The Real 1 Percenters

Forget the polarization of the parties.  Never mind the growing gap between the superrich and the rest of us.  Race relations?  Child’s play.  The generation gap?  A matter of inches.  Rural/urban, left coast/right coast, Betty or Wilma, Savannah or Anne, Tom or Katie..pah!

No, my friends, the most polarizing divide – the real one-percenters in America today who stand against the rest of us – are the roughly 3 million voters who will actually decide the November presidential election.  Chances are you aren’t one of them.

Let’s meet them.

Test #1 – Where’s home?  If you live in one of the 13 states listed below, game on; you get to play another round.  If you live in one of the other states….crickets…crickets…crickets…sit down.  Oh sure, go ahead and vote if you want – there might be some other candidates or issues on the ballot, but as far as the presidential race goes, just sit still, watch closely and don’t touch any of the buttons.

The swingingest swing state appears to be Florida as it is rated a toss-up by every news organization I checked in with – 270toWin, FiveThirtyEight, CNN, HuffPo, MSNBC, the New York Times, Real Clear Politics, the Washington Post and the Wall Street Journal – and Arizona is the least as only the Journal classifies it as a swinger. Frankly, I have trouble seeing Michigan, Missouri, Arizona or Pennsylvania as swing states; the first three seem pretty solid for Romney and Pennsylvania looks pretty good for Obama.

So…if you want to really make a difference in this presidential election, haul ass to the swing state of your choice, establish residency and register to vote there.  Nate Silver over a FiveThirtyEight (which is – for the third or fourth election in a row – one of the best web sites for polling analysis and prognostication) has even helpfully calculated which states offer the most bang for the buck per vote (New Hampshire and Nevada lead the list).

Which brings us to…

Test #2 – Are you an eligible voter?

If you’re one of the approximately 77,000,000 eligible voters living in those 13 states, keep standing, you’re still in the game.  Know, though, that the rest of us are expecting you to stay on top of this and to do the right thing not just for yourselves but for all of us.  We’ll pay you back next time.

Unless, of course, you fail the next screen…

Test #3 – Will you actually vote?

The reality is that not everyone votes in our democracy.  In the last comparable election – 2004 – only 55.7 percent of those eligible to vote actually voted.  Among the swing states, Wisconsin’s civic minded residents led the way with 71.9 percent of eligible voters making it to the polls while just 47.6 of eligible Arizonans punched their tickets.  Using these historical percentages as predictors, I’m guess only about 46,214,000 eligible swing state voters are going to make it to the voting booth come election day.

Which leads me to the last important question…

Test #4 – Are you persuadable?

Even in the swing states, the reality is that the vast majority of voters are more or less already decided on how they’re voting come November.  Only a small number – probably less than 10 percent of eligible voters – are undecided or are still truly open to an argument from one side or the other.  We can quibble over what percentage of the voting population this group represents, but I picked 7 percent because that’s the percent of respondents who keep telling pollsters they’re undecided.

The population of the U.S. right now is about 314,000,000.  The number of people who will decide this next presidential election – the people who passed all four tests above – is about 3.25 million or about 1 percent of the general population. It is this group who will be the target of the roughly $2 billion dollars the candidates, parties and their fellow travelers have starting slinging around, a spending level that works out to…wait for it…$618 dollars per voter.

The rich just keep on getting richer.

– Austin

35 thoughts on “The Real 1 Percenters

  1. Joe Loveland says:

    Excellent summary. Maybe spend the $618 per person on about 30 cases of Bud, instead of commercials and cavassing/turnout contacts?

    1. My thought was just mail all 3.25 million voters a $300 check from each campaign. It seems like the right thing to do in a Citizens United world and it would be something tangible both sides could claim as for stimulating the economy. It would probably be a better way to distribute the money than via political operatives, pollsters, advertising consultants, television station owners and the like (the parts of the economy that normally get stimulated in an election year).

  2. Newt says:

    Scott Rasmussen reported yesterday that only 21 percent of likely voters nationwide think it’s discriminatory to require proof of identity before voting. Seventy-three percent disagree and say such a requirement does not discriminate.

  3. Oh Great and Wonderful is on to something. (As opposed to … .) Were that the other 311 million of us could get some kind of noise cancelling headset from the campaigns and their cable TV arms that would spare us all but maybe two weeks of the four-year election cycle.

    Who am I to quarrel with the man behind the curtain, but I don’t think the Obama campaign is going to worry too much about Michigan, especially as their primary “issue” — Romney’s “business acumen” — sees more and more daylight.

