A Disorderly Country

The middle class, the heart of the American nation, is sick. The new president’s no. 1 priority will be to restore its health again. Visit a country going through a crisis.

“Do buy a house in Riverside!” they said. “The town’s only one hour away from Los Angeles, there’s a profusion of sun and it’s so much cheaper than in Malibu,” the estate agents kept saying. “You don’t have any put up capital? You have bad credit? No problem at all, we have custom-made financial possibilities,” promised some very accommodating bankers.

Thousands of people came, especially Latino families, in search for the American dream – owning a small white house with a red-tiled roof and a big garage. Later on, mortgage rates started to increase and tons of notices for payment arrears were forwarded. In barely two years, the country’s economy considerably has lowered. Many owner’s dreams have melted like an effervescent tablet in a glass of water.

Riverside, like numerous other towns in the U.S., looks like a bruise in the face of the biggest economy in the world. In this place, one house out of 33 has been seized by the bank. The landscaped looks like a forest of placards: “Sold by the bank”, “Cut price”, “The seller pays 6 percent of the put up capital”. Deserted residences –there are sometimes two or three of them in each street- are sadly similar: a yellow, sun-burnt lawn, and a full mailbox. A small placard stuck on the dining room’s window indicates, “Property of Prudential Financial. Trespassers will be prosecuted.”

“Do you live here?” asks a young black lady wearing a T-shirt with the logo of phone and Internet company AT&T. My answer is negative. “I’m just having a glance,” I said. “Lots of people in the ward don’t pay their bills any more,” she explains. “I have to check out if the houses are still occupied.” She’s got a three-page-long address list.

The race to the presidency is a matter of economics. “Things have changed,” writes the New York Times chronicler, Thomas Friedman. “Voters don’t care any more about Iraq’s reconstruction, they’re more than ever interested in the American nation’s future”.

In September, the flabbergasted population watched the fall of the major financial institutions: the mortgage refinancing companies Fannie Mae and Freddie Mac, the brokerage company Bear Stearns, Merrill Lynch and Lehman Brothers, the insurance company AIG as well as the Washington Mutual bank. Hundreds of billions of dollars – the taxpayers’s money- have been issued to stop this drain: Washington doesn’t want to see such situations happen again, and refuses for every news break to start badly. In July for instance, the whole country watched the anxious faces of people queuing before the branches of the Californian bank IndyMac, going bankrupt. Hundreds of them were there to withdraw all the money they had. This type of pictures usually come from the developing countries. Not from the U.S.

Beyond the real estate crisis, it’s the deep well-being of the middle class, the mainstay of the country’s economy, which is at stake. This mainstay’s feeling bad. During the last past years, access to property, health care and academic studies – key elements of the middle class- gradually closed, because of high costs. Since the year 2000, for example, health insurance bonuses have more than doubled. During that time, salaries have stagnated. From 2002 to 2006, those Americans who had the privilege to belong to the 1 percent wealthiest ones have seen their income grow yearly by 11 percent (given that inflation impact is taken into account), whereas the 99 percent of other people haven’t even gained 1 percent more! Such a social gap had never happened before in the U.S. since the late 20’s, John D. Rockefeller’s and Henry Ford’s era. Just before the Great Depression.

A drama generating the present crisis is the fact that people who have bought their houses with a sufficient outlay and punctually reimburse their mortgage loan run the risk of being on a tightrope. For if the numerous residences for sale don’t get owners, the values of each other property will fall. The middle price decrease in the United States is up to 18 percent. It reaches almost 30 percent in Miami and Las Vegas. Even a little higher in Corona, by Riverside.

Felipe Ramirez lives in this town of 150,000 inhabitants, and works as a coachbuilder. The house standing next to his was purchased by the bank. I’m coming over to this 50-year-old strong man watering his flowers. “I paid $300,000 for my house in 2004. If I had to sell it today, I wouldn’t get much more than $200,000.”

It’s a worrying situation: his mortgage loan exceeds the present value of his house! Felipe Ramirez prays every evening not to lose his job. “There aren’t any more jobs around here,” he said. “My wife and I can’t afford moving.”

