How does the GOP fight a populist, tax the rich proposal?

President Obama and his Democrat allies are back to their usual Eat the Rich strategy, one which will be on display at the State of the Union. Noah talked about this last night and left some interesting questions on the table.

Even though some of these tax increases will do the middle class no favors, it is not clear they will be rejected by a majority of the public. Pollsters increasingly find that the Democratic Party’s message of economic populism is resonating with a public that has not seen their incomes increase in years.

This is a message which hasn’t been lost on the President’s team, as they are clearly moving forward full steam ahead.

Senior White House officials say President Obama will use his state of the union to float several new economic ideas, including tax hikes on capital gains and wealthy inheritances, and new fees on the largest financial firms to pay for more middle class-friendly tax credits and cuts.

The price tag to the wealthiest Americans and those large financial institutions? According to senior White House officials it could be $320 billion over 10 years.

The president will propose raising the capital gains rate to 28 percent, up from 15 percent, which is the maximum most taxpayers pay now.

Let’s just get one thing out of the way up front. This dog and pony show has zero to do with policy and everything to do with politics. Obama already knows that not one of these proposals will ever make it within smelling distance of the floor for a vote in either chamber. What’s being done here is essentially a hand-off of the baton to Hillary Clinton and all of the Democrat hopefuls with an eye toward the next election. This doesn’t make it a stupid idea for the President. He doesn’t need to jack up the tax rates to be successful. He just needs to make the Republicans refuse to jack up the tax rates.

This populist message is referred to as “populist” for a reason. People with less wealth are often hard pressed to resist feeling a bit of jealousy toward those who are more successful. Even if draining all the wealth from the wealthy won’t make any significant difference in their own lives, there is a nasty siren call associated with the idea of taking the fat cats down a peg or two.

This is a message which can be countered, but only if it’s done intelligently. If there is one thing which is more powerful than jealousy, it’s aspiration. As far as the working class goes, they almost universally have one thing in common; they aspire to reach a higher, more comfortable status themselves. Traditionally we saw Americans who didn’t hate or even envy the rich to a great degree. They looked at that big house in the more expensive part of town and didn’t want to burn it down… they wanted a house like that for themselves. And if they did manage to make it up near the top of the ladder they certainly didn’t want a 75% tax rate bill waiting for them when they arrived.

The problem is that the worse off the middle class is and the lower their confidence that they can actually make it successfully, the less inclined they may be to protect the accomplishments of the high achievers. In darker times like that, the populist “tax the rich” message can burrow in far more deeply to the national psyche. In this way, an impoverished, despondent middle class actually works to the benefit of the Democrats. With that in mind, Republican candidates need to ensure they stick with a positive, hopeful message on domestic issues, even as they leverage their current advantage over the Democrats on foreign policy.

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