By William A. Galston
For the most part, the authors’ response on the question of insecurity amounts to a series of non sequiturs. It is easy to agree that “a catalogue of woes is not a path forward.” But who ever said it was? Naming a problem is the first step toward solving it. Those of us who argue that we must take economic insecurity more seriously than we did in the 1990s are hard at work crafting can-do responses. For example, collapse of defined-benefit pensions need not mean the end of pension security. Instead, we need a 21st century model that reallocates responsibilities among individuals, government, and the private sector.
Nor is a focus on insecurity an “inherently pessimistic” exercise, any more than a focus on inadequate or unequal opportunity would be. Pessimism is related, not to specific problems, but to an attitude about their solutions–namely, that there are none. But those of us who focus on insecurity do so in a spirit of optimism. There is a way forward; it’s up to us to find it and rally others to it.
The authors suggest that there is a contradiction between the quest for security and the acceptance of risk. This disregards the well-established fact that at least up to a certain point, increased security facilitates risk-taking. I will be more willing to start a new profession, and perhaps fail, if I don’t think I may jeopardize my family’s health insurance in the process.
The authors invoke FDR as an exemplar of optimism and hope, as indeed he was. But much of the New Deal was designed to address the extraordinary insecurity that economic collapse had produced. Is it really necessary to list all the programs–many of which exist today–that fall under this rubric? It is unfair to write this off as the “comforting bosom of the state.” Worse than unfair; it is implicitly to accept the conservative critique of the New Deal and everything that followed from it. I suspect that voters who still fear the “road to serfdom” will be Republicans all their lives (unless, perhaps, they start paying attention to what their party is doing in their name).
The authors conclude by invoking President Clinton, for whom I was proud to work. But that begs the question I raised: Are the problems, the solutions, and the public’s sentiments in 2006 the same as they were in 1992? It’s intellectually and politically easier to respond in the affirmative. That doesn’t mean it’s the right answer.

By Jacob S. Hacker

My opponent says America is a nation in decline. Of our economy, he says we are somewhere on the list beneath Germany, heading south toward Sri Lanka. Well, don’t let anyone tell you that America is second-rate, especially somebody running for President.
Maybe he hasn’t heard that we are still the world’s largest economy. No other nation sells more outside its borders. The Germans, the British, the Japanese can’t touch the productivity of you, the American worker and the American farmer. My opponent won’t mention that. He won’t remind you that interest rates are the lowest they’ve been in 20 years, and millions of Americans have refinanced their homes. You just won’t hear that inflation, the thief of the middle class, has been locked in a maximum security prison…
Now, I know that Americans are uneasy today. There is anxious talk around our kitchen tables. But from where I stand, I see not America’s sunset but a sunrise.
The world changes for which we’ve sacrificed for a generation have finally come to pass, and with them a rare and unprecedented opportunity to pass the sweet cup of prosperity around our American table.

Sounds pretty optimistic to me. Only this was George H. W. Bush, accepting the Republican nomination in 1992. Meanwhile, Bill Clinton was feeling America’s pain: “Tonight 10 million of our fellow Americans are out of work,” he said in his acceptance speech.

Tens of millions more work harder for lower pay. The incumbent President says unemployment always goes up a little before a recovery begins, but unemployment only has to go up by one more person before a real recovery can begin. And Mr. President, you are that man.

