How America’s Demented Politics Let the GOP Off the Hook for Their Giant Mess

Bill Moyers Journal / By Thomas Frank, Bill Moyers
-  How America’s Demented Politics Let the GOP Off the Hook for Their Giant Mess
Bill Moyers interviews Thomas Frank on how our short attention span has allowed conservatives to escape blame for their role in the economic meltdown.
January 18, 2010  |     

Editor’s note: In the following interview Bill Moyers and Thomas Frank, author of “What’s the Matter With Kansas” and “The Wrecking Crew,” talk about why conservatives can get away with blaming Obama for the past decade of conservative failures.
Bill Moyers: There were hands in the air in Washington this week, but it wasn’t a stickup. The new Financial Crisis Inquiry Commission, appointed by Congress to find out how America got rolled, began hearings this week. These four are not the victims of one of the greatest bank heists in history – they’re the perpetrators, bankers so sleek and crafty they got off with the loot in broad daylight, and then sweet talked the government into taxing us to pay it back.
Watching that scene on the opening day of the hearings, it was hard enough to believe that almost a year has passed since Barack Obama raised his hand, too — taking the oath of office to become our 44th President. Even harder to remember what America looked like before Obama, because we’ve also been robbed of memory, assaulted by what the Nobel laureate Czeslaw Milosz described as a “fantastic proliferation of mass media.” We live in a time “characterized by a refusal to remember.” Inconvenient facts simply disappear down the memory hole, as in George Orwell’s novel, “1984.”
President Obama’s made plenty of mistakes during his first year, and we’ve critiqued them frequently here on the JOURNAL, but hardly anyone talks any more about what happened in the years before. He inherited from George W. Bush the biggest financial debacle since the Great Depression, along with two unpopular and costly wars, and a dysfunctional and demoralized government.
It’s important to remember those years, a time that has been characterized by the historian Thomas Frank, as “A Low, Dishonest Decade.” He’s here to talk about them with me. Thomas Frank is editor of the recently relaunched BAFFLER magazine, a literary journal; a contributing editor of HARPER’S; a weekly columnist for THE WALL STREET JOURNAL; and the author of ONE MARKET UNDER GOD, the bestselling WHAT’S THE MATTER WITH KANSAS? and his latest bestseller, THE WRECKING CREW, now out in paperback. Good to have you back.
THOMAS FRANK: It’s my pleasure, Bill.
BILL MOYERS: How is it that the people who are responsible for the mess that Obama inherited are getting away with demonizing him when he’s only had less than a year to clean it up. Let me show you just a sample of commentators railing against the President.
RUSH LIMBAUGH: President Obama and the Democrats are destroying the US economy. They are purposefully doing it, I believe.
GLENN BECK: This is a well-thought out plan to collapse the economy as we know it.
JONATHAN HOENIG: The president has, I think if you listen to what he says, a hatred for capitalism. Where do jobs come from? They don’t come from the government, they come from the profit seeking self-interest, from what I hear and see, the President never misses an opportunity to smear and [no audio] slap!
RUSH LIMBAUGH: This guy is a coward. He does not have the gonads or the spine to even stand up and accept what he’s doing! All of this is his doing. He cannot even probably say, you should like this — you may not like this, but I’m telling you it’s the best thing for you, it’s the best thing for me. No! He knows it’s a disaster, he has to slough this off, on his previous– or his predecessor, the previous administration.
SEAN HANNITY: It’s his stimulus. It’s his record deficit spending. He quadrupled the debt in a year. You know, how many more are the Democrats going to say, “Well, it’s George Bush’s fault”? This is Obama’s economy now.
BILL MOYERS: What goes through your mind as a historian when you watch that?
THOMAS FRANK: Well, that is America for you. I mean, that is the, sort of the demented logic of our politics. Is that now– Obama’s been President for a year. And he will come before the public in the fall, you know, having to defend all of these terrible things. That’s how our politics works in this country.
BILL MOYERS: But you called it demented. I mean, you know, demented means crazy, mad. Mad and crazy enough to cause us to forget the world before Obama?
THOMAS FRANK: I’ll give you an example what I mean. So, I was on a radio show the other day with a tea party leader, you know, one of these protest leaders. And he seemed like a good guy. But what he did say that struck me was he said he was really against monopoly, you know? And we’re laboring under all these monopolies, all these concentrated powers here in America. And what we need to do is get back to free markets. And then we can do away with that. And it was mind-blowing.
Because if you look back any further than the Obama Administration, since, I mean, 1980 in this country, we have been in the grip of, you know, of this pursuit of ever-purer free markets. That’s what American politics has been about. That’s what has delivered this, you know, the awful circumstances that we find ourselves in today. And to think that that’s what’s missing, that’s what we need to get back to, is–
BILL MOYERS: That’s more than nostalgia. What is that?
THOMAS FRANK: Well, that’s the disease of our time. You know, that sort of instant forgetting.
BILL MOYERS: But what does it do to our politics when the very spokesmen for what some people have called a decade of conservative failure. I mean, remember before Obama, they turned a budget surplus into a deficit. They took us to war on fraudulent pretenses. They borrowed money to fight it. They presided over a stalemate in Afghanistan. They trashed the Constitution. They presided over the weakest economy in decades–
THOMAS FRANK: Not weak for everybody.
THOMAS FRANK: Some people did really well.
BILL MOYERS: Okay, they compiled the worst track record on jobs in decades. And they ended up with the worst stock market in decades. I mean, it was a decade of conservative failure. And yet, Obama’s their villain?
THOMAS FRANK: Think of all the crises and the disasters that you’ve described. And I would add to them things like the, what happened in New Orleans after Hurricane Katrina. And the Madoff scandal on Wall Street. And, you know, on and on and on. The Jack Abramoff scandal. The whole sordid career of Tom DeLay.
All of these things that we remember from the last decade. I mean, some of them that we’re forgetting. Like who remembers all the scandals over earmarking, anymore? And who remembers all the scandals over Iraq reconstruction? All that, you know, disastrous, when we would hand it off to a private contractor to rebuild Iraq. And it would, you know, of course, it would fail.
Those things have all sort of been dwarfed by the economic disaster and the wreckage on Wall Street. But I would say to you that all of these things that we’re describing here are of a piece. And that they all flow from the same ideas. And those ideas are the sort of conservative attitude towards government. And conservative attitudes towards governance. Okay?
BILL MOYERS: That government is a perversion.
THOMAS FRANK: Government is– yeah, government is a perversion. And to believe that the federal government can be operated, you know, with all of its programs, can be operated well and do things that are good for the people, is, as you say, is a perversion.
And they look at someone like Barack Obama and it makes them seethe. Because that’s, you know, that’s what he’s trying to do. What conservatism in this country is about is government failure. Conservatives talk about government failure all the time, constantly. And conservatives, when they’re in power deliver government failure.
BILL MOYERS: Not merely from incompetence, you say, but from ideology, from philosophy, from a view of the world.
THOMAS FRANK: And sometimes from design.
BILL MOYERS: From design? What do you mean?
THOMAS FRANK: Not always from design, but often. The Department of Labor, for example, the conservatives when they in office, routinely stuff the Department of Labor full of ideological cranks. And people that don’t believe in the mission.
And the result is that it doesn’t– they don’t enforce anything. Towards the very end of the Bush-era, the Department of Labor had been whittled down. It was a shell of its former self. And at the very end of the Bush Administration, one of the government accountability programs did a study of the Department of Labor. And, I’m smiling, because it’s kind of amusing. It was like an old spy magazine prank.
They made up these horrendous labor violations around the country and phoned them in as complaints to the Department of Labor to see what they would do, okay? They responded to one out of ten of these, you know, where they called in as like, “Well, we got, you know, kids working in a meat packing plant during school hours. You know, can you, you going to do anything about that?” “No.” Or you look at something like the Securities and Exchange Commission. These guys are supposed to be regulating, you know, the investment banks, okay? Goldman Sachs, Morgan Stanley, that sort of thing. These guys were so under-funded, and not just under-funded, but you had people in charge of it who didn’t believe in regulating Wall Street.
BILL MOYERS: So, they made the Securities and Exchange Commission a laughing stock, if you will. They really did.
THOMAS FRANK: Right. Well, there’s these horrible stories that came out. Once Bush was out, there was a study done of the SEC, as well. These people didn’t even have like their own functioning photocopiers, okay? So, we’re talking about the lawyers that are supposed to be protecting us from Wall Street. And they have to go stand in line at Kinko’s to do their own photocopying. And they’re going up against the best paid, you know, best educated lawyers on planet Earth, who represent the investment banks. And they’re supposed to be defending us.
BILL MOYERS: The curious thing about this is that you and I and my audience knows that our ancestors believed that capitalism needed to be supervised. But when the conservatives came to power, they begin to muzzle the watchdog.
THOMAS FRANK: Yeah. Well, or you know, do away with it altogether, de-fund it. Look, the beginning in the 1980s, President Reagan came to office and came to power, and you remember the kind of rhetoric that he used to use in denouncing the Federal workforce. He hated the Federal workforce. And this is an article of faith among conservatives.
There’s something called the pay gap that they used to talk about a lot in Washington, D.C. Which is, back in the ’50s, ’60s, and up into the 1970s, Federal workers were paid a comparable amount to what people in the private sector earned. Okay? So, if you’re a lawyer working for the government, you got about as much as a lawyer working in the private sector.
Not as much, because government benefits are considered to be much better. Okay. Under Reagan, you had this huge gap open up between Federal workers and the private sector. I asked around. And I found out a government attorney makes $140,000 a year on retirement. After he’s been there all his life. In the private sector law firm in Washington, you’d be making $160,000 starting salary. That’s first year. Right out of law school.
BILL MOYERS: So what’s the consequence of this pay gap you described? Or, do we get inferior government because of it?
THOMAS FRANK: Absolutely. It keeps the best and the brightest out of government service, unless you’re really dedicated to a cause.
But let me go one step further with this, Bill. When I say this is done by design, I’m not exaggerating. And this is one of the more surprising things that I found when I was doing the research for “The Wrecking Crew,” is that there’s a whole conservative literature on why you want second-rate people in government, or third-rate.
I found an interview with the head of the U.S. Chamber of Commerce from 1928, where he said– this quote, it’s mind-boggling to me. But he really said this. “The best public servant is the worst one.” Okay? You want bad people in government. You want to deliberately staff government with second-rate people. Because if you have good people in government, government will work. And then the public will learn to trust government. And then they’ll hand over more power to it.
And you don’t want that, of course. Your Chamber of Commerce. And I thought, when I first read this, “That’s a crazy idea. I can’t believe that sentiment.” And then I found it repeated again and again and again. Throughout the long history of the conservative movement. This is something they believe very deeply.
BILL MOYERS: It comes out of a definitive way of seeing things, right?
THOMAS FRANK: Yes. And we can summarize that very briefly. That the market is the, you know, is the universal principle of human civilization. And that government is a kind of interloper, if not a, you know, criminal gang. And getting in the way.
BILL MOYERS: But we saw with this collapse and this bailout, we saw the failure of that.
THOMAS FRANK: Of course.
BILL MOYERS: And yet there’s no sense of contrition. What’s amazing to me, and you wrote this, that the very people who brought us this decade of conservative failures, the party of Palin, Beck, Hannity, Abramoff, Rove, DeLay, Kristol, O’Reilly, just might stage a comeback.
THOMAS FRANK: I think they might. I think there’s a very strong chance of that.
BILL MOYERS: After only 11 months out of power, because of the record. I mean–
THOMAS FRANK: Look, well, the stuff–
BILL MOYERS: –it’s crazy.
THOMAS FRANK: –the stuff we’ve been talking about here today. The stuff in “The Wrecking Crew,” that’s all forgotten. The financial crisis had that effect of– that stuff is now off the– down the memory hole.
BILL MOYERS: Do you really think they believe that unfettered capitalism, unregulated markets, will deliver an ideal democracy and prosperity for everybody?
THOMAS FRANK: No, I don’t. I think that they believe that, and to some degree, they’re sincere in that belief. But the conservative movement in Washington, I’m not talking about grassroots voters in Kansas here. I’m talking about the conservative movement in Washington. And the whole constellation of think tanks and lobby shops and not-for-profits. And, you know, newspapers and fundraisers and all of this stuff.
They believe this is an industry, okay? This is an industry that churns out this product. And one of the things that, I mean, it’s one of the things that they’re doing now is they excommunicate George W. Bush, deeply unpopular, so therefore, not a true conservative, right? So, that way they get to start over fresh. The problem with George W. Bush, the reason we’re in such a deep hole is that we never went far enough.
As Tom DeLay has said, in his newspaper column, and I’m paraphrasing here. The problem with conservatism isn’t that it was tried and failed. It’s that it never really got– we never really tried it in the first place. So, what we have to do — and I’ve heard, conservatives have said this. “What we have to do is go back and deregulate all the way. We have to, you know, slash government. We have to tear that thing down. That’s what it’s all about.”
And the amazing thing about this. This allows them to represent themselves as dissidents against the sort of established order in Washington. Even though they ran the established order for years and years and years and years.
BILL MOYERS: Here’s something else that’s bizarre to me. And I wonder what you think about it, as a historian. I mean, right after the failed terrorist threat of Christmas, Obama’s critics went to work scrubbing what happened when the Bush White House was out to lunch in the weeks and days leading up to 9/11.
I mean, you know, there were terrorists sneaking into the country. There were warnings from the intelligence community about something– an attack on an American city coming. And that’s all been flushed down the memory hole. Giuliani goes on the air and says, “We didn’t have any terrorist attacks when Bush was President.”
THOMAS FRANK: Yeah, and that’s another– we also forget the anthrax episode which happened right after 9/11. Look, this is not an argument that I have made. That other people have– that all of these things need to be added to the list of government failures. And if you want to talk why does government fail? You know, there’s two answers out there.
One is the conservative answer. Government fails because that’s the nature of government to fail. And if you want to look a little bit deeper, you know, why does government fail? Because government has been systematically destroyed. When we, whether you’re talking about the, you know, the pay gap and making– deliberately making government an unattractive career option. Or you’re talking about outsourcing.
This is another conservative strategy for dealing with the state. If you hate and despise government employees. And you understand them as, you know, unbelievable human wickedness, right? What do you do about them? Well, the answer’s obvious. And at the same time, you believe in the market. You believe that private industry does everything better. You outsource the Federal workforce.
BILL MOYERS: Have we reached a stage where you make things bad enough that people despair and then you manipulate their despair into– to your own advantage in the next election?
THOMAS FRANK: It’s a cynical town, Washington, D.C. And the conservative movement tends to be deeply, deeply, deeply cynical about government. Now, it’s also, I mean, deeply idealistic about the market. I mean, the market can do no wrong, almost by definition. But government they regard as a criminal gang. I mean, many, many conservatives have compared– oh, they always do, compare government to criminals. All the time.
Taxation is a form of theft. It’s as bad as a mugger in the street saying, “Give me your money.” And America is pretty much unique among the nations in that our political system, half of our political system is basically dedicated to the destruction of the government from within. I don’t know any other country where that’s the case. But there’s plenty of countries where government works really, really well. I mean, even, for God’s sake, in India, you know, which we don’t think of as being an advanced industrial society, their banks didn’t all go bust in the latest downturn. Now, why is that?
Because their equivalent of the Federal Reserve was not, you know, deregulating, stopping enforcement. They weren’t doing any of those things. They were keeping a very tight lid on it. Government can work. It works all the time.
BILL MOYERS: You wrote “What’s the Matter with Kansas?” Let me ask you to broaden that canvas and ask, with the answer to the question, what’s the matter with America that we tolerate all of this?
THOMAS FRANK: I think a large part of it is that– well, it’s the chronic historical forgetting, you know? We just elected Barack Obama in this– you know, he had quite a mandate. You know, biggest majority of any President since Reagan. And now a year later, and the public is already turning on him. And that’s a part of the problem.
But, you know, another part of it is that the conservative argument about government and freedom is very compelling when they say that something like, you know, the national, you know, any proposal for a national health program is a violation of our freedom. Americans don’t like to hear that their freedom is being violated. That is a hot button argument. Now, the obvious– look, there’s an obvious response that Democrats could make. Which is no, this is a way of growing our freedom. This will actually expand human freedom, not limit it. They never say that.
BILL MOYERS: Why? So, part of the problem with America is the Democratic Party?
THOMAS FRANK: A huge part of the problem, because look, the conservatives have for decades now made their– the whole point of their party is to attack government, attack the state, encourage cynicism about government. And then wreck it when they’re in charge, right?
Democrats never defend the state. They never come out and say, “No, no. It’s important to have, you know, government. It’s important to have a Department of Labor. These are, you know, having government actually– a good government increases your freedom. It doesn’t ruin it.” They never fight back consistently.
THOMAS FRANK: I think they’re– some of them do. You’ve got members of Congress here and there that do. But by and large, the prominent leading Democrats in our society don’t do that. Why is that? Because I think that would get them in trouble with their funders. I mean, the power of money is huge in the political system. You know, despite all the efforts that have been made over the years to get money out of politics. It’s still immensely powerful.
BILL MOYERS: The book is Thomas Frank, “The Wrecking Crew.” The literary journal is “The Baffler.” Congratulations on both of them. And thanks for being with me on the Journal.
THOMAS FRANK: It was my pleasure.

