Why the 1 Percent Have Nothing to Fear

Who's winning, who's losing, and why.
March 5 2014 12:49 PM

Why the 1 Percent Have Nothing to Fear

Barack Obama and the Democrats aren’t really coming for your wealth. (They just want your political donations.)

Barack Obama
Notably missing from Obama's "Opportunity for All" campaign is the word inequality.

Photo by Kevin Lamarque/Reuters

If you are a member of the 1 percent, be wary, the politicians are coming for you. They’d like a donation to their campaign. Given all the talk about income inequality, you might have worried that they’d be supporting policies that could hurt you. Rest easy: Control of the Senate hangs in the balance this election year and the political system needs your donations more than your hide. Pollsters and strategists are telling candidates that targeting the rich or talking too much about income inequality isn’t a smart strategy. So you’re not even likely to receive a righteous rhetorical scapegoating. History suggests you’ve dodged a bullet, too. Today’s popular ferment for change is small by historical comparison. 

John Dickerson John Dickerson

John Dickerson is Slate's chief political correspondent and author of On Her Trail. Read his series on the presidency and on risk.

Proof of how gently politicians are treating the wealthy was on display last week when President Obama spoke to the Democratic National Committee. The president has said that addressing income inequality will be the centerpiece of his remaining time in office, but when the president spoke to the DNC, he didn’t mention income inequality at all. Democrats support “opportunity for all,” he said, whereas Republicans support “opportunity for a few.” Dropping the word inequality—which is about disparity of outcomes—shifts the conversation away from the wealthy who are enjoying those outcomes. The president has also changed the target of his political jabs. He is attacking Republicans now, but in 2012 the president talked relentlessly about a country in which everyone had a “fair shake and did their fair share.” Who, according to the president, wasn't doing their fair share? The wealthy, because of the way they were shielded by the tax code

It’s not just the president who has removed hints of class warfare from his language. Democratic candidates are being coached to do this, too. Polls consistently show that Americans of both parties believe that income inequality exists and that it is a problem, but as Democratic pollster Mark Mellman explains, when you ask voters to rank “income inequality” among other issues, only 1 percent say it is a priority. “The polling imperative is to make sure you’re attacking opportunity inequality, not income inequality,” says one veteran Democratic strategist. “Obviously, one creates the other. But the public sees a distinction. One seems American. The other, Communist.”

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Voters are more likely to back specific items that address inequality, like raising the minimum wage, extending unemployment insurance, or ensuring equal pay for women. These are the kinds of policies the president and Democrats are pushing, but none of those items actually represent a broad attack on the wealthy. The limits of this agenda are why Jason Furman, chairman of the White House Council of Economic Advisers, recently said that the 1 percent’s fears that they are under assault were “just hyperventilation around not paying attention to specific facts and data.”

Politicians can be trusted to seize on a popular notion that will help them get re-elected, particularly if that notion stirs anger and envy, emotions that propel people to the polls. If class warfare were the big Democratic idea, we’d see it dripping from every ad and speech. Look, for example, at how Republicans use House Minority Leader Nancy Pelosi in political advertising. It’s not subtle. Republicans are hanging her on any Democrat they can find. Nevertheless, to some, like Rep. Paul Ryan, the president’s toned-down rhetoric is just a sleight of hand. The president is still focused on redistributing wealth and stoking class warfare, Ryan recently told CNBC. Ryan has plenty he can point to. For years the president has been talking about  the unfair breaks that go to millionaires and billionaires. Also, the president’s budget released on Tuesday is designed to highlight trade-offs that define Republicans as the party of the wealthy and not the middle class. The budget includes a provision that would pay for the expansion of the Earned Income Tax Credit and child tax credit—programs that benefit low-income and middle-income Americans—through the elimination of loopholes that benefit the wealthy, including the “carried interest” tax loophole, which allows private equity and venture capital executives to treat such income at a lower tax rate.

House Budget Committee Chairman Paul Ryan.
House Budget Committee Chairman Paul Ryan.

Photo by Chip Somodevilla/Getty Images

This budget is a purely political document, and will never become law. Ryan and his House colleagues offer a firewall against whatever the president might be plotting in the White House basement. No tax increases on the wealthy are going to pass on their watch, but that is no comfort to some on the heated driveway side of the gated community. For some conservatives, the very mention of “income inequality” means pitting one class against the other. That’s why during the last presidential campaign Mitt Romney said the issue of income inequality should only be discussed in “quiet rooms.” Venture capitalist giant Tom Perkins is certainly spooked. He famously compared progressives and their “rising tide of hatred” of the 1 percent to the Nazi extermination of the Jews. He wasn’t the first to see a Reich around the corner. In 2010, Stephen A. Schwarzman, founder of Blackstone said that Obama’s proposal to tax “carried interest”—a big source of income for private-equity managers—reminded him of “when Hitler invaded Poland in 1939.”

These comparisons are not just loony, they’re also a waste of historical analogy miles. There’s obviously an increase in sentiment against the rich—polls show a modest increase in those who believe the wealthy unfairly benefit from the current economic system—but you don’t have to travel all the way to Nazi Germany to see whether today matches the past. There are several periods in American history—the Populist, Progressive, and New Deal eras—when the rich were on the run. 

Today’s wealthy face nothing approaching what their predecessors did. “The 1 percent should count themselves lucky,” says Yale historian Beverly Gage. “If this were the turn of the century, they would be afraid of bomb-throwing anarchists.” Gage is the author of The Day Wall Street Exploded about the largest terrorist attack on American soil before the Oklahoma City bombing. (Editor's note: She's also an occasional contributer to Slate.) That was just one of the violent acts that sprung from ideological, class-based violence at the turn of the 20th century. In 1892, Henry Clay Frick was shot three times and stabbed during a steel strike. John D. Rockefeller and executives of Standard Oil faced several bomb plots. Labor unions tried to redress the imbalances with crippling work stoppages like the Pullman strike and the Homestead strike. Ironworkers were engaged in a multiyear bombing campaign that culminated in the destruction of the Los Angeles Times building in 1910. 

Compare that level of action with Occupy Wall Street, which so frightened Perkins. The movement managed to take over some parks and irritate some people with its drumming. It did change the public conversation but still never achieved anything near the influence of the Tea Party, the other grass-roots movement of the age, which is responsible for changing control of the House and reshaping American politics for the past five years. 

Occupy Wall Street protesters demonstrate in New York City on Nov. 20, 2011.
Occupy Wall Street protesters demonstrate in New York City on Nov. 20, 2011.

Photo by Brigitte Dusseau/AFP/Getty Images

President Obama’s rhetoric, even before its recent watering down, has never approached the level of his predecessors. The starkest example of this was the president’s speech in Osawatomie, Kan., which was designed to echo the one Teddy Roosevelt gave at the same location a century earlier. In the president’s 2011 speech, and the one he gave last December in Washington, which was meant to echo its themes, Obama never came close to the wealth bashing of Roosevelt’s original. T. R. raged against “a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power” and said government’s “prime need is to change the conditions which enable these men to accumulate power which it is not for the general welfare that they should hold or exercise.”

Roosevelt, who coined the phrase “malefactors of great wealth,” was campaigning in support of the graduated income tax and the estate tax on the theory that without them a moneyed royalty would rise, a direct threat to a functioning democracy. Twenty years later, FDR took up the same charge against the wealthy, campaigning against “economic royalists” who built “new kingdoms ... upon concentration of control over material things. Through new uses of corporations, banks and securities, new machinery of industry and agriculture, of labor and capital—all undreamed of by the Fathers—the whole structure of modern life was impressed into this royal service.”

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