Some believe the
central political issue of our era is the size of the government. They’re
wrong. The central issue is whom the government is for.
Consider the new
spending bill Congress and the President agreed to a few weeks ago.
It’s not
especially large by historic standards. Under the $1.1 trillion measure,
government spending doesn’t rise as a percent of the total economy. In fact, if
the economy grows as expected, government spending will actually shrink over
the next year.
The problem with
the legislation is who gets the goodies and who’s stuck with the tab.
For example, it
repeals part of the Dodd-Frank Act designed to stop Wall Street from using
other peoples’ money to support its gambling addiction, as the Street did
before the near-meltdown of 2008.
But Dodd-Frank
put a crimp on Wall Street’s profits. So the Street’s lobbyists have been
pushing to roll it back.
The new
legislation, incorporating language drafted by lobbyists for Wall Street’s
biggest bank, Citigroup, does just this.
It reopens the
casino. This increases the likelihood you and I and other taxpayers will once
again be left holding the bag.
Wall Street
isn’t the only big winner from the new legislation. Health insurance companies
get to keep their special tax breaks. Tourist destinations like Las Vegas get
their travel promotion subsidies.
In a victory for
food companies, the legislation even makes federally subsidized school lunches
less healthy by allowing companies that provide them to include fewer whole
grains. This boosts their profits because junkier food is less expensive to
make.
Major defense
contractors also win big. They get tens of billions of dollars for the new warplanes,
missiles, and submarines they’ve been lobbying for.
Conservatives
like to portray government as a welfare machine doling out benefits to the
poor, some of whom are too lazy to work.
In reality,
according to the Center for Budget and Policy Priorities, only about 12
percent of federal
spending goes to individuals and families, most of whom are in dire need.
An increasing
portion goes to corporate welfare.
In addition to
the provisions in the recent spending bill that reward Wall Street, health
insurers, the travel industry, food companies, and defense contractors, other
corporate goodies have been long baked into the federal budget.
Big agribusiness
gets price supports. Hedge-fund and private-equity managers get their own
special “carried-interest” tax loophole. The oil and gas industry gets its
special tax subsidies.
Big Pharma gets
a particularly big benefit: a prohibition on government using its vast bargaining
power under Medicare and Medicaid to negotiate low drug prices.
Why are
politicians doing so much for corporate executives and Wall Street insiders?
Follow the money. It’s because they’re flooding Washington with money as never
before, financing an increasing portion of politicians’ campaigns.
The Supreme
Court’s decision this year in McCutcheon
vs. Federal Election Commission, following in the wake of Citizen’s United, already
eliminated the $123,200 cap on the amount an individual could contribute to
federal candidates.
The new spending
legislation, just enacted, makes it easier for wealthy individuals to write big
checks to political parties. Before, individuals could donate up to $32,400 to
the Democratic or Republican National Committees.
Starting in
2015, they can donate ten times as much. In a two-year election cycle, a couple
will be able to give $1,296,000 to
a party’s various accounts.
But the only
couples capable of giving that much are those that include corporate
executives, Wall Street moguls, and other big-moneyed interests.
Which means
Washington will be even more attentive to their needs in the next round of
legislation.
That’s been the
pattern. As wealth continues to concentrate at the top, individuals and
entities with lots of money have greater political power to get favors from
government – like the rollback of the Dodd-Frank law and the accumulation of
additional corporate welfare.
These favors, in turn, further entrench and
expand the wealth at the top.
The size of
government isn’t the problem. That’s a canard used to hide the far larger
problem.
The larger
problem is that much of government is no longer working for the vast majority
it’s intended to serve. It’s working instead for a small minority at the top.
If government
were responding to the public’s interest instead of the moneyed interests, it
would be smaller and more efficient.
But unless or
until we can reverse the vicious cycle of big money getting political favors
that makes big money even bigger, we can’t get the government we want and
deserve.
ROBERT
B. REICH, Chancellor’s Professor of Public Policy at the University of
California at Berkeley and Senior Fellow at the Blum Center for Developing
Economies, was Secretary of Labor in the Clinton administration. Time Magazine
named him one of the ten most effective cabinet secretaries of the twentieth
century. He has written thirteen books, including the best sellers
“Aftershock" and “The Work of Nations." His latest, "Beyond
Outrage," is now out in paperback. He is also a founding editor of the
American Prospect magazine and chairman of Common Cause. His new film,
"Inequality for All," is now available on Netflix, iTunes, DVD, and
On Demand.