The Biggest Engine of Economic Growth? 8 Ways Taxpayers and the Government Are Necessary to Capitalism

AlterNet [1] / By Colin Greer [2]  March 13, 2012


…conservatives have constantly attacked government. The drumbeat repeats the notion that the private sector can do everything better. “Privatize everything” is the mantra. It’s hard to imagine anything more destructive to our economy… spreading the big lie that government is too big, corrupt and wasteful without understanding just what government provides the economy and society…

the U.S. government has been the key engine of economic growth since the earliest days of the Republic— and it is now, but very few people realize that. Why? Because we don’t explain how government spending is woven into much of corporate success. We don’t counter that the government is constantly in an active, co-venture model with the for-profit sector in providing vast elements of infrastructure and directly creating technologies that the economy is dependent on, and corporations profit from…

Most everything the American capitalist system needs is provided by taxpayer dollars and government action. Here are eight examples.

1. Public Trust and Economic Infrastructure

2. Education and Social Knowledge

3. Relief in Crisis, Catastrophe, or Everyday Life

4. Regulation and the Public Good

5.  Massive Purchasing That Supports Businesses

6.  The Infrastructure in Which Everything Operates

7. The Labor Pool: Preparing Employees for the Private Sector

8.  Stimulus for Just About Everything

9. Direct Investment in the Creation of Key Innovations ing to produce natural gas.

10.  The New Phase of Social Welfare Financial Transfers


The view that the private sector is the independent engine of economic growth is obviously false. It’s time for an articulated economic framework which describes how the modern state has worked in an active co-venture with the for-profit sector…

Elizabeth Warren has clarified how the social web and the physical infrastructure that government supports is essential to market function, growth and wealth creation.  It makes sense to go a step further and clarify how government action and public dollars serve as a direct partner with the private sector in advancing growth and wealth. Then, it would not be so easy to take the money and run.

Full text

Dating back to Ronald Reagan, and even before, conservatives have constantly attacked government. The drumbeat repeats the notion that the private sector can do everything better. “Privatize everything” is the mantra. It’s hard to imagine anything more destructive to our economy. 

This presidential season, GOP candidates have revved up the maligning of government, and even liberals and Democrats join in the chorus, spreading the big lie that government is too big, corrupt and wasteful without understanding just what government provides the economy and society. 

A big part of the message is that the private sector is responsible for the progress and innovation that drive economic growth. Conservatives crow that private venture capital is what makes America great. Mega-millionaire Mitt Romney is the loudest on this point  — a man who made his money at Bain Capital, a venture operation known for buying companies, laying off workers and selling them off for big profits.

Yet the persistent view that the private sector is chiefly responsible for economic growth is false. Those who claim the superiority of private capital and insist that government is not effective as an inventor or venture capitalist should consider the history of the jet engine and the computer, to name just two inventions have been essential to progress and technology growth. They were both developed with public money. The Internet, too, was invented in a government laboratory in the late ’60s , and its early applications were heavily underwritten by the federal government.

