That great phrase was coined by the late Jack Kemp, who believed that growth and opportunity for all is the answer to poverty. In fact, Kemp believed it was the answer to all things economic. And he was right. The best anti-poverty program is the one that creates jobs. The answer to large budget deficits? Grow the economy, create jobs, watch incomes rise, and let the tax revenues come rolling in.

Partly from Jack Kemp’s work, and partly from his own experience, Ronald Reagan believed the same thing. He knew that growth is the single best solution for our economic ailments. And neither Reagan nor Kemp saw the world in terms of specific income classes or categories. They looked at the whole economy and realized that everyone is tied together. Dragging down the top earners will not help the middle class. And providing an ever larger safety net will not solve poverty. Reagan believed in the safety net, and maintained it. But he knew it was a stop-gap, not a solution.

Does Mitt Romney understand this?

The worry stems from Romney’s ill-advised statement this week. He said, “I’m not concerned about the very poor. We have a safety net there. If it needs repair, I’ll fix it.” That raises doubts as to whether he understands the Reagan-Kemp model. Perhaps he does. But he will have to tell us more.

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Just hours after winning the Florida primary, Mitt Romney let loose a potential gaffe that turned what should have been a rallying moment for Republican supporters into an uncomfortable position of having to defend the man that is likely to face Obama in the general election.

If taken out of context, which the media is very adept to doing, Romney’s comment, “I’m not concerned about the very poor” sounds heartless and indefensible. In fact, that is exactly how many conservative commentators reacted.

From a purely political position, the criticism is reasonable. Romney effectively handed Democrats a shiny set of brass-knuckles to use against, not only him, but the Republican Party in general as being out of touch with every day Americans. As NRO’s David Kahane put it, “In the Fight of the Century between the Apologetic Oligarch and the Tribune of the Folks, who do you think the fans will be rooting for?” In other words, Romney unwillingly played into the class-warfare meme that Obama has wrapped himself in.

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Looking ahead, Romney said his campaign is focused squarely on middle-income Americans—to the exclusion of others at either end of the spectrum. But his comments Wednesday about the poor appeared certain to be fodder for critics.

“I’m not concerned about the very poor,” he said on CNN. “We have a safety net there. If it needs repair, I’ll fix it. I’m not concerned about the very rich. They’re doing just fine. I’m concerned about the very heart of America, the 90-95 percent of Americans who are struggling.”

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I did a debate on income inequality for PBS but haven’t written much about the issue because I think it is a misguided diversion.

One frustrating aspect of this debate is that folks on the left genuinely seem to think the economy is a fixed pie and that rich people get money by impoverishing others.

This is utter nonsense. Just look at this chart comparing North Korea and South Korea, or this chart comparing Chile, Argentina, and Venezuela. With the right policies, countries can get much richer over time, yielding enormous benefits for the average household.

More rational leftists understand this data, so they change the argument by asserting that the rich are getting richer faster than the poor are getting richer and that politicians should “solve” this alleged problem with class-warfare tax policy and more redistribution.

They even cite numbers from the biased bureaucrats at the Congressional Budget Office to supposedly prove their point.

There are all sorts of methodological problems with this kind of research, including the fact that people move up and down the income ladder over time, so it is very sketchy to compare, say, the top 20 percent in 1990 with the top 20 percent in 2010.

But even if you incorrectly assume that all households are locked into their current income levels, the data used by the left is deeply flawed. (more…)

In the year since the Tea Party arrived in Congress, the movement has managed to change the debate on Capitol Hill, but not the way Washington works.

The Tea Party has stopped President Barack Obama and the Democrats from bailing out profligate state governments, from passing new so-called “stimulus” spending, and from raising tax rates. It has even begun to win bipartisan support for major entitlement reform.

However, the Tea Party has failed thus far to stop the overall growth in the size and cost of government. It passed over a dozen bills that would accelerate economic growth and create new jobs, only to see those bills languish in Harry Reid’s Senate.

In both the debt ceiling and the payroll tax debates, the Tea Party saw its sensible bills rejected in favor of absurd compromises–then found itself being blamed for congressional gridlock.

