Municipal Government

A Program for the Middle Class

November 21, 2014
By Oren M. Levin-Waldman

In the two weeks since the midterm elections pundits have made a great deal about the thrashing the Democrats received at the hands of the GOP. To the extent that Democrats represent a voice for a progressive agenda, that goal will no doubt be more difficult to achieve. And yet, if progressivism is defined by your ability to call the other side names, then they can keep it.

At a time when wage median wages have been in decline, a sizeable proportion of the individuals have dropped out of the labor market and/or are underemployed, and more people are increasingly concerned about rising healthcare costs, despite the Affordable Care Act, the real question in need of an answer is whether any of our politicians really care.

During these elections, Democrats either blasted the Republicans because they were waging a war on women or attributed their declining numbers to the racism of their constituents. Of course, everybody knows that calling your constituents names is always a good way to endear yourself to them and get their votes. And yet, to be fair it is difficult to win an election when you are trying to distance yourself from the man in the White House whose policies are unpopular.

Despite this thrashing, the President fails to see the electoral results as a repudiation of

his policies. On the contrary, it was a group of red states stacked against him, or it was because voter turnout was low no doubt due to voter suppression, or it was a messaging problem — that there was a failure to communicate with the American people how much better off they are. On the messaging problem, the White House may be half right: it failed to communicate why policies that benefit the middle class are essential.

None of this, of course, leaves the Republicans off the hook, as they only trotted out the same old formula of lower taxes and eliminating regulations, and repeal of Obamacare. In fact, the GOP proved once again that it never misses an opportunity to miss an opportunity. Naturally the GOP criticized proposals to raise the minimum wage on the standard argument that they would cost jobs. But they never answered the question of what value there is in simply creating low-wage jobs that are insufficient to support workers and their families.

Now let’s get real. The election results do not mean that the Republicans can roll back the welfare state. Nor does it mean the President has a blank check to use executive action because in his words he has waited long enough. If anything, the political fight that executive action on immigration will ignite is really a diversion from the real issue that need to be addressed, which is shoring up the middle class. One sign that the voters aren’t buying the Republican message is that four red states, Alaska, Arkansas, Nebraska, and South Dakota, passed ballot measures to raise the minimum wage.

Perhaps the message of the election should be, and very much in lines with the idea of the median voter, is that failure to listen to the middle class will result in political defeat. The voters have shown over and over again that they want divided government for the sake of checks and balances. This means that policy is the product of consensus, which is precisely what the Framers of the Constitution envisaged. At the same time, they want answers to their problems, and engaging in diversionary political battles will result in the Democrats thrashing the Republicans in 2016.

The opportunity the Republicans squandered was to actually support a higher minimum wage on the grounds that it was a middle class issue. And the opportunity the Democrats squandered was to couch proposals for the minimum wage in terms of the middle class. Think of how much better it would have sounded if a Democratic candidate said s/he supported policies for the middle class, and the minimum wage would help the middle class because its upwards ripple effects through the wage distribution would result in others receiving wage increases too. This would enable them to demand more goods and services, thereby adding a push to the economy. Republicans too could have made this argument, but with the additional twist that policies that help the middle class are at the end of the day about family values because family values are meaningless if workers cannot support their families.

Conservatives among the GOP like to claim that people are poor because they aren’t married and are having children out of wedlock. But one doesn’t escape poverty through marriage; rather those who are earning a decent living are likely to get married. But I don’t want to call the political parties names either. They have spoken past each other long enough and its time to work together on a true middle class program.

A program for the middle class contains four fundamental ideas: First, the minimum wage has to be raised, and then it has to be pegged either to inflation or productivity. Since there are upward ripple effects from wage policy, the middle class will benefit, with the added benefit that income inequality will be reduced some. Second, workers’ rights, which have been eroded though Business’s assault on labor, need to be redefined in terms of property rights. This would make an assault on workers’ rights akin to a ‘taking’ under the Fifth Amendment to the Constitution.

Third, there needs to be a wholesale reform of the tax code. The tax code should be about raising revenue; not about social engineering. A simple code with three or four flat tax rates for the sake of progressivity and no deductions, will no doubt spur investment. But it may also have the added benefit of reducing the number of interest groups who have none nothing more than distort American politics in favor of their single purpose. Of course, there is nothing wrong with that; they are only doing what they are supposed to. Our public officials, however, are supposed to serve the public interest; not interests groups’ definition of it.

Lastly, fiscal and monetary policy approaches need to be synchronized with wage policy. Policy for two long has involved the first two without the third. Yes easy money is important for investment, but if workers wages fail to rise as well, there is no increased demand for goods and services, and therefore no point to further investment.

Of course, both parties working together to benefit the middle class would naturally take away the partisan edge to American politics. Instead of focusing on winning and who has power, might it not be nice to try a new approach like serving the public interest? A program for the middle class is not intended to be partisan. It is intended to revive the economy. If politicians don’t get the message, they will have demonstrated that they never cared about anybody but themselves. But we knew that, didn’t we? Because if we didn’t then maybe MIT professor Jonathan Gruber is correct: "Call it the stupidity of the American people."

November 21, 2014

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.