The Big Squeeze
Republicans have always defended
But they've never done it quite like this.
by David Serota
The America Prospect magazine,
For most Americans, the last four years
have represented a low point in our economic history. But for
the big-business interests financing the Bush campaign, these
have been high times. In previous eras, and even under previous
Republican administrations, corporate America was one of a number
of players in the public-policy arena. But under the Bush administration,
big business is both the player and the referee, having finally
won its decades-long campaign to eliminate the boundary between
executive suite and public office. No longer does the private-profit
motive compete in the legislative process with public good; profit
now owns the process, and the middle class is left to the vultures.
We technically have a representative government,
but it is far less like democracy than like WWE wrestling-entertaining
theater with colorful characters, much fanfare, and a few body
slams, but ultimately a rigged outcome. Industry no longer needs
to lobby hard for regulatory rollbacks, because many of its own
lobbyists have been appointed federal regulators. Congress openly
admits that business writes many of the most important pieces
of legislation. The White House slaps an official seal on memos
from corporate executives and labels them "presidential policy
initiatives." The vice president is permitted to own shares
of stock in a company for which he coordinates government contracts.
And the Oval Office is occupied by a man whose major life experience
was not public service but money-losing business deals (that somehow
seemed to just make him richer and richer). In short, the government
is now a wholly owned subsidiary of corporate America.
This hostile takeover is no accident.
After the crushing defeat of Barry Goldwater in 1964, conservative
business interests began a campaign to intimidate, infiltrate,
and ultimately take over Washington. As David Brock documents
in his new book, The Republican Noise Machine, the chief architects
of the right's new strategy laid out an agenda "whereby conservative
business interests would create and underwrite a 'movement' to
front their agenda." And, slowly but surely, the campaign
worked. This Republican Party-big-business nexus massaged its
propaganda during the Nixon years, fertilized it under the Reagan
administration in the 1980s, and incubated it into legislative
experiments after taking over Congress in the 1990s. The George
W. Bush era is simply the full-grown, out-of-control, bastard
child of this 30-year orgy that's been running roughshod over
the middle class.
The business takeover of government seems,
at first blush, unremarkable-like something that has been with
us for years and is as natural to the order of things as the ocean's
tides. But it is not natural at all. It is new, historically speaking,
and blatant even by the standards of recent Republican administrations.
To illustrate how far down this road we've actually gone, just
contrast George W. Bush's categorical refusal to regulate the
market with three of his Republican predecessors. Richard Nixon
created the Environmental Protection Agency, the Occupational
Safety and Health Administration, and expanded the Equal Employment
Opportunity Commission-all agencies chartered to protect average
people. Even while ideologue Ronald Reagan was doing his best
to soak the poor, he was forced to increase at least some corporate
taxes in his 1986 tax-reform package. And according to the conservative
Heritage Foundation, George Bush Senior increased funding for
regulatory enforcement by 18 percent.
This administration, by contrast, resists
any government intervention or deviation from the big-business
agenda, no matter how dire the situation. It is all the culmination
of the industry's master plan: Take over the government and remove
it as an obstacle to fleecing the average American. If any legitimate
proposals arise to reregulate the market, they are bludgeoned
with any red herring available: Health reforms are tarred as "socialized
medicine," tax reforms are attacked as "job killers."
While the fat cats make off like bandits, the rest of us are left,
in five crucial areas of economic life, facing the big squeeze.
THE HEALTH-INSURANCE SQUEEZE
Last year, Americans spent 14 percent
of all their money -$1.5 trillion-on health care (such spending
is rising at more than 7 percent a year). And those are the lucky
ones: A report by the nonprofit Families USA found that 82 million
Americans went without any health insurance at some point provisions
that would have permitted seniors to buy cheaper medicines from
And this year, President Bush gave the
drug companies their crown jewel: a Medicare bill that includes
a drug benefit, yet specifically prohibits Medicare from negotiating
any price discounts. The bill will give the industry a half-trillion
dollars to administer the new program, yet without any cost controls,
even that sum is not enough to provide comprehensive drug coverage
to seniors. In short, the bill created two new entitlements: a
marginal one for Grandma and a vast one for the pharmaceutical
THE ENERGY SQUEEZE
With automobiles consuming 40 percent
of all the oil America uses, a big part of the energy solution
naturally revolves around using less oil in automobiles. In the
long term, that means serious investment in alternative energies
and mass transit. In the short term, that requires forcing auto
companies to make more fuel-efficient vehicles.
