Victimized billionaires

By Felix Salmon
October 1, 2012

Why do billionaires feel victimized by Obama? Chrystia Freeland asks that question in the New Yorker this week, and comes back with answers we’ve all heard before: in short, it’s not the policies, it’s the rhetoric.

Of course, this doesn’t stand up to scrutiny; it never did. If the rhetoric is getting overheated on either side, it’s definitely on the side of Obama’s opponents, rather than Obama himself. Chrystia finds multiple violations of Godwin’s law, not among foaming-at-the-mouth Tea Party types, but even from cosmopolitan financiers:

Some of the harshest language of this election cycle has come from the super-rich. Comparing Hitler and Obama, as Cooperman did last year at the CNBC conference, is something of a meme. In 2010, the private-equity billionaire Stephen Schwarzman, of the Blackstone Group, compared the President’s as yet unsuccessful effort to eliminate some of the preferential tax treatment his sector receives to Hitler’s invasion of Poland. After Cooperman made his Hitler comment, he has said, his wife called him a “schmuck.” But he couldn’t resist repeating the analogy when we spoke in May of this year. “You know, the largest and greatest country in the free world put a forty-seven-year-old guy that never worked a day in his life and made him in charge of the free world,” Cooperman said. “Not totally different from taking Adolf Hitler in Germany and making him in charge of Germany because people were economically dissatisfied. Now, Obama’s not Hitler. I don’t even mean to say anything like that. But it is a question that the dissatisfaction of the populace was so great that they were willing to take a chance on an untested individual.”

There’s a limit to how far you can go asking people to justify their Hitler analogies, so Chrystia asks Cooperman about his “never worked a day in his life” comment. It turns out that by “working”, Cooper means that Obama “never made payroll. He’s never built anything”. In other words, this is very much the Romney version of the great-men-of-history worldview: one where a handful of visionary builders use their skills to create jobs for the masses and wealth for themselves. Recall Nick Lemann, profiling Romney in last week’s New Yorker:

He talks to voters businessman to businessman, on the assumption that everybody either runs a business or wants to start one. Romney believes that if you drop the name of someone who has built a very successful company — Sam Walton, of Wal-Mart, or Ray Kroc, of McDonald’s — it will have the same effect as mentioning a sports hero.

If you’re the billionaire principal of a business you built yourself, then you are very likely to see the world through this lens — and as a result, you’re very likely to be very supportive of Romney’s candidacy. In that sense, it’s hardly a surprise that the Romney campaign, and its affiliated Super PACs, has raised more money than the Obama campaign: Romney, more than any presidential candidate in living memory, aligns himself completely with the views and interests of the 0.01%. And given how much discretionary cash the 0.01% has lying around, getting the support of that key group can give a candidate a serious fundraising advantage.

This, I think, is one third of the answer to the question of why billionaires feel victimized by Obama. In America’s two-party system, you’re given a simple choice: this guy, or the other guy. If you find yourself in wholehearted agreement with one of the two, then the other one becomes the enemy, the obstacle standing in the path leading your guy to the White House. And under the rule of the narcissism of small differences, everything which separates your guy from the other guy becomes a monstrosity to be fought at every turn, and a grievance to be nursed and rehearsed ad nauseam. (Liberals, in truth, are even better than conservatives at this kind of thing: just remember what they thought of Reagan, whose policies were not particularly to the right of Obama.)

You can’t ascribe all of the billionaires’ grievances back to Romney — after all, they predate his candidacy. But Leon Cooperman’s letter is dated November 2011; I don’t think it’s entirely a coincidence that it was written just as Romney’s InTrade odds of winning the Republican nomination had surged to about 70%. So I see something else going on here — the second third of the answer. And that’s the way that after the stock market rebounded sharply in 2009, financiers switched rapidly from Fear mode to Greed mode.

During the 2008 election, Obama received significantly more Wall Street money than McCain, for one very good reason: Wall Street trusted him and his egghead technocrat advisers to do whatever was necessary to prevent their world from imploding. And that’s exactly what they did. Geithner, Bernanke, Summers, and the rest of the Obama economic team threw everything they could at the markets: they were the liquidity provider of last resort, they took that role seriously, and they did exactly what was necessary to save the US — and, for that matter, the global — financial system. McCain, by contrast, never came across as being particularly competent on that front, treating the financial crisis more as an excuse for political stunts than as a serious existential threat.

After 2009, however, Wall Street felt that the crisis was over. Yes, unemployment was still unacceptably high, growth was unacceptably low, and the real economy was still struggling. But never mind that: Wall Street profits were enormous, corporate profits were hitting record highs, and bonus season was just around the corner. America’s financiers no longer needed Washington to save them from ruin; now all they wanted was for Washington to get out of the way, and to let them prosecute their profit-making strategies as aggressively as they wanted. And they were in no mood for gentle reminders from Washington that if it wasn’t for the public sector they’d all have been wiped out.

