Next week’s presidential election is not a simple referendum on Barack Obama’s first term in office, nor is it another routine debate over the appropriate size and role of the federal government. The contest between Barack Obama and Mitt Romney is a referendum on the American social contract as we know it. This November, the electorate will answer a meaningful question – to what extent do our country’s most successful captains of business and industry have a contributive, financial duty to the maintenance of the American economy?
The modern understanding of the American social contract first took form with Franklin Roosevelt’s New Deal, passed in the wake of the Great Depression. In FDR’s view, the government could only continue to fulfill its obligation to those it governed by securing some measure of economic protection for its citizens. “As I see it, the task of government in its relation to business is to assist the development of an economic declaration of rights, an economic constitutional order,” FDR said in 1932, “Faith in America, faith in our tradition of personal responsibility, faith in our institutions, faith in ourselves demand that we recognize the new terms of the old social contract.” 1
From this sentiment, programs like Social Security and, later, Medicare, were born. FDR’s program was one that called upon government and business to work together in the cause of establishing economic security for all Americans, particularly the working classes. And he was blunt about from where the financing for his newly devised social safety net would come. “The men who have reached the summit of American business life know this best; happily, many of these urge the binding quality of this greater social contract . . . They must, where necessary, sacrifice this or that private advantage; and in reciprocal self-denial, must seek a general advantage.”1
President Obama has positioned himself as the torch bearer of America’s new social contract, championing the idea that America’s wealthy are obligated by civic duty to assist the government in the process of economic recovery. This election season, Obama has proposed higher taxes for the country’s top earners as the agent of this cooperation. He has campaigned loudly on the principle that the nation’s most successful business leaders “pay a little bit more,” to help balance the budget and continue financing social service programs.2
This “little bit” includes an income tax hike for the top two tax brackets – an increase of 3% and 4.6%, respectively – and a 5% hike in capital gains tax for the same groups. It also involves hiking estate taxes and allowing the Bush tax cuts to expire.3 Ideologically, Obama justifies his proposed tax increase in much the same way FDR did – not only with the assertion that added tax revenue with stimulate economic growth, but with a forcefully delivered rhetorical principle that such contribution is ultimately the patriotic obligation of the nation’s wealthy.
The now infamous “you didn’t build that” speech, read in its entirety, serves as a neatly distilled version of Obama’s social contract theory. “Somebody helped to create this unbelievable American system that we have, that allowed you to thrive,” he said. “The point is that when we succeed, we succeed because of our individual initiative, but also because we do things together.” 4 In Obama’s view, those that profit from a free and prosperous society are obligated to return a measure of the gains to the government for the “roads and bridges,” real and metaphorical, that they used to become successful. In turn, the government is obliged to reinvest this capital at the service of the American people, in education and research, entitlement programs and infrastructure.
Mitt Romney’s platform reveals a markedly different understanding of the American social contract. The Romney campaign is driven by the idea that government must ease the tax burden for “job creators” who, along with the taxes they already pay, fulfill their civic obligation as the engines of economic growth alone. Distasteful to the expansion of entitlement programs, Romney favors a simultaneous cut in taxes and reduction in government spending. “This is ultimately a question about direction for the country – do you believe in a government-centered society that provides more and more benefits or do you believe instead in a free enterprise society?” 5
Well in line with the Reagan era theory of trickle-down economics, Romney’s social contract theory releases both the American businessperson from a heightened tax burden and the government from the financial obligation of expanding social service costs. Romney’s ideology is the modern manifestation of the classic free-enterprise gamble – that a market only minimally influenced by government interference will provide the highest standard of living for the largest portion of its citizenry.
As we approach Election Day with these two competing notions in mind, the echoes of FDR’s 1936 reelection campaign can be heard across the country. In the face of vehement opposition from industrialist rivals, President Roosevelt warned against those that would “deceive” 6 the American people into believing that the social contract comes without a cost and openly taunted the challenging Republican party. “I should like to have it said of my first Administration that in it, the forces of selfishness and of lust for power met their match. I should like to have it said of my second Administration that in it, these forces met their master.” 6 Later that year, standing on the record of his New Deal and his vision for the new American social contract, Roosevelt defeated Republican challenger Alf Landon in a landslide, winning 98 percent of electoral votes. 7
On November 6, the American people will be presented with a similar referendum on the American social contract, on Roosevelt’s New Deal and all that it has become. And while Roosevelt stood ready in 1936 to “welcome their hatred,” 6 today, President Obama asks only that the most wealthy, most successful and most accomplished individuals in the country “pay a little bit more.” Next week, it will be up to the American people to decide whether those individuals have a duty to do so.
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1http://teachingamericanhistory.org/library/index.asp?document=447
3http://www.cnbc.com/id/48739927/Stark_Differences_in_Ryan_Romney_Obama_Tax_Plans.
4http://www.youtube.com/watch?v=YKjPI6no5ng
5http://www.youtube.com/watch?v=JfTL9jZXIaw&feature=related
6http://www.youtube.com/watch?v=IjSTQwamo8M
7http://uselectionatlas.org/RESULTS/national.php?year=1936