When they were asked how much you have to earn to be rich, the presidential candidates differed wildly:
Obama didn't hesitate. "I would argue that if you are making more than $250,000, then you are in the top 3, 4 percent of this country," he said. "You are doing well."
McCain took a far more discursive approach to answering the question but ultimately settled on a dramatically higher figure: "I think if you're just talking about income, how about $5 million?"
The Arizona Republican quickly added that he was "sure that comment will be distorted," and his campaign said Sunday that he was joking.
More precisely, he said:
WARREN: Everybody talks about, you know, taxing the rich, but not the poor, the middle class. At what point, give me a number, give me a specific number. Where do you move from middle class to rich? …
MCCAIN: How about $5 million? No, but seriously, I don’t think you can, I don’t think seriously that the point is I’m trying to make, seriously, and I’m sure that comment will be distorted but the point is…that we want to keep people’s taxes low, and increase revenues. … So, it doesn’t matter really what my definition of rich is because I don’t want to raise anybody’s taxes. I really don’t.
McCain's spokesman later tried to walk the whole answer back as a joke. If so, it's of the ha-ha-but-really variety, not of the absurdist variety. McCain himself simply has no sense of what constitutes wealth in America, so he chose a number that seemed to him large but not beyond the realm of reality. A number which only a tiny fraction of Americans can achieve.
Americans tend to care what becomes of the rich to a degree that's a bit illogical, because we all hope one day to be rich. So increases on the marginal tax rate for people earning millions of dollars, or estate taxes that only impact people who leave several million dollars to their heirs (outside of various tax shelters) manage to be unpopular even with people who earn nowhere near that much money, and have no realistic chance of inheriting nor bequeathing such an estate.
What McCain is doing here plays against that. If being rich means earning half a million dollars a year, that means breaking into the top 1% of households. I like those odds. Obama's "rich" would includes somewhere between 5% and 10% of households, which is even better odds. McCain is restricting richness to less than one in 1000 households. I don't like those odds at all. That's, well, elitist.
To continue with the LA Times account:
Even so, the remark highlighted the candidates' disparate outlooks. Analysts who study income distribution said the answers appeared to reflect shifting political calculations more than economic reality.
Economists said in interviews Sunday that neither candidate was wrong because there are no agreed-upon definitions for the terms that describe income segments.
"To be fair to both of them, 'rich' is an adjective," said James P. Smith, a senior economist at the Rand Corp., a nonpartisan think thank in Santa Monica. "Economic science is not going to tell you that 'this' is the cutoff point."
Yet the $5-million level, Smith said, includes "almost nobody." Experts said that of all the households in the nation, fewer than one-tenth of 1% had an annual income of $5 million or more.
McCain, with his beer heiress wife, his 8 houses, his $520 loafers, his private jet, and his rock star lifestyle, is clearly rich. I'd rather have the person making policy for me be someone who understands what it's like to live the life of an average American, and McCain simply hasn't got that.
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I'm not a McCain supporter but I really think you missed the point here. McCain obviously was joking. To use his "$5 million" comment to support a view that he's out of touch with the common man is strecthing the point. This is especially true when you read the entire paragraph in context.
He may very well be out of touch with the common man, but to use this comment of his as proof of that is really taking his meaning out of context.
As ration, and generally liberal, thinkers we're constantly upset with the kinds of lies. misrepresentations, and out of context analysis done by the likes of Rush Limbaugh, Bill O'Reilly, the Fox network in general, and so on. But if we're claiming to be better than that then we should hold ourselves to a higher level. Using this comment to say that McCain thinks that only people who make more than $5 million a year are rich is exactly the same kind of misrepresentation that we'd like to stop.
We should be better than that.
That should be "As rational, and generally liberal . . ."
"Americans tend to care what becomes of the rich to a degree that's a bit illogical, because we all hope one day to be rich. So increases on the marginal tax rate for people earning millions of dollars, or estate taxes that only impact people who leave several million dollars to their heirs (outside of various tax shelters) manage to be unpopular even with people who earn nowhere near that much money, and have no realistic chance of inheriting nor bequeathing such an estate."
I'm firmly in the middle class, always will be. I don't expect ever to deal with "millions of dollars," and I don't favor tax breaks for the rich. Is there a source, reference, for your statement? Perhaps I'm simply out of touch.
Greg, I don't see how I distorted anything. I provided the full text of McCain's response. I interpreted it as best I can. He was asked what the cutoff is for someone to be rich, and said "$5 million." Unless he wants to give a more realistic number, that's got to be the number we discuss. I'm not going to try to gin up a more plausible explanation of what he thinks, I'm going to base my assessment on what he actually says, and how he actually proposes to govern. And as a practical matter, he acts like tax policies that benefit only the super-rich are actually meant for the middle class.
Honestly, his claim that it doesn't matter who is rich is more offensive than his inability to find a definition of rich that's within an order of magnitude of what any reasonable economist would say. We've seen a growing gap between rich and poor, to our national detriment. Wage growth has been static or negative since Bush took office, with all of the economic growth going to the wealthiest Americans. This is a fundamental problem, and a president who thinks it doesn't matter how you define rich (and who misdefines it when pressed) is not going to fix that problem.
MA: The idea that Americans tend to think they'll be rich one of these days comes from surveys which find overwhelming opposition to the estate tax, even though it only hits the super-rich, and opposition to other policies which only affect the wealthiest fraction of the population. No one but the super-rich pays capital gains taxes in any serious amount, yet conservatives have been very successful at getting people to think it matters: http://www.rasmussenreports.com/public_content/business/taxes/65_oppose…
For one anomalous estate tax result out of many: http://www.rasmussenreports.com/public_content/current_events/other_cur…
I think that was more due to McCain trying to say "I don't want to raise anyones taxes".
Although I think McCain is out of touch, I was more struck by that when he made the "I don't use the internet" comment. Granted, I might not be the average voter wrt my internet usage.
What does it mean that if we use Obama's number, both McCain and Obama are rich, but if we take McCain's number, then only McCain is rich (and then only via his wife)?
It makes me rather doubt these numbers were just picked off the top of their heads.
In any event they are both filthy rich by my standards! 4 million vs. 6 million, does it really matter?
As a youngster, part of "generation.com", I will not be suprised to see a black president. I hope and somewhat expect to live to see a female president, a non-Christian president (perhaps Jewish, Muslim or even Buddhist or Hindu!), a gay president, or a president with purple hair. I will be shocked, absolutely gobsmacked, if I *ever* see a working-class president. Social progress? Yes! Social progress on socio-economic status? Not so much.
I think part of the problem is confusion over what progressive taxation actually is. Over the past couple of years I've explained how creating a 90% income tax bracket for say, everyone getting more than $250,000/yr income, doesn't mean that 90% of that $250,000 is taken away from them.
Progressive taxation means that only the money above the cutoff is taxed at that rate.
For example, in a two bracket system where up to $100,000 is taxed at 25% and above $100,000 is taxed at 50%, a person earning $120,000 would pay $35,000 in tax. That is: 25% of $100,000 or $25,000 and 50% of the additional $20,000 adding another $10,000 and totaling $35,000.
The common misconception is that the person earning $120,000 in this system would pay $60,000 in taxes.
Of course, our current system is only barely progressive. But it wasn't that long ago, in the 1950's and 60's, when there were tax brackets in the 70% or higher range. The government didn't get much more income, but there was a real disincentive to earn enough to enter those ranges.
The money not spent on CEO's, movie stars, and sports figures went back into the economy as business loans, research and development, infrastructure, education, wages and benefits.