CNN (along with other major news outlets) has been trying to talk the US into a recession now for several years, and while the jury is still out on whether they’ve succeeded yet, they still aren’t letting up. Although this article has some admirable counter-points thrown in, it still relies mainly on anecdotal perceptions rather than the facts to examine the state of the economy.

The article also highlights one of the things which, as a Brit, I find most puzzling about American politics and economics – the definition of the “Middle Class” – which appears sometimes to include everyone except Bill Gates and Warren Buffett and at other times now includes apparently almost no-one because it is being “squeezed”. Where I come from, being Middle Class is about the kind of work you do – sitting in an office rather than working in a factory, for example – not about your level of income or what you can afford to buy with it.

At any rate, quoting from that article:

Only a few years ago, Americans who considered themselves middle class were scrimping to pay for their kids’ college education.

Now, many of them are struggling to cover far more basic needs – gas and groceries.

Take Stacy and Chuck Burris. The Pittsburgh, Pa., couple view themselves as solidly middle class. In recent months, however, they’ve felt anything but.

Burdened by high cost of food and fuel, they are having trouble balancing their budget even though Chuck Burris earns a “comfortable salary” as a software engineer. The parents of five children, three of whom are grown, have essentially stopped eating out and entertaining and are considering canceling the annual family vacation to Maine. They keep to a Spartan shopping list and have planted a larger garden. Instead of buying their 12-year-old daughter summer clothes, they are turning her pants into shorts by cutting off the legs and getting hand-me-downs from family.

Never before in previous recessions have they had to cut back like this.

Without wishing to belittle this or other families’ hardships, I find it hard to understand how current circumstances could be having such a significant impact on their financial status. The article says that:

Food prices, for instance, climbed 5.1% over the past 12 months and April’s 0.9% rise was the largest in 18 years, according to the Consumer Price Index. Gas, meanwhile, hit its highest recorded price of $3.937 on Monday, up nearly 21% from a year ago and 9.7% over the past month, according to AAA.

Well, assume the weekly grocery bill is $200 – not unreasonable, I would think – and the price has gone up by 5% – that would be a sum total of $10 per week extra, or $45 per month. If gas has gone up by 20%, perhaps the gas bill (assuming filling a 15-gallon tank once a week) has gone up by 20%, from $50 to $60, and that’s another $10 per week or $45 per month. Is there really a middle-class family that’s going to be pushed into cancelling its vacation by a $20 increase in spending per week? We’re never told what the household’s income actually is, but assume it’s $60,000 per year gross (which may be conservative since the salary is described as “comfortable”). That increase represents just 1.7% of gross income.

At the same time, the article says, housing prices are falling, but unless you’re actually trying to sell your house that shouldn’t really affect your current financial status. In fact, because the federal funds rate has fallen from 5.25% to around 2% in the last year many people’s mortgage payments should actually be falling during this time, probably by a rather greater amount than those small increases in food and gas payments.

My point here isn’t to argue the specifics of this case – because we’re not given them – but rather to suggest that it seems odd that truly middle class families should be suffering so badly because of the increases in gas and food prices, since these items are typically a small percentage of people’s incomes, especially in the middle class. And that makes this article feel more like further scaremongering from CNN than real reporting. How about emphasizing instead the factual evidence cited elsewhere in the article, and helping to turn around these perceptions, instead of leading with the perceptions and burying the facts halfway down the article and later? And how much are those poll results influenced by the fact that CNN’s been polling people about whether we’re in a recession for the last three years anyway?

Fiscal responsibility hasn’t been mentioned much in this year’s presidential campaign outside of discussion of the Bush tax cuts (which McCain voted against initially but has since supported). But it’s got to be one of the biggest issues that Republicans need to address if they want to retake Congress. The fact that they’ve been so weak on fiscal responsibility (i.e. lowering government spending and taxes) has allowed the Democrats to neutralise the traditional advantage Republicans have on the economy (and even overtake them in this regard in some polls) and has been a big part of the reason they retook Congress two years ago.

