“Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.”
That’s Ronald Wright in his collection of lectures on societal collapse – A Short History of Progress – which was followed by What is America?: A Short History of the New World Order – which means that Wright likes to keep things short, but not sweet.
Has America ever been what it thinks it is? That question keeps coming up, in this case from the outside looking in. Wright was born on London – the one in the UK and not the one halfway between Detroit and Toronto in one of the duller parts of rural Ontario – and now he lives in British Columbia. Wright is now thoroughly Canadian – where they have single-payer Medicare for all, so no one worries about going bankrupt when the kid needs a tonsillectomy. Canada also has a robust social safety net. Everyone chips in so no one is left behind. It’s just the decent thing to do, as is taking in all those Syrian refugees. They need help. Canada needs new citizens, who, feeling welcomed, not feared, chip in too, to make things better for everyone. They start businesses. They run for office. They even show up and cheer at hockey games. Everyone wins – and Canada also has Justin Trudeau, not Donald Trump – a thoughtful gracious mensch, not an angry insecure bully. All of that may skew Ronald Wright’s perspective.
Wright is not an American, but has America ever been what it thinks it is? The rest of the world wonders about that, and Ed Pilkington in The Guardian offers A Journey through a Land of Extreme Poverty: Welcome to America – a long and detailed tour of sorts:
The UN’s Philip Alston is an expert on deprivation and he wants to know why forty-one million Americans are living in poverty. The Guardian joined him on a special two-week mission into the dark heart of the world’s richest nation…
Professor Philip Alston is an Australian academic with a formal title: UN Special Rapporteur on Extreme Poverty and Human Rights.
This is the UN examining what is obviously a third-world country and the whole thing is a bit depressing:
His fact-finding mission into the richest nation the world has ever known has led him to investigate the tragedy at its core: the 41 million people who officially live in poverty. Of those, nine million have zero cash income – they do not receive a cent in sustenance.
Alston’s epic journey has taken him from coast to coast, deprivation to deprivation. Starting in LA and San Francisco, sweeping through the Deep South, traveling on to the colonial stain of Puerto Rico then back to the stricken coal country of West Virginia, he has explored the collateral damage of America’s reliance on private enterprise to the exclusion of public help.
Think of it as payback time. As the UN special rapporteur himself put it “Washington is very keen for me to point out the poverty and human rights failings in other countries. This time I’m in the US.”
And it’s one grim story after another, including this one from here in Los Angeles:
Ressy Finley, 41, was busy sterilizing the white bucket she uses to slop out in her tent in which she has lived on and off for more than a decade. She keeps her living area, a mass of worn mattresses and blankets and a few motley possessions, as clean as she can in a losing battle against rats and cockroaches. She also endures waves of bed bugs, and has large welts on her shoulder to prove it.
She receives no formal income, and what she makes on recycling bottles and cans is no way enough to afford the average rents of $1,400 a month for a tiny one-bedroom. A friend brings her food every couple of days, the rest of the time she relies on nearby missions.
She cried twice in the course of our short conversation, once when she recalled how her infant son was taken from her arms by social workers because of her drug habit (he is now 14; she has never seen him again). The second time was when she alluded to the sexual abuse that set her as a child on the path towards drugs and homelessness.
Given all that, it’s remarkable how positive Finley remains. What does she think of the American Dream, the idea that everyone can make it if they try hard enough? She replies instantly: “I know I’m going to make it.”
A 41-year-old woman living on the sidewalk in Skid Row is going to make it?
“Sure I will, so long as I keep the faith.”
What does “making it” mean to her?
“I want to be a writer, a poet, an entrepreneur, a therapist.”
She is one of those temporarily embarrassed millionaires. Almost all of those profiled seem to think of themselves as temporarily embarrassed millionaires, but not all, and Pilkington sees the ongoing problem:
The casting off the yoke of overweening government (the British monarchy) came to be equated in the minds of many Americans with states’ rights and the individualistic idea of making it on your own – a view that is fine for those fortunate enough to do so, less happy if you’re born on the wrong side of the tracks.
