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Monday, September 8, 2008

Income Inequality Means Republicans Lose Elections

David Frum is quickly becoming my favorite conservative. In the past several days, Frum has expressed sensible caution and concern over McCain's VP choice and issued a reality check for the GOP on immigration.

Add this intelligent and extended commentary from Frum on how income inequality is leading to "The Vanishing Republican Voter." Frum points to a trend of upper-income voters joining lower-income voters increasingly throwing their support behind Democrats. The middle class whom the GOP purports to champion is becoming a smaller target, with middle-class incomes stagnating due in large part to health care costs (if health insurance costs had only increased 50% rather than doubling during the Bush Administration, says Frum, "middle-income voters would have enjoyed a pay raise instead of enduring wage stagnation").

"Conservatives need to stop denying reality," says Frum: middle-class Americans need health care reform, not more cuts in federal income taxes (the burden of which, says Frum, a majority of Americans already consider "reasonable").

Frum also notes that the GOP is losing ground in the best-educated states:

Leaving aside the District of Columbia, 7 of America’s 10 best-educated states are strongly “blue” in national politics, and the others (Colorado, New Hampshire and Virginia) have been trending blue. Of the 10 least-educated, only one (Nevada) is not reliably Republican. And so we arrive at a weird situation in which the party that identifies itself with markets, with business and with technology cannot win the votes of those who have prospered most from markets, from business and from technology.

Republicans have been badly hurt in upper America by the collapse of their onetime reputation for integrity and competence. Upper Americans live in a world in which things work. The packages arrive overnight. The car doors clink seamlessly shut. The prevailing Republican view — “of course government always fails, what do you expect it to do?” — is not what this slice of America expects to hear from the people asking to be entrusted with the government [David Frum, "The Vanishing Republican Voter," New York Times, 2008.09.05].

Remember, this is conservative Frum talking. The old "Guv'mint can't do nothin' right!" grunt doesn't seem to fly with this generation of educated professionals. Obama's "Yes We Can!" taps into this mindset: even if government is failing certain areas, educated voters believe we can fix it and make it work in our interest again.

The McCain campaign is apparently counting on uneducated voters to buy into the politics of image and personality and not trouble themselves with what those darned elitist eggheads say about silly things like economic policy. Maybe the McCain campaign should pay a little more attention to conservative eggheads like Frum, who see their successful, educated neighbors voting ever more for the other party.

Update 11:04 CDT: More on middle class policy—AP offers this breakdown of who gets what under the Obama and McCain tax cut plans:

Income Bracket Fed. taxes under Obama Fed. taxes under McCain
Wealthiest 1% (making $600K+/yr) +$93,709 –$48,860
Middle 20% (making $37,600–$66,400/yr) –$1,118 –$325
Bottom 20% (making $19K or less/yr) –$567 –$21


  1. Name one Presidential election Republicans have lost to Democrats in the last 12 years. Since we're spinnin' here.

  2. Um, read the Frum article, CC, then come back and tell me where you think conservative Frum is spinning. Frum appears to be analyzing electoral facts. Frum sees Republicans losing votes in places with higher income inequality, and he worries his party will lose big time if it doesn't face reality and confront that problem. He also sees Republicans losing votes among the most affluent and most educated. That's just the facts. Go get your spin from PP... or provide your own! :-)

  3. In the long term, there will be inexorable pressure on the federal government to raise taxes to take care of the aging Baby Boomer population.

    From the article, it looks as if Obama has the right attitude here. My biggest long-term fear is the possibility that we might get stuck with a national sales tax (or worse, a value-added tax) on top of what we have now. These are regressive taxes, and would strike hardest at the lower and middle classes. Regressive taxation seems to be the Republicans' way more than the Democrats' way.

    The evil inverse of a tax cut for the wealthy would be a tax hike for the poor. Sound too bad to be true?

    Lots to think about in that link, Cory. Mahalo. Now how about a few more to back it up ... maybe some links from Obama's own Web site!

  4. You are link-hungry, Stan! Here, try these:

    —Abdon Pallasch, "Tax Plan face-Off: Obama vs. McCain," Chicago Sun-Times, 2008.06.30.

    Steven Malanga appears to like Ayn Rand and suggests Obama's plan will be Atlas Shrugged all over again. Terrible book.

  5. Frum is Spinning from Washington. He makes it clear in his first paragraph.
    The fact missing is that a lot of the Republican losses happened from Democrats "playing" more conservative than the Republican.
    Is that politics or income?

