October 3, 2012
Michael Kinsley once defined “gaffe” as the accidental telling of a political truth. That definition aptly describes the jaw-dropping admission from Joe Biden on the campaign trail this week. Thundering against Mitt Romney’s economic plan, which Biden erroneously claims will raise taxes on the middle class, the Vice President proclaimed his outrage. “How they can justify raising taxes on a middle class that has been buried the last four years?” Biden asked.
Perhaps Biden missed a memo or two, but for most of the last four years, his running mate, Barack Obama, has been President. For two of the last four years, his party controlled Congress by large majorities, as well as the two years that preceded those, and Biden’s party has controlled the Senator for all six years. In fact, both Biden and Obama sat in the Senate previously, Obama for four and Biden for decades. If the middle class has been buried, it’s been on their watch.
Is this a political inconvenient truth? Has the middle class been “buried” the last four years? By any measure, the middle class has certainly lost ground. Median household income has declined each of the last four years, a decline which has accelerated during the Obama “recovery” that started in June 2009. Median household income dropped 2.6 percent during the Great Recession, but has dropped 4.8 percent in the three years since.
That is one reason why the Census Bureau reported three weeks ago that the middle class had declined to“an all-time low” in 2011, as the Washington Post headlined their article on the subject. By the third year of Barack Obama’s presidency, poverty had leveled off at a near all-time high as well, while the middle class continued to lose ground on income. But that wasn’t the only measure on which the middle class found itself moving backward; their average work hours also declined, as did the average pay rate, while home values continued to decline. The percentage of Americans with jobs fell to a 31-year low in August at 63.5 percent, another symptom of a decline in the middle class.
All of this occurred during the Obama/Biden administration, a point that the Democrats had tried to avoid during the 2012 campaign. Biden’s admission that the middle class has been “buried” will certainly resonate with voters who have experienced the decline first hand. It will also force the media to give some attention to that decline, writes Jennifer Rubin at the Washington Post. “On the Biden remark, the media sure seemed miffed to have to respond to the Romney campaign,” Rubin notes, and “that was the reason, of course, the Romney-Ryan ticket pounced on Biden.… At least they got the media to report that the middle class has lost ground under Obama.”
They should also check Biden’s math on Romney’s tax plan, too. Biden and the Obama campaign claim that Romney’s economic agenda will mean tax hikes for the middle class in order to preserve tax cuts for the rich. That’s good populist politics, but it’s bad math, as the American Enterprise Institute’s Alex Brill points out. “The core of the Democrats’ argument is that you can’t reduce income tax rates by 20 percent, as the Romney plan proposes, without raising taxes on the middle class,” Brill writes, but that’s based on a very suspect analysis by the left-leaning Urban-Brookings Tax Policy Center.
Their conclusions are based on static tax analysis that assumes that broad tax reform would have no impact on economic growth, rather than dynamic tax analysis that takes into account the economic impact of tax policy. Brill uses the OMB’s own projections to show that even a minimal additional improvement of 0.1 percent per year would mean that “the additional revenue in 2015 would be approximately $13 billion. The result: A $12 billion tax increase on the middle class actually becomes a tax cut.”
The argument that a deficit translates into a middle-class tax hike gets even more curious when looking at the Obama/Biden record. The Congressional Budget Office reported a month ago that the FY2012 budget will run a $1.1 trillion deficit, exceeding the trillion-dollar mark for the fourth year in a row. Obama signed all four of those budgets, although he has recently tried to blame “ninety percent” of the annual budget shortfalls on his predecessor, a claim that won Obama four Pinocchios from the Washington Post’s fact checker, Glenn Kessler.
If Biden and Democrats claim that an $84 billion price tag (under their own analysis) on Romney’s tax reform means tax hikes on the middle class, what do their actual four trillion-dollar-plus deficits represent but massive tax hikes on the middle class? The wealthy don’t make enough to close those gaps even on an annual basis, let alone address the accumulation of national debt over the last four years. Those massive deficits are taxes that we pass now onto future generations of Americans without their representation.
AEI estimates that the additional $7.6 trillion of deficit spending over the next decade projected by the Obama administration, added to the four years of actual deficit spending, would add over $1400 more in tax burden each year to the median income bracket in the next ten years.
Biden’s right about the middle class being buried. But it’s his own administration and party that did the burying, which has been the only shovel-ready job the Obama White House managed to produce.