Opinion

The Great Debate

Class war in the new Gilded Age

By Robert L. Borosage
December 21, 2012

2012 was the first class-warfare election of our new Gilded Age. The first since the middle class has come to understand, in the words of new Senator-elect Elizabeth Warren (D-Mass.), that the “rules are rigged against it.” Business-as-usual may no longer be acceptable.

But Washington didn’t get the memo. Even as ballots were still being counted in Palm Beach, Florida, the two parties lurched into the fierce debate over the fiscal cliff, the noxious brew of automatic spending cuts and expiring tax cuts that would poison the recovery. The debate, a dismal sequel to the 2011 debt ceiling melodrama, focuses on deficits not jobs. Once more, Republicans are threatening to blow up the recovery unless Democrats make otherwise unacceptable concessions. Once more, President Barack Obama looks for a “grand bargain,” seeking bipartisan support for terms divorced from opinion outside the beltway. Once more, what Scott Galupo at The American Conservative called the “clown show” of the House Republican caucus blows itself up.

Republicans are the most clueless about this new reality. The election’s one clear mandate, confirmed in polls ever since, was for Obama’s oft-repeated pledge to let the Bush tax cuts expire on those earning more than $250,000. Yet, House Republicans stood staunch in defense of the very rich – refusing to pass their own speaker’s bill to extend the tax breaks on everyone except millionaires.

This came after House Speaker John Boehner (R-Ohio) spent weeks insisting that Republicans would allow the Bush tax breaks to expire on the richest Americans only if the president agrees to cut Medicare, Medicaid and Social Security, the core pillars of family security.

When the president came perilously close to giving him yes for an answer, Boehner broke off talks to get House Republicans to vote on his “Plan B” extension of all tax cuts for income under $1 million a year. But, with near Keystone Cop incompetence, House Republicans then blew up their own speaker’s plan. They recoiled at the horror of raising taxes on millionaires – though they could also eliminate the automatic spending cuts for the Pentagon, while doubling them on education, food safety and other domestic programs. Stunned, Boehner sent Congress home for Christmas, telling the media “God only knows” what will happen next.

Obama’s popularity has soared as Republicans have flailed about.

Yet Obama continues to seek a “grand bargain.” His last offer to Boehner would cut Social Security, veterans’ benefits and other government benefits over time with the lower inflation rate adjustment – the “chained CPI”  – in exchange for ending tax breaks for those earning more than $400,000. House Minority leader Nancy Pelosi (D-Calif.) said she could deliver House Democrats to support that compromise.

Nothing more clearly exposes the stark gulf between conventional wisdom inside the Beltway and the opinions of most Americans. Americans of all stripes are increasingly aware that they have been getting the shaft, while the big banks, corporations and money have been pocketing the gold. Large majorities believe their legislators are essentially corrupt – more responsive to their donors than their voters.

That’s why poll after poll shows that broad majorities of Americans – including majorities of Republicans – support raising taxes on the wealthy. Overwhelming majorities – including most Republicans – want Medicare, Medicaid and Social Security protected, not cut.

In an election night poll sponsored by the Campaign for America’s Future, voters were asked what they would find acceptable in a deal to cut deficits. Sixty-two percent said cutting Social Security over time was unacceptable. Even more, 72 percent, opposed cutting discretionary spending, like “education, child nutrition, worker training and disease control.” Almost four-fifths, 79 percent, opposed forcing seniors to pay more for Medicare.

As for raising taxes on the top 2 percent, more than two-thirds, 70 percent – including a majority of Republicans – found it acceptable. Far more, 89 percent, supported saving Medicare costs by negotiating lower drug prices from drug companies. Seventy-two percent supported reducing military spending by ending the war in Afghanistan. More than two-thirds supported a minimum tax on corporate profits reported overseas.

Americans support compromise. They also want Congress to work. But bipartisan agreement may not provide much political cover if it calls for cutting basic security for the most vulnerable.

Outside the Beltway, Americans will be less concerned about the top end tax hikes than cuts to Social Security, Medicare and veterans’ benefits.

