Requesting anonymity, officials in the White House told reporters last week that President Barack Obama would talk about the middle class in his State of the Union address. They added that Senator Marco Rubio, delivering the Republican Party’s response, would talk about the middle class, too. They also said that they expected the president to wear a tie during the speech, and that this morning, the sun would rise. These predictions have been all been borne out by events.
Of course, you didn’t need sources in the White House to know that Obama would talk about the middle class last night, because like most of our elected officials, he talks about the middle class incessantly. “A growing economy that creates good, middle-class jobs — that must be the North Star that guides our efforts,” he said in his speech last night. After the fiscal cliff negotiation, he gave a speech surrounded by about 200 humble, ordinary middle-class folks. He mentioned the middle class 22 times during his first press conference after the election. “I’ve got one mandate,” the president said that day. “I’ve got a mandate to help middle-class families and families that are working hard to try to get into the middle class.”
This is a politically convenient and intellectually lazy way of defining an agenda. If the term “middle class” means anything, it certainly includes people with divergent interests, and a mandate to protect the middle class could be plausibly interpreted to mean whatever you want it to mean.
Who’s middle class? A well-paid worker on the floor of an auto factory is probably the definitive example of a middle-class person. Yet someone who owns a couple of fast-food franchises is likely in the middle class, too, as is a successful self-employed interior designer. A kindergarten teacher, a cop, and a teller at a bank would all be on the list. So might software engineers, whether retired or recently immigrated from South Korea, along with pediatricians, although not plastic surgeons, and public defenders, but not trial lawyers. Even if all of these people make roughly the same amount of money after taxes, their circumstances are different, and it isn’t clear why any one set of policies would help all of them.
For factory workers living in a decaying industrial city like Youngstown, Ohio, whose support helped Obama win that state and the election, protecting the middle class probably means opposing the expansion of free trade. Free trade theoretically strengthens the economy on the whole, but not without creating winners and losers. The winners would be other members of the middle class, particularly well-educated people who don’t have to compete with laborers in foreign countries. Their jobs are safe, and they benefit from buying goods that cost less to produce. For the same reason, free trade also benefits the poor, who might work in agriculture, the service sector, or other industries where competition from foreign labor is minimal.
Empirically demonstrating these theoretical effects is difficult for economists, because international trade is so complex. But however the academy views the topic, there were certainly many labor advocates last night who were dismayed to hear Obama preaching free trade in the holy name of the middle class.
Likewise, consider he president’s proposal to increase the federal minimum wage. Raising the minimum might help poor people join the middle class, but it might harm middle-class workers who were laid off during the recession by rendering them more expensive for employers. A higher minimum would certainly harm those in the upper middle class by forcing them to spend more on lawn care. Raising the national minimum wage would benefit some members of the middle class, but not others.
Those upper-middle-class people with lawns to manicure also benefit disproportionately from the mortgage interest deduction, a lousy piece of public policy that allows people who own homes to deduct the interest they pay on their mortgages when calculating their income tax. Tax deductions and subsidies were among the first issues Obama discussed, and the mortgage income deduction is among the largest tax subsidies, costing the government around $100 billion each year. The very idea of incentivizing homeownership is questionable, as evidenced by the enormous damaged caused by a collapsed housing bubble. Still, it’s unlikely Rubio or Obama would seriously consider eliminating the deduction because it’s so enormously beneficial to a relatively small group of moderately wealthy people.
These examples point to the fact that the middle class as invoked by Obama and Rubio is really a cultural totem. There are indeed simple policies that would raise the standard of living for the overwhelming majority of the population: generous social insurance and the concomitant redistribution of wealth, and they achieve that goal admirably where they’ve been implemented in European countries. Yet nothing could be less “middle class” than helping the middle class this way. Protecting the middle class does not mean protecting the pecuniary interests of people with a moderate level of wealth. It means defending an old-fashioned set of values, such as ownership, entrepreneurship, and family.
That is what is most frustrating about Obama’s decision to make this thing he calls the middle class the theme of his policymaking. Summoning his audience’s half-conscious images of the traditional American family, with a dog, a picket fence, and a single breadwinner, was the wrong way to defend women’s rights in the workplace and comprehensive immigration reform. Similarly, the president deserves credit for discussing climate change at length, but claiming that new energy will lead to middle-class wages was not completely honest or particularly convincing. Defining every policy only in terms of how it can help the middle class keep jobs in the short term stretches the concept to the breaking point, and obviously so.
As long as the president keeps talking about the middle class, a liberal agenda—in fact, a sensible agenda of any stripe—will be on the defensive. Our devotion to that obsolete totem makes bad decisions more likely, as Scott Winship has written. When politicians talk about restoring the middle class, they are merely reminiscing about a past that never really existed. Americans need to abandon that useless phrase and think concretely and imaginatively about what fulfillment and happiness mean in this country in 2013. Doing so would provide a sounder basis for evaluating federal policy.