    Also, it would be amusing to grill TV news directors — anywhere — on how aggressively they question candidate rhetoric given the astonishing windfall these elections are for their owners.

    1. Belatedly, I just realized what the hell Lambert was talking about (I know, we’ve all had THAT feeling…). My bad…I meant to classify Michigan as safe for Obama, not the other guy.


      – Austin

  4. Maybe he doesn’t have to worry about Michigan….maybe he does.The job numbers aren’t good for Mr. Obama. As I stated earlier, the economy is getting better, at a glacier pace, but people don’t watch much except unemployment.

    Just wondering, who was it that signed the $17 billion bailout for the auto companies? Oh, yeah, it was Bush. Not that I think it was a good idea. But for Mr. Obama to take credit for TARP and the bailout is a farce. And I was not big fan of Mr. Bush, either.

    1. If Obama has to worry about Michigan then the election is over; similarly, if Romney finds himself losing Arizona or Missouri, game over.

      Yes, Mr. Bush did pump some important money into the automakers and while I like Mr. Bush’s governance even less than you, I do give his administration credit for working very hard in the second half of 2008 to keep the economy from cratering.

      Mr. Romney is, in my opinion, trying to revise history regarding his stance on the auto industry. His advocacy of a non-governmental assisted bankruptcy was made at a time when there was nearly no private lending or financing available. That would have been cataclysmic I suspect.

      – Austin

    2. Joe Loveland says:

      Coindentally, on Friday Rush made the same point as Mike.

      As Politifact points out, the auto industry rescue was a bipartisan, bi-Adminstration effort. I would add, however, that Obama got more blame for it than Bush, because Bush was off the stage for most of this period. Politifact:

      Bush authorized initial loans to Chrysler and GM (and their respective financing arms) before leaving office, using money from the Troubled Asset Relief Program. Chrysler initially received $4 billion, and GM got $13.4 billion in bridge loans meant to keep the companies afloat for a little longer.

      Early in 2009, Obama convened a task force to study the companies’ viability. Both were required to submit plans for getting back to solvency, but both failed, the task force determined. In the meantime, they were running short of money again.

      A report from the Congressional Oversight Panel details the chronology of the spending, including an additional $6.36 billion that GM received between March and May 2009.

      Both companies ended up going through structured bankruptcies, Chrysler in April and GM in June. The Obama administration was instrumental in the manner in which the reorganizations proceeded. Some debt holders were forced to take losses, while the autoworkers union health care trust, which was owed billions in health benefits, took an equity stake, as did the federal government.

  5. Well, facts are facts, whether they come from Rush or from me. I actually was reading an editorial in the Wall Street Journal that reminded me of the facts. Guess Rush read the same one.

    I agree with Jon that Romney may be little over the top in suggesting that a normal bankruptcy would have allowed the automakers to flourish. No doubt, financing was tight if at all, as Jon suggests. Your observation was totally accurate.

    However, Romney was right to say he was one of the first to call for the auto companies to go through bankruptcy, which Obama also signed on to. The difference was the type of bankruptcy. I still am not in favor of Obams strong arming bondholders to bascically draw the short end of the stick in favor of the unions, but then that might be a whole different debate.

    1. Every “restructuring” or “change of status” or other euphemism for a bankruptcy I’ve ever worked on – prepackaged, forced, etc. – has involved somebody getting the short end of the deal. Most often it’s the unsecured creditors and the common shareholders who get the worst of it, but not always. There are even cute terms for it like “haircut” and “cram-down” to describe various ways stakeholders get squeezed.

      As a general rule, I like my bankruptcies straight up and neat; if you’re a common stockholder or unsecured creditor, you place your bets and you takes your chances with the knowledge that you’ll be at the end of the line should the company you invest in or do business with go under. Unfortunately, as the hard-working bankruptcy judges will attest, the bigger the bankruptcy, the less likely anything is simple.

      In the GM and Chrysler bankruptcies, for example, Mike is right that the bondholders were not happy with several offers to swap their debt for stock or for the cents-on-a-dollar offers that proceeded the eventual deal. That said, it’s not at all uncommon for those sorts of negotiations to happen with or without government involvement.

      And, remember, the UAW was not “given” something in this deal as it too was owed quite a bit of change related to their health care trusts, etc.

      Whether the balancing act was the right one or not is – as Mike suggests – another debate. For my part, I’m OK with how it played out as I suspect most of the bonds were by then owned by funds that bought them for 10 cents on the dollar and were pissed off that their return on their investment was only 150 percent rather than 250 percent. God knows what that did to the real estate market in the Hamptons.

