- For most Americans, the last four years have represented
a low point in our economic history. But for the big-business interests
financing the Bush campaign, these have been high times. In previous eras,
and even under previous Republican administrations, corporate America was
one of a number of players in the public-policy arena. But under the Bush
administration, big business is both the player and the referee, having
finally won its decades-long campaign to eliminate the boundary between
executive suite and public office. No longer does the private-profit motive
compete in the legislative process with public good; profit now owns the
process, and the middle class is left to the vultures.
- We technically have a representative government, but
it is far less like democracy than like WWE wrestling -- entertaining theater
with colorful characters, much fanfare, and a few body slams, but ultimately
a rigged outcome. Industry no longer needs to lobby hard for regulatory
rollbacks, because many of its own lobbyists have been appointed federal
regulators. Congress openly admits that business writes many of the most
important pieces of legislation. The White House slaps an official seal
on memos from corporate executives and labels them "presidential policy
initiatives." The vice president is permitted to own shares of stock
in a company for which he coordinates government contracts. And the Oval
Office is occupied by a man whose major life experience was not public
service but money-losing business deals (that somehow seemed to just make
him richer and richer). In short, the government is now a wholly owned
subsidiary of corporate America.
- This hostile takeover is no accident. After the crushing
defeat of Barry Goldwater in 1964, conservative business interests began
a campaign to intimidate, infiltrate, and ultimately take over Washington.
As David Brock documents in his new book, The Republican Noise Machine,
the chief architects of the right's new strategy laid out an agenda "whereby
conservative business interests would create and underwrite a 'movement'
to front their agenda." And, slowly but surely, the campaign worked.
This Republican Partyñbig-business nexus massaged its propaganda
during the Nixon years, fertilized it under the Reagan administration in
the 1980s, and incubated it into legislative experiments after taking over
Congress in the 1990s. The George W. Bush era is simply the full-grown,
out-of-control, bastard child of this 30-year orgy that's been running
roughshod over the middle class.
- The business takeover of government seems, at first blush,
unremarkable -- like something that has been with us for years and is as
natural to the order of things as the ocean's tides. But it is not natural
at all. It is new, historically speaking, and blatant even by the standards
of recent Republican administrations. To illustrate how far down this road
we've actually gone, just contrast George W. Bush's categorical refusal
to regulate the market with three of his Republican predecessors. Richard
Nixon created the Environmental Protection Agency, the Occupational Safety
and Health Administration, and expanded the Equal Employment Opportunity
Commission -- all agencies chartered to protect average people. Even while
ideologue Ronald Reagan was doing his best to soak the poor, he was forced
to increase at least some corporate taxes in his 1986 tax-reform package.
And according to the conservative Heritage Foundation, George Bush Senior
increased funding for regulatory enforcement by 18 percent.
- This administration, by contrast, resists any government
intervention or deviation from the big-business agenda, no matter how dire
the situation. It is all the culmination of the industry's master plan:
Take over the government and remove it as an obstacle to fleecing the average
American. If any legitimate proposals arise to reregulate the market, they
are bludgeoned with any red herring available: Health reforms are tarred
as "socialized medicine," tax reforms are attacked as "job
killers." While the fat cats make off like bandits, the rest of us
are left, in five crucial areas of economic life, facing the big squeeze.
- THE HEALTH-INSURANCE SQUEEZE
- Last year, Americans spent 14 percent of all their money
-- $1.5 trillion -- on health care (such spending is rising at more than
7 percent a year). And those are the lucky ones: A report by the nonprofit
Families USA found that 82 million Americans went without any health insurance
at some point in the last two years, an increase of 7 million from the
same study a year ago.
- For years, real solutions sat on the table, all of them
requiring government intervention in the health-care market. Progressives
in Congress proposed various single-payer systems, including legislation
to extend Congress's own health-insurance program to the general public.
In California, the state Legislature passed a bill forcing employers to
provide basic coverage to their workers. Others proposed extending the
state-level Children's Health Insurance Program to cover everyone. Presidential
candidate Dick Gephardt suggested a hybrid: using both tax credits and
government spending to bridge the gap. Those proposals have solid public
support. According to an ABC News poll in October 2003, almost two-thirds
of Americans "said they preferred a universal system that would provide
coverage to everyone under a government program" as opposed to the
current private, for-profit system.
