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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

A Happy Face Isn’t Enough

By Elizabeth Warren
Without middle class support, no political party can remain in power. The trio of Kim, Solomon and Kessler has this right. The message should be tattooed on the inside of the eyelids of every office seeker in America.
And they have another point right: Many politicians don’t have a clue about how to talk to the middle class. The reason is that they really don’t know much about the middle class-about who they are and why they are in trouble.
There is much good sense in Misery, but I think it is misleading to label the problem “pessimism.” Back in 2004, John Edwards made the leap from one of seven unknown candidates to the man who, but for sudden Iowa infatuation with the promise of nominating a war hero, would likely have been the Democratic presidential nominee. Edwards broke free from the pack and made a name for himself by talking to middle class people about their problems. The middle class squeeze wasn’t sugar candy stuff, but it connected with substantial numbers real people across the state and across the country.
Americans believe in opportunity, but they are deeply worried that their opportunities and the opportunities for their children are slipping away. Just a few tidbits:

  • Far more Americans are worried about not being able to pay all their bills than are worried about a terrorist attack1
  • 30 million American people with jobs describe themselves as “financially distressed”2
  • 28% of all Americans say that after they pay basic expenses, they have not one dollar left over-the highest number in the developed world.3
  • Half of all Americans say they worry frequently about their debt, many of them saying they worry “most of the time.”4
  • The number one fear of college grads is not terrorism, it is debt-by a margin of more than 2-to-15

No wonder last year’s most chosen New Year’s resolution was “get out of debt,” replacing “lose weight” for the first time in memory.
And the worries are grounded in reality. Job losses that once were a threat only for unskilled workers now routinely invade the middle class. Millions of middle class families have no health insurance coverage, knowing that just one bad diagnosis could destroy them financially. Debt loads are at historic highs for ordinary families. Variable mortgage rates will push more than a million families into foreclosure this year. Bankruptcies are back on the rise.
We live in an America where manufacturing jobs, engineering jobs and even computer science jobs are disappearing overseas. Today’s fast-growth job category is “debt collector.”6
This isn’t about “optimism” and “pessimism.” Sure, no one likes a hang-dog. But no one wants to spend the evening with a Wal-Mart greeter either. Lou Dobbs doesn’t draw millions of listeners by handing out smiley-face buttons. He’s mad, and he’s the voice for millions of other Americans who are even madder than he is.
To frame the debate as “optimism versus pessimism” misses the point. Who wants to be on the pessimists’ team? (They have really ugly uniforms, and they don’t bother to practice.) Labels make it all about spin. Nothing-no shorthand, no bromide, no cute phrase-will substitute for understanding the enormous pressure that is transforming the middle class. And telling candidates not to be “pessimistic” is no excuse for avoiding the serious homework needed to develop a real understanding of the increasing fragility of the middle class.
In post-war America, wages and productivity rose together, but starting in the mid-1970s, income (adjusted for inflation) flattened while productivity continued to rise. In other words, workers got a smaller share of the value they produced. Today, a fully-employed, median-earning male makes about $800 less than his counterpart made back in 1972. But costs for many of the basics-housing, health insurance, transportation, college educations-continued to rise. Families responded by cutting consumption spending, eliminating their savings plans, and sending two parents into the workforce. Kim, Solomon and Kessler herald the rise in household income, but they fail to note it happened only for families that could put two people into the workforce. Median-earning one-income households were once solidly middle class. Today they still must pay for more costly homes and health insurance on stagnating wages; without a second income, they are now sliding to the bottom of the middle class, barely hanging on by their fingernails.
Even for families with a second earner, the financial picture is not rosy. In addition to higher housing and health costs, they must also pay for a second car to get to work, childcare and a higher tax rate on that second income. Today, median two-income families commit three-quarters of their pay to basics-mortgage, health insurance, transportation, childcare and taxes. A generation ago, the one-earner family covered those same expenses using up just half of their single paycheck (see chart). The bottom line: After they pay for these basics, today’s two-income family has less cash and less savings than their one-income parents had a generation ago. (The data are reported in my book, The Two-Income Trap: Why Middle Class Parents Are Going Broke and updated in “Re-writing the Rules: Families, Money and Risk” and “What’s Hurting the Middle Class.”) Kim, Solomon and Kessler may let out a cheer, but I don’t.
What do politicians have to say to these families? When their children got sick or they lost their jobs, Democrats and Republicans alike scolded them for filing for bankruptcy, while Congress embraced a credit-industry wish list that would squeeze every last dollar out of these families. When companies revealed that they had made a lot of pension promises, but they hadn’t set aside the funds to meet those promises, a bipartisan majority in Congress passed pension reform that opened the door wide to companies’ simply dropping their coverage. When payday lenders targeted military families, charging an average 400% interest for a cash loan so that a soldier deployed in Iraq could make it until the family support allotment kicked in, military leaders and the Department of Defense asked for some protection for these families, but a bipartisan Congress turned a deaf ear. When parents stayed awake nights worrying about how they would pay for college, a bipartisan majority in Congress cut back on both aid and loan programs.
This isn’t about optimism and pessimism. This is about getting it. This is about saying to the middle class, we’re here for you. We don’t work for Citibank, Sallie Mae, FastLoan or anyone else. We work for you. Of course, if that isn’t true, it is pretty hard to say it and be believed.
In all this talk about the middle class, there is the unspoken elephant in the room: the poor. Democrats have so long seen themselves as champions of the poor that any talk about the middle class quickly slips into talk about the poor. John Edwards introduces himself to America by talking about the middle class squeeze, then picks poverty as his signature issue post-election.
When I talk with families about politics, I often hear a variation on this theme: “Democrats care most about the poor. They tell me I’m better off than the poor, and that I should give up more of my money to help the poor. Well, I’m stretched to the breaking point, and I just can’t do it any more.” Whenever a Democrat stands up and says, “I’ll help every child go to college,” then cuts off benefits at $20,000 a year, the message just burns deeper.
Democrats thought that the tax cuts would cause a national uprising because they so disproportionately benefited the rich. But they missed a key point: the cuts also benefited the middle class. The middle class might make less-heck, they might make a whole lot less on the tax breaks-than the rich folks, but they would make something. And that something would stay in their pockets and help pay down their credit cards and pay their utility bills. That Republican something looks a lot better than a Democratic nothing.
Tax cuts have been a watershed. Instead of the poor and middle class partnering up for mutual benefit, Democrats and Republicans alike have pushed the middle class to align with the rich-they both get something, and only the poor are shut out. In fact, policy after policy leaves the middle class absorbing more risks and fraying the safety nets that once kept them safe. Smart proposals would align the interests of the poor and the middle, the way Social Security developed widespread support by being a program for all workers-not just for those who were destitute.
I believe in the full range of emotions. There’s room for optimism and pessimism. But there is also room for anger and accounting. And hope and dreams. And new ideas and old ideas. But none of it will work if it is just stage dressing, just memorized lines. And that brings me to the last point, which was the first point: Keep it real.
Right now, neither Republicans nor Democrats connect with the American middle class on economic issues. That leaves the field wide open for connecting on other issues-terrorism, culture wars, Iraq, environmentalism. Middle class Americans aren’t voting Republican because they think the Republicans have something helpful and supportive to offer on economic issues (except for tax relief). But right now there aren’t many Democrats who have anything useful to say on the subject either.
The middle class is the engine of the American economy. But all the talk about proposals and messages and optimism won’t bring a single voter into the Democratic camp. To accomplish that, Democrats have to learn about this new middle class, learn about the pressures and the fears and the hopes and the dreams that drive them. Only then will they have something to say. And only then can they speak to these families from the heart.

