Are You Better Off?

Page Six

TIME Says No

"For much of the middle class," Time headlined an October 10 article on the Reagan years, "the answer is no." Senior Writer George Church argued "the gap between rich and poor is still growing -- to its wildest point in 40 years, according to the calculations of some liberal economists. And that trend is alarming" since it threatens "the American dream itself." The middle class "has been shrinking" Church wrote, "as some of its members fall into poverty and others acquire wealth."

Church charged: "Reagan's tax cuts only worsened the skew. Though income tax rates were reduced in all brackets, the cuts were toward the upper income end of the scale." His authority: a Congressional Budget Office (CBO) study showing "only the top ten percent of the population received a significant net tax cut between 1977 and 1988" while "the poorest tenth of workers saw 20 percent more of their income swallowed by taxes."

How solid is the Time case for class resentment? Figures from other authoritative sources prove opposite trends. A Bureau of Labor Statistics study, released in June, determined: "America's middle class has been shrinking since 1969, but mainly because more families have moved to the upper class."

In short, syndicated economics columnist Warren Brookes pointed out, the middle class "is vanishing upward even as the percent in the lower class is declining." Brookes explained that "means since 1981 America has finally returned to its traditional pattern of strong upward mobility--a pattern that was in fact in the 1970s by soaring inflation and taxes."

Why didn't the CBO analysis used by Time reflect that? It distorted post 1980 trends by not treating 1977-81 and 1981-86 separately. IRS figures show that under Carter the shares of taxes paid by the top one percent fell as the percent paid by the poor shot up 15 percent. Thanks to the tax cuts, the share paid by the poorest group fell 14 percent as the burden for the richest jumped from 18 to 26 percent.

Time offered the usual liberal solution: Raise taxes to pay for middle class aid programs while "making the wealthy pay a large share." An accompanying article by Associate Editor, Richard Stengel, asserted that to save the "underclass" a "new agency is needed, a revitalized Jobs Corps along the lines of a Works Projects Administration."