Middle Class an Elusive Group, Politicians Find : Politics: Republicans and Democrats want to capture them, but no one agrees on who they really are.

Everybody in Washington, it seems, wants to do the right thing for the American middle class these days.

The recession that began late last year has hit the middle class harder than any other recent slump, devastating consumer confidence and making middle-class Americans feel increasingly like an endangered species.

As a result, both political parties are searching for their own formulas to reach the vast middle voting bloc that largely determines the outcome of American elections. Their proposals range from Democratic appeals to increase “economic fairness” by easing the burden on financially squeezed families to Republican cries for pro-growth tax cuts designed to create jobs and stimulate investment.

“What we are seeing is a recognition by both parties that the middle class got squeezed over the last 10 years, and so they both want to do something about it,” observes Stephen Moore, an economist at the Cato Institute, a libertarian Washington think tank.

Even President Bush, rattled by his plunging approval ratings, now seems willing to sharply reverse course on economic policy and temporarily forgo budgetary restraint to help the middle class.

But all of these efforts are running into one major obstacle: For all the talk of helping middle-class Americans, no one can agree on who they really are.

Just about everyone, after all, considers himself to be in the middle. In a society dominated by middle-class values, few Americans want to admit that they are not part of that political and cultural majority.

And there is no official government definition of the middle class to prove any of those people wrong. The national median family income was just $35,353 in 1990, and most economists define the middle class as those earning roughly between $20,000 and $55,000.

But many people who earn $100,000, or even more, do not think of themselves as affluent. Especially if they live in a high-cost city like Los Angeles.

“The middle class is a state of mind and a set of values, not just an income range,” argues Will Marshall, president of the Progressive Policy Institute, a research group with close ties to the Democratic Party’s leadership.

More important, even fewer Americans are willing to acknowledge to the government that they are not just comfortable, but downright rich--and thus can afford to be taxed more to finance a tax break for someone else. The wide variety in living costs, and the explosion in the number of two-income families, makes it far more difficult to establish a nationwide definition of who is really wealthy and who is really pinched.

Such trends help explain why the Democrats, in particular, have repeatedly miscalculated their ability in recent years to gain the trust and support of upper-middle-class voters. When Democrats, beginning with Walter F. Mondale, talked of taxing the rich to benefit the middle class, many of their proposals called for tax hikes on people who consider themselves part of the solid center.

“The Democrats are really in a tough bind, because when they talk about tax fairness, they really do have to go after people who think of themselves as middle class,” said Robert Reischauer, director of the Congressional Budget Office.

In part, that reflects the fundamental mathematics of taxes: There are simply not enough really rich people in America to soak. Of the more than 66 million families in this country, only about 3 million have household incomes of more than $100,000. And only one in three American families earns more than $50,000.

So when Congress talks about paying for a middle-class tax cut by raising taxes on the wealthy, it quickly finds that it must reduce the threshold income level used to define who is rich to raise enough revenues to pay for a major break for the middle.

“There is just not enough there at the top to tax,” acknowledges one Democratic Senate staffer.

“The Republicans can say, ‘Watch your wallet when the Democrats talk about middle-class tax cuts,’ and that kind of warning resonates with a lot of people, because the Democrats don’t have much credibility with the voters on tax issues,” adds Moore, the Cato Institute economist. “Bush will try to make an issue of the idea that when the Democrats talk about soaking the rich, they are coming after you.”

In congressional testimony last week, White House Budget Director Richard G. Darman pointedly criticized Democratic plans for middle-class tax relief on just those grounds.

“Someone has to decide, do they want what would be characterized by some others as a tax increase for the middle?” Darman said at a hearing on tax policy before the House Ways and Means Committee. “You start with the best of motives to try to help the middle, and you end up in time with a system that degenerates and comes back and hits the middle.”

The dispute is complicated by the fact that affluent Americans who still think of themselves as solidly middle class tend to vote and contribute to political campaigns at higher rates than lower income groups. According to a Times Mirror poll conducted in November, far more people who have family incomes of more than $50,000 say they always vote than do people with incomes of between $20,000 and $29,000.

That makes it politically perilous for politicians to define the middle class in ways that would shut out the most vocal, and vote-producing, groups in the nation. In addition, political leaders in both parties increasingly tend to personally identify more closely with the upper middle class than they do with the working middle class; few members of Congress spend much of their time with many people who earn just $25,000.

“When you tell a member of Congress that the median income is just $35,000, they look at you funny; they are surprised it is so low,” says Robert Greenstein, director of the Center on Budget and Policy Priorities.

“The middle class, in political terms, is much different, and much more affluent, than is the middle class that economists talk about,” argues Wendell Primus, chief economist for the House Ways and Means Committee.

As a result, many Democrats, now chastened by their past losses on the tax issue, are trying to rethink how they should define the middle. And, for the most part, their new definitions are decidedly upscale.

In fact, Congress is moving toward defining the middle in the broadest possible terms--and to include affluent groups that few economists would consider part of the middle class.

In his new tax-cut proposal, for example, House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) has offered one of the most liberal interpretations of what constitutes the middle class ever offered by a prominent Democrat. Rostenkowski’s “middle-class tax relief and fairness proposal” would provide lower taxes for 90 million households, or roughly 80% of the nation’s taxpayers. It would raise taxes, by adding a new upper tax rate for only the top 1% of all taxpayers: couples with income of more than $145,000 and individuals earning more than $85,000 a year.

A separate middle class tax-cut proposal sponsored jointly by Sen. Albert Gore Jr. (D-Tenn.) and Rep. Thomas J. Downey (D-N.Y.) would finance its tax breaks by raising rates only on those earning more than about $140,000 in adjusted gross income.

But because they are not willing to raise taxes on people at slightly lower income levels, these new Democratic plans would not raise much revenue. As a result, they have to skimp on the tax relief they provide for the middle class. The Rostenkowski bill, for instance, offers only $200 to $400 in tax relief for middle Americans earning between $20,000 and $75,000 annually.

“When you define the middle class the way some of these bills do--so broadly as to include people making more than $100,000--it becomes meaningless,” argues Greenstein of the Center on Budget and Policy Priorities. “You can’t get enough tax revenue from people over $200,000 to pay for much of a tax cut.”

But, politically, the Democrats seem to have little choice. In fact, Senate Majority Leader George J. Mitchell (D-Me.) argues that the Democrats should avoid altogether any attempt at defining who belongs to the middle class, and instead talk only about who is truly rich.