America has had a long history of white southern radicals who would stop at nothing to get their way—seceding from the Union in 1861, repudiating federal laws designed to protect the rights of black citizens during Reconstruction, enacting Jim Crow laws, resisting desegregation orders in the 1950s, and refusing to obey civil rights legislation in the 1960s. The Gingrich-led government shutdown at the end of 1995 was a prelude to the 2011 showdown over raising the federal debt ceiling—which could have triggered a government default and risked the full faith and credit of the United States. Gingrich’s recent assertion during the Republican primaries that public officials aren’t bound to follow the decisions of federal courts is in the same tradition.
The GOP’s stop-at-nothing insurgents hate government more than they hate the national debt. They refuse to reduce that debt with tax increases, even with tax increases on the wealthy, because a tax increase doesn’t reduce the size of government. By contrast, what’s left of the Republican establishment—still occasionally found on Wall Street and in corporate suites—dislikes the national debt more than it dislikes government, and it opposes using the threat of a default as a bargaining chip. It doesn’t want America’s creditors to become spooked about the risk of runaway inflation or a future default, because it depends on smooth-functioning credit markets and a stable dollar.
Some Americans tolerate the stop-at-nothing assault on our system of government because they’re searching for a villain to blame for their continuing economic fears and insecurities, and government is a convenient scapegoat. At the same time, most of what government does that helps them is now so deeply woven into the thread of daily life that it’s no longer recognizable as government. Think of the indignant Republican voters who showed up at congressional town-hall meetings to protest President Obama’s health-care bill shouting, “Don’t take away my Medicare!” The Cornell political scientist Suzanne Mettler found that more than 44 percent of Social Security recipients say they “have not used a government social program,” as do more than half of families receiving government-backed student loans, 43 percent of unemployment insurance beneficiaries, and almost 30 percent of recipients of Social Security disability. Add in the relentless government hating and baiting of Fox News and Rush Limbaugh and his imitators on rage radio; include more than thirty years of Ronald Reagan’s repeated refrain that government is the problem; pile on hundreds of millions of dollars from regressive billionaires like Charles and David Koch, intent on convincing the public that government is evil, and some public support for stop-at-nothing tactics is not all that surprising.
Yet neither the regressives’ stop-at-nothing tactics nor their social Darwinist message would have gained much traction were it not for the stunning failure of Democrats to make the case for a strong and effective government that responds to the needs of average people. There is no shortage of evidence—globalizing corporations, rip-roaring CEO pay, mass layoffs, declining pay for the bottom 90 percent, mine disasters, exploding oil rigs, malfeasance on Wall Street, and wildly escalating costs of health insurance—and it is not especially difficult to connect the dots. Yet too frequently Democrats have appeared timid and defensive; too often they’ve given in to regressive demands without a fight; and they’ve allowed the regressives’ big lies to go unrebutted for too long.
TURNING MORALITY UPSIDE DOWN
A third method regressives have used to distort public understanding of what’s at stake is to turn morality upside down. They vigorously condemn gay marriage, abortion, out-of-wedlock births, access to contraception, and the wall separating church and state.
In May 2012, North Carolina voters approved a Republican-proposed amendment to the state constitution banning same-sex marriage, joining twenty-nine other states with similar measures. Mitt Romney, the GOP presidential candidate, said he opposed same-sex marriage even as President Obama said he supported it. Meanwhile, Republicans introduced more than four hundred bills in state legislatures aimed at limiting womens’ reproductive rights—banning abortions, requiring women seeking abortions to have invasive ultrasound tests beforehand, and limiting the use of contraceptives.
But America isn’t suffering a breakdown in private morality. It’s burdened by a breakdown in public morality. What Americans do in their bedrooms is their own business. What corporate executives and Wall Street financiers do in boardrooms and executive suites affects all of us. We’re not in trouble because gays want to marry or women want to have some control over when they have babies. We’re in trouble because CEOs are collecting exorbitant pay while slicing the pay of average workers, because the titans of Wall Street demand short-term results over long-term jobs, and because of a boardroom culture that tolerates financial conflicts of interest, insider trading, and the outright bribery of public officials through unlimited campaign “donations.”
What’s truly immoral is not what adults choose to do with other consenting adults but what those with great power have chosen to do to the rest of us. America’s problems have nothing to do with private morality. The breakdown is in public morality—abuses of public trust that undermine the integrity of our economy and democracy and have led millions of Americans to conclude the game is fixed.
Yet the regressive bedroom crowd doesn’t want to talk about the nation’s boardrooms, because that’s where most of their campaign money comes from. They’d rather use bedroom morality as another means of distracting voters from what’s really going on. Regressives have no problem intruding on the most personal and most intimate decisions people make while railing against government intrusions on big business. They don’t hesitate to hurl the epithets “shameful,” “disgraceful,” and “contemptible” at private moral decisions they disagree with while staying stone silent in the face of the most contemptible violations of public trust at the highest reaches of the economy.
