PLANK SEPTEMBER 19, 2012
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In response to the “47 percent” fracas, Mitt Romney has decided to come out swinging: There’s an Obama tape too! One in which Obama says he believes in redistribution!
The tape (audio this time, not video) dates to 1998. Just to give you some context: This was back when Romney was still pro-choice, still pro-gun control, still pro-stem cell research, and still in favor of gays serving openly in the military. It was five years before Romney would, as Massachusetts governor, voice private opposition to Bush’s tax cuts and refrain from supporting them in public, and a mere six years after Romney cast a primary ballot for the Democrat Paul Tsongas. Saving Private Ryan was 1998’s big movie, and the top song was “Too Close” by Next. Best-selling books included The Greatest Generation and The Death of Outrage. Eldridge Cleaver died that year, along with Barry Goldwater and Henry Steele Commager; Bob Hope and Leni Riefenstahl would hang on a few more years. Mark Zuckerberg was 14, Justin Bieber was 4, and Elle Fanning was born that April. Everybody was “Gettin’ Jiggy Wit It.”
Now that we’ve set the stage, here’s what Obama said in 1998: “I think the trick is figuring out, how do we structure government systems that pool resources and hence facilitate some redistribution, because I actually believe in redistribution, at least at a certain level, to make sure that everybody’s got a shot.”
Whatever the context of the original statement, it’s worth asking: Is Obama still a redistributionist, “at least at a certain level,” today?
In the sense that he’s governed during a period of growing income equality, he definitily isn’t. After all, incomes have grown more unequal under Obama. The Gini index, a leading indicator for income inequality, has risen every year since 2006. In 2008 it was 0.466. In 2011, the last year for which data are available, it was 0.477, marking the largest single-year rise since 1993.
The top one percent’s share of the nation’s income fell during Obama’s first year in office, but that wasn’t because Obama is a redistributionist. It was because rich people typically get whacked in recessions. By 2010, the last year for which data are available, the one percent’s income share had resumed its upward climb (to 19.77 percent). By now it has almost certainly matched or exceeded its 2008 level (20.95 percent). Did I mention that median household income has been declining steadily since 2006? The Berkeley economist Emmanuel Saez has calculated that during the first year of the economic recovery (2010) fully 93 percent of all economic gain went straight into the pockets of the one percent, bypassing the rest of the population altogether.
Some redistributionist!
Obviously Obama would like to redistribute income, to some degree, in the opposite direction. But that’s typical. Every president is redistributionist in the sense that redistribution is what government does. It takes tax dollars and reallocates them elsewhere based on what it deems the public good. Part of the public good, the federal government decided long ago, is to help those least able to help themselves, if only (to quote Obama’s words in 1998) “to make sure that everybody’s got a shot” at economic success. Every president going back at least to Franklin Roosevelt has supported some version of this scheme, some more vocally than others.
There is one way Obama has succeeded as a redistributionist: His health care reform law, assuming it remains in place, will effect a great deal of income redistribution by extending health insurance to many people who couldn’t previously afford it, especially through its expansion of Medicaid, the state-federal health insurance program for low-income people. This is not a feature of the law that Obama has made much effort to emphasize, for fear of getting pounced on by Romney (who accomplished a smaller-scale redistribution in Massachusetts with his own health care law). Valuing income distribution achieved through the provision of health insurance is a tricky business that’s been known to drive economists crazy. Do you value it based on the market cost of health insurance or based on how much actual medical care it’s used to obtain? (Because they get sick more, the poor are likely to obtain more.) When medical inflation rages out of control—as it’s been doing for some time now—is it fair to say that redistribution is increasing, even when the subsidized insurance plan in question isn’t buying any more coverage than it did before, and may be buying less? And so on.
I find it easiest to think of it this way. Obama isn’t redistributing income so much as access to health care. Figuring out how much any individual stands to gain from Obamacare is like figuring out how much any individual stands to gain from an increase in Pentagon spending. Assuming the money is spent wisely, we all benefit from the enhanced security. But there’s no denying it costs money, and that under a progressive tax more of that money is paid by the rich.
