Monday, December 13, 2010

Back to The Future: Joan Walsh Called The Swindle of The Decade

It takes something of a ‘Beltwaytologist’ to sort out the Washington Beltway politics of tax cuts for the rich and let us eat cake for everybody else. ‘Fascinating’ even, if not for the fact that millions of real people’s lives are at stake. When Chris Matthews tells a guest he or she is “really smart!” it means the opposite. Without fail. Not that his fellow pundits from POLITICO or the Times or WaPo are stupid. They’re not. But any opinion they may impart to elicit this reaction from Chris amounts to Beltway conventional wisdom.

Joan Walsh of Salon, an infrequent guest on the Matthews show, hasn’t heard those words from Chris. She's one of those really smart people, a class act who seems to unnerve Matthews and, hilariously, other guests like buttoned-up Republican operative Ron Christie and Tea Party Don, Dick Armey — hence Matthews doesn't have her on very often. Joan should wear it as a badge of honor. In 2001, as Congress was poised to pass our ‘lost decade’ Bush tax cuts, this is some of what Joan wrote. You can read the entire article here. These are the highlights:
“[P] perhaps Buffett's attack on Bush's proposed repeal of the estate tax will breathe some life into the demoralized, strangely listless Democrats (the Gilded Age meets the Gelded Age), who don't appear to understand how crucial it is to beat back Bush's brazen tax proposal.”

