Author: Ben Steverman
Date: 30-Oct- 2020
The numbers don’t lie: We are living in the Billionaire Age.
Four years ago, America elected its first billionaire president. Since then, the nation’s 200-or-so wealthiest people — a cohort representing 0.00006% of the population — have increased their combined wealth by a staggering $1 trillion.
Now, in a moment of peril, a polarized nation is voting again. The outcome will not only determine America’s future, but also the arc of the country’s largest fortunes.
The forces that have concentrated so much wealth in so few hands were at work long before Donald Trump’s unexpected victory. Whatever Tuesday’s outcome, those factors, especially technological change, will continue to shape the nation’s economy and politics.
But the Trump presidency accelerated trends that made the very richest Americans richer still. And many are already maneuvering to protect their wealth in the event former Vice President Joe Biden wins and makes good on his pledge to raise their taxes.
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“Trump is not responsible for many of the long-standing factors that are driving large changes in inequality. However, Trump’s policy changes have served to exacerbate rather than dampen these trends,” said Reed College economics professor Kimberly Clausing, citing a 2017 tax law that favored corporations and the wealthy.
Americans on the Bloomberg Billionaires Index went from less than $1.8 trillion in net worth on election night in 2016 to more than $2.8 trillion last week. Members of the index, a daily ranking of the 500 richest people on the planet, can vary from day to day, but the number of Americans held steady, from 168 on election night to 166 this month.
The bulk of gains under Trump went to the richest of the rich — a group that includes some of the president’s least favorite people. Jeff Bezos, the Amazon.com Inc. founder whom Trump has called “Jeff Bozo,” has gained about $121 billion under his presidency, despite a costly divorce.
Meanwhile, those behind energy, real estate and industrial companies — sectors favored by Trump — have collectively lost ground on the index since the end of 2016, mostly from the impact of Covid-19.
Billionaires’ huge gains are largely due to a stock market that has steadily risen during Trump’s term of office. From election night 2016 through Thursday, the S&P 500 index returned 67%, including dividends, while the tech-heavy Nasdaq Composite Index returned 125%.
Until the arrival of the pandemic, American workers were also making small-but-significant gains under Trump. The virus has caused inequality to widen in dramatic ways, with millions losing their jobs at the very moment the stock market rebounded while a few billionaires, especially those with tech companies, profited from rapid changes in how we live and work.
There’s a limit to how much a president, or any politician, can influence the powerful trends that have tilted more and more wealth to the top. The fortunes of the richest Americans have ballooned since the late 1970s. The top 1%’s share of U.S. wealth has risen by half, according to various estimates, while the top 0.1% — less than 200,000 households with a net worth starting north of $20 million – have doubled their share.
In recent years, the average fortunes of the top 1% and 0.1% continued to grow, but their share of total U.S. wealth flat-lined during former President Barack Obama’s second term and Trump’s first as the bottom 99% inched up. The very richest billionaires, by contrast, continued outpacing everyone else.
Collectively, the top 50 wealthiest Americans are up $835 billion under Trump, absorbing 80% of the gains for all U.S. billionaires on the index.
The gains fueled an era of conspicuous consumption. The rich have poured astonishing sums into high-end real estate, including a $238-million New York penthouse. Art prices continue to hit records, and the valuations of sports teams have soared to the point where Americans have shifted their focus to buying cheaper European franchises. Meanwhile, the super-wealthy have poured unprecedented amounts into politics, on both sides.
Biden has focused on reversing many of Trump’s policies, promising to raise taxes on Americans earning more than $400,000 a year.
“Folks are worried about making their next rent payment or their mortgage payment or their car payment,” Biden said in a speech in Detroit this month. “They see the people at the top doing a hell of a lot better while the rest are left to wonder, 'Who’s looking out for me?’ That’s Donald Trump’s presidency.”
Trump has defended his record, and claimed he can bring back “the greatest economy in history.”
“Inequality declined dramatically, a complete reversal of the Obama years,” Trump said this month in an address to the Economic Club of New York. “My policies have benefited those who need it the most.”
U.S. workers were seeing wage gains and ultra-low unemployment before the coronavirus hit. Adjusted for inflation, the median household income rose 6.8% last year to $68,703, after rising just 1.8% and 0.5% in Trump’s first two years in office.
Millionaires and billionaires had far more to celebrate. A Republican overhaul of the tax code left wealthy investors and corporations paying lower overall tax rates than most working professionals. It’s also never been easier to avoid the U.S. estate and gift tax, and pass on wealth to heirs. When Covid-19 hit, the Treasury and Federal Reserve propped up markets, primarily benefiting the top 1%, who own the majority of stocks held by U.S. households.
“We wealthy have hit it out of the park during Trump’s term,” said Stephen Prince, whose fortune, which he estimates at $35 million to $40 million, was earned mostly in the gift-card business.
The irony of Trump’s term in office is that a sizable number of those who’ve done best in his presidency are supporting his opponent. That includes Prince, who’s vice chair of the Patriotic Millionaires, a group of wealthy people pushing to raise their own taxes. “It worries me that this imbalance is going to get worse and worse,” he said.
In the third quarter, donors writing checks for $100,000 or more gave $134 million to the two committees that raise money for Biden, the Democratic National Committee and state parties, according to Federal Election Commission filings. By contrast, Trump’s committee, Trump Victory, raised $96.9 million from donors giving at least that amount.
Many of Biden’s biggest funders come from Silicon Valley, which has seen remarkable wealth gains in the past four years.
Major Democratic donors this year include Facebook Inc. co-founder Dustin Moskovitz, whose fortune has risen 32% to $16 billion since Trump’s win, and former Google Chief Executive Officer Eric Schmidt, whose net worth of $17.4 billion is 61% higher than on Nov. 8, 2016. Laurene Powell Jobs has almost doubled her fortune under Trump.
Trump retains plenty of support among the top 1%. “The vast majority of my friends are wealthy people and they all think I’m crazy,” Prince said.
Many of Trump’s supporters have thrived during the past few years. Stephen Schwarzman, co-founder of private equity giant Blackstone Group Inc., has almost doubled his net worth to about $18 billion. Finance billionaires are up 39%, or $120 billion, since the last election.
Many of the president’s earliest and loudest supporters come from sectors where fortunes have shrunk in his first term. That includes Trump’s own industry: U.S. real estate billionaires have lost 12% on Bloomberg’s index since November 2016. The pandemic is to blame, with their collective net worth falling from $93 billion to $69 billion this year.
Casino owner Sheldon Adelson, a Trump supporter whom the Center for Responsive Politics ranks as 2020’s largest donor, has lost more than $1 billion under Trump, or about 4% of his fortune.
Trump himself has also lost money. While not wealthy enough to be included on the Bloomberg index, his net worth has declined more than 10% since taking office.
— With assistance by Jack Witzig, Reade Pickert, Misyrlena Egkolfopoulou, and Devon Pendleton(Updates with stock gains in 10th paragraph.)UP NEXT
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