Who Stole the American Dream?

by Hedrick Smith

  Reforming the Primary System

  To revive the political center, Third Way asserts, it’s essential to break the iron grip of parties by opening primaries to all voters and turning over the once-a-decade redrawing of congressional district lines to nonpartisan commissions. Such moves, reformers assert, will change the mix of voters and the dynamics of political campaigns. The idea is that open primaries would expand the electorate and therefore push candidates to cater more to moderates, who at 44 percent of the electorate in the presidential election of 2008 outnumbered both conservatives (34 percent) and liberals (22 percent). Third Way argues that open primaries should lead to the election of more moderates, making Congress less polarized and more prone to compromise.

  Actual experience is limited, but it supports Third Way’s logic. Twice since the 1970s, California’s legislative redistricting was forced into the courts and carried out by a panel of retired federal judges instead of the legislature. Each time, the parties wound up with less of a lock on legislative districts. Elections swung from Republican to Democrat and vice versa. Voters had more sway.

  So far, eleven states have so-called open primaries in the presidential nominating contest for both parties—that is, primaries where each party, running its own candidates, opens the balloting to all voters, whether they are registered in that party or are independents or in the opposite party. Eighteen states follow the same pattern in congressional elections—all voters can take part and vote for that party’s candidates.

  So far, only Washington State has taken the next step—running one nonpartisan primary in congressional races, where candidates for both parties run together in a single primary race and voting is open to everyone. The top two vote getters then oppose each other in the general election. Washington State did that in 2010 and the impact was dramatic. The average vote in Washington State’s nine congressional districts tripled the turnout in 2008. That seemed to favor more moderate candidates because higher turnout typically reduces the pull of extremist candidates. California has now decided to follow Washington State in its congressional elections in 2012, and if it works well there, the idea may spread.

  Ways to Boost Voter Turnout

  Since American elections with low turnout usually go to the party that can fire up the political emotions of its most ardent partisan supporters, the most obvious way to increase the influence of moderate and independent voters would be to increase American voter turnout. In 2010, just 37 percent of eligible voters cast ballots. When so many Americans move their residences from year to year, local variations in voter registration pose obstacles to higher turnouts. In the 2008 president election, an estimated 2.2 million Americans were unable to cast ballots because of voter registration problems, according to the Pew Center on the States.

  The Pew Center and other groups have urged states to adopt automated online voter registration and computerized voting, to make voting more accessible to people whose jobs are distant from their homes and voting sites. A few states such as Maine, Minnesota, and Wisconsin have instituted election-day voter registration and seen voter turnouts rise. Other countries have gotten better turnouts by putting election days on weekends or holidays to reduce conflicts with work schedules. In America, 25 percent of eligible voters have told pollsters that work and schedule conflicts impede their ability to vote.

  To boost turnout, about thirty countries have compulsory voting and some actually penalize voters for failing to exercise their franchise. Australia achieves roughly 95 percent voter turnout by holding elections on Saturdays and fining citizens A$20 for not voting, with the fine escalating each time a voter misses an election. This system changes the dynamics of the campaign and elevates the caliber of debate in Australian elections, according to Norman Ornstein of the American Enterprise Institute.

  “The way to gain votes does not come from working your base to fever pitch, it comes from persuading the persuadables, the centrists who are increasingly left out of the American political process,” Ornstein has written. “Appealing to the extremes is a formula for failure. If there were mandatory voting in America, there’s a good chance that the ensuing reduction in extremist discourse would lead to genuine legislative progress.”

  The Corruptive Influence of Money

  The toughest nut in U.S. politics today is how to reduce the influence of money in elections and on legislative policy making. As Arizona’s Republican senator John McCain once admitted, “All of us [politicians] have been corrupted by the process where big money and big influence—and you can include me in that list—where big money has bought access, which has bought influence.”

  So far, legislative efforts at reform have repeatedly been undermined. Each time Congress has tried to impose limits on donations to political candidates, either the Supreme Court has voided those measures as unconstitutional limits on free speech or ingenious political operatives have found ways around the laws. In its January 2010 decision on the Citizens United case, the Supreme Court rejected two precedent decisions and ruled that government may not ban campaign spending by corporations on behalf of political candidates. The high court gave the green light to unlimited donations to independent groups, meaning technically independent of candidates and parties. That decision, reinforced by the loose rules for independent groups adopted by the Federal Election Commission, has effectively nullified the existing $2,500 limit on personal contributions to political candidates and opened the floodgates to hundreds of millions of campaign dollars flowing from super-rich donors and corporations to theoretically independent Super-PACs.

  The Sudden Surge of Super-Pacs

  Very quickly in the 2012 elections, Super-PACs emerged to play a commanding role, acting as surrogates for the candidates they favored. In Iowa’s Republican caucuses, Restore Our Future, the Super-PAC backing Mitt Romney, demolished Newt Gingrich with a multimillion-dollar television ad blitz. In South Carolina, the pro-Gingrich Super-PAC, Winning Our Future, crippled and defeated Romney. Other candidates, such as former Pennsylvania senator Rick Santorum and Governor Rick Perry of Texas followed suit. “The Super-PACs are plainly an avenue for candidates to evade the law that limits contributions,” Mann and Ornstein commented ruefully.

