Third Way Dispatch: Category Middle Class

What would Reagan Do?

2008-09-25T12:24:00-06:00

On October 28, 1980, the race between President Jimmy Carter and challenger Ronald Reagan was deadlocked. Despite the hostage crisis in Iran and a poor economy, the electorate was not sold on Reagan, and his advisors thought he was more likely to lose than win. But on that night – the night of the only presidential debate – Reagan used his closing statement to frame the remaining week of the campaign. He did so in four words – “are you better off?” A dead heat turned into a blowout.

28 years later America faces economic turmoil at home and strife abroad. Like 1980, it is one of the most uncertain times in American history. And like 1980, we have a presidential race that is essentially even. On one side is John McCain, a Republican who wants to continue the same economic and foreign policies as the current Administration. On the other side is Barack Obama, a captivating newcomer on the political scene, but one who still hasn’t closed the sale with the American public.

Both McCain and Obama have, at different times and contexts, stressed their admiration of Ronald Reagan. McCain calls himself a Reagan Republican. Obama wants to be a transformational president “like Ronald Reagan,” he has said. So with just over a month left in the race, what would Reagan do?

At Third Way, we took a page out of the Gipper’s playbook. When Ronald Reagan asked if Americans were better off, he asked them to make that determination based on their gut and to then render a verdict at the ballot box. Well, we took out our calculators because that’s what we do over here. We combed through dozens of government economic websites and crunched gobs of numbers. We created a typical American, working age family – a family that is employed, has health care, owns their home, sends a kid to college, and puts aside a little bit each month into a retirement account. We looked to see if this family was better off than 8 years ago – especially compared to the previous 8 years.

We found that on 8 of 9 individual measures of economic success and security, the last 8 years failed the Reagan test for the typical American family. On income, when inflation is taken into account, our typical family earned $96 more than they did in 2000. $96! That covers two tanks of gas – if you own a Subaru. Over the course of 8 years, this family would have earned nearly $60,000 more in total if their incomes had risen at the same level as the Clinton years.

What about investments? If our family set $200 aside each month and put it into a retirement account that mirrored the S&P 500, they would have taken a bath. They would have actually done better if they shoved their savings into a freezer. On college, the same degree from the same university cost $7,000 more even counting for inflation in 2008 compared to 2000. And of course there is gas – over the last 8 years, the typical family spent $5,000 more on gas than in the previous eight.

What are the political implications of this report? Well, there are two admitted admirers of Ronald Reagan running for President. It probably makes sense for one of them, to use the presidential debates to issue the Reagan challenge – are you better off. And may the best Reagan admirer win.

Stimulating Prosperity, Not Pessimism

2008-01-09T12:04:00-07:00

Wall Street is off to its worst January in history. The nation’s biggest mortgage lender is rumored to be nearing bankruptcy. Unemployment is on the rise. Every day seems to bring more bad news about the economy, and Americans’ view of the economy is at its worst since 1992.

Bad economic times are red meat to many progressives, who will be jumping on the chance to talk down the economy still further and trumpet a message of neopopulist pessimism.

Progressives should resist that temptation. We shouldn’t be trying to convince Americans that we’re on the brink of a new Depression, or that the middle-class is teetering on the precipice of poverty. Rather, we should be working to persuade Americans that we understand what it takes to get the economy moving forward in a way that benefits average families.

Our new memo offers our take on the elements of a middle-class economic package that will both provide the economy the short-term boost it needs and put the middle class on solid, long-term footing. We propose:

Short-term middle class tax cuts to boost consumer spending and restart the housing market;

Targeted help to families who’ve hit a rough patch through no fault of their own;

Investment for new investment by businesses, including small businesses, to keep the economy growing;

Permanent middle-class tax cuts and new policies to create middle-class wealth and help families navigate the new rules of economy; and

Long-term infrastructure investments in schools, highways and broadband technology.

Our package is not about rescuing the middle class, progressives should be wary of portraying the middle class as victims. Rather, our message should be about re-orienting government policy toward ensuring future middle-class prosperity.

The Politics of the Bush Tax Cuts

2007-07-27T09:03:00-06:00

In today’s LA Times, I’m quoted – accurately and fairly – commenting on the Bush tax cuts and saying that the big challenge for Democrats in explaining why they don’t want to extend the cuts is to respond to the charge that they support the biggest tax increase in history.

I do believe that this is the challenge facing Democrats. Republicans only have one dusty old playbook, and on page one is their equivalent of the run off-tackle: charge the Democrats with engineering “the biggest tax increase in history.” It’s an easy play to run, and it often yields big results with little risk. With the Bush tax cuts set to expire in 2010, you don’t have to be Heath Shuler to know that play is coming.