A native Oklahoman, Warren graduated from the University of Houston and Rutgers Law School. She is now the Leo Gottlieb Professor of Law at Harvard Law School, where she teaches contract law, bankruptcy and commercial law. Her latest book, All Your Worth, is for people who worry about money. She posts on TPM Cafe.

1Center for American Progress/Center for Responsible Lending, “Frequency Questionnaire,” April 13-20, 2006 (33% of respondents “very worried” or “somewhat worried” about being the victim of a terrorist attack, 48% “very worried” or “somewhat worried” about “not having enough money to pay all your bills”).
2E. Thomas Garman, et al., “Final Report, Thirty Million Workers in America-One in Four-Are Seriously Financially Distressed and Dissatisfied Causing Negative Impacts on Individuals, Families and Employers” (March 23, 2005).
3AC Neilsen, Global Consumer Confidence and Opinions, May 2005.
4AP/Neilsen poll of 1,000 Americans December 2004, reported in “Poll: Half of Americans Worry About Debts” (December 20, 2004). The medical effects of these worries are discussed in Jean Lawrence, “Debt Can be Bad for Your Health,” WebMD (January 3, 2005).
5Partnership for Public Service, “Class of 9/11 Full Survey Results” (“What are you most fearful of at this time?” terrorism, 13.4%; going deeply into debt, 32.4%).
6See Bureau of Labor Statistics, Occupational Employment and Wages, November 2003, BLS estimates that the number of people employed as bill or account collectors increased by 44.8% from 1998 to 2003.

