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Tuesday, May 31, 2011

Conservative Social Re-Engineering - Democrats helping them out !

Mahilena's Blog

Conservative Social Re-Engineering - Democrats helping them out !

The central issue in our political life is not being discussed.

At stake is the moral basis of American democracy.

The individual issues are all too real: assaults on unions, public employees, women's rights, immigrants, the environment, health care, voting rights, food safety, pensions, prenatal care, science, public broadcasting, and on and on. Budget deficits are a ruse, as we've seen in Wisconsin, where the governor turned a surplus into a deficit by providing corporate tax breaks, and then used the deficit as a ploy to break the unions, not just in Wisconsin, but seeking to be the first domino in a nationwide conservative movement.

Deficits can be addressed by raising revenue, plugging tax loopholes, putting people to work, and developing the economy long-term in all the ways the president has discussed. But deficits are not what really matters to conservatives.

Conservatives really want to change the basis of American life, re-enginer America, to make America run according to the conservative moral worldview in all areas of life.

In the 2008 campaign, candidate Obama accurately described the basis of American democracy: Empathy citizens caring for each other, both social and personal responsibility acting on that care, and an ethic of excellence. From these, our freedoms and our way of life follow, as does the role of government: to protect and empower everyone equally. Protection includes safety, health, the environment, pensions and empowerment starts with education and infrastructure.

No one can be free without these, and without a commitment to care and act on that care by one's fellow citizens.

The conservative worldview rejects all of that.

Conservatives believe in individual responsibility alone, not social responsibility. They don't think government should help its citizens. That is, they don't think citizens should help each other. The part of government they want to cut is not the military (we have 174 bases around the world), not government subsidies to corporations, not the aspect of government that fits their worldview. They want to cut the part that helps people. Why? Because that violates individual responsibility.

But where does that view of individual responsibility alone come from? see more on (http://kvs.co/8l0U )

The way to understand the conservative moral system is to consider a strict father family. The father is The Decider, the ultimate moral authority in the family. His authority must not be challenged. His job is to protect the family, to support the family (by winning competitions in the marketplace), and to teach his kids right from wrong by disciplining them physically when they do wrong. The use of force is necessary and required. Only then will children develop the internal discipline to become moral beings. And only with such discipline will they be able to prosper. And what of people who are not prosperous? They don't have discipline, and without discipline they cannot be moral, so they deserve their poverty. The good people are hence the prosperous people. Helping others takes away their discipline, and hence makes them both unable to prosper on their own and function morally.

The market itself is seen in this way. The slogan, "Let the market decide" assumes the market itself is The Decider. The market is seen as both natural (since it is assumed that people naturally seek their self-interest) and moral (if everyone seeks their own profit, the profit of all will be maximized by the invisible hand). As the ultimate moral authority, there should be no power higher than the market that might go against market values. Thus the government can spend money to protect the market and promote market values, but should not rule over it either through (1) regulation, (2) taxation, (3) unions and worker rights, (4) environmental protection or food safety laws, and (5) tort cases. Moreover, government should not do public service. The market has service industries for that. Thus, it would be wrong for the government to provide health care, education, public broadcasting, public parks, and so on. The very idea of these things is at odds with the conservative moral system. No one should be paying for anyone else. It is individual responsibility in all arenas. Taxation is thus seen as taking money away from those who have earned it and giving it to people who don't deserve it. Taxation cannot be seen as providing the necessities of life, a civilized society, and as necessary for business to prosper. Furthermore, Conservatives totally ignore the preamble of the Constitution as regarding "domestic tranquility" and "promoting (enhancing) common welfare" so for them anything other than defense is "Unconstitutional"

In conservative family life, the strict father rules. Fathers and husbands should have control over reproduction; hence, parental and spousal notification laws and opposition to abortion. In conservative religion, God is seen as the strict father, the Lord, who rewards and punishes according to individual responsibility in following his Biblical word.

Above all, the authority of conservatism itself must be maintained. The country should be ruled by conservative values, and progressive values are seen as evil. Science should not have authority over the market, and so the science of global warming and evolution must be denied.
Facts that are inconsistent with the authority of conservatism must be ignored or denied or explained away. To protect and extend conservative values themselves, the devil's own means can be used again conservatism's immoral enemies, whether lies, intimidation, torture, or even death, say, for women's doctors.

Freedom is defined as being your own strict father with individual not social responsibility, and without any government authority telling you what you can and cannot do. To defend that freedom as an individual, you will of course need a gun.

This is the America that conservatives really want. Budget deficits are convenient ruses for destroying American democracy and replacing it with conservative rule in all areas of life.

What is saddest of all is to see Democrats helping them.

Democrats help radical conservatives by accepting the deficit frame and arguing about what to cut. Even arguing against specific "cuts" is working within the conservative frame. What is the alternative? Pointing out what conservatives really want. Point out that there is plenty of money in America, and in Wisconsin. It is at the top. The disparity in financial assets is un-American the top one percent has more financial assets than the bottom 95 percent. Middle class wages have been flat for 30 years, while the wealth has floated to the top. This fits the conservative way of life, but not the American way of life. Democrats help conservatives by not shouting out loud over and over that it was conservative values that caused the global economic collapse: lack of regulation and a greed-is-good ethic (AynRand).

Democrats also help conservatives by what a friend has called Democratic Communication Disorder. Republican conservatives have constructed a vast and effective communication system, with think tanks, framing experts, training institutes, a system of trained speakers, vast holdings of media, and booking agents. Eighty percent of the talking heads on TV are conservatives. Talk matters because language heard over and over changes brains. Democrats have not built the communication system they need, and many are relatively clueless about how to frame their deepest values and complex truths. Read this on Conservative Higher Education Indoctrination on Greed/Virtue Of Selfisness AynRand ideology ( http://bit.ly/mcCD2D )

And Democrats help conservatives when they function as policy wonks talking policy without communicating the moral values behind the policies. They help conservatives when they neglect to remind us that pensions are deferred payments for work done. "Benefits" are pay for work, not a handout. Pensions and benefits are arranged by contract. If there is not enough money for them, it is because the contracted funds have been taken by conservative officials and given to wealthy people and corporations instead of to the people who have earned them.

Democrats help conservatives when they use conservative words like "entitlements" instead of "earnings" and speak of government as providing "services" instead of "necessities."

Is there hope?

I see it in Wisconsin, where tens of thousands citizens see through the conservative frames and are willing to flood the streets of their capital to stand up for their rights. They understand that democracy is about citizens uniting to take care of each other, about social responsibility as well as individual responsibility, and about work -- not just for your own profit, but to help create a civilized society. They appreciate their teachers, nurses, firemen, police, and other public servants. They are flooding the streets to demand real democracy -- the democracy of caring, of social responsibility, and of excellence, where prosperity is to be shared by those who work and those who serve.

Beltway media scorn Main Street's People’s Budget, hail Ryan hoax for Wall Street Elite


Published on Tuesday, May 31, 2011 by Fairness and Accuracy In Reporting (FAIR)

The budget proposal released on April 5 by Rep. Paul Ryan (R.-Wisc.) includes tax cuts for the wealthy, tax hikes for the middle class, drastic cuts in social spending and a radical restructuring of Medicare that would shift most of the cost of healthcare to seniors. Its dubious claims of deficit reduction rely on fatally flawed assumptions and inexplicable projections (CBPP, 4/7/11; CEPR, 4/11).

