Miraculously the Republicans Rediscover the Average American

As if by magic, the Republican Party has rediscovered most of the rest of us. My neck is still stiff from the political whiplash I sustained when the Grand Old Party radically made its 180-degree course change back to the political middle. Did Reince Priebus or anyone else at the helm of the G.O.P. think to pipe that age-old message that all sailors know so well: “Standby to roll as the ship comes about in heavy weather.”

Mitt Romney is running like hell from his now famous 47% comment. In the days before President Obama’s State of the Union Message Romney said that the last six years have seen poverty expand and the gap between rich and poor widen. Gee, what a novel observation, where have we heard that before. Jeb Bush launched his presidential campaign with a declaration, which said in part, “While the last eight years have been pretty good ones for top earners, they’ve been a lost decade for the rest of America.” Mitch MCConnell suddenly believes that the party must focus on the plight of the middle class. Meanwhile, appearing at the Iowa Freedom Summit, Rick Santorum thundered: “We need to become the party of the worker.”  Even newly minted Republican Senator Joni Ernst mentioned union households in her rebuttle to Obama’s State of the Union Message and said that “Congress is back to work for the American people.” Well thank God for that, the 113^th Congress was the least productive in modern times.

Quoting the New York Times on the new course being charted by the G.O.P.: “Just acknowledging a wealth gap represents a significant shift in language for Republicans, who have long held that market forces driving overall economic growth will ultimately yield higher incomes without any help from government.” Central to this rhetorical shift is one elemental fact which the Democrats have failed to fully capitialize over the past six years. Which is that conservatives have venerated the business class and entrepreneurs above everyone else. At times they have spoken as if the middle and working classes hardly existed. Had you listened to the Republican National Convention in 2012 you would have heard a cascade of laudatory speeches about the business class and entrepreneurs but precious little about the people in the street. The plight of average soul seem to have mattered for little, their situation being nothing more than an afterthought. For all the convention rhetoric you would have just assumed that the rest of us had simply been pulled along in the slipstream generated by the soaring 1 percent.

Think back across the past six years on all of the debate that involved the possibility of raising taxes ever so slightly on the wealthiest among us as way of mitigating the problem of income inequality. Weren’t we told by Republicans that it would hamper job creation? Likewise the same argument was made in opposing taxation for public works spending, family leave plans and government aid for job training. Thereafter John Boehner would carry on endlessly with the question “Mr. President, where are the jobs?” Why didn’t the Democrats ask the same of the Republicans? Why wasn’t the business class and entrepreneurs creating jobs as their tax burden was the lowest since Ronald Reagan and the cost of capital lower than it had been in memory?

Democrats repeatedly failed to point out that the connection between tax rates and growth is less than emphatically esthablished? Citing the findings of Congressional Budget Office, as just one example: “ The concept of lower taxes is so appealing to voters that many embrace them as an economic cure-all… But economic research suggests that tax cuts, though difficult for politicians to resist in election season, have limited ability to bolster the flagging economy because they are essentially a supply-side remedy for a problem caused by lack of demand.” Remember when even talking about the wealth gap represented class warfare? Any effort by government to affect changes in employment policy, hiring, unionization, etc., was seen as antithetical to the working of the free market. But now, suddenly, magically, many if not most of these ideas have found a new life, a renaisance, in the Republican Party.

What lead to such a radical departure from the conservative economic policies of the past six years? For one, conservative columnist Ross Douthat pointed out one very inconvienent fact about 2014: “For the second time in four years, the Republican Party has won a sweeping midterm victory without having a policy agenda to match.”  Also consider that the G.O.P. has lost the popular vote in five of the past six presidential elections. RNC Chairman Reince Priebus considers all of the Republican victories of the past six years for naught if they don’t capture the White House in 2016. I’d hazard a guess that the G.O.P. leadership fully realizes that the 2014 election does not even remotely guarantee victory in 2016. After all they won an election in predominately red states and with national turnout of only about 33% of the electorate. That’s the lowest turnout since 1942 and it’s hardly a ringing endorsement of the G.O.P. and its ideas. The fact that 66% of the voters stayed home is a condemnation of both parties for that matter.

