There was Gov. Chris Christie’s direct appeal to middle-class voters and the everyman construction worker. And there was even talk of hiking taxes, albeit on wealthy hedge-fund managers.
Nearly four years after Democrats successfully stoked fears that wealthy GOP presidential hopeful Mitt Romney would cater only to the rich, Republicans seeking the party’s 2016 presidential nomination seem to be adopting more populist messages, something that was demonstrated during Wednesday’s three-hour debate televised live on CNN.
Christie got the ball rolling with an opening statement that stressed the election was not about the candidates, but about “our country” and “the people in the audience.” Former Arkansas Gov. Mike Huckabee also spoke out against a “Wall-Street-to-Washington axis of power” during his opening statement.
But the issue that maybe demonstrated the shift the most was when the debate turned to the topic of tax policy and specifically the tax rates that are levied on the earnings of hedge-fund managers and other top-dollar Wall Street professionals. Right now, that “carried interest” is not taxed as income, but as capital gains like traditional stock investments, which means it is taxed at a much lower rate.
On the debate stage, Republican frontrunner Donald Trump and former Florida Gov. Jeb Bush, another serious Republican presidential contender, did not balk when their support for a higher tax rate on carried interest was raised. And former New York Gov. George Pataki also called for closing “the carried-interest loophole” during the debate held earlier in the day for the candidates who are not registering as high in the polls as the top 11.
Though it may seem to be an obscure topic, the carried-interest issue has relevance in New Jersey, thanks to dozens of positions in hedge funds and other alternative investments that the $80 billion public-employee pension system has taken in recent years as part of a diversification strategy that’s aimed at protecting against fluctuations in the stock market. During the 2014 fiscal year, for example, records show that the pension system paid out roughly $335 million in carried interest to private-investment managers.
A host of leading Democrats, including President Obama and 2016 presidential hopefuls Hillary Clinton and Bernie Sanders, have been talking openly about closing what they call a loophole that allows those hedge-fund earnings to be taxed at rates far less than those charged on the incomes of factory workers, teachers, and others in less lucrative careers.
New York City Mayor Bill de Blasio also penned a recent column for The Huffington Post that cast the issue in the context of income equality, the growing gap in wealth in America between the very rich and everyone else. In New Jersey, according to federal census data, income equality has widened over the past decade.
But Trump, who like Romney is also extremely wealthy, has talked openly about raising the tax rate on carried interest for weeks as he’s soared to the top among the crowded field of Republican hopefuls — and it hasn’t turned off GOP primary voters.
“The hedge fund guys are getting away with murder. They’re making a tremendous amount of money,” Trump said last month while appearing on CBS’s “Face the Nation.” “They have to pay taxes. I want to lower the rates for the middle class.”
Bush, the brother and son of former presidents, released a detailed tax plan earlier this month that also calls for applying a higher rate on carried interest.
Ben Dworkin, a Rider University political science professor and the director of the Rebovich Institute for New Jersey Politics, said whether it’s intentional or not, taking such a position should help the Republican nominee who makes it out of the primary.
“A Republican who has this kind of message will certainly be able to appeal to lower-income voters,” Dworkin said.
For his part, Christie did not weigh in when the discussion during the main debate shifted to the carried-interest issue. And when he was asked last month during a CNBC interview if he agreed with Trump, Christie talked only broadly about a federal tax system that he said is “rigged for the rich.”
Christie has also released an economic plan, and it calls for lowering the top-end federal income tax rate to 28 percent, which could lessen the gap between the current income and capital gains tax rates. Asked to clarify his position on carried interest yesterday, Christie’s campaign did not respond to NJ Spotlight’s questions.
Still, Christie may have been the most aggressive candidate of the 11 who participated in the main debate when it came to making direct appeals to middle-class voters. At a point where Trump and former Hewlett-Packard CEO Carly Fiorina were in the midst of a terse exchange on their records as business executives, Christie weighed in forcefully.
“While I’m as entertained as anyone by this personal back-and-forth about the history of Donald and Carly’s career, for the 55-year-old construction worker out in that audience tonight who doesn’t have a job, who can’t fund his child’s education, I’ve got to tell you the truth. They could care less about your careers. They care about theirs,” Christie said.
Moments later, he added: “You’re both successful people. Congratulations. You know who’s not successful? The middle class in this country who’s getting plowed over by Barack Obama and Hillary Clinton. Let’s start talking about those issues tonight and stop this childish back-and-forth between the two of you.”
Dworkin, the political science professor, said the exchange served Christie, who is still registering marginally in most polls of Republican voters nationally, very well.
“It was almost Bill Clintonesque,” Dworkin said.
And while Christie has already tried out messages centered on truth-telling and restoring law and order with little success, this one focusing on the interests of middle-class voters may be a winning one, he said.
“My sense is that he wants to convey that he is a common man with a common touch,” Dworkin said. “That he’ll stand up for you.”
Dworkin said he expects to see Christie advance in the polls coming out of the debate, which drew a record number of viewers for CNN.
“Christie did well,” he said. “He’s poised to get a good rise in the polls. The question is whether he can stay there.”
NJ Spotlight, an independent online news service on issues critical to New Jersey, makes its in-depth reporting available to NewsWorks.