Thursday, September 21, 2006

Scratched my head for three days 

In the 6th Congressional District debate Monday, I remember typing this and saying out loud "wrong!" It was in answer to a question about making permanent the Bush tax cuts:
Wetterling: Proposed incentives for middle class tax cuts. Production is up, people making more are not doing better � people no better off than in 1949.
I tend to be forgiving of candidates who use economic statistics to make arguments -- there are lots of them, it's easy to get confused, it's usually someone looking for a crutch to prop up a bad argument (and I'd rather deal with the argument head-on than snipe the misquoted data.)

But this one was odd because I hadn't heard it said that way before. People are making more stuff but getting less of it. And the 1949 date was really, really new to me.

Google didn't help much, so I went to the first place I always go when I'm looking for Democrat economic talking points, the Center for Budget and Policy Priorities. (The place originally housed all the disaffected Carter budget people who got tossed in the street when Reagan came to office in 1981.) And off the front page I find this report from three weeks ago that I think was her reference.
Commerce Department data released on August 30 show that in the first half of 2006, the share of national income that went to wages and salaries was at the lowest level on record, with data going back to 1929. The share of national income captured by corporate profits, in contrast, was at its highest level since 1950.
The impression this is to give, and the impression that Wetterling was trying to leave in the debate, is that the middle class is getting squeezed. But if she were to read the American Prospect -- which, being a liberal, she might -- she might have found this article describing the middle class as shrinking only because the middle class is getting above the middle.

What's the matter with the middle class? Democrats like to pin their defeats on national security and culture issues alone, but the progressive economic message is also to blame. What progressives generally say about the economy is unrelentingly pessimistic -- stagnant wages, rising costs, overwhelming burdens of debt. It's a message that doesn't resonate with the middle class -- not only because it's overly negative (by itself political poison), but because it's simply flat out wrong.

Don't believe me? Believe the numbers:

  • $63,300. That's the 2004 median household income of people in their prime working years, ages 25-59 (it's $70,000 for married households and nearly $80,000 for two-earner households).
  • $248,700. That's the median net worth of pre-retirement Americans, ages 55-64.
  • Zero. That's the median credit card debt for all American households.

Drowning in debt? Squeezed to the gills? Living paycheck to paycheck? I don't think so.

These numbers all add up to this one: $23,700, the household income at which a white voter was more likely to vote Republican than Democratic in the 2004 congressional races.

My problem with the data analysis of most people is that it simply doesn't square with the human eye and one's own common sense. It just doesn't sound right; the presence of three car garages in every neighborhood of St. Cloud tells me so. Rose shows data from the Census that the share of American families making $30k-$75k in real dollars -- what you would think of as the middle class -- shrunk 13% while the share of families making more than $100k a year rose by the same amount. Stay married, and your median family income is $70k. Two wage earners? $78k. Those data square with my own eyes.

Democrats who get this have been pushing for lower college tuition and for tax breaks for child care, etc. But these are not exciting, and have been drowned out by candidates calling for troops to come home now from Iraq and for investigating the Bush Administration. And that's the problem with Minnesota's DFL slate this fall, leading with Patty Wetterling.