Democrats' Risky Strategy: Trumpeting the Wealth Gap

[question everything]

The Wall Street Journal

Democrats' Risky Strategy: Trumpeting the Wealth Gap

Candidates Blame Republicans For Economic Inequality, Woes of the Middle Class
Tactic Could Alienate Voters
By DEBORAH SOLOMON
October 2, 2006; Page A1


(snip)

It's a risky bet. Government data do show an unambiguous trend toward a widening gap between the rich and everyone else, a trend that pre-dates Mr. Bush's election in 2000. And yet U.S. electoral history is littered with Democrats who tried to use the inequality issue only to find voters unswayed and Republicans accusing them of "class warfare" or business-bashing... "There is little doubt that there has been a 25-year trend of a growing gap, sometimes called income inequality, between the wages of the skilled and the unskilled," says Edward Lazear, chairman of the White House Council of Economic Advisers. "While that trend shows no obvious signs of abating in the near future, by some measures inequality has slowed a bit in recent years."

http://www.whitehouse.gov/cea/lazear20060502.html

(snip)

Many Democrats say this year the message could draw voters. "This is an issue they are talking about and should be talking about," says Stan Greenberg, a Democratic pollster. While the war in Iraq continues to be a big issue, Mr. Greenberg and other strategists are advising Democratic candidates to talk often about the economic squeeze on their middle-class base. "Most people are seeing continuing financial pressure -- gas prices, health-care costs -- symbols that, when contrasted with the perception that the macro-economy is doing great and CEOs and others are doing very well, help to underscore what's happening and what's not happening," says Mr. Greenberg.


Some Republicans try to debunk the statistics Democrats cite, arguing that they overstate the income gap by looking at wages, while ignoring health and retirement benefits and tax breaks that help the working poor... But other Republicans concede that Democrats may have a winning argument when it comes to economic issues this year -- inequality included. "We get clobbered among economy voters," says Republican pollster Tony Fabrizio. "The reason are doing this is they see the people who are uncomfortable about the economy as people who are more likely to vote for them in real numbers."

Since the last recession ended in 2001, the U.S. economy has grown nearly 15%, after inflation. Corporate profits have skyrocketed and the stock market has rebounded. Yet many Americans haven't seen paychecks grow fast enough to keep up with rising prices. While incomes at the top rose, adjusted for inflation, the median household income fell for five years in a row before turning up in 2005. It remains below its 1999 peak. The Census Bureau reports that the top 20% of households claimed 50.4% of all the income in 2005, up from 45.6% in 1985. Even Treasury Secretary Henry Paulson has acknowledged the gap. "Amid this country's strong economic expansion, many Americans simply aren't feeling the benefits. Many aren't seeing significant gains in their take-home pay," he said in an August speech. In another talk, in September, he added, "I believe it is the responsibility for all nations to search for ways to moderate income disparities."

(snip)

Figuring out how to reverse the trend poses a problem for policy makers. Most Democratic candidates favor an increase in the minimum wage, modest proposals for college and child-care tax credits, rolling back some of Mr. Bush's tax cuts, and finding ways to shield Americans against rising gas prices. But beyond that, Democrats candidates haven't fleshed out a program for reversing inequality. The centrist Democratic Leadership Council is pushing what it has dubbed the American Dream Initiative to counter the "mistaken belief that when the wealthy do even better, the middle class will eventually get their share." The plan, championed by New York Sen. Hillary Clinton, among others, also calls for giving every child a $500 savings bond at birth so every American adult will have a nest egg.

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URL for this article:
http://online.wsj.com/article/SB115974952102879543.html (subscription)

[Jim Sagle]

1. It's only risky if they're tentative about it.

The WSJ is lying as usual.