A great passage capped with humor, but hardly devoid of gloom.
Of course, Bill Clinton went on to talk about his vision for the nation, about how he would put people first and change the country for the better and clean up government. But that’s the whole point: His message spoke to Americans’ fears and their hopes, their anxieties and their aspirations. And if there’s a single lesson in Clinton’s success–and I think there are more than one, some cautionary and some prescriptive–it’s that a winning economic strategy is rooted in an evocative narrative about why the country is not living up to its potential and how it yet can. That was certainly the story with FDR, the greatest by far of the three presidents whom Anne Kim, Adam Solomon, and Jim Kessler lionize (and the one, incidentally, that most befuddled the interesting, if preliminary, analysis by Seligman and Zullow that they cite–I guess when you’re fighting the Great Depression and World War II, optimism isn’t essential for success).
Kim, Solomon, and Kessler (as before, “KSK”) strike back hard, but I cannot tell exactly what they are striking back against. Not the notion that everything is hunky dory. They recognize that there are serious challenges and real sources of insecurity. Nor do KSK dispute the importance of linking security with opportunity, though they are certain that insecurity shouldn’t be the only subject, as if anyone in the discussion had suggested it should. (My argument, for example, was that security and opportunity are inextricably interwoven–a point that critics of public and private insurance have long disputed, as I show in The Great Risk Shift, but which those concerned about the health of the middle class should not let slip from their rhetorical and policy arsenal lightly.) Their main point seems to be that the middle class, properly defined, is richer than most of us think. But, as I noted in my last post and elaborate on in a moment, their view of the middle class is too static to capture either Americans’ real sense of insecurity (which KSK wisely don’t deny–they can read the polls, too) or Americans’ real, if often thwarted, aspirations for genuine upward mobility.
I should say right away, however, that I am grateful to KSK for talking about government and the need to restore public faith in it–a point that I emphasized in my last post. Reagan famously said that government isn’t the solution to America’s problems; government is the problem. Today, it’s fair to say that government may not be the solution to the Democrats’ problems, but that running away from government will do nothing to deal with the real problem of rebuilding the tattered public trust in the public sector, or in the Democratic Party. The dominant economic message today is that you must make it on your own, that government’s goal is mostly limited to protecting you from the illegitimate claims of others. There is no way to reverse this long-term tide without reclaiming the ideal that de Tocqueville once termed “self-interest, rightly understood”–the notion that we can achieve personal ends in concert that we cannot dream of achieving alone.
The economic standing of the middle class is constantly in flux, because our economy is constantly in flux. American incomes rise and fall–indeed, rise and fall to a far greater degree than they did a generation ago–and in those rises and those falls are stories of hopes fulfilled and dreams postponed, of expectations realized and expectations dashed. No single story will capture this complex reality. But any story that does not take seriously the legitimate fears Americans have about the increasingly ubiquitous downward trips on our economic roller coaster will fail to speak to today’s middle class.
In any case, the economic standing of the middle class can never be captured in a single statistical snapshot, because the middle class is an aspiration and ideal, not just a set of numbers in a Census table. Americans with incomes much, much lower than those that KSK hold up consider themselves solidly middle class. Indeed, those white voters with $23,700 in annual income who sat on the dividing line between the parties in 2002 probably consider themselves middle class. Which, come to think of it, is a good reason to be skeptical that the Democrats’ problems with the middle class are reflective of their failure to target their message more assiduously to families that make $63,300 a year.
What being middle class has historically meant is this: If you work hard and do right by your families, you should enjoy both basic financial security and a fair shot at the American Dream. And it is the loss of this guarantee that increasingly defines the middle class today. Middle class Americans are the new “tweeners”–too rich to receive Medicaid and too poor to know that they’ll always be protected from ruinous health costs, too rich to expect to live on Social Security alone and too poor to know that they’ll be able to put away enough in their 401(k).
The only message that these middle-class Americans have heard loud and clear, whether they’re making $20,000 or $120,000, is that they’re the ones responsible for their successes and their failures, that they are the ones who need to invest in education, take on a mortgage, ensure they have health coverage, put away enough for their retirement–and bail themselves out (now, without traditional bankruptcy protections) if things go bad. No wonder they don’t think government is there for them. It often isn’t. More important, there’s no one telling them that being middle class isn’t just about what you don’t have or what you need to do on your own. It’s about reaching a point on the economic ladder where the grip is more secure, the view more enticing, and the distance to the top shorter.
To place security at the center of Democrats’ economic agenda wouldn’t mean incessantly cataloguing the woes of the middle class, as KSK dismissively put it. It would mean identifying the gaps in the ladder of advancement and fixing them. Policy can’t be an afterthought in this vision; it has to be at the heart of the effort. Messages are one thing; leadership and action are another. And it will take leadership and action aplenty before Americans can look confidently up toward the ladder’s highest rungs, rather than worry about what lies below.

