Manhattan real-estate suffered its worst year since the housing crash of 2009, as tax changes, stock-market turmoil and jittery foreign buyers hurt sales in 2018.
The Democrats’ Obligation to Expose and Defeat the RepubliCon of American Workers
The Republican Party, commencing about the time of Ronald Reagan’s election in 1980, adopted three ideas that have proved attractive to voters but have served to undermine the nation’s economy, democracy, institutions, and health: Government (other than the military) is the source of all our problems, truth doesn’t matter, and trickle-down economic theory must guide policymaking. Collectively, these define “the RepubliCon”—the conning of American voters that the Republican Party is better for them than the Democratic Party.
Republicans continue to embrace these ideas, the culmination of which was the election of the woefully incompetent Donald Trump as president, and, until these ideas are broadly rejected, they will continue to harm our country, the West and the world.
But Democrats are to blame, too. They have failed to expose and defeat these ideas, and expose the truth that Republicans have abandoned the liberal values upon which the United States of America was founded, among them, in addition to support of democracy and capitalism: checks and balances, respect for knowledge, tolerance, equality, peace, and the rule of law, as well as liberalism’s Enlightenment commitment to testing government policies based on facts and reason.
And in its failure to expose and defeat the con of supply-side—trickle-down—economics, the Democratic Party has also failed at promotion of its own demand-side policies of the sort that created the great American middle class after World War II.
The Democratic Party is currently hobbled its mission of promoting its ideas and opposing those of Republicans, however, torn between promoting “identity politics” and addressing economic concerns. The solution is to embrace both camps, unified under the traditional Democratic policy prescription of using government to provide opportunity for all to succeed as far as their talents and drive can take them, living in comfort lives of dignity. The example to follow is that of William F. Buckley, Jr., who in the 1950s created the ideological basis for what we call today “movement conservatism” of the Republican Party by combining three disparate strands of conservative thought—the elements of traditionalism, libertarianism and anti-communism (dubbed “fusionism”)—in a way that still today defines conservatism and the Republican Party (although anti-communism has evolved into anti-terrorism).
The imperative for Democrats to pull themselves together for the fight has taken on added urgency because, in addition to the current electoral near-irrelevance faced by the party, there is looming an economic downturn that will hit hardest the very working Americans who have fallen hardest for the Republicon. And when this downturn comes, it will be longer and more painful than it needs to be because of the con of the Republican Party over the past three and a half decades.
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LABOR DAY, September 4, 2017—President Donald Trump’s Republican administration has brought to the office of the presidency a level of incompetence—to use one of his favorite superlatives—the likes of which we have never seen before.
Senator Marco Rubio of Florida, during his campaign for the Republican presidential nomination, at a stop in Oklahoma City (February 26, 2016), appropriately called Donald Trump a “con man.” And, with the ongoing failings of the Trump administration amidst Republican majorities in the Senate and House—a warning to America: President Trump and the Republican Party have been and are continuing to con us, and there is a lot of pain coming our way.
That pain is coming in the form of a market downturn that will trigger a recession. And this downturn is probably months, not years, away. There are numerous potential triggers for it, none of which on its own is sufficient, but each of which undermines investor confidence so that taken together they may inspire a rush to the exits—these include the cost of recovery from Hurricane Harvey, the failure of tax reform to pass, Trump chief economic advisor Gary Cohn’s ultimate departure, failure to pass a federal budget before the end of September, failure to raise the debt ceiling at the end of September only to extend it with a continuing resolution into December, and, most importantly: President Trump himself being forced to testify under oath regarding dealings with Russia, addressing the findings of special counsel Robert Mueller, imperiling the future of his presidency, and the ending of that presidency with impeachment.
Of course, even without these potential triggers, a downturn could occur due to the simple reason that owners of large holdings of securities see others like them beginning to sell their securities and they join in the selling, so that sellers outnumber buyers. And this could happen because of a general fear that corporate earnings are beginning to decline due, in turn, to declining demand.
The business cycle will always be with us. A simple recurrence of a down cycle in the business cycle cannot be blamed on the Republican Party. What Republicans should be blamed for is promoting an ideology that manipulates the economy so that the next downturn—as was the case with downturns if 2000 and 2007-2009—will be longer and more painful than it needs to be.
The Democratic Party has the obligation to explain to American workers just how it is that they have been conned—an obligation to brand Donald Trump Republicon Man-in-Chief and his party the Republicon Party, having conned the American people into believing numerous outlandish untruths—among them that government (other than the military) is the source of all our problems, that truth doesn’t matter, and that trickle-down economic theory is the appropriate economic policy guide. Collectively, these define “the Republicon”—the conning of American voters into believing that the Republican Party is better for them than the Democratic Party—and into trusting Republican candidates with their votes. The next economic downturn will reveal that the Republican Party is woefully incompetent at governing and responding to it.
To succeed in explaining the con, however, Democrats will have to overcome whatever it is—perhaps political correctness; perhaps ignorance—that has prevented them, for nearly four decades, from telling the truth themselves: That their Republican opponents are like the proverbial emperor with no clothes—full of bluster but oblivious to the facts. Not only is the 2018 election at stake, but also the 2020 election, the future of America, and the future of the world.
The Lesson of Branding
Donald Trump taught the Democrats a lesson regarding “branding,” as, on the way to the presidency, he branded his opponents “Crooked Hillary,” “Crazy Bernie,” “Pocahontas” Warren, “Lyin’ Ted,” “Low Energy Jeb,” “Little Marco,” and “1 for 38” Kasich. Democrats may criticize the name-calling as childish, but if a belittling brand sticks to a person, it undermines that person’s credibility and tends to overwhelm whatever message that person carried.
The author Naomi Klein, in No Logo and No Is Not Enough, explored the concept of branding. From her observations and those of University of California, Berkeley, sociologist Arlie Russell Hochschild, whose impressions living for five years among voters in southwest Louisiana were documented in Strangers in Their Own Land, it can be seen that branding elicits an emotional attachment that tends to overrule facts. And, in the context of politics, this branding takes on attachment to ideology that tends to overrule facts.
An analogy provided here is that of the Marlboro Man, a brand that overruled facts about cigarettes causing cancer, until that brand—coincidentally, evoking “rugged individualism,” as does the Republican Party for Republican voters—was banned by the tobacco litigation’s Master Settlement Agreement, which officially acknowledged the fact that smoking increases the risk of death by lung disease.
President Trump is acutely aware of his own brand. As a businessman, he prominently places “TRUMP” in gold letters atop numerous buildings all over the world, and this brand stands for opulence. As a politician, the Trump brand is also of rugged individualism; of a man who was, and remains, a brash “outsider” who came from Queens as a young man and fought hard to gain the respect of the Manhattan elites as he triumphed in real estate on their home turf, investing and making millions of dollars in Manhattan real estate when many of these same elites had given up their city for dead.
And when he ran for president, he said what the millions of people who constitute his base were thinking: “Elites” are holding our country back. They are “stupid”. We need an “outsider” who is “smart” like he is, to come in, take on the elites, say what needs to be said, and “go into Washington and blow it up.” All this is his brand—an outsider fighting against elites—both Republican and Democrat—and it endears him to millions of his base.
But a blatant pattern of conning people by exploiting and capitalizing on their misplaced trust is apparent in Donald Trump’s life—in his real estate dealings marked by four bankruptcies, in Trump University (over which he settled disputes for $25 million), in Trump Model Management (which closed in early 2017) and in his abuse of the trust of middle class and poor voters. Like the three-card monte hustlers from his native New York City, constantly on the lookout for unsuspecting, trusting tourists to fleece out of their hard-earned cash, blustery Republicon Man Donald Trump perfected his pitch to fleece the unsuspecting, trusting electorate of their valuable votes.