The entire base of the Democratic Party – from the unions to women’s groups to progressive activists – is united against any cuts in these core security programs. Moveon.org has warned Democrats that the president’s proposed cuts in Social Security will be considered “a betrayal of working and middle-class families.” The AFL-CIO called on the president to withdraw his concessions on Social Security and top end tax hikes. The AARP  is already running ads against Social Security hikes. Women’s groups have no choice to object, for women who live the longest and retire with the least savings will suffer the most from the change.

Inside the Beltway, it had been assumed that if Obama and Boehner reach a deal, it can be sold as necessary to avoid going over the “fiscal cliff.” Editorial opinion has been overwhelmingly supportive of this. Pundits have been hailing “responsible” moderates for their bipartisan cooperation and scorning the “extremes” in both parties – the right that resists tax hikes; the left that resists entitlement cuts.

The only requirement for this – made apparent this week – is that the deal be passed with Democrats joining Republicans to make up the majority, isolating the Tea Party zealots on the right. But liberal Democrats may find it hard to vote for the concessions the president has already made.

Leading the outside lobbying for a deal has been “Fix the Debt,” a multi-million-dollar media campaign funded by billionaire Peter G. Peterson, a hawk on cutting “entitlements,” and a gaggle of corporate and Wall Street CEOs.

But they personify the cluelessness of the elite debate. Bizarrely, they paraded out Goldman Sachs CEO Lloyd Blankfein to make the case for a bargain that would include cuts in the core security programs most Americans depend on.

These plutocrats were apparently oblivious that Americans might not take well to being hectored about the need for “shared sacrifice” by a Wall Street banker who had just received a multi-billion-dollar taxpayer bailout from the financial catastrophe created by Wall Street’s excesses.

Coming out of the recession, the top 1 percent of Americans captured an obscene 93 percent of the income growth in society. Corporate profits are at their highest percentage of gross domestic product and wages at the lowest since they began keeping score.

When the rewards of growth are not widely shared, calls for “shared sacrifice” are likely to be more infuriating than convincing.

In times of resource constraints, the choices made in Washington will be harder to mask. Tax breaks for millionaires or cuts in veteran benefits? Strip 65- and 66-year-olds of Medicare benefits or shut down corporate tax havens? The election last November provided the first signs of the nascent class politics of our New Gilded Age.

If they do cut a grand bargain along the lines now being discussed, politicians in both parties may pay the price two years from now.

ILLUSTRATION: MATT MAHURIN

PHOTO (Insert Top): House Speaker John Boehner (R-Ohio) talking about the “fiscal cliff” on Capitol Hill in Washington, December 20, 2012. REUTERS/Yuri Gripas

PHOTO (Insert Middle): From left to right, Lloyd Blankfein, chief executive of Goldman Sachs Group, Jamie Dimon, chief executive of JPMorgan Chase, John Mack, chairman of Morgan Stanley, and Brian Moynihan, chief executive of Bank of America are sworn in before their testimony at the Financial Crisis Inquiry Commission in Washington January 13, 2010. REUTERS/Jason Reed

PHOTO (Insert Bottom): President Barack Obama hosts a bipartisan meeting with congressional leaders including House Speaker John Boehner in the White House to discuss the economy, November 16, 2012. REUTERS/Larry Downing

Comments
20 comments so far | RSS Comments RSS

Yes, Republicans are clearly out of step with the Republic, to an amazing degree as well.

The fundamental problem is the maze of “subsidies” and “special arrangements” that sucks the life blood out of the economy to a privileged political class that contributes almost nothing of positive consequence to the country. How did “carried interest” get created in the first place, and which bureaucrats or elected officials got rich allowing such corrupt quasi-theft?? How many other “back door” channels which essentially cheat a privileged class into wealth and dominance are there? No wonder the country is sinking.

And the beneficiaries of this graft have the nerve to point a finger at hard working Americans as responsible for allowing themselves to be cheated! It is beyond outrageous. It produces nausea at the hypocrisy of “representative government” that flouts the will of over 75% of voters for over a decade in return for cash payoffs that are not only legal but not taxable as well (“campaign contributions” not spent on a campaign).