- So why has the president avoided addressing health care
in a serious way? Because his health-care-industry donors are winning big
from the existing system. A recent study found HMO profits increased 52
percent last year alone, meaning an extra $2.3 billion was pilfered from
American consumers. These are the same companies that since 2000 gave at
least $13 million to President Bush and key Republicans in Congress, and
who have seven former or current executives in the president's "Pioneer"
club (those who gave him $100,000 or more).
- Those campaign contributions bought policies that either
further pamper health-care executives or actually remove the government
from the market entirely. The White House's major health-care initiative,
for instance, is the "Health Care Savings Accounts." On the surface,
the plan seems as innocuous as one of those HMO magazine ads. It is also
just as misleading. In reality, the accounts are nothing more than tax
incentives for employers and HMOs to terminate their existing coverage,
raise deductibles and premiums, and make more money. As one study notes,
widespread adoption of the plans could more than triple the annual health-insurance
deductibles paid by workers.
- And the White House's Medicare bill was no better. Its
signature feature was a multibillion-dollar subsidy for private health-insurance
companies to compete with the cheaper, government-administered program.
The new law also included a little-noticed provision that allows companies
to continue receiving a special tax break even if they reduce their employees'
existing health-care benefits.
- THE PRESCRIPTION-DRUG SQUEEZE
- Turn on the television for more than five minutes and
you will inevitably see an advertisement for a new drug. The ads portray
happy seniors living life to the fullest, amped up on whatever pill the
company is hawking. But the images are a fallacy: We're not going to look
as good as those TV people when weíre older, and, more importantly,
many of us are not going to be able to afford the pills being peddled.
While drug companies maintain some of the highest profit margins of any
industry in America, drug prices are rising at three times the rate of
inflation, and they continue to skyrocket.
- Drug executives have the nerve to say their rip-offs
must continue in order to fund the research and development of new medicines.
These executives, backed by innocent-sounding, industry-supported think
tanks like the Competitive Enterprise Institute, claim the "free market"
must be left untouched because it has led to groundbreaking new drugs.
What they don't say is that at least a third of all research and development
is funded by the taxpayers. They also forget to mention that the industry
enjoys massive R&D tax breaks that allow it to pay 40 percent less
in taxes than the rest of corporate America. These subsidies have led to
the development of major name-brand drugs like Taxol, AZT, and Tamoxifen.
Our reward for that investment? The highest price in the world for those
same drugs at the pharmacy. As the House Government Reform Committee notes,
consumers in industrialized countries like Canada, Germany, Italy, and
Great Britain all pay at least 30 percent less for brand-name medicines
than consumers in America.
- Serious solutions to the price crisis that cost little
taxpayer money have been around for years. But the drug industry, using
lobbyists now appointed to key positions in the Bush administration, has
convinced Congress and the White House that it will make less money if
any of these solutions is adopted. The claims, of course, are untrue. A
recent Boston University study points out that profits lost to lower prices
would be made up by an influx of new consumers who previously could not
afford to buy medicines.
- Even if profits did slightly decrease, these companies
would be far from Oliver Twist cases. The industry right now makes more
money than it knows what to do with. According to Public Citizen, the drug
industry pocketed $39.5 billion in profits in 2002. That was more than
half of the total profits of the entire Fortune 500 combined. Even if the
pharmaceutical industry saw its 14-percent profit margin cut in half, it
would still be more profitable than the auto, computer, and telecommunications
industries. Its pleas of poverty are as insulting as Bill Gates buying
you lunch at TGI Friday's and then telling you the meal will put him in
- Instead of mandating serious reform in the pharmaceutical
marketplace, the Republicans in Congress have done everything possible
to perpetuate the current system for an industry that has given them more
than $65 million in the last 10 years. In 1996, the new Republican majority
followed the orders of Republican National Committee Chairman and former
pharmaceutical lobbyist Haley Barbour, attaching an $18 billion drug-industry
tax break to a minimum-wage bill -- without demanding lower prices from
the industry in return. In 2000, the GOP leadership gutted House- and Senate-passed
provisions that would have permitted seniors to buy cheaper medicines from
- And this year, President Bush gave the drug companies
their crown jewel: a Medicare bill that includes a drug benefit, yet specifically
prohibits Medicare from negotiating any price discounts. The bill will
give the industry a half-trillion dollars to administer the new program,
yet without any cost controls, even that sum is not enough to provide comprehensive
drug coverage to seniors. In short, the bill created two new entitlements:
a marginal one for Grandma and a vast one for the pharmaceutical industry.
