Billionaires and Stealth Politics
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Moreover, most of those who spoke out did so very infrequently. Most
of the tax- related statements we found were made by just four highly prominent, publicly engaged, centrist, or liberal- leaning billionaires: Michael Bloomberg (twenty- three comments or statements); Warren Buffett (nineteen); Bill Gates (fourteen); and George Soros (nine).43 Most of the other billionaires who spoke out at all did so only once or twice over the roughly ten- year search period. They usually spoke only very briefly, and often
quite vaguely.44 (See appendix 3.)
Our findings concerning Social Security are even more striking. Only
three (3 percent) of the one hundred billionaires made even a single comment about Social Security policy. Warren Buffett made seven comments;
stealth politics on taxes and social security
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table 2.1 Frequencies of Statements on Taxes and Social Security
Issue Type
Personal/ Corporate/
Capital
Direction of
Taxes
Income
Business
Carbon Gains
Estate Social
Stance
(Any Issue)
Taxes
Taxes
Taxes
Taxes
Taxes
Security
More
14
10
4
6
4
5
2
Less
14
7
9
0
1
3
1
Same
2
2
0
0
0
0
0
Contentless
3
1
2
1
0
0
1
Completely
71
80
85
93
95
92
96
Silent
Silent or
74
83
87
94
95
92
97
Nondirectional
Note: Each entry is the number of the one hundred wealthiest billionaires who, over a ten- year period, made one or more specific statements about a given type of policy.
Michael Bloomberg made four; and George Soros made just one.45 No oth-
ers took any publicly visible stand at all on Social Security (see table 2.1
and appendix 3).
We find this to be extraordinary. Social Security, after all, is by far the largest item in the federal government’s budget. It makes payments to
many millions of retired or disabled Americans, and many millions more
count on future Social Security payments to be their main source of re-
tirement income. Social Security has been very prominent in the news
and in public debates. For at least four decades, there have been vigorous controversies over whether or not Social Security is “going broke” and, if so, what to do about it. There has been an intense, well- funded campaign to “privatize” the system: to end guaranteed payments and substitute individual retirement accounts.46 Yet large majorities of the public oppose practically any kind of cut in guaranteed benefits.47 Surely the wealthiest Americans were not unaware of these controversies.
Our search for comments was comprehensive. We looked for any So-
cial Security references related to payroll taxes, benefit reductions, privatization, “reform” generally, or retirement age. Is it possible that only 3 percent of the wealthiest US billionaires held any views at all on any of these matters? We doubt it. We believe that the pervasive silence represents a series of conscious decisions not to speak, rather than an absence of opinions.
There are limits to what we can know about the policy preferences of
people who say nothing at all concerning an issue. But we suspect that
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table 2.2 Regression Predicting Number of Statements about Taxes
B (SE)
t- Value
Pr(>|t|)
(Intercept)
0.0290 (0.5489)
0.05
0.9579
Wealth
0.1531 (0.0252)****
6.09
0.0000
Consumer Facing
– 0.8686 (0.6129)
– 1.42
0.1596
Heir
– 1.0187 (0.6379)
– 1.60
0.1136
**** p < .001.
Note: The dependent variable is the total number of statements made by each billionaire concerning any aspect of tax policy. Residual standard error: 2.889 on 96 DF; multiple R-squared: 0.3197; adjusted R- squared: 0.2984; F- statistic: 15.04 on 3 and 96 DF; p- value: 4.25e– 08.
for some billionaires, one factor entering into the decision not to speak may have been a reluctance to expose unpopular positions to public view.
The SESA survey of multimillionaires found that most of them were ex-
tremely worried about budget deficits. They were much more open than
the general public to cutting Social Security. They were also less enthu-
siastic than most Americans about progressive taxation.48 If billionaires, like those multimillionaires, tend to favor unpopular policies related to taxes and Social Security, that would help account for their silence.
Our suspicions are not allayed by the fact that among the rather few
billionaires who did speak out, the same number (fourteen) advocated more taxes as advocated less taxes,49 nor by the fact that the very few
Social Security comments were narrowly divided (two for the expansion
of Social Security, one for its reduction). This pattern is perfectly consistent with the possibility that those with more popular opinions (on these issues, that means more moderate or liberal opinions) were more likely
to speak out.
