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2/08/2015 12:31 pm  #1

The Problem With Middle-Class Populism

The Problem With Middle-Class Populism

Excerpts. For the full article go to

In his State of the Union address last month, and in four subsequent addresses to the public, President Obama used the phrase “middle class” (approvingly) a total of 49 times, and the term “superrich” (in an accusatory sense) eight times. It sounded like this:

For far too long, lobbyists have rigged the tax code with loopholes that let some corporations pay nothing while others pay full freight. They’ve riddled it with giveaways that the superrich don’t need, while denying a break to middle-class families who do. We don’t just want everyone to share in America’s success, we want everyone to contribute to our success.

The problem for Democrats is that the party’s newfound emphasis on benefits for the middle class and contributions from the rich threatens to alienate the upscale wing of the party, which fears that it will be left to pick up the tab.
Middle-class populism, however, raises a host of problems for the Democratic Party. When the middle-class populist message is turned into actual legislative proposals, the costs, in the form of higher taxes, will be imposed on the affluent. Such a shift in the allocation of government resources threatens the loyalty of a crucial Democratic constituency: well-off socially liberal voters.

Over the past two decades, the Democratic Party has successfully won over – or perhaps it’s better said that the Republican Party has lost – many well-educated, well-paid, fiscally moderate men and women. These voters are repelled by a social conservatism that is anti-abortion, anti-gay rights and anti-women’s rights. But they are not eager to see their taxes raised.

In 1992, Bill Clinton lost the most affluent segment of the electorate, voters with household incomes over $75,000, by 12 points. In 2008, Obama lost voters with household incomes from $100,000 to $200,000 by 2 points, 50-48, and actually carried voters making over $200,000, 52-46.

Even more significant: In 1992, voters from households making from $15,000 to $75,000 a year – a very rough estimate of the working and middle class – made up 74 percent of the electorate. By 2012, voters from households making $30,000 to $100,000 (again, a rough estimate of the working and middle class) made up 52 percent of the electorate. By 2012, nearly three of every 10 voters, 28 percent, came from households making in excess of $100,000, the upper middle class and beyond.

In other words, the size of the target constituency for a political strategy emphasizing middle-class populism has grown substantially smaller, while the size of the affluent voting population that would bear many of the costs of financing the new populism has grown larger.

The perils of a middle-class populist strategy were demonstrated in the aftermath of the State of the Union address.

With what can only be called a surprising display of political naïveté, Obama lit a fuse under his upscale allies with one item in the message accompanying his Jan. 20th speech. The president, as a part of his assertive redistributionist agenda aimed at shifting benefits from rich to middle-income citizens, called for the effective end of tax-advantaged 529 college saving accounts.

Robert Greenstein, president of the liberal Center on Budget and Policy Priorities, wrote in a post on the center’s website on Jan. 22 that more than two-thirds of the tax breaks in the 529 program went to households with incomes in excess of $200,000.

The savings from cutting back the 529 program would be used “to strengthen and make permanent the education tax incentive best targeted on low- and middle-income families: the American Opportunity Tax Credit,” according to Greenstein.

As anticipated, Republicans were critical. But what killed the plan was Democratic opposition from an unexpected quarter: the party’s leading advocates of middle-class populism: Nancy Pelosi, House Democratic leader; Chris Van Hollen, ranking Democrat on the House Budget Committee; and Charles Schumer, chairman of the Senate Democratic Policy and Communications Center. All three members have large constituencies of upper-income Democrats.

Schumer told The Washington Post that the president’s overall plan “has the puzzle pieces necessary to bring the middle class back, but this particular piece didn’t fit.”

Within a week, on Jan. 27, Obama was forced to abandon the proposal.

Jared Bernstein, who also works at the Center on Budget and Policy Priorities, was blunt in his assessment of the politics of the 529 controversy, telling the Washington Post that the Obama proposal was like “kicking a ball in your own goal.”

“Democrats depend nearly as much on upper-class voters as Republicans do,” wrote Josh Kraushaar, political editor of National Journal. Of the 10 congressional districts with the highest per capita income, eight are represented by Democrats.

In an email, Greenstein wrote to me that:

The implications of this debacle are troubling. If we can’t reform a tax break that is highly inefficient and gives the overwhelming share of its benefits to high-income people who don’t need the benefits to engage in the desired activity (in this case, going to college) because a modest share of middle-income families also use that tax break — and we can’t do so even when the savings would be rechanneled to make middle and lower income families better off — then it’s going to be awfully difficult to address a number of the challenges the nation faces in the years ahead.

While Greenstein may be correct in his belief that the affluent are going to send their kids to college with or without 529 tax breaks, there is no question that elimination of the benefit would inflict real pain on an influential class, and provoke substantial anxiety among those who earn less but enough to disqualify them for meaningful financial aid.