Meanwhile, the 76-member Congres-sional Progressive Caucus unveiled its own “People’s Budget” proposal on April 13, which would eliminate the deficit in 10 years without eroding social services or raising taxes on the working class. Serious economists like Paul Krugman (New York Times, 4/25/11) and Jeffrey Sachs (Huffington Post, 4/8/11) have spoken out in favor of the People’s Budget as, in Krugman’s words, a “genuinely courageous” plan and “the only major budget proposal out there offering a plausible path to balancing the budget.”

Guess which one the Beltway media have embraced?

Much of the avalanche of corporate media coverage about the Ryan plan has presented it as a serious solution to long-term budget problems, or at least the starting point of a serious conversation about the topic.

In Time magazine (4/18/11), readers learned that Paul Ryan—described as having “jet black hair and a touch of Eagle Scout to him”—

has unveiled an ambitious package of huge budget cuts designed to dig the country out of its crippling debt crisis. For Ryan, reining in spending is nothing less than an act of patriotic valor.

The magazine also declared that he is “a PowerPoint fanatic with an almost unsettling fluency in the fine print of massive budget documents.”

Deep into the article, readers get this parenthetical warning:

(He’s also been criticized for peddling fuzzy math and rosy projections. A Washington Post factcheck deemed his budget full of “dubious assertions, questionable assumptions and fishy figures.”)

So someone with “an almost unsettling fluency in the fine print of massive budget documents” has presented a budget plan filled with obvious problems. How can both things be true?

For too many media outlets, probing the details of Ryan’s plan was less important than telling an appealing political story: that finally someone has presented a “serious” budget proposal. Lacking evidence to demonstrate the plan’s seriousness, media cited Ryan’s biography in order to supply the necessary credibility.

Thus the Washington Post (4/6/11) explained that Ryan is “wonky” and “an unlikely revolutionary.” The Post added that “Ryan studied economics in college, and in Congress he has embraced the weedy issues of the federal budget.” The Post’s lead wondered if Ryan can “really manage the hardest sales job in U.S. politics.” The paper seemed to think so:

So far, the sales pitch appears to be classic Ryan. He will make his case with earnestness and a hope that a quiet explanation of budget math can swing the country in a way that previous politicians could not.

Ryan’s “budget math” relies on, among other things, wildly implausible estimates concerning unemployment and government spending. Krugman (Conscience of a Liberal, 4/6/11) explains that the plan asserts without explanation that unemployment will fall to its lowest level in 50 years, and that the entire federal budget, excluding Social Security and health programs, can be slashed by more than two-thirds via unspecified cuts. But as salesman to the corporate media, it seems Ryan is largely succeeding.

New York Times columnist David Brooks (4/5/11) called Ryan’s budget plan “the most comprehensive and most courageous budget reform proposal any of us have seen in our lifetimes...[which] will put all future arguments in the proper context.”

Even those who disagreed with Ryan’s plan found ways to praise it. In Time (4/7/11), Fareed Zakaria wrote that “Ryan’s plan is deeply flawed, but it is courageous.” Zakaria added that “Ryan makes magical assumptions about growth—and thus tax revenues,” and that other aspects are “highly unrealistic.” But still he concludes that it should be applauded as “a serious effort to tackle entitlement programs.”

And on NBC’s Chris Matthews Show (4/10/11), pundit Gloria Borger declared: “We have to give Paul Ryan an awful lot of credit because, as all of our august colleagues have said, yes, it does define the conversation for 2012.”

In a piece for Time.com (4/7/11), reporter Michael Grunwald noted the incongruity of such praise and wondered, “What’s so brave about fuzzy math in the service of Tea Party ideology”?

The Washington Post factcheck of the Ryan plan by Glenn Kessler (4/6/11)—the one cited in passing by Time—represented a genuine attempt to assess Ryan’s proposal. When Ryan claims that the Congressional Budget Office (CBO) found his plan would produce surpluses by 2040, most outlets report it as fact—like the April 6 Los Angeles Times, which explained that Ryan’s budget, according to the CBO, “would dramatically improve the nation’s overall fiscal picture, reducing deficits projected in President Obama’s budget and moving the federal government into surplus by 2040."

The Post’s Kessler, however, reports that this claim “seriously overstates the case,” since the CBO analysis “reflects the scenarios that Ryan has concocted. There are, for instance, no real revenue estimates, just an assumption that federal revenues will remain at about 19 percent of GDP.” The spending cuts imagined by Ryan are equally implausible—a “bare-bones government …not experienced since before the Great Depression.”

Kessler also noted that Ryan claims substantial savings—$1.4 trillion, in fact—from a repeal of the new healthcare law—without any explanation for why he rejects the CBO’s determination (CBO Director’s Blog, 1/6/11) that a repeal would actually cost hundreds of billions. The verdict was, as Time parenthetically noted, that the plan deemed brave and serious was based on “dubious assertions, questionable assumptions and fishy figures.”

Meanwhile, the Beltway media reaction to the People’s Budget ranged from indifferent to scornful. Not a single hard news story on the proposal ran in the New York Times, Washington Post or USA Today. The Post’s Dana Milbank (4/14/11) covered the unveiling of the “far-left” budget only to mock it, spending much of his time making fun of the “starry-eyed” progressives’ press conference and attire. Milbank snidely commented on Caucus co-chair Raul Grijalva’s tie, which “hung loosely from his neck and ended five inches above his waistband,” and noted that

the lawmakers and staffers kept poking one another with their umbrellas, and they found themselves competing with the whine of a Capitol tractor. Their oft-repeated slogan, “The People’s Budget,” conveyed an unhelpful association with “the people’s republic” and other socialist undertakings.

Milbank snorted that the budget proposal

gives a sense of how things would be if liberals ran the world: no cuts in Social Security benefits, government-negotiated Medicare drug prices, and increased income and Social Security taxes for the wealthy. Corporations and investors would be hit with a variety of new fees and taxes. And the military would face a shock-and-awe accounting: a 22 percent cut in Army soldiers, 30 percent for the Marines, 20 percent for the Navy and 15 percent for the Air Force. The wars in Iraq and Afghanistan would end, and weapons programs would go begging.

Milbank treats these policies as self-evidently absurd—even though, unlike Ryan’s tax cuts for the rich and dismantling of Medicare, they’re actually quite popular with the public. Polls show large majorities favor taxing the wealthy to reduce the debt while strongly opposing cuts to Medicaid, Medicare and Social Security (ABC/Wash-ington Post, 4/14–17/11; Pew Research Center, 3/8–14/11). Opinions on cutting the military budget are more evenly split, but when asked to choose between cutting “defense spending,” Medicare/Medicaid or Social Security (Reuters/Ipsos, 3/3–6/11), 51 percent of respondents chose military spending, while only 28 percent chose Medicare/Medicaid and 18 percent chose Social Security.

The most coverage the People’s Budget received was on MSNBC from liberal hosts like Cenk Uygur and Rachel Maddow. Maddow (4/22/11) marvelled at the remarkable lack of interest by the rest of the corporate media:

The Beltway right now says that the deficit negotiations in Washington have to be between President Obama and the debt-exploding, super-unpopular Paul Ryan plan. Why shouldn’t it be between President Obama and the progressives? If this really is about fixing the deficit, why on Earth is the most fiscally responsible, comprehensive budget plan that’s been submitted...not even on the table?

