Politics & Policy

The Big-Spending Obamas

The Obamas on the night of their first White House state dinner in November 2009.
Maybe it’s time for Debtors Anonymous -- for the First Family and the nation.

Does President Barack Obama know how much he is spending?

Critics of the president asked that question after he asserted, “Since I’ve been president, federal spending has risen at the lowest pace in nearly 60 years.” (This figure comes from an online article that has been widely debunked because, among other sleights of hand, it interprets modest rates of increase in annual spending as a reduction in the spending, even though the total actual spending under Obama’s watch has been gargantuan.)

But the same question could apply to the president’s personal finances as well, given that the president and Mrs. Obama have spent enough money during their time in the White House to reportedly express anxiety about their personal finances — even as the president earns several million dollars from his book sales and even though the taxpayers cover a portion of the Obamas’ living expenses.

#ad#The Obama campaign has been quick to shine a spotlight on symbols of Mitt Romney’s wealth — the fact that he owns a Swiss bank account, the car elevator in his California home. And the media have exhibited a particular fascination with the cost of Ann Romney’s blouse and her expensive enjoyment of horse riding and training.

But President Obama also enjoys the finer things in life: hosting White House dinners that feature $59-per-pound Wagyu steak, hosting fundraisers where guests are treated to quail egg with caviar and salmon ceviche, and enjoying 100 rounds of golf as president. And Michelle knows how to relax in style as well. She and the girls recently got away to attend Beyoncé’s comeback concert.

Some of these things are paid for by the taxpayers, such as the president’s transportation. But other costs are covered by the Obamas — clothes, incidental costs, most food (but taxpayers cover the cost of state dinners and official events). When Michelle Obama and their daughters travel abroad without the president, they reimburse the government the cost of their first-class tickets to the destination. Of course, that reimbursement is a much smaller sum than the actual cost of transporting the first lady; a much-derided trip to Spain by the first lady cost taxpayers $467,000 in transportation and security expenses.

In Jodi Kantor’s book about the president’s first three years in office, The Obamas, she describes tensions in the White House before the 2010 midterms:

Even the president made uncomfortable jokes about why his wife needed so many thingsBehind the scenes, aides said, the Obamas were concerned about money: the president’s books could only sell so many copies, and it would be years until he could write more and the first lady could write her own. From vacation rental homes big enough to accommodate the Secret Service to all the personal entertaining they did at the White House, their lifestyle had grown fearsomely expensive.

#page#Every president lives a lifestyle more expensive than all but the most ostentatious billionaires. But the Obamas’ cost of living may become a political liability for the president for three reasons.

For starters, key demographics of voters perceive President Obama as a man who spends lavishly on his family and himself, according to focus groups convened by the organization Resurgent Republic.

#ad#“Our spring focus groups with Obama Independents undecided today primarily focused on the economy, Obama’s job performance, economic fairness arguments, taxes, energy, and health care,” said Luke Frans of Resurgent Republic. “Concern over Obama vacations wasn’t a topic we probed, but that also is somewhat interesting since these comments were unprompted. It didn’t come up in all of our groups, but it was mentioned several times among the working-class groups we conducted. This issue doesn’t carry the same level of concern as the desire for quality, family-supporting jobs. But it’s noteworthy since these comments came from working-class swing voters, not strong Republicans.”

Among the comments from women in the focus groups in Cleveland, Ohio:

·       “Michelle Obama spent a million dollars to take her kids to Hawaii.”

·       “President Obama is the only president to take so many trips.”

·       “The president needs to come down to our level.”

·       “We have restrictions. He [President Obama] needs them, too.”

In an April interview with NRO, Romney took a shot at Obama’s personal spending habits while discussing the GSA scandal: “I think the example starts at the top. People have to see that the president is not taking elaborate vacations and spending in a way that is inconsistent with the state of the overall economy and the state of the American family.”