      And, as long as I’m ranting, I’m also a little ambivalent on the deference the bankruptcy laws give to the management team in terms of getting the lead in reorganizing; these are, after all, the people who led the company into bankruptcy so I’m not sure that they’re automatically the best ones to lead it out. That said, I don’t have a better solution.

      – Austin

      1. You are fundamentally correct that the government did pretty much force GMs unsecured creditors to take a bath, but the government treated secured creditors much more fairly. What I don’t understand is why the secured creditors of Chrysler didn’t get the same treatment. True, unsecured creditors and stockholders bear much risk and for that, they are offered some sizeable returns, but secured creditors are a different story. BTW, size of returns should have nothing to do with normal rule of law and business, which would have subjected all the auto companies to a normal bankruptcy.

  6. BTW, speaking of unions, let’s see if Mr. Obama has any courage at all to call out the teacher’s unions in Chicago on their greedy self absorbed strike. They already make about $30,000 more a year than the average wage earner in Chicago and turn down a 16 percent wage increase. Even Rham is beside himself on this. Mr. Obama eventually took the union’s side in Wisconsin. This will be interesting.

    1. Pay is certainly part of the strike story in Chicago, but as I read it, there’s just as much frothing over the proposed teacher evaluation system and class sizes. The president does love teachers – and teachers’ unions! – especially in an election year, but he’s also pretty firmly on record regarding the need for evaluations (it’s a key element of Race to the Top I think). And, of course, how can he undercut his man the Mayor?

      It’ll be interesting to see which way he jumps or if he stays on the fence as long as possible while hoping for a quick settlement.

      – Austin

    1. OK, that’s not “little” in today’s world. A Tweet is little. A bumper sticker is little. 3,084 words of Gilderian prose is not “little.”

      I’m a big fan of capitalism as a system of economic democracy and as a companion to political freedom (in fact, I’m not sure you can have one without the other; can you have political freedom in a command economy?). I’m pretty sure most of us who participate in this blog feel the same way. Truly, even here in the heart of the People’s Republic of South Minneapolis, I don’t know of anyone who isn’t a capitalist or who wants to do away with it. Those who claim otherwise are, I think, engaging in political rhetoric rather than reasoned debate.

      I think what we disagree on are the questions of how much government do we want to:

      1) do the things that capitalism doesn’t do particularly well (national defense, build roads, invest in theoretical and basic research, provide a social and economic safety net, etc.);

      2) create and administer the “rules of the road” so that the bad guys are kept in check (the SEC, EPA, OSHA, etc.) and;

      3) do things that are perhaps important to maintaining a well-rounded society (support the arts, incent investments in socially desirable behaviors or activities, etc.).

      My predisposition is that we need a muscular government in categories #1 and #2 and I’m willing to pay additional taxes to support many of the things that fall into #3 (which is the tiniest part of the budget). Because I believe these things I have to logically believe in paying for them. My preference in paying for them is a progressive and simple tax scheme in which those with the greatest stake in society pay the most (“with great privilege comes responsibility…”) and with relatively few exemptions and deductions.

      I think one of the great tragedies of the last three years is that we squandered the opportunity to have a grand debate about these questions. Instead, we spent the time doing incredibly wasteful and harmful things like the debt ceiling debate and hyper-partisan fighting. I agree with the Mann and Ornstein that most of the blame for that should be laid at the feet of the Republicans, particularly the Tea Party wing, but I know the Dems have not been perfect on this point either (I think Nancy Pelosi when Speaker, for example, was needlessly partisan on a number of occasions).

      I am an optimist at heart so I hope that we can have that debate in a second Obama term. Because I wasn’t raised in Disneyland, though, I’m enough of a realist to guess it might not work out that way.

      – Austin

      1. Erik says:

        Re your two last paragraphs: “We” didn’t squander the opportunity to have a timely debate about the tax code / progressive taxation.

        If there ever were a time institute a tax code built with progressive ideals, it would have been while there were Democrat majorities in 2009-2010. The President allowed Reid and Pelosi to do ObamaCare instead, to the exclusion of just about everything else.

        The Bush tax cuts were to expire at the end of 2010. In December the President signed on to a deal that extended the Bush tax code. This action was dictated by the sluggishness of an economy that hadn’t been dealt with in a meaningful way and by need to ameliorate bad will in the electorate caused by ObamaCare.

