The Dirty Little Secret in McCain’s 'Socialism' Charge
John McCain’s drowning campaign has grasped at the straw of “socialism” to try to smear Barack Obama’s economic proposals. The dirty little secret is that socialism is much more characteristic of McCain’s policies than Obama’s. But it’s socialism for the rich.
It has been an explicit tenet of Republican economic policy since at least Ronald Reagan that the rich need more money and that it is the essential job of government to make sure they get it.
This is what David Stockman, Reagan’s first Budget Director, meant when he let slip that supply side economics was really a “Trojan Horse” intended to pass the nation’s wealth upward. Reagan pursued that goal with evangelical fury.
He enacted a dizzying array of tax and spending policies, all designed to benefit the wealthy. He cut the marginal tax rate for the highest income earners from 75% to 38%. A huge bonanza in its own right, this was only the beginning of the ladling.
Reagan’s massive budget deficits drove up long term interest rates, another boon to the rich. The rich are lenders and lenders prefer higher interest rates. Reagan and his successor, George H. W. Bush, delivered in spades, turning the U.S. treasury into a printing press for the rich. The data speak for themselves.
Jimmy Carter's last deficit was $77 billion. By the end of the Bush I era, deficits had reached $300 billion a year and the national debt had quadrupled, from $1 trillion when Reagan took over, to $4 trillion. Interest payments on that debt had soared from $70 billion a year under Carter to over $300 billion a year.
Virtually all of that went to the plutocratic elite that rents the Republican party as a political front for its predations on the treasury. And since payments on government bonds are tax exempt, it was all tax free.
Clinton reversed Reagan’s tax cuts, at least partially, and began running budget surpluses. As a result, long term interest rates declined 40%, a huge blow to the magical fiscal money machine Republicans had constructed to funnel wealth to themselves. This is the real reason Clinton was so relentlessly, viciously hounded while in office.
George W. Bush reinstated the Reagan supply-side tax cuts, handing, in true socialism-for-the-rich fashion, the better part of $1.6 trillion to the top 1% of income earners. And just as his father and Reagan before him had done, he ran up massive budget deficits, again re-igniting that interest paying money machine that works so effectively, so covertly, to lard the coffers of the very rich.
In fiscal year 2009, just begun, the deficit will exceed $1 trillion. Interest payments on the now $15 trillion national debt will exceed $500 billion a year, virtually all of it going to the very richest, Bush’s “base” as he calls them. In the process, the wealthy have conscripted the working and middle classes to generations of debt peonage to pay for these debts.
But the socialism hardly ends with the deficits. Military spending of almost $1 trillion a year — more than all the rest of the world combined — is another favorite Republican device for transferring wealth upward.
Bush’s unprovoked war in Iraq will cost more than $3 trillion before it is over, according to Nobel-laureate economist Joseph Stiglitz. The bounty to weapons makers and logistics companies, both favored Republican charities, is incalculable.
Ignoring anti-trust laws and in the process enshrining monopolies; refusing to enforce environmental laws so as to convert public natural resources to private gain; hundreds of the largest corporations in the country paying no income taxes; literally outlawing competitive bids for pharmaceutical companies servicing government contracts.
In these and a thousand other ways, Republican economic policy carries out its one enduring, central goal: using government to enrich those who are already the richest, everybody else be damned.
And now, the finishing touch, the financial coup d’ etat of the Wall Street bailout.
Middle class taxpayers are being forced to hand over more than $2 trillion to the very wealthiest people on the planet, not because the taxpayers themselves had failed, not because it’s fair, not because it will do anything to solve the underlying problems with the economy, but because the Republican reign is now visibly at its end, and the gangsters in charge want to carry out one last plunder on the bank. So they have.
The result of decades of such policies is staggering. In 1980, the top 20% of income earners garnered 44% of national income. Today it’s over 51%. The top 1% alone make more than the 40% of the lowest income earners combined.
In wealth terms, the disparity is even more staggering. The top 1% own more than 60% of all assets in the U.S. while the bottom 40% have a combined net worth of zero.
Supreme Court justice Louis Brandeis once commented, “We can have great disparities of wealth or we can have democracy. But we cannot have both.” That’s where we’ve arrived at today.
McCain is right. There is socialism going on in the management of the economy, but not in the way he wants us to believe. It is socialism for the rich. And that’s they way they’ve planned it. It's the shaft for working Americans but for Republicans, it's just another “Mission Accomplished.”