Private Sector Corruption

We’ve all had our frustrating experiences with the government, from the local DMV to the IRS. But what about the aggravation and heartaches caused by many private sector operations? Are you really satisfied with cable TV, telephone companies, banks and the credit card industry? In their zeal to squeeze every cent from their customers, they seem to want to drive us insane. Where the private sector meets bureaucracy, there is waste and tons of corruption.

For example, recently JPMorgan Chase, whose CEO Jamie Dimon is both a media darling and for a while President Obama’s favorite banker, agreed to pay $110 million to settle a class-action suit for gouging its customers on overdraft transactions. JPMorgan Chase, like many banks, artificially re-ordered transactions to clear from highest to lowest in order to trigger many more overdrafts payments, basically cheating customers. To the public (those who heard about the settlement), $110 million seems like a lot of money. But it is only a lot if it cut greatly into the profits that were made with the overdraft bonanza.

Fortunately, journalist Jeff Horwitz of American Banker discovered that the bank generated $500 million a year in post-tax income from high-to-low re-sequencing, according to Chase’s own analysis. Thus, Chase’s settlement is very favorable to the bank, given that the $110 million offered is just 22 percent of its alleged earnings from wrongful overdraft fees. As the Huffington Post adds [3]: “When compared with the billions of dollars big banks have rung up in overdraft fees over the last decade, recent settlements with customers over unfair overdraft charges have amounted to little more than a slap on the wrist.”  

Now imagine the uproar from conservatives if the government had perpetrated this kind of fraud on U.S citizens. But do we hear calls for the end of private enterprise because of corruption and waste? Hardly.

Though we pay obeisance to the late Steve Jobs for the iPhone, researchers Michael Shellenberger and Ted Nordhaus have noted that all of its core technologies, from the microchips to GPS to the voice-control application, Siri, depended on years of Department of Defense funding. In fact, the U.S. government has been the key engine of economic growth since the earliest days of the Republic— and it is now, but very few people realize that. Why? Because we don’t explain how government spending is woven into much of corporate success. We don’t counter that the government is constantly in an active, co-venture model with the for-profit sector in providing vast elements of infrastructure and directly creating technologies that the economy is dependent on, and corporations profit from.

In addition to the constant propaganda attacking government, there is even research trying to claim that public funding of innovation has not been a key source of revenue and growth. But those studies are off for one major reason: they don’t look back far enough to where the innovations were funded.

In the San Francisco Chronicle Magazine [4], Shellenberger and Nordhaus lay out the most obvious examples of the government priming the pump of innovation. They remind us that the Air Force, and later NASA in the 1950s and 1960s, contracted with companies to make microchips — and loaned them money to build factories. It wasn’t until the ‘80s that personal computers took off, and increases in labor productivity didn’t translate into economic growth until the ‘90s. But it accounted for much of the post-1990s economic boom.

Another myth of the market capitalism narrative is that innovation comes out of market competition. But that notion, too, is tossed on its head. As Schellenberger and Nordhaus write, “Today’s relatively inexpensive jet travel began with Pentagon procurement and R&D for jet turbines in the 1940s and ’50s. But it took many decades before jet travel became accessible to the average American, and much of the rest of the world.”

Most everything the American capitalist system needs is provided by taxpayer dollars and government action. Here are eight examples.

1. Public Trust and Economic Infrastructure

The economic system would not function without the overall infrastructure that allows commerce to operate, including guaranteeing sovereign credit worthiness and currency protection. The economy also depends on the system of law and order that enforces contracts, copyright and trade agreements.

2. Education and Social Knowledge

Public schools, public universities, not-for-profit institutions of learning and research are all paid via government grants, tax exemptions and general tax revenues. Enormous amounts of government funds go to research in private universities, which then move out to private industries via technological innovation and production. This happens with food technology, drug development, medical discoveries and health solutions. In the 19th century, Land Grant colleges and farm extension programs built U.S. agriculture. The National Defense and Education Act (1958) put science in our schools and seeded generations of technology innovators and skilled workers.

3. Relief in Crisis, Catastrophe, or Everyday Life 

How do we spell relief? Try government. The human and social costs of economic and technological growth are borne by government— from unemployment insurance to emergency room hospital care for individuals. From food stamps and income tax credits to disaster relief and community development investment. Order and stability are maintained by the relief triggers pioneered by Bismark in the 19th century and Roosevelt in the 20th which were advanced in order “to save capitalism from itself.”

At the same time, social programs like Medicare, Medicaid and food stamps send government dollars to small businesses and retail and service providers across the country. Critics of the Affordable Health Care Act worry some about another open-ended entitlement. It is worth noting that the “open end” is at least as much about no price controls on drugs companies, cost of equipment by manufactures and hospitals, and the continued pressure for private insurance profits as it is about uncontrolled demand for service.

4. Regulation and the Public Good

The government protects food, air and water for the public good. It also shapes the successful operations of commerce via global trade agreements, tort and trust law, land use (which has long favored large property owners) builders and agricultural enterprises. New York City’s skyline of skyscrapers, including the World Trade Center, was created and recreated in the 1930s and the 1960s primarily through government spending. Rockefeller Center is most noteworthy as the first large Manhattan large-scale project to be entirely funded by private capital— but still with tax subsidies. In a parallel fashion, agricultural land-use, pesticides, farm loans and tax benefits have built agri-business’s monopoly on US food production.

5.  Massive Purchasing That Supports Businesses

Massive amounts of military and government purchasing account for a significant component of large and small business in production and service sectors. This happens at all levels — from federal to local, from schools to fire departments. For example, Starbucks is a significant recipient of military contracts. Such purchasing is the very essence of “pork barrel” economy.

6.  The Infrastructure in Which Everything Operates

At least since Alexander Hamilton’s plan for the Erie Canal, government has been key to the creation of national infrastructure. This is true for rail, road, sea and air travel. National electric power, too, is the result of government’s role via coal and gas subsidies, dam design and construction. Through such investment, government actually created commercial markets that didn’t otherwise exist. This huge order of spending virtually built whole states (e.g. Texas) where public investment and planning triggered modern growth.

7. The Labor Pool: Preparing Employees for the Private Sector

Labor rules are designed for the generation of an effective workforce. So are laws enacted to directly shape the character and timing of workforce availability. The GI Bill following WWII and including both Korea and Vietnam wars re-integrated some 3-4 million workers into the economy. Through subsidized university tuition payments and mortgages, both the real estate and higher education sectors grew exponentially as part of the socio-economy. Similarly, through both foreign and domestic trade policies: e.g. NAFTA, immigration law and foreign aid, government expenditures all directly impact private sector annual and seasonal labor flow, capital markets, and profits.

8.  Stimulus for Just About Everything

Government provides stimulus to for-profit enterprise via tax codes, tax subsidies exemptions and the application and/or release of fiscal and monetary controls. Government loan guarantees for deposit bank accounts are central to American fiscal health; the FDIC insurance program has freed banks to invest with the public as the creditor of last result. Currently, tax abatements are used to entice business and to attract it to particular locations. The film industry receives major abatements for bringing filmmaking to particular states. In some instances, the value of this allowance reaches 42 percent of the overall production costs of a movie. The rationale for these tax credits is that jobs will be developed locally.

9. Direct Investment in the Creation of Key Innovations 

This is perhaps the most unseen of government’s functions. As a silent partner, government brought massive capital investment to the advancement of technological research and development with no return on investment beyond tax revenue growth to capture it. Phone, radio, TV, computers, the satellite system, nylon (invented in place of silk as war with Japan loomed), Velcro, and breakthrough drugs were all the result of intense public investment in university and corporate research and development.

R +D is a key aspect from this sphere of activity. Most recently and quite typical is the long-term government investment in drilling technologies, 3-D imagining and geological mapping. All have now been given over to the private profit through fracking to produce natural gas.

So government, then and now, serves as a venture capitalist. But the government does not get a return on investment or equity stake—the very conditions Warren Buffet required for his “bail out” investment in Goldman Sachs. (TARP is actually the first government investment to return any interest on investment at all; but of course, with no equity stake.) Further, public debt itself, while a mind-boggling size, actually adds enormous profit to the lenders— many of whom also benefit in the current crisis climate from Federal Reserve no interest loans, which were used for relending at a profit.

10.  The New Phase of Social Welfare Financial Transfers

This is the newest area of commercial profit-taking from government investment. It results from the recognition that the goods and services that are provided by the public sector are an area of enormous spending that can generate great returns for private providers. That’s why we see robust campaigns for private school vouchers, for-profit charter schools, and pecuniary on-line learning through all the grades. Despite the rhetoric that disdains public services, the “social welfare services” established over several decades for public benefit are being transferred to private enterprise. Notwithstanding claims to the contrary, this form of profit-based delivery is not less costly, nor more effective. But it is highly profitable. On both the criteria of effectiveness and profit, witness the current expenditures and results in prisons and in privatized schools and collegiate education.

In this same vein, the new national health care individual mandate is a direct partnership with private insurers that will inure to their great profit. Furthermore, the Republican idea of privatizing Social Security and Medicare would be a boon to the denizens of private wealth creation. Boom and bust cycles will likely massacre the pensions of retired workers, but they will barely dent the long term profitability of investment houses.

The demise of an industrial and manufacturing economy in the U.S. and the periodic declining rate of profit has made public capital a target treasure trove for corporations— which can now take “welfare” as the “persons” the Supreme Court in their egregious decision in Citizens United declared them to be.


The view that the private sector is the independent engine of economic growth is obviously false. It’s time for an articulated economic framework which describes how the modern state has worked in an active co-venture with the for-profit sector.

Who knows what kind of tax system on debt position the nation would be in if we had created  a venture capital bank that explicitly shared in commercial revenues as all venture capitalists do? Put another way, what would a public finance system look like if the public shared the private profit and personal wealth that was made with the help of our money?

Elizabeth Warren has clarified how the social web and the physical infrastructure that government supports is essential to market function, growth and wealth creation.  It makes sense to go a step further and clarify how government action and public dollars serve as a direct partner with the private sector in advancing growth and wealth. Then, it would not be so easy to take the money and run.

