Source: Talking Points Memo
In a speech at the Center for American Progress last December, President Barack Obama declared that economic inequality was “the defining challenge of our time.” Massachusetts Senator Elizabeth Warren and New York City Mayor Bill de Blasio have made it the centerpiece of their politics. In his announcement speech for his surprisingly successful presidential campaign, Vermont Senator Bernie Sanders called “the issue of wealth and income inequality... the great moral issue of our time.” During the first Democratic debate, frontrunner Hillary Clinton pledged “to do everything I can to heal the divides … economically because there is too much inequality.”
These appeals are grounded in a well-documented gulf between the one or ten percent and everyone else, a gulf that has been highlighted by the work of economists Thomas Piketty, Emmanuel Saez, Joseph Stiglitz and Edward Wolff. Many Democratic primary voters and voters in blue states applaud calls to tax the rich to alleviate poverty. And over the last fifteen years, Americans have become increasingly concerned, and even angry, about gaps between the very wealthy and everyone else.Yet, except among Democratic primary voters, that concern has not translated into increased and widespread support for government action to reduce income inequality. During the Great Recession and its aftermath, overall support for programs to reduce inequality has actually dropped. That suggests a disturbing disconnect between the concern about income inequality and the proposals to reduce it, and could mean that left-wing and liberal populists like Sanders and Warren still have a way to go before they can turn “the great moral issue of our time” into a great political issue.
What has drawn the attention of liberal commentators, and buttressed the confidence of politicians like Sanders and Warren that they are really onto something, is that public concern with economic inequality and rising CEO salaries has risen over the last few decades. According to the General Social Survey, which has tracked opinion since 1972, the percentage of Americans believing that “differences in income are too large” went from 58 percent in 1987 to 62 percent in 2008 to 63 percent today. According to the Gallup poll in 2000, 56 percent of respondents thought that “the distribution of wealth and income in this country should be more evenly distributed among a larger percentage of the population” and 38 percent thought the distribution was “fair.” Currently, 63 percent think income should be more evenly distributed and only 31 percent think the distribution is fair.
But what about support for measures that would reduce income inequality? There is continuing support for increasing the minimum wage. In the 2014 election, referenda raising the minimum wage even passed in four red states – Arkansas, Alaska, Nebraska, and South Dakota. A national poll conducted by Hart Associates last January showed 75 percent in favor of raising the minimum wage to $12.50 an hour by 2020. There was also support in late 2012 for increasing taxes on the wealthy by ending the Bush tax cuts in order to avoid the “fiscal cliff.” But on other issues, the public is much more ambivalent about doing anything to reduce inequality.
In polls taken over the last seventeen years, Gallup found slight support, and then slight opposition, to the idea that the government should redistribute income by increasing taxes on the rich. In March 2009, 50 percent agreed, and in April 2015, 52 percent, but in October 2008, only 46 percent agreed and in April 2011, only 47 percent. There isn’t, in other words, a clear-cut majority for raising taxes on the wealthy simply to reduce income inequality.
There is out-and-out opposition to measures that would reduce inequality by directly aiding the poor or low-income people. Congress’s refusal to spend more on welfare or food stamps – indeed, the question has been whether or not to cut food stamp allotments -- is reflected in opinion polls. In the General Social Survey, respondents were asked whether Washington should do anything possible to improve the standard of living of the poor. Only 33 percent agreed or strongly agreed in 2008, which was the highest percentage since 1990. By 2014, only 28 percent agreed. Another question, about whether government should “reduce income differences between the rich and poor,” elicited similar responses. (GSS surveys are scaled from one to five or from one to seven, in which the middle number is equivalent to those who neither agree nor disagree, or both agree and disagree.)
In a working paper, “Income Inequality and the 2012 Election,” political scientists John Sides and Elizabeth Rigby used extensive data from a carefully designed YouGov poll. They found that 80 percent of respondents agreed in July and November that “differences in income in America are too large.” But they also found overwhelming opposition to using government to reduce the difference between “high incomes” and “low incomes,” from 57 to 24 percent in July to 57 to 22 percent in November.
As Sides’ and Rigby’s numbers suggest, support for government reducing inequality actually declined slightly during an election where Democrats made Republican Mitt Romney’s allegiance to his class and indifference to income inequality a major issue. In another study of the election, “The Class War Gets Personal,” political scientist Larry Bartels, using survey data, showed that the portrayal of Romney caring more about the wealthy may have swayed some voters to oppose the Republican. However, it did not increase, and may even have decreased, support for repealing the Bush tax cuts. “The campaign produced less enthusiasm for taxing the wealthy than had existed before it began, eroding slightly what had been a significant Democratic advantage,” Bartels concluded. It is as if raising the question of inequality made some voters less likely to support measures to reduce it.