The late political scientist James Q. Wilson noted that a broken window left unattended signals that no one cares if windows are broken. It becomes an ongoing invitation to throw more stones at more windows, ultimately undermining moral standards of the entire community. Apply that logic to America and you’ll find that the windows Wall Street broke in the years leading up to the crash of 2008 remain broken. In fact, these sorts of windows began shattering years ago. Enron’s court-appointed trustee reported that bankers from Citigroup and JPMorgan Chase didn’t merely look the other way; they dreamed up and sold Enron financial schemes specifically designed to allow Enron to commit fraud. Arthur Andersen, Enron’s auditor, was convicted of obstructing justice by shredding Enron documents, yet most of the Andersen partners who aided and abetted Enron were never punished.
Americans are entitled to their own religious views about gay marriage, contraception, out-of-wedlock births, abortion, and God. We can be truly free only if we’re confident we can go about our private lives without being monitored or intruded upon by government and can practice whatever faith (or lack of faith) we wish regardless of the religious beliefs of others. A society where one set of religious views is imposed on a large number of citizens who disagree with them is not a democracy. It’s a theocracy.
Yet an economy is built on a foundation of shared public morality. Adam Smith, the putative founder of modern economics, never called himself an economist. The separate field of economics didn’t exist in the eighteenth century, when Smith wrote. He called himself a moral philosopher. And the book he was proudest of wasn’t The Wealth of Nations but his Theory of Moral Sentiments—about the ties that bind people together into societies. Those ties are now being shredded in America by the regressives. Rather than stop the abuses of economic power and privilege that are characterizing so many decisions in the nation’s boardrooms and executive suites, they would rather stir up Americans about the most intimate decisions people make.
Regressives have turned morality upside down—and they’ve done it on purpose. It’s just another way to divert the nation’s attention and to divide us from one another.
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sp; THE REGRESSIVE STRATEGY: DIVIDE AND CONQUER
When they’re not spouting social Darwinism, deploying stop-at-nothing tactics, or turning morality upside down, regressives have been trying to convince Americans we can no longer afford to do what we need to do as a nation. They say America is broke. So the only way any of us can get by in the future—keep our jobs, make our families economically secure, have enough money for retirement, preserve the public services and safety nets we rely on—is by forcing other middle- or lower-income Americans to give up even more.
The regressive aim is to divide and conquer: as I said, to pit unionized workers against non-unionized, public sector workers against nonpublic, native-born Americans against immigrants—but also to set older workers within sight of Medicare and Social Security against younger workers who don’t believe these programs will be there for them, the middle class against the poor, even religious conservatives against secularists.
It’s another means of distracting attention from the extraordinary accumulation of income, wealth, and power at the very top and the historically low tax rates paid by the rich. And they hope no one notices their push for additional tax cuts for the rich—making the Bush tax cuts permanent, further reducing taxes on the rich, eliminating the estate tax, and allowing the wealthy to shift ever more of their income into capital gains, taxed at 15 percent.
Their divide-and-conquer strategy has three parts.
The first is being played out in the budget battles in Washington. By raising the alarm over deficit spending and simultaneously squeezing popular middle-class programs, regressives want the American public to view what happens in Washington as a giant zero-sum contest that some average Americans can win only if other average Americans lose. President Obama fell into the trap by calling for cuts in Medicare, along with other cuts in programs the poor and the working class depend on, such as assistance with home heating, community services, and college loans.
The second part of the divide-and-conquer strategy is being played out in the states, where public employees are being blamed for state budget crises. Unions didn’t cause these crises—state revenues plummeted because of the Great Recession—but regressives view them as opportunities to gut public employee unions, starting with teachers. Governor Scott Walker of Wisconsin told a wealthy supporter (who later contributed more than half a million dollars to help him fight off a recall) that his first step for reducing union power was “to deal with collective bargaining for all public employee unions because you divide and conquer.” Soon thereafter, Walker and his GOP majority in the state legislature ended most union rights for public employees. Ohio’s Republican governor, John Kasich, tried to push a similar plan through a Republican-dominated legislature there. New Jersey’s governor, Chris Christie, attempted the same, telling a conservative conference, “I’m attacking the leadership of the union because they’re greedy, and they’re selfish and they’re self-interested.”
As I’ve noted, public employees don’t earn more than their private sector counterparts when you take account of their education. In fact, over the last fifteen years the pay of public sector workers, including teachers, has dropped relative to private sector employees with the same level of education. Moreover, most public employees don’t have generous pensions. After a career with annual pay averaging less than $45,000, the typical newly retired public employee receives a pension of $19,000 a year. Yet regressives would rather go after teachers and other public employees than have us look at the pay of Wall Street traders, private-equity managers, and heads of hedge funds whose lending and investing practices were the proximate cause of the Great Recession to begin with and who owe their jobs to the giant taxpayer-supported bailout.
The third part of the divide-and-conquer strategy is being played out in the Supreme Court, which has been politicized more than at any time in recent memory. On January 21, 2010, as I noted earlier, a majority of the justices ruled that corporations have a right under the First Amendment to provide unlimited amounts of money to political candidates. Citizens United v. Federal Election Commission is among the most politically motivated and legally grotesque decisions of our highest court—ranking right up there with Dred Scott v. Sandford. Two months after the Citizens United decision, the U.S. Court of Appeals for the District of Columbia Circuit, relying on Citizens United, ruled that the existing $5,000-per-year limit on the amount any individual can contribute to a super PAC or other independent group also violates the First Amendment.
