David KERANS (USA)
“I keep thinking to myself that it can’t get any worse. But…”
A progressively minded Professor of American History, in private conversation, December 5th, 2010
Disillusionment among progressive observers of the American political scene is nothing new, of course, and neither is the foreboding that the inequities and iniquities perpetrated from corporate power and its minions in Washington, DC could advance still further. What may surprise us, however, is the sheer audacity of the current right wing’s agenda for the near future.The financial crisis that exploded in 2008 managed to humble the right for only the briefest period of time. The recovery of financial asset valuations and the reemergence of the Republican Party over the last year have, as we shall see below, greatly emboldened the right in its aggression on behalf of the super rich and large corporations. The flagging competitiveness of the US economy is likely a contributing factor: if capital cannot find profit through production, it will be tempted to find profit through cannibalizing the wealth of the population. The stakes of today’s political struggles in the US are quite high, and include the possibility of reshaping the political and judicial system even further in the favor of the wealthy.
An Ossified Elite, a Less Competitive Economy
The stridency and aggression of the super rich in the US nowadays seems at least partly related to the lethargy affecting the class on the economic stage. However inflated their personal bank accounts may be, the richest Americans make a less formidable impression today than they did in the recent past. Forbes magazine’s latest list of the 400 richest Americans suggests ossification at the top, with a turnover of only 16 names from the previous year, on top of just 19 in the year before that. The newcomers’ sources of wealth are telling, coming as they do predominantly from old, smokestack industries of the past, not technologies of the future(1). US capital is not blazing big new trails, in other words. Wall Street’s poisonous innovations in financial services might be the last major export industry the US creates for a long while.
Basic measures of entrepreneurship and innovation in the country reinforce this impression. Astonishingly, US corporations now spend more than twice as much on litigation as they do on research and development.(2) Inevitably, the country has lost its once commanding lead in technological innovation. 51 percent of the patents awarded in the US in 2009 went to foreign companies, and Chinese residents are now applying for nearly as many worldwide patents as Americans are, a huge difference from just 10 years ago.(3) The Information Technology & Innovation Foundation ranks the US just sixth in the world in innovation-based competitiveness, and dead last among 40 studied economies as regards “progress toward the new knowledge-based innovation economy over the last decade”.(4)
America’s future on the science and technology front does not look likely to brighten any time soon. Already almost half of all graduate students in science departments of US universities are foreign-born, and more of them than ever before can be expected to leave America once they complete their educations here.(5) And the erosion of US secondary education poses stern challenges to the country, if it hopes to maintain a competitive workforce. To give just the most recently released data point, uniform testing through the OECD’s Program for International Student Assessment rated the math and science aptitude of US 15 year-olds significantly below the average across the OECD’s 34 nations in 2009.(6)
(Yet Another) War on Labor
While the future competitiveness of US capital on the world stage may look dodgy, the right is now demonstrating that it is fully prepared to enrich itself at the rest of the population, and indeed of the US governmental edifice itself. Labor is in the capital’s crosshairs, naturally, and is terribly vulnerable now. About 17 percent of the workforce unable to find a full-time job, and those who do find one must accept lower pay, often drastically lower. A study by the National Employment Law Project determined that only 5 percent of jobs created during the last two years pay more than $17.43 per hour, while almost half of the jobs lost in that time paid at least that much.(7) It is no coincidence that US manufacturers are now imposing two-tiered wage structures, which will condemn workers coming into affected factories to severe pay reductions, relative to those now in place.(8) The desperation of US labor is evident from the all-time record numbers on food stamps (42.9 million at last count)(9), and from the huge rise in workers seeking long-term or permanent disability aid from the government. About 3 million have applied this year, a 50 percent increase from pre-crisis levels, and an official estimate foresees an astonishing 11.5 million people being on the benefit rolls by 2015.(10) Under the accumulated stresses of the ongoing crisis fully 1 in 5 Americans experienced some form of mental illness in the last year, according to the Substance Abuse and Mental Health Services Administration.(11)
Popular welfare is no concern to the right, however, and its spokesmen continue to press the offensive against the lower and middle classes. One striking effort among many is the push to enshrine the principle that the Federal Reserve Bank shall conduct the nation’s monetary policy in the interests of the lending class, pure and simple. The right is calling for the Fed to abandon its so-called “dual mandate”, by dropping the long-standing directive for the Fed to aim for full employment (since 1977, Congress has appointed the Federal Reserve Bank two objectives: to maintain price stability and to maximize employment, hence the term “dual mandate”).(12) President Obama has the power to stand in the way of this movement to rewrite the Fed’s charter, but he might simply stand aside, judging from his record in office–especially in light of his capitulation this week on the extension of unaffordable, undeserved, unjustifiable, and unnecessary tax breaks to the richest Americans.(13)
Burning the Safety Net
Once the extension of the enormous tax cuts from 2001 is formalized, the federal budget will look grievously in the red, which will give the right a great deal more leverage with which to demand spending cuts. Ever more loudly, they will raise the specter of uncontrollable budget deficits and the possibility that foreigners will cease to fund these deficits through purchase of US treasury bills. They will insist on slashing what remains of the country’s flimsy safety nets for struggling families, as well as funding for any number of agencies that regulate businesses. The climax stands to come by April, when the Republican controlled House of Representatives could refuse to grant the administration permission to raise the federal debt ceiling. This would compel the administration to cease spending along many lines. The threat to forbid the administration to spend above the current federal debt is a powerful bargaining chip, and many Republicans have adamantly expressed their intention to use it. Former Senator Alan Simpson even said “I can’t wait for the bloodbath in April”–meaning extraordinary spending cuts as the Obama administration is forced to kneel before Congresses power of the purse.(14)
However many more policy concessions Obama may make to the Republicans in April in return for Congress raising the federal debt ceiling, astute analysts of the tax policy deal Obama reached with Republican leaders on December 7th have identified important time bombs set to detonate by early 2012. The Republicans “concession” of a 13-month partial break from payroll taxes looks especially sinister (assessed on the first $106,000 or so of wages, the payroll tax funds the Social Security program). This tax break requires government to assign some funds from the general fund (the general budget) to make up for the shortfall in social security inflows. This makes Social Security, the flagship of the New Deal, partially dependent on the whims of Congress, for the first time in its history. The Republicans will without doubt press for an indefinite or permanent extension of the 13-month reduction of the payroll tax. They will paint the Democrats as tax-raisers if they attempt to restore the full payroll tax, and insist on the new rate. Since the new rate will be inadequate to fund Social Security, the program will then depend on funding from Congress every year if it is to avoid reducing benefits.(15) Pressure within the Republican Party to reduce Social Security benefits is already very high.(16) Should the program become dependent on Congress, one can almost count on the Republicans crippling Social Security.
