Can Democrats Capitalize on GOP Extremism?

Can Democrats Capitalize on GOP Extremism?

Political parties are not just collections of like-minded folk or the embodiment of the issue platforms they purportedly stand on. They are also, in the final analysis, a business. And like all business enterprises, they are out to make a profit, even if that profit for Republicans and Democrats is denominated in the currency of people's votes and the elections that are won by collecting more of them.

Hence, the "morals of the marketplace," however unsavory that value system might be, are as corrupting for political parties as for any other business and as likely to cause them to abandon principles for gain.

As disgruntled progressives on this site and elsewhere have documented, one of the hilarities of the Obama Era has been the accusation by conservatives that the Democratic Party is "radical" and bent on the fundamental transformation of the United States into some species of "European-style" socialism.

Nothing could be funnier than the notion that today's Democratic Party is "radical," or even particularly left-leaning by the traditional categories of Western democratic political history, says Michael Lind.

Conservative Democratic Coalition

The present-day Democratic Party "has next to nothing to do with Franklin Roosevelt's New Deal or Lyndon Johnson's Great Society," says Lind, author of Land of Promise: An Economic History of the United States.  

Today's Democratic Party took shape between the end of LBJ's Great Society in 1968 and the rise of Ronald Reagan in 1980 "and has been anti-New Deal from the very beginning."

Party coalitions change every generation or two, says Lind, and the so-called New Deal Coalition that governed this country for more than half a century was a combination of ex-Republican Progressives in the North fused with the old white ethnic Jacksonian Farmer-Labor coalition.  

Civil rights nearly destroyed the New Deal coalition during the Dixiecrat walkout in 1948 and finally did wreck it in 1968 when George Wallace's third party campaign "proved to be a way-station for many working-class whites en route from the Democrats to the Republicans," said Lind.

Jimmy Carter was a center-right Southern governor who ran against big government and did not get along with big labor any better, touting his credentials as a businessman, says Lind.

Indeed, Carter's major domestic policy achievement was the dismantling of New Deal regulation of trucking and air travel on behalf of big business. His Fed chairman, Paul Volcker, also created an artificial recession, the worst since the Great Depression, to cripple American unions whose wage demands were blamed for inflation.

Many of the younger Democrats, like Bill Bradley of New York and Paul Tsongas of Massachusetts, were deficit hawks who supported the 1983 Social Security "reform" that cut Social Security benefits by raising the retirement age from 65 to 67, said Lind. In his 1984 presidential campaign, Fritz Mondale made deficit reduction his central issue.

Bill Clinton was also a center-right Southern governor who combined moderate economic conservatism with social liberalism. Like Carter, Clinton attacked a major New Deal program when he teamed up with Republicans to kill Aid to Families with Dependent Children and replace it with more conservative-friendly federal grants to state-based programs.  

Clinton famously made deficit reduction rather than public investment central to his presidency, supporting the dismantling of New Deal regulations of the financial sector, said Lind.

Lind has to stretch the analogy a bit to lump Barack Obama in as "the third New Politics Democrat in the White House" who went after a major New Deal program when Obama proposed cutting Social Security by means of "chained CPI" inflation adjustments as part of a "grand bargain" on the budget with John Boehner and other Republican conservatives.  

Lind said that Obama only backed off when what remains of the Democratic left pushed back, calling Obama an "Eisenhower Democrat" whose outlook is closer to "penny-pinching, dovish mid-20th century liberal Republicanism than to 'guns and butter' Rooseveltian liberalism."

A New New Deal?

In short, says Lind, "today's Democrats have no more in common with Franklin Roosevelt, Harry Truman, John F. Kennedy and Lyndon Johnson than today's Republicans have in common with Abraham Lincoln or Dwight Eisenhower."

From the 1970s onward, the Democratic Party "has had deficit reduction, cutbacks of New Deal-era entitlements and regulations and identity politics in its DNA," says Lind. "This is a party that is not only post-New Deal but in many ways anti-New Deal. It was born that way."

Looking forward, Lind says the Democrat's neoliberal combination of center-right economics, deficit reduction at the expense of middle-class entitlements, and parsimonious welfare programs for the working poor "is tired and uninspiring."  For their part, Republicans "can't go on for much longer trying to revive the imagined glories of the Reagan presidency in the 1980s."

Hence, American politics is at a standoff and real change may not occur in 2016, or even in 2020, says Lind.

You can't beat something with nothing, and Democrats lack a coherent economic plan for the future. There are particular plans by particular Democratic groups, like the Congressional Progressive Caucus, White House and progressive think tanks, but nothing to match the right wing's simple and straightforward plan to dismantle the post-FDR federal government and replace it with vouchers, says Lind.

"There is no Platonic Plan of the center-left, existing more or less unchanged in various documents and manifestos, comparable to the familiar Platonic Plan of the right," he said.

Reaganomics Endures

And whatever form it takes on paper at the moment, says Lind, "the Republican economic strategy has maintained its identity, election after election, decade after decade, since it was hammered out by right-wing policy wonks in the 1970s and 1980s."

It's an economic ideology that combines free market libertarianism with white working-class populism that -- in spite of its talk of "freedom" -- is a kind of illiberal white Christian tribalism or communitarianism that believes in "gun-packing vigilantes on the southwestern border" and that books like The Diary of Ann Frank and Catcher in the Rye should be banned from the local school library.

