Congress will reconvene shortly. That means more battles over taxes and spending, regulations and safety nets, and how to get the economy out of first gear. Which means more gridlock and continual showdowns over budget resolutions and the debt ceiling.
But before the hostilities start again and we all get lost in puerile politics and petty tactics, it’s useful to consider what’s really at stake for our economy and democracy.
For much of the past century, the basic bargain at the heart of America was that employers paid their workers enough to buy what American employers were selling. Government’s role was to encourage and enforce this bargain. We thereby created a virtuous cycle of higher living standards, more jobs, and better wages. And a democracy that worked reasonably well.
But the bargain has been broken. And until it’s remade, the economy can’t mend and our democracy won’t be responsive to the majority.
First, a bit of history. Back in 1914, Henry Ford announced he was paying workers on his Model T assembly line $5 a day – three times what the typical factory employee earned at the time. The Wall Street Journal termed his action “an economic crime.”
But Ford knew it was a cunning business move. The higher wage turned Ford’s auto workers into customers who could afford to buy Model T’s. In two years Ford’s profits more than doubled.
Yet in the years leading up to the Great Crash of 1929, employers forgot Henry Ford’s example. The wages of most American workers stagnated even as the economy surged. Gains went mainly into corporate profits and into the pockets of the very rich. American families maintained their standard of living by going deeper into debt, and the rich gambled with their gigantic winnings. In 1929 the debt bubble popped.
Sound familiar? It should. The same thing happened in the years leading up to the crash of 2008. The lesson should be obvious. When the economy becomes too lopsided – disproportionately benefiting corporate owners and top executives rather than average workers – it tips over.
It’s still lopsided. We’re emerging from the depths of the worst downturn since the Great Depression but nothing fundamentally has changed. Corporate profits are up largely because payrolls are down. Even Ford Motor Company is now paying its new hires half what it paid new employees a few years ago.
Employee pay is now down to the smallest share of the economy since the government began collecting wage and salary data sixty years ago; and corporate profits, the largest share.
This is a losing game for corporations over the long term. Without enough American consumers, their profitable days are numbered. Europeans are in no mood to buy. India and China are slowing dramatically. Developing nations are in trouble.
Republicans claim rich people and big corporations are job creators, so their taxes must not be raised. This is baloney. In order to create jobs, businesses need customers. But the rich spend only a small fraction of what they earn. They park most of it wherever around the world they can get the highest return.
The real job creators are the vast middle class — whose spending drives the economy and creates jobs. But as the middle class’s share of total income continues to drop, it can’t spend as much as before. Nor can most Americans borrow as they did before the crash of 2008 — borrowing that temporarily masked their declining purchasing power.
As a result, businesses are still reluctant to hire and pay decent wages. Which is why the recovery continues to be so anemic.
As wealth and income rise to the top, moreover, so does political power. Corporations and the rich are able to entrench themselves by keeping low tax rates and special tax breaks (such as the “carried interest” loophole that still allows private equity and hedge fund managers to treat their incomes as capital gains), and ensuring a steady flow of corporate welfare to their businesses (special breaks for oil and gas, big agriculture, big insurance, Big Pharma, and, of course, Wall Street).
All of this continues to squeeze public budgets, corrupt government, and undermine our democracy. The issue is not and has never been the size of our government; it’s who the government is for. Government has become less responsive to the needs of most citizens and more responsive to the demands of the monied interests.
The Republican response is to further reduce taxes on the rich, defund programs for the poor, fight unions, allow the median wage to continue to drop, and oppose any limits on campaign contributions or spending. It does not take a great deal of brainpower to understand this strategy will lead to an even more lopsided economy, more entrenched wealth, and a more corrupt democracy.
So as Congress reconvenes and the battles resume, be clear about what’s at stake. The only way back to a buoyant economy is through a productive system whose gains are more widely shared. The only way back to a responsive democracy is through a political system whose monied interests are more effectively constrained.
We must remake the basic bargain at the heart of America.
The official reason given by the Administration for delaying, by one year, the Affordable Care Act’s mandate that employers with more than 50 full-time workers provide insurance coverage or face fines, is that employers need more time to implement it. The unofficial reason has more to do with the Republicans’ incessant efforts to bulldoze the law.
Soon after the GOP lost its fight against Obamacare in Congress, it began warring against the new legislation in the courts, rounding up and backstopping litigants all the way up to the Supreme Court. Meanwhile, House Republicans have refused to appropriate enough funds to implement the Act, and have held a continuing series of votes to repeal it. Republican-led states have also done what they can to undermine Obamacare, refusing to set up their own health exchanges, and turning down federal money to expand Medicaid.
The GOP’s gleeful reaction to the announced delay confirms Republicans will make repeal a campaign issue in the 2014 midterm elections, which probably contributed to the White House decision to postpone the employer mandate until after the midterms. “The fact remains that Obamacare needs to be repealed,” said Senate Republican leader Mitch McConnell, on hearing news of the delay.
