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Richard Kirsch Headshot

The Real Economic Crisis Ties the GOP in Knots

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When it comes to the economy, the GOP has a real problem that pollsters and message-massagers can't wave away. After three decades of the rich getting richer and the middle class being crushed and closed, Americans are very suspicious of the super-rich and corporate CEOs, and are looking for real evidence that politicians understand their plight. Two issues in the Republican primaries have spotlighted the internal troubles that economic reality causes for the GOP.

The issue that has received the most attention is the aggressive attack by Gingrich on Romney's record as a financial (aka "vulture") capitalist, shutting down factories and shipping jobs overseas to make himself and his cronies richer. When the Gingrich super PAC put real money behind that message in South Carolina, Romney tanked at the polls. But in a rare show of unity, both the Republican mainstream and right-wing howled at Gingrich for daring to challenge the free market.

The other issue that is confounding Republicans is the minimum wage, where Romney has taken a shellacking from the same forces that defended his record as a corporate raider. Romney, clearly aware that he needs to support some policies that show him sympathetic to struggling families, has broken with free-market orthodoxy by supporting indexing the minimum wage to inflation. For this he was loudly attacked by Fox News, The Wall Street Journal, and Rush Limbaugh, among others. Andrew McCarthy's post in the National Review captured the mood with the headline, "See Mitt Pander."

Romney isn't the only leading Republican candidate who may be flummoxed by the conflict between the public -- which overwhelmingly supports increasing the minimum wage -- and free-market orthodoxy. When Rick Santorum attacked Romney for giving the thumbs up to indexing the minimum wage, the former Pennsylvania Senator revealed that he too is willing to support the government establishing a minimum wage. Santorum said,

That is a very bad idea. Oh, absolutely. You can't do that. You want to talk about driving wage inflation? That's a very bad idea. When -- when the minimum wage drops below a certain level -- and it's usually a floor of about 7 percent of wages at minimum wage, I've supported, you know, increasing it back up to make sure that it stays above that level, so there is, in fact, a minimum wage. But when you index it, you're not talking about a minimum wage. You're talking about an index that's going to drive wage inflation.

You can bet that if Santorum becomes the nominee, that attempt to be seen as appeasing both sides will appeal to nobody.

While Republicans may be tied in knots, you can bet that President Obama will have a field day pointing out the differences between the eventual Republican nominee's professed concern about hard-pressed Americans and the reality of their policy positions. On the minimum wage, neither Santorum nor Romney points a way out of even basic poverty for Americans who work full-time. Keeping the minimum wage where it is now and indexing it to inflation, as Romney proposes, would lock Americans who work full-time at the minimum wage into poverty. The minimum wage would need to be raised from its current rate of $7.25 to $9.30 to bring a family of three with a full-time worker out of poverty.

Santorum's proposal, based on an economic workforce indicator, has no relation to what matters to a family: whether their hourly earnings keep them out of poverty. In a study conducted for the National Employment Law Project, the Economic Policy Institute calculated his proposal would result in a wage of $8 an hour, well below that minimal test. If the minimum wage had been indexed to inflation in 1968 it would be more than $10.30 today, but Congress has raised the minimum wage only three times in the last 30 years.

This year, Democrats around the country are beginning to see that raising the minimum wage is a timely and powerful issue. The legislative leadership in Connecticut, New York, and New Jersey are each pushing to raise their state minimum wage and then index it to inflation. Similar proposals are pending in Delaware, Illinois, Massachusetts, Hawaii, and California. Activists in Missouri and San Jose, California are gathering signatures to put measures to increase the minimum wage on the ballot in November. Currently 18 states and the District of Columbia have raised their minimum wage above the federal level of $7.25. Ten states annually index their minimum wage to inflation to keep up with the rising cost of living. One sour note on this list is Governor Andrew Cuomo of New York, who has raised typical Republican reservations to the proposal, saying that "We'll look at it, we'll study it."

When Obama, ran for president in 2008 he endorsed raising the minimum wage to $9.50 in 2011 and then indexing it to inflation. Now would be a good time for the president to reaffirm that position and for Democrats in Congress to press for its enactment, if only to continue to highlight the huge contradiction between Republicans' alleged concern for working families and their deeper allegiance to free market theology.

Cross-posted from New Deal 2.0.

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