So is Obama a redistributionist? Short answer: Yes. And so is Romney. Obama hasn’t actually achieved any redistribution during his first term, but he probably will achieve some very meaningful redistribution during his second. That isn’t a reason to vote against him; it’s a reason to vote for him.
Correction. This post originally stated, incorrectly, that the following events occurred in 1998: the death of Princess Di, the release of the movie Titanic, and publication of the books Primary Colors, The Celestine Prophecy, and Men Are From Mars, Women Are From Venus. In fact, Princess Di died and Titanic was released in 1997. The three books were published in 1996, 1993, and 1993, respectively.
14 comments
I was wondering when somebody would pull out Romney's 14-year-old speeches and show what Romney was saying in 1998. Seems a very weird approach -- try to tar Obama with the "Redistributionist!" label from 1998, when Romney was pro-choice, pro-gay, and anti-gun in 1998. Oh, well, that's Fox News for you. I suppose I should be glad they had to go back in time 14 years, to find something sufficiently "bad" to attack Obama with. Seriously, 14 years? Why, George W. Bush hadn't even destroyed the economy then. He wasn't even President! We had a balanced budget!
- AllanL5
September 19, 2012 at 3:46pm
Obama is NOT a "redistributionist", in the Fox News sense. In no way does he want to take today's wealth from the wealthy, and spread it like seed corn among the poor and downtrodden. Shame on you for buying into a propaganda phrase. No, Obama simply wants those over $250K in INCOME to pay their fair share in taxes. It's about INCOME, not about hoarded wealth. They can keep their hoarded wealth, that's not a problem, it's a good thing, it's not even on the table. But if they think they can keep their 15% tax rates, while their secretaries pay 30%, well that's not "redistribution", that's simply unfair.
- AllanL5
September 19, 2012 at 3:50pm
It starts off petty, me thinks, but at least you were able to bring it home by the end. You realize this is already playing out just like with Mittens. It wasn't that what he said was "bad", except that it's the naked truth. Of course, comparing the naked truths, Obama wins hands down. Dems and Reps are redistributors, the only difference is the beneficiary; so Obama wanting to redistribute for the common good, as opposed to no-bid contracts to the vp's business buddies, or give-aways to particular health care industries, is far less a revealing truth than the disdain Mittens et alia have for those who won't jump on the bandwagon or toe the GOP line (which makes Obama all that much shinier considering his past statements of wanting to look out for the best interests of even republican voters, but since part of their best interest is having their moral authority figure elected to whatever, he obviously will fail spectacularly at this).
- GSpinks
September 19, 2012 at 3:53pm
Excellent point about hoarded wealth, Allan. Indeed, the lucre they've already accumulated is quite safe (not that they'd ever admit it while a dem is in office).
- GSpinks
September 19, 2012 at 3:55pm
Isn't all taxing and spending redistribuntionist? It's just a matter of who gets what from whom, and how much and in what form.
- ejpjr
September 19, 2012 at 3:58pm
You would think so. But somehow, Obama returning to Clinton era tax rates, and giving those over $250K a raise of 5% in their tax rates, is treated as if it was Socialist appropriation and redistribution of wealth. Everyone is against Socialist appropriation of wealth, that's a nice strawman you got there. But painting him as a "redistributionist" for a mere 5%? That's just hyperbole used to defend an unfair situation.
- AllanL5
September 19, 2012 at 4:11pm
It's not at all clear from the tape that Obama was even talking about raising taxes, much less raising taxes on the rich. He talked about government "delivery systems" and "pooling resources" to effect a "redistribution on a certain level." That could mean a redistribution of resources from the federal to the state and local levels. It could mean opening up more emergency rooms in private hospitals to charity cases. It could mean a new formula for the distribution of property taxes from rich to poor school districts. It could mean a lot of things. But it is accurate to say that Obama believed then, and believes now, that the Reaganite "government is the problem" mantra is dead wrong. "We have to resuscitate the notion that government action can work at all" to overcome the "propaganda campaign against government action and its efficacy." Obama undoubtedly brought his own teleprompter to this forum, so Romney has nothing to fear in the debates.
