A quick bet against Brooks

UBER UPDATE 4/26/10:  My copy of Rebound finally arrived, and I was essentially right (as were many commenters): Rose's figures do refer to household income. They're also limited to "prime age" adults. Brooks did not literally misquote, and I shouldn't have inferred that he did without the book in hand. But he missed some key definitions early in the chapter. More here; full review of Rebound here. I have moved prior updates to the bottom, so that everything appears in sequence. 

-------ORIGINAL POST:
Arguing today that America's future is bright, David Brooks retails a stat from Stephen J. Rose: 60 percent of US adults have earned over 100k in at least one of the last ten years..I am willing to bet that "adults' should be 'households.' George Will made a similar error in a Jan. '08 column arguing that all was rosy with the American middle class. I will check this out later today.

UPDATE:  Bingo. Post above was from a Blackberry.  The book by Stephen J. Rose that Brooks references, Rebound: Why Americans Will Emerge Stronger from the Financial Crisis, is not out yet. But in a June 4, 2007 Huffington Post column, Rose wrote (my emphasis): 

Because income swings up tend to be larger than income swings down, the median of multi-year income is higher than median in each of the separate years. Consequently, the median income over ten years ending in 2002 was nearly $75,000 (in 2005 dollars) for prime-age adults and only 20 percent had ten-year average incomes below $40,000.

In addition, half of adults had at least one year in which their total household incomes were greater than $100,000.

George Will blames the welfare state for credit crunch

George Will states the obvious today: that "Main Street" shares some responsibility for the housing bubble and credit crunch, since many Americans bought more house than they could afford or otherwise overindebted themselves.

As usual, though, ideology and moralism compromise Wills' insight. Here, for example, is a tincture of unquestionable fact glossed by an unquestioned assumption:

Democratization of everything is supposedly an unquestionable good, but a blizzard of credit cards (1.5 billion of them, nine per cardholder), subsidized loans and cheap money has separated the pleasure of purchasing from the pain of paying. Furthermore, the entitlement mentality fostered by the welfare state includes a felt entitlement to a standard of living untethered from savings.

The U.S. is far less of a welfare state than many European countries that do not share our culture of debt. In France, people look at you funny if you pay for an ordinary store purchase with a credit card (at least they did 2-3 years ago, when the WSJ published an article on the subject). In my New Jersey home, the first credit card solicitation arrived for my son when he was fourteen. What force has "democratized" debt to that obscene extent? Not government entitlements -- not "subsidized loans" -- but free-market capitalism run wild, enabled by a culture of deregulation. That is, by the Bush-era Office of the Comptroller of the Currency's aggressive preemption of state banking laws when states attempted to crack down on predatory lending and other forms of customer abuse. By Alan Greenspan's disregard of warnings that the Fed must rein in mortgage lenders. By credit card deregulation that allowed issuers to charge whatever interest rates they want - and pile fee on fee when payments are late.

Obama's diagnosis is more cogent than Will's. He laid it out most fully back in March, at Cooper Union in New York:

This loss has not happened by accident. It's because of decisions made in boardrooms, on trading floors and in Washington. Under Republican and Democratic Administrations, we failed to guard against practices that all too often rewarded financial manipulation instead of productivity and sound business practices. We let the special interests put their thumbs on the economic scales. The result has been a distorted market that creates bubbles instead of steady, sustainable growth; a market that favors Wall Street over Main Street, but ends up hurting both.

Unfortunately, instead of establishing a 21st century regulatory framework, we simply dismantled the old one – aided by a legal but corrupt bargain in which campaign money all too often shaped policy and watered down oversight. In doing so, we encouraged a winner take all, anything goes environment that helped foster devastating dislocations in our economy...

When all is said and done, losses will be in the many hundreds of billions. What was bad for Main Street was bad for Wall Street. Pain trickled up. ...

we need to regulate institutions for what they do, not what they are. Over the last few years, commercial banks and thrift institutions were subject to guidelines on subprime mortgages that did not apply to mortgage brokers and companies. It makes no sense for the Fed to tighten mortgage guidelines for banks when two-thirds of subprime mortgages don't originate from banks. This regulatory framework has failed to protect homeowners, and it is now clear that it made no sense for our financial system.

As they say in Blogland: read the whole thing.

Janesville: Obama Gets Down to Tax Brass

Janesville, Wisconsin, February 13, 2008: Obama gets down to tax brass. That is, to redistributing a bit of income and reversing the rising tide of inequality. So how's he going to build a "working mandate" for an unabashedly liberal agenda - mainly a set of income subsidies, risk relief and job creation measures?

The sweep of social spending proposed in this speech is pretty breathtaking. There's a series of measures to shore up the income and security of the working poor and lower middle class -- minimum wage with a yearly COLA raise, expanded earned income tax credit, mortgage interest tax credit, a tax cut for working families, payroll tax elimination for seniors with less than $50k income, $4,000 tuition tax credit, expanded child care tax credit, expanded Family Medical Leave Act.