I think Romney should have gone after the Republican Congress harder on this – it would have been a nice stick to beat John McCain with since he’s been right there in the thick of it (though arguably not one of the worst culprits). But I think he was hamstrung in this and in other matters by the fact that he wanted to be supportive of President Bush, who hasn’t done the Republicans any favors in this department either aside from those tax cuts, never vetoing a single pork-laden spending bill during the entire time Republicans were in charge.

At this point McCain needs to make this a campaign issue, but the Republicans (planning to stay) in Congress also need to really take it on board and ensure they send a strong message on the issue to voters between now and November.

Ed Morrissey (erstwhile of Captain’s Quarters, now at Hot Air) has written several good pieces on this whole issue over the last few weeks which are all worth reading. The Republicans have had a mixed record even over that short period, but they really need to tighten up and close ranks on this issue. They also need to put some serious reformers in prominent committee positions to give them some clout to clean things up. At this point, it’s 50/50 at best as to whether they’ll make any headway on this point in time for this fall’s elections.

It appears that Obama may actually have a policy we can really associate with him, albeit one which seems to be being pursued more aggressively by another Senator keen to use his name just at the moment (no prizes for guessing why). The Hot Air blog highlights an interview with Senator Sherrod Brown of Ohio published by the Nation in which he states the following:

I’ve talked to Barack a lot about his Patriot Corporation Act, which is not trade per se, but it’s certainly part of the economic package around globalization. The Patriot Corporation Act has not gotten the attention that I would hope it would. But, basically it says that if you play by the rules, if you pay decent wages, health benefits, pension; do your production here; don’t resist unionization on neutral card check, then you will be designated a “Patriot Corporation” and you will get tax advantages and some [preference] on government contracts.

So we have something Barack Obama apparently believes in enough that he was willing to put pen to paper (or have his staffers put pen to paper) to craft legislation to make it a reality. And is it the kind of soaring, high-minded proposal we’ve all come to expect based on that wonderful rhetoric of his? Er, no.

It’s clear where the Nation’s own William Greider stands on this – he thinks it’s wonderful. But it’s just a tiny bit shortsighted, isn’t it? For starters, it ignores the main reasons why companies offshore and outsource in the first place – high labor costs (thank you Democrats), lots of burdensome regulation (thank you Democrats), high taxes (thank you Democrats) etc. etc. It reminds me of the experience we’ve all had sometimes – we have a table or chair where one of the legs is short, so we trim the others to make them symmetrical, but then we realise we overdid it, and now we have to go back to the original one and shorten that a bit too. Pretty soon we realise the table or chair is now about the right height for a garden gnome and give up and throw it away. The Democrats’ tendency to want to intervene throughout the economy will lead to the same result – one bit of tinkering leads to another and before long we’ve completely hamstrung the entire business sector and have nothing but a mountain of unemployment and a recession to show for it.

I’m just glad we finally know where Obama stands on something, and it’s particularly wonderful that it highlights the heavily left-leaning, interventionist philosophy we all know is hiding beneath the “yes we cans” and the unity message. Now if we could just infiltrate the mainstream media enough to actually get them to report on this stuff…

More on the carbon cap and carbon credits scam from the Financial Times. Further evidence that the global warming lobby and its supporters have been more interested in being seen to do something than actually doing anything that makes a significant impact.

Ari Fleischer – former press secretary to President Bush – has a very interesting article in the Wall Street Journal about the progressive nature of the US income tax system. He focuses especially on the fact that a bare majority of American taxpayers actually pay any income tax at all and that 40% of the population pays 99% of the taxes.

This serves as another reminder of the fact that, while it’s easy to raise taxes on “the rich” it’s nigh impossible to lower them again later – “tax breaks for the rich” being unpalatable to even Republican politicians. So the system becomes ever more skewed in favor of progressive and redistributive taxation, with no end in sight.

It’s not at all obvious how we ever get beyond this situation and move to a more rational future approach to taxation which allows the burden of additional taxation (which is inevitable given the inexorable rise in spending) to be spread more evenly across the population as a whole. Of course, in an ideal world, we would be reducing the overall tax burden by reducing spending, but that seems even less likely than a less progressive tax system.