It is widely understood that the American middle class has fuzzy boundaries. Many relatively poor and relatively rich people identify as middle-class. In an ambitious 2008 survey, the Pew Research Center found that an extraordinary 53 percent of Americans described themselves as middle class. Yet it’s also clear that within this diverse, sprawling middle class, there are some households that are better off than others. College-educated households, for example, have largely been spared the scarring effects of unemployment and underwater mortgages. And upper-middle-income households, a group that overlaps fairly closely with the college-educated middle class, have seen fairly healthy improvements in their standard of living in recent years. This is a group that has a great deal, and a great deal to lose.
Advertisement
In recent years, a number of progressive historians and political scientists have been making the case that American political life is dominated by the ultra-rich. The recent obsession with the billionaire Koch brothers is only the most vivid example of this phenomenon. In Winner-Take-All Politics, the political scientists Jacob Hacker and Paul Pierson link the evolution of the U.S. economy from the late 1970s through the present to the rising political influence of the top 1 percent of the income distribution. In their view, key members of this group have actively sought to deregulate the economy, to undermine the power of organized labor, and to advance regressive tax policies. The end result, they argue, has been a policy environment hostile to the interests of the middle class.
Naturally, conservatives will object to Hacker and Pierson’s take on the decades-long effort to free the American economy, which we see as crucial to American prosperity. In the absence of deregulation, the declining influence of organized labor, and a tax policy designed to spur work, conservatives generally believe that the country as a whole, including the working and middle classes, would have fared far worse in a more competitive global economy. Indeed, if there is a social group that has been a barrier to good public policy, one can make a strong case that it isn’t the ultra-rich but the upper middle class, a group we’ll loosely define as households earning between $100,000 and $250,000.
There is no denying that Americans in the top 0.01 percent of the income distribution have more potential for political influence than those earning $150,000. This influence is channeled through campaign donations and also through charitable giving, particularly to nonprofits devoted to shaping the ideological environment. Just as the Koch brothers have donated to various libertarian causes, their opposite numbers at the Ford Foundation, Atlantic Philanthropies, the Soros Foundations, elite research universities, and countless other lesser-known organizations have devoted themselves to providing intellectual support for the expansion of the welfare state. It is very difficult to tease out which side has had the most cumulative influence over time.
What we can say with confidence is that in any given election the top 0.01 percent has less collective political weight than the upper middle class, simply by virtue of the fact that there are more voters in the upper middle class. These voters tend to be more active as volunteers and as small donors than other Americans, and they are heavily concentrated in professions — media, the upper echelons of the public sector, higher education — that further magnify their influence. In Red State, Blue State, Rich State, Poor State, Columbia University statistician Andrew Gelman and his colleagues found that Republicans in heavily Republican states tend to win elections with a coalition of middle-class and upper-income voters, while Democrats in heavily Democratic states tend to win elections with a coalition of voters drawn from all income groups. In effect, upper-middle-class voters are always represented in the winning coalitions, regardless of region.
Voters in households earning more than $100,000 constituted 26 percent of the 2008 electorate. By any standard, President Obama performed very well with this bloc in 2008. In the 2010 House elections, in contrast, voters in over-$200,000 households chose Republicans over Democrats by a margin of 64 to 34 percent, while $100,000 to $200,000 households favored Republicans by a more modest 56 to 43 percent margin. The president’s political advisers are keenly aware of the fact that Democrats need to improve their performance with these voters or face defeat in 2012. This helps explain the profound irrationality of the Obama administration’s approach to key public-policy questions.
Share the wealth - that's what Americans shouted when they voted in Obama and the ultra left crowd into Washington.
So don't blame politicians for "tricking" Americans into wanting all the benefits of being a super power without any of the work.
Sadly a lot of pain and suffering must convince Americans that paying no taxes and expecting a government check will doom America.
I don't think Americans are over this fad yet and probably Obama will easily sail into a second term while the GOP runs around dispensing bitter medicine for a terminally ill patient.
All we can do in the mean time is try to profit from America's demise - gold, silver and other commodities will become so expensive that our lazy lifestyles can't afford them - that would be the sign that America has bottomed out.
Sad to say but look to profit from citizens who get to vote on a trillion dollar country with a 25 cent mind..........
