Obama's real mandate is against America's bosses

When workers are given a clear choice, they choose the man who fights for them.

Did President Barack Obama win a mandate from the American people last week? Fox News appears to think he didn't. Some people didn't vote for him. Dick Morris doesn't see a mandate, though he foresaw a landslide for challenger Mitt Romney. Haley Barbour, the former head of the Republican National Committee, said the election was pretty much a tie. And the Wall Street Journal said Republicans, by dint of holding on to the House of Representatives, have a mandate equal to the president's.

Bill Press offers a blunt retort

Those naysayers are not only pathetic, they're dead wrong. ... Obama didn't need the help of the Supreme Court. He won the election on his own. That's a mandate. With Florida, he won the electoral vote by 332 to 206. That's a mandate. ... He beat Romney in the popular vote by almost 3 million. That's a mandate.

What's missing from this debate, if it can be called that, is that Obama's mandate is unique in the context of modern presidential history. In past elections, incumbents ran on their record, and his campaign was generally seen as a referendum of that first term. But this time, the race for the White House was framed as a choice between conflicting worldviews. 

As Mother Jones' David Corn reports, Obama and his team chose to run on ideological grounds pretty much since the "shellacking" he received after the 2010 midterms. Obamacare, financial reform, the stimulus program, the killing of Osama bin Laden -- all of these are stunning and underrated achievements compared to other presidencies, and all could have been legitimate grounds for launching a referendum election. But Obama chose a "values-and-vision" platform. Do you want to return to the trickle-down economic policies of the past 30 years or do you want to move forward with fair economic policies that benefit everyone? 

Indeed, the president ran as an old-school Democrat, a populist for the people willing to speak for the forgotten Americans who face on their own the daily prospect of economic destruction. He successfully made the case that government should protect the people against the excesses of capitalism, and voters said yes. They want government to create more and better jobs. They want social insurance programs like Social Security and Medicare. They want higher taxes on the rich. And they see no problem with greater public spending on infrastructure, education and energy. 

And Romney broadened and deepened that populist image. First by defending the supply-side policies of the Bush years (though, of course, he never uttered the word "Bush"). Then by pivoting from referendum strategy early in the campaign to a choice strategy some time over the summer. From that point onward, Romney helped Obama cast the race as a choice between worldviews: both, remarkably, characterized by class. Romney, emboldened by flawed polling that showed an electorate far more to the right than it actually is, sought to press an advantage that he didn't actually have. He thought he'd win the war of ideas, and he lost, badly.

Here's one way of looking at this: Populism is good for workers. Here's another way: It's bad for their bosses. The real bosses, the one per cent. For them, populism isn't rhetorical. They know what it means. They were listening when Obama railed against the rich for thinking they played by a different set of rules; when he said he'd go back and raise their taxes; when the crowds, in places like Ohio, gobbled it all up. If there's any doubt the bosses are worried, consider what they were prepared to do.

Prior to Election Day, Romney asked the CEOs of major corporations to "advise" employees to vote Republican. Sure, they said, warning workers they'd better support Romney or face unemployment. Georgia-Pacific, owned by the billionaire Koch brothers, did it. So did the heads of CintasASG Software Solutions and Rite-HitePapa John's and Applebee's said they'd shed payrolls before yielding to the demands of Obamacare. 

Wall Street is quaking. The big firms had bet big against the president, and after the election, the Dow Jones dropped by 2.4 per cent, or 320 points. Meanwhile, Murray Energy, the largest privately held coal mining company in the US, made good on its threat to can workers if Obama won. It laid off more than 150 workers this week, because it was in "survival mode". Future layoffs loom on the horizon. And even the rightist media followed suit. A literary blogger for Commentary, a Zionist neocon monthly, was sacked after making the conservative case for gay marriage. 

The political right lost the war of ideas and is now engaged in a guerrilla war against the president's mandate. Who knows how long that will last? What they don't seem to understand is that one goes with the other. The more Romney pushed a pro-boss agenda, the worse things got for him (conversely, as we saw after the first presidential debate, the less he pushed, the better off he was). And now that the campaign that gave expression to this war of ideas has ended, the bosses themselves are picking up where Romney left off, and they think they can win. 

They can't. But it will be fun to watch. The president won a mandate to champion the cause of Americans whose lives are threatened by economic forces beyond their control. The president has said that together we can make the country a more just place to live and work, and we can start by raising taxes on your bosses, the real bosses, the one per cent. And the people, by the widest margin ever given to a Democrat, said yes.

Now the bosses are making those abstract economic forces feel real by firing workers, and the more they do that, the more people have reason to stand behind the president.

We haven't hit a tipping point yet. Not by a long shot. But it's possible to imagine a brighter future for workers if Obama remains the populist that we saw so often on the campaign trail. The war of ideas is just beginning, and we are only now seeing the case being made that the bosses are not the makers - they are merely the owners. The real makers are the workers. And when workers are given a clear choice, as they were in this election, they choose the man who fights for them - and against their bosses.

Barack Obama delivering a statement about the economy. Photograph: Getty Images

John Stoehr teaches writing at Yale. His essays and journalism have appeared in The American Prospect, Reuters Opinion, the Guardian, and Dissent, among other publications. He is a political blogger for The Washington Spectator and a frequent contributor to Al Jazeera English.


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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.