Many of those in households making from $100,000 to $250,000 do not, in fact, believe they are affluent and consider themselves merely middle class.

Such parents, and those headed that way, are determined that their children will have every opportunity. A looming roadblock is the spreading awareness that since 1978, college tuition and fees have risen by 1,225 percent, nearly five times the rate of growth of the Consumer Price Index.

A family of four living in Illinois in 2015 with a gross annual household income of $225,000 – that is, an after-tax income of $180,000 – with $225,000 in savings, would be very likely to pay the full freight of $62,850 a year (with no financial aid), just over a third of their total take-home pay, to send a son or daughter to Harvard. Over four years, the cost would be over $250,000, a quarter-million dollars.

Should a brother or sister enroll after child No. 1 graduates, it’s another unassisted $250,000 plus.

The kind of family making a gross household income of $225,000 could include two married professors, a nurse anesthetist and a dentist, a marketing manager and an air traffic controller, a podiatrist and a veterinarian, or an optometrist and an engineer.

In many respects, the Democratic Party is in the midst of a class-based upheaval. In 1981, after Ronald Reagan won the presidency, Republicans took control of the Senate and a conservative alliance dominated the House.

As Tip O’Neill used to tell reporters, “We in the Democratic Party raised millions out of poverty into the middle class, and made them so comfortable they could become Republicans.” Now, three decades later, the Democrats’ dilemma grows out of the fact that they have won back the loyalty of many who have reached the upper rungs of the middle class.

These developments do not bode well for the party’s new priorities. If such a simple and straightforward proposal as the shift of government dollars from affluent families to far less advantaged families scraping to pay college tuition gets an instantaneous thumbs down from Pelosi, Schumer and Van Hollen, the realistic prospects for a middle-class agenda, if the Democrats return to power, are marginal at best.

Last edited by Goose (2/08/2015 12:34 pm)

We live in a time in which decent and otherwise sensible people are surrendering too easily to the hectoring of morons or extremists. 

2/10/2015 7:50 pm  #2

Re: The Problem With Middle-Class Populism

A few days before the NYT article Goose points to came out, Slate had an eerily similar article.....

The Upper Middle Class Is Ruining America

We often hear about the political muscle of the ultrarich. Billionaires like the libertarians Charles and David Koch and Tom Steyer, the California environmentalist who’s been waging a one-man jihad against the Keystone XL pipeline, have become bogeymen for the left and right respectively. The influence of these machers is considerable, no doubt. Yet the upper middle class collectively wields far more influence. These are households with enough money to make modest political contributions, enough time to email their elected officials and to sign petitions, and enough influence to sway their neighbors. Upper-middle-class Americans vote at substantially higher rates than those less well-off, and though their turnout levels aren’t quite as high as those even richer than they are, there are far more upper-middle-class people than there are rich people. One can easily turn the Kochs or the Steyers of the world into a big fat political target. It’s harder to do the same to the lawyers, doctors, and management consultants who populate the tonier precincts of our cities and suburbs.

Another thing that separates the upper middle class from the truly wealthy is that even though they’re comfortable, they’re less able to take the threat of tax increases or benefit cuts in stride. Take away the mortgage interest deduction from a Koch brother and he’ll barely notice. Take it away from a two-earner couple living in an expensive suburb and you’ll have a fight on your hands. So the upper middle class often uses its political muscle to foil the fondest wishes of egalitarian liberals. This week offered a particularly vivid reminder of how that works. In the windup to his State of the Union address, Barack Obama released a proposal to curb the tax benefits associated with 529 college savings plans, which primarily benefit upper-middle-class families, to help finance the expansion of a separate tax credit that would primarily benefit lower-middle- and middle-middle-class families. Only 3 percent of households actually make use of these accounts, and 70 percent of the tax benefits go to households earning more than $200,000, so you can see why Obama might have thought no one would get too worked up about the proposal. If anything, he might have thought, and hoped, that his critics would get more exercised about his call for big capital gains tax increases, which would have allowed him to play the part of Robin Hood—a role Obama loves to play. 
That’s not quite how things turned out. From the get-go, the 529 plan, like the capital gains tax-hike plan, was totally politically unrealistic, as Republicans in Congress were never going to sign on. But within days of the State of the Union, the Obama administration was forced to reverse course and abandon its plan to make 529 plans less generous. House Minority Leader Nancy Pelosi, who represents San Francisco, and House Budget Committee ranking Democrat Chris Van Hollen, who represents the wealthy Maryland suburbs of Washington, D.C., were the key drivers of the decision, according to a report by Rachael Bade and Allie Grasgreen in Politico. My guess is that both Pelosi and Van Hollen saw firsthand the fury of upper-middle-income voters who sensed that Obama, normally a paragon of upper-middle-class virtues, was daring to mess with one of their precious tax breaks. Paul Waldman, writing for the Washington Post, had it right when he observed that “the 529 proposal was targeted at what may be the single most dangerous constituency to anger: the upper middle class.”

