Who’s for the Middle Class?

Funny how Republicans and Democrats each think their party represents the middle class. My Republican friends can’t understand why we would vote for Democrats who want to take hard-earned middle class money and give it to bottom-feeders who are unwilling to work. My Democrat friends can’t understand why we would vote for Republicans who represent the top 1% at the expense of everyone else. So the battle lines are drawn.

The real question is not which side is more logical (both sides have an internal logic that makes sense), but which side’s logic best matches up to empirical evidence. On this score, I think the Democrats/liberals have an advantage, and here’s my reasoning.

I think both sides will agree that most of the wealth generated in the U.S. is generated by the productivity of the middle class. And if middle class income has stagnated for the past three decades, where is all the wealth going? Since 1980, 80% of all new wealth has gone to the top 1%. I don’t have numbers on where the other 20% of new wealth has gone, but I think it’s safe to say it’s more concentrated toward the top. So my conservative friends may be right that some of the fruits of middle-class productivity has gone to the bottom feeders (although I disagree when they paint all safety net recipients as such), but this is an infinitesimal trickle compared to the vast upflow of wealth to the investing elite.

Democratic Party policies that help the middle class to retain the fruits of its own productivity would include Obama’s payroll tax cut, which helps all of those who actually work for their money; reasonable universal health care to staunch the tide of middle-class health-related bankruptcies; Pell grants and low-interest loans instead of sending college students to predatory lenders and lifelong debt – basically protect education, tax rates, environmental quality, etc., that sustains the middle-class lifestyle. In return, they advocate letting the wealthy keep their full tax cut on their first $250,000, and pay a slightly higher percentage of the income that falls over that. (In other words, you and I and Bill Gates all pay the same rates on our first $250k, and you and I and Bill Gates all pay the same slightly higher rate on our income that falls over that.)

The Republican Party calls all of this “socialism.” Their plan, as articulated in the Paul Ryan budget, is to give additional tax cuts to the wealthiest tier, and offset that lost revenue by cutting Pell Grants, privatizing Medicare and increasing seniors’ out-of-pocket health costs, rolling back the social security retirement age so workers can put in a few more years before retiring, deregulating the biggest banks on Wall Street and the biggest polluters everywhere else. But if the Republican platform enhances the wealth of the 1% while putting a bit more burden on the middle class, how do they get so many of our middle-class friends and neighbors to go along? Well, through smokescreens. Two in particular:

(1)   Take the middle-class eye off the massive upflow of wealth and generate unrelenting road rage about the small trickle going to loafers at the bottom. I’ll agree with my conservative friends that welfare, although it does much good, is subject to much abuse, and I’m all for work requirements such as those initiated during Bill Clinton’s presidency. I’ll agree that as a moral issue this should be addressed. But on a macroeconomic level, the loafers on the bottom are insignificant. All statistics show that the redistribution of wealth over the past thirty years has been dramatically to the top few percentiles, with no net redistribution downward.

(2)   Keep selling the logic of “trickle-down” economics. That is the theory that if you put enough money at the top, they will create jobs and the money will trickle down through the classes. The logic makes perfect sense and as such is marketable. The problem again is that the logic doesn’t match the empirical evidence. Tax rates on the highest tiers have plummeted and stayed rock-bottom for 30 years, and all statistics show that wealth has steadily flowed upward and continues to stay there after three decades.

So both the liberal and conservative logics of my opening paragraph each match up to some aspect of reality. But the conservative logic takes a statistically insignificant problem with red meat possibilities and smokes and mirrors it into the most pressing crisis of the day, a crisis they can then “fix” by shifting more wealth to the top. The liberal logic addresses a much more significant problem and addresses it in way that can mitigate the outward flow of wealth from the middle class. If you want to see policies that really help the middle class retain the fruits of its own productivity, it’s not a close call – the Democratic Party will get you closer to that end. If you think that it’s only fair that the wealthiest Americans pay lower and lower tax rates, and you’re willing to place a slightly heavier burden on the middle and lower classes to achieve that fairness, the Republican Party, at least in its 2012 incarnation, is for you.