Thursday, August 06, 2015

Politix Update: Empty Rhetoric About An American Middle Class In Crisis

If there is a single issue on which candidates for president agree regardless of party affiliation or political persuasion, it is that America's middle class is in deep doo-doo and with a wave of their magic wand they will ride to the rescue.  But while that mantra has great appeal, it obscures a dirty secret: No one is going to be able to help the middle class in ways that count.
There are two big problems here: Defining what the middle class is, and no matter how you define what it is, how to help the middle class where it most matters, which is to say pump more money into their paychecks and piggy banks.
Americans tend to define the middle class by who they are, which has given the social stratum an elasticity that distorts it well beyond the traditional definition of a family with two and a half children, a white picket fence around a modest suburban ranch house and an income of about 40 grand.  
And so you have the specter of both Barack Obama and Hillary Clinton pledging during the 2008 presidential primary campaign not to raise the taxes of any middle class family with an annual household income of $250,000 or less.  CNNMoney pegs the income range at between $46,960 and $140,900, while families making a mere $30,000 a year may consider themselves to be middle class. 
But that's only where the trouble begins, because neither Republican nor Democratic presidential candidates are proffering proposals that would result in the kind income hikes that would make a difference between sending a child to a community college or full-blown university, or keeping the family's clunker of a minivan on the road for yet another year or trading up to a new ride that won't break down on the way to Parent-Teacher Night.
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Republicans trot out the Economic Big Three with numbing regularity: They’re going to fix the economy, lower taxes and create jobs -- all at the same time, of course.  (This means that the Rapture can't be far behind, right?) Their proposals as a group would reward the wealthy and the middle class would benefit because the tax breaks bestowed on the wealthy would magically percolate through the economy to the white picket fence crowd.  This is what is known as "trickle-down" economics, a frayed conservative security blanket that Republicans have been sucking on for years that is so widely discredited by most economists that House Republican Whip Eric Cantor (remember him?) rebadged it as "income mobility" at the height of the Occupy Wall Street movement (remember that?). 
Republicans still worship the legacy of Ronald Reagan, and cast themselves as the Great Conservative God's heirs, and his name is bound to be intoned with reverence in the first presidential debate tonight.  But Reaganism -- with its core principles of small government and lower taxes -- is beyond obsolete.  Come to think of it, the Republicans really haven't had a coherent economic message since before the Great Crash of 1929 when it was All Prosperity All the Time, just as they haven't had a coherent foreign-policy message since the fall of the Soviet Union.
Anyhow, Reaganism didn't work in the 1980s, it's sure gonna work now, and it's sure not gonna work for Millennials who are shaping up to be less prosperous than their forebears because of wage stagnation and the crushing debt of student loans.  Meanwhile, Baby Boomers like myself let the federal debt spiral out of control while increasing spending on Social Security and Medicare, all of which threaten Millennials' own promised retirement benefits.
While the Republican proposals are a covert form of government intervention, something that Republican candidates would vehemently deny since any kind of help from Washington for ordinary folks is a violation of the party's Hypocritical Oath, the Democratic proposals as a group are unashamedly interventionist and include various iterations of income redistribution, but Michael Kinsley and I are here to tell you that these cure-alls won't make much difference. 
Kinsley, a political policy wonk and onetime Crossfire co-host, argues in a recent Vanity Fair commentary that there simply aren't enough rich people to provide windfalls to the middle class, whoever they are, let alone the poor:
"Is a politician talking about taking from someone else and giving to me, or taking from me and giving to someone else? And if the answer is 'Neither—I’m talking about economic growth for everyone,' then what does that have to do with the specific problems of the middle class?
"The average household income in this country is about $50,000. To play Robin Hood, or Mario Cuomo, you've got to raise taxes on incomes down to close to that level. That's way below the point where people have started to believe that helping the middle class means more money for them, when in fact it would mean less."
What might make a difference is to goose the economy into overdrive, which Hillary Clinton and Bernie Sanders advocate.  But that would require doing three things that won't pass muster in a Congress controlled by Republicans, which will likely be the case for at least the next few years.  The things that would correct the problem of paying less to government than what we get for it are a renewed emphasis on education, robust infrastructure development, and political poison personified -- raising taxes.
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This is the part of the movie where we come to the biggest villain of our story -- income disparity -- a consequence of rampant capitalism as practiced by the Vampire Elite, the people who are sucking the middle class dry from their big corner offices in skyscrapers across America and, in my view, represent a far greater threat to our security than domestic terrorists or even Al Qaeda or ISIS.  Yet Republicans are in their thrall and most Democrats too cowardly to face them down although nothing less than the future of the tattered remnants of the American Dream is at stake.  
Median per capita income was $18,700 in the United States in 2010 (which translates to about $75,000 for a family of four after taxes), up 20 percent since 1980 but virtually unchanged since 2000, after adjusting for inflation, while the middle classes in many other industrialized countries are doing much better.  Several factors in addition to the reach of the Vampire Elite make this so, including educational attainment in the U.S. rising much more slowly, governments in other countries taking more aggressive steps to raise the take-home pay of middle class households by redistributing income, rich Americans pay lower taxes, U.S. companies distribute a smaller share of their profits to workers, and the minimum wage is lower.
"Conservatives are right about one thing: the only real way income inequality will be reduced is to create more income -- that is, to expand the economy. The one way out is to grow our way out. This only works, though, if the poor and the middle class actually get the money, a small problem that the Republicans tend to overlook. . . .
"Be skeptical of any proposal defended in the name of creating jobs in order to help the middle class. Most likely it will in practice take from one group of the middle class and give it to another. In reality, there’s nowhere else to get the money."
Further exacerbating the problem is that although the economy has pretty much recovered, thanks to President Obama and no thanks to Republicans, most of the middle class is being passed by while white-collar professionals with specialized skills in technology, finance, engineering and software are able to negotiate hefty raises -- or move to better paying jobs.
Despite the steady addition of more than 200,000 jobs a month and a decline in the official jobless rate to a post-Bush Recession low of 5.3 percent, most American workers still face lukewarm wage growth at best and very limited bargaining power with their bosses.  This is true even for college graduates, who make up 32 percent of the work force.  Since the beginning of 2014, median wages for all holders of a bachelor’s degree or more have risen only 2.7 percent, compared with about 2 percent for all workers.
(It should be noted that more businesses, in lieu of the traditional annual raise, are providing increased benefits such as one-time bonuses, health care and paid time off, as well as perks such as free gym memberships and commuting subsidies, but no one would mistake this trend as a stampede.)
Meanwhile, starting salaries for important traditional middle-class jobs requiring college degrees are taking it on the chin.  Starting salaries for nurses -- the very glue that makes the health-care system work -- are up a measly 1 percent since 2007 and are down 3 percent for social workers and an astounding 16 percent for special education teachers.
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You have to give the Republicans credit.  They're much more savvy in this presidential campaign when they talk about the middle class than four years ago when Mitt Romney became a punching bag for having a car elevator and a bunch of Cadillacs, let alone that unfortunate slip about 47 Percenters.
All this yakking from Republicans about "the two Americas" in stump speeches is giving Democrats a bad case of agita because while the GOP's tone has changed, its policies have not.
The campaign of Hillary Clinton, the presumptive Democratic nominee, will be centered on raising middle class incomes, and she is fighting the Republican rhetoric with an assist from the Center for American Progress, a liberal think tank that has conveniently just issued a report titled "The Middle Class At Risk."
The report slams Republican candidates for their records on paid family leave, the minimum wage, tax breaks for the wealthy and education cuts.

