The “Obama as FDR” meme emerged immediately after the elections. The November 20 issue of TheEconomist noted, in an article critical of the comparison:
Washington is currently buzzing with talk of Franklin Delano Roosevelt. Members of Mr. Obama’s inner circle are reading up on FDR’s first 100 days. No political conversation is complete without a knowing reference to the squire of Hyde Park. Both Time (on the cover) and the New Yorker (on an inside page) feature pictures of Mr. Obama as FDR, smoking a cigarette, driving an open-top car and looking very much as though he has nothing to fear but fear itself.
The legislative rush in these first 100 days of Barack Obama’s presidency — complete with dramatic federal intervention in the financial sector and unprecedented spending — likewise prompts comparisons with FDR’s New Deal.
But in one policy area, Obama most resembles not FDR, but another charismatic political figure of the Depression era. In his bid to redistribute the income and accumulated wealth of the “rich” to those lower on the socio-economic scale, President Obama most resembles the colorful Louisiana populist Huey Long.
Long became governor in 1928 and a senator in 1932, and he is best remembered for his radical populist challenge to FDR’s New Deal. His Share the Wealth program was an unapologetic effort to seize assets from the rich, tax their income at confiscatory rates, and redistribute the booty to the common man. It inspired the formation of thousands of Share the Wealth clubs across the country.
Long’s critique of the Depression-era status quo strikes familiar chords: The wealthiest 2 percent of Americans owned 60 percent of the nation’s wealth, he argued. Equity dictated that these riches be spread far and wide, so that it might be spent by the poor (thereby stimulating the economy) rather than hoarded by the rich. Sound familiar?
His Share the Wealth program proclaimed three bold goals:
Number one, we propose that every family in America should at least own a homestead equal in value to not less than one third the average family wealth. The average family wealth of America . . . is approximately $16,000. So our first proposition means that every family will have a home and the comforts of a home up to a value of not less than around $5,000. . . .
Number two, we propose that no family shall own more than three hundred times the average family wealth, which means that no family shall possess more than a wealth of approximately $5 million — none to own less than $5,000, none to own more than $5 million.
Number three, we . . . propose that no family will have an earning of less than around $2,000 to $2,500 and that none will have more than three hundred times the average . . . which means that a million dollars would be the limit on the highest income.
Often Long would put a human face on those titans of industry whose fortunes he would seize, referring to Morgan, Mellon, and Rockefeller by name and citing statistical evidence to elicit shrieks of class envy from his admirers. For example:
In 1930 there were 540 men in Wall Street who made $100 million more than all the wheat farmers and all the cotton farmers and all the cane farmers in this country put together! Millions and millions and millions of farmers in this country, and yet 540 men in Wall Street made $100 million more than all of those millions of farmers.
And you people wonder why your belly’s flat up against your backbone!
While Obama may not be as ambitious a redistributor as Louisiana’s Kingfish, he’s no slouch. White House economists estimate that the soak-the-rich provisions in his budget blueprint (chiefly, higher tax rates on those earning $250,000 or more and higher inheritance taxes) would take an additional $636.7 billion from America’s wealthiest households over the next decade. Coupled with his plans for various tax credits for middle-income and working-poor families, as well as health, housing, and other subsidies for the middle class, Obama’s tax hikes make his budget a blueprint for the most significant redistribution of wealth proposed in this country in 75 years.
Obama’s rhetorical defense of his proposals bears a striking similarity to Long’s. He doesn’t pretend the tax hikes will stimulate the economy or induce high-earners to work harder. Rather, he argues that the rich are too rich, and that the government has an obligation to even things out. In language that would bring a smile to the Kingfish’s face, Obama explains why ratcheting up rich folks’ taxes is the way to “fix” this:
For the better part of three decades, a disproportionate share of the nation’s wealth has been accumulated by the very wealthy. Yet, instead of using the tax code to lessen these increasing wage disparities, changes in the tax code over the past eight years exacerbated them.
According to the Internal Revenue Service, the nation’s top 400 taxpayers made more than $263 million on average in 2006, but paid income taxes at the lowest rate in the 15 years in which these data have been reported. In constant dollars, the average income of the top 400 taxpayers nearly quadrupled since 1992.
It’s no surprise, then, that wealth began to be ever more concentrated at the top. By 2004, the wealthiest 10 percent of households held 70 percent of total wealth, and the combined net worth of the top 1 percent of families was larger than that of the bottom 90 percent. In fact, the top 1 percent took home more than 22 percent of total national income, up from 10 percent in 1980. . . . And these disparities are felt far beyond one’s bank statement as several studies have found a direct correlation between health outcomes and personal income.
Whereas Long’s wealthiest 2 percent controlled 60 percent of the nation’s wealth, today Obama’s top 10 percent control 70 percent of it. Note Obama’s use of words here: The wealthy didn’t “earn” their loot; they “took [it] home.” Note also the implicit assumption that the tax code should be used to “lessen . . . wage disparities.”
The president returned to his concern with wage disparities in his March 22 interview on 60 Minutes:
You look at how finance used to operate just 20 years ago, or 25 years ago. . . . If you went into investment banking, you were making 20 times what a teacher made. You weren’t making 200 times what a teacher made. . . .
If you go to North Dakota, or you go to Iowa, or you go to Arkansas, where folks would be thrilled to be making $75,000 a year without a bonus, then I think they’d get a sense of why people are frustrated.
These echoes of Long may be just debating tools. But one worries when they are deployed in a world where government officials can purge a corporate CEO with the wave of a hand.
For now, Washington’s liberals seem content to simply raise the marginal tax rate on high incomes. Yet serious leftists such as former labor secretary Robert Reich have floated the idea of wealth taxes to confiscate a portion of one’s previously taxed assets. Will the prospect of trillion-dollar deficits as far as the eye can see be enough to elevate Reich’s dream into a viable policy proposal? – Michael G. Franc is vice president for government relations at the Heritage Foundation.