The Price of Civilization: Reawakening American Virtue and Prosperity by Jeffrey D. Sachs Page B
Authors: Jeffrey D. Sachs
Tags: United States, Social Science, History, Business & Economics, 21st Century, Economic Conditions, Poverty & Homelessness
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this pseudo–market system is sky-high costs, large profits for the private health care sector, and no political will to reform.
Recent Case Studies of Corporatocracy
Now it’s time to see the corporatocracy at work, to understand how the lobbies dominate policy making at the expense of the nation and contrary to the expressed opinions of the American people. I will explore these workings in four recent case studies.
Case 1: The Extension of Tax Cuts for the Rich
During the 2008 campaign, President Obama said he would support a rollback of the Bush-era tax cuts on the richest 5 percent of taxpayers but sustain the Bush tax cuts for the remaining 95 percent of the population. His campaign pledge to tax the rich involved little morethan a rise in the marginal tax rate from 35 percent to 39.6 percent on households with incomes above $250,000. Despite all the sound and fury on tax policy, there was in fact little difference between John McCain and Obama, a difference in essence of 4.6 percentage points on the highest incomes.
Even more tellingly, when push finally came to shove in 2010 on whether to extend the Bush tax cuts even for the rich, Obama rather quickly sided with the Republicans in favoring an across-the-board extension of the Bush-era tax cuts, including for the richest households. The two-party duopoly held firm, despite the crying need for more revenues to stanch the hemorrhaging of red ink.
It might be supposed that public opinion had forced Obama’s hand, but this is patently not the case. In the months leading up to the Obama-Republican agreement to extend tax breaks for the rich, the broad public supported a rollback of the tax breaks at the top. According to the Pew Research Center, a consistent majority of Americans from September 2004 to December 2010 called for repealing the Bush tax cuts on the wealthy or repealing the tax cuts altogether (see Table 7.2 ).
At the moment of truth during the lame-duck session of Congress in December 2010, only one-third of the public actually supported the extension of the tax cuts for the richest Americans, and nearly 60 percent opposed it. The minority viewpoint prevailed. The political system paid no heed to the public.
Obama and his top advisers have known from the start of the administration about the deep contradictions between Obama’s tax policies and his activist objectives on education, science, and infrastructure. They promised low taxes to get elected and have held to the line. In private the top advisers routinely acknowledge the need for higher tax revenues but declare that they are politically infeasible. Rather than explaining the basic truths to the public and defending a truly defensible position, they instead pander to the public and especially to their rich campaign contributors. Obama aims to raise perhaps $1 billion for the campaign war chest for 2012, which will require a political environment highly favorable to wealthy campaign contributors.
Table 7.2: Attitudes About Ending the Bush Tax Cuts
Source: Richard Auxier, Pew Research Center for the People & the Press, “Taxed Enough Already?,” September 20, 2010, and Pew Research Center, “Mixed Views on Tax Cuts, Support for START and Allowing Gays to Serve Openly,” December 7, 2010.
The proof of this pandering is the behavior of key advisers after they leave office. No sooner had Office of Management and Budget (OMB) Director Peter Orszag left the White House than he wrote about the need for higher tax revenues as a share of GDP, a position he never took publicly while OMB director. 11 The head of the Council of Economic Advisers, Christina Romer, also called for tax increases—once she had left office:
Finally, the President has to be frank about the need for more tax revenues. Even with bold spending cuts, there will still be a large deficit. The only realistic way to close the gap is by raising revenue. 12
It’s a funny thing about being frank. We spend billions of dollars every
Recent Case Studies of Corporatocracy
Now it’s time to see the corporatocracy at work, to understand how the lobbies dominate policy making at the expense of the nation and contrary to the expressed opinions of the American people. I will explore these workings in four recent case studies.
Case 1: The Extension of Tax Cuts for the Rich
During the 2008 campaign, President Obama said he would support a rollback of the Bush-era tax cuts on the richest 5 percent of taxpayers but sustain the Bush tax cuts for the remaining 95 percent of the population. His campaign pledge to tax the rich involved little morethan a rise in the marginal tax rate from 35 percent to 39.6 percent on households with incomes above $250,000. Despite all the sound and fury on tax policy, there was in fact little difference between John McCain and Obama, a difference in essence of 4.6 percentage points on the highest incomes.
Even more tellingly, when push finally came to shove in 2010 on whether to extend the Bush tax cuts even for the rich, Obama rather quickly sided with the Republicans in favoring an across-the-board extension of the Bush-era tax cuts, including for the richest households. The two-party duopoly held firm, despite the crying need for more revenues to stanch the hemorrhaging of red ink.
It might be supposed that public opinion had forced Obama’s hand, but this is patently not the case. In the months leading up to the Obama-Republican agreement to extend tax breaks for the rich, the broad public supported a rollback of the tax breaks at the top. According to the Pew Research Center, a consistent majority of Americans from September 2004 to December 2010 called for repealing the Bush tax cuts on the wealthy or repealing the tax cuts altogether (see Table 7.2 ).
At the moment of truth during the lame-duck session of Congress in December 2010, only one-third of the public actually supported the extension of the tax cuts for the richest Americans, and nearly 60 percent opposed it. The minority viewpoint prevailed. The political system paid no heed to the public.
Obama and his top advisers have known from the start of the administration about the deep contradictions between Obama’s tax policies and his activist objectives on education, science, and infrastructure. They promised low taxes to get elected and have held to the line. In private the top advisers routinely acknowledge the need for higher tax revenues but declare that they are politically infeasible. Rather than explaining the basic truths to the public and defending a truly defensible position, they instead pander to the public and especially to their rich campaign contributors. Obama aims to raise perhaps $1 billion for the campaign war chest for 2012, which will require a political environment highly favorable to wealthy campaign contributors.
Table 7.2: Attitudes About Ending the Bush Tax Cuts
Source: Richard Auxier, Pew Research Center for the People & the Press, “Taxed Enough Already?,” September 20, 2010, and Pew Research Center, “Mixed Views on Tax Cuts, Support for START and Allowing Gays to Serve Openly,” December 7, 2010.
The proof of this pandering is the behavior of key advisers after they leave office. No sooner had Office of Management and Budget (OMB) Director Peter Orszag left the White House than he wrote about the need for higher tax revenues as a share of GDP, a position he never took publicly while OMB director. 11 The head of the Council of Economic Advisers, Christina Romer, also called for tax increases—once she had left office:
Finally, the President has to be frank about the need for more tax revenues. Even with bold spending cuts, there will still be a large deficit. The only realistic way to close the gap is by raising revenue. 12
It’s a funny thing about being frank. We spend billions of dollars every
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