How Democrats Can Become Relevant Again

By Robert Reich, Robert Reich's Blog

02 March 11

How Democrats can become relevant again (and rescue the nation while they're at it).

epublicans offered Democrats two more weeks before the doomsday shut-down. Democrats countered with four. Republicans held their ground. Democrats agreed to two.

This is what passes for compromise in our nation's capital.

Democrats have become irrelevant. If they want to be relevant again they have to connect the dots: The explosion of income and wealth among America's super-rich, the dramatic drop in their tax rates, the consequential devastating budget squeezes in Washington and in state capitals, and the slashing of public services for the middle class and the poor.

It is not a complicated story. Begin with what's happened to the typical American, whose wages have been stagnant for thirty years. Today's typical 30-year-old male (if he has a job) is earning the same as a 30-year-old male earned three decades ago, adjusted for for inflation. (Although women are doing better than they did 30 years ago, their wages still trail men's.)

The bottom 90 percent of Americans now earn, on average, only about $280 more per year than they did thirty years ago. That's less than a 1 percent gain over more than a third of a century. Families are doing somewhat better but that's only because so many families now have to rely on two incomes.

But wait. The American economy is more than twice as large now as it was thirty years ago. So where did the money go? To the top. The richest 1 percent's share of national has doubled - from around 9 percent in 1977 to over 20 percent now. The richest one-tenth of 1 percent's share has tripled. The 150,000 households that comprise the top one-tenth of one percent now earn as much as the bottom 120 million put together.

Given this explosion of income at the top you might think our tax system would demand a larger share from them. But you'd be wrong. You're not taking account of the power of the super rich. As income and wealth have risen to the top, so has political power. As a result, their taxes have plummeted.

From the 1940s until 1980, the tax rate on the highest earners in America was 70 percent or higher. In the 1950s, it was 91 percent. Even if you include deductions and credits, the rich were paying a far higher share of their income than at any time since.

Under Ronald Reagan the top rate dropped to 28 percent. Under Bill Clinton it rose to 39 percent and then under George W. Bush dropped to 36 percent. As you recall, Republicans have managed to keep it there. Their avowed aim is to keep it there permanently.

Meanwhile, estate taxes (which hit only the top 2 percent) have been slashed, as have taxes on capital gains - which comprise most of the income of the super rich. In the late 1970s, capital gains were taxed at well over 35 percent. Under Bill Clinton, the capital gains rate was 20 percent. Now it's 15 percent.

So who's going to foot the bill for everything we need? Even before the Great Recession, the middle class's share of the nation's total income had shrunk. Yet their tax burden had grown. They were paying a bigger chunk of their incomes in payroll taxes, sales taxes, and property taxes than decades before.

Then came the Great Recession - and with it, lower tax revenues. That means all levels of government are squeezed. Obviously, the middle class can't pay more in taxes. But because the Democrats seem to lack the intestinal fortitude to suggest the obvious - that taxes need to be raised on the super rich - we're left with a mess.

Teachers are being fired, Pell grants for the poor are being slashed, energy assistance for the needy is disappearing, other vital public services shriveling. Regulatory agencies don't have the budgets to pay the people they need to enforce the law. Even if it wanted to the Securities and Exchange Commission couldn't police Wall Street.

All of which is precisely where Republicans want the nation to be. It sets them up perfectly to blame government, blame public employees, blame unionized workers. It lets them pit workers against one another, divide the Democratic base, and promote the false idea that we're in a giant zero-sum game and the nation can't afford to do more.

It diverts attention from what's happened at the top - so no one sees how well CEOs and Wall Street bankers are doing again, no one views the paybacks and tax giveaways engineered by their Republican patrons, and no one focuses on the tide of money flowing from the likes of billionaires Charles and David Koch into Republican coffers.

Where are the Democrats? Shuffling their feet, looking at the floor. "Please oh please give us four weeks before you shut us down," they ask. "No," say the Republicans, "you'll get only two." "Well, alright then," say the Democrats.

Here's what Democrats should be saying:

Hike taxes on the super-rich. Reform the tax code to create more brackets at the top with higher rates for millionaires and billionaires. Absurdly, the top bracket is now set at $375,000 with a tax rate of 35 percent; the second-highest bracket, at 33 percent, starts at $172,000 for individuals. But the big money is way higher.

The source of income shouldn't matter - salary, wages, capital gains, other unearned income - all should be treated the same. There's no reason to reward speculators. (Don't penalize true entrepreneurs, though. If they're owners who have held their assets for at least twenty years, keep their capital gains low.)

And while you're at it, raise the ceiling on income subject to Social Security taxes. And bring back the estate tax.

Do this and we can afford to do what we need to do as a nation. Do this and you prevent Republicans from setting the working middle class against itself. Do this and you restore some balance to a distribution of income and wealth that's now dangerously out of whack.

Do this, Democrats, and you have a chance of being relevant again.

Robert Reich is Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written twelve books, including "The Work of Nations," "Locked in the Cabinet," "Supercapitalism" and his latest book, "AFTERSHOCK: The Next Economy and America's Future." His 'Marketplace' commentaries can be found on publicradio.com and iTunes.