Her guest, Washington Post columnist and Center for American Progress fellow Matt Miller, responded:

The basic mode of coverage, I think, is that the sort of establishment press act as stenographers to power. And you have the mainstream Democratic position obviously represented by the president, and you have the opposition represented by Paul Ryan. And that sort of defines what the boundaries of debate are going to be, because the media faithfully reflects those two poles of debate.... Because [the Progressive Caucus] are not the official spokesman of the party like the president is, they tend to get ignored.

It’s true that the Beltway media largely serve as stenographers to power, and the Progressive Caucus does not represent the “mainstream” of the Democratic party, as defined by the party’s center of gravity in Washington. But remember that Ryan’s plan had all of 13 Congressional supporters even months after he first formally introduced it in January 2010 (Washington Post, 8/2/10). That didn’t stop him from getting hundreds of media mentions and dozens of interviews throughout the year, including plenty of praise for his “political courage” (e.g., USA Today, 9/7/10), well before the midterm elections skewed the party further to the right and shifted Ryan’s plan to the GOP “mainstream.”

Don’t expect the People’s Budget to ever get that kind of coverage. The “mainstream” of the two parties will always get the most ink, but where the GOP fringe gets its own slice of the coverage, progressives regularly go home empty-handed. The Progressive Caucus isn’t ignored because they’re not the mainstream of the Democratic Party, they’re ignored because they threaten the vital interests of the most powerful people in Washington—people who knot their ties appropriately and hobnob with Beltway reporters on a regular basis.

Peter Hart

Peter Hart is the activism director at FAIR (Fairness & Accuracy In Reporting). He writes for FAIR's magazine Extra, and is also a co-host and producer of FAIR's syndicated radio show CounterSpin. He is the author of The Oh Really? Factor: Unspinning Fox News Channel's Bill O'Reilly" (Seven Stories Press, 2003).

Julie Hollar

Julie Hollar is the managing editor of FAIR's magazine, Extra!. Her work received an award from Project Censored in 2005, and she has been interviewed by such media outlets as the L.A. Times, Agence France-Presse and the San Francisco Chronicle. A graduate of Rice University, she has written for the Texas Observer and coordinated communications and activism at the Lesbian/Gay Rights Lobby of Texas. Hollar also co-directed the 2006 documentary Boy I Am and was previously active in the Paper Tiger Television collective.

The Truth about the US Economy: Living on Main Street Sucks


Published on Tuesday, May 31, 2011 by RobertReich.org

The U.S. economy continues to stagnate. It’s growing at the rate of 1.8 percent, which is barely growing at all. Consumer spending is down. Home prices are down. Jobs and wages are going nowhere.

It’s vital that we understand the truth about the American economy.

How did we go from the Great Depression to 30 years of Great Prosperity? And from there, to 30 years of stagnant incomes and widening inequality, culminating in the Great Recession? And from the Great Recession into such an anemic recovery?

The Great Prosperity

During three decades from 1947 to 1977, the nation implemented what might be called a basic bargain with American workers. Employers paid them enough to buy what they produced. Mass production and mass consumption proved perfect complements. Almost everyone who wanted a job could find one with good wages, or at least wages that were trending upward.

During these three decades everyone’s wages grew — not just those at or near the top.

Government enforced the basic bargain in several ways. It used Keynesian policy to achieve nearly full employment. It gave ordinary workers more bargaining power. It provided social insurance. And it expanded public investment. Consequently, the portion of total income that went to the middle class grew while the portion going to the top declined. But this was no zero-sum game. As the economy grew almost everyone came out ahead, including those at the top.

The pay of workers in the bottom fifth grew 116 percent over these years — faster than the pay of those in the top fifth (which rose 99 percent), and in the top 5 percent (86 percent).

Productivity also grew quickly. Labor productivity — average output per hour worked — doubled. So did median incomes. Expressed in 2007 dollars, the typical family’s income rose from about $25,000 to $55,000. The basic bargain was cinched.

The middle class had the means to buy, and their buying created new jobs. As the economy grew, the national debt shrank as a percentage of it.

The Great Prosperity also marked the culmination of a reorganization of work that had begun during the Depression. Employers were required by law to provide extra pay — time-and-a-half — for work stretching beyond 40 hours a week. This created an incentive for employers to hire additional workers when demand picked up. Employers also were required to pay a minimum wage, which improved the pay of workers near the bottom as demand picked up.

When workers were laid off, usually during an economic downturn, government provided them with unemployment benefits, usually lasting until the economy recovered and they were rehired. Not only did this tide families over but it kept them buying goods and services — an “automatic stabilizer” for the economy in downturns.

Perhaps most significantly, government increased the bargaining leverage of ordinary workers. They were guaranteed the right to join labor unions, with which employers had to bargain in good faith. By the mid-1950s more than a third of all America workers in the private sector were unionized. And the unions demanded and received a fair slice of the American pie. Non-unionized companies, fearing their workers would otherwise want a union, offered similar deals.

Americans also enjoyed economic security against the risks of economic life — not only unemployment benefits but also, through Social Security, insurance against disability, loss of a major breadwinner, workplace injury and inability to save enough for retirement. In 1965 came health insurance for the elderly and the poor (Medicare and Medicaid). Economic security proved the handmaiden of prosperity. In requiring Americans to share the costs of adversity it enabled them to share the benefits of peace of mind. And by offering peace of mind, it freed them to consume the fruits of their labors.

The government sponsored the dreams of American families to own their own home by providing low-cost mortgages and interest deductions on mortgage payments. In many sections of the country, government subsidized electricity and water to make such homes habitable. And it built the roads and freeways that connected the homes with major commercial centers.

Government also widened access to higher education. The GI Bill paid college costs for those who returned from war. The expansion of public universities made higher education affordable to the American middle class.

Government paid for all of this with tax revenues from an expanding middle class with rising incomes. Revenues were also boosted by those at the top of the income ladder whose marginal taxes were far higher. The top marginal income tax rate during World War II was over 68 percent. In the 1950s, under Dwight Eisenhower, whom few would call a radical, it rose to 91 percent. In the 1960s and 1970s the highest marginal rate was around 70 percent. Even after exploiting all possible deductions and credits, the typical high-income taxpayer paid a marginal federal tax of over 50 percent. But contrary to what conservative commentators had predicted, the high tax rates did not reduce economic growth. To the contrary, they enabled the nation to expand middle-class prosperity and fuel growth.

The Middle-Class Squeeze, 1977-2007

During the Great Prosperity of 1947-1977, the basic bargain had ensured that the pay of American workers coincided with their output. In effect, the vast middle class received an increasing share of the benefits of economic growth. But after that point, the two lines began to diverge: Output per hour — a measure of productivity — continued to rise. But real hourly compensation was left in the dust.

It’s easy to blame “globalization” for the stagnation of middle incomes, but technological advances have played as much if not a greater role. Factories remaining in the United States have shed workers as they automated. So has the service sector.

But contrary to popular mythology, trade and technology have not reduced the overall number of American jobs. Their more profound effect has been on pay. Rather than be out of work, most Americans have quietly settled for lower real wages, or wages that have risen more slowly than the overall growth of the economy per person. Although unemployment following the Great Recession remains high, jobs are slowly returning. But in order to get them, many workers have to accept lower pay than before.

Starting more than three decades ago, trade and technology began driving a wedge between the earnings of people at the top and everyone else. The pay of well-connected graduates of prestigious colleges and MBA programs has soared. But the pay and benefits of most other workers has either flattened or dropped. And the ensuing division has also made most middle-class American families less economically secure.

Government could have enforced the basic bargain. But it did the opposite. It slashed public goods and investments — whacking school budgets, increasing the cost of public higher education, reducing job training, cutting public transportation and allowing bridges, ports and highways to corrode.

