There’s no denying that President Barack Obama’s proposed 2010 budget represents a major new policy agenda, and that it charts an aggressively, and surprisingly, liberal direction. And Obama followed up last week’s announcement of the spending plan by raising the stakes, lacing his weekly address with a populist challenge to opponents.
So it’s fair to say that the president has quickly abandoned some of his stated concern for bipartisanship and consensus. In their reporting about the budget, though, some news outlets have been too quick to embrace another frame that is at once ahistorical and illogical: that Obama’s plan to raise income taxes on the rich to pay for parts of his agenda amounts to “class warfare.”
Perhaps the most egregious example was a Jeanne Cummings piece in Politico, published on the day the budget was announced and bluntly headlined “Class Warfare returns to D.C.” Cummings’s article drips with contempt for anything that can’t be framed as a “new idea.” And to her mind, Obama’s proposed tax policies—which include raising the taxes that rich people pay (capital gains, the top marginal tax rates) while cutting those that the rest of us pay (payroll, mostly)—epitomizes the “old Democratic agenda.”
It’s never quite clear whether, according to Cummings’ argument, it’s the actual tax rates or simply the idea of an increase that constitutes “class warfare.” Either way, her position is problematic. As this chart from the National Taxpayers Union shows, the top marginal rate of 39.6 percent that Obama is proposing is actually low by historical standards—he may be adopting FDR-style rhetoric, but his tax plan isn’t in the same ballpark. And it wasn’t only Roosevelt. Throughout the Eisenhower administration, top tax rates exceeded 90 percent. Under Nixon, they never dropped below 70 percent. Even for most of Ronald Reagan’s term, they were at 50 percent. Those presidents aren’t often thought of as “class warriors”—at least not in the way that Cummings meant.
If the argument is, instead, that the “warfare” can be found not in the actual rate but the direction of the change, well, it’s hard to see how to run a government without sometimes raising taxes on people who have money. California’s been conducting an experiment along those lines, and the results haven’t been pretty.
More important, there is, again, a historical blind spot here. As the economists Thomas Piketty and Emmanuel Saez have shown (see pp. 50-51), the U.S. tax system has been becoming less progressive for decades. The sharpest change has come among earners in the top .01 percent, who saw their total federal tax rate fall by about half from the mid-1970s to the mid-2000s, even as the nation’s income distribution was becoming (pdf) more top-heavy. (The change occurred both because of declines in top marginal income tax rates and because a greater share of the highest income was coming from capital gains, which receive favorable treatment under the tax code.) During the same period, the total federal tax rate for all Americans remained roughly flat. It’s hard to see how a comparatively modest move in the other direction represents class warfare.
Cummings’ piece isn’t the only example. In his analysis of the response to the budget for The Associated Press, also published February 26, Tom Raum wrote that Obama’s spending plan “quickly provoked cries of class warfare in Congress,” and that Republicans complained the president was “pitting the haves against the have-nots.”
Given the alacrity with which both Cummings and Raum seized on the “class warfare” rhetoric, it seemed that Republicans on Capitol Hill must have been pushing it. Oddly, though, Raum doesn’t actually name a Republican who was making that claim. Instead, he cites House Minority Leader John Boehner, who “suggested Obama’s proposed tax increases would reach deep into the middle class, despite repeated administration statements that tax hikes would be limited to families making more than $250,000 a year.” Boehner is also quoted saying that Obama’s carbon-trading proposal could “affect all Americans who drive a car, who have a job, who turn on a light switch.”
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Whatever Marx says about class war I take as gospel.
#1 Posted by Kropotkin, CJR on Wed 4 Mar 2009 at 02:43 PM
Finally! Something that resembles actual press criticism. Now, I don't agree with the spin, that class warfare is a myth and that Mr. Obama's tax policies are the most sane fiscal policy since we went from paying for our lattes with dead goats. But at least the piece tries to tie its ideological pursuit into an actual criticism of press coverage.
That being said, I can't help but note that your analysis of tax rates fails to take into account the vast and expanding cadre of Americans (I use the word purposefully) who pay no taxes whatsoever. It also fails to note the entirely probably correlation between the rise in wealth and the reduction in those taxes, in that capitalists were, once again, incentivized to create wealth. If we raise those high-end marginal rates too substantially, incentives for wealth creation will diminish accordingly, and government will have no choice but to raise taxes for everyone to unbearable levels to sustain the vast promises it has made.