1st - The idea that there is a huge middle-class is a myth. There are the very poor, the slightly-less-poor, the middle-class, the sort-of-rich, and the uber-rich. And the very poor and slightly-less-poor aren't really affected by the fluctuations in the market or fluctuations in economic policy because, frankly, no matter what fluctuations may come these people are already poor and remain so. They don't go on vacations anyway, and they don't own brand new cars, they rent their homes, and they can't afford even the cheapest gas, bread, eggs or milk without feeling a sting. Plus, they don't pay income taxes and they have no money to invest because they live paycheck to paycheck and still don't get their bills paid on time every month. And not unnecessary bills like internet (which is almost a necessity these days, anyway) but necessary bills like the $500 rent for their one bedroom apartment.
Not that I would expect partisans to agree with that. To do so would be to blow their cover.
2nd - All political life ever, not just in modern America, has been dominated by the uber-rich. You are making the mistake of believing that voting matters and that the parties are fundementally different, neither of which is true. Before the citizens even get a chance to vote, the uber-rich Republicans AND Democrats have hijacked the political process. Only the uber-rich are capable of running in the first place and only the uber-rich rise to the top of their political field.
Partisans are the problem. The Republicans and Democrats have hijacked our process. The only reason most people identify with one or the other is because people beieve those are their only viable choices. Most of America are not political beings. They don't vote and they don't carry partisan membership cards. They don't trust the political process and they don't trust the politicians. They don't trust the banks, the corporations, the oil ocmpanies, the unions, the insurance companies, or the government.
Most Americans, even if they do turn up to vote on Election Day (which most don't) are not represented by the political class which is, in fact, bought and paid for by the uber-rich.
You lost me when you started using the language of the left - reduce "tax expenditures" - to describe Ryan's plan to raise taxes by cuttind deductions. It is not a "tax expenditure" to let me keep what I have made. Otherwise, that portion of my income that I am allowed to keep is merely a tax expenditure that the state graciously allows me to keep... for now.
The left uses occult definitions, cute little non-threatening euphemisms, as a means of framing arguments and deceving ordinary people about the effect of their plans. They dole out some sugar to hide the bitter taste, and you should not refer to what they're selling by the terms they use to sell it.
On the merits, it's a wonderful idea to tax the $100k - $250k bracket a lot more to close up the deficit. What a wonderful plan for the Republicans - it can't be framed as an attack on the poor. But, as you note, as this demographic goes, so go the elections. Taking a good hard whack at this class - which is already in an upper tax bracket - will likely drive them into the arms of whichever party did not do the whacking.
To Jim_ and the author, please correct me if I'm wrong, but I understood the term "tax expenditure" to mean a net flow of money from the Treasury to the tax filer, so that the filer in effect has a negative tax rate. Refundable credits are an example, so that the filer gets the cash even it is in excess of any tax withheld. It is use of the tax code to disguise and carry out a redistribution of wealth - hence it is indeed a euphemism. But credits and deductions that are claimed while at least some taxes are paid to the Treasury are not "tax expenditures". Can we have some clarity here?
Agreed, with respect to referring to "tax expenditures." There is no real money spent, nor is it necessarily true that revenues would be realized by removing such "expenditures." (If they were real expenditures, then not spending the money would be 100% realized!)
I'm not sure what this article is trying to get at. If the point is "we need to tax the not-too-rich more" to pay for excessive spending, I'm afraid I'm unpersuaded.
If the point is that pandering politicians tend to advocate ill-advised tax policies, that is nothing new.
The real tax solution is a simplified tax system (preferably flat, but that's wishful thinking) with no deductions. The important thing is that the tax burden must be shared, otherwise it invites the pandering that skews tax policy.
"...but it reinforces rather than debunks the right’s fundamental view of the tax question — that public services aren’t worth paying for..."
When the structure of governance is such that one subset of the population is the nearly exclusive beneficiary of "public services" paid for nearly exclusively by an altogether different subset, then it's true that those public services aren't worth paying for--at least not for those compelled to pay for them.
@HenryMiller: Who was it that warned us that once one portion of the population figures out how to vote itself stuff, our form of government would effectively be dead?