Then there's risk transfers: required direct deposit retirement accounts, debt relief for those who went bankrupt because of medical expenses -- and, uber alles, subsidies to make health care affordable. Finally there's public investment to spur employment: $60 billion for infrastructure, $150 billion for "green energy" investment. Whew.

The conservative soft spot for Obama notwithstanding, their guns are sure to be trained swiftly on the economic package laid out in its entirety here. George Will, for example, is going to have to rethink his recent outburst of Obamania:

The way to achieve Edwards's and Huckabee's populist goal of reducing the role of "special interests," meaning money, in government is to reduce the role of government in distributing money. But populists want to sharply increase that role by expanding the regulatory state's reach and enlarging its agenda of determining the distribution of wealth. Populists, who are slow learners, cannot comprehend this iron law: Concentrate power in Washington, and you increase the power of interests whose representatives are concentrated there.

Barack Obama, who might be mercifully closing the Clinton parenthesis in presidential history, is refreshingly cerebral amid this recrudescence of the paranoid style in American politics. He is the un-Edwards and un-Huckabee — an adult aiming to reform the real world rather than an adolescent fantasizing mock-heroic "fights" against fictitious villains in a left-wing cartoon version of this country.

Will is half-right. In the Janesville speech, Obama advances an Edwardian agenda, complete with a hat-tip to Edwards' precept that "this country should be rewarding work, not wealth." And he denounces tax breaks for corporations and the wealthy and the influence of lobbyists on the tax code and legislation generally. But it's also true that he presents this agenda as "an adult aiming to reform the real world" -- and avoids the demonization trap. His calls to national unity that many find so stirring and that some find vacuous are wrapped round his call to reverse the tide of income inequality that's been rising for thirty-plus years.

In fact, he casts income redistribution -- "at a time when we have greater income disparity in the country than we've seen since the first year of the Great Depression" -- as an imperative of fulfilling the American Dream. That's his key to winning the center.

There are several steps to this move-the-center-left gambit. First, Obama frames income redistribution at this time as simple fairness and a collective responsibility:

when opportunity is uneven or unequal - it is our responsibility to restore balance, and fairness, and keep that promise alive for the next generation. That is the responsibility we face right now, and that is the responsibility I intend to meet as President of the United States.

"Balance" suggests the center: the nation has careered rightward. "Responsibility" is a Republican buzzword -- but Obama applies it to the community rather than the individual. And "fairness" - who's going to quarrel with that?

One of Obama's favorite formulations is "we're not blameless." The 'we' can be the nation, the Democratic party, and even in some instances himself -- he's used this formula to confess to his own campaign's excesses in sniping at Hillary. At Janesville, it frames his economic agenda:

We are not standing on the brink of recession due to forces beyond our control. The fallout from the housing crisis that's cost jobs and wiped out savings was not an inevitable part of the business cycle. It was a failure of leadership and imagination in Washington - the culmination of decades of decisions that were made or put off without regard to the realities of a global economy and the growing inequality it's produced.

Second, Obama makes it a point to acknowledge countervailing realities. At Janesville, he denounces NAFTA and calls for "fair trade" agreements -- without specifying how such agreements can include "protections for American workers." But he also grants:

Now we know that we cannot put up walls around our economy. We know that we cannot reverse the tide of technology that's allowed businesses to send jobs wherever there's an internet connection. We know that government cannot solve all our problems, and we don't expect it to.

Third, contra the WSJ's Daniel Henninger, who accuses Obama of purveying "a message that is largely negative...a depressing message", Obama casts the current "imbalance" as a temporary aberration -- a condition we have more than enough strength to fix:

But that doesn't mean we have to accept an America of lost opportunity and diminished dreams. Not when we still have the most productive, highly-educated, best-skilled workers in the world. Not when we still stand on the cutting edge of innovation, and science, and discovery. Not when we have the resources and the will of a decent, generous people who are ready to share in the burdens and benefits of a global economy. I am certain that we can keep America's promise - for this generation and the next.

Finally, Obama makes shoring up the working poor and middle an imperative of the "unity" he always affirms, and which is often ridiculed as feel-good puffery. Here, unity is "shared sacrifice and shared prosperity":

In the end, this economic agenda won't just require new money. It will require a new spirit of cooperation and innovation on behalf of the American people. We will have to learn more, and study more, and work harder. We'll be called upon to take part in shared sacrifice and shared prosperity. And we'll have to remind ourselves that we rise and fall as one nation; that a country in which only a few prosper is antithetical to our ideals and our democracy; and that those of us who have benefited greatly from the blessings of this country have a solemn obligation to open the doors of opportunity, not just for our children, but to all of America's children.

None of this really new. Obama recognizes that. What's new, he tells us, is the context -- a time when income inequality has reached new heights, and tax cuts for the wealthy have reached new extremes, and lobbyists control legislation, and the national wealth is hemorrhaging into Iraq. On the level of values, he's calling for renewal and return rather than innovation. And like almost all U.S. politicians, he brings it back to the American Dream:

It's a promise that's been passed down through the ages; one that each generation of Americans is called to keep - that we can raise our children in a land of boundless opportunity, broad prosperity, and unyielding possibility. That is the promise we must keep in our time, and I look forward to working and fighting to make it real as President of the United States. Thank you.