By Anne Kim, Adam Solomon, and Jim Kessler
Before rebutting the critique of our strategy document, we’d like to express our thanks. First, a tremendous thanks to The Democratic Strategist for creating an exciting new forum for individuals and organizations to post ideas that challenge orthodoxies to help create a new progressive majority. We especially appreciate your asking Third Way to contribute a piece to your second issue.
We’d also like to thank our critics, Elizabeth Warren, Jacob Hacker, John Halpin, Ruy Teixeira, and Bill Galston, for taking the time to read and take a sledgehammer to our piece. In all seriousness, we appreciate your comments and take them to heart. We are honored that each of you spent the time to discuss and critique our work.
And finally, we want to thank the readers who took it upon themselves to post comments on the discussion page. We were heartened that most of you had very positive things to say about our piece as well as some very interesting ideas and suggestions. We are constantly on the lookout for relevant facts and perspectives, and you can rest assured that we’ll be incorporating these ideas in our future work.
Now to our response…
We’ll begin on common ground. All of us appear to agree on three fundamental points raised in our original piece:

1. Progressives have a problem with middle-class voters, and that problem includes our economic message;
2. Progressives need new ideas that speak to the middle class and reflect their concerns and desires; and
3. The overall economy isn’t headed off a cliff.

Where our critics disagree with us is on the following three points:

1. The “truth” about the condition of the middle class;
2. Whether security is more important to voters than opportunity or vice versa; and
3. Whether the policies briefly outlined in our piece are sufficiently robust to support an enduring message.

We’ll concede the third point up front. Our initial piece was a political strategy document, not a policy memo. In future work by Third Way, we will lay out the policy details.
On the first two points, however, we do not cede ground.
The truth about the middle class
A recurring theme among our critics is that we deny the “truth” about the middle-class condition: that the middle class is beleaguered, fragile and, as a consequence, pessimistic. Though we disagree with these characterizations of the middle-class psyche (more on that below), we don’t deny there’s cause for anxiety.
Men’s wages are stagnant or declining, especially for the less-educated. Long-term male job tenure is down; income inequality is up. Moreover, as Galston points out, massive structural shifts are now unfolding; this is a new era of fierce global competition and rapid technological change. Two billion people have entered the world labor market since the fall of the Berlin Wall, which could potentially depress world wages–particularly at the bottom of the earnings scale–for decades to come. These are truths we accept.
Nevertheless, too many progressives zero in on a handful of negative numbers as if bad news is the whole story and the only story. When progressives warn of the growth in debt, they don’t mention how assets have grown even faster. Real median net worth has risen 35% since 1989. When progressives talk of stagnant male wages, they neglect the phenomenal rise in women’s incomes at all levels of education, which has increased in real terms by 54% since 1979. Why has the bad news about men so greatly overshadowed the good news about women?
We think the current progressive bias toward the negative distorts progressive message and policy. And unless that bias is corrected, progressives will never fully understand the middle class or be able to reach it politically.
For example, it is axiomatic among progressives that the “typical” middle-class American family makes about $44,000–that’s approximately the median income for all households in 2004. But $44,000–while “accurate”–distorts the big picture in at least two significant respects:

• The very young and the very old drag the median down. In our original piece, we argued that policy makers and politicians should think of the “typical” middle-class income as being $63,300 (not $44,000). This higher figure is the median income for prime-age households, age 26-59, in 2004. From the perspective of a responsible strategist (an oxymoron?) it makes sense to exclude the very young and the very old in understanding the “typical” middle-class family. Young people at the start of their careers are underpaid but upwardly mobile. Their current income does not provide an accurate picture of their economic concerns and opportunities. Likewise, people at or near retirement often no longer draw a paycheck. However, since their costs are often lower (mortgages are paid, no children to support) their standard of living is stable, even with a lower income.
• Many more people live in upper-income households than in lower-income ones. The Census Bureau divides households into quintiles, but lower income households have fewer people in them. In fact, only 14.4% of the population lives in the bottom quintile, while 25% of Americans live in the top quintile. A family with income of $45,000 ranks only in the 35th percentile among all prime-earner families, and drops to the 16th percentile among married, two-earner households. The median income for prime-age households with two adults and children is $70,420.

