The liberal-opinion industry spoke with one voice: President Obama’s tax plan was his party’s best hope to avert a midterm disaster. Over Labor Day weekend, Obama called on Congress to continue the Bush tax cuts for every family making less than $250,000 per year and to let income tax rates revert to their pre-2001 levels only on income above that threshold.
The New Republic’s Jonathan Chait wrote that raising taxes on the rich is “wildly popular.” Indeed, voters “are in favor of pretty much any measure that takes money from the rich.” The columnist E.?J. Dionne agreed. Refusing to continue the Bush tax rates for high-income families would rally the Democratic base in advance of the 2010 midterm elections: “What do Democrats stand for if they are not willing to take on this cause?” The New York Times editorialized that the Obama plan, by cornering the GOP, was smart politics on behalf of good policy: “Holding the middle-class cuts hostage to those for the wealthy would pose both a political danger to Republicans and an economic danger to the nation.”
And then a funny thing happened. Nothing. First the Democratic House and then the Democratic Senate decided to adjourn without holding a vote on Obama’s tax proposal. They wanted to go home to campaign, but a decisive contingent of vulnerable incumbents refused to campaign on that. Democrats postponed consideration of the issue to the relative safety of a post-election lame-duck session.
The commentariat was furious. The Democrats have taken the “Curl Up in a Fetal Position Plan on taxes” wrote Chait, a choice he found “crazy,” “pure political suicide,” and “one of the nuttiest decisions, on pure political grounds, I’ve ever seen.” Expressing himself more temperately than Chait, as most people do, Dionne wrote, “For the life of me, I don’t get why some Democrats are so afraid of this vote.” “Profiles in Timidity” was the Times’s editorial verdict when the Democrats decided not to decide.
There are two problems with this indictment. First, voting for the Obama tax plan wasn’t supposed to require any Democratic courage. All the risks would befall those Republicans who were so foolish or doctrinaire that they would vote against lowering taxes for lots of people to avoid raising them for just a few. Second, this threat analysis was confidently delivered by people who were not themselves threatened—journalists, whose careers won’t be altered by the midterm elections—and rejected by people who were—legislators who would be hoping to catch on with lobbying firms or think tanks if the Obama tax plan turned out to be less popular than the journalists had promised.
It’s possible, of course, that the journalists were right and the politicians were wrong. But is it really likely that so many politicians—veterans of previous campaigns, familiar enough with their states or districts to be incumbents—could be so mistaken about a question crucial to whether they’ll remain in Congress? Several journalists cited public-opinion polls showing majorities in favor of higher taxes on the wealthy. Such surveys are notoriously easy to overinterpret, however. It took the Democrats a long time to realize that similar polling majorities in favor of gun control were a mirage, beckoning them into political danger. It turned out that quite a few people in the not-so-small minority opposed to gun control were prepared to vote for or against a politician on that basis, while very few of the people who told a pollster they favored gun control cared enough about the issue for it to determine their vote.
As with guns, so with taxation. A political strategist explained to Slate’s John Dickerson that the tax-the-rich proposal was stillborn because “voters who care the most about taxes tend to be Republicans.” Democrats running in competitive jurisdictions, where gratuitously inciting Republican voters is always a bad political tactic, made it impossible for the party leaders representing safely Democratic districts and states to move the tax proposal forward on Capitol Hill. This caution was vindicated by the state of Washington, which Obama carried with 57 percent of the vote in 2008. In the 2010 midterm elections, its voters rejected a ballot proposition that would have given the state an income tax applicable only to individuals making more than $200,000 per year and families making over $400,000. That 1.2 percent of the state’s population evidently had a lot of less-prosperous friends, since 65 percent of the voters opposed the tax.
It seems plausible, then, to conclude that the Democrats’ craven and feckless decision not to go to the voters in November as the champions of a tax increase on well-to-do families was, in fact, politically sensible. But what explains this explanation? Why are Republican voters the only ones who really care about taxes? Why, more broadly, are the well-paid Americans who write editorials in the New York Times offices during the day more exercised about economic inequality than the modestly compensated ones who empty their wastepaper baskets and vacuum their carpets after dark? And why do the editorialists’ solutions for the problem of inequality so often elicit the janitors’ indifference or disdain?
