After the Election

[These remarks were prepared for the North Atlantic Left Dialogue, Berlin, November 22-23. See http://www.left-dialogue.org/]

The discussion of electoral politics needs to be positioned in the context of the continuing economic crisis, the decades long stagnation of working class real income, growing insecurity with regard to a future which Americans feel is less likely to contain the American Dream future for themselves and their children. Global shifts make the prospects of most workers in the territorial United States bleak even as US-based transnationals and international financiers look to so-called emerging markets for new opportunities.


While the more individualist fractions of capital have always fought the Welfare State, trade unions, and funded politicians advocating small government and laissez faire policies, transnational capital no longer needing a liberal-labor alliance has abandoned commitment to Keynesianism, sees slow growth, and redistribution of the burden of government as a key issue and abandons reformist efforts at any costly modernization of the American state, taking an approach driven by the financialization of American capitalism, pressure for short term maximization of share holder value, and joins in the attack on pensions and health care spending as means to reduce the federal debt driven higher in recent years by regressive tax cuts, costs of imperialist militarism, and the financial crisis


With this context obscured by misdirection (guns, gays, and other culture war wedge issues) and now (Big Government, out of control spending, Muslim terrorists and other “take back our country” issues) the Democrats not wanting to be seen as unpatriotic or anti-business, give away class issues which could win votes (like not extending Bush tax cuts for the top two percent of wealthy Americans) and do the same in the matter of the country’s needs for financial reform which would cut the megabanks who have been rescued by the taxpayers and now return to their obscene profiteering ways through social control of investment priorities. They dare not given the need to finance election campaigns under the existing system of money driven democracy


Having compromised to get what they could in these areas they allow the Republicans to distort what is positive in what they have done. The far right does not hesitate to defeat RINOs (Republicans in Name Only) in Republican primaries. The Democrats recruit and fund DINOs in conservative districts achieving 60 votes in the Senate but not having a majority on most anything that matters but getting the blame for achieving too little of the progressive goals they were elected to achieve. The future of progressive politics, youth and minority voters were not drawn to vote in 2010. With twenty percent of Americans un- or underemployed Obama talk of “Recovery Summer,” “heading in the right direction” etc. rang hollow. Gridlock will push the Dems further to the center in the next two years hoping the Tea Party right will overstep and the country will return to the Democratic Party for 2010


If the job situation remains bleak, the economy stagnates, and economic insecurity grows, the Fox News Right will grow more threatening and there will be no Left to the left of a John Stewart let us be reasonable and have a respectful discussion in which we agree to disagree politely. Obama will continue to be called a socialist (and far worse) so that his reasonable ideas for change can be ignored. Explaining that the Tea Party is being manipulated by the rich and corporate interests which do not want social regulation or to pay taxes – like the Koch brothers will not make a dent in the ability of the Right to mobilize dissatisfaction from a “leave me alone,” “give me the mythical past back” legion.


Building and (rebuilding) independent movements of the Left (left of the left-center of the Democratic Party) is the necessary task. What socialists have to contribute is making the connections between issues and the system of capitalism in a language which can be heard by the broader movement as not the same old pitch. It is about a public philosophy which builds and demands solidarity and exposes the class interests served by the ideology of individualism. Free choice as an individual is not possible when what we want is a different sort of society. The critique form the Left needs to be a more accessible explanation of what capitalism has done to the country and its working people, that government is a terrain of struggle just as the workplace is and that we do not need “less government” or “more government” but a democratic government which does not bow to capital which finances the show and limits our choices to ones we do not want by saying what we want is unrealistic or socialism. If what we want is socialist and people agree that those things are good let us just agree to define socialism as what working people need and want for themselves and their country.


The discussion of Obama and the Democrats needs to change from is he a sellout? versus “we told you he was a capitalist flack misleading voters,” to critical support. Support for the president and progressive Democrats when they support things we like and criticism when they favor measures we do not like – making it clear at elections we will vote against the extreme right and the party of “no” which is the attack the working class vehicle of the most vicious sectors of capital. In primaries progressives should vote for principled candidates supporting left ideas and explanations of the system. There are a number of these folks and there will be more. Unlike some on the left I cannot see a successful Third Party effort in the contemporary situation and do not see sellout Democrats as the main enemy. We see what  even mildly serious effort to bring capital under some control even to preserve the system does to the flow of campaign contributions from Wall Street, energy companies and the rest. It is the system stupid. It is the economy, the economic mess, because of the system (stupid). This is not an American thing. Matters are little different in France (the “Socialist” Party?), the U.K. (a “Labour” Party?) or Germany (the SDP is social democrat?) The unwillingness to confront global capital and lack of a better explanation turns fearful voters against easy targets, immigrants, terrorists.


