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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
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.
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Associate Professor of Economics Brad De
Long, 601 Evans
University of California at Berkeley; Berkeley, CA 94720-3880
(510) 643-4027 phone (510) 642-6615 fax