Sleepwalking Toward the Millennium

excerpted from the book

The Paradox of American Democracy

by John B. Judis

Routledge Press, 2001, paper

Sleepwalking Toward the Millennium

p228
In both periods the economic conditions for reform were propitious about the time Roosevelt took office in I90I, the economy finally recovered fully from the depression of I893. The recovery removed the pressures for brute survival that had made the consideration of reform difficult. Over the next fifteen years, Americans would address aggressively and comprehensively the economic and social problems that had surfaced during the depression. Similarly, in the last year of Clinton's first term, the economy finally recovered from the I99I recession. By I998 unemployment had dipped to 4.5 percent, annual growth was at 4 percent, and productivity, spurred by the introduction of information technology, was increasing over 2 percent annually. Chronic budget deficits gave way to projected trillion dollar surpluses. The fears of national decline were replaced by a spirit of triumphalism. Yet in these circumstances, political and social reform did not take place. On the contrary, the government became even more paralyzed and ineffective than before. Instead of addressing the great challenges they faced, Americans ignored them.

Some American leaders had difficulty adjusting to the prosperity of the late 1990s. They were overcome by caution. But the main reason for failure was that the political system was dysfunctional. It continued to be dominated by lobbyists and irresponsible elites backed by conservative Republicans. Their presence on Washington's K Street discouraged reform and discouraged active public participation in politics. As a result, while the economy hurtled forward, political America sleepwalked into the next century.

Failure of Reform

The Progressive Era, along with the New Deal and the I9605, represented a high-water mark of American democratic reform. It saw the creation of the Federal Trade Commission and the Federal Reserve banking system, the establishment of a progressive income tax, federal standards for food safety, the conservation of natural resources, the adoption of the initiative and referendum and the direct election of U.S. senators-as well as myriad state reforms in social insurance and labor relations that the national government adopted during the New Deal. The I9905, by contrast, were remarkably barren of reform legislation. Clinton's effort at health care reform was repudiated. The legislation passed has been either cosmetic or reactionary. Significant reforms were proposed, but they were peremptorily rejected.

... From I993 to 1997, the number of Americans who lacked health insurance climbed from 39.7 to 43.4 million, or from 14.2 to 16.1 percent. Between 1989 and 1997, the share of wealth held by the top 1 percent grew from 37.4 to 39.1 percent of the national income, while the share held by middle-class families-those in the middle fifth-fell from 4.8 to 4.4 percent. More than 85 percent of the benefits from the increase in stock prices between 1989 and I997 went to the richest I0 percent of households. From I989 to I997, CEO salaries went from 56 times to I I6 times that of the average worker. The economy of the I990s was much more like that of the I920s, when the benefits of growth were distributed unequally, than like the halcyon I950s and I960s when the gap between rich and poor visibly narrowed.

In the face of these inequalities, Republicans in Congress proposed measures that would widen rather than reduce them, including tax breaks for investors and the fragmentation of the Medicare system. The Clinton administration, led by Secretary of Treasury Robert Rubin, resisted the most egregious Republican efforts to reward their constituents, but the administration went little further on its own. After the I993 budget, which included the Earned Income Tax Credit, the administration drew back from redistributive tax plans and agreed to a mildly regressive Republican plan in I997.

The growth of budget surpluses should have made it possible to contemplate the large increases in public investment Clinton had championed during the I992 campaign but then repudiated in the face of projected budget deficits. These surpluses could be used to widen access to health care and education, improve public transportation, and fund research and development into the next generation of science and technology. But spending on education, transportation, and high technology continued to lag during the Clinton years. If spending on education and training had not been increased but had held constant, with increases for inflation, from I976 to I998, it would have been $26.1 billion higher than it was.

There was growing public support for measures that would reduce the threat to jobs, wages, and regulations from the unlimited movement of multinational corporations. When the administration, backed by business, proposed extending NAFTA to Chile, liberals, backed by labor and environmental organizations, proposed to attach labor and environmental safeguards to any new free trade treaties. (Chile had draconian labor laws that dated from dictator Augusto Pinochet's attempt to crush the country's unions.) Clinton was initially receptive, but, under pressure from business and from Republicans, he did not include these provisions in a "fast-track" proposal he made for negotiating the treaty. No measure passed, and the treaty was never negotiated. In his last two years, Clinton joined European leaders in backing labor and environmental accords, including a global warming treaty, but these measures met with stiff opposition from a Republican Congress and K Street.