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The Deadly Secret About the Fiscal Cliff Charade

Campaign for America’s Future [1] / By Richard (RJ) Eskow [2] Published on Alternet (  January 4, 2013  |

Imagine a nation with a terrible problem – one its leaders refuse to discuss. The problem will needlessly drain trillions of dollars from its economy in the next ten years.

Now imagine that this problem also robs that nation’s citizens of life itself, draining years from their lifespans while depriving them of large sums of money. Imagine that it sickens and disables countless others, drives many people into bankrupcty, and kills more than two newborn infants out of every thousand born.

Imagine that fixing this problem would make result in a dramatic decline in publicly-held debt. It wouldn’t just “help” the debt problem, mind you – it would cause that debt to plunge [3].

And now imagine a national “deficit debate” which completely ignores this problem.

Imagine a news media which pretends the problem doesn’t exist. Imagine a corporate-funded “Fix the Debt” movement that refuses to mention it, and yet is treated as an objective source of information. Imagine a political consensus in which the debate isn’t around how to fix this problem, but how to cut service programs that help people cope with it.

Welcome to the United States of America, January 2012.  It’s a land where the population is broke, sick, gypped, and mistreated. But the problem’s fixable – if we can find the political will.


The problem, of course, is our health care system – although “system” seems like a flattering word for this greed-driven, anarchic three-ring circus. Our health care system – guess we’ll need to call it that for lack of an alternativer – is the worst in the developed world. It costs far more, provides much less, and has worse outcomes than any system that’s even remotely comparable.

How bad is it?

Our health care spending is 17.6 percent of GDP , compared with an average of 9.6 percent for all developed countries. (All figures are from the compendium of health and economic statistics [4] published by the Organization for Economic Cooperation and Development ( OECD ), unless otherwise indicated.)

Total health spending (from all sources, not just insurance-related) averages $7,960 per person in the United States, versus an average of $3,233 for all developed countries.

If we spent the same on health as the average developed country (as a percentage of GDP ) that would inject more than a trillion dollars per year into other parts of the economy. ( 1.14 trillion, by my rough calculation.)


What are we getting for our money?

  • Life expectancy at birth in the United States is 78.2 years, compared with an OECD average of 79.5 years and Japan’s life expectancy of 83 years.Our expected lifespan is the shortest of any among the countries we normally think of as “developed.” The ones that trail us are newer entrants into the “developed” category — like Mexico, Turkey, Brazil, Indonesia, and the Eastern European countries.
  • Our infant mortality rate is 6.5 deaths per 1,000 live births, as opposed to the OECD average of 4.4 deaths. As with life expectancy, we lag behind all the other long-term “developed” nations.
  • We score even more poorly on another metric, “Premature Mortality,” which measures the number of years someone loses “before their time” (essentially by calculating how many years it would have taken on average to reach the age of 70).

Our high rates of premature mortality are affected by our high rates of accidents and suicide, too, and from a homicide rate for males that’s five times the average. (That’s a figure worth citing in the gun control debate.)


The question becomes, Why? Why do we pay so much and get so little for our money?

Part of the answer lies in the fact that, despite the high cost of private-insurance premiums, our health plans don’t provide enough coverage. According to survey data, Americans were unable to meet their medical needs because of cost more often than citizens of ten comparable countries ( OECD , Table 6.1.3).

That statistic applied to lower-income Americans, as might be expected. But interestingly, it was also true for higher-income Americans – those that are most likely to have private health insurance. 39 percent of Americans with higher-than-average income had an unmet medical need due to cost in 2010. For the runner-up, Germany, that figure was 27 percent. (It was 12 percent in Switzlerland and 4 percent in Great Britain.)

Higher-income Americans also led the pack in reporting out-of-pocket expenditures of $1,000 or more per year, along with their lower-income peers, with 45 percent in the higher-earner category spending that much or more per year. The figure was 37 percent for runner-up Switzerland. It was 2 percent in Sweden. And in much-reviled “socialist” Great Britain the figure was effectively zero.

These results reinforce the findings of studies on medical bankruptcies by Prof. Elizabeth Warren, which showed that medical costs were a dominant reason for bankruptcy even for people with health insurance. (She was officially sworn in as Senator Warren today – congratulations!)


Where does all the money go? Much of it goes to profit margins for private insurance companies, of course. (They’re experts at understanding their margins, which are much higher than most observers believe.)  There are also profit margins for a number of health providers, including for-profit hospitals, medical imaging companies, and physician practice management groups.

Underlying much of our explosive cost growth is the phenomenon we described in “Sick Money [5]“: Investors like Bain Capital buy up health care companies, load them up with debt, and demand highly aggressive profit margins. Many of them respond to the problem the way the Bain companies did in our piece: through fraud.

But many other providers overtreat, subjecting the population to a barrage of needless (and sometimes invasive) procedures while other basic health needs go unmet.

Here are two more OECD statistics that illustrate the point:

The United States is second only to technology-crazed Japan in the prevalence of high-cost (and high profit) MRI and CT devices for medical imaging, both in hospitals and in free-standing facilities. Many American facilities were financed by physicians who send their patients there, which poses a significant conflict of interest and which both public and private insurers have been attempting to limit. Many others are owned by sales-driven chains. Unsurprisingly, studies suggest there is significant overuse of this equipment in the United States.

And let’s not forget drugs. When it comes to per-person pharmaceutical costs the United States is off the charts, spending $947 per person on average. That’s nearly twice the OECD average of $487.

And remember: Congress won’t even let Medicare negotiate with the drug companies.


Pharmaceutical corporations, for-profit hospital companies, private insurers — our system is sick. The diagnosis: Corporate greed.

Our “sick secret” can be fixed. In our next piece we’ll discuss how to attack it — and what it will take to shift the debate away from a “consensus” plan to adopt the miserly failures of austerity and toward real solutions that can restore our Federal budget – and us – to health.

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Bubble on the Potomac

By ANDREW FERGUSON, Time,  May. 28, 2012

The passenger bar, about 12 blocks from the White House, is just beginning the first seating of the night in its Columbia Room, a semisecret speakeasy behind an unmarked door in the back. Speakeasies are very fashionable in Washington at the moment–bars within bars, inner sanctums set aside for the most discriminating palates. But the Columbia Room is a particularly hot ticket. If you’re lucky, you’ll get a reservation a few days in advance. For $67 a head, an expert bartender serves a three-course tasting of cocktails. He carves a thick slice of lemon rind, places his hands slightly above and 10 inches back from the cocktail glass and with a snapping motion sends a scattering of lemon drops across the icy surface of what one magazine calls “the best martini in America.”

The Passenger’s motto? “God save the district.” The sentiment is easy to understand, for these are good times in Washington and the seven counties that surround it. Even as the nation struggles, the capital has prospered, making it a magnet for young hipsters but leaving its residents with only a tentative understanding of how the rest of the country lives. “It’s nice,” goes the old joke about Miami, “because it’s so close to the United States.” Well, Washington is very nice these days.

Every week brings fresh evidence of continuing prosperity: a new restaurant, a new nightclub, another restored 19th century townhouse in a previously dodgy neighborhood selling for $1 million or more. Start-ups are hiring through Craigslist, and just opened lobbying firms have no trouble collaring clients. Storefronts that stood abandoned five years ago fill with pricey gourmet-food shops like Cowgirl Creamery, a cheesemonger that has opened its only store outside Northern California on F Street downtown. Its Mt. Tam cheese goes for more than $25 per pound. It’s organic.

Another Northern California import, a limousine service called Uber, launched in December after great success in San Francisco and New York City. “The growth here has been unique in our experience,” says Rachel Holt, who oversees Uber’s burgeoning D.C. operation. Uber is Web-based and cashless: customers call for limos with a smart-phone app and pay with a credit card on file. It’s also deluxe. Riders expect nothing lower on the limo food chain than a Town Car, with offerings going up to Mercedes and beyond. Holt says with some surprise that locals are using Uber as everyday conveyance for commuting and shopping. Uber exploits Washington’s unique combination of heavy use of social media, a young and often carless population and customers with fistfuls of disposable income. When the D.C. taxi commission made a move to shut down Uber earlier this year, Twitter erupted in indignation under the hashtag #Nevergoingback. Welcome to ber-Washington.

The Good Life

Other big cities, of course, have made it through the recession in one piece. But few eased through the crash as lightly as D.C., much less prospered so widely on the rebound. The local unemployment rate, at 5.5%, stands well below the national figure of 8.2%. The region’s foreclosure rates have always been significantly lower than those elsewhere, and now housing prices in D.C. and across the river in the Virginia suburbs of Arlington and Alexandria are close to their precrash peaks. The Association of Foreign Investors in Real Estate–in Washington, everyone has an association–ranks the region as one of the best investments in the world, right after London and New York City. The cost of office space in Washington rivals New York prices, averaging $50 a square foot.

How’s a country to make sense of a national capital whose day-to-day life is so much more upholstered than its own? Increasingly, it cannot. Recently Washington passed San Jose in Silicon Valley to become the richest metropolitan area in the U.S. Since the 1990s, says economist Stephen Fuller of George Mason University, the region has led the nation’s metropolitan areas in overall employment rate. The median household income in the metro area in 2010 was $84,523, according to calculations by Bloomberg News, nearly 70% over the national median household income of $50,046. Nine of the 15 richest counties in the country surround Washington, including Nos. 1, 3, 4 and 5. Per capita income in D.C. is more than twice that in Maine. All this explains why Gallup’s Well-Being Index rates D.C. as the most satisfied large metropolitan area in the U.S. The pollsters were especially impressed with the region’s low smoking rate (15%) and the 72% who visit the dentist annually for a checkup. Washingtonians are skinnier, exercise more, eat more vegetables and are more likely to have health insurance than the average American. They’re also more optimistic–about the economy and about the future in general.

The riches reflect a regional economy as resilient–and as strange–as any in the world. “We don’t make anything here,” Fuller says simply. Washington is one of the few metropolitan areas in the country that have no significant manufacturing sector, placing it alongside Atlantic City, N.J.; Myrtle Beach, S.C.; Cape Cod, Massachusetts; and Ocean City, N.J. “There isn’t any single major industry,” says Jim Dinegar, president of the Greater Washington Board of Trade. “We’re just very diverse.”

