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2014 Midterms: Inequality Lurks Beneath the Surface of Political Discourse

Editor’s Note: As part of the 2014 Midterm Elections Series
, experts across Brookings will weigh in on issues that are central to this year’s campaigns, how the candidates are engaging those topics, and what will shape policy for the next two years. In this post, Richard Reeves explores how income inequality, despite being politically taboo, has infiltrated political discourse on a host of issues.

Inequality is the issue that dare not speak its name in the current political contests. But it lies just beneath the surface. Worrying out loud about inequality is almost tantamount to a declaration of support for revolutionary socialism from the top of a barricade—as Fed Chair Janet Yellen learned last week, in what was, in fact, a pretty conservative speech.

As far as I can glean, not a single candidate in the key battlegrounds has mentioned Thomas Piketty’s book Capital, the gini coefficient—a standard measure of inequality—or trends in 90th/50th percentile income indices, one of my own favorites. But inequality is there alright, lurking underneath contemporary political discourse and finding expression in arguments over health care, taxation and—above all—the minimum wage.

1. Obamacare

Obamacare is a big issue, of course, especially for Republican candidates trying to tie their opponents to a less-than-popular President: Democratic candidates are not by and large shrinking from the fight. While not ostensibly an issue of income inequality, health care costs are a huge factor for many low- and middle-income families, and state subsidies help to blunt the consequences of lower income. Obamacare may not get at the causes of economic inequality, but it does lessen its consequences.

2. Taxes

Taxes are the most obvious instrument for tackling inequality, and more liberal Democrats have been pushing for higher taxes on wealthy individuals and/or corporations, as Elaine Kamarck’s study of the primary races showed:

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Republicans are more consistent, with most opposing any tax increases. But some are fielding accusations that they are biased towards the wealthy in terms of tax cuts: this is one reason Gov. Sam Brownback in Kansas may be more vulnerable than might be expected.

3. Minimum Wage

The minimum wage provides the closest proxy to an open debate about inequality. Democrats are banging the drum loudly for a rise in the national minimum. Will it matter? Maybe a little. In six competitive races either for the Senate or Governor – Illinois, Iowa, Kentucky, Louisiana, North Carolina, and Wisconsin – there is strong support for increasing the minimum wage to $10.10 an hour, according to Public Policy Polling. Likely Democratic voters are most enthusiastic, of course: but almost one in three Republican voters were in favor, too. Republican candidates, knowing the public appeal of a higher minimum wage, have therefore taken a vow of silence on the issue.

Four states have ballot proposals to raise their own minimum wage beyond the federal, hourly rate of $7.25—Alaska, Arkansas, Nebraska and South Dakota—each a fairly conservative state. The Senate Race in Iowa between Joni Ernst (R) and Bruce Braley (D) seemed to tighten after Ernst clarified her opposition to any federally-set minimum wage, in a televised debate on September 28th.

The minimum wage debate highlights the most troubling aspect of the new inequality. Historical antipathy to the politics of inequality in the US was based in part on fear that it would lead to redistribution from the ‘hard-working majority’ to the ‘idle poor’. That concern was legitimate until the welfare reforms of the 1990s. Now the problem is that the hard-working majority is falling behind both the well-educated affluent and economic growth in general. Gaps are growing not between the bottom and the majority, but between the majority and the top, as work by Gary Burtless shows. As the liberal economist Jared Bernstein has put it, “for many households, economic growth has become a spectator sport”.

The political economy of the United States is shifting, tectonically. Most thoughtful analysts on both sides of the aisle know this. In private at least, many Republicans are as troubled as Democrats by the relative weakness of middle class earnings and incomes.

If the Republicans gain control of the Senate, an open question is what will happen to the prospects for measures to respond to inequality, including expanded tax credits, home visiting programs, or a higher federal minimum wage. On the one hand, Republicans may feel their victories mean that no action is required on these fronts. On the other, political possession of both Houses may increase the pressure to deliver some reforms in response to the growing anxiety on all sides about the economic health of the American middle class.

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