Stephanie Cutter, an adviser to the Obama reelection campaign, wrote a scathing memo the other day about Mitt Romney’s experience at Bain Capital, subtitled “Profit at Any Cost.”
Cutter sounded like a sworn enemy of private equity. Except a few years ago, she was a spokeswoman for J.C. Flowers, a private-equity firm. Why do work for J.C. Flowers when there are so many other worthy ventures needing communications help that don’t make insane amounts of money and pay incredibly well?
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Presumably Cutter wanted to be as well compensated as possible, by J.C. Flowers and the “several Fortune 500 companies” her communications firm served, according to her bio. This is utterly unremarkable but for the fact that she is part of an Obama team that argues there is something inherently wrong with income inequality. In his signature Osawatomie, Kan., speech, President Barack Obama asserted that rising inequality hampers those at the bottom. If that’s so, shouldn’t the people around him endeavor to keep from adding to the injustice by making too much money?
But none of them goes out and gets poor. Very few of them, it seems, even go out and get middle-class. They get rich. Many of them climb right into the 1 percent. Obama economic adviser Alan Krueger gave a speech recently lamenting the shrinking middle class, without mentioning that the reason for its diminishment is that so many people have risen all the way out of the middle. By Krueger’s (perverse) standard, major Obama officials have heedlessly contributed to the destruction of the American middle class by earning too much.
Consider only the chiefs of staff. President Obama’s new chief of staff, Jacob Lew, made $1.1 million in one year working for Citigroup. His prior chief of staff, William Daley, made $8.7 million in roughly one year working for JPMorgan Chase. His original chief of staff, Rahm Emanuel, made $16 million working for an investment firm. Judging by this record, President Obama only feels comfortable entrusting his affairs to men who have earned outrageous paydays.
The Obama 1 percenters abound. President Obama’s first national economic director, Larry Summers, earned $600,000 as president of Harvard, then went to a hedge fund where he made $5 million in one year, before joining the administration. His first budget director, Peter Orszag, left to make $2 million to $3 million a year at Citigroup. His current national-security adviser, Tom Donilon, got $7 million from his work at Fannie Mae from 2000 to 2003.
Certainly Obama’s top aides don’t have to make millions in finance, but they’d almost have to go out of their way not to get rich. In the aggregate, they are smart, highly educated, and hard-working. They tend to marry people with the same characteristics. They have relatively stable families. They have success — indeed, the 1 percent — written all over them. They probably would be scandalized to work at a private-sector job paying “only” $50,000, the median household income in the U.S.
In a report that has the tone of a revelation about it, the New York Times discovered that the 1 percent is a “varied group, one that includes podiatrists and actuaries, executives and entrepreneurs, the self-made and the silver spoon set.” By one estimate, the 1 percent starts at households making $380,000 a year. That means in 2005, Michelle Obama alone was almost making enough to hoist the Obama household into the dreaded 1 percent with her $316,962 job at the University of Chicago Hospital.
Is it too much to ask that one high-profile Obama official leave government and refuse to make more than $70,000 a year out of solidarity with the middle class and commitment to income equality? Of course it is. Just as the definition of a recession is when someone else loses a job, greed is when someone else makes a lot of money. For anyone hoping to get to the top, the collective message of current and former Obama officials should be clear: Do as they do, not as they say.
Obama's message is loud and clear. Do as he says, not as he does. It is this standard that makes it acceptable for our President to indulge in lavish vacations, designer clothes and million-dollar parties while demonizing others for flaunting their wealth in the faces of all those who have so much less. Liberals apparently believe they're entitled to have whatever it is they want, while the rest of us are entitled to have only what they determine we deserve. Who can forget Obama's 2010 declaration:
"We’re not trying to push financial reform because we begrudge success that’s fairly earned. I mean, I do think at a certain point you’ve made enough money."
