Regarding Mao, that may be true (I really don't have any idea), but the word "Mao" doesn't just have a logical meaning, it also has an emotional meaning "out of control killer". That's why there's such strong resistance - resistance that has to be chipped away slowly by sticking to less emotional topics first. They'll make the connection to abusive government control on their own - they're hyper-sensitive to it once they see the big picture.
In general, Democrats see government as the answer because they have been conditioned to think that the alternative is giant corporations like Monsanto crushing people's health and rights, alongside local racists and theocrats killing people that they don't like and oppressing their women.
In other words, it comes from the bad experiences of their families - experiences that were recorded in textbooks as well as family albums - or their own experiences.
They don't know almost anything about how government actually works, how lobbyists influence decisions, or how free markets operate. Their impression of government+business is corporations paying directly for legislation or buying congressional (or cabinet) seats.
Those impressions aren't completely wrong, but they're so limited that the evils of government hidden in the nuances slip by, and the only problem seems to be money.
Obama is so loved because of the perception that he had support from everyone in America - even the people who didn't vote. They generally dismiss his Wall Street donations as "donations from the good people in corporate America", and they see anyone who didn't support Obama as somehow out of touch with reality because, again, they think that everyone else in the world supports/supported him.
And that's where the "racist" stuff comes from. They're grasping at straws to explain how "such a popular guy" could be disliked - especially to the point that people get angry about him. They then associate that anger with the theocrats and racists who are always yelling on TV and oppressing people.
Nonsense? Mostly. There are some right-wing extremists who are racists and oppressors, but obviously not everyone against Obama being president is "out there".
And the only way to show that is to be calm, speak to things that they have a grasp of, and encourage them to read up on things you mention that they aren't familiar with (always provide them with links).
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