By Robert Borosage and Katrina vanden Heuvel / The Nation / October 10, 2011 edition of The Nation
The modern American dream was inspired by a growing middle class that was the triumph of democracy after World War II. Its promise was and is opportunity: that hard work can earn a good life—a good job with decent pay and security, a home in a safe neighborhood, affordable healthcare, a secure retirement, a good education for the kids. The promise always exceeded the performance—especially with regard to racial and ethnic minorities, immigrants and women—and America never did as well as Europe in lifting the poor from misery. But a broad middle class and a broadly shared prosperity at least provided the possibility of a way up.
Now that middle class is sinking, imperiled by an economy that does not work for working people. Twenty-five million Americans are in need of full-time work, wages are declining and one in six people lives in poverty, the highest level in fifty years.
Every element of the dream is imperiled. Wages for the 70 percent of Americans without a college education have declined dramatically over the past forty years, although CEO salaries and corporate profits soared. Corporations continue to ship good jobs abroad, while the few jobs created at home are disproportionately in the low-wage service sector. One in four homes is underwater, devastating what has been the largest single asset for most middle-class families. Healthcare costs are soaring, with nearly 50 million uninsured. Half of all Americans have no retirement plan at work, pensions are disappearing and even Social Security and Medicare are targeted for cuts. College debt now exceeds credit card debt, with defaults rising and more and more students priced out of higher education.
The economy works fabulously well for the few. The richest 1 percent capture nearly a quarter of the nation’s income and control about 40 percent of its wealth. They have pocketed almost all the rewards of the past decade’s economic growth. Tahrir Square erupted in revolution in January, but America actually suffers greater inequality than Egypt. Instead of an American dream, we have an American nightmare: a government, as Nobel Prize winner Joseph Stiglitz has written, of the top 1 percent, by the top 1 percent and for the top 1 percent.
This is not an accident; it is a defeat. It is the casualty of class warfare, waged and won, as Warren Buffett has noted, by the wealthiest few. Economists evoke globalization, technology and education as causal factors in our era’s extreme inequality. In fact, it results from policies that have weakened workers, liberated CEOs, starved social protections and savaged the middle class.
For more than thirty years, conservative ideas and corporate cronyism have consolidated their hold on both major political parties. Trade policy has been handed to the multinationals and the banks, which have not only transferred good jobs abroad but have given us a trade imbalance of more than $2 billion a day. Healthcare is dominated by drug companies and the insurance industry, creating a system that costs nearly twice as much per capita as the rest of the industrial world while delivering inferior care. Big Oil and King Coal exert a stranglehold on our energy policy, with the United States forfeiting the lead it once had in the green technologies that will be central to the markets of the future. Finance liberated itself from regulation, unleashing the Wall Street wilding that drove the economy over a cliff in 2008. The Pentagon’s budget is higher than it was during the cold war.
The past three years provide an object lesson in the power of entrenched interests. Elected in the midst of the worst economic meltdown since the Great Depression, President Obama captured a majority of the vote (the first Democrat to do so since Jimmy Carter) with a mandate for change. In January 2009 Democrats held fifty-eight Senate seats and a large House majority led by the most progressive Speaker in history, Nancy Pelosi. Crisis, mandate, majority—all were in place for reform.
Obama put forth reforms in areas the country must address: healthcare, energy and finance. The president’s proposals were cautious, often pre-emptively compromised, but he had his head handed to him anyway. The economic recovery act was weakened, energy reform blocked, financial re-regulation neutered, healthcare deformed. Conservative obstruction and powerful corporate interests stymied change.
The failure fed voter skepticism about government. Washington bailed out Wall Street but did little for Main Street. It ran up deficits but failed to generate jobs. The White House embraced establishment calls for a premature turn to deficit reduction, distracting from the need for more federal action to stimulate economic recovery. Pollster Stanley Greenberg says voters “think that the game is rigged.” As he summarizes, they “see a nexus of money and power, greased by special interest lobbyists and large campaign donations…. They do not believe the fundamentals have really changed in Mr. Obama’s Washington.”
The economic calamity, and bipartisan collusion with Wall Street, set the stage for citizen protest. With Democrats in control of Washington, the right appealed to popular anger, most notably through the much-hyped Tea Party. Contrary to initial reports, it was composed not of independents but of right-wing activists, many initially driven by racial resentment. Its members tend to be older, whiter and more affluent than the general population. Its grassroots energy was bolstered by lavishly funded Astroturf organizations like Dick Armey’s FreedomWorks, backed in part by the billionaire Koch brothers.
The Tea Partiers used the spectacle of corrupted politics to make a conservative case: Washington doesn’t work for you; get your money back. Its leaders often sounded populist themes, as Sarah Palin did at a Tea Party rally this past summer: “The permanent political class—they’re doing just fine…. They derive power and their wealth from their access to our money—to taxpayer dollars. They use it to bail out their friends on Wall Street and their corporate cronies, and to reward campaign contributors, and to buy votes via earmarks…. And there is a name for this: it’s called corporate crony capitalism.” It’s a hoary flimflam: the Tea Party’s agenda belies the populist rhetoric. The current GOP House majority, allegedly dominated by the Tea Party, champions the same elite policies that helped create the mess: lower taxes on the wealthy, rollback of basic services, assault on unions, corporate trade, Big Oil energy, financial deregulation. The only difference is their ambition: GOP zealots would roll back not simply Obama’s reforms but the Great Society, the New Deal—indeed, much of the twentieth century. Not surprisingly, those goals have little appeal to the vast majority of Americans.
Waiting for Lefty?
So where was protest on the left? Historically, whenever America has reached this extreme of what Citigroup analysts dubbed “plutonomy,” popular mass movements have arisen to champion economic justice. Populist movements of the late nineteenth century confronted the robber barons. The Socialist and Communist parties and Huey Long’s Share Our Wealth movement grew threatening enough to goad Franklin Roosevelt into the second New Deal, including Social Security; the Wagner Act, recognizing the right of workers to organize; and much more. And in more prosperous times, the civil rights movement forced the end of apartheid in the American South; the anti–Vietnam War movement drove Lyndon Johnson out of office; and the women’s, gay rights, consumer and environmental movements all helped to make America better. More recently, the movement against the war in Iraq helped sweep Democrats into power in 2006 and 2008.
Progressives did organize demonstrations in the wake of the economic collapse. Groups like National People’s Action sought to defend homeowners against foreclosure and led protests against big banks. The broad We Are One coalition, anchored by labor unions, sponsored a national march for jobs in the run-up to the 2010 elections. But these and other efforts received shamefully little mainstream press and generated little momentum. Significant progressive attention and resources were committed to helping pass the Obama reform agenda. Support for the president muted many critics, particularly among African-Americans, whose economic losses were the most devastating.
The sweeping GOP victories last year shattered that complacency. Despite continued mass unemployment, Republicans have dominated the debate about who will pay to clean up the mess left by Wall Street’s excesses—and what kind of economy will emerge out of the ditch. Their assault sparked a vigorous progressive response.
When teachers, students and firefighters joined union members in Wisconsin to defend worker rights and oppose the assault on schools and public services, the mass demonstrations electrified progressives and captured national attention. When House Republicans passed a budget that would have ended Medicare as we know it while cutting taxes on the wealthy, angry citizens filled Congressional town halls across the country.
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Katrina vanden Heuvel has been The Nation’s editor since 1995 and its publisher since 2005. Robert L. Borosage is the founder and president of the Institute for America’s Future