For the Republicon brand to stick generally, Democrats must convince the voters they are being misled by Republicans; that the Republicans are attempting to gain their confidence so they can trick them out of their votes. This will take exposing the truth of Republican disrespect for facts generally.
Now is a good time to commence this effort, while the memory is fresh of President Trump’s Republiconning the good Americans who voted for him into thinking that he was other than a sympathizer with the white nationalists, white supremacists, Neo-Nazis and the Ku Klux Klan participants in the “Unite the Right” rally at Charlottesville, Virginia in August. His con was revealed when he spoke of “very fine people” among those groups who his aides later observed he claimed in private were but defending their “heritage.” We know that at that rally participants proudly gave the Nazi salute and chanted “Jews will not replace us!” and “Blood and Soil!” while proudly waving Nazi flags with swastikas on them, Confederate battle flags, anti-Semitic banners—and Trump/Pence signs. And, most egregiously, a Nazi sympathizer raced his car into a crowd and killed a young woman there to oppose them.
For the Republicon brand to stick regarding economic matters in particular will take an explanation of the basic ideological differences between Republicans and Democrats. And, Democrats must present their own policies in opposition.
The timing for an economic presentation is appropriate, too. We have been in an unusually mild period for stock market volatility—a period in which stock prices did not fluctuate dramatically, from the bottom in March 2009 to the S&P 500 index’s latest closing high on August 7, 2017, of 2,480.91; 271% higher. History indicates this calm cannot last forever.
And history shows the most volatile months for the market are September, October and November. In the prelude to the Great Depression, the Dow Jones peaked September 3, 1929, then drifted downward 32% on the eve of October 28, 1929—Black Tuesday—when in one day it fell nearly 11.7%. In 1987 the broader market measure, the S&P 500, peaked August 25th, and slowly ratcheted downward 2.6% to October 5th, from which it fell 13.6% through trading on Friday, October 16th, then closed down 20.47% on Black Monday, October 19th. In the prelude to the Great Recession, the Dow and the S&P 500 peaked October 9, 2007, fell 20% by June 2008, slowly ratcheted downward over the following 11 months, then resumed a precipitous decline in September 2008.
No one can know if history will repeat itself before the end of 2017, but Democrats and liberals should prepare to lead because the market will, inevitably, enter a downturn, one exacerbated by policies that, for too long, pursuant to misguided Republican economic theory, starved wages and compensated by propping up demand with debt.
The Dilemma for Democrats
A particular cause for hope among Democrats is found in the results of a series of Pew Polls conducted in March 2017 of voters under 30, finding that of those who identified as Republican or leaned Republican in December 2015, 23% had since shifted to the Democratic Party.
Democrats face a dilemma, however, in capturing these young voters and others for the long term. The pitch of President Trump and his fellow Republicans is based on misrepresentations of fact—cons—that lure voters into believing that their economic policies, which happen to benefit them, are better for the American economy generally and middle class and poor working Americans in particular than are the policies of Democrats who propose policies to directly benefit middle class and poor working Americans.
The Republicon is based on the ideology of “supply-side” economics—appropriately derided by Democrats as trickle-down economics—which is the culmination of more than three decades of the Republican Party’s disrespect for the truth regarding economics.
The ideological basis for the Republicon can be described in four words: Government bad; market good. This simple basic understanding enables Republicans to criticize Democrats’ demand-side economic policies, and to promote their own supply-side economic policies.
President Reagan captured, in his first inaugural address, the first part of the philosophy: “Government is not the solution to the problem. Government is the problem.” Implied in this statement is the second part of the ideological basis for the Republicon: Government is the problem because it interferes with the market, which will work for all us if we just get government off the backs of the rich and business—“the job creators.”
The next basic assumption of Republican trickle-down theory is that, because the market is good, it is the rich and businesses—those “job creators” on the supply side—that make the economy run, so that aiding them will benefit everyone—i.e., what’s good for the rich is good for all. Preferred policies are to cut taxes (especially on the rich and business), cut business regulations intended to shield the middle class and poor from the harshness of the market, and cut spending on government benefits earned and relied upon by the middle class and poor, such spending being deemed a burden on the rich and business. The Republicans’ theory is that with more money accruing to the rich and businesses, they will be incentivized to invest in increasing productivity by building more factories and hiring more workers, thus increasing jobs, and as these “job creators’” revenues grow they will be able to give raises to their workers, all thereby stimulating economic growth. Thus, in theory, these benefits to the rich and businesses will “trickle down” to everyone else.
The dilemma for Democrats is that they do not have a winning argument to sway voters away from these erroneous beliefs in trickle-down economics and the Republicon. In fact, polls show that voters tend to trust Republicans regarding the economy over Democrats. In widely publicized results, a Washington Post-ABC News Poll of 1,001 adults conducted July 10-13, 2017, found President Trump’s handling of the economy was the only area in which he was viewed favorably by the public, albeit by a narrow 43 percent to 41 percent.
And Democrats undermine their own attempts to present the truth when they ignore the basic truths that are contained in trickle-down theory: That economic growth is hindered by excessive taxation and excessive regulation; excessive government spending runs up the debt, which then potentially crowds out private borrowing and increases interest rates; and excessive benefits for nonworking Americans kills the work ethic. But the Republicans’ perspectives regarding what constitutes “excessive” in each case can be rebutted by facts.
The Republicon Undermines Our Economy: “It’ll Be YUGE!”—The Coming Downturn and the Trickle-Down (Supply-Side) Perspective of the Republicon versus the Demand-Side Perspective of the Democrats
There is no time like the present to confront the Republicon. Much was made of the announcement the first week of August regarding the economy having added 209,000 jobs in the month of July. However, looking back over the first seven months of the Trump administration, from January through July, the average for monthly job creation was 184,000—which was the lowest level since 2012, the last year of President Obama’s first term. Every year of President Obama’s second term saw greater average monthly job creation over the same January through July period (2013: 191,000; 2014: 242,000; 2015: 232,000; 2016: 196,000). Thus, employment hiring seems to be continuing, and accelerating, a downward slide begun in early 2015 under President Obama.
Similarly, a popular theme developed among conservative commentators that the 1 million jobs created in the first six months of the administration was a major achievement—for example, the Republican National Committee sent out a tweet August 6th: “UNPRECEDENTED ECONOMIC GROWTH UNDER @POTUS!” In reality, the 1.07 million jobs created in the first 6 months of 2017 under Trump were simply a continuation of the job growth over the preceding seven 6-month periods under President Obama, and similarly, a continuation and acceleration of a downward slide begun in early 2015: The second half of 2013 had also seen over 1 million jobs created (1.09 million); then came the first half of 2014, 1.5 million; the second half of 2014, 1.5 million; the first half of 2015, 1.37 million; the second half of 2015, 1.34 million; the first half of 2016, 1.08 million; the second half of 2016, 1.08 million.
And while the stock market set new highs as measured by the Dow (over 22,000) and broader S&P 500 (over 2,480), household debt reached a new record of $12.8 trillion in the second quarter. This was attributable to record credit card debt (technically, “revolving consumer credit outstanding”) plus record auto loan debt and record student debt (“non-revolving consumer credit outstanding”). And mortgage balances, the largest component of household debt, are on the rise again. Additionally, corporate debt is approaching a record high.