The Left of the Obama administration will have to cope with what should be seen as the sellout of Social Security and Medicare in the name of fiscal responsibility. The crisis had generated fear and anger, a setting in which a powerful effort was being made to cut entitlement programs. In the United States while people overwhelmingly supported Social Security as it existed and even the popular Ronald Reagan had been unable to finesse its privatization (nor had George W. Bush), the conventional wisdom was that it was a pot of money which could be raided to pay down the federal debt. As one member of the bipartisan commission on debt reduction said, “it was where the money was.” The co-chair of the commission appointed by President Obama, former Senator Alan Simpson, has now famously described Social Security as "like a milk cow with 310 million tits," according to an email he sent to the executive director of National Older Women's League making clear his views. He was chosen by a White House which saw Social Security as the likeliest source of the sort of large savings needed to bring projected annual deficits to sustainable levels. It looked to the commission to give Washington cover to cut Social Security and Medicare instead of alternatives such as “weaning corporations—banks, insurance companies, war contractors—off the federal teat,” as Matthew Skomarovsky so accurately writes.


In order to do this a number of issues were widely misrepresented. The aging of America should not be confused with an inability of Social Security, modestly adjusted, to provide for America’s retirees. By official count it will run surpluses for the next three decades and needs little adjustment to stay robust for the next three-quarters of a century, based on official estimates. The 2010 Social Security Trustees Report projections it would be possible to not raise the tax until 2020 and between then and 2040 raise the rate by a little under a percent and a half (which would take up only twelve percent of the projected wage growth over that period) leaving “our children” over forty percent better after the Social Security tax increase than we are, as Dean Baker’s calculations show. The relevant bottom line is that Social Security Fund currently and for some decades will have a large surplus. It is invested in US treasury bonds. As it needs to draw these funds it is accused of “draining resources from taxpayers.” Social Security monies in government bonds being paid to recipients is no different than if Japanese or Saudi Arabian bond holders ask for their money by selling their treasury bonds. Potential retirees did not give the money to the treasury but lent it like the Saudis, Japanese and American investors. They are not “draining resources.”


If money for Social Security needs to be raised more progressive payroll taxes are possible. The limits to which wages are taxed could be raised from its current $106,000 or, in keeping with the concerns of this book, a financial speculation tax could be implemented. Schemes have been proposed which would not inhibit non speculative investment and could raise as much as one percent of GDP, $145 billion a year, or twice the projected shortfall in Social Security to pay benefits. (A more modest tax on stock trades in England brings in 0.3 percent of that country’s GDP.) While reducing retirement benefits is spoken of in terms of “making the difficult choices,” the real difficult choice would be to make Wall Street which has benefitted from the rescue from the crisis it created and has grown so wealthy at the expense of America’s workers pay.


As Emmanuel Saez reports, after decades of stability in the post-war period, the share of income going to the top ten percent of earners increased dramatically and has regained its pre-war level. He finds the top earnings decile share in 2007 was equal to about half of total income (49.7 percent), a proportion higher than any other year since 1917 and surpassing 1928, the peak of stock market bubble which led to the Great Depression. Between 1993 and 2008 the top one percent incomes received slightly more than half of overall income growth. In the economic expansion of 2002-2007, the top one percent captured two thirds of income growth. These very rich people are heavily stock option receiving top corporate executives and top earners at hedge fund and private equity and investment banks. Returns from financial investments add more wealth and income to those at the top because the rich disproportionately own financial assets. It is not surprising that there is a close correlation over these decades to the growth of financial assets and rising income for the top one percent. The increase in income polarization also results from the decrease in solid working class jobs which have been destroyed in the era of financialization. The top one tenth of one percent of Americans receive more income than 120 million of their fellow citizens, or half the US population. Looking at the data it is difficult to disagree with William Lazonick that “any government policy agenda that seeks to recreate the middle class in the United States needs to begin with an attack on the financialized corporation.”


Capitalist democracy is a system in which money power prevents working class issues central to the lives of people to be discussed realistically. Doing that is our job. Voting to prevent a hard right takeover is necessary even as an independent Left needs both its own identity and to be part of a broader struggle for economic democracy breaking don the walls in thinking between politics and economics which serve capital. Working people have to defend the entitlements they have won in the past and demand more government attention to the needs of the twenty million un- and underemployed and growing numbers of the poor including devastating numbers of children who face the harshest future in an economy which puts bankers and transnational capitalists first and hopes for some crumbs to drop down to the rest of us. Over the next two years leading to the 2012 presidential election booth parties have reason to make voters forget that “it is the system, stupid.” It is the job of the progressive Left to interpret events and politics in ways that make clear just how much needs to change. It is change we really need and as the stagnant real wages of the last thirty years morphs into more strident demands for more working class concessions just how this system works is important for us all to understand and talk about.


*These remarks were prepared for the North Atlantic Left Dialogue, Berlin, November 22-23. See http://www.left-dialogue.org/.

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