President Obama Does Many Things Well but Being a Socialist is Not One of Them

January 27th, 2014 at 9:42 am

–Actually, the rich should love Obama: Paul K makes many great points this AM re paranoid plutocrats, but while he notes a number of Obama-era changes that hurt the wealthiest among us—higher marginal tax rates, financial market reform—the fact is that they’ve done really well under this President.

We just learned, for example, that for the 4th year in a row, real median earnings for full-time workers fell slightly in 2013 (I have a piece going up later on the NYT Economix blog on this).  At the high end of the pay scale, however, corporate profits were 14.6 percent in the most recent data–over the history of this series going back to 1947, there was only one quarter higher than that — the last quarter of 2011.  The equity indexes may have gotten whacked last Friday (and may open lower today as well), but last year’s S&P 500-stock index was up almost 30%, its best year in 16 years.

Yes, the rich got hit hard by the capital losses linked to the housing bust, but according to the latest data point in CBO’s comprehensive household income series—2010—the after-tax income of the top 1% was up $133,000 over the previous year, while that of the middle fifth was down $100.  In fact, just the change in the real income of the top 1% was more than twice the level of the income of the middle fifth ($133,000 vs. $57,900).

I’d also note that while top personal income tax rates went up under the President, the increase only affected households above $400K-$450K, not the $250K he ran on.  His tax plan actually permanently locked in more than 80% of the Bush tax cuts.

I get that the President has said stuff that rubbed some rich folks the wrong way, but as Paul says, he’s awfully mild relative to say, FDR.  But in both economics and Buddhism, we’re taught to look at what actually happened.  That should pretty quickly lead you to conclude that if Obama is a socialist, he’s the worst socialist ever.

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5 comments in reply to "President Obama Does Many Things Well but Being a Socialist is Not One of Them"

  1. smith says:

    Krugman falls into a conservative trap on taxes, showing rates on the 1% are seemingly the same as they were before Reagan. But this makes no allowance for the fact the 1% are now taking in nearly twice the amount of national income! http://www.nytimes.com/interactive/2011/10/26/nyregion/the-new-gilded-age.html
    Greg Mankiw and other conservatives have used this fallacy of equivalence to argue the 1% are being taxed enough.
    The pre-Reagan maximum marginal rates were 70% and until the share of the 1% is reduced to pre-Reagan level, those pre-Reagan rates should be restored and then some. (Eisenhower rates of 90% on income above $2 million in today’s dollars, please).
    If the 1% are earning so much more than they did previously, but their tax rates are the same, it means the rates need to go up, if they’re earning twice as much (their share of the economic pie), double the rates.


    • Tom in MN says:

      And in 1979 the capital gains tax was 28% and its now 15%.


    • Dave says:

      Krugman is trying to help Obama politically. That is all. He’s trying to help his dismal approval rating. He’s going out on a long limb for Obama, and I hope Obama recognizes that.

      As president, it is very difficult to know who your friends are and who your foes are. They often look the same. Close watchers know what is going on here. We just kind of tune it out, because it is probably necessary, but it gets annoying sometimes.


  2. readerOfTeaLeaves says:

    What Krugman does well is point out that some of the paranoia appears to be stemming from the fact that these uber-wealthy are *not* captains of industry. They didn’t have to figure out production, engineering, or manufacturing processes and procedures. Instead, they skimmed from moving vast amounts of money around. How does that ‘add value’, or ‘generate wealth’…? It doesn’t.

    The hedgies and bankers rely on hiding behind the camouflage of ‘innovation’, I’m sure Krugman’s truth-telling increases their ire. ‘Tis a pity.


  3. Larry Signor says:

    My wife and I made ~ $35,000 last year(pretax)… BS’s and a family business but unconscionable healthcare expenses. Not much different than most of the folks we know. Statistics occlude the human cost of limited resources. We are fortunate (can you imagine getting by on 35k a year? Some folks would lust after it.) but we are older with many potential safety nets that may kick in. The US is in the midst of a human tragedy of immense proportions if we don’t look up and smell the roses.


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