Parsing Romney’s and Obama’s middle-class pablum
Throughout the last two weeks of political conventions, Barack Obama, Mitt Romney and a vast array of surrogates accused their opponents of gutting the American middle class.
Paul Ryan and Bill Clinton did it blatantly. Michelle Obama and Ann Romney did it subtly. And all speakers tried to portray themselves as in touch with the middle class, from the Romneys eating “lots of pasta and tuna fish” to Barack Obama’s proudest possession being “a coffee table he’d found in a dumpster.”
In the process, though, both parties gave politically skewed definitions of the middle class, simplistically blamed each other for its struggles and presented pat solutions for the complex problems it faces.
In Republican oratory, the middle class consists of small-business owners who are being crushed by taxes, regulation and a bloated government. In truth, only about 11 percent of American heads of household are self-employed.
In Democratic speechifying, the middle class is made up of hard-working teachers, police officers and union members being laid off by miserly Republicans. Yet those Americans, however hard they work, depend on successful businesses and banks for their prosperity.
In reality, the middle class is a dizzyingly complex demographic. It includes the 50 percent of Americans, for example, who work for large companies with more than 500 employees. And it includes drillers and farmers in North Dakota who are collecting hefty paychecks and cashing in on bumper crops in the state, which has a 3 percent unemployment rate, the lowest in the nation.
The middle class is not in free-fall, as some Republicans argued. And the middle class is not the country’s sole economic engine, as Democrats suggested. Overall, the American middle class today is struggling to surmount torpid wages, global competition for jobs, low home values and spiraling healthcare and education costs. The middle class is stagnant.
What follows is the first of several efforts to sort through Republican and Democratic portrayals, pronouncements and promises for the middle class. More will follow between now and Nov. 6.
In his acceptance speech, Romney said Obama had raised taxes on the middle class. And multiple Obama surrogates – including Vice-President Joe Biden and Massachusetts Senate candidate Elizabeth Warren – said that Romney would raise taxes on the middle class by $2,000. All of their statements were misleading.
Since taking office, Obama has, in fact, cut middle-class tax rates. Romney, though, was probably referring to the $960-to-$1,200 annual penalty that an estimated 3 million middle-class Americans who fail to obtain health insurance will be expected to pay under Obamacare. In its ruling upholding the healthcare law, the Supreme Court declared the penalty a tax. Definitions of the middle class vary, but most experts view it as the middle 50-60 percent of Americans, or roughly 114 million working-age adults. The penalty will apply to approximately 3 million of roughly 57 million middle-class Americans.
Biden’s and Warren’s claim that Romney will increase middle-class taxes is pure speculation. Romney has promised that he will cut tax rates across the board by 20 percent but not reduce overall tax revenues in the process. Independent experts have said it will be extremely difficult for Romney to achieve this goal, and the Republican nominee has declined to give specifics. But the New York Times notes that Romney could decide, instead of increasing middle-class taxes, to add to the deficit, take away preferential rates on savings and investments or make smaller cuts to marginal tax rates. And Romney has repeatedly promised not to raise middle-class taxes.
“Crushing the middle class”
Romney blamed Obama for a decline in middle-class incomes and a rise in family expenses.
“In the richest country in the history of the world, this Obama economy has crushed the middle class,” Romney said in Tampa last week. “Family income has fallen by $4,000, but health insurance premiums are higher, food prices are higher, utility bills are higher, and gasoline prices have doubled. Today more Americans wake up in poverty than ever before.”
Romney’s figure of $4,000 includes 13 months of wage decreases that took place before Obama took office, according to FactCheck.org, a non-partisan organization run by the Annenberg Public Policy Center. Romney is right, though, about food prices, which have risen by 6.2 percent.
Gas prices have, in fact, doubled, but the global recession sparked by the financial crisis artificially lowered them just before Obama took office. Healthcare premiums are up by 9 percent, but independent experts attribute 1 percent to 3 percent of the rise to Obamacare.
And while the total number of Americans living in poverty has never been higher, that is because the U.S. population has grown over time. Today 15 percent of Americans live in poverty, a figure significantly lower than the 23 percent that did when poverty rates were first calculated in 1959. In short, the middle class has definitely suffered under Obama, but not to the extent Romney claimed.
“Tax breaks for millionaires”
In his acceptance speech, Obama said that Romney’s proposed tax cuts for the wealthy would add to the deficit and fail to spark economic growth. “I don’t believe that another round of tax breaks for millionaires,” Obama said, “will bring good jobs to our shores, or pay down our deficit.”
Experts generally agree that the more educated a workforce, the higher its earnings, according to the Washington Post. But economists are divided over tax cuts for the wealthy. There is broad agreement that reducing taxes for the wealthy has led to increased deficits in the past, but there is disagreement over whether tax cuts for the rich spur economic growth. Some economists say it does not, while others insist that it does.
“So what’s the job score?”
Bill Clinton declared that 24 million private-sector jobs had been created during the 28 years Republicans held the White House over the period since 1961. But, he said, Democrats produced nearly twice as many private-sector jobs – 42 million – in the 24 years they were in power during that 52-year period.
Clinton’s figures are accurate, according to Bloomberg Businessweek. But other experts have found that if job creation starts being counted one year after a president takes office – and his policies take effect – the numbers are more even. And many economists argue that the U.S. economy is so large that short-term government policies enacted by any president have a limited effect. Administrations are given too much credit for a growing economy, they say. And too much blame for recessions.
With low TV ratings and the vast majority of voters having already made up their mind, the conventions are unlikely to decide the election. The unimpressive jobs report issued on Friday – only 93,000 new jobs in August – could blunt any momentum the Democrats gained.
In the end, both candidates stayed disappointingly true to form. Romney was cautious and vague. Obama was cautions and incremental. The middle class heard some debate, but mostly got pandering.
PHOTO: Confetti bursts following the speech of President Barack Obama during the final session of the Democratic National Convention in Charlotte, North Carolina, September 6, 2012. REUTERS/Jonathan Ernst