        Pres. Obama and Boehner had a debt ceiling deal in 2011in which the Administration would have won many of their bargaining points (Bob Woodward book). With the deal agreed, the President was nagged by House Democrats into going back and asking for tax hikes. The deal was sunk. The alternate reality is that this wouldn’t have been necessary had the President won a victory on taxes when there was a victory to be won, in 2009-2010.

        Where’s the obstructionism that stopped the debate and action you were looking for?

      2. Everybody gets a share of the blame pie in my opinion.

        Yes, Obama let the Dems in Congress direct too much of the agenda for too long and yes I think he is plagued by hubris on occasion. At the same time, the Republicans have been trapped by its most extreme minority and by a collection of single-interest pledges that are collectively a straitjacket that prevents compromise.

        As a counterpart to the Woodward book (which I haven’t read, but which appears to be in keeping with those I have which are based on extensive background interviews and thus most shaped by those willing to talk the most) I offer up the Ornstein and Mann account of that same debate. That account puts the lion’s share of the blame for that debacle (which it was) on the GOP.

        Bottom line, though, is that the opportunity was wasted, not just last summer, but over the last three years.

        – Austin

      3. Erik says:

        Great. But the House progressive caucus’ objection to Bowles – Simpson was that it didn’t raise statutory rates on high earners and that it cut entitlements somewhat. In your words, this is described as the Democrats being “trapped by its most extreme minority and by a collection of single-interest pledges that are collectively a straitjacket that prevents compromise.”

        Sure, I’d support it. The teapartiers probably would have also.

  7. Ok I agree it’s not little, but how do you know I wasn’t making a relative comparison….to War and Peace, for example. Little is in the eye of the beholder. Ok, I give up. You’re right. It’s somewhat lengthy.

    True, I think most people here support capitalism, but this piece lends to the debate of exactly what you are talking about. How big does government get before it gets in the way of a free, open and flexible economy?

    Besides, the larger point of the essay is that capitalism is not buildings and products and capital and things….it’s ideas and innovation. It always has been and it always will be, It’s about coming up with better, more efficient ways fo doing things and more innovative products and services. That can’t be redistributed. That’s the larger point.

    I certainly think there are plenty in the Democratic Party who would be happy to see government as central planner and administrator.I think they honestly believe a select few ought to determine what millions are better at determining.

    In addition, Woodwards new book chronicles Mr. Obama as a man who does not know how to compromise or negotiate and that those attempts on a grand scale have been utter failures. Yes, you can lay some blame on Republican intransigence, but to overlook Mr. Obama’s own failures at compromise is rewriting history. Like it or not, and liberals are loathe to criticize a man who carried so many expectations, but the man does not possess certain skill sets necessary for success.

    1. “How big does government get before it gets in the way of a free, open and flexible economy?”

      I would phrase it slightly differently: how much do we want the government to affect the economy?

      Personally, I want it “in the way” of those who might otherwise pollute the environment, commit fraud, etc. I want it involved in the economy to promote long-term, collective benefit-maximizing behaviors (something capitalism doesn’t do particularly well IMHO). I want it to provide a safety net for those who can’t care for themselves. I want it to support the arts, education, public broadcasting and space exploration. I’m willing to pay more taxes for these functions in exchange for these activities.

      As to the larger point, yes I agree completely that ideas and innovation are the wellspring of capitalism. I would add hard work to the list as well. Those attributes are not redistributable but the proceeds of innovation, ideas and hard work certainly are. The balancing act is determining how little (or how much) of those proceeds do we need to redistribute to the government in order to 1) create and preserve the kind of society we want and 2) to not stifle the attributes that create those proceeds.

      And, as long as I’m covering the waterfront, I’m a big fan of elitism. Spider Robinson, a science fiction writer, once wrote a defense of Robert Heinlein and specifically the charge that he was an elitist. It resonated for me back in my 20s and still does:

      “If by that you mean that he believes some people are of more value to their species than others, I’m inclined to agree—with you and with him. If you mean he believes a learned man’s opinion is likely to be worth more than that of an ignoramus, again I’ll go along. If by ‘elitist’ you mean that Heinlein believes the strong should rule the weak, I strongly disagree. If you mean he believes the wealthy should exploit the poor, I refer you to The Moon Is a Harsh Mistress and I Will Fear No Evil. If you mean he believes the wise should rule the foolish and the competent rule the incompetent, again I plead guilty to the same offense. Somebody’s got to drive—should it not be the best driver?”

      – Austin

      1. Wish I could agree, Jon. I think you are fundamentally right that the question is how much do we want government to affect the economy. I think we have our answer over the past 10 years. Say all you want about lack of regulation under Bush, the fact is regulatory burdens increased. Bush was no fan of smaller, more efficient government and neither is Obama.

