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| COURTING THE MIDDLE CLASS | |
 September 18, 2000 |
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Presidential candidates pursue the growing number of middle class voters. After stump speeches from both candidates, Margaret Warner leads a discussion.
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Welcome, gentlemen. First of all, Jared Bernstein, starting with you, let's be clear about this group we're talking about. Other than the fact they're making roughly $30,000 to $70,000 a year, fill in the demographic picture for us. With who are these Americans that now make up this middle class? |
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| Who is the American middle class? | |||||||||||
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MARGARET WARNER: And Mickey Levy, what else would you add to that picture? For instance, what's their education level? What do they do for a living? Do both parents work generally?
MARGARET WARNER: Which is, of course, while we're discussing it right now. Jared Bernstein, back to you. So even though their median income has been rising, even though they may own more stocks, still they're telling pollsters they're anxious. Why? Do they have reason to be?
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| Underlying anxieties | |||||||||||
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MARGARET WARNER: Mickey Levy, do you think they have reason to feel anxious, stressed?
MARGARET WARNER: All right. Let me get our two guests in Washington here. Ruy Teixeira, in this same Pew poll, just following up on what Mickey Levy said, 64 percent of the voters or the respondents, and this was a large poll, said, "I'm generally satisfied with the way things are going for me financially." How do you square that with the anxiety they say they have?
MARGARET WARNER: Before we get totally into the politics, let's stay with this group for a little more. David Frum, do you think this middle class today has more reason to feel anxious, has more to feel anxious about their counterparts did say in the 60's or 70's or even 80's?
MARGARET WARNER: Ruy Teixeira, do you see this as stoked by politics?
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| Better opportunities, but longer hours | |||||||||||
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MARGARET WARNER: Jared Bernstein, if we take the three things that the people in the Pew poll said they were most anxious about, their own long-term retirement, sending kids to college, or I think it was child care, are those problems that they wouldn't have necessarily felt say in the 70's as greatly?
MARGARET WARNER: We're all living longer. JARED BERNSTEIN: We're living longer, that's true. We have got more longevity. That's a very positive thing, but this has, of course, given rise to the contentious debate over the future of Social Security. Here again, I think the Gore plan, which focuses on increasing retirement savings, like IRA's for middle and low-income families, will be a boost in that regard. MARGARET WARNER: And also, Mickey Levy, it strikes me that now I think 67 percent of high school seniors are going to college. Do a lot of middle class parents really now feel their... they have to get their kids to college, in a way that maybe they didn't feel in the 60's or 70's? MICKEY LEVY: Well, look, they see the financial advantage of it. Most studies show that getting an education, getting specific skills pays off during one's working career. So there's a financial incentive to send your kids to college. Look, I think the issue goes way beyond economics. And it gets to the issue of the role of government. And you can conduct a survey and find out that people have a certain level of anxiety. Well, most people have a certain level of anxiety. What's the proper role of government? Should the government come in and calm people's nerves down, subsidize certain drugs that make people calmer? I mean, it gets to the issue of what's the role of government? How do we want to allocate national resources? And once you get outside of that box and get it into politics, then the politicians take over and try to twist things. It's almost as if the politicians, and here I'll point out Vice President Gore, it's almost as if he conducted a focus group, asked people what their most anxious moments were, and then designed public policies to almost buy votes. I know that's very, very cynical, but I don't think... I think what we really need is policies that address the long-term needs of the nation and not give into kind of the populist concerns about anxiety. And here I would add, the journalists above all feed into creating anxious moments. MARGARET WARNER: So Ruy Teixeira, if you're a working, middle-class couple watching this show right now, and you're in that income group trying to decide who to vote for. Should you take the broad philosophical approach that Mickey Levy is talking about, or should you get out a sharpened pencil and try to figure out now, how many kids do I have and which break works for me? |
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| Broad tax cuts vs. targeted tax cuts | |||||||||||
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MARGARET WARNER: Let me just explain briefly, so we don't get into the details of Bush and Gore, but Bush is essentially saying, as he just said in our tape, look, I'm going to give you some broad tax cuts and you decide how you want to spend it. I'll increase, you can put more money into education savings, but you don't have to come me to with a college bill to get your tax deduction. And, of course, he has a much broader tax cut and Gore's is more targeted. That's what I meant about broader philosophical differences. RUY TEIXEIRA: Right. I think that the problem with that - that approach - if we're looking at how it plays politically - is at this point most of the voters that we're talking about in this key working family demographic have shifted from a view that might have characterized them in the 70's and 80's - maybe even early 90's - get government off my back, to a view that more accurately characterizes, how can I get government on my side - their still a little bit suspicious, but they're really willing to listen to what politicians have to say, so - you know - for example - if you look at this issue of taking a tax cut, giving the money back to people, you decide how you spend it. The problem for the Republican - this question has been asked over and over again, would you rather get a big tax cut, or would you rather have the government take that money and put it into Social Security, Medicare, health care, education, and so on, and by an overwhelming majority, they continue to say they want the government to invest in these programs, so I think this is a very difficult problem for the Republicans. That philosophical approach that Mickey Levy is talking about isn't selling very well among these voters, who say let's not be populist, but the fact of the matter is populism is working, and Gore has the lead to show for it.