In 2008, Bonnie Snodgrass cleaned a television studio in the evenings after working days as a receptionist in Columbus, Ohio, bringing home a little more than $40,000 a year. The New Yorker’s George Packer interviewed her for a story about Barack Obama’s difficulties with working-class voters. Obama’s pledge to let tax rates revert to higher levels for families with incomes exceeding $250,000 was prominent throughout his 2008 campaign but seemed “incredible” to Snodgrass, even though she had always voted Democratic. “How many people do you know who make two hundred and fifty thousand dollars?” she told Packer. “That’s a joke! If he starts at a hundred thousand, I might listen. Two hundred fifty—that’s to me like people who hit the lottery.”
Packer understood Snodgrass to be saying that Obama’s promises to increase government spending and reduce the deficit, while raising taxes on families making more than $250,000 and no one else, would be impossible for him to keep and were, therefore, impossible for her to believe. “He’ll keep going down, and when it’s to people who make forty-five or fifty thousand it’s going to hit me,” she said. “I’d have to sell my home and live in a five-hundred-dollar-a-month apartment with gang bangers out in my yard, and I’d be scared to death to leave my house.”
Such raw skepticism, coming from exactly the sort of voter liberals devise five-point programs to impress, is no less dismaying a problem for being a chronic one. In 1972, George McGovern’s plan to impose a 100 percent tax on any inheritance over $500,000 got a hostile reception from voters unlikely ever to bequeath or inherit enough money to be affected by it. (Half a million dollars in 1972 would be worth about $2.6 million today.) According to Richard Dougherty, McGovern’s press secretary, the problem was “the dream factor—every slob in the street thinks that if he hits the lottery big, he may be able to
leave half a million to his family; it wipes out dreams.”
In 2004, Thomas Frank expanded on this assertion that working- and middle-class voters can’t or won’t understand their own best interests in his book What’s the Matter with Kansas? In Frank’s view, voters who would benefit from leftist redistributive policies are beguiled into opposing them because of an induced “derangement.” Rather than supporting Democrats, who really are trying to address their economic problems, too many of them wind up supporting a Republican Party that conceals its plutocratic agenda behind a pageant of cheap, meaningless gestures of solidarity on peripheral cultural issues: God, gays, and guns.
Most recently, Slate’s Timothy Noah has echoed Dougherty and Frank, writing that “even mild economic populism” has been “a loser for Democrats.” This lament came in a 10-part series that ran in September, examining what Noah called “the most significant change in American society in your lifetime.” The “Great Compression” of the post–World War II era, when the gulf separating the rich from the rest was unusually small, has given way since the 1970s to the “Great Divergence,” as the gulf has done nothing but grow. There “probably was no better time to belong to America’s middle class” than during the Great Compression, Noah writes. As for the Great Divergence? Noah’s “gut-level feeling” is, “I do not wish to live in a banana republic,” since societies “starkly divided into the privileged and the destitute” are “repellent.”
Noah’s series ranged over the possible causes for the Great Divergence, only to conclude that a convincing theory of the case is as elusive as the list of suspects is extensive. Altered family structures, changes in race and gender relations, education, immigration, technology, foreign trade, politics and policies, the decline of unions—take your pick. For all his synthesizing of academic research, however, Noah is less than fastidious about observing the basic distinction between inequality and destitution. He rebuts conservatives who dispute the seriousness of growing inequality, for example, by pointing to workers who have to devote such a large portion of their income to rent that they wind up skipping lunch because it’s too expensive.
But, of course, people who are destitute in this way are poor in absolute terms, not because their relative position, vis-à-vis the privileged, is so mortifying. If President Obama discovered the magic economic policy formula to exactly double, in inflation-adjusted dollars, every family’s disposable income during his tenure in the White House, millions of people’s economic anxieties would be greatly alleviated. While the number of workers forced to skip lunch to cover the rent payment would plummet, the “problem” of economic inequality would not be mitigated even slightly. The disparities between Bonnie Snodgrass’s take-home pay, Timothy Noah’s, and Warren Buffet’s would be exactly the same at the end of Obama’s presidency as they were at the beginning.
