Donald Trump is serious about smashing GOP orthodoxy

Source: WashPo

Author: Eugene Robinson

Emphasis Mine

President-elect Donald Trump’s victory tour was more than just an opportunity to strut and preen around the country like a peacock with a comb-over. It was a warning to Republican leaders in Congress that Trump intends to be in charge — and that there will be consequences if the party establishment does not fall in line.

The post-election rallies also served as venues for Trump to make grandiose promises, including some that will stick in his party’s craw.

Trump billed the series of campaign-style events as a way to thank the voters who elected him. It seems obvious that he is addicted to adulation, basks in the grandeur of his own celebrity and chafes at the prosaic labor of assembling an administration. This is a man who cannot be bothered to hear a daily intelligence briefing about threats to the nation, yet finds time to meet with Kanye West.

At the victory rallies, Trump continued his withering onslaught against the truth; he claimed, for example, to have won in a historic landslide, though Hillary Clinton received 2.8 million more votes. He renewed his attack against the news media, pointing at reporters and calling them “very dishonest people.” He offered a “thank you to the African American community” who “didn’t come out to vote” for Clinton.

Amid all the bombast and nonsense, however, there was a clear message for House Speaker Paul D. Ryan (R-Wis.) and Senate Majority Leader Mitch McConnell (R-Ky.): The next president expects them to follow, not lead.

Trump held the rallies in two solidly Republican states (Louisiana and Alabama), four traditional swing states (Ohio, North Carolina, Iowa and Florida) and three states he unexpectedly took from the Democrats (Pennsylvania, Wisconsin and Michigan). He reveled in illustrating that his electoral coalition was unique — and that his supporters were more loyal to him personally than to the party he conquered in a hostile takeover.

In Ryan’s home state, the crowd booed when Trump mentioned the speaker’s name. Trump protested, saying he has come to “appreciate” Ryan and comparing him to “a fine wine” that improves with time. But then, with a smile, he added: “Now, if he ever goes against me, I’m not going to say that, okay?”

During the campaign, Ryan was sharply critical of Trump before reluctantly falling in line. He attended the Dec. 8 rally — and got something of a dressing-down for having suggested, in a “60 Minutes” interview a few days earlier, that the border wall Trump promises to build might actually be a mere fence in some places.

We’re going to work on the wall, Paul,” Trump said, turning to Ryan. “We’re going to build the wall, okay? Believe me.”

There are Republicans in Congress who believe Trump is so naive in the ways of Washington that he can be led around by the nose — that he will basically sign whatever the GOP majorities in the House and Senate choose to pass. Many of those who share this view also were confident that Jeb Bush or Marco Rubio would be the party’s nominee. Do they really expect Trump to suddenly be transformed into an orthodox Republican? I don’t.

Trump promised the ridiculous border wall, and I believe he will expect Congress to let him build it. He also promised punishment, such as targeted tariffs, for companies that move jobs overseas. He promised a trillion-dollar program to improve the nation’s infrastructure. He promised massive, budget-busting tax cuts for corporations, the wealthy and the middle class. He promised not only to repeal the Affordable Care Act but also to simultaneously replace it, vowing that those with pre-existing conditions will still be able to get health insurance.

In foreign policy, Trump pledges even more radical departures from the Republican establishment. He has been vocal in his desire for a closer, more cooperative relationship with Russia — one reason, perhaps, why Russian President Vladimir Putin had his intelligence agents work so hard to get Trump elected, according to the CIA and the FBI. For secretary of state, Trump has chosen ExxonMobil chief executive Rex Tillerson, a man on whom Putin has bestowed the Russian Order of Friendship.

Trump promised during his victory tour to establish safe zones for civilians in Syria, which presumably would require working with Putin, who supports the continued rule of barbarous dictator Bashar al-Assad. Are you ready for that, Republicans? Have you seen the pictures from Aleppo?

The GOP establishment is soon going to have to choose between principle and political well-being. The latter almost always wins.

Read more from Eugene Robinson’s archive, follow him on Twitter or subscribe to his updates on Facebook. You can also join him Tuesdays at 1 p.m. for a live Q&A.

See:https://www.washingtonpost.com/opinions/donald-trump-is-serious-about-smashing-gop-orthodoxy/2016/12/19/a5ea18ac-c624-11e6-8bee-54e800ef2a63_story.html?utm_term=.9115dbf1dee8&wpisrc=nl_opinions&wpmm=1

There’s Already a Big Gap Between Trump’s Promises to the Middle Class and His Policies

Now that more plans and potential cabinet appointments are coming into focus, it looks worse than many of us thought even before the election.