It’s notable that all of the 0.01% moaning about Obama in Chrystia’s piece are financiers of one stripe or another. The financial sector was the first to rebound out of the crisis, and in many ways is the sector of the economy least exposed to the plight of the 47%. Hedge fund managers like Leon Cooperman don’t make their money from little people; indeed, it’s quite amazing how rich you need to be before people like Cooperman think you actually have money. For instance, Cooperman tells Chrystia, of a cardiologist friend of his who has accumulated some $10 million in savings, that “it was shocking how tight he was going to be in retirement”, especially since “he needed four hundred thousand dollars a year to live on”.

Which brings me to the final third of the answer to the question of why America’s billionaires are feeling so victimized: I think that in fact most of them simply don’t. Most billionaires are not financiers — and you don’t see Mark Zuckerberg or Mike Bloomberg or Larry Page kvetching about how Obama hates them. Neither do you see a lot of old money (the Waltons, the Mars family) pouring money into Super PACs. They might be conservative; they’ll almost certainly vote for Romney. But they’re not airing grievances in the way that Chrystia’s financiers are doing. The rhetoric that Chrystia is picking up on started I think with Jamie Dimon, and then spread around his environs; but it’s not particularly contagious outside Wall Street circles.

Financiers are among the most alpha of all billionaires, the most aggressive, the most attuned to the idea that no matter how rich you are, if you’re not making money then you’re losing. And from a purely tactical perspective it makes all the sense in the world for them to go on the offensive against Obama. After all, they might have it good now, but they’d have it even better under Romney, and at the margin the more they move public opinion in their direction — and especially the opinion of the 535 members of the public who sit in Congress — the better off they are.

So my feeling is that the sense of victimization is one part narcissism, one part greed, and one part tactical. It’s not a very pretty sight, and it’s not very easy to feel particularly righteous about. Which is one reason that people like Anthony Scaramucci — an early high-profile Romney supporter — set up echo-chamber dinners where such feelings can be stroked and reinforced. What’s depressing is that the likes of Al Gore and Antonio Villaraigosa are happy to attend those dinners, and provide little if any pushback.


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Completely agree, Felix.

– A Wall Streeter

BTW, any way to have the tech people at Reuters get the comments system to work with Google Chrome?

Posted by LA_Banker | Report as abusive

Schwarzman is obviously correct- getting rid of the carried interest loophole and forcing him to be taxed at the same rate as every other working schlub is just like Hitler’s invasion of Poland.

Posted by AdamJ23 | Report as abusive

It’s tactical. This part is a little off the mark, however –

“America’s financiers no longer needed Washington to save them from ruin;”

They most certainly do need DC to get them out of the traps they stumbled into, and we are seeing their escape from one of them with the QEIII purchases of their dud MBS stuff by the Fed – what an unconscionable gift to The Street this is.

Let’s be candid, the financial-class is predominantly of an ethnicity that understands how criticism – particularly justified criticism – can be silenced by a pre-emptive attack on the motives of critics. A ‘first strike’ in the form of allegations of ‘class-warfare/envy’ has the purpose and effect of silencing justified criticism of the financial sector and the super-rich. Obama is not the source of concern, though – he’s totally under control. It’s the traditionally anti-finance base of the Democratic Party that has to be stopped from asserting its influence – or raising its voice. Paradoxically, the attacks on Obama shield him from pressure from his most loyal supporters.

Good to see you back on the beam, FS.

Posted by MrRFox | Report as abusive

I don’t recall seeing rich people in fear mode; I thought they’ve always been in greed mode.

Posted by GRRR | Report as abusive

Is “never making a payroll, never building something” the new definition of “working”? Does this mean Romney’s 47% is actually more like 90%, as most people have never had to meet a payroll or build something?

I never could understand how people equate “we need to have the wealthy pay more in taxes” to starting a class war or demonizing them. If we put up plaques at IRS buildings with the names of wealthy people who paid more than 30% of their income in taxes, will they feel less insulted?

Posted by KenG_CA | Report as abusive

Proof positive that Obama erred by hiring and listening to the likes of Geithner, Summers, etc. His best move would have been to do unto them what was done to GM & Chrysler, i.e., an arms-length nationalization that put the US Govt’s balance sheet behind the banks (effectively ending the CDS-driven crises), nuked their management teams in toto, put in place solid managers untainted by the mess, and then backed the hell off. A simple reinstatement of Glass-Steagall would also have been welcome. This is what was done at AIG (except for the fiasco of redeeming CDSs) and it worked fine.

Instead, he tried to be nice to the SOBs. And they’ve bitten him back. I’d like to say it serves him right, except that we’re all going to pay the consequences – sooner if Romney wins and eventually if Obama wins.

Posted by SRS1 | Report as abusive

“they did exactly what was necessary to save the US — and, for that matter, the global — financial system”

Oh no, they did much, much more than was necessary to save the system. For which Wall Street should be kissing Obama’s feet. But nothing is ever enough for them, is it? There were no serious investigations, no clawbacks of bonuses, no executives were forced to resign or take any kind of responsibility. Recall that it was Tim Geithner that insisted that AIG’s creditors get paid off at par. Did anyone in the administration blink as bailout money got funneled to bonuses? Recall the 600-page reading of Goldman’s crimes and misdemeanors sent over to the DoJ from Congress. Have we heard a peep out of Eric Holder? And who could forget Treasury and the DoJ tag-teaming the state AG’s to give the mortgage servicers a free pass for widespread foreclosure fraud? No, these guys went way beyond the call of duty for Wall Street.

