Published January 20, 2015
According to White House senior adviser Dan Pfeiffer, “middle-class economics” will be the “core theme” of President Obama’s State of the Union speech this evening. Mr. Pfeiffer, appearing on CBS’s Face the Nation, said, “I think we should have a debate in this country between middle-class economics and trickle-down economics and see if we can come to an agreement on the things we can do.” The president intends to do that by raising $320 billion in tax increases over the next 10 years targeting wealthy individuals and big financial institutions in exchange for, among other things, expanding the child care tax credit (not, as some media outlets have reported, a child tax credit) claimed by about 5 million families who use commercial day care. Despite being sold as an effort to help lower- and middle-income families, the number of middle-class people who would truly be helped by Obama’s plans is quite small.
Republicans, if they’re wise, will not allow themselves to get boxed into being seen as simply defenders of the rich. In saying that, it doesn’t mean they should cave in to Obama’s demands to increase taxes on the rich or concede any arguments to the president, who is dogmatically committed to raising taxes even if doing so is economically harmful. (Recall that during a 2008 campaign debate, when asked by Charlie Gibson about his support for raising capital gains taxes even if that caused a net revenue loss to the Treasury, Obama sided with tax increases “for purposes of fairness.”)
But what Republicans need to do much more effectively than they have is to swing round the debate to terrain that is more favorable to them; to shift their attention on how they will help the middle class in ways much more far-reaching than what Mr. Obama has in mind. Fortunately a middle-class agenda exists in the form of Room to Grow: Conservative Reforms for a Limited Government and a Thriving Middle Class. This is a publication of which I was present at the creation and for which I wrote an introductory chapter, so I’m hardly a disinterested commentator on it. (Favorable takes by those who view this at more of a distance can be found here.)
People can decide for themselves the merits of the proposals it offers on tax reform, health care, K-12 and higher education, long-term unemployment, energy and regulatory matters, helping parents balance work and family, and strengthening marriage. But whether they like this agenda or not, we know that (a) the middle class is feeling anxious, insecure, and vulnerable; (b) those feelings are rooted in real circumstances and actual struggles; (c) many European countries now have more social mobility than the United States; and (d) in recent years middle-class adults are more likely to say the Democrats rather than the Republicans favor their interests. Given that the vast majority of Americans–85 percent–consider themselves part of an expanded definition of the middle class, this is a problem for the GOP.
My advice to Republicans at every level is to articulate how a conservative vision of government could speak to today’s public, and especially middle class, concerns–and to then show how such a vision would translate into concrete policy reforms in some of the most important arenas of our public life. That may sound obvious, except for the fact that it hasn’t really been done for some time.
Republicans are beginning to take steps in the right direction. Among the most promising is a plan laid out by Senators Mike Lee and Marco Rubio that would augment the current child tax credit of $1,000 with an additional $2,500 credit, applicable against income taxes and payroll taxes. (The credit would not phase out and would be refundable against income tax and employer and employee payroll tax liability; and it would also eliminate or reform deductions, especially those that disproportionately benefit the privileged few at everyone else’s expense.)
But more needs to be done, and a middle-class agenda has to be a consistent rather than episodic focus for Republicans. If President Obama’s State of the Union address succeeds in convincing Republicans to do this, he’ll actually have done them a favor. Because without it, Republicans are likely to lose the 2016 presidential election.
— Peter Wehner is a Senior Fellow at the Ethics and Public Policy Center