But just to be clear: I view this as a challenge that Democrats must find a way to meet. The Bush tax cuts were ruinous and grossly irresponsible, and they must be repealed in significant part.

The way to meet the challenge is to put the question in values terms: “It’s quite simple – Republicans believe that the rich are the engines of the economy, and so they believe that making the rich a lot richer drives economic growth. Democrats believe that the middle class is the engine of the economy. If anyone should get tax relief, it’s the middle class.”

To torture the metaphor further, I am hoping that the Democrats will respond to the Republican play with a very large linebacker who will fill the gap.

Lessons from a Loser

2007-07-24T10:14:00-06:00

I grew up in Philadelphia and also happen to be a lifelong Red Sox fan, so I know a little bit about losing. In Philadelphia, losing is handed down from generation to generation. I remember the day some 30 years ago when my father bestowed upon me four single World Series tickets from 1964 – games 1 and 2 and 6 and 7 (if necessary) for the Phillies. Tickets issued when they had a 6 ½ game lead with 12 to go. Tickets issued with Jim Bunning and Chris Short leading the rotation and Richie (“call me Dick”) Allen, Johnny Callison and Tony Taylor anchoring an offensive juggernaut. Tickets issued before a rookie second baseman named Joe Morgan blooped a game-winning single, before a steal of home stole another game, before they dropped 10 of 12. No, games 6 and 7 weren’t necessary and neither were games 1 and 2. The Cardinals won the pennant that year, defeating Jim Bouton’s New York Yankees.

But with losing comes optimism. I believed in the Phillies every year as well as my adopted Red Sox. I believed during the “you gotta believe” Tug McGraw years and the “Yes we can” Dave Cash years. I believed when Dave Henderson took Donnie Moore over the fence only to see Mookie Wilson ground one through the legs in 1986. And occasionally that belief is rewarded. The 1980 Phillies won the World Series in improbable fashion (I cried). The 2004 Red Sox came from 0-3 to sweep four from the Yanks and deliver a world championship (I matured to gloating). Good things do happen.

Maybe that is why I still believe we can someday pass major health care reform. But a new poll out by Democracy Corps (who normally do great, great work) is full of ominous warning signs. Signs I’ve heard before in sports (“it’s just a little stiffness in the elbow) and signs I’ve heard even more in politics (“mission accomplished”).

Nearly every poll response shows deep ambivalence among the public for major health care reform.

82% are satisfied with the quality of health care they receive – a great number unless you are pushing major reform.
91% say they currently have health insurance – again, a great number unless you are trying to convince people they have a health care crisis on their hands.
Only 24% say the health care system has so many problems it needs an overhaul.
By a 52-47% margin, Americans prefer incremental reforms to bold steps.
By a 58-36% margin, Americans believe the best way to lower cost is through private sector competition rather than government intervention.
The best news for reform is that the plan implemented by Governor’s Romney and Schwarzenegger are at least initially positive.

However, the message memo from Democracy Corps paints a very different picture of the political environment for reform. They call for Democrats to press their advantage and make major reform a central campaign pillar. “Country is ready for the universal health care debate,” they trumpet among other exhortations.

But this rosy scenario is the last thing health care reformers ought to hear. The reality is that progressives need to treat health care with the same care and trepidation as immigration reform. They must realize that the country is deeply ambivalent about reform and they must answer those ambivalences. They must quickly understand that as soon as the real health care debate begins – not the Youtube version – they will find a live hand grenade in their palms and the absence of a pin. That doesn’t mean they should avoid health care reform, it means they must march into the debate with eyes wide open. The alternative is 1994 all over again.

Stan Greenberg, Anna Greenberg and James Carville are among the smartest in the business. How could they have this interpretation of their own poll? I know – they must be Red Sox and Phillies fans.

(Author’s note: While I am a Red Sox fan, that is the only non-Philly team I support. So don’t give me the Celtics and Patriots line about winning a bunch of championships. I hate them.)

Oh…Canada?

2007-07-09T11:50:00-06:00

Two weeks after hitting theaters, Michael Moore’s new movie on the American health care system, Sicko, stands among the country’s top 10 box office releases (way behind the Transformers but ahead of Shrek III). Not bad for a summer flick with no explosions or Bruce Willis.

For advocates of major health care reform, this uptick in public interest is yet more evidence that times are ripe for a new discussion about the way we do health care in this country.

After Iraq, health care is once again the number one topic of concern for potential voters. Polls show growing public discontent with the current system and a seeming eagerness for change. A March 2007 CBS/New York Times poll, for example, found 59% of Americans to be “very dissatisfied” with health care costs in general, and 52% to be “very concerned” about future costs. Numerous other polls show strong majorities in favor of more government involvement in regulating health care costs.