Source: AlterNet

Author:Josh Bivens/Economic Policy Institute

Emphasis Mine

During his campaign, President-elect Donald Trump promised that he would take the side of American workers against economic elites when evaluating policy. Yet, the policy proposals he put forth during the campaign had nothing in them that would actually help working- and middle-class Americans. Now that more plans and potential cabinet appointments are coming into focus, it looks worse than many of us thought even before the election. Across a broad range of crucial issues, the incoming Trump administration appears likely to betray the promises he made to the American middle class. Here’s a rough sketch of how.

Taxes

Trump’s tax policy proposals are crystal clear about who will benefit the most—and it’s not working- or middle-class families. Despite crowing during the campaign about raising taxes on “hedge fund guys,” the tax plan Trump released raises one small tax on hedge fund guys (eliminating the so-called carried interest loophole), and then gives them a hundred times more back in the form of lower taxes everywhere else. The top 1 percent will get 47 percent of the total benefits in the Trump tax plan, while the bottom 60 percent will get just 10 percent. Worse, large numbers of working-class taxpayers will see tax increases under Trump. Yes, increases. Because that money is needed to make sure that private equity managers can see their top tax rates moved down to 15 percent.

House Speaker Paul Ryan—who many (not least Speaker Ryan himself) think will end up crafting most of the actual policy to come out of the Trump administration—has a competing tax proposal. Apparently, he thinks it’s important to give an even higher share of tax cuts to the top. The Ryan plan lavishes 76 percent of its total tax benefits onto the top 1 percent of households (the top 0.1 percent, or the top 1/1000th of households, gets more than 47 percent). In the Ryan plan, the bottom 60 percent get less than 5 percent of the total benefits.

A very large tax cut that delivers an enormous share of the benefits to the richest Americans—with an average cut of at least $1,100,000 to the richest 0.1 percent—will be one of the top priorities of both Trump and the incoming Congress. This should raise a clear red flag about just how much Trump actually cares about the bottom 90 percent.

People really can’t claim they didn’t see this coming. In the town hall debate with Hillary Clinton, an audience member asked how the candidates would ensure that the richest Americans paid their fair share. Trump’s response? He said he would cut the corporate income tax rate from 35 to 15 percent. Given that the corporate income tax is one of the most progressive parts of our tax code, cutting it absolutely does not hurt rich households.

Wall Street

Trump has also promised to end crony capitalism and “drain the swamp,” which might sound to most Americans like he wants to take on Wall Street. If by “take on” you mean “give them everything they want,” then this sounds about right. He has been forthright about repealing Dodd-Frank, which as passed in the wake of the 2008 financial crisis to rein in the risk of big banks and prevent the need for future bailouts. There are criticisms to be made of Dodd-Frank, but the Trump criticism is that it’s just too tough on banks.

This view is shared by the men mentioned as potential Treasury secretaries in the Trump administration. One name is Jamie Dimon, whose investment bank JPMorgan Chase received a 2008 bailout. In recent years JPMorgan traders have been found guilty of rigging foreign exchange markets. And yet Dimon claims that “banks are under assault” by regulators and that such oversight is essentially un-American.

Another name that’s been floated for Treasury secretary is Anthony Scaramucci, who thinks that there has been an “irrational demonization of Wall Street over the past 8 years,” and that Wall Street is “filled with integrity.” As for the financial crash of 2008, Scaramucci is clear who is to blame—mostly not Wall Street. The culprit who needs more blame cast upon them, he says, is “frankly, Main Street. Many people overreached in their homes because there was easy money and easy credit.” He hopes the “nonsense” that Wall Street bears primary responsibility for the 2008 financial crash ends with the Trump administration. And he makes it clear that his personal opinion is that Dodd-Frank restricts banking risk excessively (making banking “too, too safe”) and should be repealed.

Finally, the frontrunner for Treasury seems to be Steve Mnuchin, a Goldman Sachs alum who distinguished himself during the financial crash by buying up the crashed California bank IndyMac, renaming it, and then being found by regulators to have run “unsafe” and “unsound” foreclosure practices as he seized people’s homes.

If you want an administration where apologists for Wall Street behavior are in charge of regulating banks, then the next four years looks great. If you were hoping for an administration that would be on your side against the banks, then less so. And if you doubt my analysis of how Wall Street-friendly a Trump administration is likely to be, just check out the reaction of banks’ stock prices following the Trump win.

Medicare and Medicaid

Americans value Medicare and Medicaid very highly, and rightly so. Millions rely on these programs for health care during tough times (Medicaid) and in retirement (Medicare), and about 40 percent of long-term care in the country is provided by Medicaid. During the campaign, Trump made clear promises to protect these programs from budget cuts. The question going forward, however, is did we elect President Donald Trump or President Paul Ryan?

Ryan has wanted to voucherize Medicare and radically cut Medicaid for years. He tries to dress up his plans in technocratic language and frame them as “reforms,” but, they’re cuts, period. One would think that the more than 60 times the House has voted to repeal the Medicaid expansions that are part of the Affordable Care Act would provide sufficient proof of this.