And who is the decider of what successes are "fairly earned" and how much money is enough? In Barack Obama's world, earning $20 million for three-months work on a film that bombs at the box office is perfectly acceptable for a Hollywood liberal, but a $2 million bonus for a Wall Street Fat Cat who works 24/7 obtaining business for his employer and profits for the investors is not.
Yes, Jenna! In the world of Democrats, it shows the value of good intentions. He's for the little guy. But we must remember that good intentions are the paving stones to hell. Democrats also celebrate hell-raisers, but maybe we should re-designate them as hell-pavers.
Boy, what a strawman argument from Lowry... No serious Democrat is complaining rich folks earn too much money. The argument is the top 1% (and, yes, _including_ liberal millionaires) ought to pay somewhat higher taxes, e.g. by reverting to the same tax rates as back in the 1990s! In parallel, some painful budget cuts will certainly be required and they will hurt middle class folks, the poor, the military etc.. But the rich ought to do their part too.
"But the rich ought to do their part too." You are correct, mlindroos, it isn't really so difficult to understand. The rich make more money and pay substantially more in taxes, that is an irrefutable fact straight from the IRS. What is really so difficult to understand is the logic people such as yourself employ when making statements about the rich doing their part. Please explain to us exactly what the rich must do to uphold "their part." Cover debt? Cover the annual federal deficit?
You are right about one other thing too, no serious Democrat is complaining rich folks earn too much money... because there are no serious Democrats.
You're confusing tax rates with taxes. Increasing someone's tax rates doesn't necessarily increase the amount of taxes they pay, in fact, it typically reduces the amount of taxes the pay because it incentivizes them to find ways to shelter their income. Take Warren Buffet for example (every liberals favorite billionaire), he could easily pay a much higher tax rate by taking more of his income as a salary rather than as capital gains, but does he do that? No, he's smart. He structures his assets to minimize his and his investors tax burden. Then he hypocritically calls for higher tax rates when he knows he will never pay them.
If increasing tax rates doesn't increase tax revenues, then what's the problem? Let's make a deal!
The Democrats are happy because tax rates have increased, and the GOP addresses the attack that it only looks out for the rich. Meanwhile, the GOP hasn't given anything up because people are actually paying the same taxes as they did before - or, actually, less, according to you! ("it typically reduces the amount of taxes the pay") Democrats increase tax rates, and the GOP get an actual decrease in taxes (again, using your logic).
But, of course, the reason that hasn't happened is because it isn't true. Higher tax rates do actually lead to greater tax intake by the government. If they didn't, we wouldn't have seen a significant one-time drop in tax revenues when the Bush tax cuts took effect, and we wouldn't see the GOP fighting so hard against tax rate increases now.
You should really consult official governent income tax receipt data. What you have written is patently false. When the Bush tax cuts went into effect, tax receipts went up. As they did under Reagan. As they did under Kennedy. Google it, and only go to the .gov websites. You'll be amazed.
Supply-side economists posit that there is a cause-and-effect relationship, others say it is coincidental with other factors. But the truth is out there. You just have to want to see it.
As a highly-paid professional, it is rational that I would not want to pay more than the approximately 45% of my income that I pay -- given that many pay almost none. However, as someone who has studied economics extensively, I understand that when you tax the very rich at higher rates, you remove their incentives to risk more of their capital in their business (whether it is a proprietor or corporate budgeter) as the return on that marginal dollar invested is eaten by higher taxes. At a certain point, it makes more sense for them to invest in lower-risk investments (like bonds or real-estate) or consume their wealth at a higher rate. The point is that people like me don't want to pay higher taxes, but paying an extra couple thousand dollars a year isn't going to kill us. It also isn't going to make any difference in our fiscal situation. The problem is that the very rich will stop creating jobs for the rest of us. As someone who cares about the health of our country from the fisc to the unemployment rate, I think it is a bad idea to raise taxes. Never mind what it would do to charitable giving. You do realize that even though you can deduct charitable giving from your income, it still means you have less money, right? It's all about the margin, Josh.