Optimists for major reform may say the only big question left is this: Canada or Britain?

Or maybe not.

A closer look at public opinion on health care shows continuing deep ambivalence about major reform and a reluctance to make big tradeoffs—or even smaller ones—to guarantee universal coverage.

As progressives, we believe that the nation’s health care system is overdue for a change. Rising health care costs are a burden on business and a drain on middle-class paychecks. No one in this country should be without some sort of basic coverage.

But we also think progressives should be mindful of the lingering anxieties of a public that is skeptical of government’s ability to effect truly meaningful change. Our reading of current public opinion distills down to three observations:

Americans with insurance don’t want to give up what they’ve got.

According to a 2006 CBS/Kaiser Family Foundation poll, only 5% of insured Americans (and that’s the vast majority) are “very dissatisfied” with their current coverage. Large majorities are satisfied both with their current coverage and the quality of their care.

While small majorities say they favor “national health insurance,” these majorities dry up quickly in the face of specific tradeoffs. The same 2006 CBS/Kaiser poll found, for example, that while 56% of Americans say they would support a “universal health insurance program… like Medicare,” that support dropped to 35% if it meant higher taxes or premiums, 26% if it meant limiting the choice of doctors, and only 18% if it meant losing coverage for some treatments.

What this means for progressives is that any idea for major reform can’t threaten quality or choice—the two things Americans like about the current system. And progressives should probably avoid terms such as “shared sacrifice” when talking about implementing reform.

Americans might want more government involvement, but they are skeptical of a government takeover.

A February 2007 CBS/NY Times poll found that only 47% of Americans believe government would be better than the private sector at holding down health care costs—hardly a ringing vote of confidence. Similar polls dating back to 2000 find government and the private sector either neck-in-neck or the private sector slightly ahead on the question of who is trusted more on health care.

The lesson here is that progressives should not assume that the public is ready to embrace a government solution without clear and convincing evidence that it can truly do a better job. With public confidence in government at all-time lows, progressives have a significant hill to climb in convincing the public that a government-based solution is the answer.

Americans misperceive the nature of rising health care costs and are looking for a “bad guy” to blame.

Health care wonks know that the real reasons for medical inflation are manifold—demographic changes such as the increasing number of elderly patients and the growing prevalence of chronic diseases, expensive new treatments based on the latest technologies, cross-subsidization of the uninsured, and so on.

The public has a much simpler explanation: “high profits” enjoyed by insurance companies, doctors and hospitals who “charge too much.” Who’s NOT responsible? Seniors, patients in general, the uninsured and the poor.

What’s happening here is that in the face of an immensely complex problem that is difficult for even experts to understand, laypeople revert to value judgments about whom to blame. Thus, while the growing number of elderly patients may indeed contribute to rising costs, the public is reluctant to hold “deserving” seniors responsible. This also explains why cost-cutting solutions cast in morally neutral terms—take health IT or chronic disease management as examples—never seem to catch fire with the public; they don’t address what the public believes is the “real” problem with the system.

This doesn’t mean progressives should start bashing the health care industry. But it does mean that progressives should consider recasting sensible solutions such as health IT or chronic disease management in the context of a more emotional or value-laden message. Health IT, for example, is not only more efficient; it can help root out waste, poor management and the occasional bad actor in the system. It also means progressives have a long way to go in educating the public about what’s really wrong with health care.

Major health reform is and should be a critical goal for progressives. But for any significant proposal to succeed, progressives must understand what the public wants as much as what the system needs.

Research for this posting was also conducted by Senior Policy Advisor Scott Winship.

A New Middle-Class Compact

2007-06-14T09:33:00-06:00

Earlier this year, we released a paper called The New Rules Economy, in which we argued that middle class anxiety is rooted in the uncertainty of change.

And by change, we really mean the broad structural changes that our occurring in our economy due to advances in technology and accelerating globalization. In our narrative, we see the middle class as being forced to figure out, cope, and prosper on their own amidst these vast changes. Conservatives tell the middle class not to worry and that they should put their faith in the markets to sort out winners and losers. Many progressives tell them the opposite – to worry. They warn them of the dire consequences of change and promise to turn back the clock or cushion the blow.

Today, we released a strategy memo, A New Middle Class Compact, that offers a series of ideas that address change and help average people succeed. This memo, based on our New Rules narrative, is about steering change and not being steered by it. It is about making globalization work for America and Americans.

The ideas in this compact are intentionally medium-sized, because we sought to create an agenda that progressives could unite behind in Congress and realistically have a chance to move forward in the near term. We also wanted the ideas to be illustrative of the narrative and framework that we propose. We hope you’ll take a look.