The key to the Tea Party’s fortunes has been its relationship with the very establishment it dislikes. Where it has found common ground–for example, with House budget chair Paul Ryan–it has been able to promote its agenda of limited government. But when the Tea Party has clashed with Republican leaders–starting with key Senate races in 2010–Democrats have won by dividing conservatives from moderates, House from Senate. (more…)

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On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Francis Cianfrocca to discuss a new push to politically unite Europe to save the Eurozone, how the restructuring of the American job market may permanently kill America’s middle class, and the disappearance of “Made in America.”

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

Why debt crisis could lead to a United States of Europe
What If Middle-Class Jobs Disappear?
Manufacturing America’s New Middle Class: Henry R. Nothhaft
Unemployment’s here to stay
Graph: Total unemployed, plus all marginally attached workers plus total employed part time for economic reasons (U6RATE)
Chance of 2012 U.S. recession tops 50 percent: Fed paper
Coffee & Markets: Are We Witnessing the Death of America’s Middle Class?

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On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Francis Cianfrocca to discuss the plan for a plan to save the Euro Zone, the possibility that high unemployment is here to stay, and the impending death of America’s middle class.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

Berlin, Paris Vow New Crisis Plan as Pressure Builds
Dexia Chairman Dehaene to resign Belgian unit role
September Jobs Report: Still Smells Like ‘New Normal’
Recession Officially Over, U.S. Incomes Kept Falling
Financial crisis and stimulus: Could this time be different?
Unemployment’s here to stay
Here’s The Chart That Will Get Obama Fired

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It could almost make your head spin. With an economy on the front end of another recession, President Obama’s tax attack on the folks who are most likely to succeed, invest, start new businesses, and create jobs is nothing short of staggering. Only liberal-left class-warfare ideology can explain this.

In his speech on Monday, Obama laid out $1.5 trillion in tax hikes over ten years, aimed almost entirely at America’s well-to-do. This includes $800 billion from rolling back the top rates in the Bush tax-cut plan, $470 some-odd billion to reduce itemized deductions for upper-bracket payers, and — oh yes — a millionaire’s tax called the “Buffett Rule.”

Pause a moment on the Buffett Rule. Almost all of Warren Buffett’s income comes from capital gains taxed at 15 percent. He only pays himself $100,000 a year, which would be taxed at the top rate. Most of his wealth is untaxed as unrealized capital gains. So his effective income-tax rate is lower than his secretary’s.

So what?

The vast majority of millionaires pay a 35 percent current tax rate on personal income from salaries, bonuses, and small-business income. Their effective tax rate is around 30 percent, much higher than the roughly 20 percent effective rate for the so-called middle class (depending, of course, on how you define the middle class).

Remember that the top 1 percent of income-tax payers shoulders 40 percent of all income taxes. They are paying their fair share. Then remember that 50 percent of income-tax filers don’t pay any income tax at all.

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Michael Barone in The Washington Examiner:

This result is a rebuke to Barack Obama, but it is a rebuke as well—a stinging one, perhaps more stinging—to Senator Charles Schumer. He represented much of this district for 18 years. The now-disgraced Anthony Weiner was his staffer and pretty obviously Schumer’s chosen successor as congressman when he ran successfully for the Senate in 1998. In addition, Schumer has made it his special project to win back white middle class voters in places like metro New York for the Democratic Party.

In January 2007, just in time for the new Democratic majority in Congress, he published a book, Positively American: Winning Back the Middle-Class Majority One Family at a Time. It is a thoughtful essay on how Democrats can win the votes of the kind of voter Schumer himself has won over in his career as a congressman and senator, with specific policy recommendations as well as public relations advice. As one of the three Democratic leaders of the Democratic majority in the Senate—and by common reckoning the one who outshines in intellect the other two put together—Schumer has played an important role in fashioning Democratic policies, including but not limited to the 2009 stimulus package and Obamacare.

This vote is a startling repudiation of those policies by just the voters Schumer was hoping to win over.

