That is especially so when the political agents of the rich are demanding still more tax cuts for them while doing their best to slash spending for programs that aid the poor.
I first noticed this woe-is-me attitude among the rich in 1974. Alan Greenspan, a very successful private economist and devotee of the radical libertarian novelist Ayn Rand, had just been named chairman of the Council of Economic Advisers by President Gerald Ford. One of his first tasks was to address a conference on social services sponsored by what was then the Department of Health, Education and Welfare.
The Republican administration was struggling to get control of the budget deficit, which it viewed as the prime cause of inflation, the nation’s No. 1 problem. Much of the emphasis was on cutting programs to aid the poor, which brought demonstrators to the event.
In an effort to show that everyone was suffering from inflation, Mr. Greenspan said, “If you really wanted to examine percentage-wise who was hurt the most on their income, it was Wall Street brokers.” ...
It’s hard to feel sorry for people who may have saved almost nothing during their prosperous years and made 50 percent more than the median family income of $13,000 in 1974. But the urge to find ways to pity the well-off is still alive and well.
Last week, Bloomberg News reported that declining bonuses are creating severe hardship for many in the top 1 percent of income distribution. One of them, Andrew Schiff, complained that his $350,000 salary barely covers his expenses. Others lamented that they could no longer go to Aspen to ski and must buy discount salmon.
As I said, everyone’s suffering is subjective. But there does seem to be a widespread view that the poor don’t suffer as much from economic downturns because they are used to being at the bottom. As Bob Dylan put it, “When you got nothing, you got nothing to lose.”
Those with expectations of staying on top, who have grown used to living the good life, no doubt do suffer meaningfully when those expectations are shattered and they must learn to get by on incomes only five or 10 times the poverty-level income rather than 20 or 30 times.
But they should have the good grace not to ask for sympathy from those who are unemployed, barely have enough to eat or have had their homes repossessed. In particular, the wealthy ought to stop demanding more tax cuts and cuts in spending for programs aiding the poor, as every Republican presidential candidate promises. That’s just repulsive.
Admittedly, there doesn’t yet seem to be much downside for Republican candidates pandering to the rich. For one thing, they all have billionaires and other ultrarich people funding super political action committees for them. As long as they keep pounding the message that those people want to hear, they can remain competitive in the race for the Republican nomination because there is no cap on donations to super PACs.
But one of these days, the Republican nominee will be chosen and will have to compete in the general election against President Obama. And it is unlikely that the Republican nominee can win with only conservative Republican votes; he will have to reach out to those who don’t necessarily believe that cutting taxes for the rich is the one and only policy that will stimulate growth.
I’m still waiting for the growth Republicans promised under George W. Bush after they cut the top federal income tax rate to 35 percent from 39.6 percent, the top rate on qualified dividends to 15 percent from 35 percent and the top rate on capital gains to 15 percent from 20 percent. All of these actions significantly lowered taxes for the rich without raising economic growth at all. Why will more tax cuts for these same people do any good now?
A January poll from the Pew Research Center shows that two-thirds of Americans see strong conflict between the rich and the poor, up from 47 percent in 2009. People are also more inclined to see the wealthy as having gotten that way through family fortune, rather than through their own hard work and education. And a number of polls show that Americans support higher tax rates on millionaires by a ratio of 2-to-1 or more...
President Obama is clearly preparing for a debate on the growing inequality of wealth and income. In a January speech, Alan Krueger, chairman of the Council of Economic Advisers, laid out the White House argument.
I think the Republican nominee is going to have a hard time responding if all he has to say is the rich need more tax cuts to compensate them for all their suffering during the economic crisis.
Wednesday, March 7, 2012
The Afflictions of the Comfortable
Conservative commentator Bruce Bartlett at the NYT's Economix: