to buy one, a point he doesn't seem to think worth mentioning.) In another twist on the "Let them eat cake" mindset, Forbes said that the answer to health care costs is medical savings accounts (as if the lower and middle class can really save enough to make a difference) and the cure for the high cost of college tuition is for people to "stand up" and ask how much money is going to class room instruction "with these tenured professors," how much for administration, etc.

Dennis Kneale complained that the "bleeding hearts" don't recognize the fact that the wealthy people employ other people.

Comment: Can you say "Out of touch?"