The United States has now experienced more than 3 years of an economy worse than anything Japan experienced in its “lost decade” of the 1990s, and we are still dead in the water economically. The real unemployment rate, when you include discouraged workers and part timers/short-term temporary workers desperate for a full time job, is hovering frighteningly close to 20%, with any marginal progress in the private sector being more than wiped out by government sector cutbacks. The American middle class is being crushed by flat or declining wages, higher prices on most essential items like energy and groceries, and declining value in home prices. And the deal on the default crisis agreed to last night, combined with a continued weak response to the housing crisis, will (absent a major reversal in the next Congress) lock us in to a spiral even more destructive to the middle class. It will be a lost decade on steroids.

Our government’s focus should be on how to rebuild, expand, and strengthen the economic position of working and middle class Americans. We will not get out of the hole we are in without most Americans being able to spend more, save more, and make sure their kids are well educated. Without a little more economic standing and security, most people who want to start new businesses won’t have the ability to get their new enterprise off the ground. Without customers who have the ability to spend a little more money, small businesses won’t be able to survive and expand, and won’t have the confidence to hire new workers to help them grow. Without seniors being able to afford to take care of themselves economically through Social Security and Medicare and Medicaid, already stressed middle class families will have even less to spend in their local communities. Unless the number of foreclosures and underwater mortgages start to decline, tens of millions of homeowners who should be building economic equity will have no confidence to buy new products, start new businesses, or do anything else to grow the economy. In order for our economy to get on the right track, more Americans need to have money to spend, save, and invest- it is as simple as that. Hoping that rich people suddenly start creating more jobs, hoping that cash-flush big businesses suddenly starts investing in expansion when their customers don’t have the money to buy anything, hoping that the confidence fairy suddenly spurs millions of new jobs: it is just a crock.

When you hear generalized talk about more government cutbacks, it can all sound harmless in theory. And there is of course some wasteful government spending out there- subsidies to millionaire farmers, poorly written government contracts that allow contractors to make money even when they screw things up, subsidies for oil companies that make plenty of money, etc- but most of the cuts that will be made aren’t even in these areas of obvious waste. They’ll cut money for education and Pell Grants; they’ll cut the R and D spending that could produce important new technological breakthroughs; they’ll cut investments in green jobs that are key to the future; they’ll cut spending on badly outdated infrastructure projects; they’ll cut money for social service agencies that are helping people create productive lives for themselves.

I wrote a few weeks back that whatever deal would be cut would be a bad deal, and I was right. When the President didn’t push to make the debt ceiling extension part of last year’s lame duck session deal, and then waded into these negotiations instead of announcing that the only default deal he would accept would be a clean bill, he set himself up for this kind of unbalanced deal that has turned into an attack on the middle class. This deal, of course, could have been far worse: defense spending could have been off the chopping block, and Social Security could be on it. But it is still a terrible bill.

This country needs to fundamentally re-align its policies and its priorities. The engine of our economy, and our only hope for the future, is a strong middle class. We need to put that middle class back into the center of our economic policy.