The first ten pages of the report detail and reject "The Myths of Neopopulism" -- the view that the middle class is in trouble. (Incidentally, the only current "leading neopopulist" mentioned by name is TAP founder Bob Kuttner, whose comments regarding Third Way's Stephen Rose led to this TAP Online exchange.) To rebut the pessimism, "New Rules" points out such fun facts as that in 1979, only 12% of "prime-age households" (that is, singles or couples age 25-59) earned more than $100,000, today, 24% of such households have crossed the $100,000 line. Except for "the very poor," they say, everyone's doing okay. (The Third Way authors don't define "the very poor," but it looks to me like they mean roughly 40-45% of the country.)
And then there are four half-hearted pages dismissing "The Myths of Conservatism," because of course you can hardly call yourself Third Way unless there are two other ways.
Then, they present the "New Rules" and the policies that go with them. Just to give you the flavor of it: the "old rule" was, "The American Dream meant owning a home"; the "new rule" is "The American Dream means owning a home and a stock portfolio." Old rule: "Good jobs are in factories." New rule: "Good jobs are in offices." And various other aphorisms worthy to stand beside "To thine own self be true" and "Plastics."
There's plenty to be said about the empirical portion of the paper, in addition to the points made in the earlier debate, but I'll leave that for others. (I hope they will take on Third Way's repeated innuendo that "neopopulists" don't think women should work.) Frankly, there are some useful correctives here, and the economic picture is not bleak for many Americans. Life above the median income is really pretty good, and there's not much of a golden age when it was much better. So let's assume it's all true. All you need to do is go to college, watch CNBC and buy yourself some stocks, get your cubicle at Initech, and the American Dream can be yours.
What then is "the new policy framework" that responds to all this good news? Some of it is great, such as providing every newborn with an asset account at birth. Some of it is unobjectionable, such as, "Encourage more companies to provide investment advice to their workers." But the bulk of the policy framework amounts to: Let's "reflect the hope and optimism" of those shiny happy middle-class families by throwing some money at them through more tax deductions and tax credits: "Tax deductions and credits aimed at middle class families" for college tuition. A "new baby tax credit." "Double the tax break for child care."
None of those things are terrible, if we had all the money in the world, but they are terribly inefficient. Making college tuition tax deductible, for example, even leaving aside the inflationary effect on tuitions that would wipe out the benefit, would not open the door of college to one single student who cannot attend already. (According to the Department of Education, a student from a high-income family with low test scores is more likely to complete college than a student with high test scores from a low-income family.) The other tax breaks are not as egregious, but at a time of staggering budget deficits and 45 million uninsured, they would hardly be a high priority on policy grounds, and without the magic words "refundable," they would provide no value at all to the 42 million households that don't owe income tax.
But details aside, here's my question: if the middle class is doing so well, why do we need to throw money at them? Why not just give them a round of applause for doing so well that a quarter of them now make over $100,000? Maybe given their great optimism we could even ask the $100,000+ earners to pay a bit more taxes to help those who have the least, to make our society better? What is the theory of social justice that says, the middle class is doing great, so let's borrow more money from future generations in order to give them some extra tax breaks? And meanwhile, we'll just ignore "the very poor" who aren't doing so well, by which they mean roughly 40 percent of the country.
Of course, I'm being willfully na�ve. Substitute the word "swing voters" for "middle class" in the Third Way report, and it all makes sense. The affluent swing voters are doing great, and we Democrats need to "reflect their hope and optimism," in order to get them to vote for Democrats. How do we do that? Just as it's always been done: throw some bennies their way.
This is not policy analysis that seeks to determine actual problems and needs, and then craft policies that respond to them. Let's be blunt: It is the decade-old political analysis of pollster-turned-PR mogul Mark Penn -- in which affluent white women are key -- dressed up in the clothing of economics and policy.
There are five ways you could talk about the middle class in the current economy:
- 1. You could argue that the middle class faces serious economic stresses and anxieties, and government should help them deal with those things. That's kind of the position Senator Schumer has taken with his book Positively American, and with it, he's embraced some of the same policies, such as making college tuition deductible. I disagree with Schumer about his approach, but at least his solution fits his diagnosis of the problem.
2. You could argue that both the middle class and the working poor face increasing stresses, anxieties and insecurities, and there's a need for either universal programs that address that shared experience of insecurity (universal health care, wage insurance) or fundamental macroeconomic changes that would lead to a tighter labor market. That's more or less the position represented by, say, the Economic Policy Institute's "Shared Prosperity" project.
3. You could argue that the middle class is doing okay, but those below the median income � not just the poor, but those hanging on the precipice of the middle class and trying to climb up � are having a hard time of it, and we need policies that help their mobility, out of a moral obligation and out of our vision of America as a land of opportunity. This would be more or less John Edwards' "Two Americas" of 2004. (And not totally incompatible with option 2.)
4. You could argue that the middle class is doing fine, and therefore we should just keep doing what we've been doing, keep taxes and regulations low and let people "keep more of what they earn." This is Republican orthodoxy at the moment.
5. You could argue that the middle class is doing just fine, but we Democrats should throw a bunch of expensive tax credits and other benefit stheir way anyway because maybe they'll like us and vote for us.
--Mark Schmitt
