Among the marble busts arrayed around the statue of Ronald Reagan in the Temple of the Great Conservative God are those of James A. Baker, Michael Deaver, Edwin Meese, Alexander Haig, David Stockman and Arthur Laffer, who while not exactly a household name is the only one of Reagan's advisers whose views still deeply influence the Republican Party some 30 years on.
Laffer is the father of supply-side economics and his grandchildren are today's Republican worthies, who remain slavishly -- even obsessively -- devoted to his long discredited views that there is a "sweet spot" between extremely high tax rates and extremely low rates, that overall the best way to raise revenue is to cut taxes, and that wealth trickles down from the rich to everyone else, so the rich should be rewarded before anyone else.
The Republicans' decades-long obeisance to Laffer's capitalist doctrine is easy to understand. It fits hand in glove with their worldview that taxes are always to be cut, Wall Street is always to be coddled, regulations are always to be shredded, and government is always to be made smaller, primarily by eliminating the social programs that they say are choking capitalism. But thanks to an ever widening gap between the rich and everyone else and especially the travails of a middle class being passed by despite the slo-mo recovery from the Bush Recession, the Democratic presidential candidates are scoring points by campaigning on the need to curb the excesses of capitalism, which are doing another kind of choking: Choking Americans of hope.
This campaign is important not just because unmasking capitalism's dark side makes sense, they explain, but because doing so is a moral imperative. This is a potent strategy since Republican economic policy is as outdated as the party's social policy, and Americans who are struggling to get by but undecided about whom to vote for in 2016 may just notice the disparity.
Hillary Clinton said it best in making the case for a more progressive sort of capitalism, although Bernie Sanders said it first.
"It's always the Republicans or their sympathizers who say, 'You can't have paid leave, you can't provide health care,' " she declared during the first Democratic presidential debate. "They don't mind having big government to interfere with a woman's right to choose and to try to take down Planned Parenthood. We should not be paralyzed by the Republicans and their constant refrain, 'Big Government this, Big Government that.' "
Sanders has campaigned against capitalism run amok for years. It's just that few people were paying attention until the Vermont socialist took his show on the road. The enthusiasm he is generating and huge crowds he is attracting are misleading insofar that his base is small when compared to Clinton's, but he has almost singlehandedly shifted the debate, and perhaps even reshaped the Democratic Party, and that may well turn out to be a watershed event in modern American political history. I also certainly never thought I'd live to see the day when people finally understood that socialism -- in Sanders' case the democratic socialism embraced in Sweden and Denmark and to an extent in Canada and Australia -- is a benevolent system of governance where stuff like health care and a college education is a right of citizenship and far cry from the jackbooted Sieg Heil brand of socialism with which Republicans, and recently Ron Paul in particular, have tried to tar Sanders and Barack Obama.
What people still may not understand so well is the interplay between markets and government in a healthy economy. It's necessary.
While Wall Street is the biggest capitalistic villain, it is not the only villain, and Republicans will dig deep into their scare-tactic playbook to protect their bankster benefactors, the rich and other special interests by painting the Democrats as being anti-capitalistic. Clinton had a ready reply for that line of attack at the debate, saying "We would be making a grave mistake to turn our backs on what built the greatest middle class, [but] what we have to do every so often is to save capitalism from itself. . . . It's our job to rein in the excesses of capitalism so that it doesn't run amok and doesn't cause the kind of inequities we're seeing."
The lynchpin of the Democratic economic plan is making Wall Street accountable and, cleverly in my view, turning it into a kind of revenue stream. The Democratic candidates believe that Wall Street owes Main Street, and they're right since we bailed out the banksters, who are once again flying high in this new Gilded Age. Sanders proposes the creation of a universal college education fund through a financial transaction tax on Wall Street speculation, while Jim Webb (who is a former Republican) advocates a windfall profits tax on the executives of companies that got more than $5 billion in the 2008 bailout. All the candidates support a federal family leave law for mothers of newborns, with wealthy Americans footing the bill.
Clinton, Sanders and Martin O'Malley accuse Wall Street of "casino capitalism," a catchy phrase since the debate was held in Las Vegas, and chastised the financial markets during the debate for high-risk trading and reckless speculative behavior. O'Malley noted that no one went to prison for the Wall Street crash and said that when banksters run afoul of the law they should be treated like "street criminals" and not white-collar crminals. "We have a criminal justice system that lets CEOs on Wall Street walk away," Sanders noted, "And yet we are imprisoning or giving jail sentences to young people who are smoking marijuana."
Sanders goes even further, saying that only government can check the excesses of Wall Street, but financial institutions wield so much political clout that "Congress does not regulate Wall Street. Wall Street regulates Congress." You gotta love him, but limiting the corporate influence in politics would be like holding back the sea with a spoon.
Where Sanders and Clinton disagree is on how to reign in the excessive greed of Wall Street.
Sanders would break up the biggest banks and restore the Depression Era Glass-Steagall Act, which barred commercial banks from investing in the speculative financial deals which contributed significantly to the 2008 meltdown. Clinton said that she would not restore Glass-Steagall, but instead would better regulate speculators, and is vulnerable on the issue.
Clinton's husband supported the Gramm-Leach-Bliley Act, which overturned Glass-Steagal and let banks run roughshod, and many of her top donors have been Too Big to Fail financial institutions, although that is changing as Wall Street panics over the prospect of a President Hillary and throws its support behind Republicans like Jeb Bush, who pledges to reverse even the modest financial reforms enacted in 2010 by a president who is vilified even if he did name Goldman Sachs alumni to his key economic positions. As Paul Krugman of The New York Times puts it, "Financiers bitterly resent any constraints on their ability to gamble with other people’s money, and they are voting with their checkbooks."
Most importantly, for me anyway, is that the Democrats believe the economy should be measured by the welfare of society and not growth, which is a shot to the wheelhouse of the Republican flagship SS Laffler.
"You can have all of the growth that you want," says Sanders, who like his colleagues is disdainful of using aggregate statistics to judge the economy, "and it doesn't mean anything if all of the new income and wealth is going to the top 1 percent."
But while all this economic bully pulpiting is just great, it will collide with reality with a big thud even if Clinton is elected, which I believe she will be, and the Democrats retake the Senate, which is a possibility. That is something called the Republican House of Representatives, which has trouble even funding the government, let alone wiping its collective ass. A President Clinton would have to be prepared to use her executive power early and often if any of these kinder, gentler and fairer policies are to become reality.
Politix Update is an irregular compendium written by veteran journalist Shaun Mullen, for whom the 2016 presidential campaign is his (gasp!) 12th since 1968. Click here for an index of previous Politix Updates.
IMAGE FROM DONKEYHOTEY/FLICKR. USED WITH PERMISSION.