This last refrain resurfaces, with a vengeance, in The Betrayal of the American Dream. One of the book’s case studies recounts a story well-known to media insiders: Barlett and Steele blame a single investor, the Florida-based money manager Bruce Sherman, for forcing the sale of the Knight-Ridder chain, owner of The Philadelphia Inquirer, The Miami Herald, the San Jose Mercury News, and other newspapers. Barlett and Steele describe the repercussions of Sherman’s involvement:
The troubles affecting former Knight-Ridder properties are part of an industry-wide trend that has hit all newspapers in the Internet era. But Sherman’s acquisition of a large bloc of the company’s stock on behalf of his clients served to drive up the company’s stock price in excess of its value and was a contributing factor to the papers’ later weaknesses in dealing with debt. Every former Knight-Ridder paper has gone through layoff after layoff, killed pensions, frozen benefits, mandated unpaid furloughs, or taken other harsh measures to try to remain viable.
The valuation of these newspapers continues to plummet, as a revolving cast of owners, publishers, and editors struggles to define an uncertain future. (At the beleaguered Inquirer, the rapid exits and entrances are starting to evoke farce as much as tragedy.) Meanwhile, Barlett and Steele tell us, Sherman has retired and lives in a condominium he purchased, in 2003, for $9.5 million.
Sherman’s wealth and good fortune may inspire the opposite of Schadenfreude, but they reflect our expectations for Wall Street types. Within the lower-salaried, rapidly shrinking media industry, similar windfalls seem especially irksome—at least to journalists. Newspaper executives continue to receive six-figure bonuses and seven-figure golden parachutes after shedding personnel and driving their businesses into the ground. Meanwhile, displaced staffers are forced to find new careers, or resort to freelancing at pay rates that keep spiraling downward.
To be fair, the special travails of journalists and journalism are just synecdoche for Barlett and Steele—one instance of larger trends toward inequality and job insecurity.
Often, they make their points in black-and-white terms that verge on parable. “America is now ruled by the few—the wealthy and the powerful who have become this country’s ruling class,” they write. “Lacking a civic or moral compass, it’s a peer group . . . with no mission except to wall in the money within its ranks to an ever-greater extent.” This group consolidates its power via political spending—an old story, made worse by the super-PAC phenomenon. “We have become a plutocracy,” they write, “in which the few enact programs that promote their narrow interest at the expense of the many.”
Presumptive GOP presidential nominee Mitt Romney’s campaign promises, including more tax cuts for the wealthy and a further unraveling of the safety net, seem to forecast more of the same. But Barlett and Steele implicate the Democrats as well, noting that President Obama’s healthcare law, however maligned by conservatives, “still leaves most of the power in the health industry in the hands of private insurers.”
Yet it is not only the elite who are to blame. Large swaths of the electorate, enraptured by the ideology of success, often vote against their own economic interests, or fail to vote at all. (Warren Buffett may vote against his interests, too, but he is outnumbered by middle-class voters who support tax breaks they’re not getting. Not to mention Tea Party members who love their Medicare and Social Security, but think that health-insurance subsidies for the merely middle-aged and financially needy constitute “socialism.”) The authors know this, but they resist indicting the ignorance and political apathy of the people they are trying to rescue.
Nor do they note that President Obama’s rhetoric has ricocheted between what the Republicans call “class warfare” and a misleading inclusiveness. Witness his repeated conflation of the middle class with individuals earning up to $200,000 and households earning up to $250,000—a definition that makes sense only in a few high-priced urban enclaves, excludes just the top 2-to-3 percent of taxpayers, and shifts the debate rightward.
While Barlett and Steele don’t make this precise point, they do correct the record. Using the median household income of $50,599 as a guide, they define as “the heart of the middle class” those reporting “overall incomes” of $35,000 to $85,000 on their 2009 tax returns. That represents 34 million individuals or families, or 30 percent of returns. About 58 million returns report even lower earnings. (It’s not clear whether Barlett and Steele are using gross income, adjusted gross income, or net taxable income.) That leaves 20 percent of returns as upper-middle class, affluent, or rich, they say, and they suggest that an extended middle class could include incomes up to $115,000.