On Monday, the Obama administration released its proposals for helping the middle class. Although we will have to wait for the State of the Union speech and the president’s budget to learn more, it is already apparent that President Obama and the Vice President Biden very much want to highlight their commitment to addressing the problems faced by many American families: the need to balance work and family life; the burden of repaying student loans; and inadequate savings. These problems are long-standing. They existed before the current recession began and they will not disappear when the economy recovers. Middle class incomes have failed to grow in line with the costs of going to college and of paying for childcare, both of which are increasingly necessary if a family is going to have a middle class income.
The administration’s narrative about the middle class not only resonates with reality, but its proposals are designed to encourage all of the behaviors that help people achieve and maintain middle-class status: getting an education; working; and saving.
So what’s not to like about this new initiative?
First, we aren’t being told much about its costs or how they’re going to be financed in a time of mega-deficits.
Second, the initiative is predicated on the assumption that people can find work and earn a decent wage. We have a ways to go on both of these fronts. Congress needs to enact additional job creation measures and reduce the size of health care costs in workers’ pay packages so that more of the funds can go directly into wages and salaries.
Third, the narrative matters. Specific proposals are commendable but have a way of getting lost in the larger debate about what government needs to do and what only individuals and the private sector can do. In Creating an Opportunity Society, Ron Haskins and I argue that it will take a combination of personal responsibility and government assistance to move more people into the middle class. Almost three-quarters of those who finish high school (at least), who work full-time, and who delay childbearing until marriage can achieve a middle-class income (defined as an income of $50,000 a year or higher).
Still, I have given the administration strong marks on their social policy agenda and I commend them for their effort to find policy initiatives that can help to rebuild the foundations of middle-class prosperity.