Too many Republicans are stuck in a 1980s mode when thinking and talking about the economy. For many, tax reform comes at or near the top of the list. But, in fact, President George W. Bush’s tax cuts took many modest-income people off the tax rolls and did nothing to abate the increasingly extreme progressivity of the tax system. Most voters aren’t paying an excessive amount in federal income tax. (And for those who don’t itemize, their taxes aren’t that complicated.)
So rather than beating that dead horse and promising movement on an issue on which they will make no progress with President Obama, (who insists on raising taxes), Republicans should concentrate on the other end of the equation — middle-class household income and expenses.
The New York Times (h/t Jim Pethokoukis) reports: “Median annual household income in February 2013 was $51,404, about 1.1 percent (or $590) lower than the January 2013 level of $51,994. The numbers are all pretax, and are adjusted for both inflation and seasonal changes. . . . February’s median annual household income was 5.6 percent lower than it was in June 2009, the month the recovery technically began; 7.3 percent lower than in December 2007, when the most recent recession officially started; and 8.4 percent lower than in January 2000, the earliest date that this statistical series became available.”
In other words, the middle-class squeeze is real. To make matters worse, health care costs, college tuition and gas prices are all outpacing inflation — by a lot.
As a policy matter, conservatives can and should tie wage stagnation to the suffocating regulatory environment and Obamacare, both of which make the cost of labor higher and therefore retard full-time employment growth and wages. The irony is that Democrats fancy themselves the defenders of the “little guy,” but in fact the little guys and gals have never been as badly pinched as they are under the Obama presidency.
Conservatives have policies that address many of these issues, but they have not connected them to the middle class’s standard of living. Energy development can both spur good paying job creation and lower energy costs. College reforms such as the ones Sen. Marco Rubio (R-Fla.) has offered (including encouragement for technical accreditation that can lead to solid employment without mounds of college loan debt) is also a plus for middle-class families. Common-sense health-care reform that equalizes tax treatment for those who purchase their own health care is another aid to families struggling to make ends meet.
Too often Republicans abstractly argue for “getting government off your back” or “limiting the size of government.” A more persuasive argument would be to stop government from doing things that make average Americans’ lives more expensive and instead adopt an agenda that encourages job and wage growth, lowers health-care costs, boosts the energy sector and provides educational options (vouchers for K-12, disclosure of college tuition etc.). That is an agenda that would resonate with many voters who felt entirely disconnected in 2012 from the GOP, whom they perceived as on the side of the rich, the bosses and the well-connected.