In August, Berkshire Hathaway Inc., the conglomerate run by Warren Buffett for over 50 years, reported it held slightly under $100 billion in cash at the end of the second quarter of 2017. Because it was not finding attractive deals, the company was holding onto cash which it would deploy when investments could be made on favorable terms—which would be likely in the event of a market downturn.
Yet, the VIX, a volatility index (sometimes also called the “fear index” or “fear gauge”) hit a 24-year low in July 2017, settling in at its lowest level since July 1993. This suggests extreme complacency among investors, many of whom have taken on more leverage—borrowed more money—to buy on the margin to get more out of their investments in an atmosphere of low volatility.
Richard Koo, chief economist for Nomura Securities, first identified, in the context of the Japanese recession but in an analysis applicable to the US economy, two different types of recession: the “balance sheet” recession and the “garden variety” recession later referred to as an “inventory” recession. The balance sheet recession is distinguished by collapsing asset values (such as real estate and stocks) in a context of high debt, leading to the necessity of selling of these assets as they are losing their value, thereby forcing asset prices down further. In contrast, an inventory recession is set off by inflation due to excessively low interest rates having driven up the consumer price index and other indicators of price (such as wages), leading to excessive inventory growth that collides with declining demand as interest rates are raised by the Federal Reserve to combat the inflation.
Among the economists who have raised concerns regarding excessive debt increasing the risk of occurrence of a balance sheet or “non-garden variety” recession are Paul Krugman, Nobel laureate, CUNY economics professor and op-ed writer for The New York Times; Robert Shiller, Nobel laureate and Yale University economist; Nouriel Roubini, an NYU economist; Jeffrey Gundlach, founder of DoubleLine Capital LP, an investment firm; David Rosenberg, chief economist, Gluskin Sheff; and John Hussman, a stock market analyst.
Shiller is famous for his valuation method, the cyclically adjusted price-earnings (CAPE) ratio, which he bases on an average of 10 years’ worth of earnings of publicly-traded companies composing the S&P 500. As of early August 2017, the ratio stood at over 30x. It has only been this high two times since 1881: once in 1929, on the eve of that stock market crash, and again on the eve of the crash that ended the dot-com bubble in 2000.
Rising inequality has marked our economy for four decades, and the Republican explanation for it is based on the factual observation that we are in a rapidly changing economic world which is shaped by technology and globalization. From this fact it is theorized that we are powerless to confront these forces’ downward pressure on wages. However, rapid growth in technology and globalization is not something new. It began soon after World War II, and drove the rapid growth of the US economy, and that rapid growth continued into the 1970s. Since 1980, the US economy has continued to grow, due in great part to both technology and globalization, albeit somewhat more slowly.
What is different between the two periods—why income and wealth were much more broadly shared from soon after World War II through the 1970s than it has been since 1980—is that, while technology and globalization spurred economic and productivity growth in that earlier period (again, both were growing even faster than they do now), the revenues attributable to increased productivity which, absent government intervention, would tend to go to those atop the economy, were forced by government policies to be shared with the workers—through, for example, the GI Bill, public infrastructure spending, support of unions, increases in the minimum wage, and generous public underwriting of tuition for public colleges and universities.
Thus, the mere presence of technology and globalization in the economy does not explain why inequality of income and wealth began to rise rapidly from the 1980s on. The real reason for rapid growth of inequality of income and wealth is that government intervention in the economy to spread the revenues attributable to increased productivity was reduced as a policy matter, per the direction of the voters who voted for Republican political candidates, who promised to implement, and implemented, trickle-down economic policies.
Senator Elizabeth Warren (D-MA) has often observed that the economy is rigged against working Americans. Of course the economy is rigged against working Americans—because working Americans joined with many of their fellow Americans in so rigging it when they voted for Republican political candidates. They did so because they fell for the Republicon that trickle-down policies are good for them and America generally—policies that would rig the economy so that the revenues attributable to Americans’—their—increased productivity will be upwardly redistributed to the rich and corporations.
Democrats, too, are at fault, for not sufficiently, repeatedly, confronting and telling the truth about supply-side—trickle-down—economics—thereby allowing the Republicon to continue. The truth about trickle-down should have been widely acknowledged fact long before the 2016 presidential campaign, so that voters would have repeatedly rejected, at the polls, Republican political candidates.
What follows is the truth that Democrats must promote regarding trickle-down economics. As observed above, trickle-down starts with the assumptions: Government bad. Market good. Trickle-down assumes that nothing government does works (although inexplicably exempt from this criticism is the military, which, of course, is part of the government). And, trickle-down assumes that the best way to stimulate growth is to stimulate supply.
In contrast to the nonsense of trickle-down, Democrats have long understood, especially since the British economist John Maynard Keynes—the father of “Keynesian” economics—expounded on his “demand-side” economic theory in his 1936 book, The General Theory of Employment, Interest and Money, that what is necessary to spur the economy is to increase demand. With demand increasing, the rich and business are incentivized to invest in increasing productivity to meet that demand and thereby increase sales revenues by building more factories and hiring more workers, thus increasing jobs, and as their revenues grow they will be able to give raises to their workers, all thereby stimulating economic growth (note the parallel between results predicted by the two theories). Thus, Democrats urge policies to raise wages for workers, increase public infrastructure spending, and provide good public education and health care for all, thereby freeing up more income for spending by these workers and further increase in demand (and, of course, increase in the quality of life of the workers).
President Obama attacked the trickle-down economics of the Republican Party in both of his campaigns, a tactic that helped him win two popular vote majorities—the first president to do so since Dwight Eisenhower in 1952 and 1956. In his December 6, 2011, re-election campaign address in Osawatomie, Kansas, President Obama critiqued trickle-down: “But here’s the problem: It doesn’t work. It has never worked. It didn’t work when it was tried in the decade before the Great Depression. It’s not what led to the incredible postwar booms of the ‘50s and ‘60s. And it didn’t work when we tried it during the last decade. I mean, understand, it’s not as if we haven’t tried this theory.” What President Obama alluded to that did lead to the postwar booms was governmental policy spurring demand, guided by Keynesian demand-side economic theory.
Democratic presidential nominee Hillary Clinton, choosing to run on a message of successful economic performance during the Obama years (after all, the economy did rebound from the Great Recession, and GDP, the stock market and the number of jobs all hit new record highs), avoided continuing President Obama’s Democratic critique of trickle-down (trickle-down had restricted economic performance due to its hold on the Republicans who took control of the House and Senate after passage of Obamacare).
And, although the economy did rebound from the Great Recession in terms of GDP, the stock market and the number of jobs, the economy failed painfully with continuing wage stagnation, as wages remained flat for 90% of American workers, increasing inequality and squeezing them as costs rose for healthcare and education. This continuing wage stagnation could have been made a campaign issue by a Democrat, and appropriately attributed to Republican trickle-down policies.
The candidate who did make that pitch, Independent Senator from Vermont, Bernie Sanders, very nearly won the Democratic nomination away from Secretary Clinton because he did not repeat her mistake, the gravity of which was revealed when a Republican billionaire disinterested in governing won by talking about the failure of the economy to raise wages, although attributing the cure for wage stagnation as sourced in misguided trade deals, high taxes, and overregulation, due to the inability of government to do anything right.
Republicans’ trickle-down policies are betrayed as a con by the facts, as confirmed by numerous studies. One of the earliest of these was reported by Michael Kinsley in advance of the 2008 election, “Politicians Lie, Numbers Don’t,”, September 16, 2008.
