Oh say can you bourgeois-ie

[penfield]

"Let me tell you why I'm no fan of the middle class, okay? Nothing 'middle' is all that great. Middle class, Middle Ages, Middle East ... they're trouble."
- Esteban Colberto (a.k.a. Stephen Colbert), The Reporto Colberto (a.k.a. The Colbert Report)

The President's State of the Union address is now mere minutes away, and we are certain to hear about some sort of "stimulus package," the "thrust" of which is to "goose" the economy through the "injection" of capital, thereby avoiding a "sagging" markets and a "flaccid" economy. To economists, a stimulus package is the fiscal equivalent of Spanish Fly.

According to most reports, the heart of the package is a broad tax rebate, geared toward individuals and families between the income margins. Meanwhile, Lou Dobbs (your everyday man-of-the-people) has a best-seller with his tome War on the Middle Class: How the Government, Big Business, and Special Interest Groups Are Waging War on the American Dream and How to Fight Back Against Ridiculously Long Subtitles. John Edwards has based his entire campaign on "fighting for the middle class," which is a remarkably noble gesture from a guy sporting a $400 haircut.

Of course, when media and politicians wax rhapsodic about the noble middle class, what they're really doing is aiming at the biggest target. This is not just because the "middle class" constitutes the bulk of the population's bell curve, but also because so many of the people outside the middle class like to think of themselves as inside it, anyway. Somewhere out there tonight is a skunk-eating yokel who thinks he's a yuppie, and a millionaire in a first-class airline seat cursing the billionaire in his private jet.

I don't know if I'm middle-class or not. But I'm nearing middle-age in a middling middle-management job, living in a mid-sized apartment building (furnished according to middle-brow tastes) with my lovely girlfriend, who is herself a middle child from middle-America. Is that enough to earn me my $600?

At least I'm at the end of this entry.

Comments

Me, middle class?

[instant-ethos.livejournal.com]

Appealing to the middle class is useless, because no one wants to consider themselves middle class. This really surprising article by David Brooks talks about how 19 percent of Americans surveyed think they are in the top 1 percent of wage earners. And an additional 20 percent think they someday will be in that category. Talk about fuzzy math. This is the root of why the tax rebates are being offered to the heart of the middle class, to the exclusion of the neediest poor and elderly.

The bleeding heart liberal in me says that we should be socially responsible and share resources with those who truly need it -- everyone should get a piece, even the poorest citizens. But the dyed-in-the-red Republicans see this only as a Robin Hood trick -- tax payers hard-earned money shouldn't just be given to poor people for no good reason.

The real reason the money won't go to people below the poverty line, or elderly folks living off Social Security, is that these rebates are part of an economic stimulus plan -- and these people will only take their rebate money and spend it on stupid things like milk, diapers and heating oil. If you give the money to the "middle-class" they will spend it as if they are "upper-class." They will take their rebate and buy durable goods like new rims for the Hummer or custom storage units for their overly-stuffed McMansion. Now that makes for more jobs and faster economic growth.

And in the truest spirit of today's middle-class, they will take their $600 rebate check and spend $800 on their new toys, escalating their debt, which is what got us into this mess to begin with, isn't it?

Re: Me, middle class?

[enchanted-pants.livejournal.com]

That is a pretty convincing analysis, Ethan. (And an astonishing article in support of it.) I suppose this rebuts my instinctual suspicion that every time a "middle class tax cut" is suggested or announced, 90 percent of the country stands up and holds out their hat.

Most of the economic intelligentsia seems to prefer a "marginal rate tax cut," which is difficult for me to understand. According to Money Magazine...

"Your marginal tax rate — including federal, state, and local income taxes and federal payroll and self-employment taxes — is the percentage that will come off the top of your next dollar of incremental taxable income. Put another way, the percentage of that next dollar of income that you'll actually be allowed to keep is 100% minus your marginal tax rate."

Maybe an across-the-board tax cut will stimulate the economy. I happen to believe that a reduction in the corporate tax rate would actually do the most good for the economy, but you'll never see a tax cut for corporations in an election year.

Re: Me, middle class?

[jatchwa.livejournal.com]

It's hard to see how a cut in corporate taxes would have the immediate impact on the economy that a stimulus designed for. One can argue that corporate taxes are too high (especially if "one" were not "me"), but one cannot argue that it puts money back into the economy. We're headed for a recession. That's a pretty stupid time for a corporation to, I don't know, buy another widget-making machine when no one can afford to buy a widget these days.

Giving money to people who will spend it -- and the poorer that people are, the more likely they are to spend it -- would have a certain immediate impact. (I have no absolutely idea how much.)

Giving more money to rich people would have pretty much no immediate impact. Rich people would invest it in stocks, bonds, Mitt Romney, whatever. But they wouldn't buy more groceries or more haircuts or another car. They can already afford these things.

Re: Me, middle class?

[enchanted-pants.livejournal.com]

I think capital investment -- which can include investment in jobs, resources, services, other companies, government bonds, etc., as well as equipment -- will do more to bolster sagging markets than an influx of spending money.

Of course, this sort of assumes that they will invest the money here instead of Asia or wherever, which is not exactly a sure thing. But because of the trade deficit, increased consumption doesn't really help the U.S. directly, either.

My economic stimulus package would consist of an across-the-board rate cut, with the mandate that everyone invest the rebate in their 401(k), an IRA or a long-term CD. This would (a) provide investment capital, mostly to domestic securities and government bonds, (b) prevent people from engaging more consumer credit, which Ethan points out is how we got into this situation in the first place, and (c) prepare the citizenry for the ultimate demise of entitlement programs, giving at least some kind of nest egg for people so that their children don't have to support them in old age and infirmity.

Re: Me, middle class?

[jatchwa.livejournal.com]

I don't even know where to begin.

This assumes that the problem with our economy RIGHT NOW (we were discussing a stimulus, right?) is that Social Security will run out of money in 40 years.

Re: Me, middle class?

[enchanted-pants.livejournal.com]

Points (a) and (b) were intended to address today. Point (c) addresses tomorrow (and beyond!).