Last Friday, the latest unemployment figures revealed that, despite a better-than-expected increase in the number of people starting a new job, the rate rose slightly to 8.3%. Historically, that is bad news for President Obama: no president other than Franklin D. Roosevelt has won an election when unemployment is above 8%. With only thre months left in this campaign, it is highly unlikely to see a fall below that benchmark.
But, despite this, it was a week of good news for Obama's chances of re-election, as a number of polls showed a slowly-increasing lead in three battleground states. The numbers from Pennsylvania, Florida, and Ohio have allowed Obama's campaign to begin speculation that their candidate's support is “trending” in an upward direction. The strategists who decide the content and tone of Obama's re-election message will be delighted that their emphasis on economic fairness appears to be working.
And while these polls will be long forgotten come November, this week also saw a refrain against Mitt Romney gain considerable traction.
Romney is a wealthy man, and, though that is not in itself a disqualification in most people's minds, the means he has employed to build his fortune has raised concerns. The essence of the problem is that Romney has not made money by building a tangible product with which voters can identify. He is not the innovator or inventor that Americans so admire as part of their legacy of pioneering individual achievement.
Instead, Romney has used knowledge of financial accounting methods to manipulate the performance of existing companies. The exact details of how the former executive made money from the misfortunes of struggling companies are not that important, in electoral terms, but the perception that he used opportunities afforded him by his elite background is important. All Americans can imagine their child as the next Bill Gates or Steve Jobs – that is the American Dream in practice – but Mitt Romney's world is alien and closed to most of them.
John F. Kennedy overcame that possible obstacle to his candidacy by convincing America that he was sympathetic to the plight of those less fortunate than himself. Romney has not done that, and worse, his campaign is beginning to devolve into a defence of the wealth that the privileged have accrued in the last few decades. It insists that cutting the taxes of the wealthiest Americans will benefit everyone by increased economic growth, but that outcome is not a certainty. What it will definitely achieve is an increase in the fortunes of the friends of Mitt Romney.
That is why the release of a report by the Tax Policy Center on Tuesday, explaining how the middle class will face an increase in their tax burden to pay for the possible cuts enjoyed by Romney and his circle is so damaging. The report declares:
Our major conclusion is that any revenue-neutral individual income tax change that incorporates the features Governor Romney has proposed would provide large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower-income taxpayers.
By revenue-neutral the authors of the report mean, as Romney has stressed in his plan, that any cuts in taxes in one area will be paid for with increased tax revenue from elsewhere. This does not mean that individuals with an average income will face large increases in their income taxes, but they will see a substantial decrease in the so-called expenditures that lessen their existing tax obligations. For instance, homeowners receive a deduction in their taxable income according to the interest paid on their mortgages. Under Romney's plan that policy of tax relief aimed at helping the middle class own their homes would be substantially reduced.
Even more problematically for Romney, some of these expenditures help adults with children, and his plan to cut taxes for the wealthy would reduce those subsidies. As the Tax Policy Center report, estimating that Romney's cuts, notes:
If tax expenditures were completely eliminated for households above $200,000 and reduced across-the-board by 58 percent for taxpayers below $200,000 then taxpayers with children who make less than $200,000 would pay, on average, $2,000 more in taxes.
Democrats immediately seized upon this report, and especially the potential financial blow for a married couple with children, to attack Romney. The Obama for America website posted a tax calculator, devastating in its simplicity, to allow a taxpayer with children to find out exactly how much the Romney tax plan would cost them. With a default position of a married tax filer with 2 children, typing in an income of S100,000 and informs you that whereas the Romney plan would cost you $1,339 next year, between 2009-2012 you have saved $5,600, with a possible $3,999 of further savings in 2013.
One of the perennial questions that interests election strategists is to what extent people vote with their pocketbook rather than their ideological beliefs. If the general narrative that Romney is out to protect the wealth of a privileged class to the detriment of others' economic position, then we could see national polls follow the trend that is beginning in the battleground states of Pennsylvania, Ohio and Florida.