With the approach of the 2012 election, several more studies appeared. Among them was one by Bob Drummond, “Private Jobs Increase More with Democrats in White House,” Bloomberg Business, May 8, 2012. That was followed by World Bank economist Richard J. Carroll, “Democratic Presidents Are Better for the Economy,” Bloomberg Business, June 25, 2012. The book, Bulls, Bears and the Ballot Box by Lew Goldfarb and Bob Deitrick, was published in 2012, and concluded that over the previous 80 years, Democratic administrations outperformed Republican administrations on 11 of 12 economic indicators—the only indicator on which the Republican administrations outperformed was unemployment rate. Their findings were summarized by Elizabeth Frock in “Democratic Presidents Beat Republicans on 11 of 12 Economic Indicators,” US News & World Report Washington Whispers online site, August 10, 2012. And Ameriprise Financial reached the same conclusion in the pre-election analysis “Presidential Election 2012,” Ameriprise Financial, September 26, 2012 (no longer posted online).
Alan S. Blinder and Mark W. Watson of Princeton University, in “Presidents and the Economy: A Forensic Investigation,” November 2013, similarly concluded, in their survey of a different set of years, that the Democratic economic record is better than that of Republicans. That and other studies were addressed by Sean McElwee in “These 5 Charts Prove that the Economy Does Better under Democratic Presidents,” , December 28, 2015. Among the findings: Democratic presidents averaged higher GDP growth, a lower unemployment rate, higher stock market returns, higher corporate profits, higher compensation growth and higher productivity increases. Additionally, income growth is faster and more equal under Democratic presidents.
Trickle-down has long been part of the Republicon. It was revealed as a con in a 1981 interview in which Office of Management and Budget Director David Stockman famously confessed to journalist William Greider that supply-side economics is, in fact, trickle-down, and that the tax cuts for all included in the comprehensive Kemp-Roth tax cut bill, which implemented President Reagan’s trickle-down tax policy, were but a “Trojan horse”—a con—to hide the tax cuts for the rich—trickle-down’s real intended beneficiaries.
Another part of the Republicon is the con that Republicans actually know the facts regarding how their policies affect the economy generally, and the middle class and poor particularly. They don’t. In reality, Republicans have a basic philosophy of how the economy works, and to retain that philosophy they do not challenge it with facts. The same goes for Republicon Man No. 1—President Donald Trump. And the same goes for the other contributors to the Republicon: other Republican politicians engaged—knowingly or not—in misleading the public; and all the participants in the conservative alternative-reality fake news industry: conservative commentators on conservative talk radio (among them Rush Limbaugh, Glenn Beck, Mark Levin and Alex Jones); Fox News Channel; local stations owned by Sinclair Broadcasting; the online misinformation sources, Drudge Report, INFOWARS, and NEWSMAX; RT (Russia Today, the Russian international television network funded by the Russian government); and conservative think tanks.
Supply-side—trickle-down—theory is blind to this simple fact: Starve wages; starve demand. And, the corollary to this simple fact: Inequality leads to instability—economic, then political. Trickle-down insists on not allowing government to raise wages even when the free market will not. Rising wages directly raise costs to the favored business constituents of the Republican Party. Also, rising wages are feared for their potential to trigger a rise in unemployment, requiring more government spending. And most importantly, rising wages might trigger inflation, feared because it reduces the value of bonds already issued (because bonds are denominated in interest rates); reduces the value of stocks as bonds issued in the future raise their returns to compensate for inflation, thus competing against stocks for investment dollars; raises interest rates and thus the cost of borrowing for business and consumers; and complicates pricing calculations.
Trickle-down demands that wages be suppressed—demands the wage stagnation that working Americans have been experiencing for nearly four decades—and substitutes for these missing wages cheap debt (low interest rates) and easy credit (deregulated lending standards). But this manipulation of the demand-side of the economy pursuant to trickle-down theory also increases the chance that the next recession, once commenced, will be longer and more severe than it otherwise needs to be.
As President Obama observed, trickle-down has been tried before (in the 1920s) and it failed then (leading to the Great Depression of 1929), and it has been failing us since it was again adopted with the election of Ronald Reagan in 1980. Trickle-down never works—other than to upwardly redistribute income and wealth—because it ignores human nature: We acknowledge that the business cycle will always be with us and, accordingly, there will be downturns in the market—and economic theory says that when that happens we should allow weak financial institutions and corporations to go bankrupt—but human nature does not allow those atop these entities to take blame for their collapse, so they solicit and secure government bailouts and tax cuts (Naomi Klein’s “shock doctrine”) to help keep them in the lifestyles to which they’ve become accustomed. And, when times are good, they don’t credit their workers and give those workers raises because—surprise!—they attribute their good fortune to their own “genius” and give themselves massive raises and bonuses. Thus, “the market” never sees much need to raise wages. Human nature makes trickle-down a “heads I win; tails you lose,” economic philosophy.
Democrats should hang the Donald Trump presidency, the coming economic downturn and the Republicon like an anchor around the neck of the Republican Party, telling the American people over and over again the truth: The goal of the Republican Party is to upwardly redistribute economic and political power to its favored constituency of the rich and business. In the theory of trickle-down economics, this will result in benefits trickling down to everyone else. In reality, all that happens is the rich get richer and more powerful, and demand is starved, leading to market downturns and recessions, and further upward redistribution of income, wealth and power from the middle class and poor to the rich. You are being conned by the Republicans.
The Republicon Undermines Our Democracy
President Trump is, to paraphrase Daniel Patrick Moynihan, defining the presidency down; in fact, his party, the Republican Party, is defining politics down. His blatant, continuing, unprecedented disrespect for the truth soils the office of the presidency, undermines democracy, and embarrasses the United States of America in front of the nations of the world. He conned with his stunning, arrogant ignorance, well captured in the transcripts of his interview with The New York Times (July 20, 2017) regarding health insurance, tax policy, history, the Constitution, the basic facts of life with which average Americans deal each day, how much of his base is composed of violent white supremacists and white nationalists, and Russia’s designs on the country he leads.
He conned us with his promise: “On day one of the Trump Administration, we will ask Congress to immediately deliver full repeal of Obamacare.” He repeated his pledge on the campaign trail, adding on October 25, 2016, in Sanford, Florida: “And it’s going to be so easy.” In February 2017 he exclaimed, “Nobody knew health care could be so complicated.” Actually, Mr. President, everybody who voted against you knew.
In June aides revealed to the Daily Beast that he was conning us during health care policy discussions, not knowing the difference between Medicare and Medicaid. In his interview with The New York Times (above), he explained the way he saw health insurance working: Pay $12 a year annually starting at age 21, and by age 70 you have a nice plan. Which sounds like he confused health insurance with life insurance. Regardless, as most American voters know, health insurance costs much more than $12 per year, or even $12 per month.
Counselor to President Trump Kellyanne Conway’s famous reference in January 2017 to “alternative facts” was, of course, not to facts at all. Among the criticisms leveled was that she was implicitly claiming Republicans lived in a world of alternative reality, supporting her boss’s cons.
However, another prominent Republican, speaking thirteen years before, explicitly claimed for Republicans a world of alternative reality in a 2004 interview conducted by journalist Ron Suskind. The prominent Republican was a high-level adviser to President George W. Bush, later revealed to be Karl Rove. He said that people like Suskind live in “the reality-based community,” composed of people who are left to study the actions of people like this administration, observing that, in contrast, “we create our own reality…we’re history’s actors.” Thus, the Republicon is enabled by delusional Republican leaders living in their alternative reality, and conning millions of Americans into joining them.
