Created 2/28/1996
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The Anxious Class and the Right

Brad DeLong and David Levine

February 28, 1996

An odd thing has begun to happen since Pat Buchanan began to win pluralities and near-pluralities in Republican primaries. Republican politicians have discovered that the real incomes of people in the middle of America's income distribution today are no higher than the real incomes of people in the middle of America's income distribution a generation ago.

House Majority leader Richard Armey, in what newpaper reports described as a "major economic address," spoke of how "families today are... squeezed between falling incomes and rising taxes." House Speaker Newt Gingrich said that "economic anxiety is a reality, and we [Republicans] must be prepared to show that we recognize that reality," and quoted statistics showing that "hourly wages for workers with high school educations fell between 1979 and 1994." Senate Majority Leader Robert Dole said that while "these are the best of times for many who work on Wall Street... the facts leave no doubt they are the worst of times for many who work on Main Street," and went on to talk about corporations that report "record profits" while imposing "record layoffs" on their workers.

This is odd for a number of reasons.

The first reason is that for more than a decade Republican politicians like Armey, Gingrich, and Dole--and tame ideologues like Martin Anderson, Paul Gigot, Marvin Kosters, Alan Reynolds,and their ilk--have spilled a lot of ink denying that middle-income Americans have failed to share in the economic growth of the 1980s; denying that the Reagan tax cuts of the early 1980s were a step in tilting the distribution of income and wealth in the direction of the rich; denying that the Reagan-era NLRB's giving of a green light to union-busting lowered the bargaining power--and wages--of Americans working in manufacturing; denying that the budget deficits of the 1980s robbed America of the real savings and investment that boosts productivity and wages.

It is nice that Republican political leaders have finally made their "rendesvous with reality", to quote the phrase that first Reagan CEA chair Murray Weidenbaum used to title his not-very-complimentary book about the making of Reagan's economic policies. It will be amusing to watch with what excuses and how fast the tame ideologues manage to turn their intellectual somersaults to get back in synch with their politicall masters. But it is distinctly odd that this somersault has happened so suddenly and rapidly.

The second reason that this is odd is that it comes with no mention of the alternative Clinton program for dealing with America's stagnant middle-class incomes. This was, after all, the diagnosis of the American economy's ills that President Clinton won election on in 1992. And in early 1993 President Clinton had a multi-pronged program for dealing with income stagnation: deficit reduction, GATT, and NAFTA to boost private sector profitability and production by increasing America's access to markets and to capital for productive investment; a powerful program of public investment to provide the technological and physical infrastructure needed for a growing economy; a powerful program of human capital investment to make it much easier for workers to acquire the skills and experiences they needed to become more productive; higher taxes on the rich--who could certainly afford to pay, given income increases in the 1980s--and higher taxes on polluters; expansion of the Earned Income Tax Credit [EITC] and reform of the welfare system to together make going to work pay for all Americans; health care reform to eliminate one of the principal sources of distress affecting what Labor Secretary Reich calls the "anxious class".

Now most of this agenda went down in flames in 1993 and 1994, and most of it went down in flames because Dole, Gingrich, and Armey played the within-Washington political game skillfully for their partisan side--which was probably not so smart as far as the public well-being is concerned. Deficit reduction, GATT, NAFTA, the EITC expansion to make work pay, and a number of other small initiatives made it through. But taxes on pollution?--shot down by a skillful lobbying campaign conducted by big oil companies. Public investment? --not enough money to do deficit reduction and public investment as well in the absence of the BTU tax. Human capital investment?--shot down by Republicans. Clinton's welfare reform proposal?--ignored by Congress in 1994. Health care reform?--we all know what happened to health care reform.

Now you do not have to think that Clinton's administration is perfect in order to see that this is a coherent program to address the economic ills facing America's struggling middle class--a much more coherent program than the warmed-over rhetoric the Republicans who have just recognized the problem offer--and that most of this program was shot down by Republicans who believed that gridlock in 1993 and 1994 was to their partisan advantage. Clinton's administration has been far from perfect. What can you say about a health care reform task force headed by someone who somehow never recognizes that his task force's work is a waste of time unless Senators and Representatives are willing to vote for the plan he puts forward? What can you say about the stomach-turning White House endorsement of the Senate welfare-reform bill of late 1995?--which is best seen as a cynical attempt to make heroes of the current crop of state governors by giving them lots of federal money to spend as they wish, at the price of slashing the safety net so far as to create hundreds of thousands of homeless children early in the next decade.

The third odd thing--besides the suddenness and completeness of the Republican turnaround and the lack of Republican contact with the only political agenda proposed in the past twenty years to deal with middle-income stagnation--is that coverage of this new strain in Republican economic rhetoric also makes no reference to the past. There are occasional throwaway lines in news analysis pieces of how maybe Robert Reich is now writing speeches for Bob Dole, and occasional references to how economic insecurity was a theme on which Clinton ran for the presidency in 1992. But the context is missing.

And tracing this context is critically important to anyone's understanding of American politics. For example, the two of us distrust Newt Gingrich in large part because we recall his speeches in support of the 1981 Reagan tax cuts, his assurances then that they would not cause large government deficits, and his early 1980s proposal to put large artificial mirrors in outer space as a way of reducing the costs of night-time street lighting. We remember his sabotage of George Bush's deficit-reduction deal of 1990--an act of sabotage that ultimately produced a 1990 deficit-reduction deal much less to Newt Gingrich's liking as a matter of substantive policy, but that also strengthened Gingrich's personal position on the Republican right. Ideas, proposals, policies, and people have histories that are very relevant to understanding and interpreting what is going on in American politics today.

Yet this context is almost totally missing from the media's coverage of American politics--it has certainly been missing from coverage of the Republican turnaround in economic rhetoric. Perhaps tracking down and inserting the context is too difficult for most reporters (if so, a hint: on economic policy, at least, dial 1-202-797-6000 and ask for Charles Schultze, Henry Aaron, or Robert Reischauer: they will tell you not only what they think but what other people think and why, and they will tell it to you without the evasions and falsehoods purveyed by those who have rented their souls out in the hope of becoming the next Assistant Secretary for Paperflow). But whatever the cause, the lack of historical and institutional context in media coverage makes American politics nearly impossible for anyone who has not been closely following it for decades to even begin to understand.


Created 2/28/1996
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Brad DeLong's Home Page

Associate Professor of Economics Brad De Long, 601 Evans
University of California at Berkeley; Berkeley, CA 94720-3880
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