The Buying of America

By Rodolfo F. Acuna, Reader Supported News

01 March 11

reader responded to my article on the Arizona and Wisconsin connection that "... the Koch brothers are just the tip of the iceberg," - a statement with which I totally agree.

The Phoenix resident predicted that the corporate takeover of the state and federal governments had just begun. What would make this possible was "The Citizens United Supreme Court decision [that] will only make money laundering for public office worse, since there is no accountability measure to provide transparency about who is contributing to Tea Party or other candidates."

The US Supreme Court's 5-4 decision in Citizens United v Federal Election Commission (2010) held that the First Amendment requires that "Congress shall make no law ... abridging the freedom of speech," and that a "prohibition on corporate independent expenditures is an outright ban on speech." According to the Court, "A PAC [political action committee] is a separate association from the corporation." Because speech is fundamental to democracy, the regulation on spending infringes on political speech.

In essence, Citizens United gives corporations and unions the right to spend unlimited amounts of money on campaign ads - no matter how outrageous the ads are. The case struck down campaign reform, and a provision in the law that prohibited all corporations and unions from contributing as much money as they wanted to elections. The outcome is that the rich are protected by the First Amendment and have the right to buy elections.

President Obama criticized the decision, saying that it "Gives the special interests and their lobbyists even more power in Washington while undermining the influence of average Americans who make small contributions to support their preferred candidates."

Even more outrageous, the decision shields rich contributors by giving them anonymity. While corporations or unions may not give money directly to campaigns, they have a license to place an unlimited number of ads, and by forming "501(c) (4)s" nonprofits, the identity of the donors is hidden.

In Arizona, David H. Koch and Charles G. Koch set the template that is being followed in Wisconsin. They funded extremist groups and spread hate through lies and half-truths, allowing them to manipulate elections.

Given these facts, it is hard not to recognize a conspiracy between the Koches and the five Supreme Court Justices that formed the majority in Citizens United.

For example, on January 30-31, 2011, the Koches held a secretive retreat for billionaires in Palm Springs, California. Featured speakers at past billionaire juntas were Supreme Court Justices Antonin Scalia and Clarence Thomas, two of the five majority justices in Citizens United. Thomas' wife is the founder and president of Liberty Central, a conservative political advocacy group with ties to the Tea Party and the infamous Koches.

The corporate assault on democracy began as far back as 1868 with the passage of the "due process clause" in the 14th Amendment. Its intent was to protect the rights of African-Americans by protecting them from the southern states that wanted to keep them in a de facto state of slavery. Instead of enforcing the amendment and giving blacks equal protection, pro-business justices expanded the 14th amendment to shield corporations from state and federal regulation. They raised the legal fiction that corporations were persons and thus a protected class.

Since the 1980s, corporations, dominated by the billionaire class, have become more proactive in politics. Emboldened by William E. Simon's ghost-written "A Time for Truth" (1978), the right wing has founded a bevy of tax-free non-profits to fund right-wing causes.

As of 2007 there were 2.7 millionaires and 371 billionaires in the United States out of a population of 307 million Americans - less than one percent. The Koch brothers had only two votes, but had a combined wealth of $41 billion dollars.

The golden opportunity for the Koch cabal came in Gore v. Bush (2000) that resolved the presidential election in favor of George W. Bush. The Court ruled that the Florida Supreme Court's method for recounting ballots violated the Equal Protection Clause of the Fourteenth Amendment. The 5-4 decision was a political decision with Thomas and Scalia heading the majority.

Gore v. Bush made the Citizens United case possible, as Bush became president, and he proceeded to stack the Supreme Court as well as the lower federal courts with right-wing ideologues. He nominated John Roberts and Samuel Alito to the Court - both judicial conservatives with deep right-wing ties.

These two justices joined Scalia and Thomas in the passage of Citizens United, which represented an extreme departure from previous case law.

In Arizona the billionaire club used the Tea Party, the Minutemen and the Nazis to spread fear, misinterpretation and gross stereotypes. Like Professor Rudy Rosales has pointed out, "This attack [is] on working class people, Mexicanos and Latinos all over, African-Americans, Native Americans, Asians, women, gays, homosexuals, [and it] is possible because they do it piece by piece - first immigrants, then gays, then women, then African-Americans."

Their goal is to destroy the liberal capitalist state.

Because of Citizens United, in future elections voters will be unable to tell where the money is coming from. The 2006 election cost about $1 billion; the cost of the 2010 election was over $3 billion. It turned blue states red. The cost of the 2012 presidential campaign will dwarf these numbers. Everyone is up for sale.

Eric Drum in Mother Jones (March/April 2011) writes that, "With unions declining, the Democratic Party turned to the only other source of money and influence available in large enough quantities to replace Big Labor: Big Business."

The question is, "Who will control the country?" 371 billionaires, or the other 307 million residents of this nation?

Reader Supported News is the Publication of Origin for this work. Permission to republish is freely granted with credit and a link back to Reader Supported News.