Electric air taxis aren’t going to save the world. Really taxing the rich, on the other hand, could.
In normal times, the dedication of a new presidential memorial right in the heart of Washington, D.C. would be much more than fairly big news. Pundits the nation over would find the dedication an irresistible opportunity for pontification about the legacy of the newly honored national leader.
But we don’t live in normal times, and this week’s dedication of famed architect Frank Gehry’s tribute to Dwight Eisenhower, America’s 34th president, is receiving about as much attention as last week’s top exposé of Trump administration misbehavior. In other words, not much attention at all.
A shame. Dwight Eisenhower didn’t much bring much flash to the White House. But his eight years in office — starting in January 1953 — played a pivotal role in modern American history. The Republican Eisenhower could have killed the egalitarian gains of the New Deal. Instead, he built upon them.
Try to visualize the lay of America’s political land as “Ike” was taking in office early in 1953. The nation hadn’t had a Republican in the White House for twenty years. An entire generation had grown up under presidents Roosevelt and Truman.
Over those years, American life had changed dramatically. Average Americans had made history. Their Depression-era struggles for justice has created the first nation on Earth where the majority of people did not live in poverty, a society where average people could buy their groceries, keep a roof over their heads, and still have income — appreciable income — left over. That had never happened before. Anyplace.
In this new America, the label “middle class” would no longer evoke a narrow professional and small business strata that rested uneasily between the rich above and the poor masses below. The middle class would now be tens of millions of Americans enjoying a security — and a status — that would have been, just a few decades earlier, unimaginable.
“Even in the smallest towns and most isolated areas,” Time magazine would rhapsodize in 1953, “the U.S. is wearing a very prosperous, middle-class suit of clothes, and an attitude of relaxation and confidence. People are not growing wealthy, but more of them than ever before are getting along.”
U.S. households held $27 billion in “discretionary” spending power in 1940. In 1953, researchers at the J. Walter Thompson advertising agency would calculate, they had five times as much, $138 billion for spending on goods and services beyond the necessities of life.
American society was clearly progressing toward ever greater equality. Would that progress continue under Eisenhower? Would his administration accept the basic outlines of the New Deal fiscal state, the high taxes on the incomes of corporations and the wealthy that gave the federal government the wherewithal to fund the programs that eased working Americans into the emerging new middle class?
No one knew for sure what to expect from the former five-star general, and Eisenhower’s entry into office would at first give America’s stiffly taxed rich reason to be hopefully optimistic. Ike filled his new administration with men of substantial means. The first Eisenhower cabinet, commentators would chuckle, featured “nine millionaires and a plumber” — with the latter the new secretary of labor, a union leader Ike had plucked from the plumbers union.
But Eisenhower would soon disappoint those wealthy taxpayers eagerly awaiting tax relief from the new Republican president. His first state of the union address would promise only “clarification and simplification” of the tax code, nothing about rate reduction. Eisenhower would continue to give top-bracket tax cuts the cold shoulder throughout his eight years as commander in chief. The federal tax rate on income over $400,000 remained at 91 percent throughout Ike’s two terms in office.
Any cuts in the tax rates on high incomes, Eisenhower believed, would be fiscally irresponsible. The United States had an expensive Cold War to wage. Ike no doubt also had politics on his mind. Harry Truman had won re-election in 1948 railing against the rich and the Republican lawmakers who cut their taxes. Why cut taxes on high incomes and give Democrats another opportunity to make political hay?
But much more than fiscal prudence and political calculation lay behind Ike’s determination to keep tax rates on America’s wealthiest at New Deal levels. Eisenhower had lived through the social horror of the Great Depression. In 1932, he had watched as jobless veterans amassed in Washington. He had been part of the military operation that evicted those veterans, burned their camp, and ended their Bonus March protest. The general who directed that operation, Douglas MacArthur, would see the eviction as a triumph over the red hordes. Eisenhower would see only a hard-to-stomach, disgraceful spectacle.
How to avoid that disgrace in the future? Ike would subscribe to the same basic egalitarian world view that so many other thoughtful movers and shakers took from their experience of depression and war. Americans must never again let wealth concentrate and destabilize the nation. And wealth would not start reconcentrating during the Eisenhower years.
In the middle 1950s, as Ike later noted in an autobiography, “the bottom income groups were becoming richer, the rich were paying record taxes, and many from both groups were joining the ‘middle class.’”
America, Ike would proudly declare, was both leveling up and leveling down.
“We still had our impoverished and our wealthy, but the new prosperity was reducing the relative size of both groups,” Eisenhower explained. “The middle class, as sociologists were pointing out, was becoming the widening band around the country.”
And Ike liked things that way, as he would explain in a 1960 valedictory delivered to the magnates of the U.S. auto industry. We have evolved in the United States, the president would tell his business audience, a “socially conscious type of private enterprise” that “strives to benefit all the people.”
This emphasis of benefiting all our people, Ike would go on, “was not always so.” But we Americans now rightfully recognize the contribution “public enterprise” can make. In an ever more complex world, we have come to understand that government needs to help the people do “what the people cannot do for themselves.”
With that understanding, Ike would pronounce, has come the historic rise of the great American middle class.
“Other peoples find it hard to believe that an American working man can own his own comfortable home and a car and send his children to well-equipped elementary and high schools and to colleges as well,” Eisenhower told the assembled auto industry leaders. “They fail to realize that he is not the downtrodden, impoverished vassal of whom Karl Marx wrote. He is a self-sustaining, thriving individual, living in dignity and in freedom.”
Unfortunately, Ike would continue, other nations have not yet learned the lessons that Americans have so wisely taken to heart.
“In many countries of the free world private enterprise is greatly different from what we know here,” Eisenhower would explain. “In some, a few families are fabulously wealthy, contribute far less than they should in taxes, and are indifferent to the poverty of the great masses of the people.”
“A country in this situation is fraught with continual instability,” Eisenhower would warn. “It is ripe for revolution.”
Any society that tolerates a “fabulously wealthy,” he would conclude, is asking for trouble.
“Since time began,” Ike reminded his comfortable corporate listeners, “opulence has too often paved for a nation the way to depravity and ultimate destruction.”
That depravity, Eisenhower’s remarks suggested, could also destroy us — if we foolishly chose to let the rich “contribute far less than they should in taxes.”
That would not happen on Ike’s watch. He would not lift a finger to lower the steeply graduated tax rates on high incomes that the New Deal had bequeathed to him. Let the rich grumble. He would not be moved.
America’s mid-century politicians could read the zeitgeist of their age. They felt little awe for the men of fantastic means in their midst. To some, like Dwight Eisenhower, America’s super rich would come across as politically pitiful. In 1954, in a letter to his brother Edgar, Ike candidly shared his assessment of the super rich working to turn his Republican Party into a battering ram against the New Deal legacy.
“Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history,” Ike wrote. “There is a tiny splinter group, of course, that believes you can do these things. Among them are H. L. Hunt (you possibly know his background), a few other Texas oil millionaires, and an occasional politician or business man from other areas. Their number is negligible and they are stupid.”
The deep pockets in that “tiny splinter group” would, in the years after Eisenhower left office, gain awesome influence over America’s political and economic life. Ike would not have approved of the staggeringly unequal nation they ended up creating. None of us should either.
Sam Pizzigati co-edits Inequality.org. Parts of this column have been adopted from his 2012 book, The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970. Follow him at @Too_Much_Online.