What the U.S. is going through reminds us of the Titanic. Just like the famous ocean liner, the country is moving dangerously towards an iceberg. Voters are at the helm and have to decide if they want to turn right (voting for McCain) or left (voting for Obama). McCain proposes a traditional Republican platform – tax rebate and retrenchment of the public expenses. Obama praises interventionism. He promises to invest in big state projects – health insurance available to everyone, windmills and solar panels – and to finance these projects with a raise of the rich people’s income.

However, rather than insisting on their own solutions, each candidate tried to convince electors of the danger to vote for his rival. John McCain is thus depicted as a rich man, kind of disconnected from the middle class reality – during an interview, he admitted to not remembering exactly how many houses he owns! – and who doesn’t know much about economics. From the McCain point of view, Obama is a big tax collector who will have the middle class suffocate even more, whereas they need some fresh air.

So what’s the choice to make? Left-wing or right-wing? In order to solve the problems affecting the middle class – high costs in the health field, an oil crisis, job relocation to China and India – most Americans support the Democrats’ progressive solutions, as many of the opinion polls confirm it. For Republicans, who have nothing new to offer, David Frum, a right-wing intellectual, former speechwriter for George W. Bush, claims it. American conservatism is dying, he wrote in his last published essay, “Comeback,” which sounds like a gong noise aiming to wake the Republican party up. According to him, conservatives offer solutions to problems that occurred 30 years ago –overtaxed population, urban criminality, communist threat – and not during the 21st century. “As soon as the September 11 trauma fades away from people’s minds, Republicans will have the best reasons of all to worry”, he says.

The American liner has been navigating to the right since Ronald Reagan’s election in 1980. Reagan’s conservative revolution, full of with words such as privatization and deregulation, made the country prosperous and inspired presidents Bush, father and son alike. Thirty years later though, its limits have been reached, and the U.S. is rushing straight at the iceberg. It is pure utopia to believe that those self-leading markets efficiently distribute funds, writes the Nobel Prize in Economics Joseph E. Stiglitz, and a proof of this is a boom of the real estate market.

Is a Democratic era really about to arrive? During the 2006 elections, the Democrats gained the power in Congress. This year, during the primary elections, the party gained three Representative seats in Illinois, Louisiana and Mississippi. What have these three polls in common? They took place in a Republican constituency that was supposed to be impregnable. Nothing’s for sure, though. The last two presidential campaigns have shown that Democrats are very good at losing, Americans joke. Once more, Obama’s team is facing pugnacious Republicans, ready to do anything possible to get the victory. The choice of Sarah Palin as McCain’s fellow candidate has spread confusion. The governor of Alaska, a former Beauty Queen, a moose-hunter as well, has become an overnight celebrity.

The strategy could bear fruits. Being a Republican offers an option to voters who long for novelties but don’t trust Obama. A good way for him to be defeated would be to go on remembering in his speeches that McCain was a courageous soldier when he was made a prisoner during the Vietnam war, wrote the film producer Michael Moore, a fervent Democrat, in his most recent book, “Mike’s Election Guide.” “Trust me, we’re not in Sweden here,” Moore wrote. “War heroes always win.”

Whatever his name is, Barack Obama or John McCain, the president to come will be reminded by hundreds of pressure groups that repairing the social security’s damaged net is top urgent. The families who, after losing their houses have become homeless, will be in the foreground. So are the Clements.

David Clements, his wife Jennifer and their five children had been living the typical life of many other middle class families till November 2006. The real estate crisis struck building sites in a row, and David, working in construction, lost his job.

Afterward, the house the Clements rented in a little town called Ojai, Calif., was sold. “We had no place to go to,” said Jennifer Clement, a tall blonde who doesn’t look 48. “Because of the crisis, owners got quite frightened. They asked us a deposit of several thousands of dollars to rent a house. We didn’t have it.” The only roof standing over their head was a nine meters trailer they had bought to go on vacation. The family moved from trailer park to trailer park until their tiny savings run out. They finally stopped in Santa Barbara.

