Wobbled by Wealth?

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The New York Times

Wobbled by Wealth?

by
Paul Krugman

At just about every stop I've made so far on my book tour, what I've come to think of as The Question comes up. I talk about the origins of the long right-wing dominance of American politics, and the reasons I believe that dominance is coming to an end. Then someone asks, "How can you be optimistic about the prospects for progressive change, when big money has so much influence on politics?"

It's a good question.

The public wants change. "If Americans have ever been angrier with the state of the country," begins a new strategy memo from the polling organization Democracy Corps, "we have not witnessed it."

Nor is the demand for change solely about Iraq: there has been a strong revival of economic populism. Democracy Corps asked those who believe America is on the wrong track to choose phrases that best described their views of what's gone wrong. The most commonly chosen were "Big businesses get whatever they want in Washington" and "Leaders have forgotten the middle class."

So much, by the way, for pundits who claim that Americans don't care about economic inequality.

Longer-term studies of public opinion suggest a substantial leftward shift. James Stimson, a political scientist who uses data from many polls to construct an index of the overall liberalism or conservatism of the electorate, finds that America is now more liberal than it has been since the early 1960s. And the tactics the right has historically used to distract voters from economic issues, above all the exploitation of racial tensions, have been losing their effectiveness.

But the Democracy Corps memo warns that "Democrats have not yet found their voice as agents of change." Indeed. What the memo doesn't say, but is all too obvious, is that one big reason the Democrats are having trouble finding their voice is the influence of big money.

The most conspicuous example of this influence right now is the way Senate Democrats are dithering over whether to close the hedge fund tax loophole - which allows executives at private equity firms and hedge funds to pay a tax rate of only 15 percent on most of their income.

Only a handful of very wealthy people benefit from this loophole, while closing the loophole would yield billions of dollars each year in revenue. Retrieving this revenue is a key ingredient in legislation approved by the House Ways and Means Committee to reform the alternative minimum tax, something that must be done to avoid a de facto tax increase for millions of middle-class Americans.

A handful of superwealthy hedge fund managers versus millions of middle-class Americans - it sounds like a no-brainer.

But as The Financial Times reports, "Key votes have been delayed and time bought after the investment industry hired some of Washington's most prominent lobbyists to influence lawmakers and spread largesse through campaign donations." It goes on to describe how Harry Reid, the Senate majority leader, was "toasted by industry lobbyists" (and serenaded by Barry Manilow) at a money-raising party for his special fund to help Democrats get elected next year.

Is this the shape of things to come? My questioners fear that it is.

Fears of betrayal are often focused on Hillary Clinton. Some people who raise The Question cite an article in The Nation from last summer, which suggested that Hillary Clinton's commitment to change is suspect. "Not only is Hillary more reliant on large donations and corporate money than her Democratic rivals," warned the article, "but advisers in her inner circle are closely affiliated with unionbusters, G.O.P. operatives, conservative media and other Democratic Party antagonists."

O.K., some perspective. I sometimes hear people say that there's no difference between Democrats and Republicans; that's foolish. Look at the fight over children's health insurance, and you can see how different the parties' philosophies and priorities really are. All of the leading Democratic candidates are offering strongly progressive policy proposals; the Republicans are, if anything, running to the right of the Bush administration.

Also, even history's greatest progressives had to make compromises to win their victories. F.D.R.'s New Deal depended on the support of Southern segregationists. Compared with that, Senator Clinton's acceptance of lots of corporate donations doesn't look so bad - though I'd be reassured if she made her views on tax reform clearer, and matched John Edwards's focus on corporate reform.

Still, I am worried.

One of the saddest stories I tell in my book is that of Al Smith, the great reformist governor of New York, who gradually turned into a narrow-minded economic conservative and bitter critic of F.D.R. H. L. Mencken explained it thusly: "His association with the rich has apparently wobbled him and changed him. He has become a golf player."

So, how wobbled are today's Democrats? I guess we'll find out.

Paul Krugman is Professor of Economics at Princeton University and a regular New York Times columnist. His most recent book is The Conscience of a Liberal.

Copyright 2007 The New York Times Company

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