Pox Americana


What a country, our United States. We haven’t had a woman president. We haven’t had a black president. We haven’t had a Latino or Native American president. But we’ve had two George Bushes. If the Bush dynasty continues, the first Latino president could be George P. Bush, son of Columba and Jeb Bush, the vote-rigging governor of Florida. He’s one of the grandkids George the Elder called “the little brown ones.” George P. is a lawyer specializing in mergers and acquisitions and other corporate law. Perfect. 

George W. Bush, even more than his father before him, was, to use Hightower’s phrase, “born on third base and thought he hit a triple.” Now he and the Republican Party are born again—ready to slander and gerrymander their way to “The Architect” Karl Rove’s dream of permanent right-wing rule. 

Bushwhacker Bible 

If you haven’t read it yet, I recommend Kevin Phillips’s latest book, American Dynasty: Aristocracy, Fortune and the Politics of Deceit in the House of Bush. Phillips was a pivotal Republican strategist, blueprinting Richard Nixon’s “Southern strategy.” Over the years, though, Phillips became increasingly disgusted with the kind of crony capitalism, insider dealing, influence peddling, war profiteering, anti-worker, and increasingly fundamentalist Christian right Republicanism now personified by George W. Bush and Dick “Halliburton” Cheney. 

Phillips thinks it’s terrible for democracy that with Bush, the “de facto head of the Religious Right” and the president of the United States is the same person. As House Republican leader Tom Delay assured a Texas Baptist audience, God made Bush president to “promote a biblical worldview.” 

In the bible according to Bush, Cheney, Rove, and Delay, Jesus wants the rich to get richer and richer while children are hungry and homeless, the Garden of Eden blooms with oil wells, and you do unto others anything you can get away with. American fundamentalists want less Darwinism in the schools and more Social Darwinism in the economy. 

The core economic agenda is undo the New Deal. Even better, remake the United States in the image of retro Texas. Check out Michael Lind’s book, Made in Texas: George W. Bush and the Southern Takeover of American Politics. The Texan Michael Lind says Bush’s presidency can be seen as a successful coup by the Southern conservative oligarchy and culmination of 70 years of counter-revolution against the New Deal in both domestic and foreign policy. Bush, he writes, was shaped by “a culture that combines Protestant fundamentalism and Southern militarism with an approach to economics that favors primitive commodity capitalist enterprises like cotton and oil production over high-tech manufacturing and scientific R&D.” Now there’s a recipe for peace, prosperity, and sustainable development. 

Think the United States before Franklin Roosevelt. Before even Teddy Roosevelt. Think of the Nixon and Reagan administrations as the good ol’ days. Ronald Reagan used to joke, “Sometimes our right hand doesn’t know what our far right hand is doing.” That’s the political spectrum now driving the White House and Congress and reshaping the courts. 

Bush’s biggest corporate backer was Enron. Before it imploded in an orgy of greed—destroying jobs and retirements—Enron helped set policy on energy, the environment, deregulation and so on. Bush is Enronizing the environment and the economy. Milking them like cash cows and sticking future generations with the bills. W stands for global warming. Our grandchildren may study Bush as the president who could have taken action against global warming at the final tipping point to disaster—but didn’t.

Bush’s basic economic goal is simple: the rich get richer. This has been a trend since the mid-1970s, but Bush is accelerating it with deep tax cuts. For underpaid workers and the unemployed, “compassionate conservatism” means, “Let them eat bibles.” The shriveled public safety net is being outsourced to faith-based homeless shelters, church suppers, and so on. The government increasingly fuels right-wing faith-based initiatives, which fuels evangelism, which counters economic populism. 

Economic inequality has gone back to the future—circa 1929. The 400 richest Americans who make up the Forbes 400 have $1 trillion in combined wealth. That’s nearly as much as the combined wealth of the more than 50 million households in the less moneyed half of the population. 

The middle class is shrinking. The share of national income going to the middle class in 2003 was nearly the lowest on record, with data back to 1967. The share going to the bottom fifth of households was the lowest on record. 

Poverty rates are higher now than they were in the 1970s. One out of five children is born into poverty, by the lowball official count, in this poorest richest nation on earth. Poverty rates would be much higher if the poverty line were adjusted to realistically reflect the cost of minimally adequate housing, healthcare, food, and other necessities such as childcare for employed parents. 

In 1979, the richest 1 percent of Americans had 23 times as much after-tax income as the bottom 20 percent. By the year 2000, the top 1 percent had 63 times as much after-tax income as the bottom 20 percent. That’s before all the Bush tax cuts. 