It shredded safety nets — reducing aid to jobless families with children, tightening eligibility for food stamps, and cutting unemployment insurance so much that by 2007 only 40 percent of the unemployed were covered. It halved the top income tax rate from the range of 70 to 90 percent that prevailed during the Great Prosperity to 28 to 35 percent; allowed many of the nation’s rich to treat their income as capital gains subject to no more than 15 percent tax; and shrunk inheritance taxes that affected only the top-most 1.5 percent of earners. Yet at the same time, America boosted sales and payroll taxes, both of which took a bigger chunk out of the pay the middle class and the poor than of the well off.

How America Kept Buying: Three Coping Mechanisms

Coping mechanism No. 1: Women move into paid work. Starting in the late 1970s, and escalating in the 1980s and 1990s, women went into paid work in greater and greater numbers. For the relatively small sliver of women with four-year college degrees, this was the natural consequence of wider educational opportunities and new laws against gender discrimination that opened professions to well-educated women. But the vast majority of women who migrated into paid work did so in order to prop up family incomes as households were hit by the stagnant or declining wages of male workers.

This transition of women into paid work has been one of the most important social and economic changes to occur over the last four decades. In 1966, 20 percent of mothers with young children worked outside the home. By the late 1990s, the proportion had risen to 60 percent. For married women with children under the age of 6, the transformation has been even more dramatic — from 12 percent in the 1960s to 55 percent by the late 1990s.

Coping mechanism No. 2: Everyone works longer hours. By the mid 2000s it was not uncommon for men to work more than 60 hours a week and women to work more than 50. A growing number of people took on two or three jobs. All told, by the 2000s, the typical American worker worked more than 2,200 hours a year — 350 hours more than the average European worked, more hours even than the typically industrious Japanese put in. It was many more hours than the typical American middle-class family had worked in 1979 — 500 hours longer, a full 12 weeks more.

Coping mechanism No. 3: Draw down savings and borrow to the hilt. After exhausting the first two coping mechanisms, the only way Americans could keep consuming as before was to save less and go deeper into debt. During the Great Prosperity the American middle class saved about 9 percent of their after-tax incomes each year. By the late 1980s and early 1990s, that portion had been whittled down to about 7 percent. The savings rate then dropped to 6 percent in 1994, and on down to 3 percent in 1999. By 2008, Americans saved nothing. Meanwhile, household debt exploded. By 2007, the typical American owed 138 percent of their after-tax income.

The Challenge for the Future

All three coping mechanisms have been exhausted. The fundamental economic challenge ahead is to restore the vast American middle class.

That requires resurrecting the basic bargain linking wages to overall gains, and providing the middle class a share of economic gains sufficient to allow them to purchase more of what the economy can produce. As we should have learned from the Great Prosperity — the 30 years after World War II when America grew because most Americans shared in the nation’s prosperity — we cannot have a growing and vibrant economy without a growing and vibrant middle class.

(This is excerpted from my testimony to the U.S. Senate Committee on Health, Education, Labor, and Pensions, on May 12. It is also drawn from my recent book, Aftershock: The Next Economy and America’s Future.)

Robert Reich is Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written twelve books, including The Work of Nations, Locked in the Cabinet, and his most recent book, Supercapitalism. His "Marketplace" commentaries can be found on publicradio.com and iTunes.

Stop the Granny Bashing: Despite What You May Think, Our Seniors Are in Trouble


Stop the Granny Bashing: Despite What You May Think, Our Seniors Are in Trouble

We must fight the deficit hysterics' relentless granny-bashing. Most people don't grasp that this group has already been hit hard by budget cuts and the recession.

Photo Credit: Rosie O'Beirne

“We lived very well,” said Norma Hair, 71, over a shaky table at the small pizzeria she runs in San Miguel de Allende, Mexico, with 68-year-old Carol Schmidt, her wife and partner of over 30 years. “In 1979, Carol was making $33,000 per year, which was a lot of money back then. Then I rose to the position of supervisor of accounting in a company. So, our combined income [in the early-1980s] was probably about $60,000.”

The two women are sharp, with bright, youthful eyes and a slightly wicked sense of humor. But their bodies betray their years. “The reason we have nothing,” says Hair, “is because we spent everything we could on medical to keep Carol alive when we were in the United States.” Both women suffer from chronic heart problems in addition to other ailments.

“Hospitals have to treat you for life-threatening illnesses,“ explains Hair. “[Carol] got two lifesaving surgeries for nothing. But it was getting harder and harder, so I decided that it was easier if we traveled to different cities.”

So they did. They sold their home, bought an RV and toured the nation's emergency rooms. “We were on the road for three and a half years,” says Schmidt, “just so we could go to a new ER each time and they wouldn't be suspicious -- oh, you're back again?"

The two have lived in Mexico since 2002, in part because of their love for the country, but also because they can live well on their combined income of $2,200 per month – Social Security, a little money from a self-published book and Schmidt's small pension. The health care is cheap, too – Schmidt had what she described as an “atrial fib situation” a few weeks before our interview, and an overnight stay at the hospital cost them $45. The ambulance ride required only a “donation,” and the women offered 200 pesos – about $18 dollars.

They've also got Medicare in the US to fall back on. “I had a serious operation in 2003, and I did go back,” says Schmidt. “My surgeon told me, 'I'm going to operate or you're going to die.'” Even inexpensive health care can add up when the procedures are complicated, and the two women couldn't afford to pay for the surgery out-of-pocket. In other words, Carol Schmidt owes her life to the relatively threadbare social safety-net that their country of birth provides.

They are two among millions of older American struggling to get by. “One out of three seniors in the United States is economically insecure,” Howard Bedlin of the National Council on Aging told journalist Paul Kleyman. “Yet the public perception is that seniors are doing fine and not struggling.”

The GOP may lose control of the House as a just reward for passing Paul Ryan's draconian budget – one that would replace the popular single-payer Medicare system with vouchers the elderly would then fork over to private insurance companies (assuming they'd cover them). It's somewhat of a political mystery why they'd touch that third rail given that the measure has no chances of passing the Democratic-controlled Senate, much less surviving Obama's veto pen. I've argued that it was the result of a party believing its own spin:

For years, the American Right has portrayed itself as representing “real America,” as Sarah Palin put it. They've long characterized the U.S. as a “center-right” nation full of people who hate “big government,” and they've portrayed popular social safety-net programs as somehow being foreign, if not unconstitutional signs of “creeping socialism.” Last year, when they swept into control of the House, they convinced themselves that the American public had enthusiastically handed them a mandate.

But on a more basic level, it's likely they thought they'd insulated themselves from the wrath of seniors – a major demographic for the GOP – by leaving Medicare intact for anyone over 55 years of age. The problem for Republicans is that older Americans know quite well how difficult it can be to live out one's golden years in the United States, and they have no interest in making it much harder for their children and grandchildren when they reach retirement age. This is where ideology – the Right's emphasis on individuals taking care of themselves – meets the real world, one in which people suffer from heart attacks and strokes and require thousands of dollars in prescription drugs to stay alive.

The National Council on Aging did a study earlier this year which found that most people don't grasp the tenuous situation many of our elderly find themselves in today. Among the findings, as summarized by Kleyman:

  • Less than one-third of Americans knew that low-income elders now pay 25 percent of their incomes for health care out-of-pocket, despite having Medicare.

