Low-income Republicans Dissatisfied with Government Efforts

Low-income Republicans Dissatisfied with Government Efforts
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Although the complaint of low-income Republicans may seem similar to that of Occupy protesters, Hoover Fellow Michael Boskin dispels the idea that the two are alike. (Photo Source: Wikimedia Commons)
In a CNN interview on February 1, GOP presidential candidate Mitt Romney bluntly stated, “I’m not concerned about the very poor.” Of course, Romney meant that he is satisfied with the social safety net for America’s lowest earners, but the comment sparked a controversy anyway.

In light of a recent study conducted by the Pew Research Center, the candidate’s poor choice of words raises an issue more substantive than a mere gaffe on the campaign trail—the relationship between the Republican Party and the neediest members of American society.

The Pew study found that a majority of low-income Republicans, defined as families with an income below $30,000, feel the government does not do enough on their behalf. The result is curious because those ideologically committed to minimal government intervention, feel that not enough is done, even with a president who has vastly increased spending on welfare programs. Moreover, according to the study, half of low-income GOP constituents believe the economic system of the United States unfairly favors the wealthy and a whopping 70 percent believe the few rich people and corporations have too much power.

The most surprising aspect of this finding is that on the face of it, low-income Republican’s views seem to align with the sentiments of the Occupy Wall-street movement—views on the opposite side of the political spectrum. The importance of this similarity is difficult to determine however.

First, the prevalence of these sentiments within the Republican Party is indeterminate because the poll does not specify the fractions of the income sectors. Moreover, as Professor Michael Boskin, a fellow at Stanford’s Hoover Institute reflected, “It’s no fun being poor…regardless of political persuasion.” Thus, the political weight of an emotional response cannot be evaluated.

Professor Wright of Stanford’s Economics Department made very much the same point to dispel the analogy to the Occupy movement: “The only thing I would say is similar is…the distrust…when they interact with government. They have much of the same kind of hostility and suspicion.” Particularly, Wright continued, as members of the Occupy movement “don’t really have much by way of the specific policy agenda or proposal… it’s awfully hard to say if there is an overlap between what they would support.”

The comparison with the Occupy movement may be instructive, however, in terms of its broader social implications. Frustration by the poor on both sides of the political spectrum may reveal a unique problem of income inequality in the current economic climate. Indeed, both professors agreed that income equality has been on the rise since the 1970’s. As Wright averred, “There has been virtually no forward progress in the wages of unskilled labor.”

There are a number of statistics available through Google’s Public Data that illustrate this trend. The GDP per capita has exploded from $4,984 in January of 1970 to $47,350 in June of 2008. The median income however, has remained mostly flat. Although there has been huge growth in the country’s prosperity, the gains have only been realized by the high-earners. Otherwise, there would be a change in the median income.

The Washington Post has reported that in 2008, the top 10% of the population earned as much as the rest of the country combined. Farther towards the top, the highest .1% of the population has seen its income rise by 385% since 1970. The overall growth for the bottom 90% during that same period was negligible.

Accounting for these changes is a complex task. Furthermore, there are often political implications to even purely descriptive accounts. Many on the left criticize precisely conservative principles of governance such as tax cuts for the rich and loopholes for banks and corporations—deemed pro-growth—as a major contribution to growing income inequality.

Warren Buffet’s famed Op-ed in the New York Times, entitled “Stop Coddling the Super-Rich,” epitomizes this sentiment. He characterizes the decreasing tax rates on the rich since 1980 as a demonstration of a “billionaire friendly Congress.”  Such policy is unfair, he claims, because it does not reflect, “shared sacrifice.”

Boskin refutes Buffet’s claim, “The notion that policies such as lower tax rates are causing inequality is really ridiculous.”

He argues that governmental policies have played an “incidental” role in comparison to other broad underlying developments.

“Globalization and [improvement in] technology have dramatically increased the earnings premium among higher skilled. “Additionally, a big increase in supply of workers globally has put downward pressure on wages for less skilled workers.”

Wright acknowledges that there are a variety of potential explanations for the increase in inequality. Some of these include, improved technology, the rise of immigration, the decline of unions, and the decline in the real value of the minimum wage.

“It’s not surprising that if economists can’t agree, we can’t have a coalescence either over a diagnosis or what would be helpful as a remedy.”

Facing a reckonable rise in income inequality and increasing dissatisfaction from members of their own party, Republicans are challenged to come up with a uniquely conservative approach to a solution.

Wright and Boskin agree that a conservative approach to governmental aid for the poor calls for an incentive-preserving framework.

Boskin explained, “The problem is to design a system that has a humane cost-effective safety net that distinguishes people who should only need it temporarily.” He contrasted this approach with Democratic policies that “trap people into dependency.

“Democrats seem to want to encompass many more people…and don’t worry nearly as much about getting people off of [government programs]…While they provide some support, they also tend to sap incentives. To stay on them you can’t accumulate assets. If you start working you start losing the benefits.”

He concluded, “Republicans view themselves as enacting policies that will help low-income people rise. They understand that not all people will be able to take advantage of it, but that’s a big part of what they want to do.”

However, Wright mentioned a trend that clouds Boskin’s assertions. Using new analysis of U.S. Census Bureau data, the Economic Mobility Project has found that absolute mobility is declining for a significant group of Americans.

Does this fact speak to a failing of conservative principles, where a freer market failed to produce economic mobility? Or should the conditions of globalization be responded to with even more pro-growth policies?

For Boskin, the goal is clear, “Consolidate budget, reform social security and Medicare, preserving those programs for lower and lower middle income people, [and] as you get higher the subsidies reduce.”

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