History repeats itself. Everyone says that, usually to remind you that if you don’t study history, to know what happened before, regularly, you’ll get blindsided by current events. The idea is that most everything has happened before, one way or another, and the wise don’t get fooled, at least not quite as often as those who run around with their hair on fire saying nothing like this has ever happened before and we have no way to deal with this brand new thing – whatever it is at the moment. No, we didn’t need to throw out all the old rules and start torturing people – because history repeats itself. There already were fine ways to deal with bad guys. Remember how the Brits got through the Blitz. Remain calm. Carry on.
Of course others, who have studied history in some detail, say that the problem with history is the very fact that it does repeat itself. The same damned things keep happening, over and over, when we should have known better, and people react to these quite predictable events in the same blindly stupid ways – they never learn. Studying history can make you a cynic. Oops, we did it again, and, like clockwork, someone will do something quite predictably stupid about it, again. One assumes historians drink heavily.
There are exceptions to this. There was the 2008 presidential election – no presidential historian could go on CNN and tell us all about the last time a black man had run for president, and in this case a black man with a white mother, who had also spent four or five years of his childhood in Indonesia, after being born in Hawaii of all places, which until the late summer of 1959 wasn’t even a state. It was all new. The go-to presidential historian Doris Kearns Goodwin decided to talk about how Barack Obama was really like Abraham Lincoln – Obama, she said, liked to work with a “team of rivals” who would disagree with him vigorously, just like Lincoln. That was a stretch, but she had just written a book on Lincoln and that very thing. She had to say something. The CNN hosts nodded sagely.
But now it’s 2012 and the economy is still a mess – better, certainly stabilized, but still a mess – and no one cares that Obama is black, or where he was born, or where he went to elementary school. Only Donald Trump fumes about such things. Obama certainly doesn’t talk about any of that – he’s been everyone’s president for three and a half years. There’s nothing new anymore. Yes, Obama managed to do what no president had been able to do since before Truman, passing something vaguely like universal healthcare, and early on he somehow managed to convince congress to pony up seven hundred billion dollars in tax cuts and stimulus spending to keep the economy from collapsing again, and he managed to do what George Bush promised to do but couldn’t do, get that Osama fellow, and so on – but none of that had to do with Obama being black with an unusual backstory. He did what presidents do, and he has a record, which is now what this presidential election is about. Mitt Romney says Obama’s record is awful. Obama says it’s not, as in each case he did the right thing. It’s like old times. We’re dealing with the familiar.
Actually we’re dealing with the Roaring Twenties again, and September 2008 was our 1929 – with an absurdly overleveraged economy collapsing, again. We’re still working that out – deciding on whether to let the rich keep all their goodies and hope for the best, in a sort of Coolidge-Hoover kind of way, or do the FDR thing and damn the rich, boosting the common man and restoring something like a middle class. It’s all a matter of how we think about the rich – as the good people who run things for the benefit of everyone, and should be protected and cherished, even if they do make a ton of money, or as unaware jerks who grab everything they can, making life hard and miserable for everyone else. We’ve never really decided which it is. There were those three Romney fundraisers in the Hamptons, one at the absurdly palatial estate of one of the Koch brothers. Those brought the question in to sharp focus – while East Hampton isn’t East Egg, it was a scene from that Gatsby novel of the twenties, in almost the exact same place, with the same characters. We don’t know quite what to make of it all.
Think about it. F. Scott Fitzgerald’s The Great Gatsby is that long meditation on wealth, and gaining wealth, and its wonderfulness, and the damage it can do. It’s about the aspiration to make it big in America – which is noble and romantic and idealistic, and tawdry and dangerous, at the same time. The novel’s narrator, Nick Carraway, has no idea what to make of the mysterious Jay Gatsby, the man of equally mysterious wealth – but he does admire him as a sort of noble soul.
