“Where’s the outrage?” the virtuous and moral Bill Bennett famously asked in his 1999 book, The Death of Outrage. Well, outrage is back, but I don’t think it’s what Mr. Bennett had in mind when he documented the moral failures of Bill Clinton. While it is true that the unconscionable bonuses paid to AIG executives are just a “drop in the bucket” compared to the enormity of our current financial crisis, it is a symbol of all that has gone wrong in our politics, our government and business institutions, and our culture. Oliver Stone’s Wall Street should have been a cautionary tale to all of us, but instead it only served to warn the privileged and the corrupt: Gordon Gekko’s only mistake was getting caught by the regulators. The solution? Get rid of the regulators.
This didn’t suddenly happen on January 20th, it didn’t just happen last fall, or even in the last eight years. Over the last thirty years, we have seen the most massive transfer of wealth in this country since the early days of the twentieth century, and one only has to look up “1929” to see how well that worked out for us.
Ironically, it was the assault on all the protections that were put in place as a result of the Great Depression that has gotten us to where we are now. We can accurately point the finger at the Republicans for their slavish devotion to the free market, economic Darwinism, and trickle-down theories, but there was no shortage of Democrats to act as willing accomplices. The Gramm-Leach-Bliley Act of 1999 was signed by Democrat Bill Clinton after having been passed by a veto-proof two-thirds majority in Congress. The repeal of the Glass-Steagall Act of 1933, which had prevented savings and commercial banks from also being investment banks, brokerage houses, and insurance companies, set us on a path that future historians may view as inevitable. The depression-era regulations, designed to prevent exactly what had happened, seem to have worked very well. It was when they were systematically weakened and eliminated that something happened that bares a closer resemblance to the meltdown of the early 30’s than anyone wants to admit. To all you sober-minded economists who appear on the Sunday morning talk shows, I know what you’re thinking but won’t say.
While all this was happening – the transfer of wealth, the reckless destruction of financial protections – there was no outrage. Americans were convinced that government was incompetent, businessmen were the true wise men (and yeah, it was mostly men), and what was good for CEO’s was good for them. One of President Obama’s few gaffes during has campaign was his tactless remark about voters in Pennsylvania being difficult to reach because they are cynical of politicians and “cling to guns and religion.” It was a huge mistake, but I remember thinking, “Poorly stated, but not wrong.” I admit that I fall into that ideological group known as Eastern Liberals. The uproar that followed, however, proved the exact point Obama had been trying to make. His opponent, Hillary Clinton, started wistfully remembering going a-huntin’ as a child with a beloved uncle and got herself seen doing shots in working-class bars. Obama himself tried to get into the act until a set of bowling pins showed him that pandering just isn’t his style.
It’s no surprise that Americans who live in depressed rural areas, or those former industrial states now called the rustbelt are cynical of politicians. For years, politicians have claimed kinship with them and played to their fears and emotions. Their hardships were not caused by incompetent corporate management, or by greedy CEO’s, or by a tax policy that encouraged companies to send jobs overseas, or by the fact that the people who do most of the work in this country don’t have lobbyists funding political campaigns. Instead, their hardships are caused by the anti-gun activists, Cadillac-driving welfare queens, easily available condoms, CEO’s paying too much income tax, Mexicans, and Michael Moore.
During election years, Republicans standing in front of abandoned factories was as ubiquitous as Democrats standing on front of piles of rubble in the South Bronx. And yet, all they’ve ever managed to do was to convince people to vote against their own interests. After generations of misdirection and pandering by politicians as things have gradually gotten worse is it any wonder that they are not trusted? What’s amazing is how long it took for the fraud to be exposed.
It still continues. I’m getting a tax cut. Chances are so are you. So are the vast majority of American families. Most of us don’t even come close to earning $250,000 a year. Yet, the rhetoric that is repeated over and over by ideologues and by mainstream journalists is that Obama is raising taxes. Raising the top marginal tax rate from 35% to 39% to help support a middle-class tax cut only sets the marginal rate back to what it was in 1999, before George W. Bush’s budget breaking tax cuts. And this marginal rate applies to income over $372,000. How many of us does that apply to?
Historically, the marginal tax rates were highest from 1932 through 1980, peaking at 92% in 1952-1953. In an admittedly simplistic analysis, the marginal tax rate was at its highest during the 1950’s and 1960’s when the middle-class expanded and their quality of life improved. Executive compensation during that period remained relatively flat. Even adjusted for inflation, a corporate executive of today wouldn’t get out of bed for what his 50’s or 60’s counterpart earned (and yeah, it’s still mostly men).
I lose no sleep over the fact that someone who earns millions of dollars in compensation is going to pay 4% more, and I find it hard to believe that anyone else besides Joe-The-Make-Believe-Plumber would shed a tear. Joe, however, is an example the way we have been deluding ourselves. If Joe was in that bracket, if Joe was actually earning 10 million dollars a year, like all of us wish we ourselves earned, he certainly would resent paying an extra 4%. I know I would, and I’d be certain to talk about it to my senator over lunch at the Capital Grille. Joe, unfortunately, has as much chance of earning 10 million dollars a year as a real plumber as I have of playing centerfield for the Yankees. Or outselling Stephen King.
But no, it’s all about jobs isn’t it? When the wealthy get their taxes cut, they invest, they create jobs! How has that worked out for us? Based on what we see from the series of financial scandals that have been rocking us since Enron and before, they haven’t really been investing. They have taken the wealth of our nation and, like gambling addict Bill Bennett, they have been on a binge of epic proportions. They literally broke the bank.
Outrage, welcome back. You have been missed.
Disclaimer: I’ve been to the Capital Grille several times (although not with my Senator), and it gets my ringing endorsement. The food and service are exquisite, but all the well-healed old white guys who comprise most of the other clientele, make me feel like someone’s going to grab me by the collar, lift me out of my chair, and say, “Who let you in here, Punk?”
Senator Cardin, you have an open invitation.
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