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CAMPAIGN '08: RACE FOR THE WHITE HOUSE

Who's rich? It depends on which candidate you ask

August 18, 2008|Greg Miller | Times Staff Writer

WASHINGTON — The rich may be different for John McCain and Barack Obama.

On almost every issue, the two presidential candidates have staked out opposing positions. Their contrasting views on wealth surfaced during their back-to-back appearances in Southern California on Saturday night when each was asked to define "rich."

Obama didn't hesitate. "I would argue that if you are making more than $250,000, then you are in the top 3, 4 percent of this country," he said. "You are doing well."

McCain took a far more discursive approach to answering the question but ultimately settled on a dramatically higher figure: "I think if you're just talking about income, how about $5 million?"

The Arizona Republican quickly added that he was "sure that comment will be distorted," and his campaign said Sunday that he was joking.

Even so, the remark highlighted the candidates' disparate outlooks. Analysts who study income distribution said the answers appeared to reflect shifting political calculations more than economic reality.

Economists said in interviews Sunday that neither candidate was wrong because there are no agreed-upon definitions for the terms that describe income segments.

"To be fair to both of them, 'rich' is an adjective," said James P. Smith, a senior economist at the Rand Corp., a nonpartisan think thank in Santa Monica. "Economic science is not going to tell you that 'this' is the cutoff point."

Yet the $5-million level, Smith said, includes "almost nobody." Experts said that of all the households in the nation, fewer than one-tenth of 1% had an annual income of $5 million or more.

Ken Goldstein, an economist for the Conference Board, a business-research group based in New York, said he would define rich as income about $500,000 or more. "If you set the bar at half a million, you're talking about the top 1% of taxpayers. If you think about the last eight years, those are the folks who have benefited the most."

Other economists said they would have gone with a lower figure. Even the moderator who asked the question of the candidates, Pastor Rick Warren of Orange County's Saddleback Church, did not seem to anticipate a reply beyond the lower six figures, urging each man to "give me a specific number . . . is it 100,000 [dollars], is it 50, 200?"

Most ordinary Americans tend to massage the definitions of such terms in an attempt to crowd themselves into what many consider the least offensive category.

"If you do surveys, 95% of people think they are middle class," said Len Burman, director of the Tax Policy Center, a nonpartisan group that has analyzed the candidates' tax proposals. "This is including people who are objectively quite poor and people who are objectively quite rich."

Burman added: "I guess it says something nice about America that rich people don't want to act like they're better than anybody else and poor people don't like complaining about how tough it is to pay their bills."

Economists tend to spend more time debating the definition of poor, in large part because that cutoff has consequences for an array of social programs designed to assist those whose incomes fall below the poverty line.

The candidates' answers may stem, in part, from their financial circumstances: From 2000 to 2004, before he began earning substantial royalties from his books, Obama and his wife reported income of between $207,000 and $275,000 on their tax returns. By contrast, McCain's wife's wealth has been estimated at more than $100 million.

But their positions were likely also driven by their tax policies. The Illinois Democrat has proposed tax hikes on individuals with incomes exceeding $250,000, while the Arizona Republican has declared his intention to extend the tax cuts begun by President Bush and make new cuts to corporate tax rates -- both moves that would benefit the very wealthy. An analysis by the Tax Policy Center has calculated that the middle-income earners would get a $325 tax cut from McCain's proposed changes to the tax code, while the top 20% would have their taxes reduced by $6,500.

The Obama campaign jumped on McCain's definition of rich.

"It should come as no surprise that John McCain believes the cutoff for the rich begins at $5 million," said spokeswoman Jen Psaki. "It may explain why his tax plan gives a $600,000 tax cut to the richest 0.1% of earners."

In responding to Warren's question Saturday, McCain sought to broaden the discussion, saying that "some of the richest people I've known in my life are the most unhappy" and that rich should be defined "by a home, a good job and education and the ability to hand our children a more prosperous and safer world than the one we inherited."

Even Obama's figure of $250,000 represents a certain inflation that has crept into Democratic politics, Burman said. Presumably in pursuit of votes, he said, Democrats have for years been raising income thresholds for eligibility for social programs and tax benefits.

"It's been going up and up and up," Burman said. "It includes a lot of people who would be considered swing voters, soccer moms in previous election cycles. It seems pretty clear that Obama has decided it's safe to go after people of $250,000 incomes. And McCain has decided it's basically not safe to [go after] anybody."

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greg.miller@latimes.com

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