What's So Awful About "spreading The Wealth"?

by Jonathan Cohn | October 18, 2008

It is hard to imagine we’ve heard the last of Barack Obama’s interactions with William Ayers and Jeremiah Wright. But lately John McCain seems much more interested in talking about another Obama encounter. It’s the now infamous conversation Obama had with “Joe the Plumber”--and one particular phrase that Obama uttered in the course of it.

For those who may have been in hibernation the last few days, Joe the Plumber--whose real name is Joe Wurzelbacher--met Obama during an Ohio campaign event last weekend. Wurzelbacher was concerned about Obama’s tax plan, which would raise taxes on wealthy Americans. In the course of a lengthy response, Obama said it was a good idea to “spread the wealth.”

Conservative commentators pounced and, before long, McCain had, too. He brought it up in Wednesday’s debate, in subsequent appearances, and--most recently--in his Saturday national radio address.

You see, he believes in redistributing wealth, not in policies that help us all make more of it. Joe, in his plainspoken way, said this sounded a lot like socialism. And a lot of Americans are thinking along those same lines. In the best case, "spreading the wealth around" is a familiar idea from the American left. And that kind of class warfare sure doesn't sound like a "new kind of politics."

The rest of McCain’s presentation was pretty disingenuous. As proof of Obama’s alleged socialist leanings, he noted that Obama would have the government write checks to millions of people too poor to pay income taxes. McCain called these “refundable credits” a form of welfare, apparently oblivious to the fact that McCain’s own health care plan uses refundable credits. (One reason they make sense, in both cases: Even people too poor to pay income taxes still owe payroll taxes.)

And, once again, McCain implied that Obama would be raising taxes on everybody--when, in fact, Obama would reduce taxes for the vast majority of Americans. Only the very wealthiest people would see higher rates. And they'd still be paying less than they did when Bill Clinton was president.

But let’s get back to this apparently controverisal phrase--which, I gather, is going to remain prominent in McCain's campaign rhetoric over the next few days. What, exactly, is so awful about "spreading the wealth"?

Government performs certain essential functions, from education to national defense. It must raise money to do that. Charging everybody the same tax rate might sound simple. But it would actually impose a much harsher burden on the poor, since they end up spending much--if not all--of their incomes on the basic necessities of life, such as food, clothing, and shelter. As one famous 18th century philosopher argued,

“It is not very unreasonable that the rich should contribute to the public expen[s]e, not only in proportion to their revenue, but something more than in that proportion.”

Another rationale for progressive taxation is the fact that random chance has profound effects on everybody’s financial well-being. (A guy named John Rawls once wrote a thing or two about this.) Mandating economic equality--i.e., carrying out a truly socialist agenda--would obviously be wrong. But there are compelling moral and economic arguments for asking the fortunate to pay a little more in taxes, in order to blunt the influence of chance on people’s lives.

Among other things, it’s not clear how long a capitalist society would even survive without at least some redistribution, given the likelihood that--without it--the poor would get poorer and the rich would get richer.

As that same 18th Century philosopher put it,

“No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed and lodged."

No, capitalism is not on the brink of collapse in America. But median wages have been stagnant for a while; inequality is on the rise. And while Obama's policies would help stop and perhaps even reverse these trends, McCain's would reinforce them--which, perhaps, is why he's trying so hard to scare people.

By the way, if you don’t recognize the quotes--or haven’t guessed by now--the 18th Century philosopher is none other than Adam Smith.

Or is he a socialist, too?

--Jonathan Cohn 

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