January 18, 2013
by Tevi Troy
As President Barack Obama prepares for his second Inauguration, one has to wonder why an economically rational person would even want to run for president. Throughout history, presidents and their families have found that on a personal level, it is extremely expensive. This is why almost all of our recent presidents and candidates have been men of means.
We have not had a poor president since Harry Truman, whose modest circumstances were the inspiration for legislation granting a lifetime pension for retired presidents. Bill Clinton and Gerald Ford were not rich by Mitt Romney standards, but they were certainly comfortable. Even though Clinton's annual salary as governor of Arkansas was quite small — a mere $35,000 — his wife was a well-compensated partner at the Rose Law Firm. These examples aside, presidents are now far more likely to be part of the 1 percent than anywhere near those in the 99 percent: Think of Franklin D. Roosevelt, John F. Kennedy, both Bushes and Ronald Reagan. One reason is the office's prohibitive cost.
This phenomenon of presidential cost dates to George Washington. At the Constitutional Convention in 1787, Benjamin Franklin recommended the president serve without salary but be reimbursed for expenses incurred while in office. When the new government was established, Congress rejected Franklin's proposal, and the president was instead given a salary of $25,000 — the equivalent of approximately $1.1 million today. When Washington became president, he asked for but was denied permission to serve in an unpaid capacity.
The denial was a good thing for Washington's bottom line. Washington ended up spending an additional $5,000 per year out of pocket on expenses beyond the congressionally allocated salary. His successors had similar experiences. Thomas Jefferson owed $20,000 after leaving the White House — although he was always a profligate spender — and James Monroe spent $30,000 out of pocket as president. The "era of good feelings" designation usually applied to Monroe's presidency apparently did not apply to his bank account.
Despite the office's nearly regal trappings, presidents have long sought to remain men of the people and have been wary of incurring embarrassingly high expenses for what could be seen as personal needs while in office. In 1825, John Quincy Adams, who was on political thin ice after his narrow and controversial 1824 victory over Andrew Jackson, felt obliged to pay $61 out of pocket for a pool table for the family quarters, an expense that had originally come out of the White House furniture fund. It didn't help, as he lost his electoral rematch with Jackson in 1828.
During the Civil War, Mary Todd Lincoln tried to hide from her husband the fact that she had gone over budget in decorating the White House. Even though honesty is usually the best policy, the first lady was right to worry, as her husband was none too pleased when he found out. In our day, Bill Clinton was embarrassed when the world discovered that hairdresser to the stars Christophe provided a $200 haircut on the Los Angeles airport tarmac. As it turns out, the haircut was the cheapest part of the extravagance. The hourly cost to the government for running Air Force One was about $181,000 in 2010, although presidents don't have to go out of pocket for that cost.
We have come a long way since the initial, ungenerous approach to presidential expenses. Today, the president earns $400,000 annually, and the appropriation to run the White House is about $13 million, with $1 million more available for "unanticipated needs" of the president. In addition, Robert Keith Gray, author of a recent book called "Presidential Perks Gone Royal," estimates that subsidizing Obama and his family costs taxpayers about $1.4 billion annually. In contrast, he notes, the British spend "only" $57.8 million subsidizing the royal family.
Even with all this, according to Jodi Kantor, author of "The Obamas," the president and his family have found living in the White House quite costly. They do not pay for rent, official events or political events, but they have to pay for food and any nonofficial, nonpolitical guests and do so at what Kantor called "Ritz-Carlton" price levels. The president does have valets to service his needs and do his laundry, but they do not assist the first family in that regard. If a president does want personal servants for his family, he must hire them out of pocket, which Kennedy did by hiring a maid for his wife and a nurse for Caroline and John Jr.
When it comes to presidential vacations, while the U.S. government incurs large costs in transportation and security, the first family must reimburse the government for the cost of equivalent airline tickets and the hotel rooms, and they are on their own when it comes to food.
These outside costs put a significant dent in the presidential salary. As a result, while there are a host of good reasons for seeking the office — and recent presidents have done quite well financially after leaving office — building wealth on the job is not among them. Those looking at running in 2016 should recognize that living in the White House is still a rich person's game.
Tevi Troy is a Senior Fellow at Hudson Institute and served as the Deputy Secretary of the U.S. Department of Health and Human Services from 2007 until 2009.
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