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If you thought the class warfare tactic was being used successfully by the Progressive Left to instigate strife between the upper and lower classes in the United States you need to re-examine what you think you are seeing. With declarations by three Congressional Black Caucus Progressives that target the TEA Party, we witness a pathetic attempt by special interest Progressive Leftists to re-package the contrived charge of racism against what is essentially Middle Class America.

Over the past two weeks we have experienced some incredibly caustic declarations by three Congressional Black Caucus members: US Rep. Maxine Waters (P-CA), US Rep. Frederica Wilson (P-FL) and US Rep. Andre Carson (P-IN). All three, evidently, have little respect for their own President who, just after the shooting of US Rep. Gabrielle Giffords (D-AZ), called for “toning down the rhetoric.”

On August 20, 2011, while speaking to a friendly audience at a Los Angeles “community summit,” Maxine Waters, a member of both the Progressive and Congressional Black Caucuses in the US House said:

“I’m not afraid of anybody…This is a tough game. You can’t be intimidated. You can’t be frightened. And as far as I’m concerned, the ‘tea party’ can go straight to Hell.”

On August 22, 2011, at a Miami, FL, town hall meeting, Frederica Wilson, again, a member of both the Progressive and Congressional Black Caucuses in the US House said:

“Let us all remember who the real enemy is. The real enemy is the Tea Party…The Tea Party holds the Congress hostage. They have one goal in mind, and that’s to make President Obama a one-term president.”

Also in attendance was one Jesse Jackson of Rainbow/PUSH, a community organizing group that pressures institutions – both financial and otherwise – into doing things that would otherwise be considered ridiculous, like offering low-interest housing loans to unqualified buyers and coercing municipalities into hiring lower-scoring minority applicants to positions regarding public safety in the name of “diversity.” Rev. Jackson, a leader in the community organizing movement of social justice before he was eclipsed by one Barack Obama, compared the TEA Party to opposition to the civil-rights movement. “The Tea Party is a new name on an old game…Dr. King fought a ‘tea party’ in Alabama.”

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Let’s talk about fairness. As President Obama himself explained in a debate back in 2008, the tax code isn’t and shouldn’t be structured for maximizing either revenue or economic growth.

It’s about fairness. And by fairness, he means a highly progressive system where a small percentage of the population known as “the rich” (a group continually being defined down) pays more and more of their income to the Treasury, ostensibly to be redistributed to those who “need it”, with need being defined by Obama and his gangs of central planners.

In the current “unfair” system Obama ostensibly disdains, the wealthiest 1% of households pay 38% of all income taxes, the top 5% (those earning more than $160,000) account for 59% of all federal income taxes, while a Tax Policy Center study showed the bottom 45% paid no income taxes in 2010.

Looking at these numbers, anyone truly concerned with fairness — not vengeance — must conclude the wealthy are shouldering an unfair burden in a system in which they stand to benefit the least.

Obviously we all pay taxes of one sort or another. There are payroll taxes, Social Security taxes, property taxes, sales taxes. At the local and state levels, the wealthiest pay a higher percentage of the tax burden, because they’re buying more expensive properties and purchasing a greater number of goods and services with their disposable income.

But they benefit equally from laws protecting their property, police and fire departments, roads, public schools, and public parks and institutions. (Those who send their kids to private schools pay the cost of those schools plus the cost of the public school, for which they receive nothing in return.) Those who pay less or nothing have equal access to these protections and services.

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Michael Spence, Nobel Laureate and former Dean of the Stanford Business School, has just published a rigorous economic analysis called: “The Evolving Structure of the American Economy and the Employment Challenge.” The report illuminates how the unbridled growth of government consumption spending has destroyed America’s productivity leadership, driven entrepreneurs to off-shore production, and destroyed middle class wage rates.