It’s hard to believe that Ms. Snodgrass would consider this breakthrough to be anything less than an unequivocal triumph. It is unlikely, in other words, that her satisfaction in being able to quit her second job or buy a new car would be diminished all that much by her awareness that the Obama Miracle had also allowed yet another hedge-fund manager to purchase yet another Tuscan villa. It’s equally difficult to believe that Timothy Noah wouldn’t be morose on her behalf because of Obama’s failure to make any dent in the Great Divergence. Convinced that our “growing income chasm” makes it “especially difficult to reestablish any spirit of e pluribus unum,” Noah is preoccupied by the thought that we are “social creatures and establish our expectations relative to others.” Being able to buy stuff that was previously out of your price range is all well and good, but the pleasure of unwrapping those new toys will ultimately be vitiated by living in a time and place where lots of other people are buying more and better stuff than you are.
To whatever extent the question of comparative well-being does shape our psychology and should determine our governance, in a sprawling nation of 300 million, the others to whom each of us refer when establishing our expectations are going to be some others rather than all others. Part of the reason liberal journalists and professors are so exercised about the Great Divergence is that their others include the Stinking Rich, to use Noah’s term for the top thousandth of the income distribution, people making more than
$1 million a year. The Great Divergence is a stone in the heart for the writer or intellectual who
suffers from what David Brooks called “Status-Income Disequilibrium.” One of the distinctive features of the Great Compression, which Brooks describes in Bobos in Paradise, is that “an investment banker went to Andover and Princeton, while a newspaper person went to Central High and Rutgers. But now the financiers and the writers both are likely to have gone to Andover and Princeton. The student who graduated from Harvard cum laude makes $85,000 a year as a think tank fellow, while the schlump she wouldn’t even talk to you in gym class makes $34 million as a bond trader or TV producer.”
Two years ago, liberal magazines, columns, and blogs abounded with giddy predictions that Obama’s election marked the beginning of a long era of liberal hegemony. One reason those forecasts appear today to be highly doubtful is that for millions of working- and middle-class Americans, the others they refer to when establishing their expectations include few CEOs but many state, county, and municipal employees. These voters don’t have to regard the high-school biology teacher and assistant parks superintendent as villains to believe it’s unfair and unsustainable for public-sector workers to be the only non-rich Americans still enjoying defined-benefit pensions, comprehensive health insurance, early retirement, and near-absolute job security. Because of who’s inside and who’s outside that frame of reference, the pleas from public-employee unions and their liberal coalition partners to acquiescently disregard the school administrator who retired at 55 with a six-figure pension and demonize, instead, the “obscenely” compensated executive have failed to turn the political tide. The companion argument—that public employees defend their increasingly uncommon taxpayer-supported set of privileges not out of self-interest but as a measure of class solidarity with the private-sector workers who used to and should again enjoy such benefits—has been equally and deservedly unavailing.
The belief that the purveyors of a redistributive agenda are grinding axes to be wielded by Status-Income Disequilibrium sufferers, but ones useless to paycheck-to-paycheck Americans, would explain why economic populism does so little to help Democrats. Voters in the thick middle of the income-distribution bell curve will be indifferent to this squabble between people who are better off than they are and people who are much better off. Lacking a clear, convincing explanation for how the Great Divergence caused the Affluent Society to become the Anxious Society, these voters are also likely to be annoyed that an argument tangential to their concerns is receiving so much attention.
To go beyond the electoral failure of economic leveling and understand why it antagonizes the very voters the Democrats want to attract is a harder challenge. I have an unproven, untested, and perhaps untestable hypothesis for why so many middle- and working-class Americans confound liberals by siding, often angrily, with the Stinking Rich against the Beneficent Reformers. It is that Bonnie Snodgrass’s version of the trickle-down theory, in which tax increases supposed to be confined to the prosperous are going to wind up imposed on the precarious, is more broadly applicable and resonant. In this view, the “principle” that rich people should be forced to surrender some of their wealth, just because they are deemed to have too much, is eventually going to justify policies that force non-rich people to surrender some of their wealth, just because. One of the telling arguments against Washington’s income-tax ballot proposition, for example, was that the promise to limit the new tax to families making more than $400,000 and individuals making more than $200,000 would be good for all of two years, after which the legislature would be able to apply the tax to people with smaller incomes through a simple majority vote.