Thomas E. Mann of the centrist Brookings Institution and Norman J. Ornstein of the conservative American Enterprise Institute spoke on behalf of the majority of us in the reality-based community in their book published in the months leading up to the fall 2012 election: It’s Even Worse Than It Looks: How The American Constitutional System Collided with the New Politics of Extremism. In advance of the 2016 election, they issued It’s Even Worse Than It Was, updating their observations. In these books, Mann and Ornstein extensively displayed the modern Republican Party’s disdain for facts, in the vain hope that they would promote reform of the party, so that facts again would matter to Republicans, and the party would again become responsive to the needs of ordinary people, as opposed to just the 1%.
Angie Drobnic Holan, editor of PolitiFact, put numbers to the observations of Mann and Ornstein in “All Politicians Lie. Some Lie More Than Others,” The New York Times, December 13, 2015, in which she published rankings made by PolitiFact of statements since 2007 by the 2016 presidential candidates (and some current and former candidates and presidents) from most dishonest to least dishonest. Ben Carson was most dishonest at 84 percent false, followed by Donald Trump at 76 percent and Ted Cruz at 66 percent; further down the rankings was Marco Rubio at 40 percent. The most honest was Bill Clinton at 24 percent false, followed by Martin O’Malley at 25 percent, Barack Obama at 26 percent, and Hillary Clinton and Bernie Sanders at 28 percent.
Does lying in politics matter? Since the beginning of totalitarianism, we have thought it did. George Orwell’s 1984 (written in 1949) imagined a dystopian world of the future in which a Ministry of Truth promoted the three slogans of the Party: “War is Peace. Freedom Is Slavery. Ignorance is Strength.” The political theorist Hannah Arendt, writing about Richard Nixon’s unauthorized escalation of the Vietnam War but in words appropriate for today, warned that lying in politics is a crisis of democracy and, like Orwell, tied it to totalitarianism in her Origins of Totalitarianism (written in 1951). Arendt observed, “The ideal subject of totalitarian rule is not the convinced Nazi or the convinced Communist, but people for whom the distinction between fact and fiction…and the distinction between true and false no longer exists.”
Donald Trump’s campaign for the presidency was launched with the con that Barack Obama was born in Kenya, and he led the Birther Movement with the con that he had investigators on the ground in Hawaii who were putting their findings in a report that would support his allegation. He continued his campaign with other cons, among them, about a nonexistent terrorist attack in Sweden, about President Obama illegally wiretapping Trump Tower during the presidential campaign, about the murder rate being the highest it had been in 47 years, about failure on the part of the media to cover some terrorist attacks because it didn’t serve their agenda, about Hillary Clinton having committed crimes which the FBI failed to investigate and, of course, about his repeated promise that a border wall will be built and Mexico will pay for it.
During the campaign, he proposed a ban on Muslims entering the country—another con in that it imposed a clearly unconstitutional religious test for entry.
And, as President, he launched his administration with a con, easily debunked, that his was the largest inaugural crowd in history (Obama’s was obviously larger), and insisting that his then-press secretary, Sean Spicer, promote the con in press briefings. He also claimed he won the election by the largest Electoral College margin since Reagan—both of former President Obama’s wins, as well both of former President Clintons’ wins, and the win by former President George H. W. Bush, were by larger margins. He also claimed, without evidence, that but for illegally cast votes for Democrats he would have won the popular vote (which he lost by 2.9 million votes). A POLITICO/Morning Consult poll found that nearly half of the voters who said they voted for Donald Trump—49 percent—believe Trump won the popular vote.
The first six months of the Trump administration were rife with cons. The Carrier plant in Indiana that the president claimed to have saved announced it was beginning to lay off 600 people. The president visited the Boeing plant in South Carolina in February and declared, “We are going to fight for every last American job.” In June, the plant announced layoffs.
In mid-July, at a “Made in America” reception at the White House, he declared, “We’ve signed more bills—and I’m talking about through the legislature—than any president, ever.” Another con. In fact, the president had signed 42 bills during this period—fewer than the average of the past six presidents over that same period in office (43), and substantially fewer than Carter (70) and Clinton (50.)
The “Made in America” event was based on a bigger con—that the Trump family cares about hiring American workers. In reality, for years the Trump Organization has outsourced much of its product manufacturing, relying on a global network of factories in a dozen countries, including Bangladesh, China and Mexico. Similarly, as observed in a Washington Post investigation, the clothing line of Ivanka Trump, the president’s older daughter and a senior White House adviser, relies exclusively on foreign factories employing low-wage workers in countries such as Bangladesh, Indonesia and China.
That same week, President Trump had been informed by his Defense Secretary Paul Mattis and Secretary of State Rex Tillerson that the nuclear deal President Obama had struck with Iran, a deal which President Trump as candidate had promised to “rip up” once in office, had to be honored because Iran was keeping its promises—the second time that the president had to certify Iran’s compliance with the nuclear deal, something he is required to do every 90 days, in order to stop Congress from re-enforcing the nuclear-related sanctions on the Islamic Republic.
On another track, an 18-page document had been drawn up describing in detail US points to cover with the signatories to the North American Free Trade Agreement (NAFTA)—fine points for renegotiation, as opposed to simply throwing out this agreement as President Trump as candidate had also promised.
And, of course, all this time the Senate was struggling at repeal and replacement of Obamacare (the Affordable Health Care Act or AHCA), struggling with their seven-year-long con of the American people that they had a better health care plan in place—which they did not. And, with a Republican president waiting, as he said, pen in hand ready to sign whatever got passed, and with Republican majorities in the Senate and the House—the Republicans failed.
The Republicon was on full display not only in the draconian House Bill for repeal but even more so in the Senate Bill—named the Better Care Reconciliation Act, its acronym—BCRA—perhaps more appropriately stood for “Bigger Compensation for the Rich Act,” for its main intent was to upwardly redistribute to the rich from the middle class and poor. Of course, President Trump supported the BCRA, appropriately criticized by former President Obama as “a massive transfer of wealth from middle-class and poor families to the richest people in America.”
Mercifully, a 1:30 a.m. vote signaled the death of the Senate’s repeal bill, and the American people won. Later that same morning, President Trump floated this con to a gathering of New York law enforcement officials, “As I was saying from the beginning, let Obamacare implode.”
In July, President Trump was accused of conning us by dictating the story line that Donald Jr. had set up the meeting in the summer of 2016 with Russians to discuss adoption of Russian babies (banned by President Putin in retaliation for the Obama administration’s imposition of sanctions for election meddling)—in reality, Donald Jr. stated that he had thought the meeting was to review incriminating evidence of Clinton campaign wrongdoing supposedly possessed by the Russians.
In August, it was revealed that Michael Cohen, a senior Trump Organization executive and personal lawyer for the president, in 2015 exchanged emails with known Russian mobster Felix Sater, and in January 2016 emailed Dmitry Peskov, a Kremlin spokesperson, for assistance in building a Trump Tower in Moscow in 2016—yet more proof that the oft-repeated denials of President Trump and his campaign aides of contact with Russians during the presidential race were but more cons.
On August 30th, POLITICO revealed that special counsel Robert Mueller was teaming up with New York State Attorney General Eric Schneiderman in the special counsel’s investigation into Russian interference in the 2016 election, which had evolved into a broader investigation into allegations of crimes committed by Trump and his campaign aides with the Russian government. This was critical because President Trump’s pardon power extends only to federal offenses. Going after Trump associates—public attention immediately turned to former campaign chairman Paul Manafort—for state offenses renders these associates subject to pressure to give testimony that was anticipated to relate to allegations of money laundering and other charges arising out of Russian manipulation of financial pressure on the Trump Organization (suspected after four Trump bankruptcies).