The District of Contracting

Yet the diversity of the Washington economy is an illusion, for each of its business sectors is to some degree a creature of the region’s single great industry–the federal government. According to a 2007 report by the Tax Foundation, for every dollar in taxes Washington sends to the federal government, it receives five in return. Fuller says that over the past 30 years, the federal government has spent $860 billion in the D.C. region, two-thirds of that since 9/11.

Why the boom? The size of the nonmilitary, nonpostal federal workforce has stayed relatively stable since the 1960s. What has changed is not the government payroll but the number of government contractors. It’s estimated that, thanks to massive outsourcing over the past 20 years by the Clinton and Bush administrations, there are two government contractors for every worker directly employed by the government. Federal contracting is the region’s great growth industry. A government contractor can even hire contractors for help in getting more government contracts. You could call those guys government-contract contractors.

Which means government hasn’t shrunk; it’s just changed clothes (and pretty nice clothes they are). The contractors are famous for secrecy; many have job titles that are designed to bewilder. What is it, after all, that an analyst, a facilitator, a consultant, an adviser, a strategist actually does to earn his or her paycheck? Champions of the capital’s Shangri-la economy like to brag of Washington’s knowledge workers.

Peter Corbett isn’t so sure about the wisdom of D.C.’s version of the knowledge economy. Corbett heads a social-media marketing company, with corporate clients that have famous names. Most of his work involves nonprofit foundations that have flocked to Washington to be close to the fount of grants and tax breaks. He did a single project for the federal government and then swore it off for good. He describes his first meeting at the Pentagon. “There are 12 people sitting around the table,” he says. “I didn’t know eight of them. I said, ‘Who are you?’ They say, ‘I’m with Booz Allen.’ ‘I’m with Lockheed.’ ‘I’m with CACI.’ ‘But why are you here?’ ‘We’re consultants on your project.’ I said, ‘You are?’ They were charging the government $300 an hour, and I had no idea what they were doing, and neither did they. They were just there. So I just ignored them and did my project with my own people.”

Aside from its wealth, the single defining feature of ber-Washington is its youth. Most of the people who have moved to Washington since 2006 have been under 35; the region has the highest percentage of 25-to-34-year-olds in the U.S. “We’re a mecca for young people,” Fuller says. One recent arrival says word has gotten out to new graduates that Washington is where the work is. “It’s a place where a liberal-arts major can still get a job,” she says, “because you don’t need a particular skill.”

The Conveyor Belt

The young fill entire neighborhoods with an undergraduate air. On a warm night in Clarendon in northern Virginia or in the H Street NE corridor, with the crowded sidewalks and lines outside the door-to-door bars, you might think you’ve landed on fraternity row in Chapel Hill, N.C., or Charlottesville, Va. They’ve brought the college lifestyle with them–group houses, hookups, late-night cram sessions and lots of drinking. The local drugstores seem to devote more shelf space to condoms and pregnancy tests than diapers and formula. (Another big seller at pharmacies: Pedialyte, used as the ultimate hangover cure.)

No one doubts that the kids are changing the city. When Shana Glickfield, founder of a social-media firm, arrived in Washington in the early 2000s, one of her ears was triple-pierced. “I had to go up on [Capitol] Hill, and everybody said, You can’t do that, not if you’re going to the Hill!” she says. “Now I see Hill staffers with nose rings.” The 20-somethings have helped Washington shed its image as an uptight, work-first, party-later town. “Happy hour is the most important hour of the day,” says Emily Schultheis, a Web editor and recent arrival. “It’s how you meet people, how you get jobs, how you find roommates, how you get tips for stories and how you get in trouble.” Hill staffers devote Thursday nights to “wheels up” parties. “Congress goes out of session on Thursdays,” says Abra Belke, a lobbyist and blogger who calls herself Belle and writes the popular blog Capitol Hill Style. “Most of the bosses go home for the weekend. So you put your boss on the plane, wheels up, and then–freedom!”

ber-Washington has its own career pattern that is becoming as routinized as that of a 1950s organization man. A student graduates and goes to Washington for an internship, usually unpaid, which qualifies her for another internship, perhaps paid, until an entry-level job is offered, as it almost always will be. “Then you work for a few years,” Glickfield explains, “and then you go off and get the next degree, law or business, and then you come back for a better job.” Colleges and universities have figured this out and moved quickly to get a place on the conveyor belt. Big state schools and smaller liberal-arts colleges occupy office buildings in the city, where they run sophisticated internship programs designed to place their graduates (and soon-to-be graduates) in one of the country’s few hot job markets.

As national politics makes it impossible to expand government explicitly, these interns–often underpaid, usually overworked and frequently subsidized by their parents–have become vital to keeping government going. At the same time, they contribute to a feature of ber-Washington that too often goes unremarked: the capital has one of the most lopsided distributions of wealth of any major metropolitan area in the U.S. Along with a higher per capita income than any state and one of the nation’s lowest rates of unemployment, Washington has a poverty rate of nearly 20%, above the national average of 15%; a public-school system that is often called the worst in the nation; and a crime rate that remains higher than in any other rich community. In the district, whites enjoy a per capita income nearly three times that of African Americans.

You can often see the maldistribution of Washington’s riches block by block–even on the same block, row house by row house–as young, well-to-do high achievers move into neighborhoods that real estate agents label hot, buying up properties, planting flower boxes and tending little squares of lawn behind wrought-iron fences, next to an abandoned building or a vacant lot or a home where a fatherless family is just scraping by. Most ber-Washingtonians say they like the urban grit. The crime and decay amid the plenty, says local activist Danny Harris, “are the price you pay if you want to live in an urban environment.” The disequilibrium especially bothers Harris, he says, when it signals a civic detachment among his fellow young strivers. “You can have people who know every nuance of our policy toward Burma,” he says, “but they don’t know the name of the public school down the block.”

Greener than Thou

Socially and culturally, life in ber-Washington can seem as insular as its economy, and the insularity has consequences for the rest of the country. ber-Washingtonians, for instance, are intensely concerned about the environment. The local economy bristles with company names like GreenBrilliance and SkyBuilt Power. But the unreal character of that economy makes it easy for Washingtonians to overestimate the ability or the desire of their fellow Americans to live as they do. In ber-Washington, the private automobile is looked on as at best a necessary nuisance and at worst a morally suspect source of sprawl and climate change. Many Washingtonians are eager to tell you they don’t own one, preferring a highly subsidized commute on the Metro system’s carpeted (if often unreliable) subway cars. Even Uber, the limo service, has been hailed on blogs as a green innovation, notwithstanding its emanations of conspicuous consumption. Bike-share racks have sprung up downtown and in the close-in suburbs to take advantage of the newly painted bike lanes that have squeezed grand thoroughfares like 14th Street down to two lanes. Local authorities have reserved hundreds of parking spaces exclusively for Zipcars, which customers rent for an hour or a day in place of buying a car of their own. The Zipcar motto: “Cars with a conscience.”

No doubt the conscience thrives as much in Youngstown, Ohio, as it does in Washington, but you don’t see many locals there trading their minivans for Zipcars or rent-a-bikes. Fracking for natural gas is regulated from Washington, where it is viewed with suspicion; in Pennsylvania and North Dakota, it is a source of potential riches and a better life. The sight of an oil platform may lift the heart of a worker struggling on the Gulf Coast; ber-Washingtonians have a different impression. In D.C., if in few other places, half a billion dollars lost to a solar company like Solyndra can seem to be the price of being conscientious. At the same time, life in Washington is so comfortable that it is easy for those living there to imagine that the rest of the country is doing just fine too. Aren’t restaurants in your hometown packed at 10 p.m. on a Monday? No? Really?

No End in Sight

How long can such a culture of complacency last, even one as heavily subsidized by a country as rich as the U.S., in the face of awesome government debt?

It is a soft spring evening. The office buildings downtown are emptying out, and the bars are filling up for happy hour. Uber cars are out in force, Town Cars and Benzes rolling down 14th, up Ninth, under the overspreading oaks of Logan Circle and back down Vermont, past the Churchkey, where 555 kinds of beer are on offer. Its list gives each beer’s alcohol content and country of origin, the hops used to brew it and the temperature at which it will be served. The menu offers nibbles from the other America, served with the requisite irony: disco fries, a staple of the Jersey Shore, and a deep-fried macaroni-and-cheese stick familiar to fans of Midwestern state fairs. There’s also pricey charcuterie for those who don’t get the joke. Seven blocks east and a few blocks south, at the edge of the Penn Quarter neighborhood, six diners take their places at Minibar. In a city quickly becoming famous for tony restaurants, they are the luckiest feeders of the night: Minibar takes reservations a minimum of a month in advance for six seats from supplicants who must call precisely at 10 a.m., usually for several days in a row, sometimes for weeks. The meal they savor has 25 to 30 courses. The cost: $150.

The optimism of ber-Washingtonians so far survives the unspoken worry about a coming age of austerity, in which government spending cuts would end the high life that Washingtonians have come to expect. They are right to be optimistic. The two most plausible deficit-reduction proposals–one by President Obama, the other by the Republican-controlled House Budget Committee–each calls for the government in 2021 to spend a trillion dollars more than it spends today.


Some Better Targets for the People Who Hate Government

by Paul Buchheit, December 10, 2012 by Common Dreams

One of the pleasures of a weekend away from the city is visiting with people who express points of view that are different from my own. A lot of them hate government. Their comments are sprinkled with colorful references to taxes, waste, and socialism.

Countering with facts and statistics doesn’t seem to work. Instead, listening to their rants can be educational for a progressive, because the anti-government sentiment highlights the masterful job done by conservatives and the wealthy over the years, as they have basically convinced much of America to argue against themselves on matters of politics and the economy.

It would make more sense to take on the real villains.

1. Medical Providers

They’re taking a lot more of our money than Medicare does. According to the Council for Affordable Health Insurance, medical administrative costs as a percentage of claims are about three times higher for private insurance than for Medicare. The U.S. Institute of Medicine reports that the for-profit system wastes $750 billion a year on waste, fraud, and inefficiency. As a percent of GDP, we spend $1.2 trillion more than the OECD average.

