David Stockman, Ronald Reagan’s former budget director, published an op-ed in the New York Times last month, “The Bipartisan March to Fiscal Madness.” Stockman begins:
It is obvious that the nation’s desperate fiscal condition requires higher taxes on the middle class, not just the richest 2 percent. Likewise, entitlement reform requires means-testing the giant Social Security and Medicare programs, not merely squeezing the far smaller safety net in areas like Medicaid and food stamps.
You can see where Stockman’s going here. It’s the increasingly familiar, “we all have to share in the pain” of getting the country back into a fiscally responsible groove. Incidentally, this top 2 percent correlates roughly to households with annual earnings greater than $250,000.
Later, Stockman takes clearer aim at President Obama, writing that by focusing on Bush’s tax cuts to the top 2 percent of earners, he is “playing the class-war card more aggressively than any Democrat since Franklin D. Roosevelt.”
Stockman then, in turn, criticizes the Paul Ryan budget as
fail[ing] to recognize that we are not in an era of old-time enterprise capitalism in which the gospel of low tax rates and incentives to create wealth might have had relevance.
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Trapped between the religion of low taxes and the reality of huge deficits, the Ryan plan appears to be an attack on the poor in order to coddle the rich. To the Democrats’ invitation to class war, the Republicans have seemingly sent an R.S.V.P.
I have three observations about Stockman’s column.
First, I was struck by Stockman’s use of the term “class war,” both in the quotes above and where he writes that these competing budgets are bringing us “dangerously close to a class war.” The very use of the term “class war” seems noteworthy—and in a sense a tiny bit of progress—in that Republicans have for years been in denial about the fact that we are a nation divided by class. For example, as recently as December 2010, David Dreier, U.S. Representative from California, expressed amazement “that the Democrats were continuing the same tactics they’d used before they were buried by a landslide in November’s House elections.” Dreier continued:
The standard old class warfare, us versus them, rich versus poor. … There was a rejection of this divisive tone [in the Nov. 2 election] which we regularly hear around here – the haves and the have-nots.
That we have been a class blind nation—or at least purported to be one—makes Stockman’s acknowledgment of classes interesting (though he doesn’t exactly acknowledge the existence of “have nots,” just of the middle class, who might be considered “have a littles”). On the other hand, Stockman seems to use the term “class war” as a bogeyman—a scare tactic—something to be avoided. Yet pervasive American Dream rhetoric aside, the political right declared war on the working and middle classes long ago—think back to the Reagan administration in which Stockman served). So, I’m not sure whom Stockman is trying to scare. The middle and working classes, along with the poor, presumably have no reason to fear a class war in the sense it is nothing new. Further, acknowledging that such a war is raging might more effectively bring Democrats to their rescue–arguably what President Obama is attempting, in some small measure.
Second, Stockman asserts that the “middle class” should share the burden of rolling back the deficit. I am not clear who Stockman sees as constituting the middle class who need to step up to the plate here, but I am unsure that those much below the top 2 percent of earners are in a good position to bear the pain of balancing the budget. (Of course, a taxonomy that recognizes just two classes—the top 2 percent of earners and everyone else—is less than ideal in the context of a discussion about who can bear what. Andrew Ross Sorkin makes a similar point here, but regarding possible divisions among those above the $250K mark rather than regarding those below it).
Plenty of literature (like here, here and here) tells us that the stability of the middle class has eroded sharply in recent years, so I am very skeptical that we should demand any more from this group lest we further destabilize them with higher taxes or diminished public services. I am confident, on the other hand, that additional taxes on the top 2 percent will not take food out of any children’s mouths nor undermine those families’ ability to provide appropriate stability and enrichment opportunities for their children.
This brings me to my third point. A theme of Stockman’s column is that we all must share the pain of deficit reduction. On one level, it’s an appealing, all-American, team-work type idea, which inclines me to say, “fair enough.” But only if we take into account the relatively recent history of taxing and budgeting. From that perspective, the middle and working classes have already done their share, having taken it on the proverbial chin for several decades (e.g., through cuts to public services, as reflected, for example, in deteriorating public education). The Bush tax cuts for the top 2 percent, on the other hand, have added “roughly $2 trillion to the national deficit over the last decade.”
So it’s time for the top 2 percent of earners to step up to the plate and do more–including making up for the “lost time” represented by the Bush-era tax breaks they enjoyed. As economists Emmanuel Saez and Thomas Picketty have written, our society needs to determine whether the current level of income inequality “is efficient and acceptable and, if not, what mix of institutional reforms should be developed to counter it.” This implicates not just tax rates, but also the other part of Stockman’s proposal: that Social Security and Medicare should be means tested. It doesn’t sound crazy to me (again, depending on where you draw the income or wealth line for who qualifies), but most Republicans won’t touch that one with the proverbial ten-foot pole. (Read Gingrich’s position on Republican proposals for Medicare cutbacks here). It is interesting how even the political right—attached as they are to “personal responsibility”—has also gotten attached to at least a few “entitlements.”