Saboteurs or Morons?

It would be amusing if it weren’t so maddening that Republicans blame President Obama and Senate Majority Leader Harry Reid for the federal government shutdown and House Republicans’ refusal to go along with raising the debt ceiling, which threatens to cripple the government’s ability to finance its debt and would disrupt the world economy, unless the President agrees to stop implementation of the Affordable Care Act.

Republicans have talked themselves into risking financial calamity if Democrats won’t reverse the health care reform, which is designed to provide health insurance for the 48 million Americans, many of them working poor, who are not covered by health care plans — and it was a Republican idea to begin with.

Tea Party Republicans are the ground forces opposing all things Obama in Congress, intimidating House Speaker John Boehner and more moderate Republicans who would go ahead with the “clean” continuing resolution to put the government back to work. But the New York Times reported that conservative activists, led by former Attorney General Edwin Meese III and financed by right-wing billionaires, have been working since President Obama’s reinauguration in January to derail the President’s health care law. More than three dozen conservative groups have pushed their fellow Republicans into shutting down most federal agencies, and the shutdown is enforced by radical groups such as Heritage Action for America and the billionaire Koch brothers whose many affiliated political action committees have threatened to run attack ads and primary challengers against Republican officeholders who refuse to toe the Tea Party line.

This is the latest manifestation of conservative Republican ideology that has been promoting anti-worker economics for more than 80 years, ever since the GOP resisted Franklin Delano Roosevelt’s New Deal programs to end the Depression. Then, after the Depression was ended, Republicans spent the rest of the 20th century trying to dismantle the New Deal, with its pesky regulation of businesses to protect workers and consumers. They went after Roosevelt’s signature program, Social Security, as well as Lyndon Johnson’s signature domestic health programs, Medicare and Medicaid, which were enacted in 1965. Now they don’t want President Obama’s Affordable Care Act to get a running start at showing that government can improve the lives of working people, even though “Obamacare” is patterned after a program that was originally suggested by the conservative Heritage Foundation and patterned after Mitt Romney’s bipartisan health-care reform in Massachusetts.

[See Thomas Frank’s cover story for more on the conservative long march to reverse the New Deal and Edward McClelland’s story on page 12 on how conservative economic policies under Republicans and Democrats hollowed out the middle class.]

It took a long time for the generation that owed their families’ survival in the Great Depression to the New Deal, and then thrived on the post-war economic expansion that created the Great Middle Class, to turn their backs on the economic system that made the United States the richest nation on Earth. The economy boomed in the 1950s and ’60s with strong industrial labor unions and income tax rates that topped out at 92% for the wealthiest classes, but as Big Money took over the newspapers, magazines and broadcast outlets in the 1960s and ’70s, the word went out with numbing regularity that labor unions, high taxes and regulations were bad for the “job creators.”

In the 1960s, President John Kennedy decided to give the capitalists a break. He proposed that the top marginal tax rate be dropped to 77% in 1964. The top tax rate fluctuated between 70 and 77 percent through the ’70s, until Ronald Reagan took office in 1981. Reagan cut the top tax rate to 70% in 1980, then to 50% in 1982, 38.5% in 1987 and finally 28% in 1988. And you know what? Not only did capitalists take their profits out of their American factories and find cheaper places to manufacture their goods overseas; the Reagan administration also ran up record deficits as the national debt rose from $900 billion when Reagan took office to $2.8 trillion when he left. His successor, George H.W. Bush, reluctantly increased the top tax rates to 31%, but it wasn’t enough to turn the tide of red ink.

When Bill Clinton reached the White House in 1993, he convinced the Democratic Congress to increase taxes to 39.6% on incomes over $250,000. The budget and tax increase was adopted without a single Republican vote, as GOP economic leaders predicted — nay, they guaranteed — that the tax increase would plunge the US into economic collapse. Instead, of course, the late 1990s saw an economic boom and the increased tax revenues balanced the federal budget in 1998 for the first time since Lyndon Johnson left a balanced budget in 1969. Clinton balanced the budgets from 1998 through 2001, with surpluses for those four years totaling $559 billion.

What did Republicans learn from this experience? When George W. Bush was awarded the White House by the Republican Supreme Court in 2001, his administration expressed alarm that the federal government, with its budget surplus, was paying off the national debt too quickly, leaving capitalists no safe harbor for their excess profits, so Bush cut the top tax rate, first to 38.6% in 2002 and then 35% for the rest of his tenure, despite the costs of his War on Terror. He also cut the top tax on unearned income — interest, dividends and capital gains — to 15%. So millionaires and billionaires parked that undertaxed unearned income in banks overseas and the US national debt piled up once again.

After the 2008 election, when Barack Obama took office with the economy in free-fall, largely due to Wall Street financiers abusing the deregulation of the banking system, Republicans rediscovered the danger of a rising national debt. The GOP resisted Obama’s efforts to stimulate the economy with $800 billion in federal spending and tax cuts as well as his efforts to save General Motors and Chrysler with $85 billion in loans. Of course, they also resisted the drafting of the Affordable Care Act, which is expected to save the federal budget $210 billion through 2021, according to the Congressional Budget Office. Still, after 43 straight months of private sector job growth, the slowly improving economy has halved the $1.4 trillion annual deficit Obama was handed in 2009, to a $642 billion deficit projected for 2013, but Republicans are demanding that Obama return to GOP economic nostrums.

Supply-side “voodoo” economics got its shot in the Reagan and Bush administrations and it has proven to be quackery that hollowed out the American economy and ballooned the national debt. If Republicans really were concerned with restoring the economy and eliminating the deficit, they would:

• Join progressive Dems in rolling back the top tax rates to the pre-Reagan levels and do away with the low rates for capital gains, which would give capitalists an incentive to reinvest their profits in their businesses, but make room for tax breaks for the middle class, which actually would stimulate the economy;

• Resume enforcement of the Sherman Antitrust Act, which prevents cartels and large corporations from dominating the markets;

• Reinstate the Glass-Steagall Act, which kept investment banks from speculating with federally insured deposits;

• Replace free trade with fair trade laws that protect US jobs;

• Reverse economic policies that encourage corporate executives to maximize shareholder value at the expense of what is best for their employees and the communities in which they do business (as Thom Hartmann frequently argues on his radio show).

Instead, Republicans are demanding that they get something in return for letting the government open back up and pay the bills that Congress already has appropriated. One GOP proposal is that Democrats agree to “entitlement cuts” to Social Security and Medicare as a “compromise” from their previous demand that the Affordable Care Act be defunded. Some bad ideas just won’t go away. Whether Republican House leaders are saboteurs or simply morons, Democrats should stand firm against their hostage taking and leave Social Security and health care alone. — JMC

From The Progressive Populist, November 1, 2013


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