Democrats have turned to an agenda that Republicans are calling class warfare, as President Barack Obama presses a “Buffett Rule” to tax the rich, Senate Democrats offer a millionaires’ tax instead and party leaders fulminate against Bank of America’s $5 debit-card service fee.
Campaigning for re-election, Obama welcomes the charge.
“Then guess what? I’m a warrior for the middle class,” he declared Sept. 22, standing at a Cincinnati bridge linking the home states of the Republican leaders of the House and Senate and setting a new course for his own party.
“The president tried to be the great conciliator and suffered politically for it,” said Dan Schnur, director of the Jesse M. Unruh Institute of Politics at the University of Southern California and a former adviser to Republican Senator John McCain. “The message this fall is no more Mr. Nice Guy.”
As the Occupy Wall Street protests that have gained strength in recent weeks expanded to Washington, Obama offered a measure of solidarity, saying in an Oct. 6 news conference the demonstrators were “giving voice to a more broad-based frustration about how our financial system works.”
“Americans understand that not everybody has been following the rules,” said Obama, who stopped short of endorsing the protests. “These days a lot of folks that are doing the right thing aren’t rewarded, and a lot of folks who aren’t doing the right thing are rewarded.”
The populist causes Obama and his Democratic allies are beginning to champion may provide some inoculation against the broad public frustration with the economy that is shaping the contest for the White House in 2012.
A New Turn
This is the latest turn for a president who over the course of his tenure in office has oscillated in his public relationship with the nation’s business elite between chastising “fat-cat” bankers for large bonuses taken during the financial crisis and traveling to U.S. Chamber of Commerce headquarters to court corporate leaders.
Tension over how harshly to deal with the financial establishment has played out behind the scenes since Obama’s early days in office. Political aides such as former senior adviser David Axelrod and former White House Press Secretary Robert Gibbs argued for tougher rhetoric against banks in the aftermath of bailouts while a softer line was urged by economic aides such as Treasury Secretary Timothy Geithner and former National Economic Council Director Larry Summers.
House Majority Leader Eric Cantor criticizes the comfort Democrats provide to those he says would divide the country.
“If you read the newspapers today, I, for one, am increasingly concerned about the growing mobs occupying Wall Street and the other cities across the country,” Cantor, a Virginia Republican, said Oct. 7 at a “Values Voter Summit” in Washington organized by the Family Research Council’s advocacy arm. “Believe it or not, some in this town have actually condoned the pitting of Americans against Americans.’
The Democrats’ populist stance also complements a potential line of attack against the candidate many Democratic strategists believe is most likely to win the Republican presidential nomination, Mitt Romney. The extent of the former private equity executive’s personal wealth was underscored with the disclosure in August that he had applied for permits to quadruple the size of a $12 million oceanfront home he owns in the La Jolla section of San Diego, California.
Democratic political strategist Paul Begala already has come up with a sharp-edged corollary to the “Buffett Rule” Obama has proposed for a tax overhaul which holds that wealthy taxpayers shouldn’t pay a lower rate than middle-class workers.
Begala calls it the “Romney Rule,” under which millionaires “pay a lower tax rate than maids.” Like Warren Buffett, the chairman of Berkshire Hathaway Inc., Romney receives most of his income from investments, typically taxed at a lower rate than wages.
Obama has little to lose by alienating Wall Street. While the president enjoyed strong support from the financial industry in his last election bid, much of that money has switched sides to the Republicans, mostly Romney. At least 100 of Obama’s Wall Street donors from 2008 are now with Romney.
The populist turn “is long overdue,” said Andrew Baumann, a vice president of the Washington-based Democratic polling firm Greenberg Quinlan Rosner. His firm has been advising clients, including House, Senate and gubernatorial candidates, to focus their campaigns on “a priorities debate about whose side you’re on.”
“This is where you want to go in an election like this, where the economy is bad and not likely to get better,” Baumann said.