  • Only one in six people understood that 40 percent of seniors recently faced such housing problems as being unable to pay their mortgages or living in dilapidated housing.

  • Only one in five knew that nearly 6 million older Americans are at risk of going hungry.

  • Fewer than one-fifth of those surveyed knew that average credit-card debt for seniors was $10,000.

And whatever economic security enjoyed by older workers who are not yet eligible for benefits – those who would lose the most if the GOP's budget plan were enacted -- has been ravaged by the recession. A survey released this week by the American Association of Retired People (AARP), found that one in four older workers had burned through all of their retirement savings during the course of the downturn. As the Huffington Post's Arthur Delaney noted, “12.4 percent of the 50-plus cohort told AARP they lost their health insurance, 49.5 percent said they delayed medical or dental care because of financial troubles and 13.5 percent said they started to collect Social Security retirement benefits earlier than they'd previously planned.”

Meanwhile, in Washington, they're talking about exacting some sort of “shared sacrifice” from this vulnerable population – making “hard choices.” But what makes the deficit hysterics' relentless granny-bashing so obscene is that this is a group that has already been hit hard by budget cuts – never mind what the “Ryan plan” would do to them if passed. As Paul Kleyman put it, all of that blather about sacrifice “fails to reflect the deep cuts to seniors’ program that have already been made in the 2011 budget.” This year's budget already “ includes stark reductions for seniors in such safety-net programs as low-income housing, home-energy assistance for those in extreme weather, and job training and placement.”

It's important to note the long-term context in which this is happening: for several decades, corporate America and the government have shrugged off much of the burden of providing working people a decent retirement. In 1989, the number of workers with 401(k) plans--subject to the ups and downs of the stock market--exceeded those with fixed-benefit pensions for the first time. Even mega-corporations got into the act; in 1998, nine out of 10 Fortune 100 companies still offered their employees a pension, but that number had been cut in half by 2008.

Budgets aren't just sheets full of numbers, they're ultimately a reflection of our priorities. We spend trillions on far-flung conflicts, hand out hundreds of billions in corporate welfare and subsidies, and we can certainly afford to keep our grandparents out of suffocating poverty. The only question we need to ask ourselves is: exactly what kind of society do we want to live in?

Saturday, May 28, 2011

The Rapid Disappearance of America's Middle Class

Breaking News & Views for the Progressive Community

Published on Wednesday, January 11, 2006 by the Seattle Times
by Floyd J. McKay

Honk if this sounds like you or someone you know.

You were born during the Great Depression or World War II. Your father either grew things or made things, your mother was primarily at home.

You graduated from high school and went to college. If you graduated, you were the first in your family to do so.

You worked for one company or institution much of your life and received a fixed pension, which with Social Security provides a decent if not rich retirement.

You have helped care for an elderly parent on Social Security and Medicare.

You have also had to help at least one of your adult children because of financial problems brought about by loss of a job or a spouse's job, serious medical expenses, divorce, or a combination of the above.

You worry about your children's ability to get and stay ahead in ways your parents never worried about you.

There is reason for that concern, according to Elizabeth Warren, a Harvard law professor who has written widely on the financial challenges to middle-class America in our globalized, outsourced and downsized world.

In Harvard Magazine Warren documents what many of us have felt anecdotally: "During the past generation, the American middle-class family that once could count on hard work and fair play to keep itself financially secure has been transformed by economic risk and new realities. Now a pink slip, a bad diagnosis, or a disappearing spouse can reduce a family from solidly middle class to newly poor in a few months."

The danger, Warren finds, comes from both ends of the financial spectrum: a decline in real wages for full-time workers and huge increases in basic family expenses. As a result, families are staying afloat only because both partners work.

Male full-time workers in 2003 earned $800 less than their counterparts in 1970, after adjustment for inflation. Enter the second paycheck, and the family's combined income goes to $73,700 a year, a huge 75 percent increase from 1970.

Sounds great, right?

Not so, says Warren, and most of us would agree. Extra earnings increase costs for transportation, child care and taxes. Additional higher costs of mortgages and health care simply erase the added earnings — and then some. Warren estimates today's two-income family actually has $1,500 less per year in discretionary spending.

Don't even ask about single-parent families, the news is so grim. Divorced women with children or divorced men with child support are three times as likely to file for bankruptcy as married counterparts. "All income is budgeted, there is no one at home who can work if the primary earner loses a job or gets sick, and no one is around to take over if a child gets sick or an elderly parent needs help," says Warren.

Prefer the traditional '70s pattern, dad at work and mom at home? "The modern single-earner family trying to keep up an average lifestyle faces a 72-percent drop in discretionary income compared with its one-income counterpart of a generation ago." Mom works to keep the family afloat.

Globalization has reduced the cost of most household spending — clothing, food, appliances. Americans spend less on discretionary items than in 1970. It's the basic costs that are killing us, particularly housing and medical.

Haunting today's families is what Warren calls the "risk front," primarily insecure employment and the threat of medical emergencies. There's no room for error with both parents working and up to their necks in debt and obligations. "A once-secure middle class has disappeared. In its place are millions of families whose grip on the good life can be shaken loose in an instant."

This sounds all too familiar to many of us who were either born into the middle class or struggled to gain entry, and have now seen our kids on a treadmill to nowhere. It should be painfully evident to all, yet it seems to have escaped our leaders.

Why can't we get it right on a national health policy to reduce this huge risk to the middle class, and why are we giving tax breaks to the ultra-rich, who never have to or ever will worry about these issues?

Credit laws are stacked against consumers. Payday-cash storefronts, exorbitant credit-card interest rates and variable-rate mortgages are devastating families.

Congress has let the financial industry run wild, including legislation this year making it harder to declare bankruptcy.

All the talk about family values is just that — talk — when our financial policies are driving middle-class families to the wall.

Floyd J. McKay, a journalism professor emeritus at Western Washington University, is a regular contributor to Times editorial pages. E-mail to: floydmckay@yahoo.com

Five Eye-Opening Facts About Our Bloated Post-9/11 'Defense' Spending


A dollar spent on guns is one less buck available for butter.

This week, the National Priorities Project (NPP) released a snapshot of U.S. “defense” spending since September 11, 2001. The eye-popping figures lend credence to the theory that al Qaeda's attacks were a form of economic warfare – that they hoped for a massive overreaction that would entangle us in costly foreign wars that would ultimately drain away our national wealth.

They didn't bankrupt us the same way the Mujahadeen helped bring down the Soviet Union decades before, because our economy was much stronger. But they did succeed in putting us deep into the red – with an assist, of course, from Bush's ideologically driven tax cuts for the wealthy.

The topline number is this: we have spent $7.6 trillion on the military and homeland security since 9/11. The Pentagon's base budget – which doesn't include the costs of fighting our wars – has increased by 81 percent during that time (43 percent when adjusted for inflation). The costs of the conflicts in Afghanistan and Iraq have now reached $1.26 trillion. But that only scratches the surface; it doesn't include the long-term costs of caring for badly wounded soldiers, for example.

One line-item suggests that 9/11 has been used to justify greater military spending across the board; the nuclear weapons budget has shot up by more than a fifth after adjusting for inflation. How intercontinental ballistic missiles that can vaporize whole cities are useful in a “war on terror” is anybody's guess.

The Pentagon itself acknowledges these dollars haven't all been spent effectively – there is certainly plenty of waste. According to the Washington Post, the DoD has blown $32 billion (enough to offer free, universal college tuition for a year) on canceled weapons programs since 1997. According to the Post story, which is based on an unreleased Pentagon report, “For almost a decade, the Defense Department saw its budgets boom — but didn’t make the kind of technological strides that seemed possible.”