Economic data presented another set of factors that, at long last, could no longer be ignored. or glossed over with stock conservative talking points. Standard and Poors produced a study which showed that the widening income gap was holding back economic recovery while others showed that the American middle class was no longer the world’s richest. Income stagnation and the replacement of so many high paying jobs, pre-recession, with so many low paying jobs during the recovery could also no longer be ignored. Nor was it possible to deny the fact the current fifteen year stretch of wage stagnation predates the Obama presidency and has its roots in a Republican administration. Business statistics showed what falling wage levels could only suggest, that based on buying trends and habits, the American middle class was shrinking. To some extent the Republicans had made the situation all the worse with sequestration finally working its way through the economy killing an estimated 1.6 million jobs. Thus it’s no surprise that some Republican congressional committee leaders are talking about undoing sequestration.

During political campaigns, at least, Republicans often wax nostalgic about a return to the middle class prosperity of yesteryear. But what, in fact, did that prosperous landscape actually look like? Most historians would consider the high watermark of the American middle and working classes to be the period from the early 1950s to the mid 1970s with a steady decline thereafter carrying the reader right up to today. From the fifties to the mid seventies America was the world’s dominant industrial power. The economic landscape was characterized by large manufacturing and industrial concerns, most of which were unionized and if not, paid high wages and generous benefits anyway. Approximately 38% of the overall private sector workforce belonged to unions with the public sector soon to follow suit. Low paying service sector jobs made up a much smaller portion of overall employment and employment in agricultural continued its long term decline. A middle class wage could support a family on one paycheck with little in the way of credit card debt being accumulated. Immigration was nil and largely centered on political refugees fleeing Communism. Washington spent billions on foreign aid programs such as the Marshall Plan, multiple strategic overseas alliances, and the bases and fleets related thereto. At home domestic spending to created the Interstate Highway System, residential home building via government loan guarantee programs and the space program.

It goes without saying that the landscape of a prosperous middle class described above doesn’t even look remotely similiar to what we see today. Nor does a reconstituting of that landscape seem to logically follow from the polices that conservatives have advocated with tireless repetition for the past thirty years. Many of those policies have been undeniably antithetical to middle and working class interests. That said what policies has the G.O.P. promoted over the past six years, right up to today that stand in contradistinction to this new found concern for the average American?

For one thing conservatives have been aggressively anti-union in spite of long standing evidence which shows that unions raise the living standards of their members and thereby their communities. Anti-union antipathy extends to a plan to stymie the National Relations Board in its mission to protect the right to organize as well as protect employers from organizing campaign abuses. Apparently Republicans feel that employers, through a now long standing practice of intimidating workers seeking to unionize, need little from the NLRB. Thus the risk to business interests is slim in this case. Both the Economic Policy Institute (EPI) and The Center for Economic and Policy Research (CEPR), among others, have produced numerous studies proving this point which are sumarized in the following paragraphs and references below.

Lawrence Mishel of  EPI found that “The last decade has also been characterized by increased wage inequality between workers at the top and those at the middle, and by the continued divergence between overall productivity and the wages or compensation of the typical worker. A major factor driving these trends has been the ongoing erosion of unionization and the declining bargaining power of unions, along with the weakened ability of unions to set norms or labor standards that raise the wages of comparable nonunion workers.” Mishel found that union workers earn on average 13.6% more than their nonunion counterparts do and that they are more likely to have employer provided health care by a margin of 28.3% and a pension plan by a margin of 53.9%.

Republicans at both the national, state and now local levels have long supported the enactment of “Right-to-Work” legislation, which impedes union organizing and weakens unions that already exist. In the past six years, right-to-work laws governing the private sector were passed in Michigan and Indiana, with a failed attempt in Ohio in 2011. Earlier that year Wisconsin Republican Governor Scott Walker pushed through a budget repair plan that severely limited public employee collective bargaining power and union security. Last year Walker hinted that Wisconsin might be next in attempting to enact right-to-work laws in the private sector but has since publicly backed off on his threat. In addition, in a novel approach to the idea, right-to-work advocates in Kentucky have focused on county and city right-to-work laws rather than try to affect it at the state level. Thus far, five Kentucky counties have passed right-to-work legislation. This past summer in Tennessee, a right-to-work state, Republicans at both the state and local levels, as well as the Senator Bob Corker, weighed in heavily against the United Auto Workers attempt to organize the Volkswagen plant in Chattanooga. Ironically, the company favored unionization, as it would facilitate the establishment of a Worker’s Council, a standard feature throughout Volkswagen’s worldwide business model.

