“The Disease Of American Democracy”: The Monied Interests Are Doing What They Do Best – Making Money
Americans are sick of politics. Only 13 percent approve of the job Congress is doing, a near record low. The President’s approval ratings are also in the basement.
A large portion of the public doesn’t even bother voting. Only 57.5 percent of eligible voters cast their ballots in the 2012 presidential election.
Put simply, most Americans feel powerless, and assume the political game is fixed. So why bother?
A new study scheduled to be published in this fall by Princeton’s Martin Gilens and Northwestern University’s Benjamin Page confirms our worst suspicions.
Gilens and Page analyzed 1,799 policy issues in detail, determining the relative influence on them of economic elites, business groups, mass-based interest groups, and average citizens.
Their conclusion: “The preferences of the average American appear to have only a miniscule, near-zero, statistically non-significant impact upon public policy.”
Instead, lawmakers respond to the policy demands of wealthy individuals and monied business interests – those with the most lobbying prowess and deepest pockets to bankroll campaigns.
Before you’re tempted to say “duh,” wait a moment. Gilens’ and Page’s data come from the period 1981 to 2002. This was before the Supreme Court opened the floodgates to big money in “Citizens United,” prior to SuperPACs, and before the Wall Street bailout.
So it’s likely to be even worse now.
But did the average citizen ever have much power? The eminent journalist and commentator Walter Lippman argued in his 1922 book “Public Opinion” that the broad public didn’t know or care about public policy. Its consent was “manufactured” by an elite that manipulated it. “It is no longer possible … to believe in the original dogma of democracy,” Lippman concluded.
Yet American democracy seemed robust compared to other nations that in the first half of the twentieth century succumbed to communism or totalitarianism.
Political scientists after World War II hypothesized that even though the voices of individual Americans counted for little, most people belonged to a variety of interest groups and membership organizations – clubs, associations, political parties, unions – to which politicians were responsive.
“Interest-group pluralism,” as it was called, thereby channeled the views of individual citizens, and made American democracy function.
What’s more, the political power of big corporations and Wall Street was offset by the power of labor unions, farm cooperatives, retailers, and smaller banks.
Economist John Kenneth Galbraith approvingly dubbed it “countervailing power.” These alternative power centers ensured that America’s vast middle and working classes received a significant share of the gains from economic growth.
Starting in 1980, something profoundly changed. It wasn’t just that big corporations and wealthy individuals became more politically potent, as Gilens and Page document. It was also that other interest groups began to wither.
Grass-roots membership organizations shrank because Americans had less time for them. As wages stagnated, most people had to devote more time to work in order to makes ends meet. That included the time of wives and mothers who began streaming into the paid workforce to prop up family incomes.
At the same time, union membership plunged because corporations began sending jobs abroad and fighting attempts to unionize. (Ronald Reagan helped legitimized these moves when he fired striking air traffic controllers.)
Other centers of countervailing power – retailers, farm cooperatives, and local and regional banks – also lost ground to national discount chains, big agribusiness, and Wall Street. Deregulation sealed their fates.
Meanwhile, political parties stopped representing the views of most constituents. As the costs of campaigns escalated, parties morphing from state and local membership organizations into national fund-raising machines.
We entered a vicious cycle in which political power became more concentrated in monied interests that used the power to their advantage – getting tax cuts, expanding tax loopholes, benefiting from corporate welfare and free-trade agreements, slicing safety nets, enacting anti-union legislation, and reducing public investments.
These moves further concentrated economic gains at the top, while leaving out most of the rest of America.
No wonder Americans feel powerless. No surprise we’re sick of politics, and many of us aren’t even voting.
But if we give up on politics, we’re done for. Powerlessness is a self-fulfilling prophesy.
The only way back toward a democracy and economy that work for the majority is for most of us to get politically active once again, becoming organized and mobilized.
We have to establish a new countervailing power.
The monied interests are doing what they do best – making money. The rest of us need to do what we can do best – use our voices, our vigor, and our votes.
By: Robert Reich, The Robert Reich Blog, August 18, 2014
“A Different Set Of Rules”: Tax Dodger Running For Governor In Illinois
If you are not in the Chicago media market, you might not know much about Bruce Rauner, the Mitt Romney-like candidate for governor in Illinois, who is running ahead in the polls against Democratic Governor Pat Quinn.
If Rauner wins, Illinois will have a lot more in common with its neighbor, Wisconsin. Politically, Rauner resembles union-basher and school privatizer Scott Walker. Only Rauner is much, much richer.