5 comments on “A Happy Face Isn’t Enough

  1. Joe Populist on

    Her comments are completely correct. The Democrat Party is the party of “Identity Poltics”, which has tore apart the old New Deal coalition since 1968.
    Today the Democrats are primarily the part of the well-to-do urban elite, who care more about imposing their cosmopolitian social views on Christianity, sex, marriage and family then they do about careing for the poor. They are the party of the urban elite, and a growing dependent underclass, to whom they hand out scraps instead of real economic reform.
    Scatch a modern Democrat, and a Wall Street Republican, and you won’t see much difference on issues like globalization, and outsourcing, and unrestrained immigration. In fact, not really much on the tax burden on the middle class. For every income tax increase that Clinton imposed on the upper 20%, the gave away double in other tax cuts and benefits. In fact, the dirty little secret of the Clinton era is that his much touted budget surpluses is that they were built on the increases in the Social Security payroll tax.
    Nothing more then Social Security shows how little the Democrats understand the problems of the working classes (as opposed to the Leisure Classes and the Underclass that form it’s electoral base). The average 2 income family earning $90k pays almost $5000 in Social Security payroll taxes, a huge sum compared to the tiny benefits that they would get at retirement.
    The fact that Social Security remains popular owes more to people’s ignorance on how the Democrats have colluded with the Republicans to trash the system, and turn it into a system where the middle class pays for the underclass, and the rich gets let off the hook.

  2. Robert Goldschmidt on

    Elizabeth Warren’s response is right on target. If we don’t recognize the realities that the middle class faces, we have no hope of tapping into their votes.
    The American public is much more intelligent than the pols give them credit for. I am sure that they understand that the US at the federal level is running on borrowed time and dollars.
    We need to propose constructive solutions to the twin crises overhanging all of us — dependence on imported oil and runaway healthcare/retirement costs. This is a chance for the US to take the lead in technology development and associated job creation while attacking these underlying issues that effect almost all developed countries in the world.
    If we do not address our dependence on imported oil, the major powers will become increasingly belligerent as they jockey to keep their societies stable in a world where oil supply no longer meets demand.
    Similarly, not addressing the imbalance between the working population and medical and retirement entitlements will result in a destabilized work force, a stagnating economy and an inability to assimilate the last wave of immigration.
    Within every economic crises there resides the seeds of opportunity. Let’s talk about some real actions we can take as a country which will benefit the middle class and reduce, not add to, our deficits.
    Dependence on Imported Oil
    Set a floor on the price of crude at $45 a barrel below which Federal excise taxes would make up the difference. Even though this tax would be highly unlikely to ever kick in, this action would create a price umbrella under which to finance our conversion over to oil alternatives.
    Some examples are plug-in hybrids which use the electric grid rather than gasoline to travel the first 40 miles each day. Cellulosic ethanol which would utilize grasses and burnt out forests to replace our remaining gasoline usage with ethanol.
    Runaway Healthcare/Retirement Costs
    We need to focus on increasing quality (healthy) lifespan along with increased average retirement age.
    Some examples:
    Eliminate mandatory retirement.
    Automate the health delivery system and make it truly competitive.
    Increase the investment in preventative medicine which is by far the most cost effective method of keeping people healthy.
    Attack chronic diseases which represent 70-80% of all health care costs through use of stem cell therapies.
    Please note that the new jobs associated with most of these improvements would be captive to the country where they are delivered.
    In order for the middle class to assure the resurgence of our economy, they must be motivated not only to vote for the candidates who will give high priority to these tasks, but should donate to their campaigns. Only then can the middle class regain control of their destiny from the large corporate interests.

  3. Alan Vanneman on

    Elizabeth Warren’s rebuttal to “the trio of Kim, Solomon and Kessler” left me cold. Social Security doesn’t help the “destitute,” if by destitute she means people who haven’t worked. And, as many historians have noted, when Social Security was established, the working poor–farm laborers and domestics, for example–were excluded.
    Her chart is rather glib. Are the items in parentheses all the costs she’s counting as “fixed”? If taken literally, that would exclude rent. More people own now than in the past. More importantly, people spend much more on homes and cars now because they can afford to.
    Warren talks about appealing to the middle class, but her basic message–life is tough and getting worse–simply isn’t true for most Americans. The Bush Administration has been a time of stasis for most Americans, but stasis at a high level. A 4.7% unemployment rate is not hard times, and repeated claims about the middle class taking on the chin are trivial. People are worried about paying their bills because they’ve run up such huge debts. If they would spend a few years paying off their debts instead of adding new ones, they wouldn’t be in such a tight fix.

  4. Davebo on

    Whenever a Democrat stands up and says, “I’ll help every child go to college,” then cuts off benefits at $20,000 a year, the message just burns deeper.

    Well that’s an interesting hypothetical situation.
    I agree, whenever a democrat stands up and says that the message will burn. I’m glad none have done so.

  5. Don Quixote on

    Your point below would be more valid if you could provide one example of a Democratic politician who has suggested this proposal with the 20k cutoff. Can you?

    Whenever a Democrat stands up and says, “I’ll help every child go to college,” then cuts off benefits at $20,000 a year, the message just burns deeper.


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