POLITICS JANUARY 28, 2012
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The Wall Street Journal reports that Mitt Romney is in the top .0025% of American income earners. That makes him poorer than Warren Buffett, George Soros, Sheldon Adelson, probably even than Jon Huntsman, the father of the junior Jon Huntsman, who, with all his money and a very decent record, scored virtually nothing in the Republican presidential sweepstakes. So the question about Romney is whether the electorate will resent his wealth or take it as an index of initiative, imagination and hard work. Also, I suppose, a real drive to be rich. No, not just rich, but downright wealthy, super-wealthy. Still, he is not a billionaire and I don't know how many billionaires there are in America. But you can easily count the number in Forbes where, since Romney released his tax returns, the financial magazine has also published a story online about the richest American presidents. George Washington was the wealthiest American of his time. Thomas Jefferson died broke but with lots of fine wines in his cellar. By the way, though there are oodles of American billionaires, my quick scan tells me that there are many more in Russia and China and very disproportionate numbers in Saudi Arabia and Turkey. Look for a social crisis some time (but not too soon) in all four of these countries.
So the question is: Will there be some sort of political crisis in the Republican party? It isn't that the G.O.P. delegates or voters are allergic to zillionaires. They may be their heroes. But a large part of the party base is in the working class, unionized and non-unionized, service laborers and folk who toil in the fields, local store tenders, people who work for Walmart or Family Dollar, etc. Many of these people are, to say the least, underemployed or underpaid or both. That is the culture of their toil. They must believe in capitalism even though it hasn't made them rich or comfortable. They also seem to have accepted the truism that capital gains taxes are inimical to national growth, which means inimical to the growth of business, which means inimical to the growth of personal portfolios, and on and on.
I am persuaded by some of this. That is, I am persuaded that people who invest in risky businesses need to have some assurance that, if their investments are successful and have been smartly husbanded, they will retain a goodly share of the profits. And, as the narrative would go, invest some of that in new ventures and enterprises. But a decent society needs an ethos of solidarity between those who "have lots" because they've invested sagely and those who "have not." Frankly, I cannot put myself into the mental set of those who resent subventions to ordinary folk and think it perfectly alright to devise a tax code that protects investors from the vicissitudes of the markets and protects also descendants of the initial investors down to the umpteenth generation.
Now Romney has been a beneficiary of both the lower tax rates on capital gains and the laws that propel his heirs into those rates. I don't know anything about his children. Still, are they worthy of the protections which fell to them as a result of their being his kids?
Romney is a paradigmatic "have lots" candidate. The extremes of what he has managed to keep should at least and at last focus attention on the people who have much much less. If someone's father or grandfather has failed financially or not produced lushly should that someone be penalized forever in the stakes that deliver success or failure? What are the standards of fairness in a democratic society? Is equality a necessary virtue of such a society? I believe it is.
What happens to Mr. Romney or the president himself is less significant than what happens in such a public debate.
There is an intriguing article in Friday's New York Times about public recognition that these issues are especially salient now, not so much because Romney is seen to have gotten away with a huge bundle but that financial institutions and their stewards have been grossly rewarded for all manner of wrongdoing. The article is by Andrew Kohut, president of the Pew Research Council, which has done opinion studies on this and related issues.
Martin Peretz is editor-in-chief emeritus of The New Republic.
9 comments
It's not how big you make it. It's how you make it big. No, that's not right, either. Peretz drives a lot of people crazy, but damn it, sometimes he hits the center of the bullseye in his writing, and sometimes he hits the center of the bullseye in how he uses his money. You go, Marty, and I don't care what everyone else here says about you, even if sometimes they are right. So what? You wanna make something of it, buddy?
- skahn
January 28, 2012 at 12:41am
Well, we'll see how able middle-class folks who have not been protected from the vicissitudes of the markets and laid off are to vote in their own interests come November. Many of them seem to be suicidally determined to support candidates of the party whose tendency is to reward casino capitalists richly, even after they lose a trainload of somebody else's money. Obama protested the ransom that these criminals collected, but weakly, and he was shouted down. Money talks, but big money bellows.
- magboy47.
January 28, 2012 at 1:09am
Three cheers, Mr. Peretz, especially for this: "But a decent society needs an ethos of solidarity between those who "have lots" because they've invested sagely and those who "have not." Just some added points: 1) Much of Romney's wealth accumulated at capital gains rates has nothing to do with sage investments, but rather is because of the loophole (vigorously defended by the GOP) that permits compensation in the form of "carried interest" -- which involves absolutely no investment -- to be taxed as capital gains rather than compensation. 2) Romney's tax plans combined with his spending priorities would reduce the rates on the wealthy even further, at the expense of education, infrastructure, research, preventive health, and yes food stamps for the poor, etc., etc. His message to those who need a hand and to all of us who benefit from governmental programs such as roads and schools and police protection is "the hell with you." 3) Romney was able to go through four years at Harvard earning a MBA and JD without any financial worries, and he got there with years of well financed private education. He never acknowledges that we have an obligation to those who didn't enjoy all the advantages he did. In fact he derides Obama's belief that we do have such an obligation -- not necessarily to get everyone into Harvard or equivalent but at least to give those without his advantages a chance to get an education and decent health care. 4) And at the same time he would expand our military expenditures and military adventures, although of course he doesn't want to pay the taxes to finance them or offer himself or members of his family to do any of the fighting and dying. Beneath contempt.