Workers have not been getting their fair share of the benefits of rising worker productivity. Between 1947 and 1973, worker productivity rose 104 percent while the minimum wage rose 101 percent, adjusting for inflation. Between 1973 and 2003, however, worker productivity rose 72 percent, but the minimum wage fell 22 percent and average hourly wages fell 10.5 percent, adjusted for inflation. 

The minimum wage has been stuck at $5.15 an hour since 1997. That’s lower than the real minimum wage of 1950, which was $5.88, adjusted for inflation in 2004 dollars. In technology terms, 1950 is so long ago that pocket calculators were still two decades in the future. When the minimum wage is stuck in quicksand, it drags down wages for average workers as well. As Business Week observes in a May 31, 2004 cover story on the growing numbers of working poor, “Today more than 28 million people, about a quarter of the workforce between the ages of 18 and 64, earn less than $9.04 an hour, which translates into a full-time salary of $18,800 a year—the income that marks the federal poverty line for a family of four” ($9  is not much more than the minimum wage peak of $8.69 in 1968, adjusting for inflation). 

Many companies have been ripping off workers and shareholders. They’re paying workers so little they can’t make ends meet. They’re paying CEOs so much, their grandchildren won’t have to work. 

Some of today’s worst CEOs make millions more in a year than the best CEOs of earlier generations made in their lifetimes. Fortune magazine put a smiling pig in a pinstriped suit on the cover and headlined its 2003 CEO pay roundup, “Have they no shame? Their performance stank last year, yet most CEOs got paid more than ever.” 

U.S. companies are busily outsourcing workers when they should be insourcing CEOs from other countries. European and Japanese CEOs run many of the world’s leading companies for a lot less pay than their U.S. counterparts. U.S. CEOs make five times as much as CEOs in Japan, four times as much as CEOs in Spain, three times as much as CEOs in the United Kingdom, France, Italy, and the Netherlands, and twice as much as CEOs in Germany and Switzerland. 

U.S. CEOs have put factory workers, computer programmers, and engineers in a race to the bottom with workers around the world while keeping themselves in a rigged race to the top. U.S. CEOs at major corporations made 44 times as much as workers in 1980 and 254 times as much in 2003. British CEOs make just 28 times as much as workers. You’d think the Brits were the ones who rebelled against royalty—not us. 

A major reason for the decline in the value of wages and benefits has been the decline of unions, with plant closures, market fundamentalist globalization and union busting. Only 13 percent of workers are union members, including nearly 4 in 10 government workers, but just 1 in 12 private sector workers. The U.S. Bureau of Labor Statistics reported that full-time workers who were union members had median 2003 weekly earnings of $760 compared with just $599 for workers not represented by unions—and union members are much more likely to have health insurance and pensions. 

The decline of unions affects everyone, not just union members. In Business Week’ s words, “While labor unions were largely responsible for creating the broad middle class after World War II, bringing decent wages and benefits to even low-skilled employees…that’s not the case today. Most U.S. employers fiercely resist unionization, which, along with other factors, has helped slash union membership.”  Unions have historically been strong supporters of progressive legislation such as Social Security, Medicare, minimum wage, and health and safety protections. Shrinking union membership has left those programs and policies much more vulnerable. 

Wal-Martism 

T he model for post-New Deal America is Wal-Mart. Always low wage, anti-union, taxpayer-subsidized Wal-Mart. While Wal-Mart heirs and executives are among America’s richest, Wal-Mart workers are among the poorest. 

The heirs to Wal-Mart founder Sam Walton hold down half the Forbes 400 top-ten spots, with about $18 billion each. Wal-Mart’s U.S. workers—most without health benefits—average just $8 an hour. That compares poorly with $12 in retail trade generally. By contrast, Wal-Mart CEO Lee Scott’s 2003 pay package of $29.8 million amounted to more than $3,400 for every hour of every day of the year. 

Wal-Mart is the United States’ largest private employer and the world’s largest retailer. It’s rolling back wages in the areas it dominates, from the U.S. to China. Forget any crying about competition in the Wal-Mart race to the bottom in wages. Wal-Mart goes to cheap labor suppliers in the markets it dominates and pressures them to lower wages even more. 

As the Washington Post (February 8, 2004) reported, “More than 80 percent of the 6,000 factories in Wal-Mart’s worldwide database of suppliers are in China. Wal-Mart [accounted in 2003] for nearly one-eighth of all Chinese exports to the United States. If [Wal-Mart] were itself a separate nation, it would rank as China’s fifth-largest export market, ahead of Germany and Britain…..  ‘Wal-Mart pressures the factory to cut its price, and the factory responds with longer hours or lower pay,’ said a Chinese labor official, who declined to be named for fear of punishment. ‘And the workers have no options’.” 

