The division between conservative supply-siders and liberal economists continued into 2008 campaigns for the U.S. presidency. Reforms during the Roosevelt and Truman years had contributed to the development of the middle class beyond what it had been before the Great Depression. In his campaign for the presidency the Democrat, Barack Obama, spoke of helping the middle class. He advocated raising taxes on those earning more than $200,000 per year and of bringing back the estate tax. He argued that the rate at which he taxed businesses and other wealthy people would be rolled back from President Bush's tax cuts. He spoke of the Bush administration's "trickle-down" policies and accused his Republican opponent, John McCain of having embraced this approach "for the last eight years." The election, wrote the Washington Post columnist E.J. Dionne, was a referendum on "trickle down economics."note55
McCain was campaigning with the slogan "country first," but he and his running mate ridiculed the notion of wealthy people paying taxes as a patriotic duty. McCain described Obama's position as "tax and spend," as "spreading the wealth" and as socialism. It was an historic conservatism. In 1935 some conservatives described Social Security as socialist. In 1965 some conservatives described Medicare as socialist. It was a point of view expressed in 2008 on the internet with the claim that in electing Obama the U.S. would have its first socialist government, socialism as practiced in Europe, a socialism that creates regulations concerning every aspect of our life and therefore less freedom.
John McCain described Obama as "the far left of American politics." Meanwhile candidate Obama was advocating belt tightening, eliminating government programs that do not work and increasing jobs by way of investment in infrastructure and new sources of energy, through government spending.
Working against McCain and the Republicans was a substantial body of opinion that was displeased by the earnings of corporate executives. For example, the head of General Motors, a failing company, was making ten times what the head of Toyota Motors was making. The economist Paul Krugman pointed out that the distribution of wealth in the U.S. had returned to about what it was in 1920.
Obama was describing his economic plan as benefiting working people which, in turn, would benefit investors – a trickle up theory of economics similar to Henry Ford's decision back in 1914 to increase the pay of his workers to $5 per hour. Other industrialists had hated Ford's idea, but Ford believed that more money to his workers would allow them to buy his cars. Believers in "trickle up" held that putting more money into the hands of common people helped capitalism work better.
Into the Obama administration, Republicans stayed with their hostility to government spending and increases in taxation. They ridiculed the Obama administration's increased borrowing to stimulate the economy and the rise in unemployment above what President Obama had estimated.
Copyright © 2008-2015 by Frank E. Smitha. All rights reserved.