Obama's "Middle-Class Economics" Push Ignores A Valuable Point About The Middle Class
Before an unsympathetic GOP majority, President Barack Obama worked hard to put forth a vision of “middle-class” economics in his State of the Union address Tuesday — policies that enable working families to get a fair shot at making ends meet, sending their kids to college, putting food on the table and enjoying economic stability. His policy agenda for the next two years, the president said, would try to ease the burden on working families, in large part by making the nation’s wealthiest and corporations pay their fair share.
The Republican contingent did not seem convinced, to put it mildly. Almost immediately after the president had finished speaking, GOP congressional representatives took to Twitter to declare the president’s policy agenda, particularly his proposed tax reforms, to be practically defunct. The Democrats, for the most part, applauded many of the president’s proposals, setting up the fierce partisan divide for another two years, contrary to any asides about bipartisanship and shared goals.
From the standpoint of the majority of Americans who fall into the working and middle classes, the president’s agenda makes sense.
“That’s what middle class economics is — the idea that this country does best when everyone gets their fair shot, everyone does their fair share, and everyone plays by the same set of rules,” Obama said. “We don’t just want everyone to share in America’s success — we want everyone to contribute to our success.”
If the United States want to remain competitive in a global labor market and to live up its promise of economic opportunity to all those willing to work, then we do need to make community college as free and accessible as high school currently is. If we think that working mothers and fathers shouldn’t have to choose between basic goods like keeping their jobs, taking care of sick children or paying medical bills, then we should be expanding worker protections like paid sick leave and health care coverage.
In a world where working Americans continue to feel financially insecure as corporate profits skyrocket and the wealthiest pile up more wealth than they know what to do with, the president’s turn to “middle-class economics” is plain good sense.
But in making his case before the American people for those good-sense policies, Obama sacrificed a substantial portion of the argument that could have helped him frame the debate by choosing to herald the recent economic growth as a new page in American history. Rather than point out the serious ways in which the economic recovery has not served the vast majority of Americans but instead has siphoned more wealth into coffers that are already overflowing, the president took several moments to celebrate America’s economic turnaround:
We’ve seen the fastest economic growth in over a decade, our deficits cut by two-thirds, a stock market that has doubled, and health-care inflation at its lowest rate in 50 years…Fifteen years into this new century, we have picked ourselves up, dusted ourselves off, and begun again the work of remaking America. We have laid a new foundation.
In his sixth State of the Union speech, Obama tried to follow two competing logics: celebrating America’s economic turnaround while also calling for middle-class economic policies to help the broad swath of struggling Americans who had not benefited from that turnaround.
What if the president had gotten up before Congress and read out the following statistics on the State of the Working Class Union?
While the top earners have seen fantastic wage growth, the rest of us have watched our wages barely keep up with inflation over the past five years. In fact, the average food costs, health care costs and rents have risen at higher rates than inflation and wages, forcing American families to fork over more of their monthly budgets for base necessities. Working class Americans have watched their purchasing power decline, a blow to that they feel every time they visit the grocery store or the doctor’s office.
In turn, the wealth gap has reached its widest point in decades. According to the Pew Research Center, the median new worth of upper-income families topped out at $639,400 in 2014 — almost seven times more than the average middle-income family and close to 70 times more than the average low-income family.
Corporations are making off just as well as the wealthiest Americans. According to the Center for Effective Government and the Institute for Policy Studies, seven major corporations paid less in taxes to the federal government last year than they handed out in CEO compensation. Among the names are Boeing, Ford, Chevron, Citigroup and JPMorgan Chase. The average CEO makes more than 350 times what his (only 27 of the Fortune 1000 companies are led by female CEOs) average worker hauls in; in the 1960s, that pay gap was only a factor of 30.
Unemployment is declining, but many Americans are dropping out of the labor market entirely, discouraged that they will find a job. Almost 22 million Americans are still looking for a full-time job, but say they haven’t met with any luck.
It should come as no surprise then that 72 percent of Americans think that the economy is still in a recession. For them, comparatively speaking, it is.
This is not meant to undercut the economic progress of the past few years entirely. In some respects, the U.S. economy has finally begun to pick up steam after the devastation of the Great Recession: 2014 was the best year for job creation since 1999, the unemployment rate was down to 5.6 percent in December, and the stock market is reaching all-time highs. It appears that the president’s policies, in combination with Treasury Secretary Tim Geithner’s crisis response plan for the crumbling financial institutions, worked.
But the questions remain: Economic growth to whose benefit? Economic opportunity for whose children?
As Obama noted in the portion of his speech focused on a more populist economic vision:
Will we accept an economy where only a few of us do spectacularly well? Or will we commit ourselves to an economy that generates rising incomes and chances for everyone who makes the effort?
Obama could have made a stronger case for middle-class economics before his audience of tens of millions if he had outlined how trickle-down economic models had left them worse off. If he had stood up before the nation and told working class families that they are struggling not through any fault of their own, but because the economic recovery that the mainstream media celebrates is not structurally attuned to their needs, but to those of the top earners and the corporations they run. What better mandate could there be for tax reforms that call on the wealthy to pay their fair share than pointing out how the top 1 percent has unfairly benefited from the past few years of economic growth?
As the president begins to make his case before the American people over the next year, hard as it might be, he needs to focus less on how the soaring stock market plays on the political scorecard. After all, if he wants to be remembered a president of the working class, then his policy wins need to work for those Americans, not despite them.
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