Robert Reich explains why the growing federal debt enriches Wall St. bankers and wealthy Americans.
Democrats shouldn’t put themselves in a fiscal straitjacket.On Thursday, the best House speaker of modern times reclaimed her gavel, replacing one of the worst. It has taken the news media a very long time to appreciate the greatness of Nancy Pelosi, who saved Social Security from privatization, then was instrumental in gaining health insurance for 20 million Americans. And the media are still having a hard time facing up to the phoniness of their darling Paul Ryan, who, by the way, left office with a 12 percent favorable rating.
There’s every reason to expect that Pelosi will once again be highly effective. But some progressive Democrats object to one of her initial moves — and on the economics, and probably the politics, the critics are right.
.. The issue in question is “paygo,” a rule requiring that increases in spending be matched by offsetting tax increases or cuts elsewhere.
You can argue that as a practical matter, the rule won’t matter much if at all. On one side, paygo is the law, whether Democrats put it in their internal rules or not. On the other side, the law can fairly easily be waived, as happened after the G.O.P.’s huge 2017 tax cut was enacted.
But adopting the rule was a signal of Democratic priorities — a statement that the party is deeply concerned about budget deficits and willing to cramp its other goals to address that concern. Is that a signal the party should really be sending?
.. Furthermore, there are things the government should be spending money on even when jobs are plentiful — things like fixing our deteriorating infrastructure and helping children get education, health care and adequate nutrition. Such spending has big long-run payoffs, even in purely monetary terms.
Meanwhile, the federal government can borrow money very cheaply — the interest rate on inflation-protected 10-year bonds is only about 1 percent. These low borrowing costs, in turn, reflect what seems to be a persistent savings glut — that is, the private sector wants to save more than it’s willing to invest, even with very low interest rates.
Or consider what happened after Democrats enacted the Affordable Care Act, going to great lengths to pay for the additional benefits with tax increases and spending cuts. A majority of voters still believed that it increased the deficit. Reality doesn’t seem to matter.
.. Anyway, the truth is that while voters may claim to care about the deficit, hardly any of them really do. For example, does anyone still believe that the Tea Party uprising was a protest against deficits? From the beginning, it was basically about race — about the government spending money to help Those People. And that’s true of a lot of what pretends to be fiscal conservatism.
.. In fact, even the deficit scolds who played such a big role in Beltway discourse during the Obama years seem oddly selective in their concerns about red ink. After all those proclamations that fiscal doom was coming any day now unless we cut spending on Social Security and Medicare, it’s remarkable how muted their response has been to a huge, budget-busting tax cut. It’s almost as if their real goal was shrinking social programs, not limiting national debt.
.. So am I saying that Democrats should completely ignore budget deficits? No; if and when they’re ready to move on things like some form of Medicare for All, the sums will be so large that asking how they’ll be paid for will be crucial.
After Democrats lost the 2016 presidential election, a certain conventional wisdom congealed within the pundit class: Donald Trump’s success was owed to the Democratic abandonment of the white working class and the party’s emphasis on identity politics. By failing to emphasize a strong economic message, the thinking went, the party had ceded the election to Trump... the meantime, Trump’s administration has seen that economic message almost entirely subsumed by the focus of congressional Republicans on tax cuts for the wealthy and plans to shrink the social safety net. But even as the message has shifted, there hasn’t been a corresponding erosion in Trump’s support. The economics were never the point. The cruelty was the point... Nevertheless, among those who claim to oppose identity politics, the term is applied exclusively to efforts by historically marginalized constituencies to claim rights others already possess... Trump’s campaign, with its emphasis on state violence against religious and ethnic minorities—Muslim bans, mass deportations, “nationwide stop-and-frisk”—does not count under this definition, but left-wing opposition to discriminatory state violence does... A November panel at the right-wing Heritage Foundation on the threat posed by “identity politics,” with no apparent irony, will feature an all-white panel... But the entire closing argument of the Republican Party in the 2018 midterm elections is a naked appeal to identity politics—a politics based in appeals to the loathing of, or membership in, a particular group. The GOP’s plan to slash the welfare state in order to make room for more high-income tax cuts is unpopular among the public at large. In order to preserve their congressional majority, Republicans have taken to misleading voters by insisting that they oppose cuts or changes to popular social insurance programs, while stoking fears about
- Latino immigrants,
- Muslim terrorists, and
- black criminality.
.. In truth, without that deception, identity politics is all the Trump-era Republican Party has.
.. Trump considers the media “the enemy of the people” only when it successfully undermines his falsehoods; at all other times, it is a force multiplier, obeying his attempts to shift topics of conversation from substantive policy matters to racial scaremongering.
.. The tenets of objectivity by which American journalists largely abide hold that reporters may not pass judgment on the morality of certain political tactics, only on their effectiveness. It’s a principle that unintentionally rewards immorality by turning questions of right and wrong into debates over whether a particular tactic will help win an election... In the closing weeks of the campaign, the president has promised a nonexistent tax cut to the middle class after two years in which unified Republican control of government produced only a windfall for the rich.. Trump’s nativism, and the Republican Party’s traditional hostility to government intervention on behalf of the poor, have had a happier marriage than some might have expected.
.. But that wasn’t what Trump promised—rather, his 2016 campaign pledged both generous social-insurance benefits for working-class white Republicans and cruelty for undeserving nonwhites.
.. Republicans are scrambling to insist that they will cut taxes on the middle class, offer robust health-care protections, and protect Medicare, Medicaid, and Social Security, even as GOP leaders in Congress plot to slash all three to cut the deficit created by their upper-income tax cuts.
.. When armed agents of the state gun down innocent people in the street, when the president attempts to ban people from entering the U.S. based on their faith, or when the administration shatters immigrant families, these are burdens that religious and ethnic minorities must bear silently as the price of their presence in the United States.
And in the impoverished moral imagination of Trumpist political discourse, any and all white Americans who also oppose such things must be doing so insincerely in an effort to seek approval.
.. America is not, strictly speaking, a center-right or center-left nation. Rather, it remains the nation of the Dixiecrats, in which the majority’s desire for equal opportunity and a robust welfare state is mediated by the addiction of a large chunk of the polity to racial hierarchy. It is no coincidence that the Democratic Party’s dominant period in American history coincided with its representation of both warring impulses and ended when it chose one over the other. The midterms offer a similar choice for the American voter, in rather stark terms.
The president’s offensive on immigration is linked to his party’s struggle to build support for key pieces of its economic agenda.
GOP candidates appear to have lost faith that they can win the argument with voters over the key policies in their economic agenda, especially the longtime effort to repeal the Affordable Care Act and the huge tax cut Trump signed late last year.
“They are ending up on the culture war because we have blunted them on taxes and they can’t talk about health care,” Democratic pollster Ben Tulchin said. “So they are left with one card to play.”
.. While Republicans first expected the tax cut to anchor their midterm campaign, the public reaction to it has soured over the election year. An early October CNBC survey found that while 54 percent of Americans believe that the law provided “a lot of” benefits to large corporations, and 52 percent think that it similarly benefited the wealthy, the share who believe that it helped other groups is much smaller: 15 percent saw such gains for small business, 11 percent for average taxpayers, and a measly 8 percent for themselves personally. In campaigns across the country, Democrats have directly attacked the tax cut as a giveaway to the wealthy that will eventually compel Republicans to cut Social Security and Medicare.