Countering that has been the conviction that society must protect its own against the vagaries of hunger or unemployment that informed Franklin Roosevelt’s New Deal and the Great Society of Lyndon Johnson. But in recent times the prevailing winds have blown strongly in the “you’re on your own, buddy” direction. Ronald Reagan set the trend with his 1980s tax cuts, followed by Bill Clinton, whose 1996 decision to scrap welfare payments for low-income families is still punishing millions of Americans.
The cumulative attack has left struggling families, including the 15 million children who are officially in poverty, with dramatically less support than in any other industrialized economy. Now they face perhaps the greatest threat of all.
As Alston himself has written in an essay on Trump’s populism and the aggressive challenge it poses to human rights: “These are extraordinarily dangerous times. Almost anything seems possible.”
Anything seems possible. Things could get worse. Things just got worse:
Congressional Republicans secured enough support Friday to pass their massive tax plan, a measure that would deliver a major legislative victory to President Trump and his GOP allies and make tax changes affecting nearly every American family and business.
Passage appeared certain after two critical holdouts, Sens. Marco Rubio (R-Fla.) and Bob Corker (R-Tenn.), said they would vote for the bill next week.
Those two did make their stand:
Rubio was the key piece of a complicated and shifting political puzzle that the White House and GOP leaders spent months trying to solve, as all Democrats vowed to oppose the bill and a handful of Republicans made strident demands.
The Florida Republican insisted on an expansion of the child tax credit in exchange for his vote, and GOP leaders relented, growing a benefit for working-class families.
Congressional Republicans didn’t like that much. There was no way to pay for that small increase for working-class families and keep the package within the cost limits that allowed them to pass this with only fifty-one votes in the Senate, ignoring the Democrats. Rubio was being a pain, but there was a way out. They had lowered the corporate tax rate from thirty-five percent to twenty-one percent. They added one hundredth of one percent to that twenty percent to cover Rubio’s populist posturing. Large corporations wouldn’t even notice that, and there was this:
Corker’s support was unexpected, as he had opposed an earlier version of the tax bill two weeks ago amid concerns about its additions to the deficit. But Friday he said that he viewed the bill as a “once-in-a-generation opportunity” that, combined with changes to immigration and trade policy, would help the economy.
Corporations would thrive. The makers of toothpaste and toilet paper would thrive, and hire more folks, maybe. They could also use the money they now would save to automate everything, to eliminate jobs – but with lower or no labor costs they’d make big money anyway, so all would be just fine. Corker is a “big picture” guy.
But the picture is still cloudy:
Under the tax plan, Americans would lose the personal exemptions that often dictate how much money is withheld from their paychecks. They would instead pay taxes through a new regime that exempts a higher level of income from taxation and then subjects much of the rest to lower rates. Many more Americans would have access to the child tax credit, but they would also face a new cap on the federal deduction for state and local tax payments.
On net, Republicans believe that the bill would lower most people’s taxes. But many Americans – particularly those in high-tax states such as New York, New Jersey and California – would see their taxes go up.
That’s a political calculation. States like New York, New Jersey and California are full of liberals who always vote for Democrats. Those states are already lost. Republicans are writing them off. That’s not the real America, and that’s beside the point anyway:
The tax plan has enormous benefits for many businesses, with a permanent and sharp reduction in tax rates that Republicans promise would trigger more economic growth, new hiring and higher wages.
It also would change the tax system for households, temporarily lowering rates and creating new limits on deductions; this is expected to reduce taxes for most Americans but could still lead millions to owe the government more.
Those millions are in states like New York, New Jersey and California. Let them whine. Those who aren’t real Americans should pay more, but it’s not that simple:
The bill was originally pitched as a sweeping tax cut for the middle class, but it changed over the course of several months as Republicans demanded a variety of alterations.
Sen. Ron Johnson (R-Wis.) extracted more tax cuts for businesses whose owners file their taxes through the individual income tax code.
Sen. Susan Collins (R-Maine) and other East Coast Republicans demanded changes that would allow Americans to deduct up to $10,000 in state and local taxes, restoring some of the deduction after the Senate initially sought to scrap it entirely.
House Republicans tried to cap the mortgage interest deduction to the interest paid on up to $500,000 in new home loans, but they acquiesced eventually to a $750,000 cap – still lower than the current limit of about $1 million.
