Wednesday, November 15, 2006

Democrats And The Middle Class

The Religious Right got skanked by the Republicans, who failed to pass even one significant piece of "values" legislation since the Reagan era: no ban on abortion, no prayer in schools, no specific national gay marriage ban.

The Democrats have spent the past few years wooing back the middle class to their party. Has it worked, or will the middle class be as skanked as the Religious Right was?
Democrats won, but did the middle class?

By Andrea Hopkins

HOPETOWN, Ohio (Reuters) - Jenny Bagent considers herself a Democrat and knows she should be thrilled her party won control of Congress. But the mother of two is skeptical life is suddenly going to get better for ordinary Americans.

"Maybe I'm just too cynical. We hope things will change, but I'm not banking on it. Too many of these people have never even been middle class," said Bagent, 38, a hospital clerk.

The people she's referring to are America's newest Democratic lawmakers, who swept into power in America's congressional elections promising change in Iraq and new policies to help ordinary Americans.
Ms. Bagent raises an interesting point: one of the problems with politics in America is the amount of money needed to fund a campaign, which means that those who can afford to, run.

Meaning, they're likely rich to begin with.

There's also a sleight-of-hand going on here, semantically speaking. As Geoffrey Nunberg points out in his book, "Talking Right", people from an huge range of incomes identify themselves as middle class, even if economically only a fraction of them are. People surveyed with incomes of between $20,000 and $500,000 tend to identify themselves as middle class.

I don't make $500,000, I make much less, and I identify myself as wealthy. I recognize "middle class," economically, as somewhere in the neighborhood of $25,000 to $80,000 for a family of four.

But there's another definition of "middle class," and this is the one that the Dems are trying to court: the "values middle class."

That class cuts a broad swath through society. I think this story at Reuters was planted because, courtesy of Mr. Doggity (who really should have his own blog, or at least guest blog here), comes this blogpost, quoted in e-mail:
Reid Immediately Calls For Middle-Class Tax Cuts

“For too long, Americans have watched as Washington has ignored their needs, and concentrated on special interests instead,” said Reid, Monday on the Senate floor. “Families have struggled with high health care costs… only to see big drug companies get billions from Congress. Ranchers in Nevada have struggled to fill their tanks with gas… only to see Big Oil companies get tax breaks. In the weeks and months ahead, Democrats will focus our energies on the real challenges facing America, and take concrete steps to protect the country and help working families get ahead.”

Reid proposed that the post-election Congressional session be used in part to extend critical middle-class and business tax cuts including the following:

*Deductions for college tuition
*Deductions for state and local sales taxes
*Deductions for out-of-pocket expenses incurred by teachers
*For business, extending the Research and Development, Work Opportunity, and Welfare-to-Work tax credits

Reid pointed out the fact that, despite the GOP-controlled Senate moving heaven and earth in the last two years in attempts to pass the "Paris Hilton" Estate Tax Cut for the wealthiest Americans, they have allowed tax breaks benefiting the middle class and working families to languish and expire.

And, after a campaign season that saw the GOP trying scare every voter in America with talk of Democratic tax hikes, the Republicans' refusal to extend these cuts would -- in an ironic bit of truth -- effectively result in a GOP-instigated tax increase for middle-class families next year.
They have the majority now, although it's not veto-proof, and should be able to enact at least a skeleton program of these tax cuts.

I'd like to throw one more idea out to the Democrats for consideration: A cut in the employee-portion of the Social Security payroll tax, shifting the entire burden onto corporations. Here's how that would work:
Take the employee share of Social Security payroll taxes and make employers pay it, while giving them an additional offset against the 401(k) eligibility formula.

What this would do is give more in-hand money to workers right away, AND give companies an executive incentive that is not tied to stock performance to offer to management: 401(k) formulas say that executives can only defer pay into retirement plans based on a formula that ensures the 401(k) is set up for their workers' benefit, and not the executives. By taking that extra 7.5% or so, you expand the pool of money that executives can base their own deferred compensation on, with minimal effect to their bottom line.
As Dogg says, tongue-in-cheek, "Nice. More proof that Dems are the party with no ideas!"