Labor Day, for most workers, is an activity-packed, end-of-summer, three-day weekend. It is also a time to celebrate the work that we do, which has created the economic and social fabric of America.

When the Rev. Dr. Martin Luther King Jr. joined striking sanitation workers in Memphis, Tenn., in 1968, workers who worked full time but lived in abject poverty, he proclaimed that “all labor has dignity” and should be afforded the means to achieve the “American Dream.”

That “American Dream” has been rapidly unraveling during the current “Great Recession” and is under full-scale attack by a corporate America that won’t invest, banks that won’t lend, and politicians who would rather fight over fake political crises, like the debt ceiling, than create jobs.

As austerity budgets are imposed across our country under the mantra of shared sacrifice, the great irony is that workers, the elderly, students, immigrants, the poor and the vulnerable — the ones who suffer most under these budget cuts — are being blamed for deficits they did not create. Never have we seen such an attack on the middle class in our lifetimes.

Wall Street banks caused the immediate economic crisis by treating the economy as if it were their private casino and credit default swaps were their chips. While a few financial institutions went bust — remember at a casino the house always wins — banks now sit on over a trillion dollars of assets and obscene bank bonuses continue to be doled out to those who ushered in the recession.

But the collapse of the U.S. economy and the world economy has had devastating impacts on working people. In the U.S. and Washington state the unemployment rate remains above 9 percent, twice that if you count those who have dropped off the unemployment rolls without finding work and those working part-time involuntarily, three times that if you look at building and construction trade workers, and higher still for youth and people of color.

And that is just the tip of the iceberg. Thousands lose their homes every month to foreclosures, the rate of child poverty in Washington is high and on the rise, and there has not been such a gross disparity of income and wealth in our country since the 1920s. Workers and the poor would love to give the economy a boost, but they don’t have the purchasing power to do it.

State and local governments, faced with plunging revenues and increasing demand for social services, don’t have the purchasing power to provide the social services people need or to invest in the social, physical and public infrastructure needed to help strengthen the private economy. Some states, of course, are using their deficits in an attempt to crush public employee unions and devastate state and local safety nets.

The point is, the weaknesses in our economy have been developing over the last several decades through policies that have had the effect of accelerating wealth to the top, including:

•Deregulation of the financial industry.

•Tax policies that reward the off-shoring of U.S. manufacturing jobs.

•A tax structure so riddled with loopholes that many major U.S. corporations get tax credits rather than tax bills on profits and the wealthy, as Warren Buffett says, “are coddled.”

•Free-trade agreements that have deindustrialized the U.S. economy through the loss of 50,000 manufacturing plants over the last 10 years, that have rung up huge U.S. trade deficits, that have failed to include the most basic labor, environmental and human rights protections, and that have caused massive migration flows as workers struggle for the survival of their families.

Now it wasn’t easy getting into this mess, nor will it be easy getting out of it. We are at a turning point in our history. There is a battle going on over the moral compass of our country. What hangs in the balance is whether we define the common good broadly, and whether we want to put America back to work and restore the American Dream broadly.

Wisconsin, Ohio and some other states have used their deficits as a pretext to go after unionized public employees. Funded in large part by right-wing zealots such as the Koch Brothers, laws have been passed to eviscerate collective bargaining rights of public servants. The narrative from the right was that public-employee unions had grown too influential, created too strong a voice for working people and the social safety net, and were therefore responsible for the deficits. The narrative from the community was that Governors Scott Walker of Wisconsin and John Kasich of Ohio overreached and that people understood that the recession caused these deficits and corporate America and the rich are not paying their fair share for supporting the common good.

The result to date has been the recall of two Republican state senators in Wisconsin and 1.3 million signatures qualifying for this November’s ballot a citizen’s veto of the Ohio law removing collective bargaining rights for public employees.

This battle is playing out at the federal level through the manufactured debt ceiling crisis and the resulting “super committee” that will determine our country’s spending and revenue direction. The underlying question is, are the deficits and debt that we face as a nation the result of overly generous Social Security, Medicare and Medicaid benefits, too many workplace health and safety inspections, and too much spending on monitoring clean water and air, or are they the result of an unfair tax system, a financial industry out of control, trade policies that weaken our overall economy, and the financing of two wars?

From labor’s perspective, it is the latter. We believe that America wants to work and that as a nation, and as a state, we need to address the real crises facing us — jobs, revenue, and the loss of moral leadership.

Until we generate sufficient demand for products, businesses are unlikely to invest and generate employment. We need to create public jobs programs similar in scale to the WPA and CCC programs during the 1930s. Every state has failing transportation infrastructure — roads, bridges, transit — that we can invest in. We could energy retrofit public buildings, creating tens of thousands of jobs, creating demand in the clean energy sector, and reducing our carbon footprint. We could invest in smart energy grids and broadband expansion, creating tremendous common good and demand for privately produced products. All of these investments would create employment, income and consumer demand.

We need to oppose “free trade agreements” that create substantial net job losses and tax policies that reward the off-shoring of U.S. jobs.

We need to enhance income support and safety net programs like unemployment insurance, Social Security, Medicare, Medicaid, trade adjustment assistance and prevent more families from losing their homes. These policies, too, will increase consumer demand.

In the short run the federal government needs to provide the funds for state and local governments to cover their recession-induced budget deficits. Providing strong state services, state and local employment, and investing in our educational, health care, and transportation infrastructures helps create employment and demand and strengthens the private economy as well.

Whenever possible, state and local governments need to use their procurement policies to purchase goods and services from local businesses employing local workers. Similarly, state and local governments can invest their tax receipt accounts, social insurance trust funds and pension funds in banks that are committed to injecting credit into local communities to finance job-generating investments. Conversely, we could create a state bank.

But the truth is we need a fair tax system and we need more revenue to create and maintain healthy communities. The rich need to be taxed more and at the very least, in Washington state, we need to place a moratorium for several years on a number of the 567 tax exemptions that fill our tax code. Approximately three out of every four dollars of revenue is exempt from collection in Washington state.

However, the biggest impediment to creating a fair tax system in our state is the two-thirds requirement in the Legislature to raise revenue or remove tax exemptions. This creates irresponsible governing and unaccountable government by allowing a minority to place ideological blinders on the needs of our communities.

Dr. King used to say, “The arc of the moral universe is long, but it bends towards justice.” It will take courageous and moral leadership to bend that arc. Won’t you join us?

Jeff Johnson is president of the Washington State Labor Council, AFL-CIO.