It may be that Trump really does not want to cut these programs. But the question is whether or not he’s attentive and shrewd enough to stop congressional Republicans from doing so.

The president-elect recently claimed (through a tweet, of course) that he personally convinced Ford to keep one of its production facilities in the United States. This boast has been debunked. But compared to the rest of his trade policy, the efficacy of picking up the phone and calling his CEO friends actually doesn’t look so bad.

We at EPI have been consistent for years in opposing corporate-driven trade agreements. But Trump’s agenda on trade agreements is nothing more than a vague claim he’ll be able to negotiate “better” trade agreements. His other proposals indicate strongly that he won’t, because he doesn’t know how.

He might slap large, arbitrary tariffs on imports from countries he doesn’t seem to much like, but this will do little to improve American competitiveness. In fact, if such tariffs encourage foreign producers to set up facilities in the United States to avoid tariffs, create economic weakness in our trading partners, and/or encourage retaliatory tariffs, they will increase America’s trade deficit. A prediction: presuming the economy does not enter recession in the next four years (and there’s no reason it should, absent a huge fumble by the Trump policymaking team), the American trade deficit will be larger, not smaller by 2020.

The overall economy

Finally, I should note that Trump is once again in his life inheriting an extraordinarily valuable gift. This time it’s a stable economy that has been sailing steadily towards full employment for years. The unemployment rate has been halved since its post-Great Recession peak. The labor force participation rate stopped falling and has actually nudged up in the past year even as natural demographic changes (retiring Baby Boomers) have been pulling it down. The last year has also seen some evidence of an uptick in wage growth.

No, we’re not at full employment today—largely because Republicans in Congress and in statehouses around the country have starved the economy of normal levels of spending during the recovery. Without this austerity, we would have reached full employment years ago. But even with no help at all from tax cuts or spending increases, the economy is projected to reach 4.6 percent unemployment or lower by the end of 2017.

And now that Republicans are in charge, the austerity they forced on the American people will undoubtedly stop. A huge tax cut will add to purchasing power and demand growth in the economy. It will do so incredibly inefficiently, creating about one job for every four that could be created if this money was spent more intelligently. But job creation has to take a back seat as a goal to maximizing the take of the top 1 percent, so, tax cuts for rich households it is. Inefficient stimulus, but lots of it.

A possible infrastructure plan would also boost growth, so long as its effectiveness was not compromised by the crony capitalism and poor targeting that would result from the Trump proposal’s very odd structure of giving tax credits to private investors, rather than just having state and local governments direct and finance projects. For those hoping that the Trump infrastructure plan would be aimed at helping struggling areas, it is worth noting that a key source of efficiency gains hoped for by the plan’s authors is that private investors are much more willing to cut off necessary services to households in economic distress. They approvingly note that privately-owned water and electrical utilities are much quicker and more willing to turn off services when households cannot pay bills than publicly-owned utilities.

All in all, the hopes that a Trump administration will stand up to elites on behalf of the broad middle class look well on their way to being dashed. Republicans first priority is cutting $1.1 million tax rebate checks to the top 0.1 percent. A secondary priority is giving away tax credits to private developers while hoping that they might build something useful without the whole endeavor becoming a nest of corruption. A key question is whether or not Trump will be willing to devote the energy and effort needed to stand behind his own words about defending Medicare and Medicaid in the face of the Republican Congress. Their trade plans are pure bluster and as likely to raise as lower the trade deficit. And every single potential appointment floated to run the regulation of banks and Wall Street is on record as arguing that the big problem today is that people and governments are too mean to virtuous financial professionals.

Maybe I’m wrong (I sure hope so), but the wedge between implied promises and delivered reality to working-class households already looks awfully large, and will likely just grow over time.

Josh Bivens is the Research and Policy Director at the Economic Policy Institute (EPI).

 

See:http://www.alternet.org/labor/already-big-gap-between-trumps-promises-middle-class-and-his-policies?akid=14911.123424.RtIMmY&rd=1&src=newsletter1067774&t=14

10 Brutal Ways the American Safety Net Is Being Shredded

http://www.alternet.org/economy/10-brutal-ways-american-safety-net-being-shredded?akid=13331.123424.rqA_Q7&rd=1&src=newsletter1039872&t=1

Source: alterNet

Author: Alex Henderson

Emphasis Mine

On the 80th anniversary of the Social Security Act of 1935, which established the social security system in the United States, President Franklin Delano Roosevelt’s New Deal is on life support as the American middle class continues to be squeezed and millions of Americans struggle with poverty.

