SOTU Address: No Middle Class Economics but Lots of Spin| Hugh Hewitt |1.28.15

Last week President Obama delivered his next to final State of the Union address. In it, he extolled “middle class economics”, which was the name he attached to his economic policies. The more I listened, the more I thought, this is spin, not reality.

As with many, perhaps most, Americans, when I hear the words “middle class economics”, I think not about my own history but of my family’s. My great grandfather arrived here with his parents and siblings shortly after the Civil War. There is no record of him having much schooling, but the family clearly coveted education. Records show that his sister, who became a teacher, was soon in college, almost unheard of for a girl in the mid-19th century. His father was listed in the census as a laborer, but within the decade the son was partner in a store and later either took over the business or started his own, the records aren’t clear. After graduating from college (the family’s first male recorded as having done so), his son married a teacher and took over the business.

With the exception of the women achieving advanced education before the men, this family story has been repeated millions of times on these shore and, more recently, around the world. It reflects a recurring theme, the role of education and entrepreneurship in American and now global middle class economics. On each of these, the president’s speech and his Administration have fallen short.

I know Mr. Obama promised free community college to all. But cost is not the key barrier to completing a program of higher education at either the two-year or four-year levels. The key barrier is the quality of high school preparation.

As reported by the Community College Research Center at Columbia University: “In a sample of over 150,000 students in community colleges… 2.5 percent for students referred to developmental education” (that is, who have inadequate high school preparation) earned a bachelors degree in five years. It is not an exact comparison but after six years more than half of all students who enroll in community colleges receive a two or four year degree or are still enrolled and working on it.

Can remedial work make up for poor high schooling? Surely it can, but according to the Center, “A number of recent studies on remediation have found mixed to negative results for students who enroll in remedial courses.” In other words, the odds are stacked heavily against those who arrive at either two or four year institutions without sufficient high school training. (http://bit.ly/ComCol)

What does that say about the president and last week’s speech? An administration that is dedicated to “middle class economics” and values college performance will do everything it can to help students get the best high school education possible, including, maybe particularly, by helping them escape failing or mediocre schools. But again and again, the administration has shown indifference or hostility to school choice in all forms. It has turned its back on Middle Class Economics, preferring what might be called Teachers Union Economics.

So how about entrepreneurship? As James Pethokoukis of the American Enterprise Institute has shown (http://bit.ly/SputteringEngine), since the recession began, the number of firms closing has exceeded the number starting. It is true that the gap, which for decades favored starts ups, began closing right after Ronald Reagan left office. My guess is that this change had to do with the surge in national business regulation and class action litigation that got going about that time. Still, a disturbing development for “middle class economics” became really bad during the Obama years. In the last six years federal regulation of business has become vastly more onerous and capricious, the litigation culture has been barely checked, and taxes on entrepreneurial income have spiked. Are these examples of effective “middle class economics”?

One more thing. Vast increases in productivity made possible the rise of the middle class in the British Isles and North America beginning between the late 18th and mid-19th centuries. This burgeoning of output per worked hour was a product of institutional and technological revolutions, among them the harnessing of fossil fuels. Surely anyone who cherishes “middle class economics” will take great care in approaching the Chicken Little sky-is-falling claims swirling like a superstorm around climate policy.

Instead the president and his minions have brushed aside the large and rapidly growing body of evidence that climate change alarmist have been, well, alarmist. No one is better on these questions than celebrated science writer Matt Ridley, author of the brilliant best seller, The Rational Optimist.

One of Ridley’s recent blog postings goes directly to the question of alarmism and middle class economics. Ridley writes: “I am especially unimpressed by the claim that a prediction of rapid and dangerous warming is ‘settled science’, as firm as evolution or gravity. How could it be? It is a prediction. No prediction, let alone in a multi-causal, chaotic and poorly understood system like the global climate, should ever be treated as gospel…. The policies being proposed to combat climate change, far from being a modest insurance policy, are proving ineffective, expensive, harmful to poor people and actually bad for the environment: we are tearing down rainforests to grow biofuels and ripping up peat bogs to install windmills that still need fossil-fuel back-up. These policies are failing to buy any comfort for our wealthy grandchildren and are doing so on the backs of today’s poor.” (http://bit.ly/RidleyClimate)

Today’s poor are tomorrow’s entrants to “middle class economics”, unless, as Ridley suggests, we precipitously knock out the legs from under the middle class’s energy and productivity stool. This is exactly what the administration seems set on doing in its now-failing (thanks to fracking) war on fossil fuels of all varieties.

The president talked about “middle class economics” for something like an hour. But spin goes only so far. When all was said and done, the “middle class economics” he preached was just so much hot air.