Businesses and their lobbies were able to dictate the provisions of measures that directly affected them.

p232
... This inordinate influence by business and its lobbyists was facilitated by the system of campaign finance. By the late I990s it cried out for reform. Court rulings in the I990s had destroyed the last vestige of the I974 reform bill by allowing interest groups and wealthy individuals to campaign on behalf of candidates without any restriction on their expenditures as long as they didn't explicitly say, "Vote for candidate X." Funded by unrestricted "soft money" grants, parties could also wage their own unlimited campaigns on behalf of candidates. In effect, the campaign financing system was little better than what Theodore Roosevelt had found in I905 when he persuaded Congress to pass an eminently avoidable ban on corporate contributions. There were no longer any restrictions on what businesses and other groups could spend on candidates and parties. Instead of countering the inequality of the economic system, the political system reinforced it.

In the wake of the I996 election, there was public support for reform. A September I997 CNN/Gallup poll showed that by a margin of 55 to 35 percent, Americans wanted campaign reform legislation passed by the end of the year. With White House support, a group of Democrats and Republicans in the Senate and House proposed a modest plan, but the Republican majority, which benefited more than Democrats from the existing system, blocked even these measures.

Politics by Other Means

The Progressive Era was characterized by a lively and politically mobilized citizenry-evidenced not merely by voting, but by participation in political movements and in organizations on a local, state, and national level. There were viable third parties and fourth parties, two national labor organizations, farm groups, business groups, and a broad-based movement for woman suffrage. Party rivalry was based partly on region and religion, but in the elections of I896 and I9I2, the parties represented far-reaching democratic alternatives. The election of I9I2, in which Theodore Roosevelt's Progressive Party and Eugene Debs's Socialist Party challenged the Republican and Democratic regulars, was fought over the terms of reform, and laid the basis for Wilson's climactic first term.

Politics seemed to revive in the early I990s-evidenced in Ross Perot's third-party effort, the rise of the Christian Coalition, and the revival of the consumer and environmental movements. But by the decade's end, the signs of decay overshadowed those of rebirth and revitalization. Perot squandered his movement by turning it into a vehicle for his own thwarted ambition. The environmental movement's largest grassroots organization, Greenpeace, abandoned its local chapters in I996 and became a Washington letterhead group, financed by direct mail. In I996, Ralph Nader embarked on a desperate, ill-fated presidential campaign on the Green Party ticket, securing only I percent of the vote. Citizen Action, which had united many of the state and local community organizing efforts during the I9805 and early I9905, dissolved in I997 under a cloud of scandal. The AFL-CIO's membership continued to decline and was rocked by a major scandal involving the Teamsters. Ralph Reed quit the Christian Coalition after having failed to convert it from an evangelical interest group into a popular nonsectarian movement. Its membership plummeted, and it fell into financial arrears. It remained powerful primarily in name, and operated as a narrow pressure group within the embattled and divided Republican Party.

There was a general decline in popular interest and involvement in politics. This showed up in declining election turnout, but also in the UCLA studies on incoming freshmen. In I970, 52.8 percent thought it was important to "keep up to date with political affairs." By I997 only 30 percent did. In I97I (the first year the question was asked) 42.9 percent ranked becoming "involved in programs to clean up the environment" an essential objective. By I997 only I9.6 percent did. The lack of involvement in the late I9905 reflected in part a certain complacency born from economic recovery, but it was equally, if not more, driven by cynicism about government and democracy.

p236
The Abdication of the Elites

In the Progressive Era, there were politicians, bankers, businessmen, lawyers, and intellectuals who devoted themselves in a disinterested manner to reconciling the interests of different groups and classes. Robert Brookings, Theodore Roosevelt, Elihu Root, Woodrow Wilson, Louis Brandeis, and Mark Hanna, whom Gingrich completely misunderstood, sought to reconcile business and labor rather than to represent one against the other. They tried to accommodate America's democratic ideal to the structure of corporate capitalism. There are certainly similar leaders today, but like international investor George Soros, they exist on the margins of respectable discourse. Almost all the post-I960s intellectuals who came to Washington with Clinton departed at the end of the first term-most of them, like Robert Reich, unhappy with their inability to effect change. And the capitulation of the elites to K Street continued unabated during the same time.