- THE ENERGY SQUEEZE
- With automobiles consuming 40 percent of all the oil
America uses, a big part of the energy solution naturally revolves around
using less oil in automobiles. In the long term, that means serious investment
in alternative energies and mass transit. In the short term, that requires
forcing auto companies to make more fuel-efficient vehicles.
- Those simple solutions have been attacked and distorted
by energy companies, which in the last four years have reaped an additional
$50 billion to $80 billion in new profits from the current situation. Instead
of acknowledging the problem, these companies turn Alice-in-Oil-land fantasy
into free-market ideology. The oil industry's executives claim with a straight
face that the Earth "will never run out of oil" and call for
more tax breaks for oil and gas drilling. That kind of rhetoric is translated
into fodder for conservative, industry-backed think tanks that arm lawmakers
with "facts." For instance, the libertarian CATO Institute, which
receives grants from Chevron, ExxonMobil, and Unocal, issues reports claiming
that "fossil-fuel resources are becoming more abundant, not scarcer."
Similarly, the Chevron-ExxonMobil-Shellñbacked Heritage Foundation
issues talking points actually saying cars "clean our air."
- These claims, of course, are wholly without merit: As
National Geographic this year noted, "Humanity's way of life is on
a collision course with geology [and] the stark fact that the Earth holds
a finite supply of oil." Experts agree that, whether five or 30 years
from now, supply "will ultimately top out, then dwindle." And
there is no legitimate science to prove that burning fossil fuels is good
for air quality or the environment.
- But with the White House headed by two oilmen, industry
nonsense substitutes for public policy. Within months of taking office,
Vice President Dick Cheney convened a secret task force to solicit oil
executives' help in writing federal energy policy. No matter that Cheney
still held stock options and received a salary from the oil behemoth Halliburton,
which stood to profit from the policy decisions. What mattered was paying
back the industry that gave the Bush campaign almost $2 million.
- The resulting legislation was a classic marketplace intervention
by the government on behalf of industry -- this time, to pay wealthy oil
corporations to do what the government could have mandated for free. Billed
as a "comprehensive energy plan," the energy proposal was nothing
more than a series of multibillion-dollar tax breaks for oil and gas companies.
Even though the president's own economic guru admits "the technology
exists for sharply reducing and eventually eliminating the use of oil to
fuel cars," the legislation included no fuel-efficiency standards
at all. Making matters worse, the president proposed budgets that simultaneously
cut funding for alternative fuel and hybrid-engine research while creating
a new, $100,000 tax write-off for people who purchase gas-guzzling Hummers.
- Even the most serious crises brought no action. During
the West Coast energy crisis, when Enron was fleecing at least a billion
dollars from consumers and laughing about it, the White House refused to
support temporary price caps and pressured allies on Capitol Hill -- including
those from the West Coast -- to vote them down.
- THE WAGE SQUEEZE
- As the Economic Policy Institute reports, average Americans'
paychecks are getting smaller. During the "recovery" we hear
so much about, the industries adding jobs pay about 13 percent lower than
industries cutting jobs. In other words, people are being thrown out of
their higher-wage manufacturing and information-sector jobs and shoved
into low-wage restaurant and temp jobs.
- Looking to the November election, the president feels
he must ignore this reality and try to convince us that everything is hunky-dory.
He says "our economy is getting stronger," and the vice president
claims "real incomes and wages are growing." Yes, it is true,
CEO pay is on the rise and corporate profits have risen by 62 percent since
the last recovery. But in that same period, wages for workers have decreased
by 0.6 percent -- the worst record of any "recovery" since World
War II. As The New York Times noted, "The amount of money workers
receive in their paychecks is failing to keep up with inflation."