1. Income Inequality Is Going from Bad to Worse

FDR firmly believed that capitalism cannot function well without a strong middle class, and even auto magnate Henry Ford agreed with him: Ford famously said that American workers needed to be paid a decent wage in order to be able to afford his products. And during the post-FDR America of the 1950s and 1960s, having a robust middle class was great for a variety of businesses. But in 2015—with the gains of the New Deal having been imperiled by everything from union busting to the outsourcing of millions of American jobs—income inequality in the U.S. is a huge problem. The Organization for Economic Cooperation and Development recently released a report on income inequality among OECD members and found that the U.S. was among the worst offenders. The U.S., Mexico and Turkey had some of highest income inequality of OECD countries, while Denmark, the Czech Republic, Finland, Iceland and Belgium fared much better. OECD Secretary-General Angel Gurría commented that “high inequality is bad for growth,” and he’s absolutely right.

2. Republicans Yearn for Social Security Privatization

Although President Dwight D. Eisenhower was a Republican, he supported elements of the New Deal and saw the need for a strong social safety net: in fact, Eisenhower expanded social security, and in 1954, he bluntly asserted that any oligarchs who would “attempt to abolish social security, unemployment insurance and eliminate labor law and farm programs” were “stupid.” But in the 21st century, Republicans have been going after social security with a vengeance. The privatization of social security was proposed by President George W. Bush in 2004, and far-right Republicans, the Tea Party and wingnut lobbying groups like the Club for Growth have been doubling down on the idea of privatizing social security. GOP presidential hopeful Jeb Bush called for social security privatization at a town hall meeting in New Hampshire in June, and he also favors raising the social security retirement age to 69 or 70, which would be especially bad for blue-collar workers who have spent decades in physically demanding jobs.

3. The 1% Continue to Dodge Taxes

FDR had no problem asking the ultra-wealthy to pay their fair share of taxes: the U.S.’ top marginal tax rate rose to 94% in the early 1940s, when the country entered World War II. Taxes for the ultra-rich didn’t go down much under Republican Eisenhower, who lowered the top tax rate to 91% in the 1950s—and after that rate decreased to 28% under President Reagan, it rose to 39.6% under President Clinton and decreased to 35% under President George W. Bush. Looking at the last 80 years of tax history, one sees a clear pattern: the American middle class does much better when the 1% pay their fair share of taxes. And even though the Tea Party tries to paint Barack Obama as a soak-the-rich president, their assertion is laughable because Obama extended the Bush tax cuts and hasn’t been nearly as forceful as FDR or Eisenhower when it comes to taxing the 1%.

4. The Minimum Wage Is Much Too Low

One of the important elements of the New Deal was FDR’s strong belief in a national minimum wage. FDR began to push for a federal minimum wage after taking office in January 1933, saying, “By living wages, I mean more than a bare subsistence level. I mean the wages of a decent living.” And Congress enacted one in 1938, when the U.S.’ first federal minimum wage was set at 25 cents per hour. But in recent years, the federal minimum wage (which was raised to $7.25 an hour in 2009) has not kept up with inflation. Economist Robert Reich has proposed raising the federal minimum wage to $15 an hour, which he sees as a crucial part of economic recovery. And in some cities, including Los Angeles and Seattle, city councils have raised their local minimum wages to that amount. But at the federal level, an increase to even $10.10 an hour (President Obama’s proposal) is a steep uphill climb when both houses of Congress are dominated by far-right Republicans who hate the poor with a passion.

The U.S. desperately needed a New Deal 3.0 after the crash of September 2008 and a program of aggressive reforms. Instead, most of the welfare that followed the Panic of 2008 has been corporate welfare rather than programs to help America’s embattled poor and middle class. Overall, the U.S. has been moving away from the New Deal when it should be reinvigorating it. Below are 10 ways in which the New Deal (and by extension, LBJ’s Great Society) continues to be under attack in the United States.

5. Infrastructure Continues to Deteriorate

The New Deal was great for the U.S.’ infrastructure thanks to programs that built or strengthened everything from roads to water and electric systems to municipal power plants. But in recent years, the American infrastructure has been seriously decaying—and a major wake-up call came on May 12, when an Amtrak train derailed in Philadelphia and eight passengers were killed. But the nation’s railways are only one of the ways in which the U.S.’ infrastructure has deteriorated. According to Ray LaHood (former secretary of transportation for the Obama Administration), 70,000 bridges in the U.S. are now structurally deficient. That is in addition to all the roads that are in desperate need of repair. And when it comes to high-speed rail travel, the U.S. lags way behind Europe (where one can get from London to Brussels in just under two hours or from Madrid to Barcelona in less than three hours).

