Congress focuses on middle-class squeeze

Nancy Marshall-Genzer Jan 31, 2007

KAI RYSSDAL: Fed Chairman Ben Bernanke will have a chance to explain himself when he talks economics with Congress in a couple of week. But Capitol Hill was already buzzing about the economy today. Not about how well it might be doing. But about how tightly it might be squeezing the middle class. There were no less than three congressional committee hearings on the topic — looking at the disconnect between news reports of a good economy and a middle class that’s not feeling any love.

NANCY MARSHALL GENZER: Experts told the committees that interest rates are high, savings rates are low, and jobs are moving overseas. David Wyss, Standard & Poor’s chief economist, was paying close attention.

DAVIS WYSS: And let’s face it, the top 1 percent of the population has really pulled ahead of everybody else in terms of wealth, and people are figuring that out.

And so is Congress. Senator Charles Schumer started off by accusing President Bush of not acknowledging economic forces that are dragging down the middle class. The New York Democrat says Congress’ job is to redirect those forces.

CHARLES SCHUMER: You can’t have water flow uphill. But you can have water flow down one side of the mountain rather than the other side of the mountain. And our job is to make sure we acknowledge and accept those economic forces, but also are able to use them and direct them for the greatest benefit of the greatest number of our people.

Schumer didn’t get specific recommendations on how to do that. Former Federal Reserve Vice Chairman Alan Blinder says, at the very least, the nation’s safety net needs to be transformed — less net, more bounce.

ALAN BLINDER: We have to do a better job of cushioning the people who fall — and I would say, turning the cushion, or safety net as it’s called, into a trampoline.

These broad suggestions didn’t impress Standard & Poor’s Wyss.

WYSS: Yeah, of course it’s political grandstanding. We’ve got a new Congress coming in. They want to prove that they’re doing something.

Wyss says middle-class Americans should look to their states for help. He says there’s more of a consensus, and a better chance of getting things done in state legislatures.

In Washington, I’m Nancy Marshall Genzer for Marketplace.

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