The Obama Watch

Organizing the Takers Against the Makers

Obama unveils his campaign strategy for 2012.

By 12.7.11

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The brilliant Chavistas at the Center for American Progress have revealed the reelection strategy for President Jimmy Carter II. This time they are going to get the 1980 election right. Ruy Teixeira and John Halpin enlighten us with their publication, "The Path to 270: Demographics versus Economics in the 2012 Presidential Election."

The authors recognize the grave political difficulties created by "the perceived inability of the Obama Administration's policies to spark real recovery," creating "serious doubts about Democratic stewardship of the economy." But the authors think the Democrat party under the Saul Alinsky revolutionary Barack Obama can reinvent itself to a new majority composed of government dependents, government workers, African Americans, Hispanics, and credulous, wide-eyed, liberal-left true believers. What would be left out of this New Democrat majority is the white working class, formerly the base of the Democratic Party.

William McGurn summarized the publication in the November 29 Wall Street Journal as just "making official what everyone has known for some time: The Democrat Party is abandoning the white working class." New York Times columnist Thomas B. Edsall similarly reported early last week, "preparations by Democratic operatives for the 2012 election make it clear for the first time that the party will explicitly abandon the white working class."

As Clark Judge explained at HughHewitt.com on Monday, this means:

The president will jettison the oldest and most defining characteristic of his own party. From Andrew Jackson to Franklin Roosevelt to John Kennedy to Bill Clinton, Democrats have presented themselves as the party of the workingman and woman, the party of labor and not just unionized labor, to which they degenerated in later years. Now, in the coming election, the Adlai Stevenson, Gary Hart college faculty and yuppy wing will be seen as the center of the Democratic coalition.

McGurn explains why the working class is being dumped:

If these citizens weren't bitter before, they sure have reason to be now. For the white working class, the private sector was what gave them jobs and propelled them into the middle class. Yet whether its drilling for oil or putting up a shopping mall, today's Democrat Party seems opposed to most of the private-sector jobs that deliver opportunity to those without a college degree.

Takers vs. Makers
In other words, the Democrat party is throwing in the towel on economic growth and prosperity, because even Obama's people recognize they cannot credibly sell themselves as delivering on that. What they are going to sell in 2012 is taxes and redistribution from those that have more to buy the votes of those they think will sell their vote for government handouts. That marries perfectly Marxist philosophy with Chicago political machine politics.

But if they think the American people are going to abandon the American Dream for Castro/Chavez style equality, reality has some ugly surprises in store for them. While they are dumping the white working class recognizing they can't appeal to independent people who believe in supporting themselves through their own hard work, they are wrong to think they can hold on to the Hispanic working class, or even to their previous majorities among the African-American working class.

The unemployment rate for Hispanics has been well into double digits for more than two years now, with their wages and incomes falling. Teixeira and Halpin don't adequately account for that. But let me offer a clue. I predict a Gingrich/Rubio ticket would win a majority of Hispanic working people employed in the private sector.

African Americans have suffered depression level unemployment of 15 percent or above throughout most of the Obama Administration, with more and more falling into poverty. They are still going to go overwhelmingly for Obama with their votes. But they are not going to show up to vote in anywhere near the numbers of 2008, because they are going to feel Obama has not delivered on the explicit and implicit promises made to them in 2008. And for that reason, among those who do show up to vote, a Gingrich/Rubio ticket would break into double digits with the African-American vote, even more among those employed in the private sector.

Let me help bring Teixeira and Halpin out of the smoky haze as to what that means. Virginia and North Carolina will not be in play in 2012. It is New York and New Jersey that will be in play.

And there will be a new front in play that Teixeira, Halpin, and the Obamunistas overlook. Their class warfare is going to wake up more and more of the limousine liberals that have really been the new core base of the Democrat Party, second only to African Americans. Unless white liberal guilt has made these superficial style liberals suicidal, what this means is that in 2012 Connecticut will be in play as well. Note to those who feel they can't bear the guilt burden of their millions anymore, please send your money to my agent in New York, and we will bear that guilt for you.

I think in 2012 Obama will finally deliver on his 2008 rhetoric of uniting the American people, behind a Gingrich/Rubio ticket. That is because economic growth and prosperity have always trumped redistribution among the American people. Not well known is that the supply-side, pro-growth movement is now coalescing behind Gingrich, setting up a perfect rematch of ideas from 1980. Except that Obama is on a far worse political trajectory than Jimmy Carter. Compare the 2010 midterms to the 1978 midterms. And even Jimmy Carter was not losing Congressional seats in New York City that Republicans had not won since before the New Deal.

Occupy Piracy
The Teixeira/Halpin/Obama/Democrat strategy of organizing the takers against the makers is reflected in the Occupy Wall Street movement as well. That movement reflects a pirate mentality, as they feel perfectly free to help themselves to the earnings, savings, and property produced by others. Wake up America, this is what Americanized Marxist revolutionaries look like. But their creepy French Revolution play acting with its implied threat of runaway violence is not in the American tradition, and consequently won't work with the American people. But it is in the tradition of Barack Obama, whose previous career was precisely as a Marxist street agitator.

What it will do along with the new open Democrat strategy of pursuing redistribution instead of growth and prosperity is further depress the economy in the short run. Investors are not going to put their money in France on the eve of the guillotine breaking out. Wealth and the private investment it brings are not welcome in the current social environment in America. So it will go elsewhere until the current mental malady passes. That will mean a slower recovery in 2012 than otherwise.

But the liberal Washington establishment is still in the mode of embracing the Occupy Revolutionaries. The bureaucrats at CBO chime in with a new study claiming to show that "The share of income received by the top 1% grew from about 8% in 1979 to over 17% in 2007." The perennially out of touch Washington Post columnist Eugene Robinson says right on cue that "this jaw-dropping report [shows] why the Occupy Wall Street protests have struck such a nerve."

These people can't count. Alan Reynolds explains in yesterday's Wall Street Journal why. The CBO study estimated incomes from individual income tax returns. And income on those returns was not the same in 1979 as in 2007. Because of the Reagan revolution in tax policy reducing the top individual income tax rate from 70 percent in 1979 to 28 percent in 1986, billions in business income switched to reporting on individual tax returns rather than corporate tax returns. So the top 1% weren't earning any bigger share of income than before. They were just reporting it on a different tax form.

Reynolds reports similar effects from reductions in the tax rates on capital gains and dividends in later years. When the capital gains tax rate goes down, owners realize capital gains they had previously earned and report it for tax purposes. They had already earned the capital gain years before, but they did not have to report it on their tax returns until they sold the capital. When the tax rate on dividends was cut, corporations paid out a lot more in dividends that was then reported on individual tax returns, rather than held as retained earnings by the corporation and therefore not reported as individual income.

Reynolds explains, "In short, what the Congressional Budget Office presents as increased inequality… was actually evidence that the top 1% of earners report more taxable income when tax rates are reduced on dividends, capital gains, and businesses filing under the individual income tax code."

Gingrich has the fix for this too. He proposes to replace CBO with 5 competing private estimating firms. Each year the two least accurate would be dropped, and replaced by others. The CBO bureaucrats can get jobs teaching Keynesian economics in economic history classes at Ivy League universities.

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About the Author
Peter Ferrara is Director of Entitlement and Budget Policy at the Heartland Institute, General Counsel of the American Civil Rights Union, Senior Fellow at the National Center for Policy Analysis, and Senior Policy Advisor on Entitlements and Budget Policy at the National Tax Limitation Foundation. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.