6. Union Representation Has Reached Historic Lows 

One of the most important pieces of New Deal-era legislation was the National Labor Relations Act of 1935, a.k.a. the Wagner Act, which did a lot to advance labor unions in the U.S.: by the mid-1950s, around 35% of America’s labor force was unionized. But according to the Bureau of Labor Statistics (BLS), a mere 11.1% of salaried U.S. workers (factoring in both the public and private sectors) were union members in 2014. Among private-sector workers, the number was a paltry 6.6%. And the decline of unions has been encouraged bad working conditions: according to the Economic Policy Institute, executives at large companies earned, on average, 296 times as much as their average workers in 2013 compared to only 20 times as much in 1965. But as much as labor unions have declined in the U.S., Wisconsin Gov. Scott Walker (a GOP presidential hopeful for 2016) and his fellow Republicans would like to see them decline even more. Walker recently set a disturbing precedent in that state when he supported anti-union legislation that prohibits private-sector unions from requiring members to pay union dues; Walker has, in essence, made Wisconsin a northern “right to work” state. And it’s safe to say that Walker, based on his actions in Wisconsin, would be among the most anti-union presidents in U.S. history.

7. “Too Big to Fail” Is Bigger Than Ever

Unlike many of today’s extreme-right Republicans and neoliberal corporatist Democrats, FDR was not afraid of offending the banking sector. FDR said of the banksters of the 1930s, “They are unanimous in their hate for me, and I welcome their hatred.” One of the New Deal achievements that banksters detested was the Glass-Steagall Act of 1933, which mandated a strict separation of commercial and investment banking and was designed to prevent another major Wall Street calamity like the crash of 1929. Glass-Steagall served the U.S. well for many years: although there were some tough recessions in the mid-1970s, early 1980s and early 1990s, none of them cut as deep as the Great Depression. But the repeal of Glass-Steagall in 1999 was a major blow to the New Deal and paved the way for the crash of September 2008, clearly the most devastating financial event in the U.S. since 1929. Unfortunately, there was no real banking reform after the 2008 calamity, and as Vermont Sen. Bernie Sanders points out, JPMorgan Chase, Bank of America and Wells Fargo are now “80% larger” than they were in 2007. Critics of the banking sector propose bringing back Glass-Steagall, including Reich (who warns that another major Wall Street crash “is not unlikely”) and Massachusetts Sen. Elizabeth Warren. And Sanders has proposed New Deal-like legislation that would break up the U.S.’ largest banks.

8. Medicare, An Expansion of the New Deal, Is a Major GOP Target

Medicare, which established a single-payer health care system for Americans 65 and older, was not part of the New Deal per se: Medicare came into being in 1965 as part of Democratic President Lyndon B. Johnson’s Great Society (which was very much an extension of the New Deal). And the program proved to be so popular that even Republican President Richard Nixon (who was considered an arch-conservative in his day) expanded Medicare in both 1969 and 1972. But these days, far-right GOP wingnuts in the House of Representatives—especially Rep. Paul Ryan, chairman of the House Ways and Means Committee—have repeatedly called for drastic Medicare cuts and for replacing traditional Medicare with a privatized voucher program. In June, a variety of pro-Medicare groups (including the Alliance for Retired Americans and the Medicare Rights Center) sent a joint letter to the House criticizing representatives who wanted to cut $700 million from the Medicare program.

9. Home Ownership Is Becoming Increasingly Difficult for Many Americans, and the Rent Is Too Damn High

Before the New Deal, five-year or 10-year mortgages were the norm in the U.S., and were unaffordable for most Americans. But FDR saw home ownership as a crucial part of building a strong middle class: between the Federal Housing Administration, the Home Owners’ Loan Corporation and the introduction of 30-year fixed-rate mortgages—all of which came about under FDR—home ownership in the U.S. gradually increased. According to the U.S. Census Bureau, home ownership in the U.S. went from 45% in 1920 and 47% in 1930 to 55% in 1950, 61% in 1960 and 62% in 1970. But the Crash of 2008 has been terrible for American homeowners, resulting in countless foreclosures, and banksters have been allowed to acquire and rent out many foreclosed homes. The private equity firm Blackstone Group had, as of late 2013, bought almost 40,000 homes in the U.S. in order to rent them. To make matters worse, all those post-2008 foreclosures have caused rents to skyrocket all over the country. And the more one pays in rent, the harder it is to save for a down payment on a home. To quote Jimmy McMillan, the rent is too damn high.

10. Wingnut Attacks on Food Stamps Never End

The American food stamps program started on a pilot basis under FDR’s secretary of agriculture, Henry A. Wallace, in 1939 but became permanent when LBJ signed the Food Stamp Act of 1964 into law as part of his Great Society. In recent years, the U.S.’ economic decline has been so painful that, according to the U.S. Department of Agriculture, the number of Americans poor enough to quality for food stamps was 46.2 million in 2014 compared to only 17 million in 2000. Food stamps, as envisioned under the New Deal and the Great Society, are designed to be a stepping stone for the poor—and the benefits (which presently average $127.91 per month per person, according to USDA figures) are hardly lavish. But that has not prevented Republicans in Congress from repeatedly proposing dramatic food stamp cuts during the Great Recession. And in Wisconsin, Gov. Scott Walker has been trying to punish and shame food stamp recipients by subjecting them to drug-testing.