It’s confusing. It seems Gatsby got rich for only one purpose – to win back his childhood sweetheart, the lovely Daisy. It’s the story of one man’s quest for the woman of his dreams, and that’s all terribly romantic, but that Daisy’s heart can be won only by the man with the most stuff, and the right stuff – the good stuff and not cheap imitations – makes her a shallow twit. Gatsby wants to win her heart. She may not have one. And at the end of the novel, with Gatsby floating dead in the swimming pool with a bullet in his back, Nick Carraway – Fitzgerald’s voice and ours – says that Gatsby was the only good one of that sorry lot of rich folks hanging around their mansions out on Long Island. The rest were careless people – “they smashed up things and creatures and then retreated back into their money or their vast carelessness, or whatever it was that kept them together – and let other people clean up the mess they had made.”
Some people think of the Koch brothers that way, and Fitzgerald’s buddy from his Paris days, Ernest Hemingway, found Fitzgerald’s attitude toward the rich insufferable. According to Hemingway, he once had this conversation with Fitzgerald:
Fitzgerald: The rich are different than you and me.
Hemingway: Yes, they have more money.
Everyone agrees that conversation never actually took place, but Fitzgerald, in his short story “The Rich Boy” (1926) does lay out what he really meant:
Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft, where we are hard, cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand.
Democrats are saying such things now, and this fascinated Fitzgerald. In fact, Fitzgerald spent his last few years here in Hollywood, in an apartment on North Laurel Avenue, just a few doors down the street, working on The Last Tycoon – he was still trying to figure it all out. But aren’t we all? Now we have to figure out Mitt Romney, and decide whether he’s Jay Gatsby or Gordon Gekko – that nasty fellow from the Oliver Stone movie, Wall Street – or maybe he’s the last tycoon. We’re still watching the rich.
Josh Marshall has some thoughts on that:
There’s been a lot of chatter over the last few days about whether super-wealthy candidates get a hard rap in US politics or whether Mitt Romney is being held to a higher or harder standard. Romney is probably the wealthiest man ever to run for President, even in inflation adjusted dollars. (There are some claims that Washington was wealthier but it’s based on a total misreading of the value of land during the period.) But certainly there have been many extremely wealthy men who’ve run for President and won – Roosevelts, one Kennedy, a couple Bushes, etc.
But all of this talk ignores a fact so salient and obvious that it’s hard to fathom how some are nevertheless oblivious to it. Having vast wealth and aggressively working the law and tax code to avoid taxes is a very different thing if your policy agenda is geared almost entirely to benefit the super wealthy. If you’re a gazillionaire and your main pitch is to cut taxes on gazillionaires that’s just gonna put a bit more emphasis on your wealth. This logic should not be difficult to grasp.
Marshall is not at all impressed with Romney continually protesting that he’s not ashamed of his success, and then asserting that people should admire him for it – not resent him. Marshall suggests this careful and impartial analysis of Romney’s tax proposal – “it would not only cut rates for the wealthiest Americans, it would actually raise taxes for most of the middle class.” There’s nothing noble and idealistic about that, and folks should pay attention, damn it:
Most voters haven’t seen that study, of course. And the policies are not dramatically different from the kind of policy proposals President Bush pushed through when he became president. But at least Bush’s platform had dollops of what he called “compassionate conservatism” – things that were at least notionally (and in a few cases actually) tied to helping the underprivileged. Mitt’s entire platform is cutting programs and enabling the super-wealthy to accumulate capital to create more jobs. Whether it actually works that way is another story – an economic argument that virtually no one on the center-left buys. But that really is the Mitt message.
The problem may be that this man is not a very good messenger, but also that he’s trapped:
He’s stuck to it I think for a mix of personal predilections and his need to cement support from the hard right of the GOP which doesn’t believe he’s really one of them. George W. Bush never had that problem.
Still, one thinks about what Fitzgerald said about those careless people, as Marshall continues:
There are a lot of turbulent cross-currents in the United States today. But one of the key ones has it that the super wealthy are leaving the rest of the country behind and that they’re playing under a fundamentally different set of rules, ones they’ve written for themselves by owning the political process – on the right it’s expressed as rage at bailouts for bankers, on the left it’s focused on tax breaks and stuff like that. When people hear that Romney pays a 15% flat tax rate and has a lot of his money parked in tropical islands they know that he’s living in a very different world. As a lot of Republicans are recognizing right now, Romney can easily come off like a caricature plutocrat…
If a presidential candidate is worth hundreds of millions of dollars and pays less than a 15% tax rate, it’s even harder to swallow if he’s out there saying his taxes should be even lower. That shouldn’t be hard to understand.