"Should a Republican hold the presidency for two terms after President Obama and continue to block minimum wage hikes," the report warns, "by the end of the second term, the real value of the minimum wage would fall to below $6 an hour in today's dollars, its lowest level in 70 years."
Long story short, no matter how you look at it, and whether the next president is a Clinton or a Trump (just kidding), the middle class is screwed.
Politix Update is an irregular compendium written by veteran journalist Shaun Mullen, for whom the 2016 presidential campaign is his (gasp!) 12th since 1968.  Click here  for an index of previous Politix Updates.



Laura in IA said...

Well of course they will raise taxes. It's the story of my life while being well entrenched in the life of middle class. I anticipate as the early boomers hit 70.5 the tax increase will be large enough to eat up all the supposed savings of deferring income in IRAs and some other tax deferred vehicles. We already took a big hit to those accounts (40%)in 2008 and this year the particular vehicles are losing which is worse than the old fashioned CDs earning tenths of percents. We'll have seniors who did their duty and put money aside joining the working seniors who are still in poverty. At least my 3 children are well educated and amongst them would not let their folks starve. They are my only hope in old age even though not a one of them is more than middle class in spite of having 6 college degrees (paid for) among them. Sad, isn't it.

Shaun Mullen said...

Yes, sad beyond measure. I will not bore you with my own particulars beyond noting that I live on a fixed income despite having busted my hump from age 14 on, modest book royalties being my beer money, and took a huge hit when the tech bubble burst.

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