- The president could have pushed the federal government
to step in and mandate an increase in the minimum wage from its almost
50-year low, in terms of real inflation-adjusted dollars. Such a move would
mean an immediate pay increase for roughly 9.9 million workers. With the
poverty level increasing two years in a row for the first time in nearly
a decade, he could have argued that we at least need a minimum wage that
lifts a family above the federal poverty line. True, no one really expects
a conservative president to push to increase the minimum wage. But this
president did more than merely oppose an increase; he actually sought out
ways to deregulate the labor market and slash pay even further, offering
a series of policies that help his corporate benefactors cut their costs.
First came legislation to eliminate overtime-pay protections for 8 million
workers. Then came efforts to preserve more than a billion in government
handouts to companies that export jobs. Then the president's top economic
adviser trumpeted the outsourcing of U.S. jobs to cheap overseas labor
- Now, the executive agencies are taking over. According
to The Associated Press, the Bush Labor Department began "suggesting
ways employers can avoid paying overtime" to their workers. Similarly,
The New York Times reports that the Bush Commerce Department is participating
in "conferences and workshops that encourage American companies to
put operations and jobs in China." And the Bush Treasury Department
has tried to defy federal-court rulings by attempting to legalize "cash
balance" pension schemes that reduce retirement incomes that companies
promised to their older workers.
- THE TAX SQUEEZE
- Consider some statistics from the president's tax policy:
By 2010 more than half of all the president's income-tax cuts will go to
the richest 1 percent of the population (those making an average salary
of $1 million); by 2006, the average millionaire will receive a tax cut
of $52,000, while the average American worker -- earning less than that
tax cut, or $36,000 a year -- will get less than $600.
- But the story does not stop there. Along with tax cuts
for the rich, Bush's budgets actually raised fees by almost $20 billion,
including increased surcharges for veterans to receive health care. At
the same time, states were forced to raise taxes by $14 billion to deal
with deficits, while experts estimate local property taxes rose an average
of more than 10 percent between 2001 and 2003. And because these levies
are not graduated like the federal income tax, they hit the middle class
- So it is no wonder that at the end of this so-called
tax-cutting era, polls show ordinary Americans saying that they have not
felt any real tax relief. As The Washington Post notes, economists agree
that "Bush's tax policies have shifted more of the tax burden to the
- What makes the situation so tragic is that the White
House had such a historic opportunity to use the tax code to fight for
the middle class, not against it. The recession, along with a massive surplus,
gave the president all the political capital he needed. He could have expanded
the Earned Income Tax Credit, a tax policy widely praised for rewarding
work and helping people move out of poverty. He could have embraced a proposal
to create regular rebate checks for every American, so that General Electric's
Jack Welch received the same tax rebate as his factory workers on the shop
floor. There were even proposals to reform the payroll-tax system, changing
it from one that exempts income over a certain level to one that exempts
income below a certain level.
- But to conservatives, that would have been heresy because
it would mean no tax cuts for the wealthy few who fund their political
campaigns. It means no tax cuts for large chemical and oil companies, like
those enacted when the White House eliminated cleanup taxes on industrial
polluters. It means preserving the estate tax, a levy that falls only on
the wealthiest 2 percent of America, not eliminating it, as President Bush
did. It means admitting a problem exists when the wealth of the top 1 percent
doubles at the same time the wealth of the bottom 40 percent gets cut in
half. It means reversing the practice of giving a $52,000 tax cut to every
millionaire in America while 1.7 million Americans fall below the poverty
- In short, it means having a dialogue about what conservatives
decry as "class warfare" -- issues of rich and poor we all have
to deal with but aren't supposed to talk about because it makes fat cats
- At a high-society dinner during the 2000 campaign, George
W. Bush looked out on the audience and joked, "This is an impressive
crowd. The 'haves' and 'the have-mores.' Some people call you the 'elite.'
I call you my base."
- We should give him credit: It is a rare occasion when
a conservative politician admits who calls the shots, even in jest. Most
of the time, the right wing's real motivations are hidden under the populism
of a cowboy hat, or in the fine print of books about the free market.
- But what is happening in this country is no laughing
matter. Average Americans are being screwed as never before, and our government
is helping those turning the screwdriver. The result is that George W.
Bush has become not just a "war president" on foreign policy
but also on domestic policy. Only here at home, he is waging a war on the
middle class, and the results have been downright devastating.
- - David Sirota is a writer for the American Progress
- Copyright © 2004 by The American Prospect, Inc.