“That proposal, which gives a staggering 43 percent of its largess to the wealthiest 1 percent of Americans (though they pay less than a quarter of the taxes), is the foundation of his new world order, a bold attempt to shape the nation's social, economic and political dynamics on behalf of wealthy conservatives for many years to come.”
In the following passages remarkable for her crystal ball-like prescience, Joan predicts exactly what happened when the George W. Bush regime took power. It should be noted that President Obama’s model is Clinton, with the notable exceptions that Clinton raised taxes to pay down the debt, and used the fiscal discipline bludgeon to compel Republican “compromise” on expanding programs for the poor listed below. President Obama’s “compromise” is adding to the deficit and placing tremendous pressure on slashing Social Security, Medicare, and Medicaid as Republicans pivot to blame him for the red ink. Especially those incoming (literally, to use the military metaphor) newly-elected reactionaries who did not vote for the deal. But even those who did will brazenly flip and blame the President for the deficit on the time-honored GOP theory of blind faith in the public's attention deficit disorder.
“Clinton paid down the Reagan-Bush deficit by raising taxes slightly on the top brackets, while slowly but steadily (even a little stealthily) expanding programs for the poor, working and middle class, delivering almost $70 billion over five years with such programs as the expanded earned income tax credit, new child health programs and extra subsidies and tax breaks for college tuition.”
This paragraph, in a nutshell, describes what Bush should have done, but didn’t:
“Now, with surpluses looming, a new president has no excuse for failing to tackle the remaining problems of our winner-take-all economy — shoring up Medicare and Social Security before the baby boomers stampede toward retirement, fixing our broken health insurance system, and expanding and reforming Head Start and other education programs for poor kids. No excuse, that is, unless he gives away the surplus to his wealthy friends, risking enormous deficits in the process.”
Not surprisingly, Democratic capitulation to Republican demands on outrageous tax cuts is not a recent phenomenon:
“But it wasn't until the Dems inexplicably rolled over, announcing they would be willing to support an $800 billion tax cut (Vice President Al Gore had proposed only a $500 billion cut), that it began to seem inevitable. ”
Reaganomics Redux under Bush-Obama. Only this time David Stockman is not aboard:
Naturally, Republicans always try to disguise the fact that it is the ultrawealthy who are the main beneficiaries of their tax cuts. In 1981, after the passage of Ronald Reagan's first tax-slashing federal budget, Reagan's budget director, David Stockman, shocked Washington by admitting that the administration's tax reductions for middle-class Americans were "a Trojan horse" to disguise massive cuts for the rich. The statement wasn't a shock; Stockman's honesty was.”
President Obama’s recipe for Clintonesque triangulation is spelled out in Joan’s analysis of the Reagan years. It’s trickle-down Reaganomics, right out of the disastrous Reagan playbook. Can you spell ‘double down’, anyone?
“[T]he Reagan tax cuts served as a Trojan horse, masking their most dramatic, and intentional, long-term impact — beggaring the U.S. Treasury in order to force program cuts and spending freezes the Republicans didn't have the political clout to achieve directly. By 1984, the Reagan tax cuts had created a $200 billion budget deficit (Reagan and Stockman had promised the budget would be balanced by then); in total, Reagan and Bush quadrupled the deficit between 1980 and 1992. They screwed the economy, but they triumphed politically, by ruling out new government spending and depriving the Democrats of their traditional means of appealing to their core constituencies — problem-solving new social programs — turning them instead into the party of deficit reduction and fiscal responsibility.”
What she said, back in 2001, came to pass ten disastrous years later:
“When the Democrats — and the nation — might have reaped the benefits of fiscal discipline, with a responsible series of programs aimed at curing America's social ills, along comes another Republican president who doesn't even bother with a Trojan horse to disguise his goals of handing the surplus over to the rich, to make sure the nation can't afford new social spending … And we may well wind up with Republican budget deficits, too.” [BINGO!]
How about this … sound familiar?
Like Bush, Reagan insisted his tax cut was just the right medicine for what the Great Communicator called a "soggy" economy. The Reagan camp insisted that massive tax cuts would lead to a balanced budget, or even surpluses — despite their plans for huge new military outlays — because the rich would invest more of their money, and earn more, leading to higher tax revenues. Reagan and his team called their new plan "supply-side economics," though skeptics like George H.W. Bush, running for president in the 1980 Republican primary, called it "voodoo economics," and GOP congressman turned independent presidential candidate John Anderson predicted it would lead to massive deficits. They were both right.”
President Obama had better make sure there’s ink in his veto pen, because he’ll need it to try and stem the coming Republican onslaught against the poor, the disadvantaged, the unemployed and structurally unemployed, students, Social Security and Medicare recipients, healthcare. What Joan describes below, the cruel heartlessness of Republicans, is exactly what will play itself out if this last-gasp massive tax cut gamble does not improve the economy more than many economists predict. How secure should we feel about holding the line on Social Security, Medicare, Medicaid, student loans, and a host of other programs that benefit the middle class and the working poor? With this President’s penchant for ‘compromise’… it isn't disloyal purist sanctimony for Democrats to be very concerned.
“They achieved almost $40 billion in budget cuts in their first year — eliminating the CETA job training program, affordable-housing subsidies, the poverty programs of the Community Services Agency and legal services for the poor — and made sure Democrats wouldn't be able to restore the cuts, or enact new social programs, for many years to come. They didn't get everything they wanted on that score — Stockman proposed "zeroing out" Head Start, for instance, the program now beloved by even Republicans.”
The picture becomes clearer once historical context blows aside the fog of news cycle politics. I love history because it’s so critical to our understanding of who and where we are, and where we are going. In order to understand where we are NOW, we must also understand HOW we got here. Joan closes the circle with this 2010 essay:
Winner-Take-All Politics delivers its message in neon-bright numbers, but they are numbers all the same. The charts depicting the increasing gap between the uber-rich and the rest of us will blow your mind — if you like charts. The narrative is lively, yet wonky. If you want to get its wisdom, you're going to have to sit still for some statistics. Here's what I thought was most important:
  • The richest 1 percent of Americans now take in almost a quarter of national income, up from about 8 percent during the Carter administration.
  • Their after-tax income rose 256 percent in that same time, while the middle fifth of the country saw its after-tax income grow by about 20 percent.
  • In roughly the same period, the percent by which taxes and government benefits reduced inequality dropped by a quarter.
  • Had national income grown the way it did in the generation after World War II, that middle fifth would have earned $12,300 more income; the top 1 percent would have earned almost $700,000 less.
The Gilded Age gave us the Progressive Era; the Depression yielded the New Deal, and that approach to blunting capitalism's sharp edges and expanding opportunity persisted, ironically,  through the Nixon administration. Obama and the Democrats had an epochal opportunity to change the terms of the political debate and begin another era of renewal in 2008, and they haven't managed it yet. They still have a chance, but the window is closing, and voters are losing faith that Democrats are up to solving the nation's problem. How Obama handles the GOP's tax challenge could determine his party's fortunes, and the country's, for many years to come.

The party has been caving to the wealthy since the Carter administration. Will anyone stand up for the rest of us?”

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