Overall, what is the effect of right-to-work laws on the average American? EPI has shown that wages are 3.2% lower for comparable work, which equates to $1,500.00 less per year for those working in right-to-work states. Those same workers are less likely to participate in a pension plan by a margin of 4.8%, which equates nationally to 3.8 million fewer workers being covered by a pension. Those workers are also less likely to have employer sponsored health care coverage. Pensions, health care insurance and good wages are hallmarks of a middle class society but the lack of such benefits is a hallmark of state right-to-work economies. Thus in Tennessee as elsewhere Republican political leadership has worked to impede the average American from moving ahead economically and thereby contributed to the very problems they now say they seek to remedy.

Mostly Republicans have stood squarely against raising the minimum wage in spite of the fact that doing so has been found not to cost jobs or hinder economic growth. Even Fox News admits as much. The U.S. Department of Labor found “A review of 64 studies on minimum wage increases found no discernable effect on employment…. Academic research also has shown that higher wages sharply reduce employee turnover, which can reduce employment and training costs… Since 1938, the federal minimum wage has been increased 22 times. For more than 75 years, real GDP per capita has steadily increased, even when the minimum wage has been raised.” However there is some good news coming out of Republican controlled states on this issue. In what may be a growing recognition of the compelling arguments for raising the minimum wage and the lack of firm evidence to the contrary four Republican dominated states, Alaska, Arkansas, Nebraska and South Dakota, approved minimum wage increases through ballot measures in the 2014 general election.

On other important issues such as eliminating the gender gap in pay, family and child leave, and government funding for occupational training Republicans here too have an established track record of taking positions that are contrary to the interests of middle and working class Americans. Republicans in the 112^th and 113^th Congresses voted repeatedly against the Paycheck Fairness Act, which sought to eliminate gender pay discrepancies as well as other gender based work related issues. Republicans have an established record of accomplishment in opposing paid leave for childcare and family illness and often for reasons that are dramatically at variance with public opinion. Quoting the Washington Post, “Large majorities of voters of all persuasions said they are in favor of paid sick days, equal pay for equal work and affordable child and elder care, and 73 percent say the government has a responsibility to ensure employers treat employees fairly by providing them with such policies. About 70 percent said that workplace laws and policies are out of synch with the changing realities of modern families, and with the changing roles of men and women at work and at home. In addition, 81 percent – 94 percent Democrats, 80 percent of Independents and 65 percent of Republicans- agree that workplace rules to ensure equal pay, paid time off to care for family members and affordable childcare “is good for our nation.”

In the area of job training and infrastructure revitalization, Republican attitudes are a bit more productive regarding what is best for the rest of us. Past Republican National Platforms have contained favorable language addressing job training and infrastructure spending but as we all know, what is in a platform does not necessarily become policy even when the party that created that platform comes into power. Republicans generally favor simplifying and localizing occupational training programs and that is generally a good idea. However even those programs must be funded and here again the G.O.P. falls short. The conservative National Journal’s Fawn Johnson pointed this out in analyzing the G.O.P.’s newfound interest in job training programs. To wit: “Let’s be clear. These GOP tidbits are still pretty fluffy. As I pointed out last week, the real test of Republicans’ messaging on job training and education will be whether they are willing to fund it.” One other issue surrounding job-training reform efforts is that Republicans have often tried to shut out labor and community organizations from the process to stack things in favor of business interests, which conversely can stack them against the interests of the middle and working classes.

Republicans on Capitol Hill, professing an ongoing concern over job creation, have put a much greater emphasis on building the Keystone XL Pipeline than they have on addressing the nations’ crumbling infrastructure. The American middle and working classes would benefit much more from comprehensive infrastructure policy than they ever will from Keystone. Quoting a recent article appearing in the New York Times: “Republicans promote the project as a major source of employment and an economic engine, but the State Department review estimated that Keystone would support only about 35 permanent jobs. Keystone would create about 42,000 temporary jobs over the two years it will take to build it — about 3,900 of them in construction and the rest are in indirect support jobs, such as food service. In comparison, there were 241,000 new jobs created in December alone. Over all, the jobs represented by Keystone account than for less one-tenth of 1 percent of the American economy.” In reality Keystone will do little to ensure long term growth in jobs or the country’s energy indepence. Keystone is a private sector project which sends Canadian oil to Gulf Coast refineries with no stipulation that the refined products will stay on the U.S. market. As for the effect on oil and petroleum prices those prices are the function of a world wide market and the impact of Keystone will be measured in pennies per barrel at best. It’s also more than a bit ironic that, according to Senator Chuck Schummer, the pipeline will utilize steel products, from pipes to structural componets, that are of Canadian manufacture. If the Republicans pushing the Keystone pipeline are so concerned about American jobs why are they not insisting on the steel involved in its construction be sourced in this country? Personally I’m for building Keystone but I’m under no illusions as to it’s being of great long term import to either the nation’s energy or employment picture.