Alex Henderson’s work has appeared in the L.A. Weekly, Billboard, Spin, Creem, the Pasadena Weekly and many other publications. Follow him on Twitter @alexvhenderson.

 

See: http://www.alternet.org/economy/10-brutal-ways-american-safety-net-being-shredded?akid=13331.123424.rqA_Q7&rd=1&src=newsletter1039872&t=1

The Failure of The Free Market…

After all, the threat to a healthy democracy from concentrated wealth had been known to American leaders for generations.

From Alternet, By Robert Parry

If Ayn Rand and the Free Market Fetishists Were Right, We’d be Living in a Golden Age — Does This Look Like a Golden Age to You?

The lavish rewards flowing to the titans of industry have not exactly transformed society into a vibrant force for beneficial progress.

If the “free-market” theories of Ayn Rand and Milton Friedman were correct, the United States of the last three decades should have experienced a golden age in which the lavish rewards flowing to the titans of industry would have transformed the society into a vibrant force for beneficial progress.

After all, it has been faith in “free-market economics” as a kind of secular religion that has driven U.S. government policies – from the emergence of Ronald Reagan through the neo-liberalism of Bill Clinton into the brave new world of House Republican budget chairman Paul Ryan.

By slashing income tax rates to historically low levels – and only slightly boosting them under President Clinton before dropping them again under George W. Bush – the U.S. government essentially incentivized greed or what Ayn Rand liked to call “the virtue of selfishness.”

Further, by encouraging global “free trade” and removing regulations like the New Deal’s Glass-Steagall separation of commercial and investment banks, the government also got out of the way of “progress,” even if that “progress” has had crushing results for many middle-class Americans.

True, not all the extreme concepts of author/philosopher Ayn Rand and economist Milton Friedman have been implemented – there are still programs like Social Security and Medicare to get rid of – but their “magic of the market” should be glowing by now.

We should be able to assess whether laissez-faire capitalism is superior to the mixed public-private economy that dominated much of the 20th Century.

The old notion was that a relatively affluent middle class would contribute to the creation of profitable businesses because average people could afford to buy consumer goods, own their own homes and take an annual vacation with the kids. That “middle-class system,” however, required intervention by the government as the representative of the everyman.

Beyond building a strong infrastructure for growth – highways, airports, schools, research programs, a safe banking system, a common defense, etc. – the government imposed a progressive tax structure that helped pay for these priorities and also discouraged the accumulation of massive wealth.

After all, the threat to a healthy democracy from concentrated wealth had been known to American leaders for generations.

A century ago, it was Republican President Theodore Roosevelt who advocated for a progressive income tax and an estate tax. In the 1930s, it was Democratic President Franklin Roosevelt, who dealt with the economic and societal carnage that under-regulated financial markets inflicted on the nation during the Great Depression.

With those hard lessons learned, the federal government acted on behalf of the common citizen to limit Wall Street’s freewheeling ways and to impose high tax rates on excessive wealth.

So, during Dwight Eisenhower’s presidency of the 1950s, the marginal tax rate on the top tranche of earnings for the richest Americans was about 90 percent. When Ronald Reagan took office in 1981, the top rate was still around 70 percent.

Discouraging Greed

Greed was not simply frowned upon; it was discouraged.

Put differently, government policy was to maintain some degree of egalitarianism within the U.S. political-economic system. And to a remarkable degree, the strategy worked.

The American middle class became the envy of the world, with otherwise average folk earning enough money to support their families comfortably and enjoy some pleasures of life that historically had been reserved only for the rich.

Without doubt, there were serious flaws in the U.S. system, especially due to the legacies of racism and sexism. And it was when the federal government responded to powerful social movements that demanded those injustices be addressed in the 1960s and 1970s, that an opening was created for right-wing politicians to exploit resentments among white men, particularly in the South.

By posing as populists hostile to “government social engineering,” the Right succeeded in duping large numbers of middle-class Americans into seeing their own interests – and their “freedom” – as in line with corporate titans who also decried federal regulations, including those meant to protect average citizens, like requiring seat belts in cars and discouraging cigarette smoking.

Amid the sluggish economy of the 1970s, the door swung open wider for the transformation of American society that had been favored by the likes of Ayn Rand and Milton Friedman, putting the supermen of industry over the everyman of democracy.

Friedman tested out his “free-market” theories in the socio-economic laboratories of brutal military dictatorships in Latin America, most famously collaborating with Chile’s Gen. Augusto Pinochet who crushed political opponents with torture and assassinations.

