Dan Griswold of Cato usefully summarizes some 2007 data released today by the Census Bureau. Bottom line: the middle class is shrinking because it's getting richer, median household income is up, the poverty rate is the same as 2006 and lower than 1997, and the number of Americans without health insurance is down slightly from 2006 and lower than it was a decade ago. The forces of innovation are outdueling the forces of stupidity as we become better off even while government grows.
Could things be even better? Absolutely and they would be with less government. But is the middle class drowning and is poverty expanding? Absolutely not. And we need to constantly make this point not because the current size of government is fine, but because to the extent people believe the economy or the middle class are in trouble, they are likely to demand more government as a solution. Call it playing defense if you wish, but without doing so, the awful world that people wrongly imagine is already here would indeed come to pass.