Second, as a candidate, Obama emphasized his humble beginnings and the fact that he was uninterested in material wealth or a luxurious lifestyle. He repeatedly noted that after graduating from Columbia, he chose a poorly paying job as a community organizer instead of following more lucrative paths. In her 2008 convention address, Michelle Obama touted her husband: “Instead of heading to Wall Street, Barack had gone to work in neighborhoods devastated when steel plants shut down and jobs dried up.”

On the campaign trail in 2008, she proudly described her and her husband’s career path to a group of women at a day-care center in Zanesville, Ohio, where the median household income in 2004 was $37,192. “We left corporate America, which is a lot of what we’re asking young people to do,” she said. Then she offered advice to the group: “Don’t go into corporate America,” she urged, dismissing it as a “money-making industry.”

Of course, it’s very easy to belittle “the money-making industry” when you have a lot of money. Even in the White House, President Obama has lashed out at what he perceives as others’ greed, declaring, “I mean, I do think at a certain point you’ve made enough money.” Perhaps that’s easier to say when you live rent-free in a mansion and don’t pay for your own gas.

Finally, as a candidate and as president, Obama reminds us that he and his family went through tougher times earlier in their lives and sometimes struggled to handle their debts. One of the intriguing and little-known aspects of the Obamas’ life is just how much they struggled with personal debt issues well into their adult lives and after they were making six-figure incomes.

The first year of tax returns that the Obamas have disclosed is from 2000, and it shows a joint total income of $240,726. (Adjusted for inflation using the Consumer Price Index, that would be roughly $321,646 today.) Surprisingly, the family’s personal finances in that year were evidently so troubled that Obama had his credit card rejected at the Hertz rent-a-car counter. Obama has told this story several times to emphasize that not long ago, he was “broke.”

In the following three years, the Obamas’ income ranged from about $275,000 in 2001 (roughly $357,000 in today’s dollars) to a low of $207,647 in 2004 (about $253,000 in today’s dollars). In 2004, Obama’s autobiography, Dreams from My Father, became a national bestseller and the couple’s income jumped to $1.7 million.

Michelle Obama, campaigning in Pennsylvania in 2008, shared this surprising anecdote, as described by a Chicago Tribune reporter:

Michelle Obama is pretending to take a call, thumb and pinkie finger up to her face, telling how she and her husband used to get calls from loan debt agents not that long ago.

“I remember those days clearly, sweating to get that mail,” she said. “That collection agency, the loan debt people calling you telling you that you’ve got a few more days before you’re in trouble.”

David Mendell discussed the Obamas’ surprisingly dicey personal finances in his 2007 biography of the then-senator, Obama: From Promise to Power:

He and Michelle were living a middle- to upper-middle-class, white collar existence, going home to a spacious town house in Hyde Park and employing a caregiver to help with child care. But despite their combined incomes, which topped $250,000 a year, Obama had personal debt. He had maxed out his credit card, partly on campaign expenses, and the couple were both repaying student loans from Harvard.

Those campaign expenses came from Obama’s 2000 Democratic-primary bid to unseat Representative Bobby Rush, a four-term incumbent with 90 percent name recognition and a 70 percent approval rating. Obama lost, garnering 30 percent to Rush’s 61 percent. Michelle reportedly thought the campaign was a bad idea, and a new book, Ed Klein’s The Amateur, claims that the stress of the defeat and resulting debt brought the couple to the brink of divorce.

Undoubtedly the 2012 election will focus more on the federal government’s spending under Obama than on the president’s personal spending. But the parallel between the two financial pictures is worth noting. Almost all spendaholics or those who are unable to control their spending engage in a certain amount of denial, an effort to fool themselves about the hard truths of their financial situation. They assure themselves that they must spend money now in order to save more money later, or they count on additional earnings that are unlikely to materialize (say, through rosy assumptions of future economic growth). When confronted with evidence of a serious problem, they assert that it doesn’t really matter (“No matter what some rating agency may say, we have always been, and we will always be, a AAA country”).

In light of all this, “Does Obama know how much he is spending” appears to be an extremely relevant and entirely fair question.

—Jim Geraghty writes the Campaign Spot on NRO

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