Ed Kilgore adds this:
If your political ideology predisposes you to identify wealth with virtue, and taxation with theft, I suppose any attention to a candidate’s after-tax wealth that isn’t laudatory is by definition an appeal to envy and prejudice. But I think Romney’s identification with his wealth is even more fundamental than Josh suggests: it’s not just his platform that is focused single-mindedly on increasing the share of national treasure available for the job-creating good works of rich folks and the companies they run and invest in: his message, which rarely touches on the messy details of policy, is that he knows how to “fix” the economy as attested by his business success, which in our system is measured by money.
Romney and his supporters can wail all they want about “class warfare” and “demagoguery” and all the rest, but that won’t stop all the talk:
Of course Romney’s wealth is going to be an issue. Americans have proven repeatedly that they won’t hold a candidate’s wealth against him or her; indeed, they tend to like rich guys on one level, believing them to be less likely to take bribes. But candidates can definitely make their wealth a major liability. One way is to be like Meg Whitman and use that wealth to try to bludgeon voters into supporting them via a mind-numbing level of political advertising. And another is to be the rich guy who makes his wealth his primary qualification for office, while promising to make life easier for other rich guys.
If I were a Republican I wouldn’t want that sort of candidate leading my party at a time when unemployment is high and millions of voters have watched their financial assets erode or evaporate in very recent memory.
Maryland governor Martin O’Malley gets it:
You know, I think what’s very, very clear is that having your money sheltered overseas and avoiding paying your taxes in America when you’re part of the highest earning one percent of our country means that you’re not contributing to our economy and not making it grow.
I appreciate – you know, I know people have asked, is it patriotic or not patriotic? I think more fundamentally, we need to ask, does it work to make the economy grow or not? I mean, their theory is that if you cut taxes even more deeply for the top one percent of people, they’ll invest it back in creating jobs.
That’s not what Romney is doing with his money, is it? He put it in Switzerland. He put in the Cayman Islands, Bermuda, and that’s the core of this and why the Romney campaign is so very afraid of this issue and why they won’t release the taxes.
That’s blunt, and an attack on those Fitzgerald called the careless people, who smash up things and then retreat back into their money or their vast carelessness. Heck, that’s how Bain Capital worked after all. Obama won’t call Romney unpatriotic, but the Democratic governor of Maryland edges toward that. Why not make the implicit explicit?
Kevin Drum explains why not:
I’d just as soon not hear liberals questioning other people’s patriotism – last refuge of scoundrels and all that. But politically speaking, there’s a bigger sin here: it’s just dumb. When you say “Swiss bank account,” nobody’s thoughts turn naturally to patriotism or its lack. It doesn’t even compute. The problem everyone associates with Swiss bank accounts is much simpler: they’re for rich people trying to hide dodgy money from the tax man in dodgy ways.
Stick with what works… Romney is rich. Romney puts his money in tax havens. What’s he hiding? That’s the ticket.
And there’s precedent:
Hell, Republicans went after Romney’s personal finances during the primaries. They knew exactly what they were letting themselves in for when they nominated the guy. It would be a pretty lame campaign that decided it was too pious to take advantage of a meatball like this sailing right over the plate.
In any case, I guess I’m really more interested in Romney’s $102 million IRA. Granted, that doesn’t have the immediate resonance of “Swiss bank account,” but it raises some excellent, Bain-related-tax-dodginess questions.
Drum cites the problem:
Mysteries also arise when one looks at Romney’s individual retirement account at Bain Capital. When Romney was there, from 1984 to 1999, taxpayers were allowed to put just $2,000 per year into an I.R.A., and $30,000 annually into a different kind of plan he may have used. Given these annual contribution ceilings, how can his I.R.A. possibly contain up to $102 million, as his financial disclosures now suggest?
Romney better come up with something to explain how this happened. I doubt very much that the Obama campaign – or its not-so-pious super PAC – is going to let this meatball sail by either without taking a great big cut at it.
