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

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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.)

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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!

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