"Since 9/11, a near doubling of the Pentagon’s modernization accounts — more than $700 billion over 10 years in new spending on procurement, research and development — has resulted in relatively modest gains in actual military capability,” Defense Secretary Robert M. Gates said in an address last week.

He called that outcome both “vexing and disturbing.” Some might find the relentless focus on cutting benefits for vulnerable Americans "vexing and disturbing" in light of this profligate spending. Budgets, after all, are a reflection of our priorities.

Toward that end, let's put these numbers in perspective by looking at some of the other things we might be doing with those dollars. Because a buck spent on guns is one less for butter.

1. Post-9/11 Defense Hikes Equal Five Times the “Medicare Gap”

Economist Dean Baker notes that “the projections in the Medicare Trustees report, as well as the CBO baseline budget, show that the program faces a relatively modest long-term shortfall.” The amount of money needed to balance the program's finances over its 75-year horizon, he adds, “is less than 0.3 percent of GDP, approximately one-fifth of the increase in the rate annual defense spending between 2000 and 2011.”

2. Afghanistan Costs Alone Could Pay for 15.6 Years of Head Start

Head Start provides education, health, nutrition, and parenting services to low-income children and their families. It's an incredibly successful, effective and popular program, but there are only 900,000 places in the program for more than 2.5 million eligible kids. According to the National Priorities Project, what we've spent on the Afghanistan war so far could fund Head Start for all eligible children for the next 15.6 years.

3. Covering the Uninsured

A 2007 study conducted by researchers at Harvard University estimated that 45,000 people die every year in the United States from problems associated with lack of coverage. The study found that “uninsured, working-age Americans have a 40 percent higher risk of death than their privately insured counterparts,” even “after taking into account socioeconomics, health behaviors, and baseline health.”

According to NPP's analysis, the costs of the Afghanistan conflict alone could cover every uninsured American for 1.7 years.

4. Closing State Budget Gaps

Forty-six states face budget shortfalls in this fiscal year, totaling $130 billion nationwide. The supplemental requests for fighting in Iraq and Afghanistan this year add up to $170 billion – that doesn't include the Pentagon's base budget, nukes or Homeland Security.

5. Iraq, Just in 2011

Iraq is still a bloody mess, with an insurgency still underway. But our politicians have declared vistory and the media have largely moved on. That doesn't mean we won't spend almost $50 billion on those "non-combat troops" which remain, however. What else could we do with that kind of scratch if we just brought them home? NPP tells us it would buy:

  • 24.3 million children receiving low-income health care for one year, OR
  • 726,044 elementary school teachers for one year, OR

  • 829,946 firefighters for one year, OR

  • 6.2 million Head Start slots for children for one year, OR

  • 10.7 million households with renewable electricity -- solar photovoltaic for one year, OR

  • 28.6 million households with renewable electricity-wind power for one year, OR

  • 6.1 million military veterans receiving VA medical care for one year, OR

  • 9.8 million people receiving low-income health care for one year, OR

  • 718,208 police or sheriff's patrol officers for one year, OR

  • 6.0 million scholarships for university students for one year, OR

  • 8.5 million students receiving Pell grants of $5,550

The Big Picture

It's a tragic irony that so much of the discussion surrounding the public debt centers on “entitlements” like Social Security (which hasn't added a penny to the national debt) when we're still paying for Korea and Vietnam and Grenada and Panama and the first Gulf War and Somalia and the Balkans and on and on.

Estimates of just how much of our national debt payments are from past military spending vary wildly. In 2007, economist Robert Higgs calculated it like this:

I added up all past deficits (minus surpluses) since 1916 (when the debt was nearly zero), prorated according to each year's ratio of narrowly defined national security spending--military, veterans, and international affairs--to total federal spending, expressing everything in dollars of constant purchasing power. This sum is equal to 91.2 percent of the value of the national debt held by the public at the end of 2006. Therefore, I attribute that same percentage of the government's net interest outlays in that year to past debt-financed defense spending.

When Higgs did that analysis four years ago, he came up with a figure of $206.7 billion just in interest payments on our past military adventures.

Why the Democratic Party Has Abandoned the Middle Class in Favor of the Rich


If politicians care almost exclusively about the concerns of the rich, it makes sense that over the past decades they've enacted policies that have ended up benefiting the rich.

The following article first appeared in Mother Jones. For more great content from Mother Jones, sign up for their free email updates here.

In 2008, a liberal Democrat was elected president. Landslide votes gave Democrats huge congressional majorities. Eight years of war and scandal and George W. Bush had stigmatized the Republican Party almost beyond redemption. A global financial crisis had discredited the disciples of free-market fundamentalism, and Americans were ready for serious change.

Or so it seemed. But two years later, Wall Street is back to earning record profits, and conservatives are triumphant. To understand why this happened, it's not enough to examine polls and tea parties and the makeup of Barack Obama's economic team. You have to understand how we fell so short, and what we rightfully should have expected from Obama's election. And you have to understand two crucial things about American politics.

The first is this: Income inequality has grown dramatically since the mid-'70s—far more in the US than in most advanced countries—and the gap is only partly related to college grads outperforming high-school grads. Rather, the bulk of our growing inequality has been a product of skyrocketing incomes among the richest 1 percent and—even more dramatically—among the top 0.1 percent. It has, in other words, been CEOs and Wall Street traders at the very tippy-top who are hoovering up vast sums of money from everyone, even those who by ordinary standards are pretty well off.

Second, American politicians don't care much about voters with moderate incomes. Princeton political scientist Larry Bartels studied the voting behavior of US senators in the early '90s and discovered that they respond far more to the desires of high-income groups than to anyone else. By itself, that's not a surprise. He also found that Republicans don't respond at all to the desires of voters with modest incomes. Maybe that's not a surprise, either. But this should be: Bartels found that Democratic senators don't respond to the desires of these voters, either. At all.

It doesn't take a multivariate correlation to conclude that these two things are tightly related: If politicians care almost exclusively about the concerns of the rich, it makes sense that over the past decades they've enacted policies that have ended up benefiting the rich. And if you're not rich yourself, this is a problem. First and foremost, it's an economic problem because it's siphoned vast sums of money from the pockets of most Americans into those of the ultrawealthy. At the same time, relentless concentration of wealth and power among the rich is deeply corrosive in a democracy, and this makes it a profoundly political problem as well.

How did we get here? In the past, after all, liberal politicians did make it their business to advocate for the working and middle classes, and they worked that advocacy through the Democratic Party. But they largely stopped doing this in the '70s, leaving the interests of corporations and the wealthy nearly unopposed. The story of how this happened is the key to understanding why the Obama era lasted less than two years.

About a year ago, the Pew Research Center looked looked at the sources reporters used for stories on the economy. The White House and members of Congress were often quoted, of course. Business leaders. Academics. Ordinary citizens. If you're under 40, you may not notice anything amiss. Who else is missing, then? Well: "Representatives of organized labor unions," Pew found, "were sources in a mere 2% of all the economy stories studied."

It wasn't always this way. Union leaders like John L. Lewis, George Meany, and Walter Reuther were routine sources for reporters from the '30s through the '70s. And why not? They made news. The contracts they signed were templates for entire industries. They had the power to bring commerce to a halt. They raised living standards for millions, they made and broke presidents, and they formed the backbone of one of America's two great political parties.