The Clements’s trailer is parked on a long boulevard hugging the Pacific Ocean. Two dogs start barking as we arrive. The inside of the trailer is cluttered with boxes, bags, toys, crockery, books up. In a corner, on an unmade bed, a boy and a girl are playing with a little lizard they found on the beach. “We still can keep a form of dignity here,” said David, wearing a cap on his gray curly hair. “Passers-by think we’re tourists”. About twenty trailers and country vehicles line on the boulevard up.

“We all know each other,” Jennifer said. “A few of them are in the same situation as ours”. The most difficult in this new life as a homeless family is the lack of privacy, she said. “The only place where we can be alone are the toilets, at the back of the trailer. That’s where I go when I feel like crying.”

This “sliding” of the middle class to poverty is seen anywhere else than on the Californian coast. This year, a record number of Americans – 28 million – have registered to a federal program of ration cards. This represents one person out of ten!

In 2007, the New York reflection group Demos pulled the communication cord publishing a large inquiry whose results are worrying. In the U.S., four families from the middle class don’t have enough savings to cover their essential expenses over a period of three months, occurring a complete income loss. In one family out of four, at least one member doesn’t benefit from health insurance coverage. This means a security threat to all the family. Half of the families who went bankrupt in 2001 did it because they couldn’t afford the hospital costs.

“The middle class is the big loser of the American health system,” said Don McCanne, who was a family doctor for 32 years in San Clemente, Southern California. He’s now a blogger and lecturer, fighting for a health system similar to the Canadian one. In the U.S., rich people can offer themselves the best health care in the world, he says. Poor people benefit from free cares thanks to the Medicaid program, which is conjointly financed by both the federal government and each state.

The rest of the population is little or not protected. One one hand, there are 45 to 50 million people with no insurance. These are mostly unemployed, students, freelance journalists, part-time workers, small business managers. On the other hand, there are workers who are for the most part insured by their employer (who usually pays the three quarters of the bonuses), but in case they would lose their job, their whole family would have no protection. This might become a social matter if we had to face a recession; companies would automatically reduce their labor force.

Staying in hospital for a few weeks only – after a car accident for example – may cost $300,000. Both candidates are aware of the problem. John McCain promises to everyone a refundable tax credit of $2,500 for each insurance that will be bought. That’s very few when you know that a good insurance costs more than $12,000 yearly.

Obama’s scheme, which is pretty ambitious, could be the major realization of his presidency. It would give everyone the opportunity to subscribe to an insurance as generous as those the members of the Congress benefit from. People who can’t afford bonuses would get a state assistance to pay it (an unemployed’s family could be under protection). Companies who don’t offer a health insurance should pay a tax that would finance the federal program.

McCanne is partly satisfied. Insurance companies will always be dominating Obama’s scheme and will make tremendous efforts to justify their processing denials to their customers, in order to gain profits. “This would be a first step inthe right direction”, the physician says, but who can be certain of that? Obama first has to be the new roomer of the White House and have his project accepted by the Congress. An arduous task, even with a Democrat majority! “Insurance companies and pharmaceutical industries will do their best to avoid constraining rules. Not to mentio that these same companies contribute to the financing of numerous representatives and Democrat senators…”

In her tiny office, located in the Salvation Army building in Santa Barbara, Nancy Kapp is folding children clothes she was given for her “customers”. Strong-looking, determined, she has a full view to observe the effects of the economical crisis. She’s in charge of the homeless program for the community organization New Beginnings. She has added to her list eight new families during the past year. Families such as the Clements, whose life as “middle-classers” unfortunately turned into a homeless one.

We have at least one positive aspect of this crisis, she says. Now that the middle class is slowly getting a poverty one, politicians in Washington have no other choice than act.” Statesmen are aware of it: no-one can be angrier than the hard-working one, who respects the laws but can’t support his/her family. There are thousands of angry people, there will be millions of them tomorrow if nothing’s done. “