Adam Smith, 18th Century English economist, pioneered the concept of the “invisible hand” to describe how capitalism through self-interest, competition, and supply and demand, more effectively allocated resources than the “dead hand” of the state; it levied punitive taxes, adopted restrictive regulations, and enforced monopolies to favor their crony allies. Smith described how English entrepreneurs flourished after their King’s feudal dominance of the economy was liberated by adopting the laissez-faire economics that allowed transactions between private parties to be free from the state’s coercion. Smith described how new wealth was rapidly created and compounded over time form the productivity gains of the Industrial Revolution that leveraged the value of workers and led to higher wages.

The Spence report illuminates that from 1988 to 2008, America’s productivity dominance collapsed by 70%; shrinking from 2.5% gain per year to only .7% per year. This crash in American leadership was the result of 98% of the 27.3 million new jobs created during the period coming from the lower productivity, and thus lower wage, “consumption” sector of the economy. Higher productivity, and thus higher wage, “goods-producing” sector grew by only 620,000 jobs. The root cause of this substitution for lower productivity jobs was a 23% growth in government, to 22.5 million workers, and a 63% growth in government dominated healthcare, to 16.3 million workers. Productivity for the American goods-producing sector continued to grow by a healthy 2.3% per year, but productivity of government workers sunk by 4% and productivity of healthcare workers plummeted by 9%.

In 1988 the average value added for American workers was $75,000. Over the last twenty years, America’s revolution in information-technologies helped drive up the valued added of a goods-producing American worker to $115,200 per year. But the productivity value of government and healthcare worker tumbled to $72,000 per worker; dragging down the average value added of American workers to only $90,750. That $24,450 loss of productivity explains allot about why the American middle class wages have been shrinking in the United States.

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I’m a Trump cheerleader. After 25 years as a lobbyist for Trump and Chairman of his 2000 Presidential Exploratory Committee, I like the man. I have studied mountains of polling conducted by the Trump casino interests studying the Trump brand for twenty years. I have studied the shocking new polls that show Trump vaulting to a lead over conventional politicians. A new PPP poll for Talking Points memo showed Trump leading the field.

Trump is a middle class phenomena. Middle aged, middle income, middle class voters are Trump’s core. Hispanic voters give him high favorable ratings as do African Americans and poor whites. The higher your level of education the more likely you are to loath Trump. If you are self-made you are 70% more likely to like Trump than if you have inherited money. Small businessmen like Trump, Wall Street Gekkos do not. The Apprentice has enhanced his standing because his short segments show him being cool, tough and decisive, things voters are looking for after the vacillation of Barrack Obama.

Trump appeals to the strivers. Trump lives as they would live if they were rich. Trump’s over the top lifestyle of the biggest and the best appeals to these voters. The Ivy League educated? Not so much. Old Money? Forget it. Trump appeals to the Perot and Buchanan voter suspicious of both parties. The Tea Party is a natural launching pad for Trump.

Now the Club for Growth is bashing Trump for positions he took ten years ago under far different circumstances. Trump favored a tax on the super-rich to kill the deficit. He was willing to pay himself. He is opposed to the idea today. Hard to imagine voters seeking consistency will switch to Mitt Romney who used to be a pro-abortion, pro gay marriage liberal.

Political operatives who come to work for Trump will soon realize he doesn’t need words put in his mouth and has a very clear sense of what he wants to say and do. Trump is soaring in the polls now because he is following his own populist instincts and expressing himself in street language the average person can understand.

It takes stature, money, energy and discipline to be elected President. Trump has the stature and the money, so far he has demonstrated the energy but whether he has the discipline to stay on his core themes and to parry the attacks on him without getting personal remains to be seen. Much of this furor is about the Trump brand. At last weekends Tea Party Tax rally in Boca Raton Trump asked his host if he should take off his trademark pastel tie for his speech. “No,” he was told, “you gotta look like you look on TV.”

Cross-Posted: TobyToons (Conservative Political Cartoons)

“So how do you plan to kill me?”  Charles Morse (played by Anthony Hopkins) asked Robert Green (played by Alec Baldwin) in “The Edge.”  It was at that moment that I realized I had a deep-held sympathy for the super wealthy. It’s got to be a lonely life.  It’s got to be a life void of trust and sadly, a life of being vilified by the media and politicians alike, through no fault of your own.  Sure you should probably never feel bad for a guy who owns a plane, but I often wonder, how many of us have ever really thought of the country’s wealthiest 2% as actual human beings?