However, it won't really hurt me. So if your ilk wins the argument and has your way, we will see what happens when you raise your taxes. In statistics, we call that a destructive test. However, I suspect that term will enter the popular lexicon if you have your way. Good luck with that.
You're confusing tax rates with taxes. Increasing someone's tax rates doesn't necessarily increase the amount of taxes they pay, in fact, it typically reduces the amount of taxes the pay because it incentivizes them to find ways to shelter their income. Take Warren Buffet for example (every liberals favorite billionaire), he could easily pay a much higher tax rate by taking more of his income as a salary rather than as capital gains, but does he do that? No, he's smart. He structures his assets to minimize his and his investors tax burden. Then he hypocritically calls for higher tax rates when he knows he will never pay them.
The liberals in the 1% can write voluntary checks all day to the federal treasury. What tax rate did BO pay last year on his and MO's income? Did he pay at the current rate or the rate he wanted to impose?
"But the rich ought to do their part too."
The difficult thing to understand is why liberals continue going to this well. After decades of the same old argument, the well is dry. The "rich" simply do not have enough money any more. The top 1% already pay 40% of all income taxes collected. The top 10% pay 70% of the total. The bottom 47% pay NOTHING. Where do you think the problem really is?
The state of Wisconsin closed a $3.6 billion budget deficit simply by having the public sector union employees pay 5% of their income to their own pensions (I don't even have a pension fund) and pay for 12.5% of their own health insurance cost. Nobody's taxes had to be raised. It's not a difficult formula.
The media turns away when Obama and Democratic fat cats are raking in millions from Wall Street types. Funny too that Michelle Obama made big money doing nothing at a big hospital before "resigning" when her hubby hit it big...
Despite how much Obama and his cronies say they care about the poor and middle class, they wouldn't be caught dead associating with them or having their children attend public schools with them. The liberal elite hate everyone who is not liberal elite. It is really a form of religious intolerance, but they lack the self awareness to recognize this sad fact.
Great post Rich, which brings to mind the now-cliche "hoist with his own petard." It does seem the height of hypocrisy for The President to make speech after speech denigrating the "one percent", Wall Street, rich fat cats, bankers, "the wealthy", or any other euphemism he can think up for his class warfare tirades, while surrounding himself with these same people and, presumably, listening to their advice.
I appreciate you pointing it out so clearly - but why do you suppose Romney, Gingrich, and the rest are not doing so as well? It seems like hammering the Administration for its words vs. its actions on this issue would be a winning strategy, but for some reason our Republican field always seems to be playing defense. It's very frustrating.
I am less concerned about the rich people who come to Washington to work, than the people of modest means who come to Washington and leave rich. After the Clintons showed everyone "how it's done", the examples seem to be getting more and more outrageous. Let's face it: knowing your way around an immense government that touches every facet of American life is becoming a critical credential for the ambitious.
George W. Bush's cabinet was composed at least 80% of millionaires, declared. It is entirely questionable how much any of their actual wealth amounted to. And the fortunes of Halliburton, Vice President Cheney's firm, before, after and during his term in office, demonstrates more than amply how that regime orchestrated policy only to make cronies richer. And it is laughable in the extreme to say Cheney abandoned the welfare of Halliburton when he became vice president. The claim is he switched the interests of his long time pals for the general welfare of the public. But neither he nor any other member of the Bush White House did anything that benefited the "rank and file", and blamed that failure on "terrorism", and credited the enrichment of corporate friends to those friends' "drive" and "initiative", despite the fact they do nothing other than take 3 hour lunches and have sex in their offices.
When it's the GOP's turn next and the New World Order puts one of them into office, will National Review criticize that individual for having so many millionaires around them?
"...they do nothing other than take 3 hour lunches and have sex in their offices."
I didn't realize Bill Clinton was associated with the Bush administration.
Isn't your argument getting a little stale? Bush did it. So it's OK for Obama. Except Bush never ran around telling anyone how sinful it is to make lots of money. And if the Republicans win the White House, they also won't be criticizing money-making. The point of the article was to emphasize Obama's hypocrisy.
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