Three Last Points, for the Left and Right, on Romney’s Comment About the Poor and Middle-Income

Romney appears to be backpedaling from his comments about focusing exclusively on middle-income people and not caring about the poor, which we discussed here.  There’s three last points worth bringing up about this.

The Left

1. There’s a progressive version of something like what Romney is getting at, which would go like this: “Liberals care about inequality because they are concerned about deprivation and suffering of the poor, stigmatization through differences in status and power as well as perserving equality of opportunities.  But progressives also care about inequality beyond ensuring fairness for the least off, because they also care about economic equality generally for important reasons.  That translates into the political dialogue as ‘a strong middle class.'”

Now what are those “important reasons” for broader economic equality and a “strong middle class”?  There’s been advancements in the argument that economic equality is good for the long-term health of the economy, or what economists would call the dynamic efficiency of the economy.

Heather Boushey has been making these arguments at Center for American Progress – here’s a recap making the affirmative case.  Researchers at the IMF have created models where income inequality can cause financial crashes and crises.There’s a range of research that argues growth is more sustained with greater economic equality (see summaries by Roosevelt Institute Fellow Georgia Levenson Keohane as well as Brad Plumer).  There’s arguments being floated that a strong middle-class is essential for product innovation as well as labor-saving technological progress.  This will be an important avenue of research for years to come.

The Right

I’ve noticed a lot of policy thinkers on the Right are interested in this argument but wish that Romney didn’t approach it like someone born with a silver foot in his mouth.  Ross Douthat said Romney wanted “to define himself as a champion of the hard-pressed middle class, and to distance himself both from the “just expand the welfare state” politics of the left and the “just cut taxes on the wealthy, and the rest will take care of itself” politics that too often defines the contemporary right.”

Reihan Salam argued that Romney “must make the case that while Obama’s agenda is all about targeted remedies, his agenda is about boosting wages and growth. In doing so, he can argue that the best way to help the very poor is to foster the job opportunities that only a fast-growing economy can provide.”

2.  I think it’s crucial to understand that, at the conceptual level, Romney’s proposed economic policies are all about freeing up “the job creators” in the 1%.  Why is the economy stuck?  Because business don’t want to hire labor with Obamacare about to start, because Obama is scaring job creation with unionization threats, because Dodd-Frank implementation is keeping capital from businesses, because higher taxes on the rich are discouraging work and job creation, because the rich don’t want to pay off a future deficit, because of “uncertainty” of government actions etc.  This is at the theory level – the GOP understand the current crisis as a version of a capital strike.  Say what you will about this as a way of understanding what is going on with the macroeconomy – at least it’s an ethos – but they are distinctly not about building a middle-income class or addressing middle-income anxieties.  It’s about keeping the 1% happy and productive.

3.  This plays out in practice.  Romney is not going around talking about helping the 1% of job creators for fundraising purposes while sneaking in a plan that benefits the middle 50%.  I mean, look at Romney’s Day One proposals: “the elimination of Obama-era regulations that unduly burden the economy or job creation”, “reverse the executive orders issued by President Obama that tilt the playing field in favor of organized labor” (love the liberal metaphor of even playing fields everywhere!), cut the corporate tax rate, etc.  This is all “job creator” stuff, which targets investors, executives and the managerial class – which is much of the GOP and Tea Party base.

What programs here would help middle-income people?  The other day we created an issue platform of economic issues that (arguably) fall the most on middle-income people: rising prices in core middle-class goods (health care and education especially), high youth unemployment, the mortgage crisis, retirements and job polarization.

Re-reading Romney’s platform, there’s very little here that would address these concerns.  He wants to expand oil production immediately, which (as Reihan also noted) would help families with rising prices in oil (with the externalities passed of to their grandchildren). The status quo in health care was a disaster for families, and I don’t see a serious alternative to Obamacare being proposed by the Romney team other than that status quo.

Maybe Romney’s plan to “Lower the Rates / Broaden His Base” (because  is he really going to broaden the tax base?) might help with taxes, but taxes aren’t driving unemployment/housing/retirements anxieties at this point.  His Human Capital platform involves block-granting retraining program and deploying “Personal Reemployment Accounts” – which I assume are his awful way of shredding the social insurance part of Unemployment Insurance.

So as far as I can see Romney’s plan fails to focus on middle-income people both in theory and in practice.  No wonder he’s backing off the claim.

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3 Responses to Three Last Points, for the Left and Right, on Romney’s Comment About the Poor and Middle-Income

  1. MIke Konczal said “Romney is not going around talking about helping the 1% of job creators for fundraising purposes while sneaking in a plan that benefits the middle 50%.”

    The Republican response to that would be that democrats overpromise main street, the poor and immigration as many perks as possible to ensure their vote.

    I think the time bomb to today’s economy was in large part laid out by our own cities and states and their pension promises that were made as far back as the 70’s. Not only were the city and state pension promises too grand, but city and state pension fund managers were always trying to get the best return even when that meant not always investing their pension funds locally.

    At some point, then city and state pension fund managers went to wall street for the best return.

    Wall Street in turn invested offshore, accelerating the development of offshore competition against, ironically enough, the very local businesses that paid the taxes that helped fund those city and state pension funds that went offshore.

    As city and state budgets continue to tighten, the import businesses are more likely to generate enough taxable profits. Once again, who is left struggling the hardest, the local business owner trying to eke out a living while paying higher and higher local and state taxes while local city governments and state governments continue to ogle the higher profit margin companies that make those higher profits by selling imported products.

    The cycle may only break when ALL city and state pension funds are required to invested locally.

  2. Pingback: The Economic Role of the Middle Class | liamcmalloy

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