We live in a world today where rich = bad. If a wealthy man shows up in a movie, you are to immediately assume that he’s the bad guy. Of course, these assumptions are never reserved for the middle-eastern terrorists, rather the man with the bryl-creemed hair and Brioni suit. Add to the fact that we have a Harry Reid-minded administration consistently setting up the “Us vs. Them” cultural narrative and it seems that today’s top earners find themselves in a never-ending, uphill battle against public hatred. Prejudice is bad. Why should prejudice towards the rich be any different?

As I foray into new territories in my career (and by foray, I mean play jester-monkey for coin), I find myself meeting more and more of today’s “super wealthy.”  Little known fact; most of them are good people. It’s crazy to hear, I know.  I expected to see more men looking like the Planter’s peanut guy, thinking only of ways to scheme their next shadily earned dollar.  The truth is that like any demographic, you’re going to end up with the same percentage of good people and jackasses. I would even dare to say that I’ve encountered far fewer jerks in the wealthy community, because success leaves less room for that kind of behavior. I’ve met far more selfish poor and middle class people than I’ve ever met wealthy folks.  Often, it seems that today’s middle class are so busy nickel and diming their lives that they rarely take the time to help others.  My mom never makes me sandwiches anymore.

Try this; at the next business gathering or conference that you attend, stand back and observe the interaction of the general public with some of the wealthiest people in the room.  Throughout the night you’ll see people treat them as veritable ATM’s, extending common courtesy only for as long as it takes them to pitch their latest investment or product. Sometimes these are the same people who turn around and complain about the “have’s and the have not’s” as they lobby for higher taxes on aforementioned rich people.

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In observing the mainstream media’s treatment of the Tea Partiers I am reminded of two things: A) the mainstream media regularly pollutes public discourse in this country with false charges. I depict the phenomenon as Kultursmog in my new book, After the Hangover: The Conservatives’ Road to Recovery; and B) the mainstream media really hates the American middle class.

Astoundingly, last week the Kultursmog had all media responding to charges that the Tea Party movement embraced violent racists. Boy Clinton even summoned up the evil image of Timothy McVeigh in remonstrating against the Tea Partiers. Actually the Tea Partiers represent a civic upheaval of good-natured people defending the salient American values of personal liberty, limited government, and the U.S. Constitution—to say nothing of their proper concern for the government’s looming debt.

As Michael Barone pointed out last week at a seminar we held on Hangover at the Heritage Foundation, in the late 1930s a revulsion against the New Deal’s lavish spending and many encroachments on American liberties rattled the New Dealers’ smug statism to the point that Barone could see FDR being defeated in his 1940 reelection bid had World War II not threatened. Obviously today’s Tea Party movement is not new. In fact, their concerns have been episodic for generations, and the smoke stacks of the Kultursmog always depict such protests as extremist. Today, of course, limited-government conservatives out number statist Liberals two to one—extremist indeed!

Further the so-called Liberals hate the middle class. A perfect example of this is the diabolizing of the pulchritudinous Sarah Palin. She is the embodiment of the American middle class—and, what is more, she is very cute.

(more…)

It was kind of hard to stop laughing when I read that Joe Biden is leading a Task Force to study what’s on the mind of middle class Americans. Give me a break.

It would be funny if it were not so sad that those in Washington need a special commission to figure out what America thinks. How can we be represented in the first place if the people we hired to carry our hopes and fears are so clueless?

Here’s my suggestion Mr. Biden—take a trip to any town or city and sit down for an early breakfast in a coffee shop. Stop talking long enough to listen. Try a barber or beauty shop for the same lesson. Have a beer in a tavern. The key here, Mr. Biden—and all you folks from Washington, D.C. who have become so frightened that people are expressing their independent will at the polls—is to stop pontificating long enough to actually hear what we are saying.

(more…)