This attitude fueled the authentic bottom-up populism that reverberated five years ago when people reacted with spontaneous fury to the Supreme Court’s Kelo decision. It held that the Constitution’s power of eminent domain conferred upon city councils and economic-development boards the right to condemn private homes and entire neighborhoods if a real-estate developer had convinced them he could generate more property-tax revenue from the land in question.
Every redistributive scheme, by the same token, rests on the planted axiom that private property is only provisionally and transiently private. It wasn’t the “dream factor” that caused pathetically deluded factory workers and clerks, imagining they might win the lottery, to oppose George McGovern’s plan to confiscate inheritances he considered too large. It was small-r republican disdain for the idea that government should be empowered to confiscate wealth lawfully acquired and held. And it was the companion fear that if asserting that some people have too much money is the justification for such confiscation, other pretexts targeting other citizens will be waiting in the wings. Call it the nightmare factor.
Noah’s series on the Great Divergence includes dozens of citations and links to articles and books about economic inequality. One he doesn’t mention, however, is an intra-left admonition published last year in the American Prospect. In “Don’t Blame the Billionaires,” Dalton Conley, a New York University social scientist, argued that economic inequality is “epiphenomenal,” a “luxury” people worry about in the absence of more pressing matters. He cited one study showing that “while for Europeans, inequality truly makes them less happy, in the United States only the moods of rich leftists are adversely affected.”
Conley urged liberals to focus on what really matters: “It’s the fate of the middle and lower classes that should concern progressives, not how many private jets the super rich can afford.” Decrying “inequality in and of itself” is a “losing proposition” politically, one that “distracts from the real issue,” which should be “maximizing opportunity for all.”
The problem is that no party or politician has offered a plausible way to return to the golden age of American prosperity, from roughly 1945 to 1973, when our leaders seemed to know how to propitiate the economic gods and deliver steadily rising living standards and increasing economic security. Part of the problem is that the golden age rested on a set of irreproducible economic circumstances more than it did on the triumph of Keynesianism. As the only major industrial power that suffered battlefield casualties but no physical destruction during World War II, America had advantages unique in modern economic history. According to Grand Expectations by James Patterson, “[w]ith 7 percent of the world’s population in the late 1940s, America possessed 42 percent of the world’s income and accounted for half of the world’s manufacturing output. American workers produced 57 percent of the planet’s steel, 43 percent of electricity, 62 percent of oil, 80 percent of automobiles.”
Nonetheless, the belief that the right set of policies will re-create the long postwar boom engenders demands that the political system has failed to meet. As Noam Scheiber concluded in the New Republic after John Kerry’s defeat, “Democrats have run up against the limits of what they—or anyone else—can do to create and protect good jobs, the top economic priority of working-class voters.” Remedies like protectionism and unionization seem unlikely to be enacted, he argued, and unlikely to make much difference even if they are put in place.
The Guardian’s Michael Tomasky implicitly concedes the point but argues, more in anger than in sorrow, that these voters should give the Democratic Party credit for having its heart in the right place. The Democrats are the ones committed to such measures as an industrial policy, as well as government programs to retrain laid-off workers and to generate new jobs in post-industrial urban areas, he insists. As for the opposition, “The GOP doesn’t even have any policies along these lines.”
Tomasky ends up restating Thomas Frank’s lament: “Class politics used to mean economics in this country. On economic questions, the Democrats do at least try to help the working class. But for the last generation or so, class politics has meant culture. That’s the issue. Can it ever mean economics again?”
Someday it will, perhaps, but more likely as a consequence of Democratic policies that don’t merely try but actually succeed in relieving economic anxieties, rather than as an expression of gratitude for earnestly wanting to figure out such policies. Pending the arrival of the good luck or shrewd measures that allow Democrats to claim credit for the next prosperous era, Democrats could at least make their path easier by following Conley’s advice to disregard economic inequality, rather than heed their inner-McGovernite’s obsession with it. There are probably few committed supply-siders in the stands at NASCAR races, but even fewer Ivy League graduates embittered by the staggering wealth of their most successful classmates. Thomas Frank has it only half right—it’s not just that the Republicans attract working-class voters with, in his view, cynical culture-war appeals. It’s that Democrats repel them with sincere class-war rhetoric. Democrats would find it easier to get a hearing from voters who just want some economic breathing room if they stopped assuming that those voters share the liberal assumption that the rich, as such, are villainous.