  By late spring, Super-PACs had raised $160 million, bankrolled mainly by a small group of billionaire would-be kingmakers such as Las Vegas casino owner Sheldon Adelson and his wife, Miriam; Harold C. Simmons of Dallas and his chemical and metals conglomerate, Contran Corporation; Houston home builder Robert J. Perry; PayPal co-founder Peter Thiel; Hollywood producer Jeffrey Katzenberg, CEO of Dream-works; and hedge fund managers John A. Paulson and Paul Singer of New York. Just three super-donors—the Adelsons, Simmons/Contran, and Perry—contributed close to one fourth of all the Super-PAC cash.

  In the 2012 general election campaign, Super-PACs have cast themselves as weapons of political mass destruction. Long before the party conventions actually nominated presidential candidates, runaway campaign fund-raising by Republicans, Democrats, and independent groups was on track to outspend the record-breaking $1.8 billion presidential election of 2008. Charles and David Koch, billionaire owners of Koch Industries, an energy conglomerate headquartered in Wichita, Kansas, pledged $60 million to defeat President Obama and recruited other wealthy conservative super-donors to help raise $100 million. American Crossroads and Crossroads GPS, the Super-PACs masterminded by Karl Rove, longtime political strategist for George W. Bush, set a goal of raising $300 million to blitz Obama. Initially, President Obama had rejected Super-PACs. But facing a Republican Super-PAC offensive, Obama relented and gave the go-ahead for Democratic funders to try to match Republicans, presaging a fierce crossfire of negative attack ads in the fall campaign.

  More broadly, the explosive rise of Super-PACs and their super-donors has overwhelmed the campaign finance reform legislation enacted since 1974 and has thrown America once again into an era of essentially unregulated campaign funding.

  Reformers like Senator McCain have w
arned that unregulated funding corrodes American democracy and corrupts the legitimacy of American elections, and so they have fought to impose limits on donations. Other reformers have advocated large-scale public financing to put political unknowns and challengers on a more equal footing with incumbents and to reduce the lopsided political influence of big corporations and wealthy donors. But decisions by the Supreme Court and the Federal Election Commission have punched large loopholes in those reforms. Fred Wertheimer of Democracy 21 and others have attacked the fictional independence of some Super-PACs from their favored candidates and now call for new laws to ban Super-PACs with any links to candidates, however indirect.

  But politicians and their campaign strategists have been so ingenious and adept at getting around laws and regulations that it will almost surely require a constitutional amendment to ban campaign contributions from corporations, labor unions, and other institutions and specifically to empower Congress to impose limits on campaign donations from individuals. But that is a formidable process, sure to be fiercely opposed by entrenched interests. Only a groundswell of grassroots political activism, fueled by public revulsion at the power of Super-PACs and inflated campaign spending by America’s super-rich, will be able to overcome resistance from politicians, and especially from congressional incumbents who have thrived on the present system.

  Step #10: Mobilize the Middle Class

  The only sure way to alter today’s patently unequal democracy is for average Americans to mobilize politically—to break out of their political inertia and to move forcefully back into the political arena.

  Important as it is to open up party primaries, arrange for nonpartisan legislative redistricting, and provide a floor of public financing for elections, the fundamental need of American democracy is the practical exercise of democracy—a rebirth of citizen activism. That requires not only a populist rebellion against the political and economic inequalities of our divided nation, but a hopeful rebirth of American idealism, a revival of the belief that ordinary people can, in fact, make a difference and turn the tide.

  At election time, American voters seem flattered and even seduced by the ritualistic declarations of presidential contenders that America’s best years lie ahead and America’s democracy is the greatest in the world. But it is clear from a multitude of opinion polls and reporting that once the inflated rhetoric of campaigns subsides, people don’t really believe that anymore. They doubt their own power.

  “The loss of civic faith is an obstacle,” John Gardner remarked in the late 1990s. “One might imagine that the solution would be for government to make itself worthy of our faith. But the plain truth is that the government … will not become worthy of trust until citizens take positive action to hold them to account. Citizen involvement comes first.”

  Politicians are afraid of mobilized voters. They open their doors when home-state residents flood the corridors of Capitol Hill—evidence that continuing political pressure from the middle class can push Washington to generate what nineteenth-century British philosopher Jeremy Bentham called “the greatest good for the greatest number.”

  So the time has come for direct political action by millions of ordinary Americans to use their physical involvement as a countervailing power to Washington influence peddlers.

  You Think Government Doesn’t Work? Take Another Look

  But what’s the point? people say. Government doesn’t work.

