President Obama promised to veto any debt-reduction plan that didn’t include tax hikes on the wealthiest Americans in a speech last week. Republicans accused him of inciting a new “class war.”
They’re half right. Is President Obama suggesting that middle-class voters would choose higher taxes on the rich over cuts in their health and retirement benefits? Yes. Is this an unprovoked, Pearl Harbor-style sneak attack against the wealthiest Americans? Not by a long shot. The only reason this class war seems new is that financial interests have won so many battles in recent years that they thought the war was over. It’s not a sucker punch; it’s rallying the schoolyard to finally stand up to the bully.
The middle class boomed, in large part, with the help of the post-World War II G.I. Bill, providing returning servicemembers relatively easy access to higher education and home mortgages. Those servicemembers joined unions – unions that ensured fairer sharing between employers and labor of the profits, risks, burdens and sacrifices of various industries and entrepreneurial enterprises.
As a result, workplace safety improved greatly, as did wages. For nearly three decades of post-war prosperity, America’s middle-class workers earned wages that could sustain a family – even with just one paycheck.
Lyndon Johnson’s Great Society added Medicare to the social safety net – first established by Franklin Roosevelt – to protect Americans in their twilight years from illness, much as FDR’s Social Security program protected them from poverty.
Even Republican president, Richard Nixon considered a broader health-coverage plan than “ObamaCare.”
Historically, candidates who advocated for the middle class won the lion’s share of that decisive voting bloc during elections. Those votes were gained by policies that measurably helped middle class families stay among other Americans in that prized socioeconomic rank – policies which, in some cases, also helped more Americans become middle class.
The former is still true, but President Reagan began to change the latter. He stoked optimism, convincing Americans that tax breaks to their wealthier neighbors would “trickle down” to their bank accounts, and help them when they, too, became millionaires. He also wed the social and fiscal conservative movements, initiating a bait and switch perfected by President Bush #43. Both dangled issues such as abortion and the so-called “radical gay agenda” to distract middle class voters while Republicans (and some Democrats) slashed regulations and taxes on behalf of corporate America.
Thirty years later, social conservatives are still waiting for constitutional amendments, while corporate and financial interests have cleaned up. CEOs who once made 24 times the average employee’s salary now make nearly 300 times what they pay their workers. Some presidential candidates and (for now, more importantly) the U.S. Supreme Court now consider corporations to have the same rights as individual Americans, along with their deep pockets and limited liability.
Meanwhile, the Medicare prescription drug benefit, with its rules against price negotiation, is as much a drug company hand-out as an individual entitlement. When it came to battling the financial crisis, even President Obama, under the tutelage of Larry Sommers and Tim Geitner, chose banks over homeowners and tax cuts over investment.
Fortunately for the middle class, Obama the candidate has begun to realize what Obama the compromiser seemed to forget: No Americans are successful if most Americans aren’t successful. In the past few years, almost 50 percent of wages were earned by the top 10 percent of earners. The last time that was true was in the 1920s, just before the stock market crash heralded the Great Depression. While historians debate who lost the most in those dark times, few identify any winners.
Still, President Obama’s first instinct was a truce, offering a debt ceiling deal that made liberals retch. House Republicans turned him down cold. That left the president two choices: Unconditional surrender or rally the troops. He chose the latter. Unfortunately for the spirit of compromise, “Fight for a grand bargain where you only put in 75 percent” doesn’t rally the troops. The rhetoric has to be winner take all. Thus entitlement reform has given way to Medi-scare and tax the wealthy has been remessaged as “The Buffett Rule.”
These arguments didn’t work in 1984 or 2004, but times, and candidates, have changed. Social wedge issues have lost their grip, as evidenced by moderates supporting the repeal of Don’t Ask Don’t Tell and chastising a debate audience that booed an openly gay soldier. Homeowners know that TARP didn’t trickle down to their mortgage payments. Polling shows that a tax increase on the wealthy is America’s favorite “revenue-increase” plan. President Obama is no Walter Mondale, channeling President Reagan better than any of the would-be Republican candidates.
Given the political landscape, conservatives would be wise to stop pretending that class warfare is new, and start looking for a truce. Obama the compromiser might still be willing to avoid an all-out war, but the window is narrowing. Once Obama the campaigner hits his stride, he’ll be spoiling for a fight. In 2008 he convinced voters they needed “change.” If he can convince Americans they need dollars in 2012, conservatives will be reaching for their white flags.
