As Income Inequality Widens, Rich Presidential Candidates Dominate
In Harry Truman’s day, anyone (or at least any white male) could grow up to be president—even a failed haberdasher from Independence, Mo. Today, it’s mostly the super-rich who get as far as running for our highest office. It’s a measurable problem that’s gotten much worse in recent years.
In this new century, the gap between the income of average Americans and that of their presidential candidates has widened dramatically.
In 1987, Michael Dukakis’s income as governor of Massachusetts was just four times that of the average American. In 2007, it took 70 John and Jane Q. Publics to match then-senator Barack Obama’s income, most of it from book royalties. And last year, Mitt Romney—another former Bay State governor—took in more than 400 times Mr. or Mrs. Smith.
But the implications are much more significant than Mitt Romney’s extraordinary success as the founder of Bain Capital. The widening space between our candidates and ourselves is of a piece with the rift separating the super-rich from the middle class. And that represents a threat not just to the ideal of the American dream, but to the stability of our society, which is only as strong as the mobility of the middle class.
Don’t get me wrong—I believe that the American Dream is alive and well, especially for those who belong to what Thomas Jefferson called the “aristocracy of talent” and W.E.B. Du Bois called the “talented 10th.” Most significantly, stubborn old tribal societal barriers like race are fading away. And exhibit A for the endurance of the American Dream in this respect is our president, Barack Obama.
But the issue is broad accessibility to the American Dream. Even as barriers of race are falling in America, barriers of class are growing. Since 1993, the top 1% has seen a real-income growth of 58%, while the remaining 99% have seen their incomes grow just 6.4%.
The average CEO this year will make 380 times as much as the average worker. The average professional baseball player now makes 66 times the average American household—twice as much than just two decades ago.
The same rich-get-richer dynamic is at work in our politics. Back in 1972, Democratic nominee George McGovern, a U.S. Senator from South Dakota, had an income of $89,000—roughly 10 times the average household income at that time. Four years later, peanut farmer and Georgia Governor Jimmy Carter had an income of $136,000. Four years after that, Ronald Reagan—a successful actor and public speaker as well as a former California governor—had an income of $515,000. (All this data comes from numbers crunched by Professor Emmanuel Saez, director of the Center for Equitable Growth at Berkeley.
Reagan was criticized for giving paid speeches to foreign audiences and corporations after he left office, but this is now an uncontroversial and established pattern—capitalizing on public service once it ends, like making up for lost time and earnings. Bill Clinton, who entered office earning just $244,000 as the governor of Arkansas, netted $13.4 million last year in speaking fees alone.
But in the past decade, this pattern has reversed: candidates cash out before they run for president.
In 2004 Massachusetts Senator John Kerry enjoyed a gross income of $5.4 million dollars. He was the only Democrat in the past four decades to have made more money in the year before running than his Republican counterpart. In 2008 Arizona Senator John McCain entered the race with an income of $4.5 million dollars. (And both Johns have total net worths significantly higher than even those numbers would suggest.) And Obama took in $4.1 million in 2007—just a few years after he finished paying off his student loans. But Mitt Romney dwarfs them all, with an income of $20.9 million that’s effectively passive income from investments he collected at Bain, a company he left a decade or so earlier.
Of course, we have had many decidedly wealthy presidents before, most notably George Washington, who by some measures was the richest man in the colonies. Democratic icons FDR and JFK were sons of privilege and extraordinary wealth. And unlike Mitt Romney, they could not claim to have exponentially grown the money they inherited through entrepreneurial achievements.
But the overall trend is troubling. We are seeing a growing gap between the jet-set super-rich and middle class that is unlike anything we have experienced since at least the Gilded Age.
This gap is evident even when the income of the super-rich is compared with the upper-middle class, who might be termed the working wealthy. It is one reason why President Obama’s emphasis on raising taxes on households who make $250,000 a year (five times the average income) fails to provide the same powerful contrast as the alternative upper-income rate that would only hit people who make over $1 million a year—some 233,000 households. That is a much more difficult line to defend.
In our current hair-trigger, hyper-partisan environment, just recognizing the growing gap between the super-rich, the middle class, and the poor can be attacked as engaging in class warfare, or smacking of socialism. But it is a matter of math.
America works because class has always been seen as surmountable, a fleeting state for families that can be overcome with hard work, brains, and a bit of luck. If that idea starts to erode, especially at the symbolic pinnacle of our meritocracy—the presidency—we will start to lose an important part of what makes us American.
The log-cabin roots of Abraham Lincoln, the orphan-turned-millionaire inspiration of Herbert Hoover, or the failed haberdashery of Harry Truman, send out powerful signals in our country and around the world about just what makes America different. We ought to guard that evidence of American exceptionalism with great care and forethought.
It is the secret of our success.