  6. National health care - well, I have my much thought out opinions for that here on my site. Short version: it's health insurance that makes health prices deviate from standard competition-based economic models... the solution is to cap the amount that hospitals can charge for procedures (ie a government-mandated fee schedule). No need for the government to actually take over the job of processing claims to solve the problem.

    Also, national health care means that everybody gets the same product (health insurance) but they all pay different amounts for it. Because of our graduated income tax, some citizens (those with little income) will receive health insurance for free. Others will pay millions of dollars (Obama wants 36%-40% tax brackets for all income over $250,000) for exactly the same product. How is this fair?

    I have a job providing vision plans that send our enrollees to independent optometrists (ie not Walmart, Shopko, Pearle, etc.) to receive their vision coverage. The reason we exclude big box eyewear retailers is because consumer surveys have been unanimous for 30 years that independent optometrists provide by far the best quality of care, and the best quality of glasses (and often the lowest prices... the big box's $99 specials are almost always gimmicks). We would probably sell more vision plans if we decided to include the big boxes... but we don't because we are in business to increase the quality of vision within South Dakota. If I started including Walmarts, I couldn't legitimately make that claim.

    Anyway, my point is that government-run health care makes our hospital system the biggest box possible. All hospitals would be one system, and the quality would plummet. Consider, for example, getting your drivers' license at the DMV... you wait in line, fill out dumb reports, the employees take a break when they want to (and you have to wait until they come back), and clock out at 5:00 PM sharp. Should health care go universal, that is about the kind of attitude we should expect in our hospitals. Doctors would have little incentive to treat their patients any better than the DMV guy.

    Kind regards,

  7. Evidently David was so eager to post his self-promo that he didn't notice Frum doesn't mention national health care... ;-)

  8. Don't you conservatives read your own guy? CC, you and the rest of the GOP (you sound like a member) ignore reality and good advice from your own people at your own peril.

  9. Wow, Cory... that's really weird. I must have gotten my wires crossed when my section on national health care landed on this thread. I know I copied and pasted it from a recent email, but it was meant for a different blog. Guess that's what happens when there are too many browser windows open.

    Well, we'll leave it up just in case anyone wants to know who to contact for a quality vision plan.

    Kind regards,

  10. Thanks for the links, Cory. I find the "Steven Malanga" and "Atlas Shrugged" links particularly interesting.

    I can do a "mind experiment" here by placing myself in the position of one of these creative types who earns a lot of money. All I have to do is imagine that, suddenly, all the home schoolers in the USA decided to buy my math books and kept on doing it!

    Were that to happen under an Obama Presidency, I'd pay a lot more in taxes than I would under a McCain Presidency, assuming President Whoever got exactly what he says he wants.

    Either way, I'd be happy indeed. Even if my top income were taxed at around 54 percent (39 percent top rate plus 15 percent self-employment tax), I would not for one instant consider withholding my creative energies. I would not know how to begin doing such a thing. I like my work. Why should I cut back or quit?

    More likely, I'd get out of some of the tax by establishing a writers' foundation, grant, school, camp, or whatever. Or maybe I'd just absorb it. Truly creative people aren't going to sit around and sulk after resounding successes, unless they have some underlying depressive disorder having nothing to do with taxes or government. Success for such people is measured in ways more important to them than financial profit.

    As for health care, if we could really get a system where people could go to the doctor whenever they got sick and not have to worry about ending up in poverty, I'd be willing to pay out a good piece of dough. If I were fortunate enough to make millions, I'd be all right with paying more for the same health care that poor people might get for free.

    The people who are going to scream "bloody murder" over the Obama tax plan are the ones who have been raking it in over the past few years from cushy executive positions and from investments. They might move some of their wealth and investments offshore, and that could indeed present some economic problems. Obama has indicated he might make it harder for these folks to move their capital around, but how he is to accomplish that without establishing a police state is unclear to me.

    I can speak with certainty about my own state of mind. Quit my work or hold it back because of taxes? H*** no!

  11. Hi Stan,

    The relevant question should not be whether you would be ok making millions of dollars and paying over half of it in taxes... the questions you're avoiding are:

    1) Who earned the money?

    2) What right do politician have to force you how to spend money you earned on their projects?

    Feel free to donate your money to hospitals to offset the amount they charge the poor (and I highly encourage that), but what makes it legitimate for politicians to coerce all other rich people do likewise with their money?

    Kind regards,

  12. Thanks for the explanation, David. I figured there had to be some good reason!

  13. YEAH!

    Finaly intelligent posts, no name calling, no put downs just intelligent discussion of issues.

    This is what I expected of your blog.