Democrats’ hopes of easing Americans’ economic pain in time for the president’s re-election have faded. Growth weakened during the first half of the year to its slowest pace since the recovery began, escalating concern over the European debt crisis has roiled financial markets, and worries of a double-dip recession are mounting.
While payroll growth in September beat forecasters’ expectations and added 103,000 jobs, the pace barely kept up with population growth and didn’t budge the unemployment rate from 9.1 percent, where it has been stuck for three months. The median forecast for the average unemployment rate during the election year isn’t much lower, at 8.8 percent, according to a Bloomberg survey of economists taken in September.
The slow progress has hardened economic divisions.
Among Democrats, 59 percent say the country is split between “haves” and have-nots,” up from 47 percent who said so in April 2009. Among independents, the portion is 47 percent, up from 32 percent in 2009, according to a poll conducted by the Pew Research Center Sept. 22-25.
Standards of Living
Of greater political consequence, standards of living have been falling for the nation overall. Per capita real disposable personal income -- the average after-inflation value of the amount of money going into Americans’ pockets -- has dropped 0.5 percent during the 12 months ended in August and is lower than it was when Obama took office in January 2009.
Income growth has been the best economic predictor of presidential election results since 1952, according to research by Douglas Hibbs, a former government professor at Harvard University and economics professor at Sweden’s Gothenburg University. Hibbs tested factors such as per-capita real disposable personal income growth and fatalities in foreign wars against a range of models using other economic data.
Senator Dick Durbin, an Illinois Democrat who was one of Obama’s early supporters, cites public frustration with growing disparities between the wealthy and working class.
“What you hear being expressed in many places -- on the floor of the Senate, in the House, even in the streets -- is this pent-up anger over the inequality of income in this country and the difficulties working families face,” said Durbin, second-ranking Democratic leader in the Senate. “It’s a cumulative impact this economy has had on working families: They are falling farther and farther behind.”
After Bank of America imposed a new $5-a-month fee for accountholders who use debit cards, Durbin went to the Senate floor Oct. 4 to urge customers to “get the heck out of that bank.” Representative Brad Miller, a North Carolina Democrat, followed up by introducing legislation to bar banks from charging customers fees to close accounts.
Vice President Joe Biden tapped public anger over the nation’s $700 billion bank bailout in denouncing the debit-card fee, which the bank said it was charging to recoup income lost by a new law limiting debit-card transaction costs for retailers.
“Look, the American people know -- they don’t guess -- they know the reason the CEO of the Bank of America or any other body in that business is in the business is because they -- that guy making 50,000 bucks -- bailed him out,” Biden said Oct. 6 at a forum in Washington.
He went on to question whether banks are “paying their fair share of the bargain” while “middle class people are getting killed.”
Only a year ago, Senate Democratic leaders avoided a vote on ending the Bush administration’s tax cuts for the wealthy as midterm congressional elections loomed. Last week, Senate Majority Leader Harry Reid, a Nevada Democrat, coupled a 5 percent surtax on people who earn at least $1 million to Obama’s jobs plan, inviting a vote on the proposal as a line of demarcation against Republican opponents.
Shift in Stance
For the president, the new approach represents a break from the “above-the-fray” stance he took in July and August during debt-limit negotiations with Republican congressional leaders, when he showed a willingness to give ground on traditional Democratic priorities such as Medicare and Social Security to try to forge a broad bargain on long-term deficits, according to Schnur, who was a campaign adviser to McCain, a senator from Arizona, in his 2000 presidential campaign.
The more confrontational approach carries a risk of clashing with the public persona of a political figure who was introduced to the nation as a unifying figure and has mostly eschewed divisive public rhetoric, Schnur said.
“As much as Obama knows intellectually this is the right political path to take, it’s still not who he is,” Schnur said. “At heart, he’s still a conciliator.”
To contact the reporter on this story: Mike Dorning in Washington D.C. at firstname.lastname@example.org.