Those simple solutions have been attacked
and distorted by energy companies, which in the last four years
have reaped an additional $50 billion to $80 billion in new profits
from the cur- ' rent situation. Instead of acknowledging the problem,
these companies turn Alice-in-Oil-land fantasy into free-market
ideology. The oil industry's executives claim with a straight
face that the Earth "will never run out of oil" and
call for more tax breaks for oil and gas drilling. That kind of
rhetoric is translated into fodder for conservative, industry-backed
think tanks that arm lawmakers with "facts." For instance,
the libertarian CATO Institute, which receives grants from Chevron,
ExxonMobil, and Unocal, issues reports claiming that "fossil-fuel
resources are becoming more abundant, not scarcer." Similarly,
the Chevron-ExxonMobil-Shell-backed Heritage Foundation issues
talking points actually saying cars "clean our air."
These claims, of course, are wholly without
merit: As National Geographic this year noted, "Humanity's
way of life is on a collision course with geology [and] the stark
fact that the Earth holds a finite supply of oil." Experts
agree that, whether five or 30 years from now, supply "will
ultimately top out, then dwindle." And there is no legitimate
science to prove that burning fossil fuels is good for air quality
or the environment.
But with the White House headed by two
oilmen, industry nonsense substitutes for public policy. Within
months of taking office, Vice President Dick Cheney convened a
secret task force to solicit oil executives' help in writing federal
energy policy. No matter that Cheney still held stock options
and received a salary from the oil behemoth Halliburton, which
stood to profit from the policy decisions. What mattered was paying
back the industry that gave the Bush campaign almost $2 million.
The resulting legislation was a classic
marketplace intervention by the government on behalf of industry-this
time, to pay wealthy oil corporations to do what the government
could have mandated for free. Billed as a "comprehensive
energy plan," the energy proposal was nothing more than a
series of multibillion-dollar tax breaks for oil and gas companies.
Even though the president's own economic guru admits "the
technology exists for sharply reducing and eventually eliminating
the use of oil to fuel cars," the legislation included no
fuel-efficiency standards at all. Making matters worse, the president
proposed budgets that simultaneously cut funding for alternative
fuel and hybrid-engine research while creating a new, $100,000
tax write-off for people who purchase gas-guzzling Hummers.
Even the most serious crises brought no
action. During the West Coast energy crisis, when Enron was fleecing
at least a billion dollars from consumers and laughing about it,
the White House refused to support temporary price caps and pressured
allies on Capitol Hill-including those from the West Coast-to
vote them down.
THE WAGE SQUEEZE
As the Economic Policy Institute reports,
average Americans' paychecks are getting smaller. During the "recovery"
we hear so much about, the industries adding jobs pay about 13
percent lower than industries cutting jobs. In other words, people
are being thrown out of their higher-wage manufacturing and information-sector
jobs and shoved into low-wage restaurant and temp jobs.
Looking to the November election, the
president feels he must ignore this reality and try to convince
us that everything is hunky-dory. He says "our economy is
getting stronger," and the vice president claims "real
incomes and wages are growing." Yes, it is true, CEO pay
is on the rise and corporate profits have risen by 62 percent
since the last recovery. But in that same period, wages for workers
have decreased by o.6 percent-the worst record of any "recovery"
since World War II. As The New York Times noted, "The amount
of money workers receive in their paychecks is failing to keep
up with inflation."
The president could have pushed the federal
government to step in and mandate an increase in the minimum wage
from its almost 5o-year low, in terms of real inflation-adjusted
dollars. Such a move would mean an immediate pay increase for
roughly 9.9 million workers. With the poverty level increasing
two years in a row for the first time in nearly a decade, he could
have argued that we at least need a minimum wage that lifts a
family above the federal poverty line. True, no one really expects
a conservative president to push to increase the minimum wage.
