President Obama has embarked on one of the most audacious experiments in American political history. He’s trying to expand support among America’s broad middle class through new programmatic appeals, while paying for this new largesse by boosting taxes on “the wealthy”–those individuals who earn more than $200,000 per year (or families who earn more than $250,000).
No big surprises here. Obama indeed promised to “spread things around a little” during the 2008 campaign. Normally an exercise like this produces some political friends and enemies. But here’s the twist. The president has some unlikely allies in his crusade to support the middle class: the “rich” themselves.
Upper-income Americans are the ATM of the recently-released Obama budget. They not only pay for what New York Times reporter David Sanger calls the new “Great Society for the Middle Class”–but they also gladly give the president their password in the form of political support.
Despite the impact of higher taxes on their income and investments, as well as the loss of other benefits like their mortgage interest deduction, many high-income individuals embrace Obama and these policies. It’s part of a broader political trend over the past 50 years–wealthy Americans supporting the Democratic Party in greater numbers. Instead of broadening his appeal among the middle class at the expense of the rich, he’s trying to do it with their consent. And so far it looks like he may succeed. Here’s why.
These days, those who earn over $200,000 a year are less Republican than you think. Despite the conventional wisdom that these country club, Mercedes-driving Americans support the GOP, Obama actually prevailed among these voters 52 percent to 46 percent, according to exit polls from last November’s election. However, this number deserves a little context. The conventional wisdom is not without some basis. Historically, Democrats rarely win this group. Looking at party support among higher-income individuals in presidential races back to 1948, the only other time a Democrat won was in the 1964 Johnson landslide, according to the University of Michigan’s American National Election Study.
Yet Democrats began to perform better with this cohort starting in 1990s. The Heritage Foundation’s Michael Franc has noted this trend. “Democrats now control the majority of the nation’s wealthiest congressional jurisdictions,” Franc wrote in a November 2007 paper. “More than half of the wealthiest households are concentrated in the 18 states where Democrats control both Senate seats.”
With all this adulation from the affluent, Obama can spend his political capital on redefining his agenda for the middle class and the poor. Like some of his allies on Capitol Hill, such as Senator Chuck Schumer of New York, the president believes the problems of the middle class and poor are beginning to overlap in America today. As Joshua Green wrote in the January/February 2009 Atlantic, “Far from being adversaries, both groups favor things like better schools and reasonable gas prices.”
Democrats believe they can consolidate their electoral gains by joining the poor and the middle class together against the rich. Schumer said this to Green in the Atlantic piece: “What will happen if we do it right is that there’ll be an alliance between the middle class and the poor, as opposed to the alliance between the middle class and the rich (that held for the past 28 years). Everything we’re talking about is the work of an active, strong government, and if it works it will wed the middle class to the Democrats for a generation.”
Yet what about wealthier Americans? Do they morph into Obama’s collective piggy bank and say “crack me open” over and over again? Some suggest individuals who earn over $200,000 per year deserve to pay more. Or, that they have the means to hire accountants to help take the sting out of the higher tax levies. But rightly or wrongly, people with more money also spend more. These individuals have lifestyle obligations that–at some point–become painful to shift. It’s also unlikely 2 percent of Americans can satisfy all of the costs of Obama’s ambitious spending appetite. So are even higher taxes on the way, and what’s the tipping point? When do the so-called “rich” say: “Enough!”?
It’s unclear what could trigger a Rick Santelli moment among higher-income individuals. (The CNBC commentator recently sparked a near riot on the floor of a Chicago stock market exchange over people with good mortgage history paying for the irresponsibility of others.) But one thing is clear–so far the Obama experiment is working. Many upper-income individuals are willing benefactors of the new middle class/poor Democratic coalition. But even the rich’s generosity has limits. And once it can’t pay for all middle class dreams and mounting debt, what’s next?
Gary Andres is vice chairman of research at Dutko Worldwide in Washington, D.C., and a regular contributor to THE WEEKLY STANDARD Online.
