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Explaining ‘middle-class economics’

Nancy Marshall-Genzer Jan 21, 2015
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Explaining ‘middle-class economics’

Nancy Marshall-Genzer Jan 21, 2015
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Ask just about anybody, and they’ll tell you they’re part of the middle class.

“Certainly, it is the label of choice,” says Frank Newport, editor-in-chief of Gallup. More than half of the people in Gallup’s last survey identified themselves as middle class, he says. But there’s more to it than just wealth, or income. “Middle class seems to be a very comfortable place for Americans to put themselves,” Newport says.

In Tuesday’s State of the Union address, President Obama called middle-class economics “the idea that this country does best when everyone gets their fair shot, everyone does their fair share, and everyone plays by the same set of rules. “

But “middle class” has no formal economic definition, meaning many people define it themselves.

“And that often means working, not relying on government,” says Melissa Kearney, director of the Hamilton Project at the Brookings Institution. “But it’s really a nebulous concept.”

Politicians love to talk about middle-class Americans, Kearney says, but it’s hard to tailor government programs to them, precisely because there’s no middle-class definition. As a result, Obama’s plan bleeds over to not-so-middle class Americans, she says.

“Some of these tax benefits would extend to folks – couples making $200,000,” she says, referring to beneficiaries of a proposed tax credit for two-income couples. 

Other parts of the president’s plan apply mainly to low-income Americans – things like increasing the minimum wage and instituting paid sick days. The president’s proposal would have to be more targeted to reach people truly in the middle of the pack.

Did he hit the target? 

“He threw a water balloon at it, and it splattered all over the place,” says Sharyn O’Halloran, a professor of political economy at Columbia University’s School of International and Public Affairs. “He saw a target – middle class – and just made a bunch of big sweeping proposals which he thought would be appealing to them.”

The proposals won’t necessarily be appealing to Congress.  Still, O’Halloran says, the president has set the stage for Democrats who want to make middle class economics part of the 2016 presidential race.

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