David Coates

Why Promising to Save the Middle Class May Just Not Be Enough!

This is the lull before the storm, the final moments within which to settle the character of the presidential campaign of 2012. Even in the lull, however, the likely lines-of-march are already clear – lines that, if unaltered, should give far more comfort to conservatives than they do right now to progressives.

The Romney camp is already hammering away at the poor performance of the economy under Obama’s stewardship, and laying full responsibility for that poor performance at the President’s door (and at his door alone). The Republican message will no doubt continue to be a simple one, remarkably easy to grasp. It will be that all our contemporary economic problems are Obama-created, easily solved by removing Obama from office. If the American people want economic growth and rapid job creation, so the pitch goes, all that they will need to do is to elect a Romney Administration that will cut government programs, repeal the Affordable Care Act, ease the tax burden on all Americans (including on the rich) and remove intrusive regulations on American business.

In response, the Obama team – if present efforts are any guide[1] – will primarily emphasize their commitment to the economic well-being of the middle class, and promise to protect that well-being more effectively in a second term than circumstances allowed them to do in their first term. They will defend their record on things achieved (like the Affordable Care Act) and on things attempted but blocked by Republican intransigence (like the American Jobs Bill). They will remind Americans of the severity of the crisis they inherited (and imply that a McCain presidency would have achieved even less in those circumstances). They will insist that they would have done more had Congressional Republicans been more bipartisan. They will warn of horrors to come if Republicans sweep the board in November; and they will turn to their supporters as they did in 2008, urging an all-out grass-roots effort to offset the impact of a Republican advertising campaign better funded than anything they are likely to be able to mount.

The key question, therefore, for those keen to block a Romney victory becomes this: will an Obama campaign based primarily on his record, his promises, his problems with Republican filibusters, and his capacity for grass-roots mobilization be enough to bring victory in November? The answer is that most probably it will not.

Why? Because there is a considerable and undeniable gap between the promises made by candidate Obama in 2008 and the record in office since, a gap that will almost certainly undermine the credibility of the new crop of promises now being made, particularly their credibility among independent voters.  It is a gap that will also erode the degree of grass-roots mobilization evident on the Democratic side, and one that will let the Republicans in as the untested alternative. It will let the Republicans in during the campaign, by permitting them to focus endlessly on the under-performance of the Obama team; and the danger is that it will also let their candidate in after the campaign – actually put Romney into the White House – unless he and his program are both effectively challenged now.

That challenge will require more than an Obama promise to strengthen the middle class. The Romney campaign will promise that too, and will point to the Administration’s failure to strengthen the middle class thus far. Putting the emphasis on that issue, and that issue alone, will effectively level the playing fields between the candidates, and reduce the choice to one between various shades of tax relief. That choice is Republican heaven. No, to win in November, the Obama campaign will have to do more.  It will also have to explain – and explain to an increasingly skeptical electorate – why its promised program, and its program alone, can and will strengthen the American middle class. Such an explanation requires not simply the assertion, but also the demonstration, of the underlying superiority of the Democratic Party’s economic growth model over that being canvassed by its Republican opponent.

That demonstration, in its turn, will require the President to prioritize the one task on which, as he recently admitted, he has regularly under-performed – the task of telling America its own story, and the place within that story of this generation and this moment.[2]

Republicans are very good at that story telling – they tell a story that goes back to Ronald Reagan, and then leaps backwards at great speed to the Founding Fathers, skipping over the excesses of the Gilded Age and the great gains made by the New Deal. Democrats need to tell a good story too, and one that more honestly captures the complexity of our recent past. The Republican Party would have us believe that American prosperity has always been based on small government and on markets uncluttered by regulation. The truth is otherwise, of course, and conservatives must know that: which is presumably why the Republican framing of our contemporary condition so often writes the New Deal out of the American story. Democrats need to put the New Deal back in, and put it back in center-stage; and they need to emphasize, over and over again, that this side of the 2008 financial crisis the era of Ronald Reagan and trickle-down economics has gone, and gone for good.[3]

