In 2012, as the perpetual-motion media monster churned out story after story, the most important news stories often got overshadowed by short-term crises and teakettle tempests. With that in mind, we at DailyFinance decided to take a look back at the nine stories of 2012 that are most likely to have affected your life (and your wallet), and will keep doing so 2013... and in the years that follow.
More than any presidential election in the last century, the 2012 campaign was about class, with the Republican Party taking the side of the economic establishment. This became especially clear when Mitt Romney was caught on video telling a roomful of his supporters that 47 percent of the population was in thrall to the president because they are "dependent upon government [and] believe that they are victims."
His offhand remarks crystallized the class rhetoric of the campaign in a way that dozens of speeches could not. Following his defeat in November, the GOP seems to be attempting to move away from what The Washington Post's Wonkbook has described as its "Rich Guy" problem. With the fiscal cliff looming -- and the GOP fighting its reputation as an advocate of cuts to the social safety net -- any Republican move toward the center could have a major impact on middle-class pocketbooks.
By the fall of 2012, Occupy Wall Street was well on its way to becoming a punchline, but a funny thing happened on the way to the trash bin of history: The movement found a new relevance. Its efforts during Hurricane Sandy highlighted the plight of middle-class homeowners, while Strike Debt, an offshoot of the movement, suggested a bold new path for Occupy. Thus far, Strike Debt has raised enough money to purchase and retire more than $2.5 million worth of consumer debt -- a fraction of the total debt in the U.S., but a major boon for the families it aided, who are no longer drowning in unpayable debt obligations.
For years, college tuitions have been rising far faster than inflation, leading many to wonder if higher education is still a good deal. Polemicists like James Altucher and Peter Thiel aside, most experts agree that it still is, but as prices go up, students (and their parents) are becoming more careful about where they spend their education dollars. On a broader scale, with some law school graduates suing their universities for false advertising, and the federal government cracking down on for-profit schools, there are hints that the higher education establishment may be on the way to a massive showdown.
In 2012, amid the tumultuous debates over underemployment and the outsourcing of manufacturing jobs, a quiet change started to happen: Jobs began coming back to the U.S. Some of these involved the sort of mini-mini manufacturing that is rising in places like Brooklyn and San Francisco -- tiny companies with few employees and limited distribution. On a larger scale, however, some manufacturers, including General Electric, have started to discover that on-shoring jobs could have an economic upside.
One of the Great Recession's less-discussed consequences is the massive growth in the numbers of part-time, low-wage workers. As these workers, barely above the poverty line, put an ever-increasing strain on social programs -- and pocketbooks -- across the country, anger over income inequality came to the fore. At Walmart and Target, workers protested their treatment over Thanksgiving. At Hostess, after executives gave themselves large raises while underfunding pensions and pushing workers to accept lower wages, the company's rank-and-file went on strike, ultimately dooming the company. And recently, at McDonald's restaurants in New York, 200 workers took part in the largest strike in fast food history. While this doesn't necessarily presage a promising future for organized labor, it suggests that the pendulum between unions and management may be sliding back in the other direction.
But it wasn't all good news for workers. While fast food and big box workers began attempting to organize for higher wages and better treatment, traditional organized labor seemed to be facing an existential crisis. This was certainly the case in Michigan, a longtime bastion of unions, whose governor signed legislation making it a "right to work" state. Under the new law, a company's non-union members will not have to pay union dues to the groups that negotiate on their behalf. By cutting the economic legs out from under Michigan's organized labor, the new legislation is bad news for traditional unions in America.
The LIBOR scandal was that most challenging of news stories: a confusing mess that seemed important, but was all-but-impossible for the average person to understand. In a nutshell, it involved a group of banks that together make decisions that set the rate at which banks lend money to other banks. In doing so, they basically determine the worldwide short-term interest rate, which in turn affects hundreds of trillions of dollars worth of financial products. In 2012, some of the banks were caught conspiring to manipulate the interest rate to get themselves better returns or to prop up their bottom lines.
Since LIBOR affects so many financial products, its influence on the average American's wallet is literally immeasurable: pensions, securities, retirement accounts, and a stunning array of other investments are tied to LIBOR, as are municipal investments, which can affect almost every aspect of daily life. This latter consideration gives a glimpse at the LIBOR scandal's overall effect: According to Bloomberg, the rate's manipulation cost American municipalities at least $4 billion -- which works out to an average of $13.33 for every man, woman and child in the U.S.
Since the end of the presidential election cycle, the fiscal cliff has dominated headlines. But while the mixture of budget cuts and tax increases loom large, most experts seem convinced that the president and Congress will reach an agreement on the economy soon after Jan. 1, if not before. What is less clear, however, is the future of the 2% payroll tax break that has been in effect for two years. Right now, it's not part of the White House compromise proposal. If the holiday isn't renewed, the average American family will pay another $1,000 a year to the government -- a move that, experts argue, could cost the economy 1 percent in output, as well as a million American jobs.
The Patient Protection and Affordable Care Act is being implemented slowly and gradually, but it promises to transform America's daily life -- and our pocketbooks. The health care plan has already abolished the right of insurers to refuse coverage to children with preexisting conditions, increased the age to which offspring can be covered under their parents' insurance, and made it harder for insurers to drop customers when they get ill. Right now, medical expenses are the top cause of personal bankruptcy in the United States. For many families, it's a very short path from a personal illness to a financial collapse. Obamacare could change that equation for the better -- especially for families in red states.