MARGARET WARNER: All right. And on that note we're leave it. Thank you gentlemen, four, very much. |
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MARGARET
WARNER: This fight for middle class voters comes at a time of continued
prosperity. The current economic expansion, now in its tenth year, is
the longest in American history. The unemployment rate stands at just
4.1 percent, near a 30-year low. And the median family income, after
sliding in early 1990's, has rebounded to an estimated $47,000 last
year. Yet a new poll by the Pew Research Center for the People and the
Press found considerable economic anxiety among voters, including those
in the $30,000- $70,000 family income group. 79 percent of voters said
they were concerned about not having enough money for retirement. 77
percent were concerned about not being able to put their children through
college, and 82 percent were concerned about being unable to afford
health care for a sick family member. 
We
explore the economics and politics of the middle class vote now with
Jared Bernstein, an economist with the Economic Policy Institute and
co-author of the recently published study, The State of Working America;
Ruy Teixera, a senior fellow with the Century Foundation, and author
of America's Forgotten Majority: Why the White Working Class still
Matters; Mickey Levy, chief economist at the Bank of America; and
David Frum, author and senior fellow at the Manhattan Institute. 
JARED
BERNSTEIN: Well, the conventional way that economists explore the question
is to divide American families into five equally-sized groups, based
on their income. So we have the lowest fifth, the middle fifth, the
top fifth. As you've mentioned, the middle fifth covers a range roughly
from $30,000, to $55,000, $60,000. Their median stands at around $47,000,
probably now closer to $48,000 or $49,000. On an hourly base basis,
the median wage is in the $12 to $13 an hour range. So these are families
that depend on their paycheck in order to make ends meet, that is, they
may hold a few stocks - a few shares of stock, but clearly it's their
earnings that determine their well being. That's why much of what we're
hearing discussed in this campaign is focused on working families. 
MICKEY
LEVY: I don't think you can generalize. Sometimes you have multiple-earning
households. Many are single worker households. They come in all different
age groups. One thing I would point out is that if the median household,
their home ownership ratios have gone up in the last 10 years, more
of them own stock and mutual funds. And so I don't think you can - I
really don't think you can generalize. I think the concept of the middle
class, particularly now, has more political meaning than economic meaning.
JARED
BERNSTEIN: I think one of the keys is something you mentioned a second
ago - having to do with how much they're working. One of the things
we know about middle income families is that, in fact, the vast majority
have two earners, and if you look at the average number of hours that
a middle income, married couple, family with children worked last year,
it was about 3800 hours a year, that is, if you pool or combine the
hours of all the family members together. Now, that's getting close
to two full-time jobs. That leads to a kind of time crunch, a level
of stress that I think is perhaps one of the less welcome characteristics
of what we're calling the new economy. In terms, by the way, of demographics,
many of these folks are non-college educated. We often forget 75 percent
of the work force does not have a college degree. So we' talking about
working families who depend on a couple of people working close to full
time, often non-college educated workers, earning wages that are well
below the target range of some of the tax cuts that have been discussed,
particularly in the Bush plan. 
MICKEY
LEVY: I don't think the middle class is any more anxious than they've
ever been in the past, maybe even they're less anxious. As you've pointed
out, we've had 10 years of expansion; we have an unemployment rate the
lowest in over 30 years. In fact, if you look at the unemployed, those
who have voluntarily left their jobs, it has risen a bit, suggesting
they have more confidence in finding another job with the low unemployment
rate. There's more job security, not less. If you look at the way they're
spending money, the fact that the rate of personal income has come down
suggests that households are comfortable spending their incomes and
in fact if you team that up with home ownership and the appreciation
of housing, you team that up with stock holdings, then people are feeling
more comfortable spending their cash flow and enjoying appreciating...
some appreciating wealth in stocks and in housing. 
