POLITICO By Mark Penn - July 29, 2009

It sounds so simple: Just tax the few to pay for social programs that benefit the many.

Yet no political idea — embodied by House Speaker Nancy Pelosi’s call to tax the wealthy to cover health care for everyone else — has ever proved more contentious. The country was founded on the principle of unlimited and unbounded opportunity. Despite what poll questions often appear to say, class warfare language, outside the Democratic primary electorate, has always been politically counterproductive, because it divides Americans from one another and from their own aspirations and dreams.

And class warfare could be especially problematic now, considering that many of the Democratic Party’s newest supporters are among the highest-income categories — groups that had previously voted overwhelmingly Republican.

President Barack Obama steered clear of class warfare during his 2008 presidential bid. He emphasized that he would reduce taxes for 95 percent of the country and rarely mentioned what would happen to the other 5 percent. And when he took office, one of his first acts was to defer repealing the Bush tax cuts; instead, he decided to let them run out in 2010, postponing increases until past the midterm elections.

Obama’s economic platform on the crisis and on taxes helped Democrats win unprecedented numbers of higher-income voters at a time when the proportion of upper-income households had skyrocketed. Exit polls suggest that a record 26 percent of voters in the presidential campaign had a household income of $100,000 or higher, up from just 9 percent in 1996. For perhaps the first time aside from the 1964 Lyndon B. Johnson landslide, a Democratic nominee won close to half of these upscale voters and achieved a 52 percent majority, even among the 6 percent making over $200,000.

While Democratic-supporting higher-income voters were expecting income taxes to return to Clinton-era rates, the proposed health care surtaxes emerging from the House took them by surprise, along with other ideas — such as proposals before House Financial Services Committee Chairman Barney Frank to limit bonuses in companies that did not take government money. Whether any of these happen, just the possibility is enough to undo some of the class-neutral dynamic Obama created in the campaign.

An attorney running a small firm put it this way: “I started my firm with a single lawyer, grew it to create over 50 new jobs; I pay for health care for all of them, and now I am being looked at as the bad guy because I have done well.” It’s a feeling that is spreading among professionals and small-business owners.

Tax rates for upper-income earners early in President Bill Clinton’s presidency were, I believe, a major factor in the Democrats’ loss of their congressional majorities in 1994. Working with Clinton in 1995 and beyond, we scrubbed the Democratic lexicon of class warfare language. We would stop accusing the Republicans of trying to kill Medicare and give tax breaks to the wealthy — and just accuse them of trying to kill Medicare and threatening to blow a hole in the deficit.

The point was to stop talking about the fabled top 1 percent of earners and, instead, focus on the nation’s overall guiding values. It was this strategy that won the government shutdown against then-House Speaker Newt Gingrich — we stopped accusing the Republicans of shielding the “wealthy” and instead appealed to the values of protecting Medicare, Medicaid, education and the environment. Because of the difficulties in finding the money for health care reform, the Democrats’ rhetoric is now taking a turn toward class warfare and diverging from Obama’s more balanced campaign trail rhetoric.

Everyone agrees we should reform health care, control costs, improve quality and make access affordable for everyone.

But bringing them together has proved vexing because two problems creep up: the specter of government-run health care and the challenge of who pays. The discussion has begun to spiral down rather than appeal to the basic values and core actions everyone supports.

Clinton re-centered his post-1994 presidency on three values: opportunity, responsibility and community. And so many of the programs were organized around the reciprocal responsibility required in exchange for publicly supported help — you didn’t get a Hope Scholarship unless you were performing with a B grade-point average. If you did your part, the government would help you tap your God-given talents.

The current health care debate has had precious little discussion of personal responsibility for those who are uncovered and can contribute, and not enough discussion of quality and costs to reassure those with coverage that they will see it improve. And so business owners who already cover their employees and carry out their responsibilities are irked that they may be asked to pay through a surtax a second time for health care.

With the CBO report of last weekend, Obama now faces a lot of work in order to get health care back on track and on budget. Whether or not he is successful with that, the process has triggered a class warfare problem that threatens to re-create some of the dynamics of the 1994 congressional election. And he has to get back to basic values to make everyone feel part of the solution to a common problem.

Mark Penn, the CEO of Burson-Marsteller and of Penn, Schoen & Berland Associates, has been a pollster and an adviser to President Bill Clinton and Secretary of State Hillary Clinton.