In an interview with the Chicago Sun Times, Rauner talked about his career at GTCR, the Chicago-based private equity firm he founded.
“I made a ton of money, made a lot of money,” he told Sun Times reporter Natasha Korecki.
When Korecki asked Rauner, a billionaire who owns nine homes and made $53 million last year, if he is part of the 1 percent, he corrected her: “Oh, I’m probably .01 percent.”
Last Sunday, the Sun-Times broke the news that Rauner has made himself even richer by avoiding taxes and hiding a lot of his wealth in the Cayman Islands.
Rauner has not released his current tax returns, so the full value of his offshore accounts is not verifiable, but the Sun Times was able to document five offshore holdings by Rauner in the Caymans.
A detailed analysis by the Chicago Tribune shows that Rauner used many other complicated tax strategies “out of reach for those of more modest means” to cut his tax bill to less than half the rate paid by other earners in the top bracket:
Thanks to one business-tax strategy, Rauner paid no Social Security or Medicare taxes at all in 2010 or 2011, the Trib reports.
Meanwhile, Rauner is campaigning against “government union bosses,” and teachers unions in particular, and is targeting public employee pensions, with a plan to freeze the Illinois pension plan and convert it into a 401(k)-style retirement account, in order, he claims, to save the state billions.
He says he got into the race because he wants to “reform” public education, and is a big charter school advocate.
“I am adamantly, adamantly against raising the minimum wage,” Rauner said in a campaign event captured on video in January.
He has since backed off that position, and says he supports a minimum-wage increase.
Rauner’s campaign has also had to respond to stories about his phone call to Obama’s education secretary Arne Duncan, pulling strings to get his daughter into prestigious Walter Payton College Prep High School, after the school rejected her.
The Sun-Times reported in January that Rauner made a $250,000 contribution to Payton after his daughter was admitted.
Rauner’s story shows what’s behind all that union-bashing and belt-tightening for the poor and middle class–rightwing billionaires like Rauner push these policies, even as they play by an entirely different set of rules, dodging taxes, pulling strings, and get special treatment most people could never afford.
If he is elected, Rauner, like Walker, might support legislation to loosen the rules to help other wealthy investors and corporations avoid taxes by parking their assets abroad–leaving even less revenue for the public sector he and his rightwing billionaire friends love to bash.
By: Ruth Conniff, Editor-in-Chief of The Progressive Magazine; Published at The Center for Media and Democracy, August 6, 2014
“A Mislearned Lesson”: McDonald’s Indigestible Excuse For Low Pay
When Henry Ford realized it was good business to pay employees enough to buy the products they built, it was a breakthrough, not only because the idea challenged the reflex to pay as little as possible, but because the product was a car. He was talking real bucks.
McDonald’s has mislearned the lesson.
In response to escalating protests by McDonald’s employees calling for higher wages and the right to form a union without retaliation, McDonald’s chief executive, Don Thompson, defended the company at the annual meeting on Thursday, saying that McDonald’s pays a competitive wage.
But what constitutes “competitive” in the fast-food industry is precisely the problem. Hourly pay averages about $9. The low pay is possible in part because employers rely on taxpayers to subsidize it through public assistance and on non-unionized workforces to swallow it. The competitive fast food wage, in short, is not enough to live on.
Mr. Thompson presumably knows that. But he is paid not to understand what the protestors are demanding because his own pay is based on profits that are derived in part by keeping worker pay low.
Of course, if the political economy were functioning as it is supposed to – with Congress imposing reasonable boundaries on businesses, markets and the economy – workers wouldn’t have to get their bosses to understand what it’s like to live on $9 an hour, because Congress would make sure that no one had to.
The McDonald’s workers are asking for $15 an hour. That sounds like a lot compared to the current minimum wage of $7.25 an hour and compared to the Democratic proposal to raise the minimum to $10.10. But it’s actually closer to where the minimum wage would be today if it had kept pace over the years with growth in labor productivity.
McDonald’s workers are not asking for too much. Democrats are asking for too little and Republicans won’t even go along with that.
By: Teresa Tritch, Taking Note, The Editors Blog, The New York Times, May 23, 2014
“The GOP Is Trying To Repeal The 20th Century”: The Right’s Crusade Against Overtime Pay, Why They Despise Worker Rights
Silly me: President Obama’s executive order to expand opportunities for overtime pay Thursday seemed like a win-win. Currently, if you make more than $23,000, you can’t necessarily receive overtime; the president’s order would raise that cap, and also make it harder for employers to classify people with almost no supervisory duties as “supervisors” and thus exempt.
