The news that former President Barack Obama will reportedly accept $400,000 to give a speech to Wall Street investment bank Cantor Fitzgerald has inspired a strange paroxysm of rage from writers on the center-left. “Obama’s $400,000 Wall Street speaking fee will undermine everything he believes in,” Vox’s Matt Yglesias proclaimed. Obama and Bill Clinton biographer David Maraniss said the 44th president “does not need the money and should not accept it.” Others noted the unseemliness of the fee at a time of income inequality and seemingly rampant populism, especially since Barack and Michelle Obama have already struck insanely lucrative book deals.
This is an absurd double standard—that Obama should forgo what is the norm for former presidents because several well-paid people who work in the media think it is wrong. Just as silly are the comparisons to Hillary Clinton and her speeches to Goldman Sachs and others. Obama, unlike Clinton at the time, is definitely done with electoral politics. But these arguments get some more profound things wrong. They short-change the populism of Obama’s presidency and betray a misunderstanding of the market forces animating the industries in which Obama now works. Most importantly, they assign far too much symbolic value to activities that, at their core, have not been anathema to progressivism in the past and shouldn’t be now.
Speaking for money is a very large industry. Many people participate in it—journalists, thinkers, college professors, former politicians, consultants of all stripes. Speaking agents routinely field requests from people who are staging events—for profit, for charity, for client entertainment, for education, for employee morale. Many of us, including me, participate in this economy. The fees range all over the place, but it’s extremely lucrative. It’s harder to make more money legally in an hour than you can giving a speech.
The more in-demand you are, the more someone values your presence, the more tickets a producer might be able to sell, the more clients that might be impressed, the greater the entertainment value, the higher the price your agent commands in the market. And, like sports and other entertainment industries, there is a superstar economy. If you’re a company with $50,000 to spend on a speech, you’ll hire Tom Friedman or Malcolm Gladwell. If you have $5,000 or $10,000, you’ll settle for a less luminous nonfiction writer who is an expert on economic and business topics. But there are only so many ex-presidents. So it’s no surprise that the price corporations will pay for Obama, a popular and highly successful ex-president and one of the best orators of our day, is high. There’s a reason Obama’s asking price is $400,000 and George W. Bush gets about $100,000. It’s also no surprise that a firm working in an industry in which conspicuous consumption is a measure of self-worth was the first out of the gate to book Obama.
But it should be obvious that Obama isn’t getting this absurd-sounding amount for reasons of crony capitalism: He was no friend to Cantor Fitzgerald while he was in office. And Cantor Fitzgerald isn’t a particular friend to Obama. (In the 2016 campaign cycle, Chairman Howard Lutnick gave $25,000 to Jeb Bush’s political action committee and a mere $2,700 to Hillary Clinton’s campaign.) Rather, this is an instance of a firm whose principals were largely hostile to Obama paying the asking price because it sees value in having him at their event, not because it can curry favor. With Republicans in complete control of Washington, Obama is in no position to offer any lobbying or influence on behalf of Cantor Fitzgerald—even if he was of the temperament to do so.
The same holds for the publishing deal. Now, there are certainly instances in which the owner of a publishing firm may be currying favor with a politician by paying an above-market price for a book on which it is likely to lose money. Like when HarperCollins (which is controlled by Rupert Murdoch) paid a $700,000 advance to New York Gov. Andrew Cuomo for a memoir, which went on to sell about 3,200 copies.
But the fact that the former president and first lady signed a joint book deal worth a reported $65 million with Penguin Random House doesn’t fall into that category. Over the past decade, the publisher of Obama’s previous books have made a ton of money. Penguin Random House made a calculation that, based on the potential global sales of two Obama memoirs, it could make its own pile. This isn’t favor-seeking or lobbying by proxy. Rather, the publisher made a preemptively large bid so that it would win an auction.
But what about the optics?
Accepting speaking fees doesn’t inherently compromise your integrity, and there is no baked-in conflict between having or making money and being heavily invested in progressive causes. Progressives don’t hold George Soros’ wealth against him but praise what he does for democracy and philanthropy. If the only thing keeping left-of-center politics viable is the rejection of a set of symbolic, virtue-telegraphing public behaviors, it has much bigger problems than Barack Obama’s income streams. Besides, after eight years of relentlessly adhering to norms—often to his own detriment and the detriment of his party—I don’t think it’s fair to ask President Obama to keep striving to set new norms for ex-presidents.
But to understand why taking a speaking fee shouldn’t diminish Obama’s role as a progressive leader, it’s useful to look at the work he’s done—not to mention what he might do now.
Obama was the most effective populist—yes, populist—president since Lyndon B. Johnson. The Affordable Care Act was the single most redistributive piece of legislation passed in the last half-century. It expanded Medicaid and provided subsidized health care coverage to millions of others by enacting new taxes that fell only on rich people. He signed the most far-reaching financial reform legislation since the New Deal over the screams of the financial industry. He set up the Consumer Financial Protection Bureau, which has returned billions of dollars to consumers screwed over by financial companies. He continually agitated for the minimum wage. Under his watch, taxes on the highest earners and taxes on capital gains rose. If one speech, about which nothing is untoward, irreparably poisons his image as a counterweight to the forces of Trumpism, then we haven’t given nearly enough credit to his accomplishments.
What’s more, Obama’s buckraking will turn out to be quite redistributive itself. In this era of phony populism, there is a real problem of really rich people avoiding tax payments on a massive scale. Think of Mitt Romney and his $102 million individual retirement account, the hedge fund and private equity managers who manage to pay 15 percent on their massive incomes thanks to a persistent loophole, or our current president, who refuses to disclose precisely how much (or how little) he pays in taxes.
Unlike these hondlers, Obama will take all of his earnings as ordinary income. Which means that thanks to his own policies, which include the extra .9 percent Medicare tax that was part of the Affordable Care Act, he will be paying a marginal rate of more than 40 percent on that income. Sure, he’ll keep the other 60 percent for himself. But he’ll pay a much higher rate than most fat cats pay and a higher rate than corporations like Cantor Fitzgerald and Penguin Random House pay. So, in effect, he’ll be channeling large sums of money from corporations who pay far below their fair share in taxes and converting it into income that will be taxed at a substantially higher rate. Converting private resources into public goods—some might call it populism.