Footnote: How can Obama pay for all this? Roll back some of the Bush tax cuts? Probably. Get troops out of Iraq quickly? Dicey. Forget about the $150 billion for green energy -- or, say, 90% of it? Probably. Question, Senator: what about military spending? Looked at any big-ticket weapons programs lately?

Related posts:
Obama brings it back to earth in Virginia
Feb. 5: Hillary's Speech was Better than Obama's
Obama's Metapolitics
Obama: Man, those Klinton Kids are Something
Obama Praises Clinton, and Buries Him

Hillary gets motherly

Bidding to lead the so-called Mommy Party, Hillary Clinton delivered a credo in her Florida victory speech that certainly casts her as the Mommy President:

"I believe everyone who works full time in America should bring home an income that lifts that person out of poverty and gives them and their children a better chance.

"I believe that every man, woman and child has a right to quality, affordable health care.

"I believe that every child has a God-given potential that we can help to develop if we have universal prekindergarten and we have a school system that is not so worried about giving tests as in making sure our kids can learn.

"I believe that our tax system should be fair for everyone. It is wrong that people making $50 million a year on Wall Street pay a lower percentage of their taxes than as teacher making $50 thousand dollars in Florida.

"I believe it is time for us to begin to bring our troops home from Iraq as carefully and responsibly as we can.

"I believe it is important we do everything to promote better relations in our hemisphere with all of our neighbors and that we continue to support democracy in Cuba.

"And I believe that we can, working together, feel pride and progress in our country again. You are giving me a tremendous gift, not only with your votes, but with your trust, because I believe that public office is a trust, and I will get up every single day, worrying about you, your families, your future.I think it is time we again have a president who put the American people first and that is what I will try to do.

While the agenda is unexceptionably Democratic, the language and emphases are stronly gender-inflected. Hillary seems to promise 'universal prekindergarten' not only for our children but for all of us. In fact in Hillaryland, everything we need to know we learned in kindergarten: we all play fair, we're all secure and taken care of, we have good neighborly relationships, and we're watched over by a president who will get up every single day worrying about us, our families, our future and who, like every good mother, earns and treasures our trust.

Not that there's anything wrong with any of this. George Will would deride it as a nanny state vision, but most Americans seem to believe again that the state should ensure universal healthcare, fair wages, a fair tax code, and even, in a competitive world, universal pre-k. But I wonder if we're in for another swing of Hillary's persona pendulum, from commander- to worrier-in-chief.

Will-fully Misleading?

UPDATE 4/6/10: David Brooks joins Will in misrepresenting Stephen J. Rose's household income figures as individual income

George Will, slamming the populism of Edwards and Huckabee, uses some pretty dicey-looking numbers to paint a picture of a wealthy electorate:

Economist Stephen Rose, defining the middle class as households with annual incomes between $30,000 and $100,000, says a smaller percentage of Americans are in that category than in 1979 — because the percentage of Americans earning more than $100,000 has doubled, from 12 to 24, while the percentage earning less than $30,000 is unchanged. "So," Rose says, "the entire 'decline' of the middle class came from people moving up the income ladder." Even as housing values declined in 2007, the net worth of households increased.

According to U.S. Census figures, in 2006, 19% of U.S. households earned over $100,000. Households in the top two income quintiles , those with an annual household income exceeding $60,000, had a median of two income earners while those in the lower quintiles (2nd and middle quintile) had median of only one earner. These numbers suggest that a small percentage of "Americans" earn over $100,000. The median household income is $48,201.00 (a handy summary is at Wikipedia*).

This is not to say that Edwards doesn't overstate the economic distress of Americans generally. It's fine to emphasize the continued prevalence of poverty in the U.S., which Edwards rightly calls shameful. It's also fair to stress that middle class income has stagnated, that income inequality is rising, and that there's been a massive risk transfer to households over the past 2-3 decades (e.g. in pensions, healthcare costs, and homeowners' insurance). But when Democrats start speaking as if the majority of Americans are in acute economic distress, it puts them out of tune with much of the electorate.

UPDATE, 5/6/09: What Rose actually said, in a Dec. 23, 2007 Washington Post op-ed, is that between 1979 and 2007,"the number of people in households that bring in more than $100,000... rose from 12 percent to 24 percent." Rose doesn't say whether the 1979 percentage is inflation adjusted. But he's a reputable economist, so let's assume that it is.  His broad point that per capita income has risen in this period holds -- though it's largely offset by the rise of one-income households, the fraying of the safety net, and the disproportionate rises in the cost of housing, higher education and health care.

* While the Wikipedia article places the 19% of U.S. households earning over $100k in 2005, the 2006 Census figures show the same percentage.