        As an editorial in tomorrow’s Wall Street Journal points out, a recent speech by a leading banker from the Bank of England correctly summed up the carnage of the finanancial crisis and attributed it to far too complex regulations instead of a lack of regulations.

        They argue that the metrics of the Basil Accords were so complex and turgid that they proved virtually no help whatsoever in predicting which institutions would crash into the rocks and sink. In fact, Bear Stearns was in compliance right up until the time it needed to be rescued. Yep. You read that right.

        This speech quotes Enstein as saying “the problems that exist in the world today cannot be solved by the level of thinking that created them.”

        More regulation, leading to more regulation with models that regulators ththemsleves don’t understand is a recipe for disaster.

        I today with a small businessman who was at his wit’s end. Seems his business discharges a lot of water, and only so much of it can be hardened with minerals. The allowable amount keeps changing. When they installed new equipment to meet the regs and struggled to calibrate it, they were given no time to get it right, though they were barely over the limit. The government threatened fines and jail time…over too many minerals in the discharged water. They were thinking about building a new plant in another location but have since scrapped that and the jobs that would go with it.

        Then there is the paper plant in Sartell that had an explosion in early summer and had to be closed. The company tried to make reopening it feasible, but all the environmental modifications and re permitting and all the compliance regs made it more cost effective to close it and lay off several hundred.

        My larger point is that not only are the regulations themselves deterring business from expanding, but anyone who thinks that regulatory capture isn’t a major factor has his or head in the sand.

        If you are paying employees today and own a small business (I do), you can’t help but be intimidated by the numbers of rules, regulations and laws that abound. Break any of them or be late with any reports regarding wages, payroll taxes or tons of other things, and you will be threatened with stiff penalties, fines and interest. Is it any wonder that fewer people want to take the risks associated. At some point, the risks out weigh the rewards, and that’s the point of the essay that I linked.

        Yes, government is needed and necessary. How much of it and what its drag on the economy truly is will be at the heart of the debate that I hope is only beginning.

  8. PM says:

    OK, on to a slightly different topic: the economy and its impact on the election.

    Check out this fascinating post from Ezra Klein–the upshot is that the economy favors (narrowly) the re-election of Obama–because the economic indicators are positive (ie., things are looking up–in the near term future) (as opposed to how the economy looks right now).

    1. Very cool analysis. It roughly tracks where Nate Silver has the odds these days. Right now, he’s giving Obama roughly an 8 out of 10 chance of winning.

      – Austin

  9. Typical hit and run, Jim. I used anecdotal evidence in two specific instances in illustrating a larger point….including the Basel Accords which are hardly an anecdotal piece of evidence. World banking health regarding capital and stress testing were based on the accords. Then you haul out a killing birds article. Huh? I seem to remember a number of liberals in this forum, maybe you, using Madeoff as an example of more regulation being necessary in the financial advisor arena. Seems to me liberals are content with drawing individual anecdotal evidence when it suits them. Apprently you misssed the entire first half of my post.

    1. Jim Leinfelder says:

      No I read it. I was reacting to your anecdote about your client who’s being somehow unfairly subjected to water quality standards, which hardly seems to relate to the Basel Accords.

  10. Well, you got me there. It doesn’t relate to the Basel Accords. Thanks for pointing that out…almost escaped me. OK, here we go again. The Basel Accords….big picture regulation. The client….small anecdote about day to day effects of government regulation on small people.

  11. So let’s get back to the big picture. What’s your opinion of the Bank of England regulator’s opinion and speech? Agree or disagree? Give me something to swing at.

    1. Erik says:

      I thought it was you could say a case of unfortunate serendipity yesterday when the Cairo American embassy reflexively apologized for American free speech. One of Romney’s craven lies is that the President and the Administration traipse the world apologizing for America. With Politifact having debunked that as pants on fire, it’s ironic an event like yesterday happens out of the blue where fact sort of mimics fiction. And it’s obviously unjust that it will be used as an example to perpetuate the original lie.

  12. PM says:

    So what will Romney do? Will he continue to double down on this matter, or will he sit back and reflect on what he has said and reconsider? Frankly, i think that is more telling about what kind of a President he would make–a knee jerk, insecure reactionary who would never admit to a mistake (because someone might see it as an apology, and therefore a sign of weakness), or someone who is capable of thought and reflection.

    We will find out in the next 24 hours. This would make a great question for the foreign policy section of the upcoming debates.

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