Tuesday, November 18, 2008

Obama's Secret Political Weapon: Tax Hikes

Leading up to Nov. 4 there were countless articles questioning Obama's ability to win over that most coveted group of voters: the Reagan Democrat. This was the demographic that would decide Indiana, Pennsylvania, and most importantly, Ohio. What is a “Reagan Democrat?” In short, the voter is white, probably male, blue collar, and no one really said it explicitly, but the underlying assumption was that he was uncomfortable voting for a black man (read: at least a little bit racist). Obama won all three Rust Belt states, most surprisingly Indiana. And he did it, sure enough, by winning over the Reagan Democrats. How did he do it?

I’m sure there are a lot of factors that contributed to Obama’s victory, but my hunch is that one factor played an outsized role. Ironically, I think that the traditional Republican-dominated issue of taxes is what brought home the bacon for Obama. By saying that he would cut taxes on 95% of the population and, more importantly, raise taxes on the rich, Obama was able to convince these guys that he was one of them. Even though McCain would cut taxes across the board, the Obama line that the McCain tax cuts would help the rich much more than the little guy really hit home. McCain was for Wall St. and Obama was for Main St. If there is anything that can overcome uneasiness with what a politician looks like, it’s the populist promise to redistribute wealth. In a clash between identity politics and class warfare, the class argument will win out every time the economy is in a recession.

Everyone automatically thinks about taxes as a losing issue for Democrats—especially if there is any talk of raising taxes…on anyone. But this election cycle, middle class anger at the greed of Wall St. actually made Obama’s policy of raising taxes a winning issue, as long as it was only a tax-hike on the rich. It will be interesting to see how this plays out politically if Obama decides not to raise anyone's taxes because of the severity of the economic crisis.

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