  Well, take a closer look. Government may not work well for average Americans, but it has been working very well for Wall Street, for multinational corporations, and for the financial superclass. They get the government they want, and they pay handsomely to get it.

  During 2009 and 2010, when Congress was writing laws on financial regulation, health care, and taxes, business interests spent $6 billion on lobbying. In “soft money” campaign donations, business outspent labor 97 to 1 in the 2010 elections, and it got a Congress eager to roll back regulations on banks, health insurers, and other businesses and refusing to close corporate tax loopholes or raise taxes on the rich. Over the years, the multinationals have won new trade deals, tax holidays on overseas earnings, and laws that let them import cheaper foreign labor to displace American workers. Some of America’s richest families bankroll anti-tax conservatives like the Tea Party, which has wielded huge influence in two short years, even though it represents only a small fraction of Middle America.

  So government can work. You just have to make it work for you.

  People are understandably skeptical. Many say they want smaller government, but that may be because they don’t realize how much they already depend on government, like the South Carolina man who in an anti-government tirade told his congressman to “keep your government hands off my Medicare”—not realizing that Medicare was a government program.

  In a 2008 survey by Cornell University, people were asked if they had ever benefited from federal policies and government programs. In response, 57 percent said, “No, never.” But when they were questioned more closely, it turned out that 94 percent had actually benefited from at least one government social program and the average person had used four programs.

  So government has an impact on our lives, and we in the middle class need to learn from Wall Street, Corporate America, and the Tea Party how to make it work better for us. That may sound impossible. Ever since the late 1970s, the power game has been dominated by money. Of course, people in the middle-income brackets cannot hope to outspend the rich and the big corporations.

  The most powerful action that average Americans can take is to organize at the grass roots, as the Tea Party did, and then put ourselves on the line. Ordinary people need to personally join the battle: Show up at town meetings with members of Congress; get out on Main Street and demonstrate for jobs and homes; head for the state capital; take the bus or train to a march on Washington. Like the civil rights protesters, or the military veteran bonus marchers during the Great Depression—or the Tea Party people today—average Americans can stage rallies and demonstrations and put up tent cities on the Washington Mall that make it impossible for Congress and the White House to ignore the needs and demands of ordinary people.

  The Touchstone Issues—Jobs and Fairness

  It would help rekindle public faith in government if political leaders would demonstrate that Washington actually works for average Americans, that the White House and Congress are ready to help out Main Street the same way they bailed out Wall Street.

  The test should focus on two touchstone issues—jobs and fairness. Both issues can mobilize the middle class. People have an existential understanding of jobs and fairness, either from their own lives or from the lives of their family, friends, and neighbors.

  If enough average Americans mobilize around jobs and fairness and demand action from Congress and the White House, politicians will get the message and respond. As the Tea Party has demonstrated, a highly vocal activist minority with a clear agenda and focused demands can change the debate and direction of policy in Washington.

  Jobs come first. They are the essential economic lever to lift the middle class back to shared prosperity and to jump-start the consumer engine to drive the American economy. The test of whether business leaders are committed to America’s growth or just to their own company’s profits is whether they invest their $1 trillion or $2 trillion in cash reserves and their overseas profits in creating jobs in America and not primarily in stock options, higher dividends, and buying back their own company’s stock.

  Practical programs to promote and create jobs are the political litmus test of whether Congress and the White House are committed to a middle-class revival or just to a futile repetition of the failed litany of the lower taxes, less regulation, free market mantra that in the 2000s generated the worst economic performance for most Americans of any decade since World War II.

  Catch-22 for Twenty-Two Million Homeowners

  Fairness is the touchstone for money issues—a test of whether Amer
ica can return to a more equitable sharing of the nation’s economic gains.

  As we have seen, the middle class won’t have enough spending power to regenerate “the virtuous circle” in the economy unless a much larger share of America’s national income goes to average Americans. Fairness requires rebalancing how business profits are divided between shareholders and employees, and it calls for rebalancing government policies more in favor of average Americans.

  Some quick symbolic steps such as closing corporate tax loopholes, raising taxes on the rich, and imposing new fees on Wall Street’s stock transactions and executive stock options could help restore government’s credibility with ordinary people.

  But a more central long-term yardstick of fairness to the middle class is how the Congress and the White House handle housing, since homes are the heart of the American Dream and the cornerstone of middle-class wealth. As Harvard economist Kenneth Rogoff noted, “There is widespread agreement among economists that housing debt is at the heart of the slow recovery, and that finding a way to bring it down faster would accelerate the recovery.”

  The biggest debt now overhangs twenty-two million families stuck in homes that are “under water.” Like the big Wall Street banks, which were bailed out not only with $700 billion in taxpayer funds, but with $7.7 trillion in loans from the Federal Reserve, these creditworthy homeowners desperately need help with rewriting and refinancing their mortgages, and smart economists have spelled out steps to speed massive refinancing—steps that would be a shot in the arm to the whole nation.