That’s an amount equal to the entire deficit wasted on private medical care companies. One out of every six dollars we earn goes to doctors, hospitals, drug companies, and insurance companies. All good reasons to redirect our hatred.

2. Retirement Brokers

Various reports have concluded that administrative costs for 401(k) plans are much higher than those for Social Security — up to twenty times more.

It would be difficult to find, or even imagine, any short-term-profit-based private insurer that is fully funded for the next 25 years. Social Security is. It works for all retirees while private plans work for a limited number of investors.

3. Banks

Government is often blamed for local budget shortfalls, but cities and towns around the country have been repeatedly victimized by a “bid-rigging” process that diverts billions of dollars — a few thousand at a time — from numerous unsuspecting communities to the accounts of a few big banks.

Individual homeowners, especially minorities, have also been victimized by the banks. Because of the housing crash and the corresponding decrease in home values, black households lost over half of their median wealth, and Hispanic households almost two-thirds.

There are scandals and scams galore: the privately run Mortgage Electronic Registration System (MERS) headed up the illegal foreclosure business; the banking association LIBOR was guilty of interest rate manipulation; and plenty of financial institutions have engaged in the subtle art of imposing hidden fees. Credit cards are loaded with “gray charges” like surprise subscriptions and auto-renewals that cost the average consumer $356 a year.

Yet we’re forced to keep paying. Shockingly, it has been estimated that 40% of every dollar we spend on goods and services goes to banks as interest.

Public banks, on the other hand, focus on the needs of communities and small businesses rather than on investors. The most well-known example is the Bank of North Dakota (BND), which has successfully worked with local banks throughout the state, promoting business growth through loans that a larger bank might be reluctant to make, while managing to turn a profit every year for the past 40 years.

4. Higher Education Operators

Outside of the banking industry, there may not be a more egregious example of public abuse than the expropriation of higher education by profit-seekers who have subjected underemployed young people to years of student loan obligations. The collection of outstanding student debt is managed in good part by big banks like JP Morgan and Citigroup.

In most countries tuition remains free or nominal, but in America, as noted by Noam Chomsky, the belief that education strengthens a country is giving way to a philosophy of paying for your own educational benefits. Meanwhile, the “corporatization of universities” has led to a dramatic increase in administrators while relatively expensive programs like nursing, engineering and computer science are being cut.

But the easy loans keep accruing interest long after college ends. With a hint of foreboding, the Consumer Financial Protection Bureau and Department of Education reported that the student loan debacle has been fueled by the same forces that led to the subprime mortgage collapse.

5. Big Box and Fast Food Companies

Smaller government is promoted by the very companies that make record profits while forcing their employees to accept public assistance.

While McDonald’s enjoyed profits of 130 percent over the past four years, and Yum! Brands (Pizza Hut, Taco Bell and KFC) made 45 percent, and while the Walton family made $20 billion in one year, the median hourly wage for food service workers and Walmart employees is about $9 an hour. Many workers are stuck at the $7.25 minimum wage, which according to the National Employment Law Project is worth 30 percent less than in 1968.

Food service and big box store employees, among the fastest-growing job segments in the nation, are making barely enough to stay out of poverty. And it’s not just the employees who are subsidizing their bosses. We all are. Low-wage employees are more dependent on the food stamps and Medicaid that are paid for by our tax dollars.

Some Alternative Targets: Panic, Poison, Plowing, Postage, Prison

What is the incentive for private companies to deal with tragedies like Hurricane Sandy? The Pacific Standard aptly stated that “the free market doesn’t want to be in the flood business.”

What is the incentive for private companies to keep the poisons out of our drinking water? Without sufficient government regulations the Clean Water Act was violated a half-million times in one year.

What is the incentive for private companies to plow the county roads? Or to reduce the number of prisoners in profit-seeking prisons? Or to allow you to send a birthday card for just 45 cents? Or to simply treat its customers with respect rather than as a source of profit?

The “invisible hand” of the free market is unable, or unwilling, to satisfy the needs of society in all these areas. For that it is worthy of our contempt.

Paul Buchheit is a college teacher, an active member of US Uncut Chicago, founder and developer of social justice and educational websites (,,, and the editor and main author of “American Wars: Illusions and Realities” (Clarity Press). He can be reached at

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Survey shows falling satisfaction among federal employees

By Joe Davidson, Washington Post,  December , 2012

When he released a federal worker survey on the afternoon before Thanksgiving, Office of Personnel Management Director John Berry forthrightly noted that “continued tight budgets and pay freezes” contributed to many lower ratings.

The report goes a bit further, suggesting “the downward trend of many of the survey items . . . suggest that the continued tight budgets, salary freezes and general public opinion of federal service are beginning to take a toll on even the most committed employees.”

Those reasons and the findings should serve as a cautionary note to Congress and the Obama administration as they look for ways to cut spending in an attempt to avoid the “fiscal cliff.”

Yet, the reasons given for the falling marks in the Federal Employee Viewpoint Survey don’t fully explain the degree of discontent indicated by details deep in the report.

But before we focus on the negative, here’s the positive.

“Even faced with difficult and uncertain times, nearly all federal employees (90 percent or more) report the work they do is important, are constantly looking for ways to better do their jobs and are willing to put in the extra effort to get the job done,” the report says.

“Over 80 percent of employees like the work they do, understand how their work relates to their agency’s goals and priorities, and rate the overall quality of the work done by their work unit as high. Employees feel they are held accountable for achieving results and know what is expected of them. Nearly three out of four employees believe their agency is successful at accomplishing its mission, feel that their co-workers cooperate to get the job done, and feel they have enough information to do their job well.”

That’s cool, but why are so many other indicators pointed the wrong way, literally?

The report’s Appendix D, which contains a trend analysis for the years 2008, 2010, 2011 and 2012. indicates that there is far more bad news than good within the workforce this year. The appendix uses arrows to show significant trends in 84 categories. How many have arrows pointed up for positive movement from 2011 to 2012?

Two. Just two out of 84.

“How would you rate the overall quality of work done by your work unit?” (82.2 percent in 2011 to 83.4 percent in 2012) and “how satisfied are you with . . . telework” (69.7 to 72.9) are the only questions that rated upward arrows.

Many items that fell don’t appear directly linked to the budget problems Berry cited. John Palguta, who has examined the report for the Partnership for Public Service, said there might be a “halo effect” that allows the bad vibes of the pay freeze and budget cuts to influence perception of other issues.

“The biggest thing,” he said, is “increasing workload and decreasing resources.” The partnership uses the survey to formulate its Best Places to Work in the Federal Government, which will be released Thursday. (The partnership has a content-sharing relationship with The Washington Post.)

Several questions with falling positive replies are related more to the leadership of managers and supervisors than to their budgets. For example, after a steady rise from 2008 through 2011 (40.2 to 45.0), this year saw a drop in the percentage (42.9) who responded positively to “in my organization, leaders generate high levels of motivation and commitment in the workforce.”

Even positive replies to “I believe the results of this survey will be used to make my agency a better place to work” fell from 2011 to 2012 (45.3 to 42.4).

But at the same time, at least a couple of items that do seem related to budgets increased in positive replies, although to a tiny degree. “I have sufficient resources . . . to get my job done” (48.0) and “Physical conditions . . . allow employees to perform their jobs well” (67.5) each rose by 0.2 percentage points from last year to this, not enough to rate an upward arrow in the appendix.

Jonathan Foley, OPM’s director of planning and policy analysis, takes a longer view, going back four years. Overall, it indicates an upward trend beginning in 2008, he said, “and so what we see this year is essentially a leveling off.”

That is true in some cases. The improved response to “I can disclose a suspected violation of any law, rule or regulation without fear or reprisal” is an example. The percentage of positive replies rose substantially from 54.8 in 2008 to 62.5 last year. The question scored a down arrow this year because the percent positive fell slightly to 61.5.

In other cases, the fall below 2008 levels is troubling. Then, 83.9 percent said “the people I work with cooperate to get the job done.” This year, 72.8 agreed. Cooperation doesn’t come with a price tag. Both these items probably have more to do with managers than money.

While the wave of downward arrows is dispiriting, Palguta, the optimist, sees the silver lining.

This year, he said, probably represents a “bottoming out.”

“Barring something unusual,” he predicted, “2013 should be an up year.”

Previous columns by Joe Davidson are available at

Life, Death and Deficits

by Paul Krugman, The New York Times, November 16, 2012

America’s political landscape is infested with many zombie ideas — beliefs about policy that have been repeatedly refuted with evidence and analysis but refuse to die. The most prominent zombie is the insistence that low taxes on rich people are the key to prosperity. But there are others.

And right now the most dangerous zombie is probably the claim that rising life expectancy justifies a rise in both the Social Security retirement age and the age of eligibility for Medicare. Even some Democrats — including, according to reports, the president — have seemed susceptible to this argument. But it’s a cruel, foolish idea — cruel in the case of Social Security, foolish in the case of Medicare — and we shouldn’t let it eat our brains.

First of all, you need to understand that while life expectancy at birth has gone up a lot, that’s not relevant to this issue; what matters is life expectancy for those at or near retirement age. When, to take one example, Alan Simpson — the co-chairman of President Obama’s deficit commission — declared that Social Security was “never intended as a retirement program” because life expectancy when it was founded was only 63, he was displaying his ignorance. Even in 1940, Americans who made it to age 65 generally had many years left.

Now, life expectancy at age 65 has risen, too. But the rise has been very uneven since the 1970s, with only the relatively affluent and well-educated seeing large gains. Bear in mind, too, that the full retirement age has already gone up to 66 and is scheduled to rise to 67 under current law.

This means that any further rise in the retirement age would be a harsh blow to Americans in the bottom half of the income distribution, who aren’t living much longer, and who, in many cases, have jobs requiring physical effort that’s difficult even for healthy seniors. And these are precisely the people who depend most on Social Security.

So any rise in the Social Security retirement age would, as I said, be cruel, hurting the most vulnerable Americans. And this cruelty would be gratuitous: While the United States does have a long-run budget problem, Social Security is not a major factor in that problem.

