As I acknowledged in my post yesterday, I support Barack Obama for president. We have had four decades of Republican presidents or Republican control of Congress, during which the politics of corporatism have reigned with deregulation, privatization, tax cuts (especially for the wealthy--increases in payroll taxes primarily paid by ordinary taxpayers aren't a problem for corporatists), and military expansion. That agenda has been supported by an all-out effort by the Olin Foundation, George Mason Law School, acolytes of Milt Friedman, and lbbying groups and think-tanks from Grover Norquist's [Wealthy] Americans for Tax Reform to the Cato Institute's Dan Mitchell and the Tax Foundation (just to name a few) to sell ordinary Americans on an economics of greed.
The economics of greed is based on the Friedman theory of "free markets" --greed incentivizes commercial activity, market masters serve as self-regulators, and economic growth accrues to the top (maybe eventually someday to trickle down to ordinary Americans). The made-from-whole-cloth Laffer Curve has been bought by the Republican party and resold to ordinary Americans to their detriment. The "theory" (to the extent there is one) is that tax cuts generate revenue, since capitalists have more money to invest and create more jobs.
The reality is different. Markets can't exist or work properly without various checks on speculative and systemic risk that results from soaring greed. The free marketarian preference for low taxes on capital income and higher taxes on wage income (especially, as enacted under Reagan, through FICA and FUTA taxation increases) does not result in the kind of sustainable broad-based growth that advances well-being for all of us. Capitalists whose income is increased through favorable tax cuts may just as likely invest that income in other countries rather than in the US, in more financial gambling that creates few jobs for ordinary Americans rather than in productive activities that do. Joe Conason, in a recent Slate article, Obama's Winning Argument, notes that most Americans seem to have caught on to this now. After years under Republican regimes of lowering taxes on the wealthy, spending hugely on military and war, and letting public infrastructure projects go wanting, ordinary Americans seem to have figured out that what is good for the wealthy and corporate goose may not be so good for the ordinary American gander.
What Obama needs to explain, over and over again, is that Democratic economic programs have succeeded in promoting growth precisely because they distribute national wealth more widely than the Republican tradition of trickle-down. The numbers have told the story for decades -- and the statistics detailing the Clinton administration's success and the Bush administration's failure have only reinforced the narrative.
Consider the cumulative performance of the stock market. Until this year, the best data available showed that on average, equities increased in value by more than 12 percent during Democratic administrations, and by around 8 percent when Republicans were in power. The largest gains in the past 80 years occurred under FDR, Truman, Johnson and Clinton -- and when the awful declines of the past few months are factored in, the Democratic record will look even better.
Joe says this is a "teachable moment" when the new president can perhaps help Americans understand the importance of adopting progressive economic solutions. If Obama wins, and if he uses the presidential bully pulpit appropriately, perhaps he really will be able to lead Congress to enact a program of progressive economic policies from more progressive taxation to single-payer, single-provider universal health care.
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