Which Side Are You On?

by David Moberg

In These Times magazine, October 2000

This uninspired presidential race may turn out to be historically significant after all-but not because of the stature of the candidates or the issues they're raising. Underneath the bunting, sound bites and subliminal RATS, there is the start of a big shift in public sentiment against corporate excess and toward a more active government.

After many years of conservative backlash and endless government bashing, national polls reflect a growing outrage at abuses of power by corporations and the rich, a desire for government to help the vast majority of working people, and a profound concern about economic security and inequality. Coupled with support for a more tolerant and compassionate society and concern about the natural environment, this sea change could open up new opportunities for progressive politics.

Much of this shift is a reaction to the changes in society unleashed by the conservative policies that have dominated the past quarter century. Globalization, job insecurity, a squeeze on family time and income, the arrogance of big corporations and greed of the very rich all have contributed to a new sentiment about the value of government and the power of private business. Most Americans have come quite rightly to believe that globalization favors the rich and powerful. The wave of corporate mergers and reorganizations in the '90s also has taught them that their livelihoods are insecure even at highly profitable companies. The scandal of big money political fundraising and the price paid for inadequate regulation-from utility price hikes to deadly Firestone tires and Ford trucks-add to public distrust of big business and the wealthy.

But perhaps the most significant factor is growing economic inequality. Although median wages grew in real terms in the late '90s, the highest paid elite pulled even further away from the vast majority, according to the latest "State of Working America," just released by the Economic Policy Institute (EPI). The picture looks even more stark if income from property and investments is added to wages. Looking at tax data, the Center on Budget and Policy Priorities found that the top 1 percent of income tax filers reported that their average income grew by 41 percent from 1993 to 1997, while the bottom 90 percent gained less than 5 percent. The rich have fared well partly because of stock market gains and partly because of the huge increase in executive salaries (which rose from 42 times the average worker's pay in 1980 to 420 times in 1998, according to a Business Week survey of large companies). Underscoring the continuing strength of this change, for the first time in the postwar era, according to EPI, "the division of total corporate income between income paid to workers and income paid to owners of capital shifted strongly in favor of owners during the 1990s."

The main reason that inequality has increased so consistently since the early '70s, Chuck Collins and Felice Yeskel of United for a Fair Economy argue in a new report, Economic Apartheid in America, is that corporate power has increased. Corporations used their political influence and economic power to rewrite the rules for both the global and domestic economy to suit their interests, which in turn increased their power even more.

When income inequality began to rise in the early '70s, most families responded to stagnant or falling wages by working harder: first, by women and other family members taking jobs, then by increasing their hours of work. EPI found that the most important explanation of family income growth in the '90s was the number of hours worked-a total increase of about six weeks per year for the average middle-income married couple (with lower-income or black and Latino families all working longer hours).

This squeeze on working families in the late '70s and '80s fed into the backlash against welfare: People were working harder but getting nowhere, so they often turned their frustration against people they saw as collecting paychecks without working. Welfare reform drastically cut the rolls of recipients, reducing public spending in the '90s. But as the nonpartisan Economic Roundtable recently concluded about the Los Angeles welfare-to-work program, former aid recipients have bounced from one low-wage employer to another, with most remaining stuck below poverty. As time limits on benefits run out, and especially when the next economic downturn hits, a crisis is sure to follow. Yet ironically, according to surveys, welfare reform has yielded one benefit for the working poor: more sympathy for raising wages. If people are working, they deserve a decent life, most people say, which is one reason why the janitors' strikes earlier this year struck such a popular chord.

The conservative movement laments its waning momentum but hasn't changed its stripes. It is just trying to put on a more appealing disguise. Even as inequality continues to grow, conservatives keep promoting policies that would give even more wealth and power to the rich and corporations. They have been clever in some cases, attacking an estate tax as a "death tax" aimed at the middle class, when in fact it affects only about 2 percent of all estates (mainly those making more than $190,000 a year at death). Meanwhile, under the cover of eliminating the "marriage penalty," the Republicans would provide four-fifths of the tax break (costing nearly $30 billion a year at decade's end) to the top one-fifth of taxpayers and half of the tax cut to families that already receive "marriage bonuses," according to the Center on Budget and Policy Priorities.

Most Democrats have resisted (and President Clinton vetoed both measures), but not as forcefully as they should. They usually emphasize the inequity of tax cuts skewed heavily to the rich, but they feebly argue that tax cuts would be fiscally irresponsible instead of making the case for using the money to guarantee prescription drug insurance for the elderly or universal health insurance for children.

