‘War on Wall Street’? Billionaires Declare Themselves a Persecuted Minority
Billionaires are scrambling to ward off the specter of populist anger – from wealth taxes to increased regulation – looming over an age of unprecedented inequality. Perhaps they should have thought of this outcome 40 years ago.
The 2020 election may trigger a “war on Wall Street and wealth,” too-big-to-fail bank Citi has warned its clients in a letter quoted by Bloomberg this week. The bank laments that the rich these days are merely seen as a cash cow for “re-distributional policies, including further tax relief for low- and middle-income persons” – never mind that the primary beneficiaries of Trump’s 2017 tax cuts were the same rich individuals who received Citi’s letter, as well as the corporations they own. The pitchforks are coming out, and Citi wants its customers to be prepared.
The Citi letter is far from an isolated case of billionaires declaring themselves a persecuted class. The wealth tax floated by Democratic presidential candidates Bernie Sanders and Elizabeth Warren to pay for a much-needed reinforcement of the country’s tattered social safety net has clearly struck fear into the hearts of the super-rich, combined as it is with an upsurge in populist rhetoric and the gradual realization in other parts of the world that neoliberal capitalism isn’t all it’s cracked up to be.
Bloomberg, the only outlet to publish the letter, is named for its founder Michael Bloomberg, the former mayor of New York City who is so opposed to the idea of wealth taxes and increased regulation that he jumped into the presidential race last month, despite an already-crowded field and an electorate with no particular desire for another wealthy white male septuagenarian in the race. As mayor, he turned New York into a playground for the super-rich and a police state for the poor, a record that appeals to few – except, of course, his fellow billionaires.
“The vilification of billionaires makes no sense to me,” hedge fund billionaire Leon Cooperman told CNBC last week, tearing up on national television as he defended his fortune from the grasping hands of a hypothetical President Warren and insisted his fellow billionaires – Bloomberg included – have made the world a “better place.” Cooperman has called the wealth tax a “bankrupt concept” and warned that the stock market would crash if Warren is elected – a prediction that sounded more like a threat than a warning from the hedge-funder. When he dies, “I plan to give away all my money!” he whined, apparently shocked that such posthumous philanthropy didn’t impress politicians.
Fear of the pitchfork-wielding masses is nothing new, but with inequality so entrenched that billionaires are actually paying a lower tax rate than the working class, even a slight correction is bound to feel like a punishment to the monstrously rich. Perhaps this is why so few of them are trying to avoid the anticipated class war by championing initiatives that might work out positively for working people, such as closing the tax loopholes that allow the wealthy to hide their fortunes overseas or in “charitable” foundations, taxing Wall Street transactions, or taxing massive fortunes as Sanders and Warren want to do. Instead, billionaires are following the lead of former Starbucks CEO Howard Schultz – the only Democratic candidate whom people have turned out to protest against – who insisted the public refer to his ilk as “people of means,” because of the negative connotation of the word “billionaire.”
After Warren released a commercial splicing together several billionaires’ incredulous reaction to her wealth tax, several of them fought back. Goldman Sachs CEO Lloyd Blankfein suggested dumping on billionaires was discrimination – “criticism of people as a group” – and got in a dig at the Massachusetts senator’s ‘Native American’ origins. Cooperman got nastier, snarling “She doesn’t know who the f*** she’s tweeting” in response to her choice to superimpose “charged with insider trading” over his face.
“In America, people don’t hate the wealthy, they want to be them,” hedge funder Cooperman pleaded, continuing in his tearstained defense of obscene wealth.
But it’s not as easy as it used to be to enter the ranks of the rich in the erstwhile Land of Opportunity. Social mobility has dropped 70 percent in the US in the last half-century, according to Harvard economist Raj Chetty, to the point where by 2016 half of 30-year-olds were earning less than their parents had at the same age. The bottom half of workers by income have seen no real growth in their earnings since the 1970s, though Chetty points to 1980 as the “inflection point” after which inequality exploded. The once-secure American middle class has been decimated by offshoring and the dismantling of unions, while the “trickle-down” economic policies that kicked off the inequality epidemic have instead caused the savings of the working class to trickle up to the wealthy. And most Americans – four out of five – are struggling with some kind of debt. It’s not surprising people are starting to wake up from the American dream.
But it was one particular complaint of Cooperman’s that epitomizes the billionaires’ panic. “The idea of vilifying wealthy people is so bogus – they’re appealing to the masses!” he cried, as if appalled that any politician would speak to voters rather than the donors who typically fill their war chests. Big-time Democratic donors have even threatened the party with the removal of their support if Warren (or Sanders, who famously threw down the gauntlet with “I don’t think billionaires should exist,” now a bumper sticker) gets the nomination.
Genuinely populist politicians haven’t been a problem in the past – the last Democrat in the White House, Barack Obama, staffed his cabinet under the direction of Citi executives despite promising to fight for the people on the campaign trail. While he was taking orders, his predecessor was bailing out Citi and the rest of the banks that had destroyed the US economy with predatory mortgage lending, leaving almost a million families out on the street in 2008 alone. But a stubborn populist current has infiltrated American politics despite the best efforts of the (billionaire-owned) media, which equates populism with fascism any chance it gets – and young Americans are looking increasingly favorably upon socialism. Neither of these trends predicts a rosy future for the super-rich.
Of course, even if the next president sticks to their guns and targets billionaires in the wallet, success is not guaranteed. Citi alluded to this in its letter, reminding investors that any reform-minded president will have a tough time pushing legislation through a Congress loyal to Wall Street. And the rich can take comfort in the fact that everything else Washington has declared war on in the last 50 years – poverty, drugs, and terrorism – are all still thriving.
By Helen Buyniski