A number of GOP donors complained that the bill could push their taxes up, so Republicans agreed to a late change that would cut the top tax rate to 37 percent (down from 39.6 percent) for income above $600,000 for a married couple filing jointly.
That last change was a surprise. There’s no plausible microeconomic or macroeconomic argument for lowering taxes on that top bracket – that’s expensive and helps no one – but those are the donors that make Republican political careers possible. Congressional Republicans aren’t dummies, and the rest was just a series of adjustments:
Many of the changes to the tax code that Republicans initially sought were dialed back or removed.
They had proposed allowing multinational companies to bring cash held overseas back to the United States at a 12 percent tax rate, but they raised the rate to 15.5 percent in the final agreement as a way to generate more revenue.
They opted against imposing taxes that would have hit graduate students, and they did not strip away tax benefits for families who adopt children.
They had proposed to eliminate the estate tax and the alternative-minimum tax for individuals, but those changes proved too costly, and the final plan would exempt more families from these taxes but not get rid of them.
There’s much more but that’s the gist of it, and America’s Canadians were not happy:
Democrats have blasted the bill, saying it would shower corporations with lower taxes at the expense of driving up the debt and giving only temporary and uneven benefits to the middle class. The tax-rate cuts for individuals and households would expire after eight years, while most of the cuts for corporations would be permanent.
“This is daylight robbery,” said House Minority Leader Nancy Pelosi (D-Calif.). “And with every iteration the GOP tax scam becomes even more cowardly, outrageous, dishonest, brazen theft from middle-class families, giving money from them to the richest people in our country and to corporations. It’s a monumental con job.”
Perhaps so, but this may not seem like a monumental con job to all those temporarily embarrassed millionaires out there. Their condition is only temporary after all. One day they’ll be millionaires too. Why would they object to any of this?
Michael Tomasky has some objections:
You think this is bad, think about what’s next. What are next are cuts to Medicaid, Medicare, Social Security, and other domestic spending programs. Because this is the Republican formula:
Pass massive tax cuts for the top one percent. Run up the deficit. A year or two later go, “Oh my God, look at the deficit! This proves that spending is just out of control!” Start taking the axe to entitlement programs and the domestic discretionary budget.
That’s how it works, ever since supply-side became part of conversation.
Tomasky then offers his own “short history” of that:
Ronald Reagan cut taxes and ran up deficits like mad, tripling, quadrupling them over Jimmy Carter’s level. George H. W. Bush raised taxes a little, but the economy was so in the doldrums that the deficit was still bad. Along came Bill Clinton, who had to fix it. He raised taxes. He did investments. He got the economy humming. He eliminated the deficit. He gave George W. Bush a surplus.
Then Dubya cut taxes – twice – and started two unfunded-mandate wars. Up shot the deficit again. Ach, they all said! These deficits! We must cut spending. And bring Social Security under control. But they never did cut spending, and popular will against Bush’s Social Security privatization scheme was so strong that that one died on the vine fast. Meanwhile they turned the banking system into a casino, and that crashed.
Then came Barack Obama, who, again, had to fix it. He wasn’t able to, quite enough, because his stimulus package should have been much larger than political realities allowed. But he did reduce the deficit substantially. As a percentage of GDP, it went from the 10 percent Bush handed him to around 2.5 percent. And he oversaw 75 consecutive months of job growth. He handed Donald Trump exactly the economy that 14 months ago Trump was saying was a disaster but now is saying is beautiful.
Tomasky says that’s how it always works, and how it’s working now:
Now, thanks to the GOP, we’re about to open another gash in the deficit. They’ll try to slash away, but I hope and think that by and large they won’t succeed, because if you thought this tax bill was unpopular, wait till you see what happens when they start openly talking about tinkering with people’s nursing home care (Medicaid), prescription drug benefits (Medicare), and fixed pension distributions (Social Security).
And so a Democrat may well get elected in 2021, inheriting a mess from Trump. A deficit. Maybe a bad economy. And it will be on the Democrat to fix it again. And he or she will. But only to a point. The Republicans, then in opposition, will obstruct and not allow the next Democrat to really fix things, because Republicans will know deep down that public investment would fix the economy, but they’ll rail against it on the grounds that it will… increase the deficit! So they will try to engineer things so that the recovery is tepid, so they can get the Democrat out and cut taxes for the rich one more time and balloon the deficit and start the whole grim process again.
