In his State of the Union address, President Obama is expected to focus on the middle class and how to improve its prospects. Alas, it’s doubtful that he will suggest what would really improve the prospects of middle class Americans, or keep them from falling still further into more difficult economic straits.

Here’s what has to happen to give real help the middle class. First, as I’ve noted before, the crippling Middle Class Tax, a.k.a the Payroll Tax, should be restructured. Everyone earning more than $113,000 a year and all unearned income (dividends, et. al.) should pay this tax so those making less than $113,000 a year can pay less. In other words, make the Payroll Tax a flat tax on all income, and expand this tax’s base so everyone paying this tax can pay a rate lower than what middle class Americans now pay.

There something else that would work even better to keep more middle class Americans middle class — restructuring bankruptcy laws that currently make it far too difficult and often virtually impossible to get out from under a debt load, much of this debt generated by legal usury.

Here’s the big picture story on debt. Political tyranny was the main 20th century evil. Debt tyranny is the great and growing evil of the present century. Banks and other lenders have gamed or bought elected officials and the courts in ways that favor them in outrageous ways vis-a-vis borrowers — a vast number of these borrowers being middle class people on the way into personal peonage in consequence.

Many things have to be changed to redress the current lender-borrower imbalance. Here’s where to start — what Mr. Obama should really focus on in his State of the Union speech if he wants to protect the middle class. Bankruptcy rules on student loans and other debt obligations, and usury laws, must be brought back to where they were before banks took total control of our politics and legal system.

Before 1976 student loans could be discharged in bankruptcy court. Then Congress changed the law and now they can not be discharged there. You want a college trained middle class in the future? The pre-1976 rules have to be brought back.

In 2005 a new bankruptcy law passed by a Bush-era congress made it much harder for middle class borrowers of all stripes to escape debt they could no longer afford. The pre-2005 version of bankruptcy law has to be brought back as well.

Federal usury laws were thrown out for good reason in the last 1970s because inflation was then rampant and lenders wouldn’t lend at rates lower than inflation rates. That kind of inflation no longer exists. Federal usury rules should therefore be put back into place. (Usury rules for state chartered lenders are a separate issue)

Mr. Obama’s prescription for helping the middle class will likely involve plans to grow the economy and create jobs faster. That’s nice. Except that all the bennies from such growth will likely go to the top 1 or 2 percent as has been the case in recent decades. And more jobs will likely just allow more Americans to service their existing debts to lenders more easily.

Along with economic growth and more jobs, Mr. Obama, restructure the Payroll Tax and bankruptcy laws. That’s a REAL pro-middle class agenda.

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