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SERIES: The Top Economic Stories of 2012 | Number 5 of 12 « Previous | Next »

Make 2013 the Year to Improve Middle Class Economic Prospects

U.S. President Obama visits members of middle class families to discuss Administration's push to cut taxes for 98% of Americans while visiting Falls Church in Fairfax County (REUTERS/Larry Downing).

President Obama campaigned on a promise to improve the economic prospects of the middle class and those aspiring to join the middle class. Delivering on that promise is a tall order. After decades of slow or no progress in middle class incomes, and with the recovery limping along at a glacial pace, and with even that progress threatened by fiscal and European troubles, the challenge is daunting.

In the short-run, the President's priority has to be to resolve the debt crisis without sending the economy back into recession, raising taxes on the middle class, or decimating spending on such growth-enhancing areas as education, infrastructure, and research. While raising taxes on the wealthy somewhat relieves pressure on these other parts of his agenda, it will not produce the kind of broadly shared prosperity that he presumably wants. Most critically, the fragile recovery must not be allowed to collapse. Without jobs, progress will be impossible.

For the longer-term, the President needs to focus on upward mobility for those trying to remain in or join the middle class. There is an emerging bipartisan and expert consensus that America has less mobility than it believes and less than some other advanced countries.

But what can a President do when faced with a divided Congress and an opposition party intent on keeping his legislative agenda tied up in knots?

First, he can rely more heavily on institutional reform, executive orders, and regulation to achieve his goals. As one example, he could establish a Commission or task force to better publicize, track, and recommend measures to improve economic mobility in the U.S. As Richard Reeves has argued, the U.K. has already established the architecture for such an effort with useful lessons for the U.S. As another example, he could convene a group of wise men and women to debate the future of affirmative action in a society where race and gender inequalities, while still important, are now arguably less serious than class or income-based inequalities. Perhaps an African American president is uniquely positioned to call for such a discussion.

Second, he can use the bully pulpit and appeals to civil society to address barriers to mobility that have their roots in cultural attitudes and behaviors. For example, he has already addressed the need for parents to turn off the TV, to read to their children, and instill in them a lifelong love of learning. He has also encouraged absent fathers to connect with their children and employers to provide more work-family balance for their employees, but he could do more in these critical opportunity-enhancing domains involving stronger families and better parenting.

Finally, he can look for areas where there is likely to be common ground with Republicans. One example that I have written about elsewhere is my proposal to provide a temporary super deduction for charitable giving. The proposal would create jobs, help nonprofits, and provide some tax relief for the very wealthy who are especially civic-minded while asking those intent on keeping their wealth to pay higher taxes, both on their incomes and on their estates.  

To be sure, these are small-bore ideas, and will not solve all of the problems facing the middle class, but we should not minimize the power of the President to set an agenda and influence behavior in ways both large and small.

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