While I don't necessarily agree with the argument that a modest increase on the "wealthy" will spell the end of capitalism, particularly in light of the historic highs in our tax rates, I do worry that the prevailing rhetoric ... that the "wealthy" must pay their share, does promote class-based disdain for success. And I worry that it could engender more radical reforms that could seriously harm our economy.
#2 Posted by Mike, CJR on Wed 4 Mar 2009 at 02:56 PM
The real problem is that "class warfare" is a vague, mostly meaningless political insult, along the lines of "fearmongering", "fat cat", and "Barack the Magic Negro". Reporters should not be wasting their time asking whether this or that program "promotes class warfare". There's no serious answer to the question.
Getting someone to say on record that the President's budget is class warfare is a pathetic accomplishment for which Maura Reynolds deserves no praise. It's like getting a quote from a Red Sox fan saying that the Yankees are a bunch of losers.
#3 Posted by D. B., CJR on Wed 4 Mar 2009 at 03:10 PM
Fact, nearly one half of all working Americans pay no income taxes. Expanding the EITC and providing additional tax breaks for individuals who already pay nothing is a bribe, and that bribe is being extorted from the top income earners. Naturally though, as Obama robs Peter to pay Paul he is certainly expecting Paul’s help and counting on the press to tell Paul how much he deserves Peter’s money.
Liberals have always been keen to expand the ranks of those who come to depend on them for everything from jobs, to education, to basic necessities like food and shelter. This explains why inner city blacks are the most loyal democratic voters, being increasingly dependent on generous chucks of government cheese since the end of WW2.
As more and more people jump into the wagon, and fewer and fewer are able/willing to pull it, what happens when the draft horse decides it needs a break?
But I suppose none of this matter to Obama and his administration. After all, regardless of how high marginal rates go they seem exempt to paying the very same taxes they expect me to.
#4 Posted by Mike H, CJR on Wed 4 Mar 2009 at 03:24 PM
Please remember that many of the Fox "News" hosts, and public commentators are actually funded by the most financially "top-heavy" corporations in America. That is, these people, claiming to be merely entertainers, are paid to say exactly what is needed to promote discord for such progressive ideas as having the wealthiest 1% of the country help to fund public programs.
Of course these people don't like it ! But since when did the Republican party represent everything anti-"public? Since when did the great party of Lincoln, who represented the poorest in the nation, become the mouth of the rich against the American society in which they live? (When did the Republicans start to represent the rich anywhay?) When did they become so anti-American as to try to cancel out every type of public program, from Head-Start to Pell grants and college scholarships for the needy.
As was demonstrated with the "No Child Left Behind" policies, one well-respected and famous opinion writer was paid 250,000 dollars to frame the corporate money-makers in a great educational light. Not until we realized that again we had been duped by the CEO's of Educational Testing Systems, we spent (and are still spending) millions upon millions of taxpayer dollars, and these programs are still growing.
Imagine if California didn't have to spend so much money on tests made, graded, and operated by Educational Testing Systems. The state would be hundreds of millions of dollars richer. Did you know that the CEO's actually had the gall to say, unofficially, that their scores aren't really reliable enough to be used for high stakes testing?
But no matter, the taxpayers will never find out, simply because of the loud and well-paid mouths of our "news" entertainment and our corporate-paid "opinion" writers such as Jeanne Cummings.
#5 Posted by Camille Thomas, CJR on Wed 4 Mar 2009 at 05:05 PM
It's always amusing to marvel how these millionaire "journalists" like David Gregory and Jake Tapper can get burger-flipping high school dropouts to fulminate over raising the top marginal tax rates by this much (see that little blip at the end?) until their heads explode. Just begging to have their OWN taxes raised and tax credits taken away so Sean Hannity won't pay a couple hundred more bucks in taxes two years from now. Right. Earned Income Tax Credit is a "bribe" for "inner city blacks." (eyeroll.)
#6 Posted by Tom, CJR on Thu 5 Mar 2009 at 06:59 AM
Tom thinks a 13% tax increase for all earnings over $375,000 is just a "little blip"? Not to the people who earned it, I'm sure.
And just because one of those "burger-flipping dropouts" you condescend to aren't well off now doesn't mean they don't strive to be well off one day -- they may not share you and Marx's (!) envy.
Given that you have contempt for poor HS dropouts and hate the "rich," what kind of people are worthy of your company? And do you adjust that list for inflation?