Almost seems like the middle-upper middle class is becoming just as big a target as the rich in the eyes of the liberal wing of the Democratic Party


I think you're going to see a lot of different United States of America over the next three, four, or eight years. - President Donald J. Trump

2/10/2015 8:09 pm  #3

Re: The Problem With Middle-Class Populism

Hey, I'm up there with the affluent.
But, I'm putting 4 daughters thru college.
Been saving since  the day each kid was born. Being responsible. Not asking for any government money.
But, the 529 plans help me.
Take them away, and sure, I'll pay to send my kids to college anyway.
And I'll never vote for democrat for the rest of my life,,,,,,

Last edited by Goose (2/10/2015 8:10 pm)

We live in a time in which decent and otherwise sensible people are surrendering too easily to the hectoring of morons or extremists. 
     Thread Starter

2/11/2015 3:55 pm  #4

Re: The Problem With Middle-Class Populism

This country is whack. Some of the same people who say that $250,000 a year isn't a lot of money, also say that $10.10 for minimum wage is just too much. (I'm not talking about anyone on this exchange, more about the talking heads in politics). While everyone else is arguing over what constitutes rich, I'm wondering why the hell college's get away with charging what they do for no apparent reason.


2/11/2015 4:39 pm  #5

Re: The Problem With Middle-Class Populism

It's political. Socially liberal, affluent people are becoming a bigger part of the democratic party's power base.
The dems are going to have to address their concerns to keep them in the tent.

We live in a time in which decent and otherwise sensible people are surrendering too easily to the hectoring of morons or extremists. 
     Thread Starter

2/11/2015 4:52 pm  #6

Re: The Problem With Middle-Class Populism

Where else are they going to go? Lets face it, we have a two party system, and I doubt they will mosey on over to the R side.


2/11/2015 4:59 pm  #7

Re: The Problem With Middle-Class Populism

I'm not so sure that they have no place else to go.
These folks genuinely care about progressive ideals, but the party would neglect and abuse them at their own peril.
Even the Goose was driven into the arms of Mitt Romney in 2012 over the issue of taxation.

We live in a time in which decent and otherwise sensible people are surrendering too easily to the hectoring of morons or extremists. 
     Thread Starter

2/11/2015 5:09 pm  #8

Re: The Problem With Middle-Class Populism

First off, great avatar! Second, I wouldn't go so far as to say neglect and abuse. We (people in general) need to realize that we can't have everything, and that some things you'll like and agree with, and some things you won't. But if the majority of your priorities still line up with the L or R side, then that's where you should be. I, personally, think so much time is wasted arguing over taxes, when the tax system could be simplified and evened out quite easily. As far as being driven into Mitt's arms, there are worse arms you could be in...........


2/11/2015 5:24 pm  #9

Re: The Problem With Middle-Class Populism

Good comments.
Hey, I'm 55, doing very well, got little to complain about.
But, having been around a long time, I've seen a few "get the rich" efforts.
And they always seem to miss Warren Buffet, and strike me right in the arse.
My kids qualify for zero financial aid, and that's just fine. Send the aid to kids who need it.
But, the 529 plan was sweet. I'm not getting any government money. Just getting a tax break on money ear-marked for my kids' college, which I earned, and which will make them better citizens, and this a better country.

With Mitt Romney living in a 14% tax bracket, is it too much to let me have this little cookie?
I mean, I make too much for dependent exemptions, a quarter of my deductions are phased out, sheesh!
Enough already! 

Last edited by Goose (2/11/2015 5:25 pm)

We live in a time in which decent and otherwise sensible people are surrendering too easily to the hectoring of morons or extremists. 
     Thread Starter

2/11/2015 5:46 pm  #10

Re: The Problem With Middle-Class Populism

That is a good point you made about not getting anything from the gov. with the 529 exemption. A few days ago I saw on the news an interview with a Congressman (I forget who, other than that it was a Republican - which is neither here nor there), who actually said that people shouldn't get tax breaks when it came to some reason or another (I forget what they were for) because it's the government giving them a handout. To the news anchor's credit, he said,"are you seriously suggesting that a tax credit is the government giving something to people? Those people aren't being given anything. They worked for that money, and it's theirs to begin with." The Congressman stuttered around and changed the subject. It was pathetic and I'm glad he was called on it, but the truth is that many in politics have trained themselves and others around them to think that if you get a tax break as an average person, that it's a handout. 


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