These facts alone should radically change the mental image that most progressives hold about the middle class, and it should change the way that progressives think about how to target the middle class effectively. Believing that the “typical” middle-class family earns $44,000 leads to a different place from where the middle class actually is, and this could in fact be one reason why some progressives think populism works. But that extra $20,000 to $30,000 likely makes a huge difference, for example, as to whether people find high gas prices annoying or oppressive–and whether they find oil companies distasteful or puppeteers.
We will never reach the middle class unless we fully understand it.
The politics of opportunity and the trap of security
The second broad set of criticisms leveled at our piece argues that security, not opportunity, is the real concern of most Americans and that security should therefore occupy center stage when progressives talk about the economy.
Again, we don’t deny that security should be an important component of the progressive message and policy agenda. In The Politics of Opportunity, on which our discussion piece was based, we in fact put economic security as one of three pillars for creating opportunity.
But we don’t think security should be the linchpin of the progressive message. If security is the central building block of an economic policy agenda and message, it’s inevitable that policy analysts and politicians will spend a lot of time cataloging all of the anxieties and catastrophes that justify that effort. Such an exercise is inherently pessimistic; and the truth about pessimistic candidates is that they lose.
In 1990, two leading psychologists at the University of Pennsylvania, Martin Seligman and Harold Zullow, conducted groundbreaking research on the effect of optimism in politics. They found that in 18 out of the 22 presidential elections from 1900 to 1984, the more optimistic candidate won. Since 1948, the only pessimist who’s won is Richard Nixon.
The second problem with a message based on insecurity is that it fails the test of leadership. A catalogue of woes is not a path forward; it is simply telling folks what they already know: a lot of them have debt and everyone worries about paying their bills (especially those involving education, health and retirement).
Americans like to aim high and want to succeed. And they want leaders who can show them the way. Presidents Clinton, Kennedy and Roosevelt challenged and inspired Americans to be greater than they were and to aim for something higher and better for themselves. They stood for confronting a changing world with hope and optimism–even if that involved taking risks. This is the reason they are the greatest politicians of the last century. They promised people more than security and the comforting bosom of the state.
Sure, as Warren points out, 800,000 people might watch the populist tirades of Lou Dobbs at night. But let’s put that in perspective: 35 million people tune in to American Idol, a show that for all its faults epitomizes the aspirational spirit of America.
In 1979, President Jimmy Carter warned Americans that, “For the first time in the history of our country a majority of our people believe that the next five years will be worse than the past five years. The productivity of American workers is actually dropping, and the willingness of Americans to save for the future has fallen below that of all other people in the Western World.”
If it sounds familiar, that’s because it is. For the last 35 years progressives have carried the same message of angst; the one exception is President Clinton, the only Democrat in recent history to win the White House. As a political strategy, this message of misery has generally failed. We see no reason why–given the relatively strong state of the economy and the actual state of the “typical” middle class family–a new, updated catalogue of woes would work today.
A politically winning message is not about where people are but where they want to go. It’s time for something new.
The way forward
Progressives have poured tremendous intellectual energy into describing the decline of the middle class when that energy would be better spent in developing new ideas for re-engaging the middle class and helping it to prosper. That is what we aim to do.
As Third Way continues its work on economic messaging and policy, we envision a new role for government–reinvigorated, ambitious and in tune with modern times. In our view, the business world and the American people are already adapting to the changing realities of the modern era. Why else are American companies still dominating the global economy, and why else are so many Americans making college an imperative for their children? They already know what it takes to succeed in today’s world.
Government policies and institutions, however, have failed to evolve in step with changing times, and these failures are a drag on America’s continued prosperity. Worse, the Republican administration and Republican Congress have moved the nation backward, to the detriment of the middle class. They’ve squandered opportunities to ready the nation for its future by wasting Clinton’s surplus on tax cuts for people who don’t need them instead of on tax cuts for middle-class people so they can send their kids to college. Their active mismanagement of government has degraded faith in government as an active force for good in people’s lives.
As Governor Tom Vilsack noted in David Broder’s recent column, Americans feel isolated from government and have the sense that they are navigating the crosscurrents of change on their own. It will take a lot to undo the damage and restore people’s faith in government.
We began our opening piece reciting the number $23,700 and noted that in 2004, this was the household income level at which a white voter was more likely to vote Republican than Democratic in congressional races. Of course, national security and cultural issues come in to play with these voters as they do to a certain degree with all voters. But this extremely low tipping point is a bright-red neon sign message to Democrats.
Middle-class voters do not find our policies at all relevant to their economic situation. They do not believe that what we offer will make an appreciably positive difference in their lives. And when an economic message and agenda have little relevancy, the other issues–abortion, gay marriage, and national security–will take primacy.
To all progressives, we ask that each of us do a better job of really understanding who the middle class is and how it lives, otherwise we will find that our message is not only tone deaf, it is just plain wrong.