Unlike their immediate predecessors, the business leaders of the I9905 did not have to worry about rising energy costs and falling profits, but the absence of a threat to their survival did not make them more inclined to civic involvement. If anything, they came to see themselves as part of a competitive global economy whose concerns often did not mesh with those of American workers or purely American-based companies. By the mid-I990s, many of the largest corporations, including Coca-Cola, General Motors, and Ford, had abolished the distinction between their American and international divisions to emphasize that they were global rather than purely American companies, and the CEOs saw themselves as world citizens.

Herb Stein, who had worked with the Committee on Economic Development for two decades, bemoaned the lack of national leadership from businessmen and bankers. "I think there was a period when there were businessmen outside the government who had some authority and who were respected, and who had a genuine national patriotic concern with the problems of the country," he said. "I can't think of a single name now of such a person." Many of those business leaders who became politically involved embraced a kind of irresponsible individualism that was antithetical to the spirit of twentieth-century elites. Fred Smith of Federal Express and John Malone of Tele-Communications Inc. were among those drawn to the Cato Institute, a libertarian think tank that rejected the progressive income tax, Social Security, and the welfare state.

p242
In the I990s the great newspapers and magazines were shaped by the spread of high-powered corporate capitalism. Most newspapers and magazines had been run for a profit, but the best of them prided themselves on placing public service on a par with making a profit. They adhered to a strict policy of separating the news and editorial departments from the advertising and business departments of the publication. At Time, Henry Luce pioneered the idea of a "church-state separation" between the business and editorial functions of the magazine; when he died in I967 he stipulated in his will that his company remain "principally a journalistic enterprise . . . operated in the public interest as well as the interest of its stockholders." But this wall of separation began to break down in the I9705 and virtually crumbled in the I9905, subjecting the news department to pressure from advertisers and from corporate owners.

At Time, the merger between Time and Warner created an entertainment conglomerate in which the editor in chief of Time reported to the officers and directors of a multinational corporation. At the New York Times, publisher Arthur Sulzberger, Jr., established regular meetings between advertising executives and the news department, contending that news editors had to understand that "since we have a clear responsibility to make a profit, they can't succeed if they have an adverse impact on the profit margins of the paper." The Times also continued to penalize reporters who appeared too critical of business.

The introduction of the Internet only accelerated the merger of business and editorial functions. Asked whether advertisers would dictate content on new-media web pages, Sulzberger responded, "New media are by definition transactional. We need to work more closely with advertisers and marketers to create content that meets their needs. We must develop new ground rules."

But the breakdown was most dramatic at the Los Angeles Times. In the I9605, Otis Chandler transformed it into one of the country's best newspapers, but after Chandler's retirement in I980, the newspaper's profit margins began to decline. In I996 the newspaper's parent company, the Times-Mirror Co., appointed Mark Willes the CEO, and in I997 Willes made himself publisher of the Los Angeles Times. Willes, who had never worked for a newspaper-he was a director of the Federal Reserve for eleven years and an executive with General Mills for fifteen years- began merging the business and editorial departments. He appointed general managers from the business side to serve as "partners" for the editors. He demanded profit-and-loss statements from each section, and he established bonuses for editors based on how profitable each section was. These kinds of changes have made it more difficult for the elite newspapers and magazines to mediate, arbitrate, and assess objectively the conflicts between business and labor and between business and consumers.

In the past, publishers and top editors had considered themselves to be mainstays of the nation's political elite. They had belonged to the Council on Foreign Relations. Many of them conferred regularly with the president and top administration officials. But in the I9905 newspaper publishers like Willes and the Washington Post's Donald Graham saw themselves simply as businessmen selling a product in an increasingly competitive market. When in January I998 a reporter interviewed Graham, the grandson of Eugene Meyer, about the paper's achievements under his leadership, he talked entirely about its circulation figures. Wrote the New York Times's Iver Petersen, "What is missing in this inventory of success are accounts of the articles themselves." The Washington Post's executive editor Leonard Downie professed to have no political opinions whatever. Time Inc. editor in chief Norman Pearlstine admitted he was much closer to Hollywood moguls than to Washington officials and that he did not participate in any policy groups. He felt closest, he admitted,-to the Cato Institute.

