Class war in the new Gilded Age
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