Technically, postponement won’t affect other major provisions of the law — although it may be difficult to subsidize workers who don’t get employer-based insurance if employers don’t report on the coverage they provide. But it’s a bad omen.
The longer the Affordable Care Act is delayed, the more time Republicans have to demonize it before average Americans receive its benefits and understand its importance. The GOP raged against Social Security in 1935 and made war on Medicare in 1965. But in each case Americans soon realized how critical they were to their economic security, and refused to listen.
In order to fully understand what the five Republican appointees on the Supreme Court have been up to when they make decisions that affect our democracy, as they did last week on voting rights, you need to understand what the Republican Party has been up to.
The modern GOP is based on an unlikely coalition of wealthy business executives, small business owners, and struggling whites. Its durability depends on the latter two categories believing that the economic stresses they’ve experienced for decades have a lot to do with the government taking their money and giving it to the poor, who are disproportionately black and Latino.
The real reason small business owners and struggling whites haven’t done better is the same most of the rest of America hasn’t done better: Although the output of Americans has continued to rise, almost all the gains have gone to the very top.
Government is implicated, but not in the way wealthy Republicans want the other members of their coalition to believe. Laws that the GOP itself championed (too often with the complicity of some Democrats) have trammeled unions, invited outsourcing abroad, slashed taxes on the rich, encouraged takeovers, allowed monopolization, reduced the real median wage, and deregulated Wall Street.
Four decades ago, the typical household’s income rose in tandem with output. But since the late 1970s, as these laws took hold, most Americans’ incomes have flattened. Had the real median household income continued to keep pace with economic growth it would now be almost $92,000 instead of $50,000.
Obviously, wealthy Republicans would rather other members of their coalition not know any of this — including, especially, their role in making it happen. Their nightmare is small-business owners and struggling whites joining with the poor and the rest of the middle class to wrest economic power away. So they’ve created a convenient scapegoat in America’s minority underclass, along with a government that supposedly taxes hardworking whites to support them.
This is where the five Republican appointees to the Supreme Court have played, and continue to play, such an important role.
First, wealthy Republicans have to be able to spend as much money as possible to bribe lawmakers to do their bidding, tell their version of history, and promulgate several big lies (the poor are “takers not makers,” government keeps them “dependent,” the wealthy are “job-creators” so cutting their taxes creates more jobs, unions are bad, regulations reduce economic growth, and so on).
The five Republicans on the Supreme Court have obliged by eviscerating campaign finance laws. Their 2010 decision in Citizens United v. Federal Election Commission, along with the broad interpretations given it by several appellate judges (also Republican appointees), has opened the money floodgates.
Second, wealthy Republicans want to quietly reduce the impact of any laws that might limit their profits, even though they may help struggling whites as consumers or employees. The easiest way to execute this delicate maneuver is to make it harder to sue under such laws.
Here, too, the five Republicans on the Court have been eager to oblige by tightening requirements for class actions and limiting standing to sue. In their recent Comcast Corp. v. Behrend decision, for example, they threw out $875 million in damages that a group of Philadelphia-area subscribers had sought from the cable giant, reasoning that the subscriber plaintiffs hadn’t proven they constituted a “class” for the purpose of a class action.
Third and finally, wealthy Republicans want to minimize the votes of poor and minority citizens – and further propagate the myth that these people are responsible for the economic problems of struggling whites – through state redistricting and gerrymandering, voter-identification requirements at polling stations, and the use of almost any pretext to purge minority voters from voting lists.
The five Republicans on the Court obliged last week by striking down a section of the 1965 Voting Rights Act that sets the formula under which states with a long history of discrimination must ask the federal government or a judge for approval before changing their voting procedures.
The significance of Shelby County, Alabama vs. Holder was made plain Thursday when the Court effectively nullified two cases involving Texas voter laws by sending them back to lower courts to reconsider in light of Shelby. One was a voter identification requirement, enacted in 2011, that a federal judge had rejected on grounds that it imposed a disproportionate burden on lower-income people, many of whom are minorities. The other was a redistricting plan, also rejected by a federal court, in part because it would block minorities from gaining a majority vote in almost all districts.
But now both are effectively reinstated, as are the efforts of several other states to suppress votes.
Supreme Court justices are appointed for life in order to ensure their independence from politics. But when it comes to the core political strategy of the Republican Party, the five Republican appointees are, in effect, an extension of the GOP.
Our government works on a system of checks and balances in which each branch of government is supposed to hold the other two branches accountable for their actions and decisions.
Currently, the two branches who can act of their own accord, the legislative and executive branches, are pursuing separate but not mutually exclusive agendas. As such, both branches are ignoring the other and nothing is being done to keep our government from being any more than a farce.
The judicial branch can’t really act on it own, someone has to bring a case before them which, considering the appeals process required, can take years.
You have no freedom, your elected officials don’t care about your interests. The American Empire is in a downward spiral and when it crashes it is going to crash incredibly hard.
That being said, Al Franken, Elizabeth Warren, and anyone else who refuses to play nice with the private interests choking Congress is great, but they are in a serious minority.