Is Barack Obama A One Percenter?

Over the past number of weeks, there has been a great deal of mainstream media coverage regarding the net worth of the Republican Presidential candidates.  In the interest of at least some balance on the subject, I thought that it was time to take a look at the value of another soon-to-be Presidential candidate; Barack Obama.  Rather than looking at his net worth on his last Public Financial Disclosure, I thought I’d take a look at what he was worth when he was running for office in 2008 and compare it to his net worth now just to see if his portfolio has shaken off the effects of the Great Recession, unlike so many Americans that find themselves out of work and underwater.

 

Let’s look back at history first.  According to Open Secrets, in 2004, Barack Obama was worth between $200,004 and $400,000.  This rose to between $1,100,008 to $2,500,000 in 2005, fell back to between $456,012 to $1,142,000 in 2006 and the rose to between $2,022,016 to $7,356,000 in 2007.  Let’s not forget that his book, Dreams from My Father was republished in August 2004 after his successful United States Senate primary race in Illinois and that the Audacity of Hope was published in October 2006, just months prior to Obama’s announcement that he was running as a Presidential candidate.  That, in large part, explains the jump in his assets during the 2004 to 2007 time period.

 

For the President’s net worth while he was running for the biggest office of them all, I am using the filing that he made on March 17th, 2009 when he closed out his personal financial reporting to the United States Senate.

 

 

That’s a total of $2,462,843 in book royalties in just one year or roughly 50 times the average household income of an American family.  Note that as part of the disclosure, no member is required to include any income derived from the federal government (i.e. his salary and benefits as a Senator).
 

 

 

 

 

Other relatively small items include a total of between $16,000 and $65,000 in two checking accounts.

 

Let’s look at the range of Senator Obama’s total assets in 2008.  On the low side, his net worth in 2008 was $1,486,000 and on the high side, his net worth was $6,190,000 with a midpoint of $3,838,000.

 

That’s a one half million dollar advance that was negotiated just days before he took possession of the Oval Office plus whatever royalties he receives on the abridged version of Dreams from My Father.  Reportedly, he received a $1.9 million advance for the delivery of three books back in January 2005.

 

Living life large in D.C.!

 

In this Disclosure, the specific amount of royalties gleaned from his book sales is not given, rather, a range of income values is provided.  Royalties from Dreams from My Father ranged between $1,000,000 and $5,000,000 along with a $225,000 advance.  Royalties from Audacity of Hope came in at between $100,000 and $1,000,000 and the advance for his book Of Thee I Sing: A Letter to my Daughters, a book which was published in November 2010, came in at $133,334.  After tax proceeds from sales of the book, including the advance, will be donated to the Fisher House Foundation for a scholarship fund for the children of fallen and disabled soldiers.

 

Let’s now look at the range of President Obama’s assets in 2010.  On the low side, his net worth in 2010 was $2,802,000, up $1,316,000 or 89 percent from 2008.  On the high side, his net worth in 2010 was $11,830,000, up $5,640,000 or 91 percent from 2008.  The midpoint is now $7,316,000, up $3,478,000 or 91 percent from two years earlier.   Apparently any impact on the President’s portfolio that could be attributed to the Great Recession seems to have evaporated by 2010.

 

In a quick look through President Obama’s Disclosure for 2009, the royalty income from each of his two books ranged from $1,000,000 to $5,000,000, the same as in 2008 and slightly more than in 2010. We have no way of knowing the exact amounts, however, it is interesting to see that the royalties remained in the same range in the first year of the Great Recession when consumers were cutting back as they did in the prior year.

 

While President Obama’s net worth is not in the same league as Mitt Romney, he is definitely well entrenched in the one percent, although, surprisingly, compared to the Bush Presidents, he certainly is not flush with cash.  Certainly, he worked his way up from "the other side of the tracks", however, had he not become Senator and then President, it is unlikely that his book sales, which are providing the vast majority of his income, would have become the gold mine that they are now.  The biggest difference between the current President and his recent predecessors is that he wrote his books prior to taking office and is now gleaning the rewards while still in office; most previous Presidents earn or earned relatively vast sums of money from writing books and giving speeches after they leave office.  Should that precedent continue, after he leaves office, Barak Obama could become an extremely wealthy man.

 

Sometimes, I think that we lose perspective when it comes to personal finances.  We hear so much about millions, billions and trillions of dollars that the numbers become meaningless.  If we want to gain a better understanding of our politicians’ wealth, we need to remember that, according to the Census Bureau, in 2009, an average American family had a net worth of $96,000.

While some people feel that it is only the elite of America who have the necessary qualifications to become President or serve in Federal politics, I would strongly beg to differ.  Such has not been the case historically in the United States, particularly in the1800s and early 1990s (think, in particular, peanut farmers who found themselves in debt to the tune of nearly $1 million when they left the White House and Harry S. Truman among others) and it most certainly is not the case in other similar democracies, most particularly Canada where the country’s current Prime Minister definitely not enter the Prime Minister’s office as one of the country’s elite.  It definitely is worrisome that politics has increasingly become a game for a very, very small part of American society, leading to further division between the haves (who make the rules) and the have nots (who are supposed to blindly follow), between them and us.  

Addendum:

After reading a reader comment, I thought I’d add a bit more information.  According to Bloomberg, the number of what are considered ultra-high net worth households (more than $5 million in assets) was 1.1 million in 2010 (Federal Reserve data).  According to the United States Census Bureau, in 2011, there were 78,613,000 households in America.  So, with those figures in mind, Barak Obama’s household is probably not in the top 1 percent, however, the distance between him and the one percent is extremely small if one uses the 2010 midpoint data of $7.316 million.  As well, while many American households have a lot of assets in a gross sense (i.e. including debt owed), the Census Bureau (as I noted above) states that an average American family had a net worth of only $96,000, a far cry from the Presidential family net worth.

 

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