The expanding government bailout of institutions and individuals caught up in the national financial fiasco, however, points to a real class conflict in this country. It is not a conflict that divides Americans by wealth. It is a conflict that divides Americans by character.
First, consider the phony class war—the one both John McCain and Barack Obama have tried to exploit.
When President Bush in 2001 offered a proposal to cut income-tax rates for everyone who pays income taxes, McCain—who had lost a bitter primary campaign to Bush the year before and who still desired to become president—could not bring himself to vote for it.
Bush’s proposal cut taxes too much for the rich, McCain argued. His solution: Cast a vote to deny non-rich people a tax cut he decried as too small—on grounds he was saving them from paying for the rich to get a tax cut that was too big.
“I cannot in good conscience support a tax cut in which so many of the benefits go to the most fortunate among us, at the expense of middle-class Americans who most need tax relief,” McCain said on the Senate floor.
In this campaign, Obama has expanded the phony class war by introducing a third group of potential combatants. He now classifies Americans as being either “rich,” “middle class” or living in a sort of income-bracket no man’s land.
In a forum at the Saddleback Church last month, Pastor Rick Warren asked Obama to define “rich.” Obama eventually said: “What I can say is, is that under the approach I’m taking, if you make $150,000 or less, you will see a tax cut. If you’re making $250,000 a year or more, you’re going to see a modest increase.”
What about the Americans making between $150,000.01 and $249,999.99? What will Obama do to their tax bills? How does he want to manipulate them politically? Does he want to make them feel like victims, or does he want to hold them up as economic evil-doers to the worthier—yet put-upon—people making a mere $149,999.99 per year?
In real wars, there are unjust aggressors and victims forced to defend themselves. Presumably, if there were a class war in America, the unjust aggressors would be those who wrongfully take money or other things of value from those to whom it rightly belongs.
When Congress cut tax rates for all taxpayers, it was a wholly benign act. There were no victims, period. Congress did not—by cutting everyone’s tax rate—unjustly take money from anyone. Nor did taxpayers whose top rate dropped from 36 percent to 33 percent, allowing them to keep more of their own money, commit an act of aggression—financially or otherwise—against taxpayers whose top rate dropped from 28 percent to 25 percent.
But what about in the financial fiasco? Are there are unjust aggressors and true victims at the core of this crisis?
Absolutely. But the dividing line is not an income bracket, because people of all incomes are on both sides of this conflict. If you want to know which side you are on, just answer this question: Are you getting bailed out? Or does the government expect you to bail someone else out?
On one side are Americans who rely on themselves. On the other side are Americans who rely on the federal government—and politicians who exploit that reliance to gain and maintain political power, and corporate bureaucrats who exploit that reliance to get money.
On one side are Americans who exhibited the ancient virtues of hard work, thrift and prudence. The people who never bought—and never would buy—a house they could not afford. These people will pay for the bailout.
On the other side are Americans who exhibited a core vice of the welfare state: wanting something they did not earn. They took out a mortgage they could not afford, or from a position of government power pushed public policies promoting mortgages to people who could not afford them, or profited within some corporate bureaucracy from wholesale commerce in such mortgages. These are the people who will benefit from the bailout.
What is the solution? Roll back government dependency in all its forms. As long as the federal government maintains a welfare state, there will be politicians in Washington who have an interest in increasing the number of people who will need bailouts and decreasing the number of people who pay.