I can understand how the college educated may have been less likely to receive a sub-prime mortgage. Can someone elaborate on why they would be less likely to be underwater on their mortgage?
Sub-prime mortgages were given to people who didn't pay their bills. I would suspect college-educated people were more disciplined and would be less likely to use their property as an ATM. It will be interesting to see what happens when "underserved" groups start complaining about redlining or discrimination. Will there be another attempt to close the housing gap?
"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship."
Uncertainly attributed to an Eighteenth Century guy named Alexander Tytler, but it's appeared in various forms by different people since.
At a guess, those eligible for government-subsidised sub-prime mortgages likely made smaller down-payments on their houses, thus have bigger mortgages consequently more likely to exceed the declining value of the house.
It is amusing to see this President flounder around, trying to figure out how to pay for his agenda of ever-expanding government. The truth is, he cannot. Sooner or later the chickens are coming home to roost.
Still, at this time, few people realize that we are in an existential crisis, one that will have profound effects if the culmination of this crisis is as I fear. The President would refer to those effects as "transformative." I see them as destructive - of our economy, our way of life, our liberties.
There will be no middle or upper middle class if Obama gets his way. We will all be poor - except for the favored cronies and syncophants of the Democrats.
If we replaced income tax with a national sales tax, we would no longer get to complain about half the country not paying income tax.
We'd all contribute. And if you want lower taxes, you simply don't buy as much. No loopholes. No legions of Mordor-like accountants who exist only to translate arcane tax law. They'd all have to go out and produce something real. In jobs generated by a demand in the marketplace, rather than battleship armor-thick tax code books.
kartiste - "tax expenditures" refers to tax credits and tax deductions. FWIW, very few people making $100k or more qualify for tax credits; or to the extent they do it's a token hundred bucks for child care credit or something similar - which I'd be fine with doing away with. That isn't going to save the treasury much money. In reality, getting rid of "tax expenditures" for people making over $100k means eliminating widely available deductions, like home mortgage interest, business expense deductions for the self-employed, and getting rid of the cap on social security 'contributions'. This would be a killer. For instance, losing the home mortgage interest deduction would cost me around $10k per year. I don't live in a palace but losing that deduction will boost my marginal income by $30k, and that increase will be taxed at a high marginal rate, so my wife, kids and I will basically get punished (for owning our faaabulously crummy townhouse in a high cost of living area).
If this kind of class warfare is what Republicans have come to, then I might as well vote Democrat and support the people who are at least occasionally honest about their desire to steal as much of my earnings as possible. I used to think the "going Galt" thing was sort of a joke but if even Republicans are talking about punishing highly productive people in this way, then maybe it's time to be less productive, work a 30 hour week in some low cost of living area, and spend more time with my family.
"When you spread the wealth around it’s good for everybody." BHO
"It's the economy stup*d"...no question.
"It's the redistribution of wealth stupid" or "its theft stupid" or "it's socialism stupid" unfortunately will not get any traction with the resentful herd who elected the President in Thief in the first place!!!
Jim_: The Simpson Bowles plan regarding tax reform is similar to Ryan's. It calls for reduced marginal tax rates with three brackets (12%, 22%, 28%), along with the elimination of most tax expenditures (deductions, exemptions, credits). Perhaps your loss of the tax deduction for your mortgage would be offset partly by a reduction in tax rate.
Regarding "tax expenditures." In my mind, tax rates and deductions really need to be considered separately. To me, actual taxation is given by the rates, while the deductions are really subsidies that are administered through the tax code. And I think it is thus quite appropriate to refer to them as "expenditures." Looking at taxes this way lets us see that 1. our tax rates are higher than we thought and 2. many of us are on welfare. And it is healthy for us to realize this.
That deductions are subsidies is particularly obvious with "targeted tax cuts" like giving $8,000 to anyone who buys a hybrid car. There is no way that this is a tax cut. Similarly, the home mortgage interest deduction is a subsidy, one that goes primarily to the relatively affluent.
TycheSD, I can't say for certain if a national sales tax could replace the income tax and maintain the government. About half the adult households in this country essentially pay no income tax. I imagine a few cents on every dollar of purchase from Walmart, etc. would mean a considerable sum of money.
Also, I don't think the government's current level of spending should BE maintained.
