Bushenfreude—when you love the president's tax cuts but loathe the president.

Bushenfreude—when you love the president's tax cuts but loathe the president.

Bushenfreude—when you love the president's tax cuts but loathe the president.

Moneybox
Commentary about business and finance.
Nov. 1 2006 5:17 PM

The Return of Bushenfreude

Voters who love the president's tax cuts but loathe the president.

Illustration by Mark Alan Stamaty. Click image to expand.

The super-rich and even the very well-off have even more to be happy about than they did in 2004—the S&P 500 is 21 percent higher than it was in November 2004. Long-term interest rates are still low by historical standards. Corporations continue to report record profits. High-end consumers continue to reap the rewards of globalization, from ever-cheaper flat-screen televisions to ever-expanding options for adventure travel. Far from trying to afflict the comfortable, Congress has continued to push for more tax cuts for the wealthy.

And yet Bushenfreude—the phenomenon whereby high-income beneficiaries of the Bush tax cuts use their windfalls to fund Democratic candidates—is still raging this election season. If anything, it's more intense than in 2004. Around the country, high earners with million-dollar homes, foreign cars, and fancy jobs, people who have won the meritocratic race, are furious at what's happening to their country. You've seen the Pissed-Off Yuppies, weighing $5-per-pound heirloom tomatoes at the farmer's market in one hand while gesticulating wildly against the government with the other. (If you're reading this column in Slate, there's a high likelihood you're one of them.) But these angry folks are too polite to riot. Instead, they make political donations. The result: In a handful of races in which socially moderate Republicans are struggling to gain re-election, the POYs could be the difference.

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Fairfield County, Conn., remains Ground Zero of the Bushenfreude epidemic. The ultimate Bushenfreude candidate is Connecticut's Democratic Senate contender. Ned Lamont is a Greenwich resident, a scion of a banking family, and a self-made gazillionaire—and hence a natural-born Republican three times over. Yet Lamont's candidacy, fueled by his own substantial capital and that of his friends and neighbors, is a primal scream against everything Bush stands for. In the primary, the insurgent Lamont beat Lieberman handily in Fairfield County. Fairfield County is also host to the Diane Farrell- Chris Shays 4th-District Grudge Match. In 2004, Shays, the moderate Republican incumbent, outspent challenger Farrell by 50 percent and won by only a slim 52-48 margin. This year, Farrell has raised more cash from individuals than Shays has. Where does the cash come from? Pissed-Off Yuppies. The most recent poll shows her leading.

Jodi Kantor, writing in the New York Times earlier this week, spotted an outbreak of Bushenfreude in the suburbs of Seattle, formerly "a stronghold of socially liberal Republicanism," where Democrat Darcy Burner is giving incumbent moderate Dave Reichert a run for the money. Their overall fund-raising totals are roughly equal: $2.47 million for Reichert to $2.41 million for Burner. But factor out the PACs, and Burner's winning the money race. She's raised $1.85 million from individuals, compared with $1.25 million for Reichert. Some of that Democratic cash is doubtlessly coming from folks like the die-hard Republican with a Harvard MBA and a job at Microsoft who told Kantor: "The Schiavo case. Tapping people without a warrant. Whether or not people are gay … Let people be free! It's not government's job to interfere with those things."

Rep. Sue Kelly's New York district includes some very tony parts of Westchester County. In 2004, the Republican outspent token Democratic opposition by a whopping $1.27 million to $56,000. Kelly's fund-raising margin against this year's challenger, John Hall, is much smaller. And polls show a tight race.

Again, it's not surprising that many suburbanites with high incomes aren't down with the Republican agenda, despite its friendly tax policies. If you'll let me indulge in a few crude generalizations: People who work at technology companies tend to favor stem-cell research and recognize that global warming is a serious issue. People who know how to read balance sheets tend to recognize the hash Republicans have made of the federal budget. People with lots of gay neighbors and colleagues cringe when they hear President Bush rail against the pernicious impact of gay marriage.

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There's something else at play beyond Bushenfreude. All politics is local, and so is the sense of economic well-being. And for the residents of Stepford Country, not all is well. To be sure, the top 1 percent of American earners have done quite well in recent years. But, as the Center for Budget and Policy Priorities noted this summer, between 2003 and 2004, "more than half of the increased share of income going to the top one percent of households actually went to the top one-tenth of one percent of households." In other words, the super-rich are doing much better than the merely rich.

As a result, yuppies who live in areas where these ultra-earners congregate may be angry and envious, and act out. Hence, the "revolt of the fairly rich," as Matt Miller wrote in a great Fortune column last week. "Economic resentment at the bottom of the top 1 percent of America's income distribution is the new wild card in public life," he argued. In certain areas such as Fairfield County and Bellevue, Wash., people who make well over $200,000 don't qualify as obscenely rich compared with their neighbors. They're not getting the benefits of the Bush tax cuts because they're getting nailed by the Alternative Minimum Tax. They don't care about the estate tax, since they know most of their assets will go to pay the huge mortgages on their fancy homes. And as Miller notes, thanks to the free-spending ways of the richest of the rich, the price of everything they want for themselves and their kids—private school and college, ski condos—is rising.

Pointing out the travails of the merely rich may be unseemly in a country where median wages have barely budged this decade. And nobody should shed any tears for these people. But their resentment may be contributing to an intensification of Bushenfreude in certain areas.

What effect will the resurgence in Bushenfreude have on electoral politics? Come election night, if television's conventional-wisdom purveyors start talking about the irony of well-off districts booting out their socially moderate Republicans, just remember that you heard it here first.