Plutocrats’ sway continues under democratic rule
By Max J. Castro
majcastro@gmail.com
It is one thing for the United States to emulate pre-Lula Brazil’s levels of economic inequality with a faux-compassionate conservative like George W. Bush in the White House and a right-wing Republican-controlled Congress. It is quite another when the plutocrats’ piñata goes on unabated after two years of Democrat Barack Obama in residence at 1600 Pennsylvania Avenue and Democratic control of both houses of Congress (until January 2011).
The statistics detailing the breathtaking increase in inequality of income and wealth in the United States over the last generation are well known and incontrovertible. No case needs to be made that class warfare on behalf of the rich and against everyone else has been going on in this country for more than three decades under both Republican and Democratic presidents. And it was no surprise that it reached a sort of apotheosis under George W. Bush.
Bush’s 2001 and 2003 tax cuts enormously benefitted the very wealthy while providing meager relief for the middle class. To put an exclamation point on the question, Bush (with an assist from GOP propagandist Frank Luntz who invented the term “death tax”) abolished the estate tax, a tax that applied only to the 1-2 percent of the population lucky enough to inherit a huge estate.
As for the famous “compassionate conservatism” that was to promote well being of the less prosperous, it was never anything but a cruel joke and a convenient talking point. “How are we doing on compassion?” Bush is overheard asking his aides in a scene in a Michael Moore film. As if compassion were an afterthought to be taken up after the really important items on the agenda, like tax cuts and wars of aggression. At best, Bush’s “compassionate conservatism” amounted to continuing to step on people of scarce or middling means but refraining from doing it while wearing golf shoes.
But that was then and this is now, and what should be happening now should be quite different from what went on during the last eight (or thirty) years. Only it’s not. Bush represented very well the interests of nearly all the reactionary forces in the Republican Party (the low tax for the rich/big business constituency, neo-conservative hawks, religious fundamentalists, gun nuts). In contrast, Barack Obama, propelled to victory by the most progressive forces within the Democratic Party, including blacks, Latinos, younger voters, the gay community, and liberal whites of all ages and sexual preferences, has not produced for his base.
This is surprising because unlike Bill Clinton, who as part of the business-friendly Democratic Leadership Council (DLC) helped steer the Democratic Party to the right, Obama — as a state legislator and U.S. Senator — had staked out solidly progressive positions.
Yet, during the presidential campaign, Obama walked back some of those progressive positions and, unlike John Edwards, he never really focused on the grave problems of inequality and poverty instead centering his appeal on platitudes like “change” and “hope.” That perhaps should have given us a clue of what was to come. That is that in his first two years as president, Obama (unlike Bush), has for the most part provided cold comfort to his most loyal supporters.
The debate about the extent to which Obama’s own choices are to blame versus the pervasive obstructionism of the Republican minority in the Senate plus the awesome power of a handful of interest groups — the military/intelligence industrial complex, the pharmaceutical/insurance/medical complex, the Wall Street/Washington campaign finance complex — will be long and heated.
But men and women do make their own history, although almost never under conditions of their own choosing. Yet at the very least, Obama can certainly be blamed for the decisions that he alone has made, from his first day in office to today. Emblematic of these decisions made by Obama, two can stand as examples. One came early in the early days of the administration and the other is much more recent.
The first was the naming of an economic team led by Lawrence Summers — a key architect of the financial deregulation that had led to the 2008 financial meltdown — and Tim Geithner, the former president of the New York Federal Reserve, who during his tenure did nothing to curb the wild gambles (with other people’s money) that the big banks and investment houses were undertaking right under his nose.
With such economic advisers, is it any surprise then that, as unemployed Americans, who could not pay their home loans, were being thrown out of their houses, the Obama administration made sure that the government gave the failed giant insurance company AIG the money and the direction to repay its creditors — such as Goldman Sachs and several other major financial institutions –100 cents on the dollar rather than forcing the financial titans to share in some of the pain endured by tens of millions of ordinary Americans due to the greed and irresponsibility of the very financial institutions that managed to get off scot-free thanks to a huge infusion of taxpayer money?
Nor should we be shocked that, unlike the European countries (whose level of compensation for CEOs and financial traders are not nearly as obscene as those in the United States and where high incomes are taxed at a much higher rate than here), the administration has done nothing to curb astronomical executive bonuses and huge CEO pay packages even at the risk of perpetuating the kind of perverse incentives (an exclusive focus on short-term profits) that contributed to the recent financial implosion. As a result, while real unemployment rose to 17 percent, Wall Street was back to business as usual, giving their employees record bonuses in 2009 and getting ready to top that sum in 2010.
The second fateful decision that can be blamed squarely on Obama was creating a commission to reduce the deficit, and then naming to that commission dinosaurs like former Wyoming Senator Alan Simpson, who serves as co-chair of the group along with Democrat Erskine Bowles. Mr. Simpson, never known for his sensitivity, responded to the concerns of the executive director of the National Older Women’s League in a now infamous email in which he described Social Security — the most successful social program in U.S. history — as being “like a milk cow with 310 million tits.” For his part, Mr. Bowles, a North Carolinian, is the kind of “blue dog” Democrat who could pass for a Republican in many parts of the country. His bio states, “Mr. Bowles began his business career at Morgan Stanley & Co. in New York as an associate in the corporate finance group.” How perfect is that?
Last week the co-chairs of this commission, officially the National Commission on Fiscal Responsibility and Reform, issued an outline of their proposals, and predictably it is horror story for the vast majority of Americans and a dream come true for the upper classes.
In an excellent article published on November 11, Nobel Prize winning economist and New York Times columnist Paul Krugman dissects the class biases of the Bowles-Simpson proposals in considerable detail. Under the section on taxes contained in this set of supposedly deficit reduction proposals, Krugman writes that “the goals of reform, as Mr. Bowles and Mr. Simpson see them, are presented in the form of seven bullet points. ‘Lower Rates’ is the first point; ‘Reduce the Deficit’ is the seventh.”
Actually, Mr. Krugman finds that what the co-chairmen are actually proposing is not lower taxes but rather “a mixture of tax cuts and tax increases — tax cuts for the wealthy, tax increases for the middle class.”
Krugman concludes that “under the guise of facing our fiscal problems, Mr. Bowles and Mr. Simpson are trying to smuggle in the same old, same old — tax cuts for the rich and erosion of the social safety net.” (See: “The Hijacked Commission.”)
Who would have believed that all this could happen on the watch of a president with a consistently progressive track record — himself a former community organizer on the tough streets of Chicago — and a solidly Democratic Congress? Given the experience of the last two years, the outlook for social and economic justice in the next two — with a weakened Obama and a solidly Republican House of Representatives including several Tea Party extremists — is grim indeed.
