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The Plutocrats Strike Back

The rich strike back against the new populism, with politicians running for cover. But populism is popular with voters, just not with donors.
The Plutocrats Strike Back

“The rich strike back,” headlines Politico, reporting that “the denizens of Wall Street and wealthy precincts around the nation” aren’t going to put up with populist politicians making “class-based appeals.” And that politicians in both parties are discarding their pitchforks, as “the effectiveness of the populist approach comes into question.”

Strike back at what?

What has roused the plutocrats to the barricades? The top 1% captured fully 95% of the nation’s income growth from 2009 to 2012. Their income grew by nearly one-third (31%) while the income of the 99% stagnated (up 0.4%), and most Americans lost ground.

The affluent have been nicked with a few tax hikes. Medicare taxes went up a smudge on households making over $250,000. The Bush tax breaks for the rich (households over 400,000) expired, with rates going from 35% back to the Clinton rate of 39.6%. High earners have to 20% on dividends and capital gains, up from 15%.

But Mitt Romney and his comrades still enjoy lower tax rates than their chauffeurs. The obscene tax break for hedge fund billionaires – the “carried interest tax break” – still is on the books. Multinationals still stash trillions abroad to avoid taxes. The income from wealth is still taxed at about half the rate as the income from work. The “Buffet rule” proposing that billionaires pay the same rate as their secretaries appears in the president’s budget and speeches, but can’t get a vote in the Congress. The cap on Social Security taxes means that besieged billionaire Tom Perkins continues to pay a far lower payroll tax rate than the cop that guards his street. New York Governor Andrew Cuomo, the plutocrats’ champion, has deep sixed the plans of New York City Mayor Bill DeBlasio to levy a small tax on the superrich to pay for universal pre-K.

Don’t Even Think About It

What has aroused the billionaires is that politicians could even think about taxing the rich. The Politico article features yet another dyspeptic billionaire – this time Home Depot co-founder Ken Langone, a major Republican donor, comparing the threat posed by populist political appeals to Hitler: “ Because if you go back to 1933, with different words, this is what Hitler was saying in Germany. You don’t survive as a society if you encourage and thrive on envy or jealousy.”

The billionaires aren’t going to put up with this kind of talk anymore. A good example is the proposal contained in Republican Rep. Dave Camp’s comprehensive tax reform proposal to levy a tax on the 10 biggest Too Big to Fail Banks – those with over $500 billion in assets -- essentially a partial payment to taxpayers who are forced to guarantee their survival.

Republican leaders Mitch McConnell and John Boehner made it clear that Camp’s proposal as a “discussion document,” dead on arrival with no chance of coming to a vote in either house. Boehner dismissed specific provisions as “blah, blah, blah.”

That wasn’t enough for Wall Street. The bankers went ballistic that Camp could even think about taxing them. Goldman Sachs cancelled discussions with the Republican National Congressional Committee about yet another fundraiser. The bank lobby mobilized to demand that Republicans publicly repudiate Camp’s heresy. Immediately 54 Republicans signed a letter to Camp stating their “deep concerns” about the proposal, suggesting it would reduce access to credit and curb economic growth.

They’ve Got the Dough

Billionaire Tom Perkins, another hysteric about the “threat” posed to the rich, argues that the superrich should get more votes in any election. But, of course, they already do. Wall Street and the wealthy are leading sources of funding for both parties. In our politics, as the Supreme Court has ruled, money is speech, and they can afford more of it. Thus the 2012 Republican presidential primaries turned into a playground game of billionaires, each betting on his favorite pony running for president.

The Folly of the Plutocrats

Politico, not surprisingly, gets it wrong. It isn’t that “the effectiveness of populism has come into question.” Voters know the game has been rigged. They see entrenched interests producing gridlock in Washington. They know that Wall Street blew up the economy, in an epidemic of fraud and criminal conspiracies, and then got bailed out while the rest of the country took it in the teeth. Being willing to go after the corruption and the big money is one of the few things that allows a political candidate to transcend the growing cynicism of voters.

Populism is popular with voters, but not with big donors. But the problem for the bankers, Langone, Perkins and the rest is that they no longer operate in secret. The special interest claims no longer have legitimacy. Folks don’t buy the trickle down voodoo anymore.

They can keep invoking Hitler and Nazis and the threat to the 1%, but their folly is feeding the populism they fear. As former President John Kennedy states, “Those who make peaceful revolution impossible will make violent revolution inevitable.” We aren’t close to a revolution in this country. If Wall Street and the billionaires continue to use their money to protect their privileges and pocket virtually all of the income growth of the society while the rest of the country sinks, they will sow a whirlwind that eventually they will reap. You’d think folks who know how to make money would have more sense. But extreme inequality too often breeds a blinding arrogance.

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