The political world has found the latest pull-quote to obsess over today. In an interview with ABC, MItt Romney claimed that middle-income Americans make up to $250,000 a year. This has spawned the usual chuckles and claims of being out of touch. And it’s true that it’s hard to swallow all this concern for those making $250,000 a year, less than 4% of the population, when at the same time the same elites have been denigrating Chicago public school teachers who make the astronomical sum of $70,000 a year.
But let’s take a look at the full context here, because there’s something to be pulled out here. This came up in the context of tax policy:
MITT ROMNEY: Well, I said that there are five different studies that point out that we can get to a balanced budget without raising taxes on middle income people. Let me tell you, George, the fundamentals of my tax policy are these. Number one, reduce tax burdens on middle-income people. So no one can say my plan is going to raise taxes on middle-income people, because principle number one is keep the burden down on middle-income taxpayers.
GEORGE STEPHANOPOULOS: Is $100,000 middle income?
MITT ROMNEY: No, middle income is $200,000 to $250,000 and less. So number one, don’t reduce– or excuse me, don’t raise taxes on middle-income people, lower them. Number two, don’t reduce the share of taxes paid by the wealthiest. The top 5% will still pay the same share of taxes they pay today. That’s principle one, principle two. Principle three is create incentives for growth, make it easier for businesses to start and to add jobs. And finally, simplify the code, make it easier for people to pay their taxes than the way they have to now.
Romney happens to be wrong about those five supportive studies. But his demarcation line for “middle-income people” is in EXACTLY the same place as it is for Democrats, including President Obama. For the last four years, Obama has promised not to raise taxes on those making less than $250,000 a year. And Democrats constantly conflate this with the need to extend “middle-class tax cuts.” The clear implication is that the middle class ends at $250,000 a year. So there’s unanimity across the political spectrum on the dividing line between the “middle class” and the rich. It happens to be completely out of touch with reality, but it exists.
This also happens to be a bad idea. If 97-98% of the population gets walled off from any tax increases, the pool of money that can be used to increase revenue gets smaller and smaller. That shouldn’t necessarily be a problem for funding the government, but it is a political hurdle. Furthermore it plays out the argument on conservative territory, with the idea that public services aren’t worth paying for – and by implication should be eliminated – made paramount.
Mitt Romney plans to get out of this box by building deficits, as his Republican predecessors have done. But Democrats, the new party of austerity, have not shed their cloak of alleged “responsibility,” and the consequences of refusing to increase taxes more broadly is a sharp pullback of public services, which ends up being much more damaging.
So before we guffaw at Mitt Romney thinking someone making $250,000 is part of the middle class, we should wonder why this sentiment is so universal in Washington.