Can the middle class be rebuilt?
What Should Government Do? Less

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Article Highlights

  • America's true social safety net is with charitable giving

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  • At this point, there's not much #Obama can do

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  • What the middle class needs most is more of what it already does so well

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As a foundation for the middle class, good jobs, stable families and individual creativity are hard to beat. America didn't generate the strongest middle class in history by having lots of bureaucrats and rules but by having few of them, creating a chaotic economy in which college dropouts become C.E.O.'s and seemingly only political offices are handed down father-to-son.

Yet today's economy looks bleak. Recessions born from the financial system are particularly tough to shake. Nearly $1 trillion in fiscal stimulus and hundreds of billions more in Federal Reserve action have failed to revive growth. It is hard to believe the president has been saving the real solutions until now.

Indeed, policy errors helped put us here and will hinder the recovery. High corporate taxes cost jobs and wages. Housing policies tell banks to issue low-down-payment mortgages that lead to defaults. Entitlement programs encourage middle-class Americans to save less for retirement. Federal tax law boosts health spending that saps wages and drives inequality. Public employee pay is excessive and bad school teachers are impossible to fire. Welfare encourages rising illegitimacy, creating new generations of poverty. It's not the rich who suffer from misguided social engineering.

"America didn't generate the strongest middle class in history by having lots of bureaucrats and rules but by having few of them." -- Andrew Biggs

It seems unlikely that the president has been saving the real solutions until now. There is not much he can do.

But America's true social safety net remains strong, with charitable giving multiples higher than other countries (and highest among conservative and religious households). Americans give even more through their inventive entrepreneurialism, producing not just automobiles and iPhones but also meaningful, creative jobs building these products. And, contrary to the left's entitlement mind-set, Americans are happiest when they earn what they receive. What the middle class needs most is more of what it already does so well.

Government has been calling the plays while ordinary Americans ride the bench. But when the game is on the line, it's time to give the real playmakers the ball. The answer to too much government isn't more government.

Andrew G. Biggs is a resident scholar at AEI.

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