After all, as Andrew Leonard argues, this is going to be a Rich-Man, Poor-Man Election and cites the new report from the Pew Charitable Trusts, Pursuing the American Dream: Economic Mobility Across Generations:
The Pew Economic Mobility Project has been tracking the economic status of thousands of families since 1968 – the data covered in the current report is through 2009. And there is some good news: Absolute income has increased for Americans of all economic classes, from the poorest to the richest. The richest Americans have seen much larger relative gains, and, naturally, are far more immune to skyrocketing healthcare and education costs than are the poor, but at least part of the American dream is still intact: Children are still earning higher incomes than their parents.
But then there’s the bad news. Wealth, the total assets held by families, is not the same as income, as Catherine Rampell summarizes in the New York Times:
The median person in the poorest quintile has a family net worth that is 63 percent less than that of his counterpart a generation ago: $2,748, versus $7,439 …
The median family in the top socioeconomic class today (i.e., the family at the 90th percentile) is worth $629,853, compared to $495,510 in the last generation. That’s a 27 percent increase in the size of the median fortune in the top income stratum.
The rich got vastly richer and the poor got vastly poorer, which is echoed in a research paper produced by the Minneapolis Federal Reserve, Inequality and Redistribution During the Great Recession:
In 2010, the bottom 20 percent of the U.S. earnings distribution was doing much worse, relative to the median, than in the entire postwar period. This is because their earnings (including wages, salaries, and business and farm income) fell by about 30 percent relative to the median over the course of the recession. This lowest quintile also did poorly in terms of wealth, which declined about 40 percent …
However, even as earnings plunged, disposable income and consumption managed to hold even, relatively speaking, for the poorest Americans as compared to other classes. This is a bit of a mystery, noted the authors, who believe it can be explained by aggressive government redistribution and tax cuts.
The research paper:
Our main substantive conclusion is that government redistribution in the Great Recession was at historical highs and partially shielded households from experiencing large declines in disposable income and consumption expenditures. The same households, though, have experienced losses in net wealth, and this might make them more vulnerable to further or more persistent earnings declines in the future.
If you’re still keeping score: While the rich were getting richer and the poor poorer, the Great Recession absolutely hammered the worst-off Americans, but substantial government support – unemployment benefits, food stamps, Medicaid, tax cuts – saved the most vulnerable Americans from utter disaster.
And don’t even get him started on the Congressional Budget Office’s latest numbers on federal taxes in The Distribution of Household Income and Federal Taxes: 2008-2009:
The bottom line: In 2009, as a result of tax cuts included in the stimulus, Americans ended up paying the lowest percentage of their income in federal taxes since 1979.
Leonard says that these reports mutually reinforce each other:
For example, one reason why the wealthiest Americans have done so much better than everyone else is directly related to substantial cuts in the capital gains tax rate over the past several decades. High unemployment and the collapse in home prices as a result of the Great Recession, on the other hand, have a disproportionately greater effect on poorer Americans, whose net wealth has been declining over past decades.
The numbers also beg to be put in political context. Over the long term, the rich have been getting richer and the poor poorer. In the short term, the poor took the brunt of the impact of the Great Recession, and were only kept afloat through government assistance. However, as tax rates have fallen to historic lows, it has become more and more difficult for the federal government to find the resources necessary to ameliorate widening inequality.
Now consider the fact that the Republican candidate for president wants to cut taxes even further, while eviscerating the social welfare safety net that is the only thing staving off complete economic disaster for poorer Americans. This is class warfare all right, but one side seems to have already won.
And that brings us back to the Gatsby novel and those careless people, who smash up things and then retreat back into their money or their vast carelessness – and other people can clean up the mess they had made. Fitzgerald was drawn to such people. They fascinated him, and repelled him. Yes, Hemingway thought Fitzgerald’s obsession with such folks was nuts, but now we’re all playing out that same fascination. Mitt Romney is Jay Gatsby and it’s Long Island in the twenties once again. History repeats itself.
Oops, we did it again, and, like clockwork, someone will do something quite predictably stupid about it, again, like elect Mitt Romney. And the historians will all pour themselves another stiff drink.