- koppgeo
September 19, 2012 at 7:06pm
Romney wants to redistribute over $2 trillion to defense contractors over ten years. How can he sleep at night? Besides, who cares if the President wants to tax people who can afford to pay and spend on things we need. Which is better, being globally competitive or having a wide disparity in wealth?
- Nusholtz
September 19, 2012 at 9:43pm
Good column today...by Thomas Sowell. Redistributors can only redistribute current wealth, not future wealth. When the producers of the current wealth realize an Obama-sort wants to confiscate it, they stop producing or move to a more congenial state or country. 1920s Ukraine had prosperous farming w/no hunger. In the 1930s, Stalin redistributed private farm products, farmers lost the incentive to farm, starvation ensued. Manufacturers can just pick up their companies and relocate away from the socialists. Sowell is at his own site & the column is elsewhere, such as nro.com A lot of talk about compassion & what "we" need at TNR, not so much knowledge of basic economics.
- raygun
September 20, 2012 at 7:16am
Obama provided considerable needed redistribution in the stimulus and beyond w/ expanded EITC, making work pay tax cut, payroll tax cut, extended unemployment benefits, expanded student loan program, Lily Ledbetter, and the already-effective parts of the ACA. The fact that those policies were only partial offsets to continued rise of the Gini, caused by larger economic forces, doesn't mean that he didn't do what he could to ease the burden of recession on the poor and middle class.
- adsprung
September 20, 2012 at 8:20am
There is probably not a dollar spent that doesn't help someone more than it helps someone else. I guess we are all redistributionists.
- johnkuhlman
September 20, 2012 at 12:26pm
GSpinks makes a good point. The GOP redistributes wealth to rich people, because, well, rich people need to get richer. It's true that we're becoming a nanny state--Time had a feature article about it recently. But that's the only way our citizens, even business people, can survive. However, we are not becoming a socialist state. Not when the capitalists get to keep their record profits--profits that are multiplied by tons of free money from the government.
- magboy47.
September 20, 2012 at 1:42pm
"Good column today...by Thomas Sowell." I read that column, which puts me in a good position to say that Raygun's comment is incredibly depressing. If that's what passes for good economic analysis on the right, god help us all. For those of you who haven't read the column, let me summarize it for you: Under Stalin, there were some awful consequences of redistribution. There are other bad consequences of redistribution as well. Obama, since he believes in redistribution, wants to take us backwards to these failed policies. Thanks for that erudite and nuanced contribution to the discussion, Dr. Sowell. OK, maybe not erudite or nuanced, but you managed to cite Stalin rather than Hitler, so you at least dodged the application of Godwin's Law, which is a small victory.
- Fishpeddler
September 20, 2012 at 2:21pm
raygun is completely off-base about the situation in the Ukraine in the early Thirties. The starvation there had nothing to do with market forces. Stalin was determined to collectivize agriculture at any cost, so he accused anyone who opposed collectivization, even poor peasants who produced almost nothing, of being kulaks (rich peasants), so he could turn them into slaves on collective farms and in gulags. His confiscation of peasant lands was one way to produce the huge supply of slave labor needed to build Russia into a worldwide industrial power and to ensure that any food produced was going to the slaves working in the industrial sector. Those who refused to collectivize were not given food, and they starved--by the millions. Stalin actually wanted many of them to starve, because the collective farms weren't producing enough food to feed them. The Right should read a history book or two before inserting market forces into a situation where they don't apply. BTW, Stalin was not a socialist. He was a state capitalist, something that more than one American corporation dreams of becoming. Wal-Mart comes to mind. They couldn't survive without Third World slave labor.
- magboy47.
September 20, 2012 at 3:44pm