In October of 2008 in Toledo, OH, a non-plumber named Sam approached Barack Obama and demonstrated an inability to comprehend marginal taxation*. Obama engaged him in a civil discussion about taxes during which he used the phrase "spread the wealth." From that day forward, Obama's opponents foolishly referred to him as a "socialist."
I encourage you to read the entire discussion to understand the context. In summary, Obama explained how a weak consumer base hurts businesses and referenced the universally accepted problem of income inequality. He defended his tax plan, which would cut the bottom rate and allow the top rate to return to Clinton-era levels when commerce still managed to thrive.
Does Obama's support for a mild adjustment of tax rates make him socialist? Do any of his policies qualify him as a socialist? The question is so stupid that liberals rarely even bother to answer it. In this column, I will bravely venture down the rabbit hole and attempt to clear up conservatives' confusion.
When I first heard this slur uttered, I laughed and thought to myself, "What are they trying to do? Red-bait? Don't they know the Cold War is over?" I figured that it would fade away, but it never did. Millions of conservatives and dozens of pundits on this site believe that Obama is a socialist.
This silliness arises out of a fundamental misunderstanding of the current ideological composition of the Democratic party, the concept of a mixed economy, and the definition of socialism. Let me try to explain.
A generation ago, we saw the rise of the "New Left." Unlike liberals of the past who were staunchly anti-communist, many of these liberal idealists flirted with socialism and believed that government could create an egalitarian utopia through aggressive redistribution and anti-poverty programs. To varying degrees, these liberals fundamentally opposed capitalism. They rejected incrementalism and compromise and argued for radical change.
Conservatives seem to believe that these people still carry weight within the Democratic party. Conservatives are wrong. Starting in the late 1980s, the New Democrat movement (DLC/Third Way/etc) began to take control of the party. The rise of the DLC was a reaction to the excesses and failures of the New Left. They internalized Reaganism's critiques of government and attempted to work within that framework.
New Dems acknowledged that the welfare state (and many government programs) created dependency, and that dependency exasperated social problems. They also acknowledged that government was an inefficient tool of last resort in the face of market failures. They believed in a mixed economy, strongly supported capitalism, and supported pragmatism over ideology. They see the American experiment as a delicate balancing act between rugged individualism and kumbaya collectivism and retained their belief that government can be a force for good. In place of many of the market disruptive government programs of the past, New Dems often favor programs that "nudge" the market in order to create a more efficient economy where entrepreneurs can innovate and creativity can thrive. Their favored programs utilize competition and incentives.
But enough about history. Let's get back to Obama's statement. Another belief of New Dems is that a market economy functions best when it includes a healthy middle class. We believe that a healthy middle class is the engine of consumption, which enriches everyone. A middle class with spending power creates explosive growth and a rising standard of living (see: the 90s). We accept that over-taxation of wealth and profit stifles growth, but we agree with most economists that our current level of taxation is well below the level that might discourage work (aside from the corporate tax rate, which can come down). We support free trade. We also believe that a small adjustment in marginal tax rates (toward a bit more progressivity) will create a healthier middle class without disrupting the market. That was the idea that Obama was trying to express. It's not a controversial idea. It's an idea that Reagan expressed multiple times when proposing tax increases on the rich.
Today's Democratic party includes New Democrats and Paleo-Liberals (leftovers from the Great Society era or members from extremely liberal districts). Barack Obama is a New Democrat. This puts him to the Right of the modern Democratic party. He's definitely to the Right of most most rank and file Democratic voters.
Obamacare provides a great case study for Obama's position within the party. Obama modeled the ACA after Mitt Romney's healthcare plan. It is to the Right of Nixon's healthcare plan. Many of Obama's ideas came from the Heritage Foundation. The ACA works within the market economy and was designed with assistance from the healthcare industry. Forget a public option, most liberals wanted single-payer healthcare, or a complete government takeover of the insurance industry. Republicans opposed it because they (correctly and cleverly) believed by denying the plan an aura of bipartisanship, they would make it unpopular. Blue Dog Democrats (who tended to be big government Democrats from donee states, by the way) voted against it not because they opposed it, but because they feared for their political lives.
That's why we laugh when conservatives call Obama a sociaist or they refer to him as a central planner. It's absurd. If Obama is a socialist, then Bush and Reagan were quasi-socialists and Bernie Sanders is some sort of mega-socialist. If you believe that the entire Democratic party is a socialist party and that most Republicans (until 2008) were socialists, then I suppose Obama is a socialist. Otherwise, you might want to look that word up in a dictionary.
Photo Credit: An Honorable German
*This is a huge pet peeve of mine: "I run a small business and make $250k per year. You want to raise my taxes! I'm not rich!" Listen, stupid. Your taxes aren't going up. First of all, your taxable income is probably around $190k. But even if it were $250k, your taxes would remain the same. Marginal taxation means that every dollar earned after $250k would be taxed a several percentage points more. Your failure to understand our system of taxation makes it a small wonder that your business manages to bring in $250k.