On August 31st, it was revealed that Mueller was teaming up with the IRS, indicating that the Russia investigation was going to look into Trump tax returns—the ones Trump had refused to make public, unlike every modern era president—and, again, supporting suspicions of the investigation turning to money laundering and manipulation of financial pressure by Russia.
And, as the news media in the reality-based community covered these stories, references kept returning to President Trump’s statement May 9th, through then-press secretary Sean Spicer, that he had fired FBI Director James Comey because of his handling of the Hillary Clinton investigation, based on the recommendations of both Deputy Attorney General Rod Rosenstein and Attorney General Jeff Sessions. This statement was contrasted with President Trump’s statement to NBC’s Lester Holt in an interview May 11th in which he said he had decided to fire Director Comey anyway, regardless of his advisers’ recommendations, saying, “When I decided to [fire Comey], I said to myself, I said you know, this Russia thing with Trump and Russia is a made up story.” (On September 1st, it was revealed that special counsel Mueller had obtained a letter drafted by President Trump and top political aide Stephen Miller that revealed Trump’s thinking in the days before the president fired FBI Director Comey).
President Trump is a national embarrassment. Transcripts of Trumps’ conversations with Mexican President Enrique Peña Nieto and Australian Prime Minister Malcom Turnbull, released by The Washington Post showed he is as uninformed and boorish when attempting to con foreign leaders as he is attempting to con us. He complained to President Peña Nieto about drugs coming from Mexico, implying he knew about the problem because, “I won New Hampshire because New Hampshire is a drug-infested den.” In fact, he lost New Hampshire to Hillary Clinton by 2700 votes (although he did win the Republican primary there), and the opioids plaguing New Hampshire come primarily not from Mexico but China.
He also acknowledged to President Peña Nieto that Mexico would not, in fact, have to pay for a border wall, but asked that President Peña Nieto stop saying that fact publicly, because it was it was undermining his con of American voters that he would make Mexico pay.
Prime Minister Turnbull repeatedly explained to President Trump the terms of an agreement made by President Obama for the US to resettle as many as 1,250 asylum seekers. Trump mistakenly put that figure at 2,000, later saying he “heard like 5,000 as well.” The prime minister even counseled the president that he could deny the entry of some or all based on further vetting—that Trump’s only obligation was to go through the process. To which Trump replied: “I am the world’s greatest person that does not want to let people into the country. And now I am agreeing to take 2,000 people.” Then Trump informed Turnbull that he had spoken with four other world leaders that day—including Russian President Vladimir Putin—and that “this was the worst call by far.”
After his mishandling of the tragedy in Charlottesville, resignations by business leaders led to disbanding of his Manufacturing Jobs Initiative council, the Strategy and Policy Forum, and an infrastructure council, exposing as a con his campaign claim that because he was a businessman, he could work with other businessmen to build the economy.
By mid-August, after having run on repealing and replacing Obamacare, repealing the Iran deal, repealing NAFTA, signing an infrastructure deal, implementing tax reform, delivering 4% GDP growth, and reviving manufacturing—Obamacare lived, the Iran deal lived, NAFTA lived, there had been no infrastructure bill, there had been no tax reform, and GDP growth for 2017 and 2018 was projected by the IMF to be on track for 2.1%, and manufacturing employment hit a record low of 8.47% of overall employment. So, President Trump went on a “working vacation” at his golf club in Bedminster, New Jersey. Looking forward, he needed a budget agreement before the end of September and the debt ceiling had to be raised by about that same time.
Is there any hope that Vice President Pence is anything other than Vice Republicon Man? Of course not. He shares the Republican lack of respect for truth, as he demonstrated on two prominent occasions. Among his cons during the vice presidential debate, Pence denied ever having praised Vladimir Putin as a leader (he and Trump were both on videotape praising Putin); denied that Trump ever advocated spread of nuclear weapons (videotape showed he did); and denied Trump ever proposed punishing women (Trump in a videotaped interview said women should be punished for having an abortion). And, in a videotaped interview for the Today Show, after the Charlottesville white supremacy rally, Pence claimed “there was no moral equivalency drawn by the President”—but there was: The President declared “there were fine people on both sides” of the rally and found fault “on many sides, on many sides” for the violence that led to a young woman’s death. Truth gets no better treatment under Vice Republicon Man Pence than under Republicon Man-in-Chief Trump.
America had been conned regarding the competence of the Republicon Party, and all Americans should have seen it coming.
The Republicon Undermines the Institutions of Government
The cynicism of the Republican Party toward government was well captured in the quote above from President Reagan in his first inaugural address, that government is not the solution to the problem but rather is the problem.
Of course, government was proposed by investment bankers as the solution to their problem of the market having crashed during the 2007-2009 market downturn, endangering their incomes and wealth, leading to their promotion of government support of their inflated incomes and bonuses, as well as of purchase of bonds as part of “quantitative easing.”
Republican hypocrisy doesn’t end there. The Trump campaign repeatedly pledged to “drain the swamp” of the Washington world of “pay to play” influence-peddling corruption—a con on behalf of the party that gave politics “the K Street Project,” named after the street in Washington, DC on which many lobbyist offices are located. Launched in 1995 by Grover Norquist (Americans for Tax Reform) and then-House majority whip Tom DeLay (R-TX), it was an influence-peddling rent-delivery machine for the Republicon Party. Other individuals associated with the project were Karl Rove, Dick Cheney, Newt Gingrich, former House Majority Leader Dick Armey (R-TX) and former chairman of the College Republican National Committee in the 1980s, and later convicted felon, Jack Abramoff. The principle behind the K Street Project was expressed best by Armey, in a widely quoted gloat: “There’s an old adage. To the victor goes the spoils.” And, they made sure the Republicon Party won and got the spoils in terms of taxpayers’ money directed to wasteful projects benefitting Republican House members and Republican Senators.
In another con, the Trump campaign hired to “help” them drain the swamp Paul Manafort and Roger Stone as campaign advisors—they had been among the cofounders of Black, Manafort, Stone and Kelly, a lobbying firm based in Washington, D.C. famous as the “torturers’ lobby” for having made millions representing dictators all over the world—and very comfortable and highly compensated residents of the swamp.
An odd aspect of Donald Trump is that as president-elect and even continuing into his presidency, his pride was so great it would not allow him to believe that, while he had won the Electoral College vote, he had lost the popular vote to Hillary Clinton by almost 2.9 million votes. Accordingly, he undermined the institution of our democratic system of elections by launching the con that perhaps as many as 3 to 5 million votes were cast illegally, and while he provided no evidence for this allegation, he established the Presidential Advisory Commission on Election Integrity to find evidence to support his con (at the taxpayers’ expense). This con of voter fraud, especially regarding votes cast by minorities, complements a broader effort over the past several years waged by the Republican Party to intimidate minorities inclined to vote Democratic, and thereby suppress their vote.
The American people were reminded again of the corrosive values of the Republican Party in the days following the departure of Hurricane Harvey. Republican Senator Ted Cruz of Texas had led 25 members of the Republican Texas congressional delegation (all but Republican Representative John Culberson, who was joined by the 12 Congressional Democrats) in voting against Hurricane Sandy relief for New Jersey and New York.
Of course, however, Texas Governor Greg Abbott (a Republican) was able to forget his Republican values and let it be known that Texans would be looking to the federal government for help in the future, saying days after Hurricane Harvey had left that it could cost as much as $180 billion to rebuild Texas following Hurricane Harvey—more than four times what most experts expected ($40 billion)—and more than the cost to rebuild after Hurricane Katrina (total: $160 billion), the costliest storm in US history.
