Obama takes risky stance against the rich

 

Obama takes risky stance against the rich

By Richard McGregor in Washington

With the US economy suffering through its deepest slump since the Great  Depression, the Obama administration has designed a political strategy to match,  with echoes of the campaign rhetoric deployed by Franklin Roosevelt in the  1930s.

Throwing out the standard presidential playbook dictating an aspirational  pitch to centrist voters, the White House is cementing a high-risk message that  strikes firmly at wealth and privilege.

“There is surging sentiment out there among voters that the economy is  weighted towards the wealthy,” said a senior White House official. “Public  opinion has changed dramatically.”

The White House strategy will make the 2012  election a generational test of the Republican push of the past three  decades for cutting taxes, in ways their critics say have been constantly skewed  towards the highest earners.

The after-tax income of the wealthiest 1 per cent of US households increased  by 275 per cent over the past three decades, compared to an average of 62  per cent for all Americans, the independent Congressional Budget Office reported  this week. For the poorest 20 per cent, the growth was only 18 per cent.

The “Occupy  Wall Street” protests that are spreading raggedly across the US and the  world have thrown a spotlight on mounting popular anger at economic stagnation  and income inequality.

But the factors driving the White House go further, to their inability to  strike any substantive deals on their terms with congressional Republicans  emboldened by their smashing victory in last November’s mid-term elections.

The failure of the economic recovery to yield many jobs during its mild  upswing of the past two years has also transformed the political calculus for a  president facing a perilous re-election battle.

“In normal circumstances, this pitch might be suicidal. But these are not  normal circumstances,” said William Galston of the Brookings Institute.

Mr Galston has been reading the speeches of Franklin Roosevelt’s winning  campaign for the 1936 presidential election and finds striking comparisons to  the emerging line from Mr Obama.

“Roosevelt wasn’t just saying: ‘I am fighting for you.’ It was: ‘I am  fighting against them,’” he said.

All sides of politics have been regrouping since the fraught negotiations in  August over the country’s  borrowing limits that bought the US to the edge of sovereign default.

While Mr Obama was widely depicted as weak in his dealings with Congress, the  clash damaged the Republican majority in the House of Representatives even more.  Congressional approval ratings are now in single digits.

Although they have offered little fresh on policy, Republicans are tweaking  their public message, with the hardline house majority leader, Eric Cantor,  recently acknowledging the need to address the rich-poor gap.

Mitt Romney, the frontrunner in the Republican race to challenge Barack Obama  in 2012, has taken to saying that he is standing up for the “middle class” because the rich “can look after themselves”.

For the White House, this is just the terrain that it wants to fight on. “The  Republicans want to give the average millionaire a $200,000 tax cut, while the  middle class is struggling,” said the White House official.

The majority of Republican voters polled by the White House agree with the  president, the official added, meaning “they hold a different opinion from their  lawmakers and their candidates”.

Mr Obama has been barnstorming the country for the past month, highlighting a  jobs package which his aides acknowledge little of which has any chance of  passing.

The aim is put Mr Obama back at the centre of the debate after a period in  which he seemed marginalised and ineffective, the worst position a sitting  president can be in.

“Let’s re-emphasise what powers we have! What we can do on our own! Push the  envelope!” William Daley, the White House chief of staff, said in an interview  with Politico, the Washington publication.

Despite Mr Obama’s battered standing, senior Republicans remain wary of a  rejuvenated president.

“What the president wants to turn this into is the proposition that you may  hate us, but you will hate these people more,” said a senior Republican  congressional official. “We need to make sure we do not allow him to turn this  election into an anti-incumbent election.”

Besides the inherent risk in making wealth the central issue in a country  which has prided itself on the ability of anyone to get rich, Mr Obama must also  surmount a credibility gap in taking on Wall Street.

“He has blown hot and cold on the finance sector, so he is widely regarded as  having fallen between two stools,” said Mr Galston.

In the White House, there is no doubt that it is entering the election year  with its back against the wall.

“You can just feel this electorate is very volatile,” Mr Daley told Politico. “So strap yourself in.”

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