Ayn Rand became the darling of the American Right with her books, such asAtlas Shrugged, promoting the elitist notion that brilliant individuals represented the engine of society and that government efforts to lessen social inequality or help the average citizen were unjust and unwise.

The Pied Piper

Yet, while Rand and Friedman gave some intellectual heft to “free-market” theories, Ronald Reagan proved to be the perfect pied piper for guiding millions of working Americans in a happy dance toward their own serfdom.

In his first inaugural address, Reagan declared that “government is the problem” – and many middle-class whites cheered.

However, what Reagan’s policies meant in practice was a sustained assault on the middle class: the busting of unions, the export of millions of decent-paying jobs, and the transfer of enormous wealth to the already rich. The tax rates for the wealthiest were slashed about in half. Greed was incentivized.

Ironically, the Reagan era came just as technology – much of it created by government-funded research – was on the cusp of creating extraordinary wealth that could have been shared with average Americans. Those benefits instead accrued to the top one or two percent.

The rich also benefited from the off-shoring of jobs, exploiting cheap foreign labor and maximizing profits. The only viable way for the super-profits of “free trade” to be shared with the broader U.S. population was through taxes on the rich. However, Reagan and his anti-government true-believers made sure that those taxes were kept at historically low levels.

The Ayn Rand/Milton Friedman theories may have purported to believe that the “free market” would somehow generate benefits for the society as a whole, but their ideas really represented a moralistic frame which held that it was somehow right that the wealth of the society should go to its “most productive” members and that the rest of us were essentially “parasites.”

Apparently, special people like Rand also didn’t need to be encumbered by philosophical consistency. Though a fierce opponent of the welfare state, Rand secretly accepted the benefits of Medicare after she was diagnosed with lung cancer, according to one of her assistants.

She connived to have Evva Pryor, an employee of Rand’s law firm, arrange Social Security and Medicare benefits for Ann O’Connor, Ayn Rand using an altered spelling of her first name and her husband’s last name.

In 100 Voices: An Oral History of Ayn Rand, Scott McConnell, founder of the Ayn Rand Institute’s media department, quoted Pryor as justifying Rand’s move by saying: “Doctors cost a lot more money than books earn and she could be totally wiped out.” Yet, it didn’t seem to matter much if “average” Americans were wiped out.

Essentially, the Right was promoting the Social Darwinism of the 19th Century, albeit in chic new clothes. The Gilded Age from a century ago was being recreated behind Reagan’s crooked smile, Clinton’s good-ole-boy charm and George W. Bush’s Texas twang.

Whenever the political descendants of Theodore and Franklin Roosevelt tried to steer the nation back toward programs that would benefit the middle class and demand greater sacrifice from the super-rich, the wheel was grabbed again by politicians and pundits shouting the epithet, “tax-and-spend.”

Many average Americans were pacified by reminders of how Reagan made them feel good with his rhetoric about “the shining city on the hill.”

The Rand/Friedman elitism also remains alive with today’s arguments from Republicans who protest the idea of raising taxes on businessmen and entrepreneurs because they are the ones who “create the jobs,” even if there is little evidence that they are actually creating American jobs.

Rep. Paul Ryan, R-Wisconsin, who is leading the fight to replace Medicare with a voucher system that envisions senior citizens buying health insurance from profit-making companies, cites Ayn Rand as his political inspiration.

A Land for Billionaires

The consequences of several decades of Reaganism and its related ideas are now apparent. Wealth has been concentrated at the top with billionaires living extravagant lives that not even monarchs could have envisioned, while the middle class shrinks and struggles, with one everyman after another being shoved down into the lower classes and into poverty.

Millions of Americans forego needed medical care because they can’t afford health insurance; millions of young people, burdened by college loans, crowd back in with their parents; millions of trained workers settle for low-paying jobs; millions of families skip vacations and other simple pleasures of life.

Beyond the unfairness, there is the macro-economic problem which comes from massive income disparity. A healthy economy is one where the vast majority people can buy products, which can then be manufactured more cheaply, creating a positive cycle of profits and prosperity.

With Americans unable to afford the new car or the new refrigerator, American corporations see their domestic profit margins squeezed. So they are compensating for the struggling U.S. economy by expanding their businesses abroad in developing markets, but they also keep their profits there.

There are now economic studies that confirm what Americans have been sensing in their own lives, though the mainstream U.S. news media tends to attribute these trends to cultural changes, rather than political choices.

For instance, the Washington Post published a lengthy front-page article on June 19, describing the findings of researchers who gained access to economic data from the Internal Revenue Service which revealed which categories of taxpayers were making the high incomes.

To the surprise of some observers, the big bucks were not flowing primarily to athletes or actors or even stock market speculators. America’s new super-rich were mostly corporate chieftains.

As the Post’s Peter Whoriskey framed the story, U.S. business underwent a cultural transformation from the 1970s when chief executives believed more in sharing the wealth than they do today.

