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March 27, 2009

Today's Populism Still an Echo of Past

By David Paul Kuhn

There are no Huey Longs or Father Coughlins stirring millions of Americans against the rich. President Obama has been charged with class warfare for raising the top tax rate from 35 to 39.6 percent. By comparison, Herbert Hoover raised the top tax rate in 1932 from 25 to 63 percent.

Obama's inaugural address spoke of an economy "badly weakened" by "greed and irresponsibility on the part of some but also our collective failure to make hard choices." Franklin Roosevelt's inaugural did not share responsibility with the public. FDR used biblical language to blame "the rulers of the exchange of mankind's goods" and the "practices of the unscrupulous money changers" for the Great Depression.

Today, the United States is supposedly reliving a populist fervor. CNBC host Larry Kudlow has talked of Washington politicians "throwing a lot of faux populism" and accused Obama of "waging war against capital." Salon.com headlined the "uprising on Main Street," noting "today's populist rage." One Wall Street Journal column recently warned, "populist anger is hard to contain."

America is indeed flirting with populism. From CNN's Lou Dobbs to recently the halls of Congress, populism is on the upswing. In Ronald Reagan's conservative era economic populism was never able to hinge itself to the mainstream, a requirement for a movement meant to represent the masses. Some Democrats tried. Al Gore revived the slogan "people versus the powerful" in 2000. But it turned out many people aspired to be the rich and powerful.

When historian Michael Kazin published "The Populist Persuasion" in the 1990s he concluded, with a tone of regret, that "the centrist course of American politics" will likely continue as long as "the people' remain united more by what they wish to consume than by their grievances as producers." The question now facing the nation is whether the worst U.S. economic crisis in seven decades will unite Americans more by their grievance than their economic aspirations. For now, grievance has only gone so far. American populism today, however shocking for its absence in recent decades, remains mild by historical measure.

Consider one recent Rasmussen poll result. A modest 55 percent of Americans were classified as populist. Modest, that is, because populism by definition extols the common people over a small privileged elite.

"If we expect economic populism like that of the '30s we are going to be disappointed. It's not going to happen," Kazin said in an interview. "We are much more likely to see people going to stock holders meetings and demanding that CEOs get fired rather than seeing people on the streets."

American populism, it seems, is not yet exceedingly popular. By Rasmussen's measure, less Americans have a populist outlook than have the impression that President Obama is politically liberal.

It's particularly American that in this recession only a slim majority trust, to the extent it can be measured, the people more than the powerful. Rasmussen asked Americans a series of questions to differentiate the political class from the populist mainstream. For example: do you have more trust in the judgment of the people or political leaders on national issues?

It was American International Group's controversial $165 million in executive bonuses that sparked these questions and perhaps the most potent episode of populism in a generation. A Gallup Poll taken shortly after the news broke found that six out of 10 Americans were "outraged" by the bonuses. Politicians understood the sentiment and ran before klieg lights to condemn AIG.

The House of Representatives retroactively taxed most of those bonuses. The Senate, the more prudent chamber by design, stalled the proposal. By that point, much of the media was condemning the House's actions. The Washington Post turned up its nose in an editorial and wrote that the public outrage was "hardly relevant" to "what is in the public interest now" and that "AIG's demagogic critics in both parties should keep that in mind."

Looking back, the House may have been constitutionally out of line--oh that bill of attainder--but the House was not out of touch. Rasmussen found that while the public is overwhelmingly against Congress imposing retroactive taxes, a clear majority support making an exception in AIG's case. Gallup found that three in four Americans wanted the government to "block or recover the bonuses."

The public's view of Wall Street has generally crashed with the market. A January NBC/Wall Street Journal poll asked Americans to rate their confidence in 21 institutions. Wall Street and the financial industry ranked last. But Obama and most Democrats are notably not framing the whole of Wall Street as the scapegoat. One factor is that Democrats received 57 percent of the donations from securities and investment industries in 2008, some $86 million.

