Tag Archives: Class Warfare

Political Corruption in America, Then and Now

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Zephyr Teachout is a law professor at Fordham University. She recently ran against Governor Andrew Cuomo in the Democratic primary, a quixotic venture if her goal was to become the Governor of New York. Her more realistic goals included calling attention to Cuomo’s political shenanigans, highlighting ways to improve our politics and maybe selling a few copies of her book (we all have to eat).

The book is Corruption in America: From Benjamin Franklin’s Snuff Box to Citizens United. The snuff box was a diamond-encrusted gift that Louis XVI gave to our ambassador to France. “Citizens United” is the recent Supreme Court decision allowing corporations and other organizations to influence elections as much as possible by spending unlimited amounts of money.

From a review of Corruption in America by the journalist Thomas Frank:

Today’s [Supreme Court] understands “corruption” as a remarkably rare malady, a straight-up exchange of money for official acts. Any definition broader than that, the justices say, transgresses the all-important First Amendment. Besides, as Justice Anthony Kennedy announced in the Citizens United decision, the court now knows that “independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption” — a statement that I guess makes sense somehow in law-land but sounds to the layman’s ear like the patter of a man who has come unzipped from reality….

Our current Supreme Court, in Citizens United, “took that which had been named corrupt for over 200 years” — which is to say, gifts to politicians — “and renamed it legitimate.” Teachout does not exaggerate. Here is Justice Kennedy again, in the Citizens United decision: “The censorship we now confront is vast in its reach. The government has ‘muffle[d] the voices that best represent the most significant segments of the economy.’ ”

You read that right: The economy needs to be represented in democratic politics, or at least the economy’s “most significant segments,” whatever those are, and therefore corporate “speech,” meaning gifts, ought not to be censored. Corporations now possess the rights that the founders reserved for citizens, and as Teachout explains, what used to be called “corruption becomes democratic responsiveness.”

Being “unzipped from reality” aptly describes much of our politics, including a series of decisions by our Republican-dominated Supreme Court.

Did it matter that the Supreme Court helped George Bush get elected in 2000, which made it possible for him to be reelected in 2004? David Cole, writing in the New York Review of Books, reminds us:

… when Justice [Sandra Day] O’Connor announced her retirement and Chief Justice Rehnquist died in office in 2005, President Bush, not Al Gore or a successor, had the privilege of appointing two new justices and shaping the Court for years to come. Had a Democratic president been able to replace Rehnquist and O’Connor, constitutional law today would be dramatically different. Affirmative action would be on firm constitutional ground. The Voting Rights Act would remain in place. The Second Amendment would protect only the state’s authority to raise militias, not private individuals’ right to own guns. Women’s right to terminate a pregnancy would be robustly protected. The validity of Obamacare would never have been in doubt. Consumers and employees would be able to challenge abusive corporate action in class action lawsuits. And Citizens United v. Federal Election Commission, which struck down regulations on corporate political campaign expenditures and called into question a range of campaign spending rules, would have come out the other way. But it was not to be.

Returning to Thomas Frank’s review of Zephyr Teachout’s book, it’s hard to believe that political lobbying used to be shameful, even criminal, not a multi-billion-dollar industry:

Once upon a time, lobbying was regarded as obviously perfidious; in California it was a felony; and contracts to lobby were regarded as reprehensible by the Supreme Court. Here is a justice of that body in the year 1854, delivering the court’s decision in a case concerning lobbyists and lobbying contracts:

“The use of such means and such agents will have the effect to subject the state governments to the combined capital of wealthy corporations, and produce universal corruption, commencing with the representative and ending with the elector. Speculators in legislation, public and private, a compact corps of venal solicitors, vending their secret influences, will infest the capital of the Union and of every state, till corruption shall become the normal condition of the body politic, and it will be said of us as of Rome —omne Romae venale [in Rome, everything is for sale].”

Well, folks, it happened all right, just as predicted. State governments subject to wealthy corporations? Check. Speculators in legislation, infesting the capital? They call it K Street. And that fancy Latin remark about Rome? They do say that of us today. Just turn on your TV sometime and let the cynicism flow.

And all of it has happened, Teachout admonishes, because the founders’ understanding of corruption has been methodically taken apart by a Supreme Court that cynically pretends to worship the founders’ every word. “We could lose our democracy in the process,” Teachout warns, a bit of hyperbole that maybe it’s time to start taking seriously.

Considering how money pollutes our politics, and how gerrymandering, vote suppression, low turnout (especially among the young and the poor) and the Constitution itself skew the results, the idea that America is an oligarchy, not a democracy, doesn’t sound hyperbolic at all.  