Posted by usagadfly | Report as abusive
 

Both sides are just dreaming. The basic problem is we have entered the age of globalization. That means that right now there are 7 billion people and only around 4 billion jobs. In 20 years, we will have 9 billion people and probably still only 4 billion jobs.
Tell me, how are we going to handle that?

Posted by tmc | Report as abusive
 

“The election’s one clear mandate…” Are you kidding me? How does 51% vs. 49% translate into a clear mandate in your mind? Perhaps in a third world African dictatorship… The mindset of communists is frightening…reminds me of why the West engaged in a Cold War vs. Communism…taken to the brink of global annihilation, and why we should continue that fight. Authors like this one are wolves in poorly disguised sheep’s clothing. Luckily, most of the American public sees right through this garbage for what it is…propaganda…yellow journalism.

Posted by sarkozyrocks | Report as abusive
 

Another left wing propaganda piece by Reuters . Obama is the real destroyer of the middle class .Check the income stats . Numbers don’t lie … just politicians and the loyal state media

Posted by NJ989 | Report as abusive
 

Clueless? I don’t think so. This is very much the strategy that was in use during the first term of FDR.
The rich crying that the state couldn’t raise taxes because it would hurt capitalists. Even after these same capitalists excesses had crashed wall street. These arguments from the business community are the same as they have always been. Give us everything and we will throw you a bone.
“People of privilege will always risk their complete destruction rather than surrender any material part of their advantage” (1977) John Kenneth Galbraith.

Posted by relegn | Report as abusive
 

We had banks that failed because of lack of regulation and all we did give them money. Would not a n=more logical ting to do would have been give their good assets to the good banks. In any case under the unregulated profit motive would loan money in good times when people are good risk and not in bad time the opposite of good monetary policy. Therefore, loaning money for profit should be the monopoly of the FED it may use banks a service organization by paying them to take and process the loan applications according FED guidelines. In any case Greenspan and the de-regulators including the ones pushing loans for people who could not afford them had the ultimate responsibility for the banking-housing failure.

Posted by Samrch | Report as abusive
 

Our high education costs go up and number of free colleges go down. Obviously shrinking equality.

We pay more for all education than other advanced nation and same for health care, but the the results test poorer for both than most advanced nations. Proof positive or corruption and stupidity in high places. The stupidity can take the for ideology and politics over observation and testing of ideas.

Posted by Samrch | Report as abusive
 

Two of the biggest causes of corruption are. News papers and other news media of large readership do not get get part of proven corruption exposed them. That would be a incentive to put corruption on the front page.

Depending one the nature of the work, a suitable span of control for manager is about 10 people according to the management courses I took. The voters are hit with voting a long list of offices that do not have have to follow and are not reported on. The number elected offices should reduced like local and state governments for a start. The effect is shield the top form blame for corruption at local and state levels. Funds are distributed for education and roads at the local level and are great source of corruption.

Posted by Samrch | Report as abusive
 

Mr. Borosage expresses the truth in this excellent piece. We have a new class of robber barrons who have effectively taken over our government, bribing our elected officials to legislate in ways that only benefit the few at the expense of almost everyone.

It’s no coincidence that the beliefs held by the rightwing masses just happen to be the same beliefs espoused by industry leaders. In other words, the rightwing masses have formulated their beliefs from the propaganda that is being issued by our major industries for the benefit of industry profits.

For example, the fossil fuel industries have promoted the idea that global warming is a myth since scientists first recognized that the earth was growing warmer. However, we’ve now reach a point where the evidence is indisputable, so the latest spin is that there’s no “man-made” global warming. The fossil fuel industries are exerting their considerable influence to make sure their profits continue rolling in unabated. Sadly, in large part because rightwing leaders in government and in the media have promoted the belief, too many conservative US citizens have decided to ignore the well-researched positions of the scientific community and, instead, adopt positions espoused by industry leaders, who obviously have a conflict of interest. If it wasn’t for the gullibility of the rightwing masses, we could force our government to regulate the fossil fuel industries so that they act more responsibly. Those people act as a protective buffer zone for criminal fossil fuel executives and their bought government officials.

