Rick Perry's Reverse Class Warfare

Rick Perry's attack on Reagan's Earned Income Tax Credit is stupid, nonempirical, and corrosive.

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Monday, I asked if there were any Lincoln Republicans left.

Today I'm wondering where the Reagan Republicans are.

The sweeping 1986 tax overhaul that Reagan signed into law broadened the tax base, closed loopholes, and lowered individual income tax rates. It also established the Earned Income Tax Credit program, or EITC, which eliminated millions of the working poor from the rolls altogether. Expanded by President Clinton in 1993, the antipoverty program has been a smashing bipartisan success.

Now it's become commonplace among the right to question whether such programs are "fair."

Gov. Rick Perry, in the speech announcing his presidential candidacy, picked up the meme and injected it with a sense of personal grievance.

"We're dismayed at the injustice that nearly half of all Americans don't even pay any income tax. And you know the liberals out there are saying that we need to pay more," Perry said. [See a slide show of who's in and out for the GOP in 2012.]

Call it "reverse class warfare."

A lunkhead like Perry appears poised to torque such downward-aiming resentment for all it's worth: Washington socialists are working with the shiftless poor to soak us hard workers.

The reality, of course, is far different.

In the current Atlantic magazine is a long extract from Don Peck's new book, Pinched: How the Great Recession Has Narrowed Our Futures & What We Can Do About It, which chronicles the increasing "employment polarization" between (especially male) blue-collar workers and the rising "super elite."

Here are some of its key data points:

  • In 2005, the top 1 percent of households earned as much annually as the bottom 60 percent combined. Not counting capital gains—which have recovered since the crash—these households saw income gains even in 2008.
  • In March of this year, the unemployment rate for those with only a high-school diploma was 12 percent. For college graduates it was 4.5 percent. For those with a professional degree, it was just 2 percent. From 2009 to 2010, according to Peck, wages grew 11.9 percent in Manhattan and 8.7 percent in Silicon Valley.
  •  From May 2009 to May 2011, according to Gallup data cited by Peck, "daily consumer spending rose by 16 percent among Americans earning more than $90,000 a year; among all other Americans, spending was completely flat."
  • "In 1967," Peck writes, "97 percent of 30-to-50-year-old American men with only a high-school diploma were working; in 2010, just 76 percent were.
  • Employment polarization is wreaking havoc on the nonprofessional middle class: Unhappy marriages, divorce rates, and out-of-wedlock birth rates in those communities are now comparable to those among high-school dropouts.
  • Read the whole thing.

    There is no simple answer to all this. Such trends—the upward concentration of wealth, the shift away from manufacturing, the increasing value of intellectual capital and analytic skill-sets—are not unique to America, but, rather, common to most industrial nations embedding themselves into the global information economy. [See a collection of political cartoons on the economy.]

    I'm a free-marketeer. I'm fully aware that, in a dynamic capitalist economy, inequality is inevitable.

    But what's happening now is anything but dynamic—at least for the vast majority of citizens. It's more like a creeping caste system that perpetuates misery and blocks upward mobility.

    The idea that the middle class—or whoever Rick Perry means by "We"—is suffering because the lower classes aren't paying taxes; the idea that the rich would create more jobs if their share of national wealth was even more heavily concentrated; the idea that, if everyone had "skin in the game," the economy would somehow improve, even as the beneficiaries of programs like the EITC are bearing the brunt of the Great Recession—all this is, to put it bluntly, a load of crap.

    It's a stupid, nonempirical, and corrosive mindset.

    Reagan wept.

    • See a photo gallery of Ronald Reagan.
    • Read Rick Newman: How Rick Perry Created Jobs in Texas.
    • Vote: Will Rick Perry's Prayer Summit Help or Hurt His 2012 Chances?