Why is there only marginal support for reducing inequality by raising taxes on the rich and opposition to government measures that would narrow the gap between rich and poor? Political scientists attribute this to a profound distrust of the national government that translates into opposition to any active government measures that would increase taxes or spending. As Louis Hartz showed in his monumental work, The Liberal Tradition in America, this distrust dates back to the American Revolution and helps explain American resistance to European social democracy, but it has been rising intermittently since the mid-1960s and has recently accelerated during the Great Recession.
Asked by Gallup in December 2008 which was the “bigger threat to the country in the future,” big government, big business or big labor, respondents chose government over business by 53 to 31 (big labor was a distant third); by December 2013, the percentages were 72 to 21 percent. Another Gallup poll showed those who trusted the federal government to “do what is right” “just about always” or “most of the time” had fallen from 32 percent in 2006 to 19 percent this year.
This year, four economists, Ilyana Kuziemko, Michael I. Norton, Emmanuel Saez, and Stefanie Stantcheva published a study, “How Elastic are Preferences from Redistribution,” based on use of Amazon’s Mechanical Turk surveying capacities. In their study, they first presented respondents with information about the increase in economic inequality, even demonstrating how much their own income would have increased had growth been more evenly distributed. They found that after this presentation, the respondents were “more likely to believe that inequality is a serious problem,” but they also found “no more appetite for many government interventions to reduce inequality.” That includes raising taxes on the wealthy and government transfer programs for the poor, including food stamps and the earned income tax credit.
The economists found a statistical correlation between the level of distrust for government and opposition to these government initiatives. “The aversion to government intervention,” they wrote, “is due to a deep level of distrust of government.” Priming the respondents with information about inequality and the government’s ability to reduce it through raising taxes made them more aware of “areas of society where government intervention may be needed, but simultaneously [made] them trust government less.” The respondents did support one measure for reducing inequality – raising the minimum wage. But this exception proved the rule, because increasing the minimum wage doesn’t require government spending or taxing.
I doubt, however, that sheer distrust for government is the only or even the principal reason why much of the public is reluctant to translate their concern about economic inequality into support for government programs to reduce it. Many Americans are reluctant to fund programs that will, they believe, entail a transfer of their income or wealth to poorer Americans. The beneficiaries of these programs are usually not thought of simply as the poor, but are identified by race or country of origin.
Opposition to these kinds of liberal transfer initiatives dates back to the Civil Rights Movement and to Lyndon Johnson’s Great Society. Resistance to welfare spending helped trigger the collapse of the Democrats’ New Deal majority and rise of conservative Republicans in the 1980s. In 1985, after Ronald Reagan had won a landslide victory over Walter Mondale, Stanley Greenberg conducted focus groups among white working class voters in Macomb County outside of Detroit. Many of these voters had been loyal Democrats, but had backed Reagan. Greenberg found that Mondale’s Rawlsian appeal to “fairness” in income distribution had been understood by these voters to mean higher taxes on themselves to finance special favors to minorities.
Pollsters have often steered away from exploring this issue, but when I’ve done more than cursory interviews during campaigns, or more recently among Tea Party activists, I’ve often found that those who evince a knee-jerk opposition to government spending and taxes believe that they are paying taxes to finance spending for the undeserving poor. Sometimes they have identified this group with African Americans, but more recently with illegal immigrants. Even if middle- or working-class Americans think a particular group of the poor is deserving, they worry that they, and not the wealthy, are footing the bill. And their perceptions are often correct given the way taxes are levied on the wealthy.
So Americans’ distrust of government is often intertwined with the belief that their taxes would go to the undeserving poor. According to the University of Michigan’s biannual national election studies, 73 percent of Americans trusted the government to do what was right during the Eisenhower administration. The big decline began in 1966, not during Watergate, and before Americans became disillusioned with the Vietnam War, but during the time when Johnson was launching the Great Society. Distrust of government fell under Reagan – not just because of his simple popularity, but because the public agreed with his disdain for government programs that didn't bolster the nation's defense.