Medicare, on the other hand, is a big budget problem. But raising the eligibility age, which means forcing seniors to seek private insurance, is no way to deal with that problem.

It’s true that thanks to Obamacare, seniors should actually be able to get insurance even without Medicare. (Although, what happens if a number of states block the expansion of Medicaid that’s a crucial piece of the program?) But let’s be clear: Government insurance via Medicare is better and more cost-effective than private insurance.

You might ask why, in that case, health reform didn’t just extend Medicare to everyone, as opposed to setting up a system that continues to rely on private insurers. The answer, of course, is political realism. Given the power of the insurance industry, the Obama administration had to keep that industry in the loop. But the fact that Medicare for all may have been politically out of reach is no reason to push millions of Americans out of a good system into a worse one.

What would happen if we raised the Medicare eligibility age? The federal government would save only a small amount of money, because younger seniors are relatively healthy and hence low-cost. Meanwhile, however, those seniors would face sharply higher out-of-pocket costs. How could this trade-off be considered good policy?

The bottom line is that raising the age of eligibility for either Social Security benefits or Medicare would be destructive, making Americans’ lives worse without contributing in any significant way to deficit reduction. Democrats, in particular, who even consider either alternative need to ask themselves what on earth they think they’re doing.

But what, ask the deficit scolds, do people like me propose doing about rising spending? The answer is to do what every other advanced country does, and make a serious effort to rein in health care costs. Give Medicare the ability to bargain over drug prices. Let the Independent Payment Advisory Board, created as part of Obamacare to help Medicare control costs, do its job instead of crying “death panels.” (And isn’t it odd that the same people who demagogue attempts to help Medicare save money are eager to throw millions of people out of the program altogether?) We know that we have a health care system with skewed incentives and bloated costs, so why don’t we try to fix it?

What we know for sure is that there is no good case for denying older Americans access to the programs they count on. This should be a red line in any budget negotiations, and we can only hope that Mr. Obama doesn’t betray his supporters by crossing it.

© 2012 The New York Times

Paul Krugman is professor of Economics and International Affairs at Princeton University and a regular columnist for The New York Times. Krugman was the 2008 recipient of the Nobel Prize in Economics. He is the author of numerous books, including The Conscience of A Liberal, The Return of Depression Economics, and his most recent, End This Depression Now!.

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Obama Won, But He Still Has to Contend with Millions of Americans Taught to Hate Their Own Government

By Robert Parry [2, Consortium News [1] November 8, 2012|

As Campaign 2012 ends, it is clear that perhaps the most profound transformation of American politics in recent decades has been the Right’s successful demonization of the federal government and its role in national life. Tens of millions of voters, especially white men, buy into Ronald Reagan’s dictum that “government is the problem.”

This animosity toward the federal government explains not only the Tea Party’s victories in 2010 but the buoyancy of Mitt Romney’s candidacy in 2012 despite his stunningly dishonest campaign and his off-putting political persona.

The hard truth for liberals and progressives is that the Right’s imposing propaganda machinery can make pretty much make anything into anything, whatever serves the Right’s ideological and political needs, while the Left has nothing to compare to this right-wing capability.

For instance, the Right’s propaganda has convinced many Americans of a bogus historical narrative which has the Framers enacting the Constitution as a states’-rights document designed to have a weak central government – when the reality was nearly the opposite.

The key Framers, James Madison and George Washington, organized the Constitutional Convention in 1787 to rid the young country of a governing document, the Articles of Confederation, that declared the states “sovereign” and “independent” and gave the federal government very limited powers. The Constitution stripped out the language about state sovereignty and made federal law supreme.

As Washington had noted earlier in supporting one of Madison’s ideas – to give the federal government authority over interstate commerce – “the proposition in my opinion is so self evident that I confess I am at a loss to discover wherein lies the weight of the objection to the measure.

“We are either a united people, or we are not. If the former, let us, in all matters of a general concern act as a nation, which have national objects to promote, and a national character to support. If we are not, let us no longer act a farce by pretending it to be.”

Washington had personally witnessed the dysfunction of the Articles of Confederation during the Revolutionary War when the “sovereign” states balked at sending promised supplies and money to his Continental Army.

The Commerce Clause

After the war, Washington recognized the need to build a national infrastructure of canals and roads to enable the sprawling young nation to grow and to succeed. That practical interest became a key factor for Madison as he devised the new Constitution with an explicit clause giving the federal government power over national commerce, the so-called Commerce Clause.

In Federalist Paper No. 14, Madison described major construction projects made possible by the powers in the Commerce Clause. “[T]he union will be daily facilitated by new improvements,” Madison wrote. “Roads will everywhere be shortened, and kept in better order; accommodations for travelers will be multiplied and meliorated; an interior navigation on our eastern side will be opened throughout, or nearly throughout the whole extent of the Thirteen States.

“The communication between the western and Atlantic districts, and between different parts of each, will be rendered more and more easy by those numerous canals with which the beneficence of nature has intersected our country, and which art finds it so little difficult to connect and complete.”

The Framers expressed through the Constitution what might be called a Founding Pragmatism. The Articles of Confederation weren’t working because the central government was too weak so the likes of Washington and Madison scrapped the Articles and created a strong central government under the Constitution.

Their interest was more in devising a system that would protect the nation’s hard-won independence and to thwart foreign commercial encroachment than in imposing some rigid ideology of liberty. After all, many Founders viewed freedom in a very restricted sense – at least by modern standards – applying it mostly to white men. In those years, slave-ownership was widespread and married women were legally subordinated to their husbands.

When the Constitution was publicly unveiled in 1787, Madison’s constitutional masterwork drew fierce opposition from defenders of the old order who became known as the Anti-Federalists. They immediately recognized what Madison, Washington and the other Federalists were up to.

Dissidents from Pennsylvania’s delegation to the Constitutional Convention wrote: “We dissent … because the powers vested in Congress by this constitution, must necessarily annihilate and absorb the legislative, executive, and judicial powers of the several states, and produce from their ruins one consolidated government.” [See David Wootton, The Essential Federalist and Anti-Federalist Papers.]

It’s true that some of the Anti-Federalists were a bit hyperbolic in their concerns. But there can be no doubt that the Constitution consolidated under the new central government the power to act on matters of national interest, including to promote the “general welfare.”

Still, the Founding dispute over the balance between federal and state powers didn’t disappear after the Constitution was narrowly ratified. In particular, Southern states bristled at the imposition of federal authority, leading eventually to the Civil War in 1860. Even after the defeat of the Confederacy in 1865, white Southerners continued to resist federal demands for equal treatment of former black slaves and their descendants.

Economic Necessities

The spirit of Washington’s and Madison’s pragmatism reemerged in the 1930s in the economic sphere. Laissez-faire capitalism had failed, marred by a series of financial panics and recessions through the latter half of the 19th Century and into the 20th Century, finally culminating in Crash of 1929 and the Great Depression.

At that point, President Franklin Roosevelt invoked the broad powers of the Constitution to impose regulations on Wall Street, to organize a national effort to put Americans back to work, to legalize labor unions, and to expand the nation’s infrastructure. His New Deal also created a limited safety net for Americans who were unable to work or who lost their jobs due to the vicissitudes of capitalism.

Subsequent presidents built on Roosevelt’s reforms, through such measures as the GI Bill, which helped World War II veterans buy houses and return to school, and the Interstate Highway System, which made transportations faster and cheaper. The federally funded Space Program provided a powerful impetus to technological development, and Medicare addressed the problem of families being impoverished to pay for medical treatment of senior citizens.

Overall, the reforms from the 1930s through the 1960s created the Great American Middle Class, which in turn fueled more economic and productivity growth. As Washington and Madison might have appreciated, the pragmatism of their founding document had helped make the United States the envy of the world.

In the 1950s and 1960s, the federal government also began enforcing the legal framework for equality that had been enacted nearly a century earlier after the Civil War. The South’s walls of segregation were battered down by a combination of brave civil rights activists and a supportive national government.

That federal intervention, however, revived the old conflicts over states’ rights, with many white Southerners furious that they could no longer marginalize, humiliate and terrorize blacks. Under Richard Nixon, the Republicans also spotted an opportunity to peel off Southern states from the Democrats by appealing to these racial antagonisms.

The 1970s marked an important political turning point in the United States with many middle-class Americans having forgetten how they and their parents benefited from the New Deal, with many working-class whites resentful of gains by minorities, and with frustration building over a decline in American dominance in the world. The Vietnam War was lost; oil-producing states were banding together to raise oil prices; inflation soared; foreign competition increased; wages began to stagnate; and the environment became a concern.

The Right – detecting an opening amid these public resentments – began to pour vast sums of money into creating a right-wing propaganda system that combined sophisticated think tanks with extensive media outreach to the American people. The overriding message was that Big Government was the problem, interfering with states’ rights, corporate autonomy and individual liberty.

The Left inadvertently magnified the success of the Right’s new strategy by shutting down many progressive publications, downplaying the importance of information, and refocusing on “local organizing” about local issues. “Think Globally, Act Locally” became the Left’s new slogan, even as the Right began waging a national “war of ideas.”

The Rise of Reaganism

The stage was set for the former actor Ronald Reagan to emerge as a transformational figure in U.S. politics, playing to white racism with comments about “welfare queens” and ridiculing the work of government with the old joke: “The nine most terrifying words in the English language are: ‘I’m from the government and I’m here to help.’”

During Reagan’s First Inaugural Address, he declared that “government is the problem” and he soon enacted drastic cuts in the income tax rates for the wealthy. This policy of wealth redistribution to the upper levels was justified by a novel economic theory called “supply-side economics,” which held that the rich would then invest in new factories and other businesses, thus creating new jobs and improving productivity.

However, Reaganomics proved terribly flawed. The rich invested relatively little in U.S. manufacturing which continued to decline, while the well-to-do lavished themselves with luxury goods and showed little patriotism in where they did put their money, favoring fast-growth foreign countries, not the United States.

Yet, the Right’s propaganda system – now fueled by the diversion of money to the upper classes – continued to expand with right-wing media moguls buying up or starting up all sorts of new outlets, from newspapers, magazines and books to radio, TV and eventually the Internet.