So it is not too late – though it is already well past the eleventh hour – for Barack Obama and the entire Democratic Party to recapture the modern American political narrative by showing exactly when, and under whose political leadership, American middle-class incomes and job security did actually grow. They simply need to remind us that Americans have known not one, but two, periods of sustained economic growth in the post-war period. Each period was different in the balance of manufacturing and finance it contained. Each period was different in the pattern of rewards and responsibilities it sustained, and each period differed in the political party largely responsible for its creation of its underlying social compact. And though you would not know it, if all you listened to were right-wing historians and political commentators, it was actually the first period (the New Deal period), and not the second one (the Reagan period), that brought sustained prosperity to ever-widening strands of the American middle class.

In that first post-World War II growth period, with the New Deal coalition firmly in place in Washington, the United States enjoyed full employment and strong trade unions, rising middle class consumption and a world-class manufacturing sector. Between 1948 and 1973 the U.S. economy grew on the basis of a social compact negotiated between north-eastern and mid-western manufacturing industry and powerful industrial unions. Productivity and wages rose together in those years, rising wages which then gave the entire U.S. economy a strong internal demand dynamic. [4] With either liberal Republicans or Democrats in the White House and the Congress predominantly in Democratic hands, income inequality in the United States in those years was low by modern standards. Indeed, Lyndon Johnson’s “War on Poverty” halved poverty rates in little more than a decade.

It was only when the policies of that New Deal coalition were replaced after 1980 by supply-side economics and the deliberate erosion of trade union power that income[5] and wealth[6] inequality soared in the United States. It was only then that wages stagnated and personal debt rose, and that the outsourcing of well-paid manufacturing jobs ultimately left the U.S. disproportionately dependent on low-paid service employment and the bonus culture of Mighty Finance. As Robert Reich put it, “Can I say this more any more simply?  The earnings of the great American middle class fueled the great American expansion for three decades after World War II. Their relative lack of earnings in more recent years set up the American bust.”[7] The war on poverty did not fail. Poverty did not win, as Reagan famously claimed. The war on poverty failed only when it was abandoned [8] – abandoned by conservatives mistakenly and self-servingly committed to the viability of trickle-down economics.[9]

The President needs to say that the economic growth strategy which raised middle-class living standards in the 1950s and 1960s was a Democratic Party creation supported by the liberal wing of the Republican Party. He needs to say that the growth strategy that suppressed middle-class living standards in the 1980s and 1990s was a Republican Party creation, one that was also bought into for a time by centrist Democrats. And he needs repeatedly to stress that this second growth strategy is now totally defunct – its weaknesses having been fully exposed by the financial crisis of 2008 and by the recession which followed.[10] The President needs constantly to insist that it is time to create a new growth strategy, one able to replicate the best of the original New Deal. For only with that argument in place can the President credibly place Romney as the advocate of a strategy predetermined to fail – a Reagan Mark-2 that can only make the rich richer by swelling the ranks of the American poor.

To win, and to win convincingly in November, the case has to be made afresh that what America suffers from now is not too much taxation on the rich but too much inequality between the classes.[11] The case has to be made afresh that income and wealth inequalities of the scale built up since the Reagan years are now hurting the core of the U.S. economy:[12] stagnating wages and demand, eroding the tax base vital to the maintenance of key public services, and locking us in a race to the bottom with appallingly-paid and super-exploited Asian labor. The case must be conceded that the first Obama stimulus package failed to retrigger economic growth because it was too small rather than too large, and that it was too small only because the new president was still seeking a bipartisan solution in which Congressional Republicans had never any intention of participating.[13] The case has to be made that cutting federal aid to struggling states in the middle of a recession only adds to unemployment, not to job growth.[14] For only when the case is made that targeted public sector spending is vital for long-term private sector economic vitality can Romney’s many-sided weaknesses be fully demonstrated. His weaknesses? That he apparently doesn’t care much about the American poor[15] and is indifferent to the intensification of income inequality.[16] That he supports a Ryan budget that “solves” the contradictions of the Reagan growth model only by gutting the U.S. welfare net[17] and adding to the burdens of the American poor.[18] That he made much of his millions participating in the outsourcing of well-paid U.S. jobs[19] and has no credible strategy for bringing those jobs home; and that, remarkably, he appears to attach no particular significance to the protection and expansion of even basic public sector services like education or law and order.[20]

