Convention hoopla aside, it probably won’t be clear until the final days of the presidential election campaigning which candidate will win. That’s mainly because the broad band of beleaguered middle-class voters who will determine the outcome of the election are often guided more by their emotional and aspirational values than by their pocketbook realities.
If the recent decades of ongoing shrinkage of middle-class Americans’ inflation-adjusted income and rising health care insecurity were the guideposts, that wouldn’t be the case. Given those trends, voters surely would reject the troubling GOP path of shifting an increasing percentage of national income to a small elite, and paying for those policies by effectively whacking incomes and earned entitlements for the mass of American families and workers.
Recent studies confirm the long domination of these destructive trends. A comprehensive new study by the nonpartisan Pew Charitable Trust, for instance, finds that middle-class American families have suffered a decadelong fall under Republican policies and global employment shifts. The percentage of middle-class Americans has shrunk, and those left in that category have experienced declines in inflation-adjusted income and accumulated wealth, and in optimism for the future. At the same time, a vastly smaller band of very affluent to super-rich citizens has enjoyed sharply rising incomes and wealth. Though Pew doesn’t say so, those outcomes reflect inequitable tax policies and needless off-shoring of jobs to boost corporate fortunes.
An new analysis by the Institute for Policy Studies shows the striking irony: ordinary taxpayers essentially subsidize the huge tax loopholes that let the nation’s richest 1 percent and corporate CEOs take home annual megamillion compensation packages — including pay packages that often exceed the tax payments made by their companies.
The “carried interest” rate of 15 percent on capital gains and dividends — rather than the top income tax rate of 35 percent — lets billionaires and megamillionaires like Mitt Romney pay a far smaller percentage of their income in federal taxes than many Americans in the upper-middle-class range. Corporations, as well, get to write off the value of these compensation packages, just as they do other costs of business. This loophole, the study reported, allowed 26 CEOs to receive more in annual compensation in 2011 than their companies paid in taxes. The four major loopholes involving executive pay, the study said, cost taxpayers $14.4 billion last year.
Middle-class Americans — those with incomes of two-thirds to twice the national median income — surveyed by the Pew study were well aware of their decadelong slide in income, wealth and economic security, not just since since the 2007-09 Great Recession. “Fully 85 percent of self-described middle-class adults,” the Pew report noted, “say it is more difficult now than it was a decade ago for middle-class people to maintain their standard of living.”
Among these respondents, 62 percent said “ ‘a lot’ of the blame lies with Congress, while 54 percent say the same about banks and financial institutions, 47 percent about large corporations, 44 percent about the Bush administration, 39 percent about foreign competition and 34 percent about the Obama administration. Just 8 percent blame the middle class itself a lot.”
That’s a fair consensus. The gridlocked Congress has failed to achieve constructive policies for working Americans. The gratuitous Bush administration tax cuts in 2001-03, its two wars on borrowed money, Wall Street’s speculative-casino crash in 2007 and the resulting bailouts and Great Recession, destroyed more than 8.8 million jobs — more than the previous four recessions combined. The policies rolled back 25 years of steady gains in middle-class incomes and wealth, and wrecked the economy in ways that will take many years to repair. President Obama erred by not rolling back the top-end Bush tax cuts and pushing through deeper reforms and stimulus when he had a Democratic majority in Congress.
It’s hardly surprising that middle-class Americans surveyed by the Pew study found than 52 percent trusted Obama’s policies to help them, vs. 42 percent for Romney. Wealthy respondents, however, favored Romney’s policies by 71 percent, vs. 38 percent for Obama. Poor people favored Obama’s policies by nearly a 2-to-1 margin.
Regardless, polls show a GOP edge in white males who favor Romney over Obama by more than 10 points, and who are more glued to social wedge issues — guns, abortion, religion, gay rights and groundless fears of world government — than to a realistic view of ways to restore their economic underpinning, fair wages and secure benefits. Their support for a candidate whose policies don’t represent their economic interests currently suggests a virtual toss-up in November. How they ultimately vote will test whether middle-class Americans will progress, or continue to lose ground.