They did far more than that, though. As historian Kim Phillips-Fein puts it, "The strength of unions in postwar America had a profound impact on all people who worked for a living, even those who did not belong to a union themselves." (Emphasis mine.) Wages went up, even at nonunion companies. Health benefits expanded, private pensions rose, and vacations became more common. It was unions that made the American economy work for the middle class, and it was their later decline that turned the economy upside-down and made it into a playground for the business and financial classes.

Technically, American labor began its ebb in the early '50s. But as late as 1970, private-sector union density was still more than 25 percent, and the absolute number of union members was at its highest point in history. American unions had plenty of problems, ranging from unremitting hostility in the South to unimaginative leadership almost everywhere else, but it wasn't until the rise of the New Left in the '60s that these problems began to metastasize.

The problems were political, not economic. Organized labor requires government support to thrive—things like the right to organize workplaces, rules that prevent retaliation against union leaders, and requirements that management negotiate in good faith—and in America, that support traditionally came from the Democratic Party. The relationship was symbiotic: Unions provided money and ground game campaign organization, and in return Democrats supported economic policies like minimum-wage laws and expanded health care that helped not just union members per se—since they'd already won good wages and benefits at the bargaining table—but the interests of the working and middle classes writ large.

But despite its roots in organized labor, the New Left wasn't much interested in all this. As the Port Huron Statement, the founding document of Students for a Democratic Society, famously noted, the students who formed the nucleus of the movement had been "bred in at least modest comfort." They were animated not by workplace safety or the cost of living, but first by civil rights and antiwar sentiment, and later by feminism, the sexual revolution, and environmentalism. They wore their hair long, they used drugs, and they were loathed by the mandarins of organized labor.

By the end of the '60s, the feeling was entirely mutual. New Left activists derided union bosses as just another tired bunch of white, establishment Cold War fossils, and as a result, the rupture of the Democratic Party that started in Chicago in 1968 became irrevocable in Miami Beach four years later. Labor leaders assumed that the hippies, who had been no match for either Richard Daley's cops or establishment control of the nominating rules, posed no real threat to their continued dominance of the party machinery. But precisely because it seemed impossible that this motley collection of shaggy kids, newly assertive women, and goo-goo academics could ever figure out how to wield real political power, the bosses simply weren't ready when it turned out they had miscalculated badly. Thus George Meany's surprise when he got his first look at the New York delegation at the 1972 Democratic convention. "What kind of delegation is this?" he sneered. "They've got six open fags and only three AFL-CIO people on that delegation!"

But that was just the start. New rules put in place in 1968 led by almost geometric progression to the nomination of George McGovern in 1972, and despite McGovern's sterling pro-labor credentials, the AFL-CIO refused to endorse him. Not only were labor bosses enraged that the hippies had thwarted the nomination of labor favorite Hubert Humphrey, but amnesty, acid, and abortion were simply too much for them. Besides, Richard Nixon had been sweet-talking them for four years, and though relations had recently become strained, he seemed not entirely unsympathetic to the labor cause. How bad could it be if he won reelection?

Plenty bad, it turned out—though not because of anything Nixon himself did. The real harm was the eventual disaffection of the Democratic Party from the labor cause. Two years after the debacle in Miami, Nixon was gone and Democrats won a landslide victory in the 1974 midterm election. But the newly minted members of Congress, among them former McGovern campaign manager Gary Hart, weren't especially loyal to big labor. They'd seen how labor had treated McGovern, despite his lifetime of support for their issues.

The results were catastrophic. Business groups, simultaneously alarmed at the expansion of federal regulations during the '60s and newly emboldened by the obvious fault lines on the left, started hiring lobbyists and launching political action committees at a torrid pace. At the same time, corporations began to realize that lobbying individually for their own parochial interests (steel, sugar, finance, etc.) wasn't enough: They needed to band together to push aggressively for a broadly pro-business legislative environment. In 1971, future Supreme Court justice Lewis Powell wrote his now-famous memo urging the business community to fight back: "Strength lies in organization," he wrote, and would rise and fall "through joint effort, and in the political power available only through united action and national organizations." Over the next few years, the Chamber of Commerce morphed into an aggressive and highly politicized advocate of business interests, conservative think tanks began to flourish, and more than 100 corporate CEOs banded together to found a pro-market supergroup, the Business Roundtable.

They didn't have to wait long for their first big success. By 1978, a chastened union movement had already given up on big-ticket legislation to make it easier to organize workplaces. But they still had every reason to think they could at least win passage of a modest package to bolster existing labor law and increase penalties for flouting rulings of the National Labor Relations Board. After all, a Democrat was president, and Democrats held 61 seats in the Senate. So they threw their support behind a compromise bill they thought the business community would accept with only a pro forma fight.

Instead, the Business Roundtable, the US Chamber of Commerce, and other business groups declared war. Organized labor fought back with all it had—but that was no longer enough: The bill failed in the Senate by two votes. It was, said right-wing Sen. Orrin Hatch (R-Utah), "a starting point for a new era of assertiveness by big business in Washington." Business historian Kim McQuaid put it more bluntly: 1978, he said, was "Waterloo" for unions.

Organized labor, already in trouble thanks to stagflation, globalization, and the decay of manufacturing, now went into a death spiral. That decline led to a decline in the power of the Democratic Party, which in turn led to fewer protections for unions. Rinse and repeat. By the time both sides realized what had happened, it was too late—union density had slumped below the point of no return.

Why does this matter? Big unions have plenty of pathologies of their own, after all, so maybe it's just as well that we're rid of them. Maybe. But in the real world, political parties need an institutional base. Parties need money. And parties need organizational muscle. The Republican Party gets the former from corporate sponsors and the latter from highly organized church-based groups. The Democratic Party, conversely, relied heavily on organized labor for both in the postwar era. So as unions increasingly withered beginning in the '70s, the Democratic Party turned to the only other source of money and influence available in large-enough quantities to replace big labor: the business community. The rise of neoliberalism in the '80s, given concrete form by the Democratic Leadership Council, was fundamentally an effort to make the party more friendly to business. After all, what choice did Democrats have? Without substantial support from labor or business, no modern party can thrive.

It's important to understand what happened here. Entire forests have been felled explaining why the working class abandoned the Democratic Party, but that's not the real story. It's true that Southern whites of all classes have increasingly voted Republican over the past 30 years. But working-class African Americans have been (and remain) among the most reliable Democratic voters, and as Larry Bartels has shown convincingly, outside the South the white working class has not dramatically changed its voting behavior over the past half-century. About 50 percent of these moderate-income whites vote for Democratic presidential candidates, and a bit more than half self-identify as Democrats. These numbers bounce up and down a bit (thus the "Reagan Democrat" phenomenon of the early '80s), but the overall trend has been virtually flat since 1948.

In other words, it's not that the working class has abandoned Democrats. It's just the opposite: The Democratic Party has largely abandoned the working class.

Here's why this is a big deal. Progressive change in the United States has always come in short, intense spurts: The Progressive Era lasted barely a decade at the national level, the New Deal saw virtually all of its legislative activity enacted within the space of six years between 1933 and 1938, and the frenzy of federal action associated with the '60s nearly all unfolded between 1964 and 1970. There have been exceptions, of course: The FDA was created in 1906, the GI Bill was passed in 1944, and the Americans with Disabilities Act was passed in 1990. And the courts have followed a schedule all their own. Still, one striking fact remains: Liberal reform is not a continuous movement powered by mere enthusiasm. Reform eras last only a short time and require extraordinarily intense levels of cultural and political energy to get started. And they require two other things to get started: a Democratic president and a Democratic Congress.

