Ryan Streeter
Middle class families are the backbone of the US economy - and as a result they form the territory over which today's ideological war in America is being fought.
No one knows exactly what the middle class is. But if we adopt the general idea that the middle class is what you have when you don't consider the top 20% and bottom 20% of income earners, we can say that families earning between about $30,000 and $100,000 are in the middle class. Now, that's a very wide swath, and amounts in that range do or don't go a long way depending on where you live.
But this is the center of America. It's where you get if you've climbed your way up out of poverty, and it's often where your children start when they go on to become more successful than you. And it's where the war over the future of America is being fought.
Jim Capretta of the Ethics and Public Policy Center and e21 made an important point in a policy forum in Washington yesterday that often gets lost in policy debates but needs to find its way into the open public air. Obamacare can be regarded as the left's attempt to expand social welfare broadly and deeply into the middle class.
The law provides premium discounts on the government health insurance exchanges to families between 130%-400% of poverty. 111 million people fall into this category, or more than a third of the country (and that's a third of the country over and above lower income families who already have Medicaid coverage. And while the Congressional Budget Office estimates that "only" 20 million Americans will come into the program, there's really no way to say that it won't ultimately be 2 or 3 times that.
It is nearly impossible to make the case that the healthcare bill offers anything to economic growth. If anything, as Capretta notes, it will have deleterious effects on the economy, discourage employers from hiring poorer workers, and ultimately consume more income in tax to provide the healthcare coverage for the very people it's taxing. It's a viciously circular policy, certain to further downgrade our economic prospects.
Voters on November 2 were energized in part by Obamacare, but I would venture to guess very few of them see the bill in the terms I'm using here. As I've written before, GOP policy going forward needs to be evaluated through the lens of how it affects families and small businesses. Median household income in America is just north of $50,000. A family of four at that level can expect its new "coverage" to squeeze disposable income out of their pockets at a faster rate than it is able to experience income gains. Families have seen premiums spike since the bill came online and its provisions haven't all fully taken effect.
Republicans often like to avoid using the term "middle class" because it has "class" in it and thus smacks of class warfare. But they need to get over this if only because most Americans think of themselves as middle class (even if they're really too rich to qualify). More importantly, there really is a silent war going on over their future - maybe not in the Lou Dobbs sense, but it's certainly a battle in the Arthur Brooks sense.
I propose that we draw up a list of the policy reforms that would be most likely to free up disposable income in the middle class, encourage saving, and encourage enterprise. The newly energized GOP should make this its core mission.
For starters, as Capretta says, sending a strong message of repeal in this next Congress is needed, even if it can't be done. It will set the stage for full repeal later. And at the same time, we need to offer the full spectrum of policy reforms from savings accounts to pooling to purchasing across state lines to replacing preferential tax treatment with across the board credits for insurance purchase. And so on.
And then along with making the Bush tax rates permanent for everyone, we as Republicans need to get more creative on how we look at sacred cows we have not been willing to touch. For starters in that category, I recommend an honest discussion about the regressive nature of the home mortgage deduction. Harvard's Ed Glaeser makes a good case here for why tea partiers and other conservatives should favor its repeal.
That's just a start. We will be focusing on these issues on The Republican in the weeks to come leading up the beginning of the 112th Congress.
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