Still, Obama's outlook is more like progressive Teddy Roosevelt than populist William Jennings Bryan. TR's "malefactors of wealth" emphasized criminal conduct, not one class persecuting another. Bryan's "crown of thorns" and "cross of gold" evoked a sense of the common people's crucifixion.

"Core populist rhetoric tends to demonize people who have a lot of money and have concentrated power," Kazin said.

Of late, the president is going through pains to do the opposite. It's widely publicized that Obama plans to meet with about a dozen top bankers today, including the chief executives of Citigroup, Goldman Sachs and JPMorgan Chase.

Roosevelt did not have similar public summits with the giants of finance. J.P. Morgan himself is only recorded to have met with Roosevelt once during FDR's presidency, and they more likely discussed the Soviets than stocks.

Wall Street figures were so unpopular during the Great Depression that Hoover attempted to secretly have dinner with the New York Stock Exchange president and vice president. It took two days for newsmen to force the White House to confirm that the meeting took place.

Unlike Hoover's and FDR's day, the nation has not seen populist revolts. No runs on banks, thanks to reforms from Roosevelt's era. No food riots. Unemployment is at 8.1 percent, a third the unemployment rate in 1932.

The public is also married today, for better and now worse, to Wall Street. Half of Americans are directly invested in Wall Street's recovery.

"Once a society like ours passes from a society where most people don't have Marxist class consciousness but do see themselves as working class, to a society that sees itself as middle class, it's pretty hard to go back," Kazin said. "I don't see it happening. What people want is to get back to the '90s."

In other words, people want the rich times again. It is in fact Americans' optimism that helps explain why populist figures like Bryan never won the presidency. This past January, pollster John Zogby found that the portion of Americans who believe in the American dream dropped to 56 percent. What struck Zogby though, despite the recession the majority still held true to the American Dream-- however much it eludes many.

It was during Obama's first primetime press conference that he remarked, "the party now is over." Most of America missed out on that party. The 1974 median annual earnings of Americans, adjusted for inflation, was $38,102. By 2007, it was $40,320. At the turn of the century the nation's ultra-rich commanded more of the nation's income than anytime since the Roaring Twenties.

To an extent easy credit allowed the public to live with the illusion of rising prosperity. But the ultra-rich's hold over wealth has fallen since the 1920s. In 1929, the richest 1 percent owned about 40 percent of the nation's wealth. By 2000, one study found, it was cut in half. That decline mitigates grievance.

Obama is now attempting to strike the middle road between populism and the American quest for prosperity. He is forever the conciliator, as the New Yorker was early to point out.

In this week's press conference he said, "Bankers and executives on Wall Street need to realize that enriching themselves on the taxpayer's dime is inexcusable" but that "at the same time, the rest of us can't afford to demonize every investor or entrepreneur who seeks to make a profit. That drive is what has always fueled our prosperity."

The floor of this economic downturn may still be far off. The Great Depression saw it's 1929 crash followed by recovery and only another crash some eight years later. The populist sentiment today will likely rise if the recession slogs on for years or worsens. And Obama's conciliatory nature may then seem out of touch. As Kazin notes, "It's not in Obama's DNA. I think he is much more comfortable talking about unity."

By the mid-1930s, Roosevelt was being challenged from the left by Long and from the right by the ultra-rich who saw him as a "traitor to his class." FDR's rhetoric did escalate as the Depression dragged on. At the 1936 Democratic National Convention he spoke of the "privileged princes of these new economic dynasties, thirsting for power, [who] reached out for control over government," adding that "as a result the average man once more confronts the problem that faced the Minute Man."

That's class warfare. Gallup indeed found in 1936 that four out of 10 people believed "the government should limit the size of private fortunes" for all Americans. Today, solely for companies saved by tax dollars, it's controversial to merely demand executives don't get bonuses.

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