We explored this idea further by analyzing what factors predict the
number and the directionality of tax- related statements by different billionaires. Table 2.2 displays the results of an ordinary least squares re-gression50 predicting the total number of tax- related statements that each billionaire made by the level of wealth (in $ billions) of that billionaire, whether or not his or her fortune was largely inherited,51 and whether or not he or she was substantially exposed to consumers.52
It turns out that the level of a billionaire’s wealth is a strong and highly significant predictor of the number of statements he or she makes about
tax policy. The regression coefficient for wealth predicts, in fact, that a billionaire at the very top of our wealth range (at $72 billion in net worth) would make fully ten (10.2) more tax- related statements than a billionaire
stealth politics on taxes and social security
41
at the bottom ($4.6 billion). This result fits nicely with the high frequency of statements by Gates, Buffett, and Bloomberg, and with the very low
frequency among the least wealthy. But it is not overly dependent on any
particular observation.53 The relationship is rather strongly linear. The regression as a whole accounts for nearly one- third of the variance, and the bulk of that is accounted for by wealth level.54
The same regression analysis also suggests— though it does not con-
clusively demonstrate— that our expectations concerning consumer ex-
posure and inherited wealth may be correct. Controlling for wealth level, being an heir or being exposed to consumers tends to have a small negative impact on the number of tax- related statements made, though these
coefficients do not quite meet standard levels of statisti
cal significance.
We learned still more about wealth effects by examining predictors of
the directionality of tax policy stands among those who made at least one relevant statement, using a simple additive index that combined advocacy
of raising or lowering taxes on any of five specific tax issues: personal income, corporate, estate, capital gains, and carbon taxes.55
Wealth level turns out to be a fairly strong predictor of the direction-
ality as well as the frequency of tax- related statements, as table 2.3 indicates. Wealthier billionaires tend to favor getting more revenue from each of several kinds of taxes in order to fund government programs. This is
consistent with the idea that wealth may have declining marginal utility, and that at some high level of wealth some billionaires may begin to see
the benefits of government spending as exceeding any losses to them per-
sonally as a result of higher taxes. It fits the fact that Gates, Buffett, and Soros each advocated increased revenue from all or nearly all of the five types of taxes mentioned, and that the lower- wealth billionaires tended to favor cutting taxes.
table 2.3. Regression Predicting Directionality of Statements about Taxes B (SE)
t- Value
Pr(>|t|)
(Intercept)
– 0.7137 (0.5370)
– 1.33
0.1958
Wealth
0.0688 (0.0205)***
3.35
0.0025
Consumer Facing
– 0.2685 (0.6516)
– 0.41
0.6838
Heir
– 0.8060 (1.2581)
– 0.64
0.5276
*** p < .01.
Note: Directionality is coded – 5 to +5 to reflect the number of types of taxes each billionaire favors: increasing (+) or decreasing (– ). Residual standard error: 1.697 on 25 DF; multiple R- squared: 0.335; adjusted R- squared: 0.2552; F- statistic: 4.198 on 3 and 25 DF; p- value: .01551.
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Once again, the relationship was rather strongly linear, and about one-
quarter of the variance was accounted for.56 This analysis also indicated that— controlling for wealth level— being an heir or being exposed to
consumers had no detectable influence on the directionality of tax stands; the coefficients came nowhere close to statistical significance. This suggests that billionaires may behave strategically in deciding whether or not to speak out publicly, but that they do not tend to modulate the substance of any message they deliver— or falsify their preferences— in anticipation
of how the public might respond.
Putting together the above results, we can see that a billionaire’s level of wealth is statistically entangled with his or her policy stands. One reasonable interpretation, which fits well with other findings, is that the effect of wealth level on frequency of statements about taxes represents— in part—
a tendency for fewer statements about taxes to be made by billionaires who are more conservative on tax policy (less in harmony with prevailing public views) and who are also relatively less wealthy than some of the famously liberal- to- moderate billionaires at the top of the distribution. This tendency is broadly consistent with half (the silence half) of the idea of stealth politics. What about the other half, which involves quiet political action?
Political Action
Despite their general silence about tax and Social Security policies, US
billionaires tend to be very active politically, just as resource theories of political engagement would predict.57
Our searches revealed that a remarkable one third (actually a bit more: 36 percent) of the one hundred wealthiest billionaires hosted political
fund- raisers and/or bundled others’ contributions to political causes. Bundling is an extremely high- level form of political activity, associated with membership in elite fund- raising groups (dubbed “Pioneers,” “Rangers,”
and the like) that offer easy access to top- ranking public officials.58 Within the US population as a whole, bundling is an extremely rare activity, engaged in by well under 1 percent of Americans. (Bundling is rarely asked
about in nationally representative surveys, since it would be a waste of
time to do so.) In the SESA survey of multimillionaires, one of the most
highly trumpeted findings was that one- fifth (21 percent) of the top 1 percent or so of wealth holders reported bundling others’ contributions.59 Billionaires bundle even more often.