Nevertheless, quixotic or not, I’m still going to vote in a couple weeks for the Democratic candidates for the U.S. Senate (he’s sure to win) and the House (she’s sure to lose), as well as for bail reform and more environmental funding. It’s the least I can do.

Two Brechtian Commentaries on the Way of the World

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Although they’ve been attributed to him, there is no evidence that the German playwright Bertolt Brecht wrote the following words (in German or English):

The worst illiterate is the political illiterate. He doesn’t hear, doesn’t speak, nor participates in the political events. He doesn’t know [that] the cost of life, the price of the bean, of the fish, of the flour, of the rent, of the shoes and of the medicine, all depends on political decisions. The political illiterate is so stupid that he is proud and swells his chest saying that he hates politics. The imbecile doesn’t know that, from his political ignorance is born the prostitute, the abandoned child, and the worst thieves of all, the bad politician, corrupted and flunky of the national and multinational companies.

On the other hand, he did write the words below (in German). They’re from the Threepenny Opera‘s “Second Threepenny Finale”, also known as “Wovon lebt der Mensch” or “What Keeps Mankind Alive”:

You gentlemen who think you have a mission
to purge us of the seven deadly sins,
should first sort out the basic food position,
then start your preaching! That’s where it begins.
You lot who preach restraint and watch your waist as well,
should learn, for once, the way the world is run:

However much you twist, whatever lies you tell,
food is the first thing, morals follow on.
So first make sure that those who now are starving
get proper helpings when we all start carving.

What keeps mankind alive? The fact that millions
are daily tortured, stifled, punished, silenced, oppressed.
Mankind can keep alive thanks to its brilliance
in keeping its humanity repressed.

It’s not as catchy as “Mack the Knife” or “Alabama Song”, but it’s still pretty good.

Dollars and Poverty

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Republican Congressman Paul Ryan, chairman of the House Budget Committee, is worried that the federal government spends too much money trying to help poor people:

“The question isn’t whether the federal government should help; the question is how,” Mr. Ryan said at [a committee] hearing on Wednesday. “How do we make sure that every single taxpayer dollar we spend to reduce poverty is actually working?” 

Can you imagine someone like Ryan ever wanting to make sure that every single dollar spent on the military is actually working? I can’t.

The quote above comes from a New York Times article called “Changed Life of the Poor: Better Off But Far Behind”. The article describes the economic situation facing the poor today: 

Two broad trends account for much of the change in poor families’ consumption over the past generation: federal programs and falling prices.

Since the 1960s, both Republican and Democratic administrations have expanded programs like food stamps and the earned-income tax credit….

As a result, the differences in what poor and middle-class families consume on a day-to-day basis are much smaller than the differences in what they earn.

“There’s just a whole lot more assistance per low-income person than there ever has been,” said … a senior research fellow at the conservative Heritage Foundation. “That is propping up the living standards to a considerable degree,” he said, citing a number of statistics on housing, nutrition and other categories.

[At the same time], the same global economic trends that have helped drive down the price of most goods also have limited the well-paying industrial jobs once available to a huge swath of working Americans. And the cost of many services crucial to escaping poverty — including education, health care and child care — has soared.

So, for example:

Tammie Hagen-Noey, a 49-year-old living in Richmond, Va., tapped at an iPhone as she sat on the porch of the group home where she lives… She earns $7.25 an hour at a local McDonald’s, and makes a little extra money on the side from planting small plots of land for neighbors….A few months ago, she sold her car for $500 to make rent.

Almost everybody could manage their spending better (even members of Congress) and that woman in Virginia presumably didn’t spend hundreds of dollars to buy the latest iPhone. Human beings get into all kinds of trouble, because of their own mistakes or through no fault of their own, and will continue to need help from the rest of us, even if every single dollar intended to help them doesn’t “work”. Republicans claim that cutting taxes and reducing regulations will create lots of better-paying jobs, allowing us to spend less on government assistance for the poor. What they’re really advocating is a race to the bottom, with more inequality, dangerous workplaces, pollution and unsafe food. Since we have to compete in a global economy, we’ll end up closer to the economic middle in future decades (nobody stays on top forever), but we shouldn’t race to become worse off.

The Plutocratic Party and Social Security

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The latest Republican budget plan has a section on Social Security. Ordinarily, I wouldn’t have read it, but Michael Hiltzik, a business columnist for the Los Angeles Times, wrote an article called “Paul Ryan Rehashes An Old Social Security Lie”. 

The lie in question appears in the second paragraph below. I think it’s worth reading the surrounding paragraphs too (all of which appear on page 66 of the Republican’s budget document):

An all-too-common reaction to the fiscal problem in Social Security has been denial that a problem exists. It is claimed that the Social Security Trust Fund will remain solvent for at least a decade, at which point the government could theoretically cover any shortfall by raising taxes. Others downplay the necessity for change, contending that sustained economic growth could take care of the problem all by itself.

