How Does Attacking Bain Help the Middle Class?—David Frum

Here's the upside to Newt Gingrich's attack on Mitt Romney's record at Bain: it could at last open the way for a Republican debate on how to raise middle-class incomes.

To date, the Republican candidates have competed as to who could cut taxes deepest for the richest. Rick Perry offered a maximum 20% income tax rate. Born-again class warrior Newt Gingrich offered a maximum rate of 15%.

Rick Santorum proposed a larger per-child tax credit. But since that credit is only applicable against income-tax, not payroll tax, it's unclear that it offers much additional benefit to middle-class families who are already often exempted out of the income tax system. (Which at other times enrages Republicans, who rail against the 47% who pay no income tax precisely because of credits like the per-child allowance.)

What does the American middle class need?

For starters, it needs a health insurance system in which premium costs do not double every decade.

The rising cost of health insurance is the proximate cause of middle-class income stagnation. During the Bush years, compensation costs—the cost of labor to employers—rose on average by 25%. Virtually none of that money reached employees, however, because virtually all of it was siphoned away by the rising cost of health and other benefits.

Had healthcare costs risen at a slower pace, as they did in the 1990s, employees would have seen their productivity improvements translate into higher pay. Instead, they got the same (or worse) insurance at a higher price.

Beyond that—well let's have a real debate.

But the idea that the right response to the troubles of the middle class is to punish Mitt Romney by denying him a presidential nomination is silly. The one big winner from a Romney defeat would be Newt Gingrich. And whatever else he is, Newt isn't middle class!

See more of our coverage in your search results.

ADD THE DAILY BEAST ON GOOGLE

David Frum

Got a tip? Send it to The Daily Beast here.