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How I Learned to Soak the Rich

Summary:
From time to time I argue that the optimal strategy for Democrats is good old egalitarian populism: soak the rich and spread it out thin. I note the polls which have, for 3 decades now, shown that a majority of US adults think that upper income people and corporations pay less than their fair share in taxes and the fact that Bill Clinton, Obama, and Biden were elected promising to raise taxes on the rich and cut taxes on everyone else. I suppose I should address two important questions. FIrst why don’t all Democrats do this? In particular, why didn’t Mondale, Dukakis, Gore, Kerry, or Hillary Clinton do this (note the perfect 100% pattern of fitting which Democrats get elected) ? Second, given the importance of the issue and the fact that all

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From time to time I argue that the optimal strategy for Democrats is good old egalitarian populism: soak the rich and spread it out thin. I note the polls which have, for 3 decades now, shown that a majority of US adults think that upper income people and corporations pay less than their fair share in taxes and the fact that Bill Clinton, Obama, and Biden were elected promising to raise taxes on the rich and cut taxes on everyone else.

I suppose I should address two important questions. FIrst why don’t all Democrats do this? In particular, why didn’t Mondale, Dukakis, Gore, Kerry, or Hillary Clinton do this (note the perfect 100% pattern of fitting which Democrats get elected) ? Second, given the importance of the issue and the fact that all Republicans did when they had power was cut taxes on the rich and on corporations, why do Republicans ever win elections.

I will get to these questions, but first I want to take a stroll down memory lane. First I remember a day in 1992 when I was watching the commentary on a Clinton Bush Sr debate. They had the focus group dials so that viewers could indicate agreement and disagreement. They had 3 groups: Clinton supporters, Bush supporters, and undecided voters. Clinton said of the Reagan years “only rich people got tax cuts”. The three groups (on average) each dialed in agreement. Then the calm TV commentators noted that it was unusual for supporters of one candidate to vigorously agree with the other candidate (I think it may have been more unique than unusual). The memory remains vivid.

The next year, I talked with my friend Brad DeLong then deputy assistant of the treasury for policy analysis. He introduced me to someone who was lunching on a hot pretzel and said he was the only person who really understood the budget reconciliation act. He also said that the Clinton internal pollster had polled raising taxes on the rich. First raise taxes on the rich to pay for more education spending. Huge majority for yes (education spending is always popular). The raise taxes on the rich to pay for more this or more that with always a majority for yes. Finally they lost patience and asked if people wanted to raise taxes on the rich to pay for more waste fraud and abuse. A plurality said yes.

At the time, there was the argument that, for some reason, non rich Americans supported Regan type tax cuts, because they expected to be rich some day or because they really believed the supply side story. There has never been real evidence of this and the question has been as settled as any question in social science is since 1992.

OK so Democrats missing the chance. I am fairly sure that the main issue is that they spend a lot of time talking with rich people who are less enthusiastic about raising taxes on the rich (not all opposed but less enthusiastic). One part of this is the huge amount of time and effort raising campaign cash. One other suggestion I have is that Presidential nominees should just stop doing that. They can raise absurd amounts of money in small donations. Free coverage of presidential campaigns dwarfs paid advertising. They often get in trouble saying things to donors that are supposed to remain private (Obama and “clinginh”, Romney and 47%, and Hillary Clinton and “Deplorables”).

This doesn’t get me very far as the tax code is written by Congress plus nominees have to win the nomination, but it sure seems to be a no-brainer to me.

Another issue is that opinion leaders and commentators have high incomes. Even policy makers have much higher than median incomes, but the social circle of policy makers, elite journalists and lobbyists is very high income. This means that soak the rich populism is frowned upon (I think literally). Effective democratic Democratic strategy is called demagogic (note that back in the day elite opinion leaders like Plato and Aristotle used democracy and demagogy as roughly synonymous pejoratives).

In any case, Biden has noticed the pattern and will lead the Democrats 2024 effort.

The other really puzzling question is why do people vote for Republicans. It sure does not fit opinions about big dollar taxing and spending. Earlier explanations were that the Republican party was the daddy party trusted to keep us safe with a strong defense. This makes less sense when the party is bitterly divided between hawks and isolationists. I think it is clearly not the issue (they did gain from fear of the communist menace and of terrorism but I think it is clear that this is a losing issue for them while stuck with Trump v the establishment). It used to be argued that they won based on the votes of conservative Christians. Those votes are key but public opinion has changed. I am old enough to remember when the debate was over whether gay sex should be legal and now the debate over gay marriage is over — the armies are still in the field but the outcome is no longer in doubt. Of course (as predicted by many not including me) abortion has switched from being a winning issue for the GOP to a deadly losing issue the moment the Supreme Court over-ruled Roe V Wade.

I am pretty sure the key issues are — well you recall the people in the basket of deplorables which is not empty — and the fact that GOP voters are totally clueless about current policy, proposed policy, and recent developments. I note a months ago poll in which 51% of US adults said the US was in a recession or a depression. I note the repeated report that, say, Obama campaign workers found that people in focus groups just would not believe their accurate statements about Romney’s policy proposals. I think the problem is clear (but have no idea how to solve it while a large fraction of US adults trust only conservative “news” sources). Actually looking at Gallup (link above) I found it again. There is strong support for more progressive taxation and the (highly progressive) federal income tax is called the least fair tax vs regressive payroll, state, and local taxes. The answers are not coherent at least they don’t make any sense given the actual facts (regarding which I assume the vast majority of respondents are clueless)

My only proposal is to keep policy proposals simple (as in Obama’s $1000 tax credit and Biden’s $2000). I consider three warning examples. Mondale said he was talking to us about taxes as if we were grownups (do not do this). Dukakis told his aids who told him to say something in a speech “but I already said that” and Hillary Clinton designed targeted tax credits which I have no idea what they were.

I say simple and don’t be afraid to appeal to voters’ self interest.

Robert Waldmann
Robert J. Waldmann is a Professor of Economics at Univeristy of Rome “Tor Vergata” and received his PhD in Economics from Harvard University. Robert runs his personal blog and is an active contributor to Angrybear.

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