If Barack Obama is to win a second term, he has to turn left.[21] He has to turn critical;[22] and he has to turn historian. He has to tell the American people a different story to that implicit in the Republican critique of him and his Administration as un-American, as closet socialists and as secret admirers of European welfare capitalism. The President has to actively reframe the electoral conversation by placing the Romney camp as advocates of an economic growth strategy that visibly failed in 2008, and go back in time to remind Americans of an earlier and more successful growth strategy – the New Deal one – that Democrats alone now have the capacity successfully to mine in search of that illusive route to a better and more secure American future. The President has to make the choice between growth strategies the central issue of the campaign, and insist on being judged on the appropriateness of the strategy offered, and not just on the level of a particular month’s employment figures.[23]

The President has to tell the American electorate that the future lies, not in a second round of trickle-down economics, but in the creation of a second New Deal, one inclusive of those left out the first time round (particularly the rural and urban poor) and one inclusive of those that the Romney alternative will most certainly leave out (namely the mass and generality of the American middle class). We need to hear less in this electoral cycle about Ronald Reagan and more about FDR. We need to be reminded that they were both Americans, that Americans have two twentieth-century economic stories (not one), and that the FDR story is the more relevant of the two to our contemporary moment.

 



[1] See Amy Gardner and Karen Tumulty, “Obama offers vigorous defense of his presidency in speech,” The Washington Post, June 14, 2012: available at http://www.washingtonpost.com/obama-romney-plan-dueling-speeches-on-economy/2012/06/14/gJQAz6yecV_story.html

 

[2] See Mary Bruce, “Obama’s Mistake: Not Telling The ‘Story’ Better To the American People,” ABC News, July 12, 2012: available at http://abcnews.go.com/blogs/politics/2012/07/obamas-mistake-not-telling-the-story-better-to-the-american-people/

 

[3] See George Lakoff and Elisabeth Wehling, Obama v Romney: The Framing Matchup, Round One, posted on The Huffington Post, June 18, 2012: available at http://www.huffingtonpost.com/george-lakoff/obama-romney-slogan_b_1605212.html

 

[4] On the positive role of trade unions, see Harold Meyerson, “What happens if America loses its unions?”  The Washington Post, June 12, 2012: available at http://www.washingtonpost.com/opinions/what-happens-if-america-loses-its-unions/2012/06/12/gJQA1d7UYV_story.html. Also David Coates, Making the Progressive Case: Towards A Stronger U.S. Economy, New York, Continuum Books, 2011, pp. 50-52

 

[5] See CBO, Trends in the Distribution of Household Income Between 1979 and 2007, Washington DC, Congressional Budget Office, October 2011: available at http://www.cbo.gov/publication/42729

 

[6] See Linda Levine, An Analysis of the Distribution of Wealth Across Households, 1989-2010, Washington DC, Congressional Research Service, July 17,2012: available at www.fas.org/sgp/crs/misc/RL33433.pdf

 

[7] Robert Reich, Why The Economy Can’t Get Out of First Gear, posted on The Huffington Post, June 12, 2012: available at http://robertreich.org/post/24974761785

 

[8] See Peter Edelman, “The State of Poverty in America,” The American Prospect, June 22, 2012: available at http://prospect.org/article/state-poverty-america

 

[9] See Michael Ettlinger and Michael Linden, The Failure of Supply-Side Economics, Center for American Progress, August 1, 2012: available at http://www.americanprogress.org/issues/2012/08/failure_supply_side_econ.html/

 

[10] On the recent stagnation of family net worth, back to levels last seen in the 1990s, see Jesse Bricker et al, Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances, Federal Reserve Bulletin Vol. 98, No. 2, June 2012: available at www.federalreserve.gov/pubs/bulletin/2012/pdf/scf12.pdf