- PeteBeck
January 28, 2012 at 10:01am
all well said, except I would remind PeteBeck that the champion to preserve the "carried interest" loophole was once Senator Charles Schumer, or, as the NYT named him in their series "The Reckoning", the Senator FOR Wall Street. Just want to be fair in declaring this has been a bi-partisan loophole. and, a bi-partisan effort to change it. The rare voices who want to include moral and ethical to legal are still being drowned out by both political parties. Y'all might be surprised at how many conservatives rail against Romney and Bush43 as Big Government Statists, seeing no difference with the Pelosi-Obama rump of the post-2010 Democratic Party.
- K2K
January 28, 2012 at 10:28am
To K2K, Tuesday on MSNBC Schumer said he would vote to eliminate the tax break for carried interest, although he seemed too be qualifying it a bit by saying it should be part of a total reform which cause all forms of privileged compensation to be taxed at low rates. I guess his point is that if you are going to hit my guys on Wall Street, the people in Texas should get hit too. Surprise: Rupert Murdoch is also an enemy of the carried interest loophole.
- PeteBeck
January 28, 2012 at 12:38pm
That is, I am persuaded that people who invest in risky businesses need to have some assurance that, if their investments are successful and have been smartly husbanded, they will retain a goodly share of the profits. Nonsense, this just creates bubble economies. Flipping real estate for a quick profit is a risky investment, it also contributes nothing to society. Building a housing development, after studying demand, and meeting all requisite laws, is beneficial (and not as risky) but as such projects take years I am in favor of a lowered capital gains tax rate for long term investments. We have set up a system to reward long term savings (IRA's), why the hell not reward long term investors? And the idea that someone sees there is a need for a consumer item, they believe they have the skills and ability to provide it and to make a good profit, that somehow they won't because they will pay the same tax rate that they would if they were a common laborer? If Marty is so worried about risk, then lower casino gamblers earnings tax rates to 15% too. After all, what could be more risky than gambling? Gambling on black jack is bad, gambling on a stock for a quick gain though is good...somehow.
- blackton
January 28, 2012 at 2:58pm
Here is Marty Peretz at his best: " But a decent society needs an ethos of solidarity between those who "have lots" because they've invested sagely and those who "have not."" I agree, I have my own ideas but I wonder how Marty would define such an "ethos?" "Frankly, I cannot put myself into the mental set of those who resent subventions to ordinary folk and think it perfectly alright to devise a tax code that protects investors from the vicissitudes of the markets and protects also descendants of the initial investors down to the umpteenth generation." This has been true since Reagan (and before Franklin D Roosevelt) and it reached an hysterical high point with Newt Gingrich in the 90's. Now that he thinks it might help his campaign he is attacking Romney for being "super wealthy." I don't care for Romney for many reasons, but at least he is not an hypocrite on economic issues as he is on many other social issues.
- arnon
January 28, 2012 at 3:06pm
It is a never-ending struggle (apparently never quite achieved) to figure out and create a society which is "fair," "productive," "caring," "just," "tightly knit/related," and just plain decent. Obviously people who are intelligent, industrious, creative, etc. in ways that help our economy "work," should be rewarded in material and glorious ways. At the same time, they need to abide by some decent limits and behaviors. [I am for apple pie and motherhood, also, btw.] In today's world, most people would describe Bill Gates as a person who passes the accomplished/decent test pretty well (though he has lots of critics). I have some [slight] personal experiences and contacts on which to endorse him. Romney (especially compared to people such as Gingrich and Santorum] has some accomplishment chops and some decency chops, but some problems. As an analogy, my family contains a great deal of musical talent, including a Pulitzer/MacArthur winning composer, a person who can play every Western string instrument there is, some good singers, including an opera singer, and so on. I, on the other hand, am not quite tone deaf, but I can hear it, and if I sang to the prisoners at Guantanomo, it would be rightly judged a serious torture/human rights abuse. My analogy is that Romney has a serious tone deaf performance problem. He is improving a bit, but has a long way to go, and his audience is not helping move in the best direction. I have my doubts about Obama (as I have had about every President during my life time), but he seems to learn, grow and improve. Romney has some possibility; the other GOP candidates (except Huntsman) not a bit, and Huntsman was disqualified for at least being reasonably sensible. Obama seems to be playing a winning game. If not, God help us all (and you know my religious beliefs).
- skahn
January 28, 2012 at 10:53pm
There is something inherently wrong with any economy that thinks the tax code is the sole driver of innovation and job creation. PeteBeck: of course Schumer circa 2012 would say that about "carried interest" on MSNBC. Schumer used the same excuse (other industries need that loophole, not just private equity) to defend the loophole 1997-2009, and thus was able to raise enough cash from WS to win the Senate when Schumer chaired the DSSC. I just wonder what Schumer would say if the audience was a fundraiser in one of Henry Kravis's dining rooms :) Jon Stewart had a terrific bit lsst week featuring Iowa's Grassley, and Romney, in I think 2007, when Grassley was trying to end the "carried interest" loophole, and Romney started the PE lobby - one of the time stamped bits had Grassley sounding like the lobbying tactics of PE lobbyists made the National Rifle Association seem reasonable :) Since I woke up this morning without the dread that America is doomed, for the first time in months, it is time to return to my free HBO weekend. No news is starting to work!
- K2K
January 29, 2012 at 8:27am