Fortunately, Texans generally were also able to forget their Republican values, as they welcomed help from government at the local, state and national level, readily accepting aid from these same governmental agencies that Republican orthodoxy claimed were the root of all our problems.
A sad contrast was drawn to the Bush administration’s Hurricane Katrina response, sewing the Republican values of divisiveness, fear, greed and disrespect for government (except the military!) in the early days of Katrina response.
And, adding to so much distress in Texas immediately after Hurricane Harvey, the Trump administration announced its intent to end, after six months, giving Congress a window to act, the Obama-era protection to immigrants that grants work permits to undocumented immigrants who arrived in the country as children, Deferred Action for Childhood Arrivals (DACA).
The Republicon Undermines the Health and Quality of Life Generally of the Middle Class and Poor
Not surprisingly, a Pew Poll based on a survey conducted January 4-9, 2017, revealed that, among Democratic and Democratic-leaning voters, about 85% agreed that it is the responsibility of the federal government to make sure all Americans have health care coverage. And although only about 30% of Republican and Republican-leaning voters agreed, 52% of those Republican and Republican-leaning voters making less than $30,000 per year agreed. Presumably, many of these voters live in the white working class communities in which drug dependency and suicide rates are rising.
As was shown by a POLITICO/Morning Consult poll conducted July 20-24 of 3,981 registered voters, only 36% of voters supported repealing Obamacare without a replacement, and 50% of voters opposed repeal without replacement. The Washington Post-ABC News Poll of July 2017 found 50% of adults favored Obamacare over 24% favoring the Republican plan (although, among registered Republicans, 59% favored the Republican plan). The poll, taken the week before Trump’s six-month anniversary in office, found that his approval rating had dropped to 36%; 48% registered “disapprove strongly,” the lowest at the six-month point in any presidency over the past 70 years, when modern polling began.
President Trump had conned with promises of “insurance of everybody,” “much lower deductibles,” and “there will be no cuts to Social Security, Medicare & Medicaid. To simply have a bill onto which he could sign his name and tick off his list “repealed and replaced Obamacare,” President Trump signaled willingness to support legislation from the House and from the Senate that was, based on analyses by the Congressional Budget Office (CBO), predicted over its first 10 years of existence to remove anywhere from 20 million to 32 million people from the health care rolls, with the result that thousands more Americans would die needlessly each year due to reduced health care coverage—with these deaths concentrated among middle class and poor families.
Not only do the facts betray Republicans’ trickle-down policies as a con—Republicans themselves betray that they know trickle-down is a con when they criticize Democrats for “buying votes” by proposing policies that will actually help people—like increasing the minimum wage; increasing infrastructure spending; proposing to improve Obamacare by mending its flaws (e.g., by funding subsidies for plans bought on ACA exchanges) rather than ending it, or, even more, by proposing Medicare for all; and proposing to protect Social Security, Medicare and Medicaid.
With this criticism, the con is revealed: Even Republicans recognize that their proposed tax cuts disproportionately benefitting the 1%, cutting of regulations that shield the middle class and poor from the harshness of the market, and cutting of spending on government benefits earned and relied upon by the middle class and poor only benefit their favored constituency of the 1%; not their professed constituency of the American people.
And Republicans’ criticisms of the Affordable Care Act reveal themselves as a con as well. For Republicans rightly criticize the rising premiums and deductibles of health insurance policies issued pursuant to the Affordable Care Act, but wrongly refuse to do anything about it other than to release people from the obligation of purchasing health insurance—thereby conning millions of middle class and poor families into unnecessarily exposing themselves to bankruptcy due to the burden of an unforeseen catastrophic health care event.
What Democrats Stand for: Using Government to Improve the Lives of the Middle Class and Poor—Trickle-Up—in a Democrats’ Agenda for American Workers
Democrats must realize that not only do the Republicans con voters with misrepresentations of facts generally and Republican policies in particular, but they also con voters into believing the Democrats are socialists, demanding the government take over ownership of all of American industry. Democrats must confront and rebut this element of the Republicon, and part of this effort consists of repeatedly observing, as shown above, that Democrats are better stewards of capitalism than are Republicans.
Before elaborating on why Democrats are better stewards of capitalism, it is appropriate to first address an adjunct of Republicans’ trickle-down theory: the Laffer curve, named after USC economist Louis Laffer. The theory itself is sound, holding that there is some marginal tax rate above which yields a decrease in tax revenues because it discourages economic growth. From this fact, there has emerged another aspect of the Republicon: Every tax cut “pays for itself”—i.e., encourages so much growth that tax revenues increase. And the flip side of this nonsense is that every tax increase kills off growth, perhaps so much so that tax revenues will decrease. Again, we have facts to dispel this con. Republican President George W. Bush cut taxes, yet the economy went into the Great Recession towards the end of his presidency, and federal budget deficits soared. And before him, Democratic President Bill Clinton raised taxes, and economic growth nonetheless was robust, and four years of federal budget surpluses resulted.
Excessive regulation will slow down growth, but it is important to remember that regulations in general are implemented to protect the middle class and poor from the harshness of the market. Minimum wage regulations are intended to provide a basic standard of living, as are the Affordable Care Act regulations. Financial regulations not only defend the middle class and poor, but also help stabilize the market, preventing excessive risk. And environmental, safety and health regulations are issued in the interest of preserving health and saving lives. Cutting regulation deemed by Republicans to be “excessive,” studies have shown, may have an imperceptible impact on economic growth, but it may expose us all to deeper and longer recessions and loss of income and wealth, and raise risks to our health.
Excessive government spending runs up the federal debt, which then potentially crowds out private borrowing and raises interest rates. However, if foreign creditors are not demanding higher interest rates—and interest rates in fact fell when federal debt as a percentage of GDP was high in President Obama’s first year in office—then the borrowing is not deemed excessive by the nation’s foreign creditors.
And, excessive benefits for nonworking Americans kills the work ethic. However, President Clinton in 1996 fulfilled his pledge of “ending welfare as we know it” by signing the Welfare Reform Act of 1996 which, among other things, instituted work requirements and placed time limits on welfare assistance.
If Democrats had not learned this lesson before 2016, they certainly should have learned it then: If you don’t state your vision clearly, your opponents will do it for you, and you won’t like it. And Democrats have a lot of work to do to clearly state their vision so they can recapture the votes of the Americans they lost.
The Washington Post-ABC News Poll conducted in July gave some illustration of how much work: Only 37% of all adults—35% of registered voters—said the Democratic Party “stands for something.” Majorities in both populations (52% and 53%, respectively) said the Democratic Party “just stands against Trump.”
This finding was consistent with results compiled by Priorities USA of two sets of focus groups in Wisconsin and Michigan and 800 voters nationally consisting of Obama-Trump voters (voters for Obama in 2012 but Trump in 2016) and drop off voters (voters for Obama in 2012 but who did not vote in 2016). As recounted in The Washington Post by Greg Sargent (in “Why Did Trump Win? New Research by Democrats Offers a Worrisome Answer,” May 1, 2017), among Obama-Trump voters: 50% said their incomes are falling behind the cost of living and 31% said their incomes are merely keeping pace with the cost of living; and 42% said congressional Democrats’ economic policies will favor the wealthy, versus 21% who said the same thing about Republicans!
Asked what Democrats stand for, among the answers of Obama-Trump voters: “The 1%.” These same voters—who, again, voted for Donald Trump—expressed concern that President Trump will actually do what he promised he would: Cut social programs and repeal Obamacare.