Neither is correct. First, any value in the balances in the Social Security Trust Fund is derived from dubious government accounting. The trust fund is not a real savings account. From 1983 to 2010, it collected more Social Security taxes than it paid out in Social Security benefits. But the government borrowed all of these surpluses and spent them on other government programs unrelated to Social Security. The Trust Fund holds Treasury securities, but the ability to redeem these securities is completely dependent on the Treasury’s ability to raise money through taxes or borrowing.

Social Security is currently paying out more in benefits than it collected in taxes–in other words, running cash deficits–a trend that will worsen as the baby boomers continue to retire. To pay full benefits, the government must pay back the money it owes Social Security. In testimony before the House Budget Committee, CBO Director Doug Elmendorf stated that:

“Well, again, Congressman, on a unified budget basis, taking account of just the tax revenues, the dedicated tax revenues, and the benefits, [Social Security] is contributing [to] the deficit now. If one instead looks at just the balance in the Social Security Trust Fund, that balance is, the annual balance is positive now, but will be negative within about a half dozen years.”

Given how difficult it is to predict the future, it isn’t clear exactly when Social Security would have trouble paying 100% of everybody’s promised benefits. As Ryan’s document says, however, the government could “theoretically” raise Social Security taxes at some point to make up the difference. The “theory” in this case is arithmetic.

Not everyone knows this, but as of 2014, Social Security taxes are only applied to the first $117,000 of a person’s income. Here’s what the Center for Economic Policy and Research says about raising that threshold and thereby putting more money into Social Security:

There have recently been several pieces of proposed legislation to raise or do away with the payroll tax cap. Sen. Bernie Sanders and Rep. Peter DeFazio have sponsored legislation that would raise the cap to income above $250,000 while Sen. Mark Begich and Rep. Ted Deutch’s proposal  would fully eliminate the cap, with a small portion of earnings above the current cap going toward benefits. If enacted, proposals like these could almost entirely close Social Security’s projected long-term funding gap without reducing benefits nor increasing taxes on the vast majority of American workers.

Of course, applying the Social Security tax to the highest incomes would also partly address the problem of economic inequality in America, a worthy goal in itself.

The statement in the second paragraph that “any value” in the Social Security Trust fund is “dubious” is the one that Michael Hitzlik called a lie (it’s good that reputable journalists are finally getting around to using that word). I’ve heard this claim before – that somehow the Social Security Trust Fund doesn’t have real money in it – but never understood how such a thing could be true. As Hitzlik explains, the Trust Fund holds almost $3 trillion (not billion, but trillion) worth of government bonds. In fact, as of December 31, 2013, the Department of the Treasury said these bonds were paying an interest rate of 3.626% and were worth 2,765,212,571 dollars (give or take a penny).

So why aren’t these bonds worth anything, according to the Republicans? Their idea seems to be that since the Trust Fund paid cash for those government bonds, and the government used that cash for various non-Social Security purposes like watering the White House lawn and paying Paul Ryan’s salary, the government has already spent the money in the Trust Fund. So it’s gone!

However, in the real world, when someone purchases a bond, whether the buyer is the Trust Fund or an individual investor, the bond pays interest (for example, 3.6%) and can eventually be redeemed (converted back into cash). That’s how investing in bonds works. Whatever the government did with the cash it got from the Trust Fund is irrelevant, so long as the government keeps paying interest and redeems its bonds when they mature.

The second “reason” they offer for saying all those bonds are worthless is that the government could stop paying interest on them and not redeem them when they mature. That’s what’s known as the U.S. government “defaulting” on its financial obligations.

As the Republicans say, the government’s ability to meet its obligations depends on raising revenue, either by taxing or borrowing (or selling stuff like national forests). But that’s what the government has been doing for more than 200 years. Is there any reason to think that the federal government will eventually become unable to pay its debts, including its debts to the Social Security Trust Fund? No, the United States is the richest country in the world. Investors all over the world, including foreign governments, believe our government’s bonds are very safe investments.

In fact, the only remotely likely scenario in which the government fails to pay its debts is if Republican extremists somehow manage to shut down the government again for an even longer period of time, which stops the government from levying taxes and selling more bonds! That’s what the Republicans recently threatened to do, many of them arguing that a government default wouldn’t be a very big deal. So on one hand, the Republicans claim to worry that the government won’t pay its debts to the Social Security Trust Fund, but on the other hand, they think it might be o.k. if the government didn’t pay its debts. (These people truly are amazing.)