Wal-Mart is heavily subsidized by taxpayers as well as underpaid workers. For example, a state survey in Georgia, where Wal-Mart is the largest employer, looked at enrollment in PeachCare, which provides health insurance to children in low-income families. It found that Wal-Mart had one child in PeachCare for every four employees. The ratio for the next ranked company, Publix, was one child in PeachCare for every 22 employees. 

Wal-Mart’s chief competitor, Costco, takes a higher road approach. Comparing the two, Business Week (April 12, 2004) reports, “Costco’s high-wage approach actually beats Wal-Mart at its own game on many measures…. We found that by compensating employees generously to motivate and retain good workers, one-fifth of whom are unionized, Costco gets lower turnover and higher productivity.” With an average hourly wage of nearly $16, plus much better benefits than Wal-Mart, Costco gets higher profits per employee than Wal-Mart’s Sam’s Clubs. 

Business Week said, “The larger question here is which model of competition will predominate in the U.S…. The cheap-labor model turns out to be costly in many ways. It can fuel poverty and related social ills and dump costs on other companies and taxpayers, who indirectly pick up the health-care tab for all the workers not insured by their parsimonious employers. What’s more, the low-wage approach cuts into consumer spending and, potentially, economic growth.” 

Taxes and Social Insecurity 

If there is one mission President Bush has accomplished, it’s tax cuts for the wealthy. When the first round of tax cuts was proposed the public propaganda was we have so gigantic a budget surplus we could shrink government revenues, protect Social Security, and still have plenty for needed services. Surplus quickly changed to deficit. Never mind, tax cuts would be wrapped in the post-9/11 flag of economic recovery, and now, the rhetoric of Bush’s so-called ownership society. That means, “We own, you pay.” Already enacted tax cuts for the wealthiest 1 percent will cost more than $1 trillion in 2001-2010. That translates into more than $300 million in lost revenues every day for 10 years. 

Bush is building up deficits and debt to record levels, setting Social Security and Medicare up for the kill. One out of three seniors depends on Social Security for ninety to one hundred percent of their income. Two out of three seniors depend on it for more than half their income. Bush’s moral values mean robbing retirees to pay for tax cuts for millionaires and billionaires. 

Since 1983, the government has collected much more from Social Security taxes than it pays out in benefits in order to build up a surplus for the baby boom retirement. From 1984 to 2002, the government collected $1.7 trillion more in Social Security taxes than it paid out in benefits. In the year 2000, the federal budget was balanced without borrowing the surpluses in the Social Security or Medicare trust funds. 

Contrary to common belief, Social Security is not going broke. Social Security Trustee projections over 75 years show that Social Security can pay full benefits until the year 2042—nearly four decades from now. That’s using pessimistic economic assumptions. The Congressional Budget Office (CBO) says Social Security won’t have a shortfall until 2052, after which about 80 percent of benefits could be paid under the current system. 

Most Americans pay more in payroll taxes than income taxes. The Social Security payroll tax takes a bigger share out of low- and middle-income paychecks than high-income ones because earnings above a cap ($87,900 in 2004) are exempt. Removing this cap would erase most of Social Security’s projected future revenue shortfall. 

The Center on Budget and Policy Priorities reports, “The cost over the next 75 years of the tax cuts just for the one percent of households with the highest incomes —a group with average incomes of about $1 million per year— exceeds the entire 75-year Social Security shortfall that CBO projects .” 

Social Security is popular and politicians who want to kill it can’t say that. Instead, they manufacture a “crisis” and offer to fix it with cuts and privatization. They want you to be so scared Social Security won’t be there in the future that instead of restoring higher taxes on the rich you’ll let them rip you off even more. You’ll let them privatize Social Security, putting more and more of your retirement in the hands of the stock market with no security—even though Social Security is meant to give people stable retirement income whatever the ups and downs of the market. 

The Bush administration wants to turn the nation’s most reliable anti-poverty program into a cash cow for Wall Street. The Bushwhackers specialize in the politics of fear. They want you so scared Social Security won’t be there in the future, you’ll let them make that a self-fulfilling prophecy. 

When President Bush launched the PR campaign to sell his first tax cuts, he surrounded himself with middle-class families. When asked why no one was there representing the top bracket, Bush laughingly replied, “Well, I beg your pardon. I’m representing…the top tax bracket.” 

“The Bush tax cuts, which included a reduction in the top tax rate, as well as reductions in taxes on estates, capital gains and dividends,” the Wall Street Journal observed, “helped bolster the fortunes of the fortunate.” Households with incomes above $1 million will receive tax cuts averaging $123,600 in 2004, says the Center on Budget and Policy Priorities. That will cause their after-tax income to jump by more than 6 percent—widening the gap with those below. 

