Through thick and thin, there has always been one group of dedicated Americans whose support for President George W. Bush has been unwavering: The wealthy.
Their loyalty to Bush is not misplaced. His first priority upon taking office in 2001 was to significantly cut taxes for the affluent, and he delivered. Mission accomplished!
Forget the rapid transformation of a healthy budget surplus into monumental debt; forget the prosecution of a costly and unnecessary war in Iraq (and the indecent treatment of its veterans); forget the incompetent and inadequate response to Hurricane Katrina; forget the rising costs of health care and Bush’s attempt to dismantle Social Security; and forget soaring energy prices and the lack of a comprehensive strategy to deal with them.
Those things don’t matter to his wealthy backers. The debt is good for the bond markets, their children don’t have to fight in the war; they were unaffected by Katrina, they can afford health care and retirement, and the price of gas is an abstract concern.
As long as the stock market is trucking along, the richest Americans are going to be happy. And they have had ample reason to remain satisfied under Bush, since the Dow Jones Industrial Average has steadily crept up since the Sept. 11, 2001, terrorist attacks, hitting an all-time high late last year.
In fact, Bush’s defenders always point to the stock gains as they incredulously complain about his declining approval ratings, apparently oblivious to the fact that most Americans don’t have enough assets to play the market.
Or they try to convince us that we should be pleased that the wealthiest among us are making so much money on their daily trades, because their profits will eventually “trickle down” to the masses. It’s the theory popularized by Ronald Reagan (and famously called “voodoo economics” by the current president’s father).
Now, however, we are beginning to see the very real impact of that theory — but turned upside-down.
Wealth may not trickle down, but financial hardship appears to trickle up.
Earlier this week, the New York Times reported about how the increase in mortgage defaults among the poorest homeowners is having a ripple effect.
“The pain is also being felt widely throughout the business world,” according to the March 5 article. “Large companies that bought subprime lenders during the boom … are now scrambling to sell them or scale back their exposure. Many investors are also likely to suffer: Wall Street firms made billions in fees, commissions and trading revenue from packaging and selling subprime mortgages to them as bonds.”
Also, on the same day, the Times carried a story about how the number of Americans without health insurance has grown to include the “solidly middle class.” A nonpartisan institute estimates that more than one-third of the uninsured have family incomes of $40,000 or more.
And as the tide of financial insecurity rises ever higher toward what used to seem like a safe perch, the wealthy were shocked by last week’s bolt of lightning: the largest single-day drop in the Dow since Sept. 11, 2001, precipitated by a sharp decline in China’s stock market.
As it happens, it is the Chinese who eagerly have been purchasing the massive debt our government issued to pay for Bush’s tax cuts and the Iraq war. Now, the instability of China’s developing economy and the interconnectedness of global markets have come full circle to hit wealthy Americans where it hurts.
Unfortunately, the economic agitation is only just beginning. The chief economist at Moody’s Economy.com said on Monday that “the recent market sell-off is not over, but about halfway done.” He added that “there’s a 50% probability that it’ll be a modest correction, which will not dissolve into a major economic crisis.”
Meanwhile, the price of oil is on the rise and consumer debt is at unprecedented levels, which means the average American will have less disposable income. Defaults on mortgages will continue to increase, and financial institutions will eventually have to make some tough decisions about how much debt they can sustain.
All of this will contribute to the ongoing market “correction,” and finally the wealthy will have to pay attention.
And Bush, whose approval rating hit an all-time low in the latest Zogby poll this week, might lose even the die-hard 30 percent who still say they support him.
In the end, the only thing that trickles down is the number of Americans left unscathed by the destructive actions of the Bush administration.
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Editor’s note: This is Warwick Sabin’s final opinion column for the Arkansas Times. He starts March 19 as associate vice president for communications at the University of Central Arkansas.