In their new found desire to address the plight of America’s middle and working classes what can the Republican Party do to help mitigate the worst aspects of income and opportunity inequality while not straying too far from the conservativism of the post Reagan era? The answer in reality is not all that much. Any attempt to force fit remedial policies into the long esthablished belief that market forces drive overall economic growth and higher incomes without any help from government will most likely yeild little in the way of net results. Secondly, to what extent will what’s left of the Tea Party Caucus with its radically out of date economic views further constrain any movement by Esthablishment Republicans back to the center where the compromises need to effect these remedies naturally exists? The radicals on the far right can be counted on to continue to espouse the stock ideology that harkens back to the days of Calvin Coolidge but in doing so they will only further remove themselves from the national converstation. That’s because effecting a solution to the problems besetting America’s middle and working classes are beyond the abilities of individual companys, industries, well meaning philanthrophists and charitable organizations. Republican leaders need to acknowledge this reality.

However there are policy solutions being formulated independnet of efforts within the Republican Party to which Republicans could look to if they are serious about solving the problems of economic inequality. Former Treasury Secretary Lawrence H. Summers has compiled such a study: “Report of the Commission on Inclusive Prosperity”, referenced below. That report found that the advanced nations of Canada and Australia, among others, have done a better job in lessening income inequality in a time of slow economic growth than has the United States. These nations have achieved this through doing a better job in mass education, assisting low income students through college, near universal preschool, more equitable income distribution through progressive tax law, stronger financial regulation and generous child and family leave. Workers in these countries are more likely to be unionized, their unions stronger than ours and the percentage of the overall workforce unionization much higher. These countries have better job training programs in place which contribute to a better mix of jobs and stronger pre-tax income growth.

Policies addressing government investment in research and development will also pose some serious challenges to Republicans who have long believed that “government is part of the problem.” Quoating Robert Atkinson, President of the Information, Technology and Innovation Foundation: “For the United States to regain its lost manufacturing prowess, it must build on policies… to regain technological advantage over our global competitors. The private sector cannot do this alone, as businesses have been shown to underinvest in new technologies both in theory and in practice. Government investment in commercial manufacturing technologies — through programs like those proposed in the Revitalize American Manufacturing Innovation Bill — can pay significant dividends and is essential if the United States hopes to compete. Other nations are already making these investments. Unless we do the same, we will be left behind, and pay the price in jobs and national income stagnation.”

Members of the incoming Republican Congress have some good ideas such as compensation time off in lieu of overtime pay, expanding the Earned Income Tax Credit, greater employee ownership, increased profit sharing, purchasing health care insurance across state lines and wage subsidies via tax reform. The Republican Establishment also knows that the future of the G.O.P. depends on winning elections by decisive margins and that cannot be done by continuing to promote an ultra conservative agenda. The Party has a history that goes back to the post the Civil War era, of favoring business interests over the interests of the broader population. That said I can’t see the Republican Party effectively addressing the declining socio-economic conditions in this country without a radical departure from those conservative free market driven principles which have become a defining a feature of the Party in the post Reagan era. In the period between the end of the Second World War and the rise of Ronald Reagan, the Republicans never seriously challenged the basic structure of the New Deal even though they sought to fine-tune it here and there and, overall better manage the process of government and its policy output. I would suggest that the G.O.P. needs to return to that mindset if it hopes to be effective in addressing the problems of income inequality. Anything short of that will most likely yield mixed results at best and further economic stagnation at worst.

The G.O.P. of today is a far cry from that of the post WWII era and there are still too many who willingly or naively assume that government has no constructive role to play in the economy. That notion is contrary to an accurate reading of the country’s economic history. The G.O.P. cannot effectively reverse decades of middle class and working class decline single-handedly and it cannot do it without a major departure from the mindset of the past thirty years. Perhaps the now glaring issues of income inequality, with the longer term threat that it poses to democracy and growth, will finally drive the G.O.P. back towards the center they way Tea Party radicalism drove it to the right. That prospect would bode well for the G.O.P. due to the simple fact that America is not a conservative country; it is not even a right of center country. In the final analysis, there is a lot more to ensuring prosperity for all than making democracy safe for the business class and the entrepreneurs and there is certainly much more to it than empty rhetoric like “We need to become the party of the worker.”

 

Steven J. Gulitti

1 February 2015

 

 

 

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