The article cites a U.S. dairy company CEO from the 1970s, Kenneth J. Douglas, who earned the equivalent of about $1 million a year. He lived comfortably but not ostentatiously. Douglas had an office on the second floor of a milk distribution center, and he turned down raises because he felt it would hurt morale at the plant, Whoriskey reported.

However, just a few decades later, Gregg L. Engles, the current CEO of the same company, Dean Foods, averages about 10 times what Douglas made. Engles works in a glittering high-rise office building in Dallas; owns a vacation estate in Vail, Colorado; belongs to four golf clubs; and travels in a $10 million corporate jet. He apparently has little concern about what his workers think.

“The evolution of executive grandeur – from very comfortable to jet-setting – reflects one of the primary reasons that the gap between those with the highest incomes and everyone else is widening,” Whoriskey reported.

“For years, statistics have depicted growing income disparity in the United States, and it has reached levels not seen since the Great Depression. In 2008, the last year for which data are available, for example, the top 0.1 percent of earners took in more than 10 percent of the personal income in the United States, including capital gains, and the top 1 percent took in more than 20 percent.

“But economists had little idea who these people were. How many were Wall Street financiers? Sports stars? Entrepreneurs? Economists could only speculate, and debates over what is fair stalled. Now a mounting body of economic research indicates that the rise in pay for company executives is a critical feature in the widening income gap.”

Jet-Setting Execs

The Post article continued: “The largest single chunk of the highest-income earners, it turns out, are executives and other managers in firms, according to a landmark analysis of tax returns by economists Jon Bakija, Adam Cole and Bradley T. Heim. These are not just executives from Wall Street, either, but from companies in even relatively mundane fields such as the milk business.

The top 0.1 percent of earners make about $1.7 million or more, including capital gains. Of those, 41 percent were executives, managers and supervisors at non-financial companies, according to the analysis, with nearly half of them deriving most of their income from their ownership in privately-held firms.

“An additional 18 percent were managers at financial firms or financial professionals at any sort of firm. In all, nearly 60 percent fell into one of those two categories. Other recent research, moreover, indicates that executive compensation at the nation’s largest firms has roughly quadrupled in real terms since the 1970s, even as pay for 90 percent of America has stalled.”

While these new statistics are striking – suggesting a broader problem with high-level greed than might have been believed – the Post ducked any political analysis that would have laid blame on Ronald Reagan and various right-wing economic theories.

In a follow-up editorial on June 26, the Post lamented the nation’s growing income inequality but shied away from proposing higher marginal tax rates on the rich or faulting the past several decades of low tax rates. Instead, the Post suggested perhaps going after deductions on employer-provided health insurance and mortgage interest, tax breaks that also help middle-class families.

It appears that in Official Washington and inside the major U.S. news media the idea of learning from past presidents, including the Roosevelts and Dwight Eisenhower, is a non-starter. Instead there’s an unapologetic embrace of the theories of Ayn Rand and Milton Friedman, an affection that can pop out at unusual moments.

Addressing a CNBC “Fast Money” panel last year, movie director Oliver Stone was taken aback when one CNBC talking head gushed how Stone’s “Wall Street” character Gordon Gecko had been an inspiration, known for his famous comment, “Greed is good.” A perplexed Stone responded that Gecko, who made money by breaking up companies and eliminating jobs, was meant to be a villain.

However, the smug attitude of the CNBC stock picker represented a typical tribute to Ronald Reagan’s legacy. After all, greed did not simply evolve from some vague shift in societal attitudes, as the Post suggests. Rather, it was stimulated – and rewarded – by Reagan’s tax policies.

Reagan’s continued popularity also makes it easier for today’s “no-tax-increase” crowd to demand only spending cuts as a route to reducing the federal debt, an ocean of red ink largely created by the tax cuts of Ronald Reagan and George W. Bush.

Tea Partiers, in demanding even more cuts in government help for average citizens and even more tax cuts for the rich, represent only the most deluded part of middle-class America. A recent poll of Americans rated Reagan the greatest U.S. president ever, further enshrining his anti-government message in the minds of many Americans, even those in the battered middle class.

When a majority of Americans voted for Republicans in Election 2010 – and with early polls pointing toward a likely GOP victory in the presidential race of 2012 – it’s obvious that large swaths of the population have no sense of what’s in store for them as they position their own necks under the boots of corporate masters.

The only answer to this American crisis would seem to be a reenergized and democratized federal government fighting for average citizens and against the greedy elites. But – after several decades of Reaganism, with the “free market” religion the new gospel of the political/media classes – that seems a difficult outcome to achieve.

see:http://www.alternet.org/media/151426/why_do_people_believe_stupid_stuff%2C_even_when_they%27re_confronted_with_the_truth/