The quotation above ends with the Republicans making the point that Social Security is running a deficit and the deficit is expected to get worse. That’s true, and that’s why raising the income cap would “theoretically” be a good idea. They then quote some testimony from the head of the Congressional Budget Office. I had to read that paragraph several times to see if it somehow supported the Republican contention that Social Security is in deep trouble. It doesn’t.

What the head of the CBO is saying is that Social Security is affecting the overall federal deficit now (since the government is paying what it owes to Social Security) and the Trust Fund itself will start running an annual deficit in about six years. What the Republicans don’t bother mentioning is that the Trust Fund is expected to have money in it until 2033 (and that’s if nothing is done in the meantime to put more money into the Trust Fund). Plus, even if the Trust Fund were to run out of money, Social Security would still pay about 75% of everyone’s promised benefit, since working people would still be paying Social Security taxes (reference here).

The Republicans go on to suggest limiting benefits for upper income Social Security beneficiaries (certainly a possibility) and hint that maybe the retirement age should be raised because people are living longer (which is a bad idea, because it wouldn’t save much money and lots of people – unlike politicians – can’t keep working or can’t find jobs by the time they reach 65 or so).

For all their fear-mongering, Ryan and his colleagues don’t offer a solution to this supposed crisis, except to suggest that the President go first by making some specific recommendations (which they can then use to attack him as an enemy of Social Security). The Republicans even suggest that benefits should be increased for low-income retirees (another good idea, but one more often made by us “tax and spend” Democrats). 

Michael Hiltzik thinks this budget document is evidence that Republicans don’t want the government to make good on its debt to Social Security:

When you hear people like Paul Ryan talk as though the country can’t afford to pay back the money by redeeming the bonds in the trust fund, what you’re hearing is the sound of the wealthy preparing to stiff the working class. If the income tax has to be raised to turn those T-bonds into cash for payment of benefits over the next couple of decades, that’s how the rich will be made to repay the people who lent them the money. Some people love to claim that the government has “stolen” the trust fund. The correct reply to that is: “Not yet.” But if Ryan has his way, yes, the money will be stolen. It’s up to you and me to make sure that doesn’t happen.

The idea would be, I guess, that if the Trust Fund doesn’t have any real money in it now, we won’t miss it when it’s gone. I’m not convinced that’s the Republican plan. But I’ve given up trying to understand whether people like Ryan are knaves (unscrupulous and dishonest) or fools or both. What’s clear is that their principal goal as politicians is to serve the needs of the wealthy. The surprising thing is that so many voters, in particular, the Tea Party types who don’t want the government messing with their Medicare or Social Security, continue to vote for the Plutocratic Party. 

For more on Social Security (if you can stand it), there was a recent article at Salon written by a so-called “Millennial”. He rejects what most of his generation believe: that Social Security will go bankrupt before the Millennials can collect any benefits. He also argues that it makes no sense to be a “social conservative and economic liberal”.

PS — Ryan Budget Gets 69 Percent of Its Cuts from Low-Income Programs

Republicans on Supreme Court Make Plutocracy Official

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In their latest effort to make America’s status as an oligarchy (sub-class plutocracy) official, the five Republicans on the Supreme Court have now decided that wealthy people will be able to give as much money as they want to political parties and groups of candidates. According to the New York Times, the Republicans ruled that:

Overall limits of $48,600 by individuals every two years for contributions to all federal candidates violated the First Amendment, as did separate aggregate limits on contributions to political party committees, currently $74,600.

So, rich people will now be able to give millions of dollars every two years to the political party of their choice, without going to the trouble of setting up supposedly independent political action committees. In addition, rich people will now be able to give millions of dollars directly to candidates every two years, so long as they don’t give any candidate more than $2600 for a single election.

The $2600-per-election limit wasn’t killed off today, but it will be eliminated as soon as the Republican justices gets their chance. That’s because the Republicans on the Court claim, in the Chief Justice’s words, that “there is no right in our democracy more basic than the right to participate in electing our political leaders.” And by “participate”, of course, the Court means “use one’s financial resources to elect and influence as many politicians as possible”.

It’s now official, therefore, that the most basic right in our democracy is no longer the right to vote, a right that should belong to rich and poor alike. Now the most basic right is to “participate”. Anatole France once pointed out that “in its majestic equality, the law forbids rich and poor alike to sleep under bridges, beg in the streets, and steal loaves of bread.” In the same way, the law in the United States now allows rich and poor alike to give millions of dollars to the candidates of their choice and buy as much political advertising as possible, all in the name of freedom of speech.

Treat money as speech, discourage low-income voters from voting (as Republican politicians are doing in every state they control), and do whatever possible to encourage financial inequality (let’s get rid of the death tax!). It’s an amazingly clear agenda. Replace government of the people with government of the few and make sure the few are the rich!