 

[11] See Elise Gould and Hilary Wething, U.S. Poverty Rates Higher, Safety Net Weaker Than In Peer Countries,  Economic Policy Institute Issue Brief #339, July 24, 2012: available at http://www.epi.org/publication/ib339-us-poverty-higher-safety-net-weaker/

 

[12] See Joseph Stiglitz, “The Price of Inequality,” Project Syndicate, June 5, 2012: available at http://www.alternet.org/story/155738/joseph_stiglitz%3A_the_price_of_inequality/

 

[13] See Andrew Fieldhouse, Failure to stimulate recovery is costing trillions in lost national income, posted on the EPI website, June 18, 2012 and available at: http://www.epi.org/blog/failure-stimulate-recovery-costing-trillions/

 

[14] See Michael Greenstone and Adam Looney, A Record Decline in Government Jobs: Implications for the Economy and America’s Workforce, Brookings, August 3, 2012: available at http://www.brookings.edu/blogs/jobs/posts/2012/08/03-jobs-greenstone-looney

Also Josh Bivens and Heidi Shierholz, Three years into recovery, just how much has state and local austerity hurt job growth? Posted on the EPI website, July 6, 2012: available at http://www.epi.org/blog/years-recovery-state-local-austerity-hurt/

 

[15] See Luke Johnson, “Mitt Romney: I’m Not Concerned About The Very Poor,” Politico, February 1, 2012, available at http://www.huffingtonpost.com/2012/02/01/mitt-romney-very-poor_n_1246557.html

 

[16] See Samuel Brown et al, On the Distribution Effects of Base-Broadening Income Tax Reform, posted August 6, 2012: available at http://www.bespacific.com/mt/archives/030958.html

 

[17] See Nancy Altman, Eric Kingston and Benjamin Veghte, “How the GOP-Backed Ryan Plan Threatens Middle-Class Retirement Security,” Politico, August 6, 2012: available at http://www.huffingtonpost.com/eric-kingson/how-the-gopbacked-ryan-pl_b_1733072.html

 

[19] See Tom Hamburger, ‘Romney’s Bain Capital invested in companies that moved jobs overseas,” The Washington Post, June 21, 2012: available at http://www.washingtonpost.com/business/economy/romneys-bain-capital-invested-in-companies-that-moved-jobs-overseas/2012/06/21/gJQAsD9ptV_story.html

 

[20] Remember the remarkable quote by Romney: “Obama wants to hire more government workers. He says we need more firemen, more policemen, more teachers. Did he not get the message from Wisconsin? The American people did. It’s time for us to cut back on government and help the American people.” (see Paul Krugman, “We Don’t Need No Education,” The New York Times, June 14, 2012: available at http://www.nytimes.com/2012/06/15/opinion/krugman-we-dont-need-no-education.html

 

[21] See for example, Jacob S. Hacker and Nate Loewentheil, Prosperity Economics: Building an Economy for All: published 2012, available at www.prosperityforamerica.org/prosperity-for-all.

 

[22] No more Mr. Nice Guy, as in “Mitt Romney is certainly a patriotic American, and he should be proud of the great personal success he’s had as the CEO of a large financial firm” (fund raising letter from the DNC, 2012)

 

[23] See Robert Reich, “The Real Battle in 2012 and Beyond,” posted on Nation of Change, July 12, 2012: available at http://robertreich.org/post/26990374473

 

 

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David Coates holds the Worrell Chair in Anglo-American Studies at Wake Forest University. He is the author of Answering Back: Liberal Responses to Conservative Arguments, New York: Continuum Books, 2010.

He writes here in a personal capacity.

One Response to “Why Promising to Save the Middle Class May Just Not Be Enough!”

  1. US 2012 – Why Promising to Save the Middle Class might juts not be Enough! — Social Europe Journal says:

    […] response, the Obama team – if present efforts are any guide [1] – will primarily emphasize their commitment to the economic well-being of the middle class, and […]

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