The public’s disapproval of the Obama administration’s Affordable Care Act stems from this peculiar web of distrust. While the program was sold as a quasi-universal benefit, it was widely seen as forcing middle class and senior citizens on Medicare to subsidize the costs of medical insurance for the poor and uninsured. The Obama administration reinforced this measure with provisions like the so-called “Cadillac tax,” which will penalize many middle-class, as well as Cadillac-owning, policy-holders in order to fund the overall program.
In other words, attempts to use government to reduce inequality mean different things to different groups of Americans. Some Americans see these efforts as meeting a great moral challenge, but others see them as surreptitious initiatives designed to get them to subsidize people who either don’t deserve subsidies or who should be subsidized by those who can better afford it.
There is a facile assumption that this opposition to government programs to reduce economic inequality rises with income. According to the General Social Survey, higher-income Americans have been more opposed to government helping the poor or reducing the income gap between rich and poor than other overall income groups. However, if you break the groups down by race and education, you get a much more complicated result – one that better mirrors the political debate between Republicans and Democrats over these issues.
The two groups most supportive of government programs to reduce inequality are minorities, particularly African Americans, and people with advanced college degrees, many of whom are professionals such as teachers or engineers. In the 2014 survey, for instance, whites with advanced degrees favored using government to close the gap between rich and poor by 54 to 38 percent (with the rest falling in between favor and oppose). The groups most opposed to these kinds of programs were whites in general who did not have an advanced degree, from college grads to those with less than a high school education. Surprisingly, however, the group most opposed to helping the poor (41 to 19 percent) or equalizing incomes (53 to 33 percent) comprised whites who had completed four years of college, but did not have advanced degrees. These Americans, as economist Stephen Rose has argued, are people who primarily work in lower and middle tiers of the office economy.
Equally surprising – especially for those who believed demography and history are on the side of Sanders and Warren – is that college graduates from the racial group that is composed of non-whites who are not African Americans, and which includes Hispanics and Asians, were opposed to equalizing incomes by 47 to 41 percent. That suggests as these fast-growing immigrant groups rise up the educational ladder they will join their white counterparts in opposing government efforts to reduce income inequality. That’s good news for conservative Republicans, who have benefited since 2008 from the movement of college-educated voters away from the Democrats and into their column.
What, then, can those who want to use government to reduce income inequality do to get results now? In her recent book, The Undeserving Rich, sociologist Leslie McCall observes that the public’s concern about inequality does not necessarily jibe with the actual rise in economic inequality but with how they evaluate their own and their children’s economic opportunities. Pessimism about opportunity and concern about inequality grows during recessions and the first part of halting recoveries like the recoveries from the 1991 downturn or Great Recession. Pessimism about opportunity doesn’t fall off until a boom visibly begins, and at that time concern about economic inequality also subsides. It subsided during the Clinton boom of the late 1990s even though the gulf between the one percent and everyone else grew significantly during this period. We are presently still in the halting recovery from the Great Recession when Americans remain pessimistic about their futures and concerned about inequality.
In a forthcoming essay, “Political and Policy Response to Problems of Inequality and Opportunity,” McCall turns this observation into a proposal for addressing inequality. She distinguishes between proposals that would create equality of outcomes and those that would create equality of opportunity. Politically, Americans have been averse to proposals that would simply create equality of outcomes, but they have been receptive to proposals that would widen economic opportunity. McCall argues that proposals that raise taxes on the wealthy in order to widen economic opportunity or promote economic growth (which is seen as increasing opportunity) have the best chance of winning public support. She calls her strategy “equalizing outcomes to equalize opportunities.”
McCall cites an Oregon initiative adopted in 2010 that raised taxes on household incomes above $250,000 in order to “provide funds currently budgeted for education, health care, public safety, other services.” In 2012, she notes, California voters passed a similar initiative that temporarily raised taxes on the wealthy to fund education and public safety. McCall could have also cited the debate in the winter of 2013 over the Bush tax cut for the wealthy. In the case of the Bush tax cuts, the public’s support for raising taxes on the wealthy wasn’t tied to increasing opportunity, but it was tied to the specific objective of preventing another government shutdown and drastic cuts in government services. So one lesson drawn from McCall is that proposals for reducing economic inequality have to be tied clearly to achieving desirable objectives other than simply reducing inequality.
