THERE IS A FATAL flaw in the argument of some Democrats that the party must now move to the right in order to appeal to America's middle class. The flaw is that we do not have a monolithic middle class, and the Democrats don't need the votes of all middle-income Americans to win presidential elections.
It is true that there is an upwardly mobile segment of the middle class involved in finance, high tech, real estate, upscale retailing, services and the professions. The majority of these people voted Republican this time, and probably always will. The Republican Party is the party of their economic class.
But the Democrats can live without their votes. They already have a base among 41 percent of the electorate; to reverse their misfortunes, all they need is 10 percent more. The way to get at least that margin is to appeal to the lower ranks of the middle class with economic populism linked to growth and jobs.
The target of such an appeal would be the growing numbers of middle-class people who are either sliding downward or afraid they will. They include blue-collar workers who will never go back to jobs in basic industries, service workers stuck in low-wage jobs, divorced or separated women with young children and a large number of young, would-be professionals who are crowded off the track of upward mobility.
The majority of them voted Republican this time principally because Ronald Reagan was the candidate of hope. It is on this side of the middle-class divide that the Democrats must place their bets. This will mean a return to a tradition that was abandoned by Jimmy Carter and his advisers in the middle of the Carter presidency, and again this year by Walter F. Mondale.
The long-term battle to regain political hegemony will, of course, focus on younger voters.
Ronald Reagan won their allegiance, as every other age group, in 1984. But the base of long-term Republican support from the young is undermined by the same economic fault line that runs through the rest of the middle class.
The majority of young adults born in the baby boom, who are now settling into career paths and forming families, appear to be relatively less well off than the same age group in the past. As a percentage of the median income of all families, the median income of families between 25 and 34 has been dropping for more than a decade.
Moreover, home ownership among young families -- a critical determinant of middle- class status -- has slumped from 67 percent in 1979 to 61 percent in 1983. And that includes ownership of mobile homes.
The drop is most pronounced for the 76 percent of this age group with less than four years of college. George Sternlieb of the Rutgers Center for Urban Policy Research estimates that only one-third of baby boomers qualify as "yuppies." The middle third need generous help from their parents to buy a home, and the bottom third have no chance at all of buying one.
The age group coming just behind are nervously eyeing their older brothers and sisters and even more concerned about their personal future. Yet the ideology of 18-24- year-olds is a mixed bag. A survey by the National Opinion Research Center reported last year that 38 percent of young adults saw themselves as liberals, compared with 42 percent a decade earlier. And on some issues, such as the death penalty, there was a clear trend towards the right.
In the other hand, a larger portion of today's young people would vote for a qualified black or woman for president. In terms of their outlook, 70 percent agree that "the lot of the average man is getting worse," compared with only 59 percent a decade ago.
They have some reason to be pessimistic. They are members of the second generation in a row to be faced with the consequences of reduced American economic power in the new era of world competitiveness. The promise that reduced government and more incentives for the private sector will recreate the post-World War II boom is illusory. So is the notion, embraced by the conventional economic advisers to the Democratic Party, that our economic problems will be over if only we cut the deficit.
As a growing number of more independent eonomists have pointed out, America lives in a new world of competition for markets and struggle for technological supremacy. Our present bipartisan strategy for meeting this competition is to lower wages -- which means lowering the standard of living of the bottom two-thirds of the population.
Ronald Reagan's popularity has tracked almost step-for-step with the unemployment rate. At the depths of the last recession, he was less popular than his last four predecessors had been at similar points in their terms. When the current deficit-fueled recovery runs its course -- the recent slowdown in growth suggests it might already have -- the illusion of Reaganomics will be apparent.
But if the Democrats are to reverse their fortunes they must do more than wait for the Republicans to trip. To prevent a permanent political realignment, Democrats must have a two-track solution for the declining living standards that confront the bulk of Americans.
First, they must face the fact that over the next 5-10 years the decline in living standards cannot be stopped without government intervention. The incessant pressure on American firms to lower labor costs in order to compete will mean continued pressure to keep wages and fringe benefits down.
In addition, the long-run shifts in the economy away from high-wage, unionized sectors to low-wage services will continue. As economist Lucy Graham has pointed out, employment projections to 1995 show that the bulk of the net new jobs created between now and then will be in industries that in 1980 paid less than $12,500 a year.
Instead of joining Wall Street Republicans and Director David Stockman of the Office of Management and Budget in demanding cuts in Medicare and other middle-class entitlements, the Democrats ought to be defending, and calling for a gradual expansion of housing, health care, day care and student loans, along with minimum incomes, job training and community development for low-income people.
In this way, the Democrats could begin restoring the alliance between the middle class and the poor that was the party's historic strength.
Recent political history shows that when, in the name of efficiency, Democrats narrowed the eligibility of programs to the poorest and neediest, the alliance was broken and the poor became isolated and powerless to defend themselves politically.
Care should be taken to run government programs more efficiently and sensitively. But efficiency was never the real issue in cutting programs that attempted to redistribute income. It was ideology. The bland acceptance of a monstrously bloated Pentagon budget studded with ripoffs such as $500 wrenches, which every American can understand, tells us that efficiency in government never was and never will be the decisive political issue.
How can we pay for all this, cry the editorial writers? What about the
overloaded budget? They are valid questions. It will not be enough to return to fairness and to the politics of welfare. The alternative to a strategy of lower wages is a strategy of efficiency and productivity. At the same time that Democrats put themselves on the side of programs that help their natural constituency among middle-class Americans, they must also put themselves on the side of programs that invest in American competitiveness.
This means using taxes and regulation to channel private capital away from mergers, speculation and paper entrepreneurism toward technological innovation and new products. It means a commitment to putting all Americans to work who can hold a job. It means shifting public investment from useless and dangerous overproduction of military weapons to research and development in civilian transportation and education, where the Democratic priority has traditionally been.
In short, Democrats can win over the part of the middle class they need for electoral victory by returning to the philosophy that has held together the Democratic constituency historically: a commitment to economic growth that makes life better for the majority of Americans.