One indication of a political sea change has been the lukewarm public response to the centerpiece of Bush's campaign-a massive $1.9 trillion tax cut. Most people probably don't realize that 43 percent of the cut would go to the richest 1 percent of households, who would get an average of $46,072 a year, while the middle 20 percent would get only 8.4 percent of the tax cut, an average of $453 a year. However, the average voter probably has an intuitive sense that she won't benefit much from Bush's tax cut.

There's a widespread sense that there are more important things for the government to do with its money-like improve schools, protect Social Security and Medicare, or expand health care coverage. As pollster Stanley Greenberg, now working for Gore, argued in his book Middle Class Dreams, middle-class Americans (including most of what others would call the working class) want government to help give them a chance to prosper. With growing insecurity and inequality, and the frustration that more hard work has yielded so little, more working families don't want to eliminate government. They want to see government on their side. But there's a caveat for progressives: People want government as an ally, not as Big Brother.

Bush's "compassionate conservatism" is a political recognition that the majority of citizens reject both the hard-edged intolerance of the Christian right and the abandonment of the less fortunate. Even he had to embrace the idea that government needs to do more to help people with education, for example. But the fundamental thrust of his message remains much the same: Turn over more control to big corporations and the market, but describe it as providing more "choice." Bush's program offers a false choice in nearly every case, including school vouchers.

Progressives, however, should not dismiss the deeply popular idea of increasing choices. But they need to make it clearer to people why the choices they offer are more meaningful. For example, it seems likely more people would rather choose between doctors than choose which HMO will exploit and abuse them.

Gore's vision of how to help is also woefully inadequate. Although the Democrats need to show the public that they can be fiscally responsible, Gore's zeal to reduce the national debt is thoroughly misguided. Many of the targeted interventions in his vast grab bag of targeted tax cuts could be more fairly, comprehensively and effectively delivered through direct spending programs, without cluttering the tax code. His response to growing inequality, which he understandably is loathe to acknowledge, is feeble. It consists largely of offering middle-class tax cuts, a higher minimum wage and expanded earned income tax credits for the lowest paid workers.

Otherwise, his strategy is to increase productivity, mainly by reducing the debt (hoping that will lower interest rates), further deregulating the economy, and opening foreign markets-with a brief aside about investing in people and technology. Continued productivity growth is a laudable goal, but workers presently are not getting their share of productivity growth, and Gore's plan will do little to enhance productivity and almost nothing to redistribute its fruits. The income problem for workers is not taxes but corporate power. While Gore briefly has endorsed ideas to make it easier to organize unions and some modest measures to make women's pay more equal to men's, he does not link unionization to his strategy to raise family incomes.

Ralph Nader obviously offers a much more robust program of attacking "corporate crime," strengthening unions, rewriting the rules of globalization, reviving citizen politics, getting big money out of politics and eliminating corporate subsidies (a topic that Gore would never raise). He lampoons Bush as "a giant corporation running for president disguised as a person," and challenges Gore to give back the corporate soft money donations to the Democrats if he truly intends to stand up to powerful interests. Nader's candidacy reflects a cutting edge of the renewed anti-corporate spirit and undoubtedly has forced Gore to adopt a more populist tone.

But even Gore's mild anti-corporate comments generated an immediate charge from Bush that the vice president was fomenting "class warfare." National Association of Manufacturers President Jerry Jasinowski complained that Gore had forgotten that business was responsible for the recent prosperity. Indeed, a significant faction of Democratic officials (like Joe Lieberman, whom Jasinowski glowingly quoted) are ideologically closer to Jasinowski than to Nader. Yet it is also true, progressives must remember, that most Americans are ambivalent about big business, resenting its power and irresponsibility, but dependent on it for jobs and products.

However, overall sentiment is turning against corporate power. A Business Week poll revealed that 74 percent of Americans say that "business has gained too much power over too many aspects of American life." While the survey showed that people think some companies (like computer-makers) serve their customers well, 63 percent think that company treatment of their employees is "only fair" or "poor." Around three-fourths of those surveyed thought big business had too much political influence.

There's the rub. Political influence, exerted both through campaign contributions and economic blackmail, is certain to curb Gore's new populist fervor if he wins-and it now looks like his wooing of working families may do the trick for him. But the renewed distrust of corporations will not vanish and could break out more dramatically in the next economic downturn. Even as conservative Democrats cheer the death of the left and curry favor with business, the reality of class reasserts itself in American politics.

Gore and the Democrats will be forced to answer the old question: Which side are you on?

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