Given public anger and fear, that “socialist” Barack Obama could be a lot more radical than he has been. For example, he could be proposing marginal tax rates of 80 percent or higher on the richest Americans, like we had back in the ’50s, and with just a little stoking of public anger at the economic elite, he could probably pass it.
After all, 85 House Republicans — almost half the GOP caucus — bowed to populist sentiment last week by voting in favor of taxing AIG bonuses at 90 percent. That idea began to die only when Obama stepped in to say he didn’t think it was wise or necessary.
Obama does propose to raise the top rate from 35 percent to 39.6 percent, largely to help keep the deficit within the lower stratosphere. But that hardly makes him socialist. All he’s doing is letting the Bush tax cuts end, as they were scheduled by Bush to do. As Obama said in his news conference Tuesday, “Let’s go back to the rates that existed … during the Clinton era, when wealthy people were still wealthy and doing just fine.”
Obama could also make himself a popular man —- at least for a while —- by announcing that he was finished trying to bail out Wall Street with hundreds of billions of dollars and that the financial industry should be allowed to collapse into a smoking pile of ruin as punishment for its greed.
There’s a bull market for that kind of populism, and its appeal cuts across the political spectrum. Many on the ideological right distrust any government involvement with business, dismissing arguments that it might be necessary in a crisis. In their purist view, the free market has to be allowed to punish failure, even at the risk of that punishment falling on millions of innocents as well.
Many on the left would be happy to let it fall as well. They’re unhappy that Obama is trying to reinforce the existing economic structure; they don’t like the fact that some of those who got us into this mess are being rewarded for helping us get out of it. And they see a trillion dollars going to prop up Wall Street and they wonder how many poor and middle-class people could be helped with that kind of money.
But Obama isn’t doing that either. He’s trying to use government to save capitalism, understanding that in the modern era, both institutions need each other. Government provides the basic, essential stability that unfettered capitalism cannot. And capitalism provides the prosperity that government cannot.
Obama further understands that it’s not just public faith in capitalism that is being tested in this crisis. Public faith in government has collapsed as well. Obama is trying to resurrect the reputations of both simultaneously, understanding that you can’t save one without the other.