The anti-government message became pervasive, sometimes cleverly tailored to specific interest groups, such as young white men who were told that they had become the victims of “political correctness” when they faced punishment for uttering racial or sexist epithets. Even as millions of Americans were pushed down the ladder of personal success, many kept believing that the federal government was somehow at fault.

The Right also devoted some of its vast supply of money to assigning “scholars” the task of reframing the Founding narrative by cherry-picking a few quote out of context to transform Framers like Madison into federal-government-hating, states’-rights-loving ideologues.

Much was made of Madison’s efforts to downplay how radically he had expanded federal power under the Constitution and his agreement to add the Tenth Amendment as a sop to the Anti-Federalists, though it had little real meaning since it only reserved to the states and individuals powers not granted to the federal government under the Constitution, when those grants of power were already quite extensive.

One-Sided Argument

But the Right made its loud propaganda case often unopposed. By the 1990s, the Left’s media had shriveled to irrelevance and the mainstream media was increasingly intimidated by right-wing attack groups that would go after individual journalists who could be labeled “liberal.”

In this hostile climate, many Democrats also scurried to the center and struggled to protect the core programs of the 1930s and 1960s, the likes of Social Security and Medicare. But they made major concessions on issues like Wall Street regulations, enabling freewheeling casino capitalism to return.

The consequences of decades of Reaganomics and hostility to “guv-mint” landed on the American electorate just weeks before Election 2008 when Wall Street experienced its worst financial crash since the Great Depression.

The collapse helped Democrat Barack Obama to become the first African-American U.S. President, but the underlying ideological realities hadn’t changed. The Republicans recognized that fact and immediately went to work seeking to ensure that Obama would be a one-termer, even if that meant worsening the suffering of Americans.

Drawing from the power of the Right’s propaganda machinery, the Tea Party quickly emerged as a potent force in U.S. politics. And, as Obama futilely tried to gain some bipartisanship in Congress, the Republicans worked to make his political life miserable and the country as ungovernable as possible.

Their success can be measured in the Republican congressional victories in 2010 and the closeness of the election in 2012 as Obama sought to refashion the argument for an effective federal government as a fight to protect the embattled middle class.

However, Obama found himself arguing against a powerful and longstanding dynamic: how tens of millions of Americans had been taught to hate their own government.

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Conspiracy World – Editorial NYT

New York Times, October 9, 2012

When Republicans began questioning President Obama’s birth certificate four years ago, it seemed at first like a petulant reaction to a lost election, a flush of nativist and racist anger that would diminish over time. But the preposterous charges never went away. As this election cycle shows, many in the Republican Party continue to see the president as the center of a broad and malevolent liberal conspiracy to upend the truth.

To live and seethe in that world of conspiracy theories means rejecting any form of objective reality. When unemployment numbers make the administration look good, they are obviously “cooked.” When poll numbers put Mr. Obama ahead, they are skewed. Birth certificates are forgeries. Safety-net programs are giveaways to supporters. Health insurance reform is socialism. And campaign donation disclosure is antibusiness.

It’s an upside-down version of life, and it is not innocuous. When desperation leads political critics of the president to discredit important nonpolitical institutions — including the Census Bureau, the Bureau of Labor Statistics, the Federal Reserve and the Congressional Budget Office — the damage can be long-lasting. If voters come to mistrust the most basic functions of government, the resulting cynicism can destroy the basic compact of citizenship.

Last week, the Labor Department reported that the unemployment rate had fallen to 7.8 percent, depriving Mitt Romney of his standard talking point that the rate had never been below 8 percent during Mr. Obama’s term. No one expected Republicans to celebrate a positive trend for the country, but almost immediately the anchors on Fox News and the editors of right-wing Web sites saw something more sinister: a conspiracy, led by the Obama campaign, to manipulate the numbers to make the president look good a month before the election.

The charge was absurd. The Bureau of Labor Statistics, which along with the Census Bureau conducts the underlying household survey, is run by career civil servants and is impervious to political pressure and manipulation, as all but the hypnotized in Washington understand. But, this time, the conspiracy theorists went beyond the usual suspects. Jack Welch, the former chief executive of General Electric, said Mr. Obama’s Chicago staff obviously changed the numbers, though he had no evidence of chicanery beyond the outrageous charge that the numbers came from an “ideologue division of the federal government.

To Mr. Welch and his fellow cynics, the facts were inconvenient, so they had to be wrong. And not just wrong, but deliberately so. That’s the same mentality that led ideologues last month to accuse independent pollsters of deliberately skewing polls to show Mr. Obama ahead, though no such charges are emerging now that Mr. Romney is improving in the polls. And this trend is reinforced when people who know better, like Newt Gingrich and Senator John McCain, trash the civil servants at the State Department and the Congressional Budget Office. (Mr. Romney, to his credit, did not question the latest jobless figures.)

Democrats aren’t happy about the latest polls, but they aren’t suggesting Mr. Romney is manipulating them, just as they didn’t undermine the Bureau of Labor Statistics when the jobless numbers were high. Many are far more worried about a conspiracy that is verifiable and serious: the concerted effort by Republicans over the last four years to deprive minorities, poor people and other likely Democratic supporters of their voting rights.

That, of course, doesn’t seem to bother those who see “Chicago’s” evil hand everywhere. When there is real-world evidence of political collusion, the conspiracy theorists are nowhere to be found.

America’s Duopoly of Money in Politics and Manipulation of Public Opinion

by Charles Ferguson, October 4, 2012, The Guardian/UK

Presidential campaigns aren’t where you look for honest, serious discussion of economic policy. Usually, the candidates confine themselves to slogans; sometimes, as with George W Bush, we also get a moron. But in this election, something very different is going on. For the first time, we are explicitly seeing the effects of America’s new political duopoly.

Both Obama and Romney are very intelligent men. And yet, both of them are completely avoiding, or being dishonest about, huge economic issues – even when their opponent is highly vulnerable to attack. Thus, we have the bizarre spectacle of a Republican ex-private equity banker attacking the Democrat on unemployment, while the Democrat argues gamely that if we just give him more time, everything will be fine – which we all know is not true. Both men say vaguely that they will “reformWashington”, when neither means it.

Neither of them says a serious word about the causes of the financial crisis; the lack of prosecution of banks and bankers; sharply rising inequality in educational opportunity, income and wealth; energy policy and global warming; America’s competitive lag in broadband infrastructure; the impact of industrialized food on healthcare costs; the last decade’s budget deficits and the resultant national debt; or the large-scale, permanent elimination of millions of less-skilled jobs through both globalization and advances in robotics and artificial intelligence.

In a time of pervasive economic insecurity, with declining incomes and high unemployment, four years after a horrific financial crisis, how can all of these questions be successfully ignored by both candidates?

As it turns out, their behavior is entirely rational, though for disconcerting reasons. The answer lies in the combined effect of three related forces: America’s deepening economic problems; the role now played by money in politics; and the emotions of a scared, increasingly cynical, economically insecure electorate.

Since the late 1970s, US politics has been increasingly shaped by the pressures generated by globalization, rising inequality and America’s declining competitiveness. As average Americans felt increasing pressures and endured stagnant real wages, they initially responded by working longer hours and going into debt (personal, household debt). But then came politics.

Beginning with the Reagan-Carter contest in 1980, Republicans started to abandon traditional financial prudence in favor of an increasingly demagogic strategy of blaming government regulation, waste and welfare payments in order to justify tax cuts. Demonization of regulation served the additional purpose of justifying the deregulation of industries such as financial services and energy. Since the Republicans’ tax cuts were never accompanied by spending cuts, they not only reduced voters’ tax bills, but also stimulated the economy generally.

It was unsustainable, of course, but when the Democrats tried counter-arguments based on fiscal prudence and government services, they generally got slaughtered – as did Carter in 1980, and Mondale in 1984.

It worked again for George W Bush, although, of course, he lost the popular vote in 2000 and only became president thanks to an infamous supreme court decision. But it really did work in 2004, when he trounced Kerry despite the increasingly obvious disasters of the Iraqi occupation.

And so, starting with Clinton’s reduction of capital gains taxes and financial deregulation, the Democrats started making deals with the devil. Clinton, to his credit, still tried to do some progressive things where he could, and the internet revolution allowed him to balance his budget. But the Democrats have, by now, been profoundly reshaped by the oceans of money that dominate US politics.

In 2008, Obama could afford to run as the reformer, and perhaps even needed to. But not so in 2012: Obama’s economic positions – not just his actions, but even his public statements and promises – are the result of triangulating reality, public opinion and money. Obama still needs to get some votes from his base, so he must call for some burden-sharing by the rich. But he cannot be honest about the depth, or the sources, ofAmerica’s structural economic problems, for two reasons.

First, he would be telling much of his blue-collar, minority, unionized and/or less-educated voter base that their skills are obsolete and they are economically doomed. Even in 2008, he might not have been able to get away with that; he certainly can’t get away with it now. But second, Obama cannot be honest about the economic damage caused by a criminalized, out-of-control financial sector, nor about other major industries contributing toAmerica’s economic problems (energy, telecommunications, industrialized food, pharmaceuticals) – because he needs their money.

As a result, Obama seemingly makes himself unusually vulnerable on the economy. But he can afford to, because Romney cannot take full advantage of Obama’s vulnerabilities. Romney, you see, depends even more heavily on the money and support of the financial sector, the wealthy, business and of anti-union, anti-immigrant forces. Romney’s only appeal to average Americans is through “values” conservatism (religion, opposition to gay marriage, abortion, drugs, immigration, etc), vague complaints about government bureaucracy and, yet again, tax cuts.

And so Obama can avoid all the hard issues and yet retain the grudging support of his base simply by proposing modest tax increases on the wealthy, and by supporting the safety net (unemployment benefits, Medicare, social security) that Romney might cut.

Voila: an election in which there are a dozen elephants in the room, and neither candidate pays them any notice at all; an election that Obama can win because he’s somewhat less bad, somewhat less utterly bankrupt, than the other guy.

Welcome toAmerica’s new and improved two-party system.

© 2012 Guardian News and Media Limited

Charles Ferguson is director and producer of No End In Sight: The American Occupation of Iraq (2007) and Inside Job (2010), which won the 2011 Academy Award for best documentary

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