Soaking the Middle
Boiling Point: Republicans, Democrats, and the Decline of Middle-class Prosperity.
by Kevin Phillips.
Random House. 336 pp. $23.00.
At the very beginning of his new book, Kevin Phillips reminds us of his outstanding record in predicting—and in creating—major trends in American politics. His chain of successes, he writes, began in 1968, when Richard Nixon’s presidential-campaign operatives used Phillips’s demographic analyses to shape and target their message. In 1969 this research appeared in book form as The Emerging Republican Majority, which became, as Phillips reminds us by quoting the words of one news-magazine, “the political Bible of the Nixon era,” influencing Republican strategy “not only in 1972 but right through 1980.”
After The Emerging Republican Majority, and several less momentous books which he does not mention here, Phillips hit the jackpot again in 1990 with The Politics of Rich and Poor. There he argued that successive Republican administrations in the 1980’s had coddled the rich but left the rest of the once-victorious Reagan coalition ripe for plucking by a populist Democratic candidate. This book, he reports, angered his old political allies on the Right—but Newsweek called it a “founding document” of the 1992 presidential campaign and the New York Times “noted that Democratic strategists ‘revere’ the book’s thesis.”
Now, in Boiling Point, published after the November 1992 election but before President Clinton took office in January of this year, Phillips tries to forge another link in his chain of success. Yet what he has to say here is barely distinguishable from the argument of his previous book. Boiling Point has all the problems of Rich and Poor but none of the novelty.
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Boiling Point is not an orderly book, and its assertions are sometimes in conflict. Basically it offers a series of claims to the effect that the middle class has suffered in recent years, and there is no doubt that Phillips thinks that suffering has been severe. Thus, he points out that in the Reagan-Bush 80’s, while some middle-class Americans benefited from lower federal income taxes, a number of upper-middle-class managers paid higher marginal rates than their rich bosses did, and the middle class as a whole was soaked by an increase in Social Security taxes. Meanwhile, the states, no longer getting enough money from the federal government, had to raise more funds through taxes that were themselves mainly borne by the middle class.
Nor, according to Phillips, have the growing problems of the middle class been simply a matter of taxes. This group may have made some small economic progress during the Republican 1980’s, but its gains were virtually wiped out by the years of stagnation leading up to the 1992 election. Homes became a less secure investment for those who already owned them, and less affordable by those who did not. The cost of services used by the middle class, from health insurance and college tuition to cable-television rates and concert tickets, climbed skyward. The social health of overworked, over-extended middle-class families declined.
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To hear Phillips tell it, middle-class Americans simply cannot win. They have been hurt by aspects of Republican-era taxation that left the rich with the lion’s share of the country’s growing prosperity, and they have also been hurt by the progressive features of 1980’s taxation which concentrated tax relief on the poor and punished members of the upper-middle class by taxing them as if they were wealthy. When congressional liberals have set out to save the Social Security system, they have saddled the middle class with more taxes; when conservatives have deregulated, they, too, have hurt the middle class by sticking it with increased costs in areas like banking. When home prices have declined, the middle class has lost the investment it made in housing; when prices have risen, the middle class has found housing beyond its reach.
Such things, Phillips says, have happened before in the history of great powers. In 17th-century Holland and 19th-century Britain, public policy was captured by the rich; as a consequence, these nations declined. Late-20th-century America faces the same sort of danger. What distinguishes our case is that the disturbing trends of the 1980’s have generated active opposition from Middle Americans, who have suppressed their cultural conservatism and begun to act politically on the basis of their economic anxieties. These people have put a huge number of initiatives on state ballots and launched drives for term limits. They have supported populist figures as diverse as the liberal Harris Wofford in Pennsylvania and the racist David Duke in Louisiana. And in 1992 they elected Bill Clinton, who they thought would look out for their interests and not raise their taxes.
Yet the populism that brought Clinton to power, warns Phillips, could sweep him out of office just as easily. So massively alienated is the middle class in Phillips’s view that it is in danger of becoming “the biggest economic interest group of them all,” permanently wedded to its entitlements. The only way to square this circle is through leaders who will develop an agenda of “shared sacrifice” designed to take more from “those who had made so much money from the speculations and abuses of the 1980’s” (by which he means anyone with a high income) while protecting the economic interests of the middle class. Otherwise, if a leader like Clinton should appear to be breaking his promises to the middle class—for instance, by raising its taxes—the climate of our times will not easily forgive him.
Thus, Kevin Phillips before the Clinton inauguration, and well before the President’s February speech on the economy.
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In fact, an interesting and murky debate is taking place these days about what has happened to American economic performance and income distribution over the past two decades. The only sure thing is that the answer is complicated.
Yes, income inequality increased during the 1980’s, but the trend has slowed and may even have begun to reverse itself. Besides, as the economist Marvin Kosters has explained, “snapshot” tables of the country’s income distribution at any single time do not reflect the considerable upward movement in a family’s income over the years. Moreover, although the wages of young workers with low schooling levels have lagged behind those of other workers and sometimes even declined, this lag largely reflects not tax policy but the increasing value our labor markets place on education and training, and (according to Kosters) we can already see self-correcting market forces at work.
Whatever the objective state of the middle class, though, there was indeed an upsurge in populist politics during the late 1980’s, and middle-class anxieties did increase, showing themselves in more talk about unfair Japanese trade rules and Mexican labor practices, in the Ralph Nader/talk-show axis protesting the planned congressional salary increases of 1990, and in the rise of the inimitable Ross Perot. And Bill Clinton’s 1992 presidential campaign made highly specific appeals to middle-class economic discontents.
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It is reported that President Clinton took Boiling Point to Camp David with him before making the budget proposals in his State of the Union address. Certainly, the two major features of the Clinton plan—calling for increases in upper-bracket taxes but no cuts in middle-class entitlements—follow the Phillips outline quite exactly. Clinton’s speech was duly applauded by Phillips, who wrote in an oped piece in the Wall Street Journal that it was a wonderful performance.
Yet, for the most part, neither Clinton nor the other political entrepreneurs purporting to speak for Middle Americans have been so reckless as to urge out-and-out class warfare. Instead they have complained that the rich do not pay their “fair share” of taxes, or they have lambasted an unresponsive political system ruled by illegitimate interest groups that milk the citizenry.
Nor, so far, have middle-class Americans reacted to the Clinton plan in quite the way Phillips’s book would predict. Many have said they are willing to pay a little more money to put the national house in order. They have also voiced a distinctly un-Phillips-style worry. Like good citizens, they want to be assured that the extra taxes they may be required to pay will go toward cutting the national deficit, as promised by their new President, rather than being used to fund more programs and more benefits.
However concerned it is with fairness, then, the real-life American middle class does not readily buy the Phillips-Clinton talk about “shared sacrifice” for the sake of a more active, reinvigorated government. Too experienced with politicians to be shocked by Clinton’s broken campaign promise not to raise their taxes, middle-class Americans are also too experienced with government to trust that it will use its tax revenues better than it has done in the past. Which suggests that in order to pass his budget plan, Clinton will need to develop a more sophisticated understanding of what middle-class Americans want, and what they expect, and what they will stand for, than he is likely to have learned from Kevin Phillips.
