I sat down this morning to write about teachers and bridges, about motivation and inspiration. Upon rereading the President's Roanoke remarks, however, my focus shifted away from my planned topic of entrepreneurial outrage ("You didn't build that!"). Reading deeper, a more alarming theme emerged:
Now, we don’t need more top-down economics. I’ve got a different view. I believe that the way you grow the economy is from the middle out. (Applause.) I believe that you grow the economy from the bottom up. I believe that when working people are doing well, the country does well. (Applause.) ...
So we say to ourselves, ever since the founding of this country, you know what, there are some things we do better together. That’s how we funded the GI Bill. That’s how we created the middle class. That’s how we built the Golden Gate Bridge or the Hoover Dam. That’s how we invented the Internet. That’s how we sent a man to the moon. We rise or fall together as one nation and as one people, and that’s the reason I’m running for President -- because I still believe in that idea. You’re not on your own, we’re in this together. (Applause.)
So, contrary to what you may have learned in your reactionary history class in high school, the middle class was not an organic outgrowth of the Industrial Revolution, or the coming-of-age of the mighty American Economy. No, the middle class is a policy construct of government, at least in Obama's perception.
One thing about this President, he telegraphs his blows. He tells us precisely what he's about, then he sets about doing it.
The President's concept of "middle class" diverges radically from the traditional one, the middle class I grew up in. That middle class bought into a concept of the American Dream that included class mobility. Good grades, hard work, passion and a willingness to take some risk were a ticket to a better life.
The President's vision is of a permanent, entitled Democratic voting majority of comprised of the lower- and working classes, more of a "meso-class" than a true middle class. In this vision, government "safety nets"-cum-hammocks have the necessities (food, shelter, health care) covered. Government even provides some of the trappings of the middle class, like cell phones. Class mobility is punished: anyone who tries to escape the meso-class climbs a steep slope of taxation. Many will judge it not worth the effort, quite a rational decision given the cost of entitlements foregone vs. the risk of failure. Tax collections will fall as the truly rich sit on their assets, absent a motivation to risk capital on new investment. It won't matter so much, since job creation will be a central function of government, not the private sector. Tax rates will necessarily increase, and the cycle repeats.
The President's understanding of history is flawed. It's not that trickle-down economics has been tried and found wanting, it's never really been tried. The most dramatic period of economic growth and rebirth, at least in my experience, was 1980 to 2000. The foundation of the renaissance was President Reagan's tax reform, which shifted the economy's focus away from the avoidance of ridiculously burdensome 70+% marginal tax rates (characterized by abusive tax shelters and intentionally unprofitable investments) toward real, productive economic growth. A Democratic Congress refused to reign in spending, so Reagan got half a measure of what might have been possible, but it undeniably worked.
Today's Democrats, meanwhile, cling to the notion that we can tax our way to prosperity. This week, Steny Hoyer declared that unemployment benefits and food stamps are the two most effective means at our disposal of stimulating the economy. Left to their own devices, one can be sure that the Democrats would create two new Cabinet-level departments: the Department of Digging Holes and the Department of Filling Them Up.
Cross-posted at Maley's Energy Blog.