The libertarians object to government as a threat to individualism.  The white Christian communitarians don't mind if government suppresses individuals as long as they control the government and those being suppressed are individuals Christians view as threats to their tribal social order, namely nonwhites, homosexuals, secularists, long-haired radical professors.

Lacking secure national majorities, the default strategy of these Southern-based populists is to prevent national majorities, acting through the federal government, from intervening to protect minorities against the tyranny of state and local majorities, says Lind.

And so for different reasons, economic libertarians and social populists have a common enemy in the federal government, and this common hostility to the federal government has united otherwise-incompatible Wall Street libertarians and disproportionately Southern white communitarians.

Hence the gridlock of the last eight years as Southern Republican senators have waged an unprecedented war of obstruction using a record number of filibusters to beat back legislation they don't like.

The Democrat's Populist Opening

But as the Washington Post's E.J. Dionne argues, after eight years of inactivity, the public has grown impatient with those who treat a refusal to compromise as a virtue. And so, Tea Party extremism may have opened an opportunity for Democrats to be more progressive and get in touch with their inner populist.

And it's not just Democrats who are concerned. In Kansas, Dionne reports that in the last election a group of 104 Republican politicians bolted their party to endorse the Democrat challenging Republican Governor Sam Brownback because they believed the steep income tax cuts Brownback championed went way too far.

"We're all very alarmed by the damage to our public schools, very alarmed by the damage to the state's financial responsibility and very alarmed about the credit downgrade that Wall Street is paying attention to," said a former Republican state senator, a banker.

"If there's one thing that separates Republicans from Democrats these days, today more than ever, it's that Democrats believe that government can be a force for good and Republicans have become an anti-government party," said New York Senator Charles Schumer. "Business is sometimes an anti-government group, but less and less so in this modern, complicated world."

And on issues such as infrastructure spending and immigration reform, he sees the middle-class and business groups as sharing common interests.

"In the past, conservatives have used social and cultural issues as wedges to split Democratic constituencies," says Dionne. "Now, Democrats view the GOP's attitude toward government as a wedge issue that might make pro-business populism possible. In American politics, stranger things have happened."

Populism has supplied an almost inexhaustible source of energy for the Right so long as Fox News and others were able to persuade their mostly white working class listeners that the only threat to their liberties came from the encroachments of "big government."

Insider Trading: Making Money the Old-fashioned Way

Yet, at the same time that middle-class voters (and even some conservative populists) think Tea Party radicals have gone too far in their efforts to dismantle the government, revelations of how Wall Street and American business really operate has caused many to temper their support for the free market as well.

It is easy to make money the old-fashioned way when the price of admission is a membership at some exclusive country club where insider trades worth millions or billions are parlayed between bets on which player will be closest to the pin.

As far back as 1934, the Securities and Exchange Act banned insider trading but there were always loopholes since the law left it up to the SEC and the courts to define it, says Robert Reich. That is why in recent decades confidential information of the sort exchanged on the tee box has become "the coin of the realm."

The laws on insider trading are so porous that it's perfectly legal for a CEO to tell his golf buddy that his company is being taken over and for the buddy to make a killing on that information, says Reich. It is also legal for that golf buddy to leak the information to a hedge-fund manager so long as he doesn't tell the manager where the information comes from.  Honesty among thieves has an ancient and honored pedigree after all.  

"Major players on Wall Street have been making tons of money not because they're particularly clever but because they happen to be in the realm where a lot of coins come their way," says Reich. And last year the top 25 hedge fund managers took home an average of a billion dollars each, with even run-of-the-mill portfolio managers banking more than $2 million, says Reich.  

Insider trading is why CEO pay has skyrocketed since so much of their compensation comes in the form of company stock whose value they can manipulate or trade on with the inside knowledge only they and a few others are privy to.

None of this was legal until 1981 when Ronald Reagan's SEC removed requirements that companies publicly disclose the amount and timing of their buybacks. And so, it is no surprise that between 2003 and 2012 the chief executives of the ten companies that repurchased the most stock (totaling $859 billion) received 58% of their total pay in stock options or stock awards.

Social Justice Finds a New Market

"But profiting off inside information that's not available to average investors strikes many as unfair," says Reich. "The 'coin of the realm' on Wall Street and in corporate boardrooms is contributing to the savage inequalities of American life."

Public opinion surveys are interesting, but the reality is that American politics responds to organized groups who can make their influence felt on election day with foot soldiers and cash.

And so. the enfeeblement of Big Labor as a counterweight to Big Business has had far deeper ramifications than most people realize, reorienting the center of gravity of American politics and allowing the country to be inexorably pulled ever further to the right.

Americans might not believe in equality of result but they have been instructed by Democrats and Republicans alike to favor equality of opportunity. Support for capitalism rests on a core tenant of the American Work Ethic that rewards should be tied to risk or hard work -- not for cleverly gaming the system in one's favor as so many of today's American oligarchs have done.

And it's within that percolating public consensus of the injustice and unfairness of the present reward system itself that the Democratic Party might find a new market for its old and discarded ideas of social justice.  

 

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