That’s the game. It feels like we’re fated to play it for the next fifty years.
Perhaps so, but Fareed Zakaria thinks this tax bill is extraordinarily awful:
If the Republican tax plan passes Congress, it will mark a watershed for the United States. The medium- and long-term effects of the plan will be a massive drop in public investment, which will come on the heels of decades of declining spending (as a percentage of gross-domestic-product) on infrastructure, scientific research, skills training and core government agencies. The United States can’t coast on past investments forever, and with this legislation, we are ushering in a bleak future.
The future is the United States as third-world country, and this tax bill would assure that:
The tax bill is expected to add at least $1 trillion to the national debt over the next 10 years, and some experts think the real loss to federal revenue will be much higher. If Congress doesn’t slash spending, automatic cuts will kick in unless Democrats and Republicans can agree to waive them. Either way, the prospects for discretionary spending look dire, with potential cuts to spending on roads and airports, training and apprenticeship programs, health-care research and public-health initiatives, among hundreds of other programs. And these cuts would happen on top of an already difficult situation. As Gary Burtless of the Brookings Institution points out, combined public investment by federal, state and local governments is at its lowest point in six decades, relative to GDP.
This, then, is not the time to cut taxes:
The United States is at a breaking point. In August, the World Bank looked at 50 countries and found that the United States will have the largest unmet infrastructure needs over the next two decades. Look in any direction. According to the American Road & Transportation Builders Association, the United States has almost 56,000 bridges with structural problems (about 1,900 of which are on interstate highways), and these are crossed 185 million times a day.
Another industry report says that in 1977 the federal government provided 63 percent of the country’s total investment in water infrastructure, but only 9 percent by 2014. There’s so much congestion in America’s largest rail hub – Chicago – that it takes longer for a freight train to pass through the city than it takes to get from there to Los Angeles, according to Building America’s Future, a public interest group.
And then there’s the decline in funding for research:
A recent report in Science notes that for the first time since World War II, private funding for basic research now exceeds federal funding. Research and development topped 10 percent of the national budget in the mid-1960s; it is now less than 4 percent. And the Senate’s version of the tax bill removed a crucial tax credit that has encouraged corporate spending on research, though the House-Senate compromise version will probably keep it. All this is happening in an environment in which other countries, from South Korea to Germany to China, are ramping up their investments in these areas. A recent study found that China is on track to surpass the United States as the world leader in biomedical research spending.
All of this adds up, and maybe it takes an outsider looking in to see what has been going on:
When I came to America in the 1980s, I was struck by how well the government functioned. When I would hear complaints about the IRS or the Federal Aviation Administration, I would often reply, “Have you ever seen how badly these bureaucracies work in other countries?” Certainly compared with India, where I grew up, but even compared with countries such as France and Italy, many of the federal government’s key offices were professional and competent. But decades of criticism, congressional micromanagement and underfunding have taken their toll. Agencies such as the IRS are now threadbare. The Census Bureau is preparing to go digital and to undertake a new national tally, but it is hamstrung by an insufficient budget and has had to cancel several much-needed tests. The FAA lags behind equivalent agencies in countries such as Canada and has been delayed in upgrading its technology because of funding lapses and uncertainties. The list goes on and on.
And so does his column. He agrees with Ronald Wright. Has America ever been what it thinks it is? The rest of the world wonders about that, and Zakaria adds this:
America has fallen into extreme partisanship and embraced a know-nothing libertarianism that is starving the country of the essential investments it needs for growth. Those who vote for this tax bill – possibly the worst piece of major legislation in a generation – will live in infamy, as the country slowly breaks down.
And the UN Special Rapporteurs on Extreme Poverty and Human Rights will come and go and file their reports, as this country slowly breaks down. How did it come to this? Why is this crew in charge of things now?
The answer to that may be that all the temporarily embarrassed millionaires in dire (temporary) straights voted them in. Democrats told them they were the exploited proletariat, rightly so, but that offered no comfort. Republicans told them they were simply incipient millionaires, and one day…
That day will never come. This will never end.