A second lesson is that, in general, appeals for government to reduce inequality have to be related to objectives that benefit all, or almost all, Americans. They can’t be tied simply to the poor or to minorities. Sanders is careful to talk about the “gap between the very rich and everyone else” and Warren rails against the government being run “for the top ten percent.” And Sanders and Clinton have both directed their appeals toward aiding what Sanders calls the “collapsing middle class.” That goes for the programs themselves, as well as the rhetoric. Social Security and Medicare remain popular because they are universal programs. The Obama administration, eager to fend off business lobbies and get its proposal through Congress, introduced elements into the Affordable Care Act that made it appear directed primarily at the uninsured; that’s what has invited the public’s disapproval of the plan.
A third lesson is that at least in this election, the proposals themselves cannot be so ambitious that they raise fears about higher taxes and greater spending. While a proposal like the one Sanders makes for extending the Medicare system to all Americans could conceivably lower individual healthcare costs, it would require a very large increase in government taxes and spending. Politically, it would inevitably get caught in the web of distrust of large government programs – if not in the months before the primaries, certainly during a general election. For the present, proposals to reduce inequality will have to be linked to more modest objectives that can be pursued incrementally. A candidate like Sanders could argue persuasively that by advancing these kind of bold proposals now, he is preparing the ground for public acceptance of this approach in the years to come. But he can’t argue that a majority of Americans would now find them acceptable.
To be sure, Americans have adopted measures that have dramatically reduced inequality. They did so during the two world wars and during the height of the Cold War, when the America’s leaders attempted to unite the country in a spirit of common sacrifice. During World War II, the top marginal income tax rate rose to 94 percent. But outside of wartime, Americans have only backed populist measures during the progressive era from the 1890s until World War I, during the New Deal of the 1930s, and during the 1960s.
There were three conditions that prevailed during the Progressive and New Deal eras. First, there were sharp downturns and panics. There was a depression in the 1890s and a financial panic in 1907, and the Great Depression spanned the 1930s. Second, there was genuine immiseration. During the progressive era and the first six years of the Great Depression, unemployed Americans had to fall back on charity in order to survive. Americans at both times stood in danger of losing their life savings from bank runs. Americans in the 1930s, historian Alan Brinkley wrote in Voices of Protest, “stood in danger of being plunged back into what they viewed as an abyss of powerlessness and dependence.” Third, there were large, powerful movements demanding the reduction in economic inequality: the Populists, the Socialist Party, and American Federation of Labor during the progressive era, and the fledgling industrial union movement, the Socialist and Communist parties, and Huey Long’s Share the Wealth Clubs, which claimed three million adherents, during the 1930s. During the 1960s, there was no economic downturn, but America’s leaders had to unite the country to fight a war and maintain peace at home in the face of a large anti-war movement and civil rights movement.
If you look at America today, the only one of these conditions that prevails is the first. During the Great Recession, unemployment did climb to ten percent, and the overall labor participation rate plummeted. But the unemployed and the working and middle class were protected from immiseration by the “safety net” that was erected over the last century. From 2007 to 2009, when the recession was at its height, after-tax income of the middle fifth fell only 1.4 percent. When transfers, including Medicare, Medicaid, unemployment compensation and social security are included, the median income fell less than one percent between 2007 and 2010. By 2014, according to economist Scott Winship of the Manhattan Institute, total income for the middle third was back to where it was in 2007.
There were political movements over the last seven years, but the leftwing and liberal populist movements flickered and died off. Occupy Wall Street arose in September 2011 and briefly spread to other cities, but was gone by the winter. The labor movement has continued to decline. Sanders' appeal in the primary shows growing support for a leftwing alternative, but it remains to be seen whether that can be translated into ongoing movements. The main grassroots movements arose on the right. The Tea Party groups, many of which were spontaneous and not directed by business lobbies from Washington or Wichita, were in response to the unease and dislocation created by the Great Recession, but they tended to blame big government, illegal immigrants and undeserving poor for the country’s economic ills. They rejected liberal proposals to end economic inequality.
Circumstances could, of course, change. The recovery from the Great Recession has been weak, and could halt together in the face of a slumping world economy. A prolonged economic slowdown could have unexpected effects – among them, a growing cry, heard in the early 1930s, that government not continue to shrink and withdraw but instead do something to turn the country around. If that happens, it could provide fertile ground nationally for the kind of populist appeals against economic inequality that Sanders and Warren have made. Reducing economic inequality could become not merely a moral, but a political imperative. But in the meantime, the politics of inequality are clouded and confused, and those politicians who hope to win national or state office by making appeals to reduce inequality must proceed with care.