By Chrystia Freeland, Special to the Globe and Mail, July 12, 2012
Why have the rich turned against U.S. President Barack Obama?
That has been a persistent theme of this campaign: We were reminded of it this week, when Mitt Romney’s team raised more money than the President’s for the second month running, and more colourfully in weekend reports of the Republican presidential candidate’s lavish fundraisers in the Hamptons.
Viewed from outside the U.S., the animosity of America’s 1 per cent toward the President is a bit of a mystery. Although those at the bottom of the income scale and in the middle are still suffering from the economic downturn that began in 2008, with unemployment above 8 per cent, the affluent have bounced back quite smartly. The stock market has recovered, corporate coffers are overflowing with cash, and the luxury goods market is booming.
Even Wall Street, where hostility toward the White House is especially acidic, has reason to be grateful. Bankers got the biggest government bailout of all – much more than laid-off workers or beleaguered homeowners received from this Democratic administration – and the President resisted calls from the left to nationalize the banks he rescued, even as the British nationalized some of theirs.
Part of the answer is self-interest. As the economics writer Matthew Yglesias has argued, there is one easy and obvious explanation for the animosity of the rich toward the incumbent: He wants to raise their taxes significantly. That is certainly right. On Monday, Mr. Obama reiterated his support for letting the Bush-era tax cuts expire for households with incomes of more than $250,000 (U.S.), while keeping the lower rates in place for everyone else.
This is a powerful point. It can be tempting to imagine that the affluent might fret less about their tax bills than the poor, who are struggling to get by, but the elaborate tax-avoidance strategies of superrich Americans suggest otherwise.
But this is about more than bank balances. Some of Mr. Obama’s most vehement critics in the private sector insist they are willing to pay higher taxes, if that’s what it takes to get the United States back on track. Their complaint, if you take them at their word, is instead with the President’s attitude toward them, toward their wealth and toward capitalism itself.
Their sense of insult is easy to mock: Do those testosterone-pumped Masters of the Universe really have the tender feelings of teenage girls? It is a mistake, though, to dismiss the outrage of the 1 per cent, simply because it is so emotionally rendered. The truth is that Mr. Obama is telling a very different story about capitalism from the one Americans are accustomed to hearing, and it is no surprise that the rich don’t like it one bit.
Consider the two narratives on the campaign trail this week. In Colorado, Mr. Romney described those who make more than $250,000 a year with the Republican term “job creators.” And he warned that the President’s proposal to raise taxes at the top wasn’t bad just for the rich, it would hurt the whole country: “At the very time the American people are seeing fewer jobs created than we need, the President announces he’s going to make it harder for jobs to be created. I just don’t think this President understands how our economy works.
Mr. Obama, meanwhile, insisted that “we love folks getting rich.” But his focus is different: “I do want to make sure that everybody else gets that chance as well.” One way to do that is to tax the rich. As a new television ad for the President argued this week, Mr. Obama’s plan is to “ask the wealthy to pay a little more so the middle class pays less, eliminate oil subsidies and tax breaks for companies that outsource.”
This is more than a fight about taxes. It is a fight about whether 21st-century capitalism is working for the American middle class and who should pay to fix it. The Republicans are telling Ronald Reagan’s story of trickle-down economics – the winners in the capitalist contest are “job creators” whose prosperity helps everyone else. The wealthier they are, the wealthier all Americans will be.
The Democrats are challenging that win-win story. Their contention is that the U.S. economy is failing the middle class. They argue that those at the top need to contribute “a little more” to help rebuild the American middle. Even more threateningly, they point out that some of the business strategies that have enriched the elite have actually hollowed out the middle.
It is this last argument that most enrages the 1 per cent. Mr. Obama’s most extreme critics delight in accusing him of being socialist and sometimes communist. That charge is not just overheated, it is plain wrong. But American capitalists are right to sense a challenge from the White House. The President is arguing that what works for the top isn’t working for the middle, and that is a criticism the country’s lionized elite hasn’t heard from its leader in a very long time.
Is this a new guilded age when the rich are so wrapped up in their own narcissism and pride and greed that anyone who attempts to speak for the whole population is considered anathema to the achievement of their personal financial goals? Perhaps.
Speaking in the heartland of the American farm in the late 1990's, I was dubbed a pinko, Canadian communist by Republican red-necks who could not drive my ass out of their town fast enough, just as Nixon dubbed Pierre Trudeau a pinko, commie bastard when they both were in power in our respective countries. This contempt for sharing, often called the "Nanny state" is ideological, and continues to be tied to the now-ended, except in the American simple-minded (read the current Republican party), cold war with the previous Russian government.
What is striking about America, to start with, is that their consciousness is bounded by their borders. They literally know nothing, and care less about whatever is going on in the rest of the world, unless and until they can take a top-down, top-gun posture toward it and 'wipe it out'. Their attitude is that America is the best country in the world, and that mantra is seemingly the only song they know, as a culture, even though there are myriad voices singing very colourful tunes in various locations around their country.
Their worship of gold, money, luxury and richness, as a goal for their lives is unmatched anywhere. They will argue that that addiction is part of a bigger goal, to be the economic engine for the world, in innovation, in manufacturing, in technology and in leadership and there are some significant successes to which they can and do point when making that argument. Cars, planes, televisions, phones, along with space science and considerable growth in medical and pharmaceutical sciences are mainly American productions, along with their commitment to the popular theatre and music.
However, over the last thirty years, since the Reagan presidency, regulation of the airline industry, for example, has gutted that industry to the bare bones and rendered its economic stability and physical safety questionable. De-regulation of the financial service sector has permitted rampant greed to run amuck on Wall Street, infecting unsuspecting buyers of bogus mortgages around the world. American corporations have taken much of their production off-shore, where they can get labour at cheap rates, without having to provide benefits, or worry about the environment. Also American corporations have found ways to avoid paying taxes by sheltering their profits in off-shore tax havens, thereby robbing the American treasury of billions of what would have been legitimate dollars prior to globalization.
Getting those dollars back into the U.S. treasury is not the concern of the uber-rich. They too have found tax havens for much of their stashed wealth, thereby also draining tax dollars from the U.S. treasury, among them the current Republican candidate for the White House.
Derision, in the form of insults, patronizing, bullying and virtually fighting a war against anything that bruises the interests of the very wealthy has become the campaign chant of the Republican party, so enmeshed are they with the rich robber barons, like the Koch brothers, whose lives would be greatly enhanced, they believe, with less government, less government tax, and less government regulation for the protection of such entities as the shared environment. They do not care about the quality of education being received by American students, now slipping to much lower scores on independent international testing. They do not care about the unemployed, the sick and the destitute for the simple reason that they do not see them, because they do not go where they can be found. They do not care that innovation has slipped in the U.S. and that other countries are far-outpacing their country, in many fields previously led by the U.S.
So long as their dividend cheques continue to pour into their tax-sheltered bank accounts, and they can live in one of the many mansions, in various 'chic' locations around the globe, and they have a president and a Congress on whom they can trust to keep that cash flowing, without having to share that wealth with their less fortunate neighbours, they will be happy.
However, preserving the happiness and the affluence of the 1% is not the only or even the primary job of the occupant of the White House, and unless and until Obama begins to strut his argument for the whole economy, and the whole American population in terms that literally galvanize the voters, even more than he did in 2008, Romney is likely to take over the White House, and the Tea Party will take over both houses of Congress, and then the rich will have "bought" their very own valhalla...and the rest of us be damned.