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January 27, 2010

Barone: This Isn't 1994, It's Worse Than That -- Like Watergate

I will get around to posting something non-poll-based eventually, I promise.

The victory of a Democrat in the special election to fill Vice President Gerald Ford's House seat in February 1974 was a clear indication that the bottom had fallen out for the Republican Party. Brown's victory last week looks as if something similar has happened to the Democratic Party.

Many people ask me whether the Democrats are in as much trouble as they were in 1994. The numbers suggest they are in much deeper trouble, at least at this moment. Back in 1994 I wrote the first article in a nonpartisan publication suggesting that the Republicans had a serious chance to win the 40 seats necessary for a majority in the House. That article appeared in U.S. News & World Report in July 1994.

This year political handicapper Charlie Cook is writing in January, six months earlier in the cycle, that Republicans once again would capture the 40 seats they need for a majority if the House elections were held today. I concur. The generic vote question -- which party's candidates would you vote for in House elections -- is at least as favorable to Republicans as it was in the last month before the election in 1994.

Nothing is entirely static in politics, and opinions could change....

But I sense that something more fundamental is at stake. Obama in his first year adopted the priorities of what pundit Joel Kotkin, a Democrat himself, calls the "gentry liberals."

That last bit is a sort of interesting observation -- Obama abandoned the blue-collar/middle-class Democratic voter in favor of two groups, the lower class, and the, ahem, "Educated Class" about whom David Brooks waxes so poetically.

I was just talking to a friend about this. I don't know what the number is, so let's call it $250,000 per year -- at that level of income, all of your needs, and most reasonable wants (great private school for kids, big damn house, etc.) are taken care of. Any additional taxation doesn't really sting too badly, because above that level, you're pretty set.

On the other hand, anyone making less than that still has outstanding wants. And if you take money from them, they feel it. That means no new (or new-ish) car for your daughter. That means no renovation on the house. That means you take a cheap domestic vacation with your family rather than something more extravagant.

At lower levels of income, it may mean living in a house that's too small for your family, or being unable to send your kids to the schools you want.

The two cohorts Obama cares about -- the lower class, and the "Educated Class" -- don't care about this as much. The "Educated Class" tends to be wealthier, and have fewer children, and also tends to be so partisan that even if they're not making that much money, they set aside such concerns for the sake of political victory. The lower class of course approves of direct wealth transfers from the middle class to the lower class.

But the middle class -- the uncontested kingmaker in American politics -- gets that the Obama/liberal Democratic agenda is not only not designed to help them, but to affirmatively hurt them, dismissing their concerns and insecurities as trivial compared to their great project of further socialization and further transfer of wealth and benefits from the middle class to the lower class. (Inefficient transfer, too, of course -- of every dollar stolen from taxpayers, only seventy cents, tops, winds up in the hands of the poorer beneficiary; the rest goes to the government.)

Would-be radicals in American politics have to con the middle class into thinking their agenda will help them, or at least not hurt them. They do so by promising endlessly to only tax others -- the "rich," of course.

But the rich do not have that much money, in aggregate -- because there's so few of them. Sure, they individually have a lot of money, but collectively, they have quite a bit less than the middle class has in aggregate.

In some point, any would-be radical must take it out of the hide of the middle class. Why? Well, as Willie Sutton answered when asked why he robs banks, "Because that's where the money is."

Barone mentions the possibility that Obama might triangulate and seek a more centrist course as Clinton did, much to his benefit, in 1995.

But that seems impossible to even contemplate. This is who Obama is. This is what he believes. Like the scorpion in the fable, this is his nature.

We face an odd situation of a president who might wind up being a lame duck for a full three years of his term.

Correction/Softening: Angler disagrees that any taxation after $250,000 doesn't "sting."

Well, yeah, I overstated; I shouldn't have said that.

The point I was trying to make was that in relative terms, it doesn't sting as much as it does at lower levels of income, in terms of addressing your wants.

If I hike taxes by $12,500 per year on someone making $350,000 per year, that doesn't eat into the "reasonable wants" funds as much as taking $5000 away from someone making $125,000 per year.

At some point, all marginal income becomes more or less "disposable income." The point I am making is that taxes on disposable income is not as onerous as taxes on non-disposable income. And at some point, if you are rich (and especially if you are also childless, or have just one kid), more and more of your income is in the "disposable" category.

Do you want to keep that money? Of course you do. Do you have a right to your money? Of course you do. Can you find a good use for that money? Of course you can.

But there is a difference in how such taxes actually impact the way people live their lives. At lower levels of income, I know people (for example) who are living in apartments that are simply far too small for their families. Taking additional taxes from such people -- even if on paper the family is making $200,000 per year -- really, genuinely forces them to give up important things to pay the costs of government.

At very high incomes, yes, of course you have a right to keep money you earn, and of course you can spend it better than the government, but I think it's much less true that additional taxes actually compel different economic decisions. Less for your retirement account and investment portfolio, yes, but at high levels of income, you've got a fair amount going into that and it's really mostly a question of how much you can bequeath your children, not whether you can live comfortably in retirement.

And yes, that's a concern. I don't mean to suggest otherwise.

But there is a difference between worrying about the size of a child's inheritance and worrying if you can pay for the tuition for his first-choice college in the present.

The latter obviously is a greater impact on someone.

And what I was attempting to do was to explain why someone like Chris Matthews, with his quite-undeserved million-a-year contract (or whatever it is), is so dismissive of the idea of hiking taxes.

It's not due to his altruistic nature, although he'd like to ascribe it so.

It's because he's made his nut and he's no longer really striving like so many middle-class folks are. The utility to Chris Matthews of each dollar taken by the government is far less than the utility of each dollar taken from someone making, say, $90,000 per year.

He'd like to think he doesn't care about additional taxes because he's such a swell guy, but the real reason is simply that he's making so much money that taking another $20,000 from him doesn't change the way he lives his life day-to-day in the least.

Higher taxes, to Chris Matthews, become something of an abstraction, because whether he has that money or the government has that money, either way, he'd have to work to actually spend that money. He'd have to go out of his way in terms of consumption to actually use that money in the here and now.

I really was just trying to explain why it is the very-wealth tend to be much more liberal than the middle class. (Much more left-liberal.) And my point is just that at their levels of income, taxation becomes an abstract sort of issue to them. And they are very willing to trade one abstraction (higher taxes on money they'd have trouble spending even if they really tried) for another abstraction ("I want to see Obama win on this just so he can have his victory").

It's not abstract to the great majority of Americans.

It's counter-intuitive, because the very, very wealthy should, theoretically, be small-government/low-tax types, but the fact is many of them are not. Many of them -- I don't know the figure, but it seems to be a high percentage, like 40% -- are very left-liberal on this issue.

And I am just trying to figure out why, and cast it as an assertion (I suppose I really should cast it as a theory or as questions, but it's punchier to say I just know it's like this, even though I don't quite know it).

All of these Hollywood guys like Ben Affleck can agitate all they like for higher taxes because at their level of income it is almost cost-free to do so. Oh, there is a cost, but it's mostly a paper cost; Ben Affleck won't have to change a single lifestyle choice even if the government took an additional $100K from him per year.

And, again, they ascribe this to their altruism and their concern for the downtrodden and all that, but at their levels of income, it's not really about altruism. Altruism is when you give up something of value for someone else. At their levels of income, $100,000 is... well, you can never say it's without value, of course, but in practical terms of day-to-day living, it's just money they'd have to work hard at actually spending anyway.

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posted by Ace at 11:41 AM

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