stealth politics on taxes and social security
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table 2.4 General Political Activity by the One Hundred Wealthiest Billionaires Percentage
Average Annual
Type of Contribution
(of Billionaires)
Contribution Size
Bundled others’ contributions
36%
N/A
or hosted one or more
fund- raisers
Made reportable contributions to
92%
$509,248
state or federal political parties
or candidates, outside groups,
or ballot initiative efforts
Among major- party
contributors:
Contributed primarily or
64%
$384,121
exclusively to Republicans
Contributed primarily or
36%
$110,821
exclusively to Democrats
Note: Entries are the number (identical to the percentage) of the 100 wealthiest Americans who engaged in bundling or fund- raising sometime during a ten- year period (according to our web searches) or who made the indicated type of political contributions from 2001 to 2012 (according to contribution data gleaned from the Follow the Money database of the National Institute on Money in State Politics.
Billionaires also tend to give a lot of money to political causes, as indicated in table 2.4. In the twelve years from the beginning of 2001 to the end of 2012, for example, fully 92 percent of the wealthiest billionaires made a reportable federal or state political contribution of some kind. Ninety percent made a contribution to a candidate, 70 percent to a party, 40 percent to a ballot initiative, and 38 percent to an outside group.60 Money
giving is much less common in the general population (only 18 percent of
Americans reported making campaign contributions in a 2008 survey61),
and of course ordinary citizens generally give much less money.
The figure of 92 percent of billionaires contributing also exceeds the
60 percent of SESA multimillionaires who reported making a political
contribution in the previous three or four years. The billionaires who made contributions invested an average annual total of $509,248— an amount that dwarfs the average of $4,633 that SESA multimillionaires reported giving in the twelve months prior to that survey.62 It is also useful to remember that our figures for billionaires deal only with reportable contributions, not unreported dark money, so that their total political contributions
may well have been substantially higher.
As one might expect of very wealthy people, most billionaires (64 per-
cent of those who made partisan or ideological contributions) contributed primarily or exclusively to Republicans or conservative groups, and the
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chapter two
table 2.5 Frequency of Billionaires’ Policy- Related Actions on Taxes and Social Security Issue Type
Personal/
Corporate/
Capital
Direction
Taxes
Income
Business
Carbon
Gains
Estate
Social
of Stance
(Any Issue)
Taxes
Taxes
Taxes
>
Taxes
Taxes
Security
More
0
0
0
0
0
0
3
Less
13
3
5
3
4
12
4
Note: Each entry is the number of the wealthiest one hundred billionaires who took one or more policy- related actions, over a ten- year period, on a given type of policy.
bulk of their money (averaging $384,121 annually) went to Republicans or
conservative groups rather than to Democrats or liberal groups ($110,821) (see table 2.4).63
When we move away from contributions to political parties or candi-
dates, and focus on issue- specific, policy- oriented contributions to political causes, contributions, of course, are less frequent and smaller. Yet, as table 2.5 indicates, a solid 12 percent of the billionaires made a contribution to an organization with a narrow mission that took a clear stand
on estate taxes— in every case seeking to cut or eliminate estate taxes.
(These individuals were clustered toward the top of the wealth distribu-
tion.) Smaller but still noticeable proportions of billionaires acted in relation to corporate taxes (5 percent, all seeking lower taxes), capital gains taxes (4 percent, all wanting them lower), personal income taxes (3 percent), and carbon taxes (3 percent)— all working for lower taxes.
A similar- sized 7 percent of our billionaires acted on Social Security by contributing to policy- focused groups, with 3 percent favoring more
in Social Security benefits and 4 percent favoring less. (These relatively evenly balanced actions, of course, exclude the billionaires’ many contributions to economically conservative Republican candidates, who quietly
supported the Paul Ryan agenda of reducing guaranteed Social Security
benefits.)
These findings about actions hint at stealth politics, in that they disclose the existence of a fair number of billionaires who acted in ways opposed
to the policy preferences of the average citizen. In the general public, the proportion of people favoring “more” spending on Social Security has
always overwhelmingly outweighed the proportion favoring “less.” Most
members of the general public favor increasing rather than cutting corpo-
rate income taxes. Most favor progressivity (and ending “loopholes” for
stealth politics on taxes and social security
45
the wealthy) in the personal income tax, and most oppose total repeal of