In 2008, fully four decades after our last burst of liberal change, we got that again. But instead of five or six tumultuous years, the surge of liberalism that started in 2008 lasted scarcely 18 months and produced only two legislative changes really worthy of note: health care reform and the repeal of Don't Ask, Don't Tell. By the summer of 2010 liberals were dispirited, political energy had been co-opted almost entirely by the tea party movement, and in November, Republicans won a crushing victory.

Why? The answer, I think, is that there simply wasn't an institutional base big enough to insist on the kinds of political choices that would have kept the momentum of 2008 alive. In the past, blue-collar workers largely took their cues on economic policy from meetings in union halls, and in turn, labor leaders gave them a voice in Washington.

This matters, as Jacob Hacker and Paul Pierson argue in one of last year's most important books, Winner-Take-All Politics, because politicians don't respond to the concerns of voters, they respond to the organized muscle of institutions that represent them. With labor in decline, both parties now respond strongly to the interests of the rich—whose institutional representation is deep and energetic—and barely at all to the interests of the working and middle classes.

This has produced three decades of commercial and financial deregulation that started during the administration of a Democrat, Jimmy Carter, gained steam throughout the Reagan era, and continued under Bill Clinton. There were a lot of ways America could have responded to the twin challenges of '70s-era stagflation and the globalization of finance, but the policies we chose almost invariably ignored the stagnating wages of the middle class and instead catered to the desires of the superrich: hefty tax cuts on both high incomes and capital gains. Deregulation of S&Ls (PDF) that led to extensive looting and billions in taxpayer losses. Monetary policy focused excessively on inflation instead of employment levels. Tacit acceptance of asset bubbles as a way of maintaining high economic growth. An unwillingness to regulate financial derivatives that led to enormous Wall Street profits and contributed to the financial crisis of 2008. At nearly every turn, corporations and the financial industry used their institutional muscle to get what they wanted, while the working class sat by and watched, mostly unaware that any of this was even happening.

It's impossible to wind back the clock and see what would have happened if things had been different, but we can take a pretty good guess. Organized labor, for all its faults, acted as an effective countervailing power for decades, representing not just its own interests, but the interests of virtually the entire wage-earning class against the investor class. As veteran Washington Post reporter David Broder wrote a few years ago, labor in the postwar era "did not confine itself to bread-and-butter issues for its own members. It was at the forefront of battles for aid to education, civil rights, housing programs and a host of other social causes important to the whole community. And because it was muscular, it was heard and heeded." If unions had been as strong in the '80s and '90s as they were in the '50s and '60s, it's almost inconceivable that they would have sat by and accepted tax cuts and financial deregulation on the scale that we got. They would have demanded economic policies friendlier to middle-class interests, they would have pressed for the appointment of regulators less captured by the financial industry, and they would have had the muscle to get both.

And that means things would have been different during the first two years of the Obama era, too. Aside from the question of whether the crisis would have been so acute in the first place, a labor-oriented Democratic Party almost certainly would have demanded a bigger stimulus in 2009. It would have fought hard for "cramdown" legislation to help distressed homeowners, instead of caving in to the banks that wanted it killed. It would have resisted the reappointment of Ben Bernanke as Fed chairman. These and other choices would have helped the economic recovery and produced a surge of electoral energy far beyond Obama's first few months. And since elections are won and lost on economic performance, voter turnout, and legislative accomplishments, Democrats probably would have lost something like 10 or 20 seats last November, not 63. Instead of petering out after 18 months, the Obama era might still have several years to run.

This is, of course, pie in the sky. Organized labor has become a shell of its former self, and the working class doesn't have any institutional muscle in Washington. As a result, the Democratic Party no longer has much real connection to moderate-income voters. And that's hurt nearly everyone.

If unions had remained strong and Democrats had continued to vigorously press for more equitable economic policies, middle-class wages over the past three decades likely would have grown at about the same rate as the overall economy—just as they had in the postwar era. But they didn't, and that meant that every year, the money that would have gone to middle-class wage increases instead went somewhere else. This created a vast and steadily growing pool of money, and the chart below gives you an idea of its size. It shows how much money would have flowed to different groups if their incomes had grown at the same rate as the overall economy. The entire bottom 80 percent now loses a collective $743 billion each year, thanks to the cumulative effect of slow wage growth. Conversely, the top 1 percent gains $673 billion. That's a pretty close match. Basically, the money gained by the top 1 percent seems to have come almost entirely from the bottom 80 percent.

And what about those in the 80th to 99th percentile? They didn't score the huge payoffs of the superrich, but they did okay, basically keeping up with economic growth. Yet the skyrocketing costs of things like housing and higher education (PDF) make this less of a success story than it seems. And there's been a bigger cost as well: It turns out that today's upper-middle-class families lead a much more precarious existence than raw income figures suggest.

Jacob Hacker demonstrated this persuasively in The Great Risk Shift, which examined the ways in which financial risk has increasingly been moved from corporations and the government onto individuals. Income volatility, for example, has risen dramatically over the past 30 years. The odds of experiencing a 50 percent drop in family income have more than doubled since 1970, and this volatility has increased for both high school and college grads. At the same time, traditional pensions have almost completely disappeared, replaced by chronically underfunded 401(k) plans in which workers bear all the risk of stock market gains and losses. Home foreclosures are up (PDF), Americans are drowning in debt, jobs are less secure, and personal bankruptcies have soared (PDF). These developments have been disastrous for workers at all income levels.

This didn't all happen thanks to a sinister 30-year plan hatched in a smoke-filled room, and it can't be reined in merely by exposing it to the light. It's a story about power. It's about the loss of a countervailing power robust enough to stand up to the influence of business interests and the rich on equal terms. With that gone, the response to every new crisis and every new change in the economic landscape has inevitably pointed in the same direction. And after three decades, the cumulative effect of all those individual responses is an economy focused almost exclusively on the demands of business and finance. In theory, that's supposed to produce rapid economic growth that serves us all, and 30 years of free-market evangelism have convinced nearly everyone—even middle-class voters who keep getting the short end of the economic stick—that the policy preferences of the business community are good for everyone. But in practice, the benefits have gone almost entirely to the very wealthy.

It's not clear how this will get turned around. Unions, for better or worse, are history. Even union leaders don't believe they'll ever regain the power of their glory days. If private-sector union density increased from 7 percent to 10 percent, that would be considered a huge victory. But it wouldn't be anywhere near enough to restore the power of the working and middle classes.

And yet: The heart and soul of liberalism is economic egalitarianism. Without it, Wall Street will continue to extract ever vaster sums from the American economy, the middle class will continue to stagnate, and the left will continue to lack the powerful political and cultural energy necessary for a sustained period of liberal reform. For this to change, America needs a countervailing power as big, crude, and uncompromising as organized labor used to be.

But what?

Over the past 40 years, the American left has built an enormous institutional infrastructure dedicated to mobilizing money, votes, and public opinion on social issues, and this has paid off with huge strides in civil rights, feminism, gay rights, environmental policy, and more. But the past two years have demonstrated that that isn't enough. If the left ever wants to regain the vigor that powered earlier eras of liberal reform, it needs to rebuild the infrastructure of economic populism that we've ignored for too long. Figuring out how to do that is the central task of the new decade.

Kevin Drum is a political blogger for Mother Jones. For more of his stories, click here. Get Kevin Drum's RSS feed.