It would take 17 Donald Trumps to match the $43 billion net worth of investor guru Warren Buffett, the world’s second richest man. When it comes to federal taxes, though, Buffett pays about the same rate as his office receptionist. “I pay a somewhat higher [federal tax] rate for my combination of salary, investment and capital gain income than our receptionist does,” Buffett wrote in 2003, “But she pays a far higher portion of her income in payroll taxes than I do.” 

If Bush’s tax cuts for the wealthy keep moving forward, the receptionist will pay a higher overall tax rate than her boss. She already pays a higher rate in state and local taxes. In Nebraska, home of Buffett’s firm, Berkshire Hathaway, the richest 1 percent of families effectively paid 6.4 percent of their income in state and local taxes in 2002, the middle 20 percent of families paid 9.8 percent, and the bottom 20 percent paid 10.2 percent, reports the Institute on Taxation and Economic Policy. 

In Bush’s home state, Texas, taxes are even more regressive. The richest 1 percent paid just 3.2 percent of their income in state and local taxes, the middle fifth paid 8.2 percent, and the poorest fifth paid 11.4 percent—more than 3 times the rate of the rich. Nationally, the richest 1 percent paid just 5.2 percent of their income in total state and local taxes in 2002 while middle Americans paid 9.6 percent and those with income less than $15,000 paid 11.4 percent—more than twice the rate of the rich. 

By Bush’s moral code, soldiers and teachers should pay a larger share of their incomes in taxes than even the laziest heirs of the wealthy living off inherited investments. The Bush administration wants to remake the tax system, increasingly exempting money from investments, so that non-rich citizens pay a bigger share of their incomes—mostly from paychecks—than wealthy Americans pay from their incomes, heavily derived from investments in stocks, bonds, real estate, and so on. If they can get away with it, the Bushwhackers will implement a flat tax or national sales tax—shifting the tax burden even more heavily onto people living off their paychecks. 

Bush wants growing government debt, like the Reaganites did, so the public services and public works they don’t want anyway are starved of money under this and future Administrations—whether they’re in the White House or not. 

In the now famous words of conservative strategist Grover Norquist, president of Americans for Tax Reform, the goal is to get government “down to the size where we can drown it in the bathtub.” The huge tax-cut driven Bush debt wave will drown education, Social Security, and Medicare along with much else. The lifeguards will be protecting the military, some homeland security, and corporate cronies. 

Since January 2001, a projected 10-year federal budget surplus of $5 trillion has become projected deficits of more than $4 trillion. The budget crisis is a revenue crisis. Federal revenues have fallen to their lowest level as a share of the economy since 1950. As the Center on Budget and Policy Priorities observes, that’s “a time when Medicare, Medicaid, most federal education aid, [and] most environmental programs…did not exist.” 

Democratic Values
 
T
hese are dangerous times. The Republican rulers think the United States can recreate the post-World War II Pax Americana with pre-World War II, pre-New Deal values and policies. The United States is an increasingly shaky superpower with a skyrocketing debt held heavily by other countries. It has a growing trade deficit, including a newly growing agricultural deficit. 

The European Union is an economic superpower and China is fast becoming one. Unlike the EU and China, the United States is increasingly hostile to science and reason. According to an AP/Gallup Poll from 2001, the “percentage of Americans who believed more in” creationism was much higher than those who believed more in the theory of evolution: 

  • creationism 48 percent/evolution 28 percent 
  • leaning creationism 9 percent/leaning evolution 5 percent 
  • no opinion 10 percent 

Bush and his base think you can lead globalization like the Crusades—by force. Pax Americana born again without the Pax. A Pox on Your House Americana. It can’t last. But it sure can hurt. 

We’ve heard a lot of talk about values since the election. We need to value democracy. We need democratic values. 

  • Democracy is not demagoguery. Democracy is not divide, conquer and crush. 
  • Democracy is not government of, by, and for the right-wing Republican people. Democracy is not government of, by, and for corporations. 
  • Democracy is not a gated community of beliefs. 
  • Democracy is not bully politics and bullying pulpits. 
  • Democracy is not theocracy. Much less the theocracy of Armageddon. 
  • Democracy is not religious fundamentalism or Fox News fundamentalism or market fundamentalism. 
  • Democracy is not sending other peoples’ kids to die in wars of choice you wouldn’t expect your own kids to fight. 
  • Democracy is not thinking freedom ends at your beliefs. Democracy is not conformity. 
  • Democracy is not voter purges, suppression, unverifiable electronic voting, and fraud. 
  • Democracy values whistle blowers. 
  • Democracy is equal rights, not self-righteousness. 
  • Democracy is openness. Democracy is compromise. 
  • Democracy is diversity.  

Holly Sklar’s latest book is Raise The Floor: Wages and Policies That Work For All Of Us (www.raisethefloor. org).