However these and similar maneuvers may play out, the right will be busy taking concrete, predictable steps to entrench their positions within legislatures and courts nationwide, so as to assure themselves opportunities to press their offensive for years to come. Thus, the results of the midterm elections handed many state legislatures over to the Republican Party, and put them in control of 29 state houses. With the conclusion of the population census of 2010, the state governments can now begin gerrymandering (redrawing district lines so as to maximize the number of representatives the party now in control can expect to elect in future elections). This will serve to expand the right’s control over the functioning of government at all levels.
Rightwing gains in the judicial branch will be especially enduring. The partisan tactics of Bush-appointed Supreme Court Chief Justice John Roberts are transparent here. Roberts is deliberately delaying the appointment of federal judges, leaving seats open until such time as the Republican Party can wrest control of the Presidency, and appoint judges more staunchly conservative than Obama’s selections. (17)We can safely expect conservative judges to be very aggressive in the future; the Republican Party clearly has that in mind.(18) And progressives clearly have plenty to fear.
(1) Robert Frank, “Where will Tomorrow’s Billionaires Come From?”, Wall Street Journal, September 23rd, 2010.
(2) Michael Milken, “Unprecedented Times, Unprecedented Opportunities”, Milken Institute presentation, Citi North American Credit Conference, New York, November 17th, 2010, slide
(3) The World Bank, “Patent Applications, Residents”, http://data.worldbank.org/indicator/IP.PAT.RESD.
(4) Robert D. Atkinson and Scott M. Andes, “The Atlantic Century: Benchmarking EU and US Innovation and Competitiveness”, www.itif.org, February 25th, 2009.
(5) Alfred W. McCoy, “The Decline and Fall of the American Empire”, TomDispatch.com, December 6th, 2010.
(6) “US Teens Lag as China Soars on International Test”, Bloomberg.com, December 7th, 2010.
(7) James B. Kelleher, “Special Report: Blue-Collar, Unemployed, and Seeing Red”, ABC News, September 15th, 2010.
(8) See, e.g., Roger Bybee, “Firms See Long-Sought Goal in Sight: Major Pay Cuts”, In These Times, November 24th, 2010.
(9) Sara Murray, “Food Stamp Rolls Continue to Rise” Wall Street Journal, December 8th, 2010.
(10) Derek Thompson, “The Hidden Cost of Denying Unemployment Benefits”, TheAtlantic.com, December 6th, 2010, and Michael A. Fletcher, “Disability Claims Rising at Social Security”, September 14th, 2010.
(11) “Mental Illness Hit 1 in 5 U.S. Adults in Past Year”, Bloomberg Business Week, November 18th, 2010.
(12) See, e.g., George Will, “The Trap of the Federal Reserve’s Dual Mandate”, Washington Post, November 18th, 2010.
(13) The deal with Republican congressional leaders that Obama announced on December 7th does include some tax breaks for lower-income Americans, it is true. The voluble indignation from the Left over the deal concerns both the inequity of the tax breaks for the rich and the feebleness of the administration’s negotiations with the Republicans. For a representative and informative roundtable discussion on the response from the left, see MSNBC’s “The Last Word with Lawrence O’Donnell”, December 7th, 2010, 10:00-10:25pm.
(14) Quoted in Paul Krugman, “There will be Blood”, New York Times, November 22nd, 2010.
(15) A good treatment is Ryan Grim, “Tax Cut Deal a Hidden Threat to Social Security”, Huffington Post, December 8th, 2010.
(16) See, e.g., Lori Montgomery, “Familiar GOP Plan Lives: Cutting Social Security to ‘Save’ it”, Washington Post, October 21st, 2010, or Laura Meckler, “Social Security Cuts Weighed by Panel”, Wall Street Journal, August 20th, 2010.
(17) See, e.g., Linda Greenhouse, “Calling John Roberts”, New York Times, October 21st, 2010.
(18) The Republicans have gone so far as to drop their longstanding catcalls about “activist” judges, because they can no longer pretend that they don’t want their judges to be increasingly active (Michael Kinsley, “Look Who’s a Judicial Activist Now”, Politico, December 7th, 2010.
Source: Strategic Culture