Where’s the downside? Newly qualified workers currently being forced to work overtime without pay will now get higher wages. Or, if their employer doesn’t want to spring for the overtime pay (traditionally time and a half), they will have to expand their workforce to get the work done. Higher wages and/or more jobs: Sounds good, right?
Not to Republicans, of course. The backlash to the president’s overtime-pay expansion just makes clear what we’ve known for a long time: They oppose every attempt by government to reward hard work and protect the rights of workers – unless it applies to the very wealthy.
Speaker John Boehner sounded unusually befuddled opposing Obama’s move. “If you don’t have a job, you don’t qualify for overtime. So what do you get out of it? You get nothing,” he told the Washington Post. “The president’s policies are making it difficult for employers to expand employment. And until the president’s policies get out of the way, employers are going to continue to sit on their hands.”
The president’s policies are in fact making it harder for employers to exploit their workers. That’s all. As Jared Bernstein told the New York Times. “I think a potential side effect is that you may see more hiring in order to avoid overtime costs, which would be an awfully good thing right about now.”
Or you’ll see higher wages, which would also be an awfully good thing. One of the major causes of rising income inequality is that back in the 1970s, rising productivity suddenly became detached from rising wages. For decades — since the labor-rights reforms and social welfare advances of the ’30s and ’40s — the two lines climbed in tandem, with higher productivity translating into higher paychecks. The two came apart, in what’s become known as “the great divergence,” at the same time as income inequality began to climb. There are many reasons for the productivity-wage split, including a stagnant minimum wage, declining union membership, and weaker labor rights overall – including less compensated overtime.
Republicans no longer accept that it was government intervention in the economy, first in the Progressive era and then, more forcefully, after the Great Depression, that created the greatest economic boom and the biggest middle class in history. The 40-hour work week. The weekend. Vacations. Child labor laws. The minimum wage. Social Security. Health and safety protection. All of these represented government intervention on the side of working people, to balance the playing field with exploitive employers, and to carve out a realm of family and personal life that could be protected from ceaseless labor. Progressive public policy essentially created childhood, as a time when kids who weren’t wealthy might be educated and protected from labor abuse.
These became bipartisan values, with some debating around the margins, through Richard Nixon’s administration. But then a pro-business backlash put all of those gains back on the table. Republicans are now trying to repeal the 20th century.
“The federal government, in particular, shouldn’t be involved in labor markets in any way, shape or form,” says Jeffrey Miron, economic studies director at the Cato Institute. Cato is a libertarian think tank, but Miron’s once-radical point of view is now the GOP mainstream.
We’ve seen Republicans, like friend-of-the-poor Paul Ryan, fiercely oppose even modest increases in the minimum wage – even though earlier hikes always had a decent amount of bipartisan support. In fact, more Republicans today are openly insisting there shouldn’t even be a minimum wage, from formerly sensible Tennessee Sen. Lamar Alexander to Texas Gov. Rick Perry and his home state ally Rep. Joe Barton. GOP Senate candidates in North Carolina and Iowa have made abolishing the minimum wage a pillar of their campaigns.
We already know Republicans hate unions, whether public or private sector. One of the hottest CPAC sessions last week focused on “the Wisconsin model” of public sector union busting, but we also saw how hard GOP elected officials in Tennessee fought a union drive among Volkswagen workers there.
Some on the right have even clamored to bring back child labor. Newt Gingrich suggested poor kids should work as janitors to earn their school lunches, in order to fight the “culture” of poverty. (Like Paul Ryan, he doesn’t seem to see that food is the best answer for hunger.) Utah’s Tea Party Sen. Mike Lee has declared federal child labor laws “unconstitutional,” while up in Maine, wingnut Gov. Paul LePage would like to lower the legal working age from 16 to 12.
I’ve never understood why Republicans believe rich people need more money to ensure they’ll work harder, but the non-rich don’t deserve such incentives. From skyrocketing CEO pay to lower tax rates, the GOP defends putting more money in the hands of rich folks as a good thing. Giving more money to working people, by contrast, only encourages slackers and moochers. The president can’t wait for Republicans to join the 21st century while they’re busy repealing the 20th. He’s right to do whatever he can to boost workers’ wages on his own.
By: Joan Walsh, Editor at Large, Salon, March 14, 2014
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