    Thank you,
    Joseph G Thompson

  14. What we need in Washington is some financial sanity and not every elected official or bureaucrat trying to see how much money that they can spend.

    We don't need more rhetoric about how stupid the opposing party is. We need leadership.

    Our President should tell us the truth and not lies like Bush or Clinton before him.

    I know that I am not alone in my absolute disgust at the extremists on both ends of the political spectrum.

    Here's a test: try and think about any decent legislation to come out of Congress that was signed by the President. I bet you it's a pretty short list.

    The Democrats and Republicans in Congress are to busy pointing the finger at the other guy instead of looking in the mirror at who is really at fault.

  15. Interesting matrix. I guess those people who make between 19,000-37,600 or between 600,000-66,400 are just taken out and shot?

    I genuinely have always liked Frum, but I think he is seriously mis-analyzing with his fortellings of doom for conservative ideology. The trends he sees in relation to income inequality are just not there. For example his reference to Prince William County is just puzzling since it has everything to with conservative backlash against Bush's immigration policy and little to nothing to do with class resentment. He seems to have looked for proof in trends lining up with economic demographic changes for proof of the false conclusion he had had in his head from the start.

  16. Hi David:

    Good questions. I'll try to answer them.

    Q. Who earned the money?

    A. My income is the product a combination of my own hard work and more or less good luck. In retrospect, I'd like to say I've more than earned whatever luck I have had. God knows I've worked like the devil to make a living at my craft (writing). Book royalties depend on sales, and that in turn depends on so many factors that I could never claim to know how they all work.

    Q. What right do politicians have to force you how to spend money you earned on their projects?

    A. We, the people, give them this right by putting them in office. Unfortunately, the collective mind of the American people does not always agree with me. I'd like nothing better than to see a Libertarian majority in both houses of Congress. I doubt, however, that I'll live to see any such thing. (Pity.)

    Q. What makes it legitimate for politicians to coerce all other rich people do likewise with their money?

    A. "Coerce" is, I think, too strong a word here. The people, as a whole, elected these politicians. They had better not forget it. What the people give, the people can also take away. And sometimes they do. Witness what happened in 1994 and again in 2006.

    I do harbor a bit of revulsion at the notion that I, should my luck soar and my rewards be great, could end up paying out over half of my income in federal taxes alone. When the other taxes are factored in, and particularly if South Dakota were to enact a state income tax, it could be more like 60 percent or even 2/3. At that point, I could begin to contemplate such bizarre notions as emigrating to The Netherlands or Iceland, because our taxes would be as high as theirs whilst the government would be less likely to launch misguided wars and prop up huge corporations on my dime.

    Comment by Anon 9:34

    What we need in Washington is some financial sanity and not every elected official or bureaucrat trying to see how much money that they can spend.

    My countercomment


    Comment by Phaedrus

    Interesting matrix. I guess those people who make between 19,000-37,600 or between 600,000-66,400 are just taken out and shot?

    My countercomment

    I think the AP table is meant only to show certain sample ranges, not the entire spectrum of incomes.

    Final thoughts

    Even if McCain is elected, our taxes won't go down to the extent he would want, if they go down at all. Congress will still likely be controlled by the Democrats. McCain can wear out his veto pen, but that will only go so far, and it could end up harming the Republicans even further. In the long term, I suspect taxes will have to rise, in part to get us out of the debt hole we've burrowed into, and also because we're going to have a massive explosion of Baby Boomers getting old and demanding Social Security and Medicare benefits.

  17. caheidelberger, We're not the ones who are scared, here.

    Barack said he would "keep the Bush tax cuts if we were in a recession." Why?

    The reason, like JFK knew, is that lower tax rates create more income to the government. It's a proven econimic principle.
    What Barack is suggesting is class warfare not economic growth! Either that or he doen't know his issues.

  18. Taxes, faxes. The fact is that the US economy always does better under democratic administrations. http://www.washingtonmonthly.com/archives/individual/2005_05/006282.php .

    Perhaps republicans think government is incompetent because they govern incompetently.

  19. We'll government isn't supposed to be Democratic under Obama's Democrat policies, are they!
    Rich pay more, poor keep paying nothing!

  20. Anon 9/09/2008 2:26 PM
    I particularly like how the Washington monthly article says it is true that the president doesn't control the economy but then doesn't go down the list of the various more influential factors and instead just dismisses the argument by saying the president does influence the economy. This is what is called partisanship. Taking a set of facts (the methodology and details never fully described) and using them in a vacuum to undermine your political enemies. It is an easy way to manipulate people who don't understand economics or presidential powers...or history.
    Congratulations on being one of them.


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