#7 Posted by SamTyler, CJR on Thu 5 Mar 2009 at 09:43 AM
Yeah, um, my heart weeps for those poor buggers like David Gregory and John Gibson paying the same taxes they paid during the prosperous 1990's. Let's hope ALL you burger-flipping drop-outs do that well!
#8 Posted by Tom, CJR on Thu 5 Mar 2009 at 10:18 AM
[Karl] Marx needs a lesson in US Tax Collections:
1. The Top 5% of the Income Earners already account for more than 36% of all taxes paid.
2. The Top 10% of Income Earners account for 47% of all taxes paid.
3. The Top 25% of Income Earners account for almost 70% of all taxes paid.
4. The Top 50% of Income Earners account for 97% of all taxes paid.
Source: http://www.taxfoundation.org/news/show/250.html (see table 1)
Enough with the welfare-based handouts! Enough bailouts to the banks, to the automakers, to the homeowners. The best bailout is a decent education and the desire to be successful. But, in Obamanomics, Hope is just a handout.
My favorite quote:
"You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it."
---- Dr. Adrian Rogers, 1931
#9 Posted by A.R. (NYC), CJR on Thu 5 Mar 2009 at 04:04 PM
It's interesting that the cries of "class warfare" are coming from the bourgeoisie's cheer squad among poltical intellectuals and journalists in DC.
There is constant class warfare in a capitalist society - Antonio Gramsci called it the struggle for political and ideological hegemony.
As K Marx points out, sometimes it's out in the open - strikes, civil unrest, revolution - and sometimes hidden: carried on at the level of propaganda.
The class nature of government should also not be forgotten. The State is the organising committee of which ever class is in charge. In capitalism it's the capitalist class (bourgoisie) that calls the shots.
The class nature of the current bailouts is also interesting, billions to the captains of industry to prop up failed capitalist enterprise and very little to help the workers thrown on the scrap heap.
Let's face it, capitalism is in crisis and the ruling class is right to fear a return of class warfare. The last thing the bourgoisie wants is a politically educated and angry working class demanding justice.
Viva la revolution
#10 Posted by Ethical Martini, CJR on Thu 5 Mar 2009 at 05:17 PM
Never thought I'd post to CJR. I do love it. I listened to President Obama's speech to the nation last week. I was driving and unable to watch him on TV. I am a reasonably astute guy. I had what might be considered a Nixon/Kennedy moment...his speech sounded different from what other's saw. He's such a charismatic man. Here's what I heard...I "heard" that I don't want my daughter to become a successful banker. I don't want my son to be successful on Wall Street. I heard that I certainly don't want to be called out as one of those in the top 2%.
President Obama's not changed one bit. He earned his spurs & his recognition as an ultra liberal. No one should be surprised that he's talking & acting like one. His concern is not that of folks who earn real dollars and employ others. It just isn't.
#11 Posted by Tom, CJR on Thu 5 Mar 2009 at 05:57 PM
Several of the previous comments miss the central issue: gross inequality destabilizes states. Social programs that enable less fortunate citizens to become productive taxpayers are both a more humane and more cost-effective investment in human capital than incarceration. It is not a zero-sum game; not every dollar invested in assistance represents a net, long-term loss to the more affluent. And not every dollar granted to the more affluent via tax cuts actually incentivizes them; Niskanen at the Cato Institute acknowledges that capital gains tax cuts do not pay for themselves. The sincerely curious, as opposed to those anxious to maintain their position, are referred to Peter Lindert, Growing Public.
#12 Posted by Stan Wiggins, CJR on Fri 6 Mar 2009 at 02:45 PM
I think when wealth inequality grows too great, the value of money becomes unstable. That is, when the median income is around $50,000, the guy making $10,000,000 experiences his own personal hyperinflation--he has so much money that it's worthless to him, so he spends and invests it increasingly foolishly. Thus we get asset bubbles, dangerously volatile markets, lack of job creation, and economic decline.
The rich need to be out in front, but close enough to the rest of the pack that they don't forget what their dollars are worth. And that's why I think we need higher top marginal income tax rates. It will increase the efficiency and stability of capitalism.
#13 Posted by D. B., CJR on Mon 9 Mar 2009 at 11:04 AM
Please read this article on the Individual Income Tax system and Class Warfare for an interesting fact based analysis of the fairness in the U.S. Individual Income tax system:
http://www.nomoreclasswarfare.com
#14 Posted by No More Class Warfare Please, CJR on Sun 15 Mar 2009 at 10:58 AM