These three aspects of divide and conquer—a federal budget battle to shrink government focused on programs the vast middle class depends on; state efforts to undermine public employees whom the middle class depends on; and a Supreme Court dedicated to bending the Constitution to enlarge and entrench the political power of the wealthy—fit perfectly and diabolically together. They pit average working Americans against one another, distract attention from the almost unprecedented concentration of wealth and power at the top, and conceal regressive plans to further enlarge and entrench that wealth and power.
THE TEN BIGGEST ECONOMIC LIES
A final aspect of the regressive strategy is to tell a few big lies about the economy over and over. You hear them repeated endlessly on right-wing radio and on Fox News, and you read them incessantly on the editorial pages of The Wall Street Journal. Together they paint a picture of an America in which social Darwinism replaces the public good. Demagogues throughout history have known that big lies, repeated often enough, start being believed—unless they’re rebutted. George Orwell once explained that when a public is stressed and confused, a big lie told repeatedly and unchallenged can become accepted truth. Make sure you know the facts and spread them.
The lies:
1. The rich are “job creators,” so tax cuts for the rich trickle down to everyone else while higher taxes on the rich hurt the economy and slow job growth. Untrue. Look at recent history. George W. Bush cut taxes on the rich, and what happened? A fraction of the number of jobs were created under Bush than had been created under Bill Clinton, and the median wage dropped, adjusted for inflation. Trickle-down economics is a cruel joke.
As I’ve said, from the end of World War II until 1981, the richest Americans faced a top marginal tax rate of 70 percent or above. Under Dwight Eisenhower it was 91 percent. Even after all deductions and credits, the top taxes on the very rich were more than 52 percent—far higher than they’ve been since. Yet the economy grew faster during those years than it has since. During almost three decades spanning 1951 to 1980, when the top rate was between 70 percent and 91 percent, average annual growth in the American economy was 3.7 percent. Between 1983 and the start of the Great Recession, when the top rate dropped to between 35 percent and 39 percent, average growth was 3 percent.
Regressives say small businesses would be hurt by a higher marginal tax. Don’t believe this, either. Only just over 1 percent of small-business owners earn enough to be taxed at the top rate—and that’s just on the portion of their incomes exceeding $379,000.
The rich don’t create jobs. Jobs are created when the vast majority of Americans buy enough to make companies add capacity and hire more workers. But that won’t happen unless the vast majority has enough money to do the buying. As I’ve said, when a disproportionate amount of national income goes to the rich, the middle class no longer has the purchasing power to create these additional jobs.
2. American corporations would create more jobs and spur the economy forward if their taxes were lower. Wrong again. American corporations don’t need tax cuts. As I’ve noted, many of them, like General Electric, manipulate the tax code so they don’t pay any taxes at all. Besides, large and middle-sized companies are having no difficulty getting loans at bargain-basement rates, courtesy of the Fed. Big companies are sitting on more than $2 trillion of cash right now that they don’t know what to do with.
The reason they’re not investing in additional capacity or many new jobs has nothing to do with taxes. It’s that they
don’t see enough customers with enough money in their pockets to buy what the additional capacity would produce. Businesses are spending as much as they can justify economically. Almost two-thirds of the measly growth in the economy in 2011 came from businesses rebuilding their inventories. But without more consumer spending, businesses won’t spend more. A robust economy can’t be built on inventory replacements.
The wrongheaded idea that corporations need tax cuts to create jobs is also being used by regressive governors who are cutting business taxes willy-nilly in order to compete with other states that are doing the same. They’ve entered into a giant zero-sum game that doesn’t create a single new job overall but robs the states of money needed for critical investments in schools and infrastructure. In 2012, Florida’s governor, Rick Scott, said his corporate tax cuts “will give Florida a competitive edge in attracting jobs.” But Florida simultaneously cut education spending by $3 billion, when the state already ranked near the bottom in per-pupil spending and had one of the nation’s lowest graduation rates. Even if Scott’s tax cuts created jobs, the jobs would pay peanuts.
3. We’d have more jobs and a better economy if we shrank the size of government. Wrong. Shrinking government results in fewer government workers—including teachers, firefighters, police officers, and social workers at the state and local levels, and safety inspectors and military personnel at the federal level. And it results in fewer government contractors who therefore employ fewer private sector workers. This is the same claptrap regressives have been mouthing for decades. Their ultimate goal, in the words of the regressive guru Grover Norquist, is to take government “down to the size where we can drown it in the bathtub.”
I recently debated a conservative Republican who insisted the best way to revive the American economy was to shrink government. When I asked him to explain his logic, he said, simply, “Government is the source of all our problems.” When I noted government spending had brought the economy out of the Great Depression, he disagreed. “The Depression ended because of World War II,” he pronounced, as if government had played no part in World War II.
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