We have the same sorry situation with healthcare. The US has the most inefficient healthcare system in the world. Our healthcare costs are presently prohibitively high, and yet the Republicans protect our healthcare system’s pricing structure and the rightwing constituents allow them to do it. There is a relatively small number of healthcare execs who are amassing fortunes from a healthcare system designed to serve only them, at everyone elses expense. The Republicans have actually passed legislation forbidding Medicare officials from negotiating with pharmaceutical companies for lower drug prices. They protect the industry’s ability to endlessly raise prices while demanding that Medicare and Medicaid be cut. It’s crazy.

People who have voted Republican all their lives just can’t bring themselves to admit what is really going on. It’s not a case of both sides doing the same thing in opposite directions. The negotiations that are supposed to be taking place between Boehner and Obama really started a long time ago when Reagan drastically cut taxes on the rich and industries were allowed to write their own rules. It’s not like negotiations are starting on an equal playing field. It’s not a situation where the people need to give some and the wealthy need to give some, because the people have been giving, and giving, and giving until there’s little more to give. We won’t see any real sense of balance returned to our tax structure, but certainly that’s the direction these negotiations need to go. The government exists to serve the people, not just a priviledged few.

Posted by flashrooster | Report as abusive
 

What I suspect is happening is, the stronger governments of the planet may try a sort of planetary triage and they will start by writing off the poorest third or simply allowing them to die. I just read re: Africa – the US is planning to station training personnel in about 35 countries starting this year.

Isn’t one form of triage: those not needing attention, those needing immediate attention, and those too gone to benefit from attention? But in economic terms it will be obscene. The world’s economies are not known for their code of ethics.

Economics would translate triage into a paranoid and bunkered system where the wealthiest and the middle tier will live in an increasingly uncomfortable, dangerous and expensive environment, while they do everything they can to block out or stifle the screams of the dying. And they may live that way the rest of their lives or until the situation ever finds a new equilibrium. It will be very burdensome to them.

Because the modern capital obsessed world will be perverse and rank “attention” on the basis of income and not on innate human value; it will allow the well healed to purchase an inordinate share of attention (even on credit and phony “money” (debt could easily be seen as faux wealth) while those who can’t will be left to starve. Those trapped in economies that are withering, while they are still young and full of human promise, will not be in a “good mood” and will swell the ranks of the enemies of the wealthy and well placed.

Old, rich and nearly-dead economic wrecks (with gigantic debts and gigantic deficits – both people and countries) will be able to buy more days of fading and very selfish life while the young and poor, who would have potential and abilities if they had the means and the credit, will find little help unless the old corpses with money can somehow induce the young, well and strong to be their protectors.

I don’t think the situation will last too long before the cost of additional days for the affluent will wipe out more of them and they join the bottom ranks. The wealthy tend to hate each other as a rule and really only ever see each other as potential sources of wealth and influence.

To borrow an analogy: more and more bats will fall from the ceiling of the cave to be devoured by worms and beetles on the floor. “Survival of the fittest” is not something any creature can ever really decide while it is alive. It is definitely a process that depends on the will of “God”. There are too many variables at work for any person to truly say they are among the “elect” and deserving – while they are alive. The theory is always something of an optical illusion.

“Social Darwinists” who seem to derive personal comfort from the theory have a better time with it as long as they set their frame of reference narrowly and focused on their good years. Empire builders and racial chauvinists are every fond of it if they think it casts them in the favorable light. But only the future decides what survives and the future always has a big bag of tricks to upset even the most comfortable expectations.

Posted by paintcan | Report as abusive
 

The difference in the popular vote was less than 3%, therefore, the Republican Congress is representing nearly half of all Americans. The structure of the Democrat’s new tax plan is punitive to upper middle class, not the wealthy, and will hurt small business, S-Corps the lareget employment sector.

Posted by GSH10 | Report as abusive
 

further evidence that partisan politics supersede the common good…and a greedy & ignorant electorate will elect the greedy and ignorant.

Posted by rikfre | Report as abusive
 

Very unproductive piece of class warfare rhetorics..
The usual 1% and 99% percents, haves, have-nots scream.

If people want to have a constructive debate, they should focus on another issue that has some legitimate ground: The incompetence of some of the US 1%.