RUY
TEIXEIRA, The Century Foundation: Well, I think it's pretty simple.
They have been doing better in terms of wages and incomes in the last
few years, but the things that are really bothering them have to do
with the kinds of things you mentioned from the Pew poll: health, education,
retirement. Where's the money going to come from to cover all those?
Problems that might arise, how am I going to get my kids through college?
Do I really have enough money for retirement? What if something goes
wrong. These are the anxieties people have. The new economy has been
doing relatively little to solve on its own. Putting more dollars in
your pocket as you go up the income scale a little bit, as people have
been able to do in the last few years, doesn't deal with those fundamental
underlying anxieties. Here we have the as-good-as-it-gets phenomenon.
If people think, this is as good as it gets, I'm in some kind of trouble
and I may need someone on my side to help me out. And that's exactly
where Al Gore comes in with his targeted programs on health, on education,
on retirement that are really aiming at those working families. So I
think you know, this will be a tough thing for Bush to counter, and
he's got to develop his own approach to it, which he's trying to do.
DAVID
FRUM, Manhattan Institute: Of course not, not from an economic point
of view it should be said. They are better off. They are no less insecure.
We tend to put a kind of golden gauze over the past and imagine it as
a world in which people had jobs for life and stable pensions. But the
jobs were unstable then for blue collar workers. They weren't as unstable
for white collar workers. But, of course, there were many fewer white
collar workers in those days. I mean, there is something a little bit
artificial about the stoking of these anxieties. And that does have
to do with politics. The Democrats in their years in the wilderness
from 1968 to 1992 suffered from an image of being a conspiracy of the
morally lax top and the welfare-dependent bottom against the virtuous
middle. And Democrats have made a real effort over the last eight years
to identify themselves with that middle. The problem is that they have
a limited repertoire of things they want to do. And it is important
because their philosophy is one in which you treat people as dependent;
you have to stoke their anxieties or justify their anxieties in order
to create opportunities to do things for them. And in many ways the
argument about is the middle class stressed or is it okay, is in many
ways an adjunct to the argument that actually comes first, which is,
do you see them as essentially dependent people or do you see them as
essentially independent or potentially independent people?
RUY
TEIXEIRA: I don't really. I mean, clearly politicians are going to try
to take advantage of what the feelings of the public are on key issues.
They're going to try to reach those voters. But Al Gore didn't create
this level of economic anxiety. George Bush didn't create some of the
sentiments he's trying to appeal to about how government sometimes screws
things up. Politicians have to play with the hand they're dealt. And
the hand their dealt today suggests that even though, again, the last
few years have been pretty good, there are these underlying difficulties,
anxieties, problems that they want politicians to help them solve. And
that's what politicians need to target, and I think if they don't, they
will be in some trouble.
JARED
BERNSTEIN: They wouldn't have felt some of those problems as greatly,
particularly let's start with child care. Child care... the need for
child care is very much a function of the fact we now have more two-earner
families, husbands and wives working many more hours than they have
in the past, certainly than they did 20 years ago. In fact, the average
hours of work of middle-income families with kids are up 500 hours since
1979. That's about three months of full-time work. That engenders a
significant childcare burden that you hear some, particularly Al Gore
speaking to in some of his policy ideas. Regarding retirement savings,
obviously that is... 
RUY
TEIXEIRA: I'm not sure what kind of broad philosophical perspective
the typical American family has - this working family we're talking
about -
DAVID
FRUM: It's a political problem for Democrats - for the Democrats - because
they have to explain that, gee, I mean, the more horrific and dependent
and stress-laden and anxious the condition of the middle class is said
to be, the more it raises the question, well, what kind of appalling
set of careless self-indulgent people have been in power for the past
eight years, that have plunged the middle class into all of these terrible
problems? I mean, Al Gore wants the benefits of incumbency, and these
are good times, and he wants people to appreciate the party that brought
them the good times. At the same time, he's trying to stoke an anti-...
a feeling of discontent that ought to play against the incumbent. If...
If I had a little money, the one poll I would like to see ask, is ask
people, do you believe what happens to you is primarily the result of
your own exertions or primarily the result of forces beyond your control?
Maybe that's the crux of what this argument is about.