The Democratic Party is the sole defender of the liberal values upon which the United States of America was founded. Among these values, in addition to support of democracy and capitalism, are checks and balances, respect for knowledge, tolerance, equality, peace, and the rule of law. And, accordingly, Democrats are proud members of “the reality-based community,” and, in accordance with their philosophy’s Enlightenment tradition, proud to test policies based on facts and reason.
However, the Democratic Party has failed to expose and defeat the con of supply-side—trickle-down—economics, while promoting its own demand-side policies of the sort that created the great American middle class after World War II.
For the Democratic Party to succeed in its mission, however, it must overcome its internal battle over whether it should be promoting “identity politics” or addressing economic concerns. The solution is to embrace both camps, unified under the traditional Democratic policy prescription of using government to provide opportunity for all to succeed as far as their talents and drive can take them and to live comfortable lives of dignity. The example to follow is that of William F. Buckley, Jr., who created the ideological basis for what we call today “movement conservatism” by promotion of the combining of the elements of traditionalism, libertarianism and anti-communism (dubbed “fusionism”).
Specifically, among their tasks is that the Democrats must clarify the nature of the Affordable Care Act or ACA (Obamacare). Republicans portray Obamacare as a socialist scheme. In reality, its basic idea—of a mandate to purchase health insurance from a private insurance company, enforced by a tax penalty—was a conservative one promoted by Republicans before the Republican Party drifted so far rightward that the party rejected it. Democrats proposed it in the naïve hopes that Republicans would support it since it was their idea in the first place. In fact, the Affordable Care Act passed Congress only because Democrats held majorities in the Senate and House at the time—not a single Republican voted for it.
A health insurance system based on the twin basic elements of Obamacare—a mandate to purchase private health insurance enforced by a tax penalty—was first proposed by Stuart Butler of the conservative Heritage Foundation in 1989. (Conceptually, it is not so different from the requirement of many states that to drive a car one has to purchase car insurance. The law in such states enforces the mandate, and insurance companies form pools to share the risk of insuring bad drivers.) The concept was later endorsed by the libertarian conservative economist and Nobel Prize winner, Milton Friedman, in a 1991 article in The Wall Street Journal.
Republican Governor Mitt Romney of Massachusetts implemented it in his own state, and commended it to President Obama as an example for the nation in an op-ed in USA Today (“Mr. President, What’s the Rush?,” July 30, 2009). Of course, after that Governor Romney became the 2012 Republican presidential nominee, so he quickly had to change his tune to get in line with the right-wing extremists who had taken over the Republican Party nationally, and he condemned as a model for the nation the program that he had been implemented to widespread approval in his own state.
In short, the Democrats tried to provide more health care for Americans by applying the Republicans’ solution: Taking the free market and bending it slightly. That approach has not been as successful as it could be, in great part due to sabotage by Republican governors and legislatures in the states. Even in the face of this sabotage, however, in August it was reported by the Kaiser Family Foundation that only one county in the US—Ohio’s Paulding County, with just 334 enrollees—was without a health insurer for 2018 on the exchanges established by the Affordable Care Act.
After having proposed the model for Obamacare in 1989, the conservative Heritage Foundation epitomizes the radical turn rightward by today’s Republican Party, promoting the popular Republicon that we need “a market-based solution for health care.” There has never been and can never be a “free market” in health care. Older Americans and those with pre-existing conditions face premiums and deductibles that are so high as to be unaffordable, unless they are in a pool with younger, healthy Americans, who, in effect, subsidize their care. Of course, in a free market, these younger Americans will balk at doing this, and they’ll drop their coverage. Too, those stuck with high premiums and deductibles will be incentivized to forego basic preventive care, leading to their small problems potentially developing into bigger ones, and raising costs to the overall system over time. Finally, purchasing health care procedures is not like buying apples at a grocery store. The prices for procedures are not publicized, and while we as consumers can feel confident that the apples we buy and eat won’t kill us, the same cannot be said for medical procedures.
The Obamacare experience reveals the true nature of the Republicon: It is like a nightmare, in which things taken for granted and familiar, in the public realm, slowly disappear or are privatized, for the benefit of a tiny favored minority. Publicly supported health insurance, public schools, public parks, public roads, public support for wages, public support for jobs…all these publicly—governmentally—provided enhancements to our quality of life as Americans, supporting our sense of community, are threatened at being taken away from us by the Republican Party.
The Democratic Party stands against this privatization of the public sphere—this upward redistribution of economic and political power—by the Republican Party as it employs the Republicon of voters.
And the Democratic Party stands for things, too. Obamacare can be mended to address its problems and need not be ended, at the cost of leaving an additional 20 to 32 million people without healthcare coverage. And the Trump administration can help by stopping dangling in front of insurance companies’ destruction of the ACA but, instead, enforcing the individual mandate and honoring providing of the cost-sharing reduction subsidies (CSRS).
Longer term, the Obamacare experience reveals the shortcomings of attempting to use the market to address problems that defy market solutions. A single-payer health care system—Medicare for all—would remove the fat from a market system. The Cornell economist Robert H. Frank observed in his op-ed “Why Single-Payer Health Care Saves Money” (The New York Times, July 7, 2017) three reasons for this: (1) Large government entities are able to negotiate more favorable terms with health care providers; (2) Administrative costs average only 2% of total expenses under a single-payer program, like Medicare, versus upwards of 12% for many private insurers; and (3) A single-payer program, like Medicare, spends very little on competitive advertising, which can cost more than 15 % of total expenses for a private insurer.
Besides Medicare for all, a Democratic agenda could consist of using federal money to provide means-tested support to students for tuition at vocational school and college, and an expanded child tax credit. For those without children, the Earned Income Tax Credit could be expanded. Infrastructure spending of $1 trillion over a decade could be proposed, and potential projects solicited.
Taxes will have to be increased on trickle-down’s beneficiaries atop the economy. A popular Republicon is that Social Security, Medicare and Medicaid are all unsustainable. The unstated assumption here, consistent with trickle-down, is that taxes cannot be raised. In reality, though, the incomes upon which the taxes for Social Security is assessed are capped. Of course we can raise the tax rates themselves for Social Security, Medicare and Medicaid but, before that, we can raise—or remove—the income cap on the maximum amount of earnings subject to the Social Security payroll tax which, in 2017, is $127,700. Doing so would ensure the funding of Social Security further into the future.
The federal government requires a minimum wage of at least $2.13 per hour be paid to employees that receive at least $30 per month in tips. If wages and tips do not equal the federal minimum wage of $7.25 per hour during any week, the employer is required to increase cash wages to compensate. The $2.13 per hour wage was established in 1991 and has remained unchanged. The $7.25 minimum wage was established effective July 24, 2009. We are overdue for increases in both.
Prison reform must be a priority—and overreliance on our prison system is a problem recognized by both parties. As observed by both the Democrat Hillary Clinton and the Republican Senator Rand Paul of Kentucky, the United States has less than five percent of the world’s population (about 4.4%, being 319 million out of 7.1 billion), yet we have almost 25 percent of the world’s total prison population (actually, about 22%, being 2.24 million out of 10.2 million worldwide). And, as Secretary Clinton also observed, the number today is much higher despite the fact that crime is at historic lows.
Finally, however, the effort of Democrats to overturn the Republicon, while it contains policy recommendations, begins with overturning the most basic con of trickle down, the mistaken belief of the conservative Republican that we all do better when the rich do better. To quote Adam Smith, in The Wealth of Nations: “But the rate of profit does not, like rent and wages, rise with the prosperity, and fall with the declension of the society. On the contrary, it is naturally low in rich, and high in poor countries, and it is always highest in the countries which are going fastest to ruin.” The liberal Democrat knows the truth: We all do better when we all do better.