But this president did more than merely oppose an increase; he
actually sought out ways to deregulate the labor market and slash
pay even further, offering a series of policies that help his
corporate benefactors cut their costs. First came legislation
to eliminate overtime pay protections for 8 million workers. Then
came efforts to preserve more than a billion in government handouts
to companies that export jobs. Then the president's top economic
adviser trumpeted the outsourcing of U.S. jobs to cheap overseas
Now, the executive agencies are taking
over. According to The Associated Press, the Bush Labor Department
began "suggesting ways employers can avoid paying overtime"
to their workers. Similarly, The New York Times reports that the
Bush Commerce Department is participating in "conferences
and workshops that encourage American companies to put operations
and jobs in China." And the Bush Treasury Department has
tried to defy federal-court rulings by attempting to legalize
"cash balance" pension schemes that reduce retirement
incomes that companies promised to their older workers.
THE TAX SQUEEZE
Consider some statistics from the president's
tax policy: By 2010 more than half of all the president's income-tax
cuts will go to the richest 1 percent of the population (those
making an average salary of $1 million); by 2006, the average
millionaire will receive a tax cut of $52,000, while the average
American worker-earning less than that tax cut, or $36,000 a year-will
get less than $600.
But the story does not stop there. Along
with tax cuts for the rich, Bush's budgets actually raised fees
by almost $20 billion, including increased surcharges for veterans
to receive health care. At the same time, states were forced to
raise taxes by $14 billion to deal with deficits, while experts
estimate local property taxes rose an average of more than lo
percent between 2001 and 2003. And because these levies are not
graduated like the federal income tax, they hit the middle class
So it is no wonder that at the end of
this so-called tax-cutting era, polls show ordinary Americans
saying that they have not felt any real tax relief. As The Washington
Post notes, economists agree that "Bush's tax policies have
shifted more of the tax burden to the middle class."
What makes the situation so tragic is
that the White House had such a historic opportunity to use the
tax code to fight for the middle class, not against it. The recession,
along with a massive surplus, gave the president all the political
capital he needed. He could have expanded the Earned Income Tax
Credit, a tax policy widely praised for rewarding work and helping
people move out of poverty. He could have embraced a proposal
to create regular rebate checks for every American, so that General
Electric's Jack Welch received the same tax rebate as his factory
workers on the shop floor. There were even proposals to reform
the payroll-tax system, changing it from one that exempts income
over a certain level to one that exempts income below a certain
But to conservatives, that would have
been heresy because it would mean no tax cuts for the wealthy
few who fund their political campaigns. It means no tax cuts for
large chemical and oil companies, like those enacted when the
White House eliminated cleanup taxes on industrial polluters.
It means preserving the estate tax, a levy that falls only on
the wealthiest 2 percent of America, not eliminating it, as President
Bush did. It means admitting a problem exists when the wealth
of the top 1 percent doubles at the same time the wealth of the
bottom 40 percent gets cut in half. It means reversing the practice
of giving a $52,000 tax cut to every millionaire in America while
1.7 million Americans fall below the poverty line.
In short, it means having a dialogue about
what conservatives decry as "class warfare"-issues of
rich and poor we all have to deal with but aren't supposed to
talk about because it makes fat cats uncomfortable.
AT A HIGH-SOCIETY DINNER DURING THE 2000
George W. Bush looked out on the audience
and joked, "This is an impressive crowd. The 'haves' and
'the have-mores.' Some people call you the 'elite.' I call you
We should give him credit: It is a rare
occasion when a conservative politician admits who calls the shots,
even in jest. Most of the time, the right wing's real motivations
are hidden under the populism of a cowboy hat, or in the fine
print of books about the free market.
But what is happening in this country
is no laughing matter. Average Americans are being screwed as
never before, and our government is helping those turning the
screwdriver. The result is that George W. Bush has become not
just a "war president" on foreign policy but also on
domestic policy. Only here at home, he is waging a war on the
middle class, and the results have been downright devastating..
DAVID SIROTA is a writer for the American
Progress Action Fund.
The Bush page