As the great newspapers, magazines, and television news networks became obsessed with their bottom line, they abandoned their responsibility as guardians of the national interest. Beginning with the exposure of Democratic presidential candidate Gary Hart's marital infidelity in I987, they allowed the barrier separating the elite media from the tabloid press to crumble. From the Clinton campaign in 1992 through the Lewinsky affair in I998, they printed or broadcast unsubstantiated rumors; they intruded into areas of private life that had formerly been marked off; they blithely published illegal leaks. During the McCarthy investigations, some of the same publications and CBS News under Edward R. Murrow and Fred Friendly had led the effort to expose the Wisconsin senator's baseless charges, but as the drive to impeach the president grew during I998, the great publications and networks became accessories to the campaign being waged against the Clinton administration. They shared blame with the Republican conservatives for the travesty of Constitutional government that finally took place.

Intellectual Drift and Reaction

In the Progressive Era, there was intense intellectual ferment. Herbert Croly, Walter Lippmann, William Weyl and The New Republic, John Dewey, Thorstein Veblen, John Commons, Richard Ely, and Charlotte Perkins Gilman grasped the challenge that corporate capitalism posed to America's older democratic ideal. In the 1990s, there was no shortage of brilliant social scientists and journalists, but the political journals lost their focus on larger questions, and the loudest strains of political thought were either apologetic or reactionary.

In the Progressive Era, The New Republic had played a vital role in defining and seeking to resolve the conflict between democracy and corporate capitalism. With greater or less success, it had maintained this focus through the New Deal, the Eisenhower era, the sixties, and the Reagan years, but with the Cold War's end, and the election in 1992 of a Democratic president pledged to reform, the magazine, ironically, lost its focus. As the editorship rapidly changed hands, the magazine became distinguished primarily by its advocacy of an aggressive foreign policy and by eclectic political causes that were not directly related to or contradicted the magazine's original project. It helped, for instance, the effort to derail national health insurance in I994 and was either opposed or indifferent to campaign finance reform during Clinton's second term. Conservative journals failed to define the choices Americans faced. While Buckley's National Review had presented a philosophical counter to progressive reform, the conservative journals of the I9905 were either an extension of television punditry or tabloid journalism. The American Spectator, which claimed the largest circulation, had originally been designed as the successor of National Review, but during the Clinton years, it became known for publishing sordid and irresponsible exposes of the president's sex life.

In books and magazines, op-ed pages of newspapers, and talk shows, political discussion was extraordinarily shallow, dominated by celebrity glitz, speculations about scandal, and predictions of political success or failure. It was typified by Washington Post reporter Bob Woodward's insider books about the Bush and Clinton administrations. There was much discussion of economics, but most of it resembled the kind of naive boosterism that characterized the discussion in the I9205. AEI fellow James Glassman co-authored a book claiming that the Dow-Jones average of stock market prices would rise to 36,000. New magazines like Wired and Fast Company promoted the idea of a "long boom" that would last well into the twenty-first century. When Rolling Stone columnist Bill Greider published a study of the world economy, One World, Ready or Not, warning of overcapacity and financial instability in world markets, he was roundly criticized in The New York Times Book Review and Foreign Affairs.

p248
... control over the national economy has become more concentrated in a few giant corporations and banks, which in the last three decades have become even more removed from local, popular control. Political power has devolved from the national government, but not toward the states and neighborhoods. It has become increasingly lodged in multinational corporations and international finance. In Washington, it has shifted away from the federal bureaucracy toward the issue networks that are dominated by K Street.

Weakening the federal government still further-whether through privatizing its functions or by abolishing regulatory agencies-would not shift power to workers, consumers, and local entrepreneurs, but to large corporations and banks and their lobbyists in Washington. The government remains the only national institution through which the inhabitants of Camden or Peoria can contest the power of IBM, Ford, or Caterpillar.

The conservative champions of civil society were equally mistaken in blaming the decline of civil society and of Tocqueville's intermediate associations on the growth of the national government. Those periods in which private, voluntary, local activity has flourished-for instance the I930s and I960s-were exactly those times when the national government grew and was strengthened. In twentieth-century America, the growth of government power and of civil society occurred in tandem rather than in opposition to each other. The decline in civil society was as much symptom as cause of our democratic distemper. Its cure won't be found in dismantling but in strengthening the structure of democratic I pluralism that emerged over the first half of the century.

p249
The dominant spirit of the late I990s was a return with a vengeance to the Reagan years' obsession with becoming wealthy and successful. Everything and everyone had a "bottom line."

Paradox of American Democracy

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