The 1% are not supposed to be there to ‘enjoy’ life, they are put in there because they are supposed to be the best, the gifted, the elites. They are there so that it is easier for them to make the best use of their gifted talents and make real progress.

Instead, many of the 1% are mediocre if not downright useless incompetent. If the left wants to attack the 1%, that should be how they do it. But they can’t do it either, because leaders on the left (also among the top 5%, if not 1%) generate as much value (as in close to zero) as the people they want to attack. Ironic isn’t it, good luck fighting yourselves…

End result is ‘solution’ that is not actually solution at all (as in making the problem worse).

Posted by trevorh | Report as abusive
 

We are going to destroy the only true capitalism in the world. The class warfare is waging on and we just stand aside and watch the whole theatre play out. Let us pretend that the other half, and yes the takers are also worthy of taking part in the future of this country. No, they should not.
The great men who brought this country to were it is now were greedy men who didn’t want to share, they did not want to abide by regulations, their plan was to do great things and in the process get rich and yes, live a lavishly filthy rich life. Most importantly they didn’t apologize for it.
Nobody should be forced to share the fruits of their labor with those are not worthy of it. No distribution of wealth tax increase, and specially at the 250K group who are just starting to climb the ladder and promote growth in this country.
The critical point in this country is now, it might be too late to turn back, even in the near future.

Posted by truthsaid | Report as abusive
 

Too many people trying to make $100.00 an hour off of people making $7.00 an hour.

Posted by urownexperience | Report as abusive
 

@sarkozyrocks. I bet that if the republicans had won not matter how small of a margin you would be talking about a mandate.
The fact is that that’s what democracies do, they vote and whoever wins has a mandate to govern, not necessarily dictate but nevertheless a mandate. But i bet that your view of a compromise is for the winning party to cave to every demand of the losing party and that’s what’s been wrong with the tea party zealots and republican party.

Posted by ofilha | Report as abusive
 

more of the ignorant talk of takers and makers. This country was build on robbery, robbing the indians, robbing working people not on great men. But the bigger issue is that the 1% are nothing like the Rockefeller, they are users and takers who produce nothing and from our last great recession show that they are also extremely incompetent and it’s only because of their connections that they keep their lavish salaries, not because they built anything.

Posted by ofilha | Report as abusive
 

What i see in this debate is the right win always trying to paint their opponents as communists, robbers of the wealthy, etc.. But at every turn as we in this last election it was the Republican party that was lying about the president, about the economy, pushing class warfare on the working people and the poor, repressing the vote with phony fraud issues – and it turned that the fraud was actually being perpetrated by the Republicans. We see the wealthy demanding that we become their slaves because we owe them our jobs, even though government could very well create those jobs if allowed, and what i saw was a party that if it had elected Mit and won the senate they would have turned the Republic into a fascist dictatorship.

Posted by ofilha | Report as abusive
 

I see a lot of rightist and leftist viewpoints here. When will you realize that the further you are from the center, the less effective you are? Witness the Tea Party, who has achieved exactly nothing. No element of their agenda has yet succeeded. The same is true of the leftists. I urge us all to consider the political center as the only effective use of our time.

Posted by justine1939 | Report as abusive
 

@justine1939- In a few million words of less – what is the “center”.

I suspect very few people actually live in the center, or rather: they think wherever they are politically is the center.

To make matters worse; the political outlooks of so-called extreme positions aren’t exactly opposite the further from the theoretical center one goes but can exist in something like a bent or folded space. In other words. The enemy of my enemy is my friend (temporarily anyway).

Sometimes the extremes can actually see eye to eye because they have extremism in common. Politicians like to keep the greatest numbers of the constituents happy or their fickle constituents won’t support them for reelection. Neither side can make a move without alienating their supporters.

Lack of a coherent center leaves only the various degrees of extremism. The solution to the difficulty is something that is squeezed out by the conflict.

It has been said that a good solution to a political impasse is the one that doesn’t make any side particularly happy. It makes me think of the former government of Saddam Hussein in Iraq and the (now threatened) stability of Syria. But SH’s government had to impose his centrist solutions by force and imprisonment.

Posted by paintcan | Report as abusive
 

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