Posted by Moopheus | Report as abusive

And of course there are the Koch brothers. Unlike the financiers they’ve never pretended to like what Obama is doing, though they share the financiers’ sentiments.

Posted by gringcorp | Report as abusive

“Neither do you see a lot of old money (the Waltons, the Mars family) pouring money into Super PACs.”

Not that you’d know, since Super PACs don’t need to make that information available.

Posted by jonhendry3 | Report as abusive

There are appropriate analogies to fascism. They involve things like drones and the NDAA. Not Schwartzman’s twisted billionaire tax holocaust,

Posted by williambanazi7 | Report as abusive

When they say “build anything” they mean “buy” or “pay to have built.” When they say “worked” they mean “bossed.” It is a subtle distinction.

Posted by Eericsonjr | Report as abusive

The sense you get from reading the New Yorker profile is that he thinks the peasants don’t bow down low enough to their betters. Just a nod of the head from the President is not enough. He needs to bend over, as they do or used to do in Japan, from the waist so that his forehead almost touches the ground and then he might be deferential enough.

Posted by Chris08 | Report as abusive

The funniest part of the hedge fund whining is their failure as real businesses. They are great at sucking money out of their suckers, but not so great at paying the suckers. edge-funds-are-getting-murdered-this-yea r-2012-8

Posted by masaccio | Report as abusive

By their standards, did Romney “ever work a day in his life?” He was a senior partner in a firm he didn’t found, right? Just like, let’s see, Barack Obama…

Posted by raymondscum | Report as abusive

I do not feel sorry for these hyper senstive spoiled little Lord Fauntleroys.
They have spent such a long time being fetted as ‘masters of the universe’ they think they are invincible and we are all just peons who’s job is to bow and scrape before them.
If these arrogant whiners were at all atuned to the country they would not be walking around with noses in the air but, hiding in shame knowing they are the most despised people in the country.
Obama was simply stating a fact and they cannot handle the truth. They are fat cats and of little use to us or the country and if they cannot handle reality then they should just move out of the country and leave it. We would be relieved and very happy to see the last of these vipers.

Posted by dlake | Report as abusive

Hedge fund = crowded trade.

Some people can make a lot of money, or many people can make a little money, but you simply cannot have an environment in which many people make a lot of money. There aren’t enough profits to go around.

Posted by TFF | Report as abusive

@MrRFox: Just to clarify, you mean Jewish right?

Posted by MLite | Report as abusive

Just to clarify MrRFox, you mean Jewish right?

Posted by MLite | Report as abusive

I’m a rather meek person.

But give me 15 minutes with any of these folks, and I’ll have them begging for Marx and Lennin.

Posted by waltz1 | Report as abusive

Everyone here with the exception of AdamJ23, including Felix and the writer of the new yorker piece, is missing the point. This is about one issue and one issue alone: the carried interest loophole. For many of these guys, that loophole is worth tens if not hundreds of millions of dollars in tax savings *per year*. I had lunch with one of the figures in the New Yorker pieceabout a year and a half ago, and when he spoke candidly, that was the very root of all the Obama hatred. It is the most ludicrous, indefensible, and counter-gaap giveaway to people who least need giveaways, but don’t expect a person to understand something that his or her livelihood is predicated on not understanding.

Posted by boson | Report as abusive

Boson — On the money (so to speak).

I know a hedge fund guy, hardly an in-line GOP voter, whose anti-Obama vitriol has gone ’round the bend. He hasn’t articluated the carried interest protection as the source of his angst, but — The numbers don’t lie.

Posted by EPB | Report as abusive

I think the more interesting question is…

How is it that Romneys 0.01 percenters accuse half of America of being tax dodging victims, when they talk like this?

Is it projection??

Posted by Dafydd | Report as abusive

Dafydd, it is narcissism. They see their earnings as evidence that they are contributing more to society than anybody else, and thus they shouldn’t be asked to do any more. Let those lazy slobs earning $30k or $40k take responsibility for their lives and pay their fair share, right? After all, even 5% of $1M is many times what the average citizen is expected to pay. That 15% tax rate on carried interest is clearly unjustly high.

Posted by TFF | Report as abusive

I make a great living,in the top 5% of the US. I’m not a billionaire and at 62, it looks like I will have to keep on working for many years, as I don’t have enough to retire, unless i want to live a very meager lifestyle. I agree that billionaires possibly should pay more, but I know that that is not going to happen. Instead the empty rhetoric about billionaires will be translated down to people making 250,000, er 200,000,er 150,000, oh hell 75000 and they will be the ones to bear the brunt of the tax burden. We should have a low flat tax with absolutely no loopholes or exceptions from the top income to the bottom income levels, a level playing field and no room for the pols to complicate the issues to buy their next election. We should also have term limits.

Posted by zotdoc | Report as abusive