Florida senator Marco Rubio struck a chord on Monday when, in a speech announcing his candidacy for the Republican Party’s presidential nomination, he argued that too many Americans are starting to wonder if the “American Dream” is still within their reach.
Those Americans include “hard-working families, living paycheck to paycheck, one unexpected expense away from disaster,” Rubio said; “young Americans, unable to start a career, a business or a family, because they owe thousands in student loans for degrees that did not lead to jobs”; and “small businessowners, left to struggle under the weight of more taxes, more regulations and more government.”
In a speech in Detroit in February, Rubio’s most formidable contender for the Republican nomination, former Florida governor Jeb Bush, similarly lamented, “Tens of millions of Americans no longer see a clear path to rise above their challenges.”
Democrats see the same problem.
In his annual State of the Union address last year, President Barack Obama acknowledged that “too many Americans are working more than ever just to get by, let alone get ahead.” His likely successor as party leader, former secretary of state Hillary Clinton, said in a video released on Sunday announcing her own candidacy for the presidency, “Americans have fought their way back from tough economic times but the deck is still stacked in favor of those at the top.”
Whether everyday Americans struggle just because of self-enrichment at the top of the income scale is debatable but what’s beyond dispute is that their struggles are real.
Although the American economy has recovered from the financial crisis and is adding jobs at its fastest rate since 1999, Federal Reserve survey data show families in the middle fifth of the income scale earn less and their net worth is lower than at the start of Obama’s presidency.
Between 2010 and 2013, the average net worth of families in the middle fifth shrank 19 percent. Those in the top 40 percent, by contrast, became richer as stock prices recovered.
Similarly, the average earnings for families in the top 10 percent grew more than 9 percent from 2010 through 2013 while those at other levels stagnated or declined. For the middle fifth, earnings fell 4.6 percent on average.
The decline in middle incomes can be attributed in part to a steep decline in the values of homes between 2007 and 2010. The housing crisis, that led to a broader financial crisis, wiped out nearly half of the median family’s wealth in those years.
The housing crisis was precipitated by a well-intentioned federal policy designed to help poor Americans buy homes. Reckless financial institutions contributed to the crash but the seeds were planted by government overreach.
That, of course, is something pro-business Republicans are keen to point out. Indeed, they are prone to blame government for the entirety of the middle class’ decline.
Bush, in his Detroit speech, said contributing the widening “opportunity gap” is a welfare system that “traps people in perpetual dependence.”
America’s byzantine welfare system — made so complex in part because Republicans resist streamlining it — certainly doesn’t help. But it doesn’t explain the disappearance of middle-class jobs.
While the American economy has added jobs to the top and bottom of the wage scale since Obama took office, traditional middle-income positions have been outsourced or made redundant by mechanization.
Labor force participation has declined dramatically as a result. While some ten million Americans are unemployed, a roughly equal number is believed to have given up looking for work altogether.
The causes are largely beyond politicians’ control. Globalization makes outsourcing feasible while technological advances often take away the need for manual labor. Far lefties and right-wing nationalists propose protectionism in response but their cure is worse than the disease. Erecting trade barriers or blocking progress for the sake of environmental protection would do even greater harm to America’s economic prospects.
Rubio is right that politicians obsessing about “taxing, borrowing and regulating” aren’t helping either.
If we reform our tax code, reduce regulations, control spending, modernize our immigration laws and repeal and replace Obamacare, the American people will create millions of better-paying modern jobs.
Possibly. But spending restraint is something neither party has convincingly demonstrated, even Rubio couldn’t get immigration reform done and the president’s health reforms are extremely unlikely to be repealed two years from now even if a Republican does succeed him.
Better for both parties to recognize that, as Rubio put it, “good-paying modern jobs require different skills and more education than the past.”
If we create a twenty-first-century system of higher education that provides working Americans the chance to acquire the skills they need, that no longer graduates students with mountains of debt and degrees that do not lead to jobs and that graduates more students from high school ready to work, then our people will be prepared to seize their opportunities in the new economy.
Bush, too, is an advocate of reforming public education. He created America’s first statewide school voucher program in Florida and has actively championed conservative education reforms, including charter schools, since.
Unfortunately, Democrats like Clinton oppose vouchers, seeing them as a gateway to a two-tier education system that disadvantages the poor. But the two-tier education system already exists and it disadvantages not just the poor but every American family that is unable to get their children into a quality private school. It’s surely preferable to give more children the chance to study at a successful private school than condemn them to a failing public school system? A system that is not going to improve as long as Democrats continue to shield their allies in the teachers unions who resist any move toward accountability, competition and transparency.
Republicans need to compromise as well. They can’t stick to a hands-off approach to higher learning and allow universities to charge exorbitant fees if they don’t want to stop young Americans from modest backgrounds getting an education that meets their skills and talent.
The two parties still favor different policies to arrest the middle class’ decline — policies that are often in contradiction with one another — but at least they are after the same thing. That is progress from the last presidential election campaign when Republican Mitt Romney infamously dismissed the “47 percent” of Americans who get government handouts while Democrats spent more time whining what an out-of-touch plutocrat he was than challenging his laissez-faire policies. Now that Democrats and Republicans are talking about the same problem, Americans can make an honest choice about the best way to start solving it.