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.”