Free Market v. Government Intervention

Exclusive: Backed by a powerful right-wing media and aggressive Tea Party activists, Republicans appear unafraid of any political risks from their out-of-hand rejection of President Barack Obama’s jobs bill. The GOP senses its anti-government message remains potent, writes Robert Parry.

By Robert Parry

With Senate Republicans voting en bloc to block President Barack Obama’s jobs bill and with the Republican presidential contenders all vowing to slash government even more it is clear that Election 2012 will turn on whether U.S. voters want to double down on “free-market” economics or decide that government action is crucial to address the nation’s ills.

It also will be a test of whether the Right’s potent propaganda infrastructure can continue to rally millions of Americans, especially working- and middle-class white men, to the notion that their “liberties” depend on crippling the federal government and giving free rein to the corporations and the rich.

For three decades now, the U.S. public has been inundated with the Right’s flood of anti-government messaging persuading a large swath of middle America that “freedom” means making themselves modern-day serfs to a new economic aristocracy operating without rules imposed by government.

This propaganda has obscured for many the devastating consequences of these right-wing economics theories. Not only have the financial rewards flowed overwhelmingly to the top over the past several decades, but average Americans are experiencing sharp declines in their standards of living.

For instance, since the Great Recession officially started in December 2007, median income in the United States has fallen 9.8 percent  and by more than 10 percent since 2000 according to a study by two former Census Bureau officials. Yet, the Republicans are demanding more reliance on the “free market” as the cure-all for what ails America.

Commenting on Tuesday’s night’s Republican presidential debate, the Washington Post’s Ezra Klein noted that the eight participants were united “in their diagnoses of America’s economic woes: It’s the government’s fault.

“If the problem is government, then it stands to reason that the solution is less government. A lot less. And the discussion, at times, took the form of a game of one-upmanship over just how much less government the candidate would promise.”

Rep. Michele Bachmann, R-Minnesota, boasted that she had introduced a bill to repeal the mild Wall Street reforms sponsored by Sen. Chris Dodd and Rep. Barney Frank after the financial crash of 2008. Rep. Ron Paul, R-Texas, upped the ante by calling for an end to the Sarbanes-Oxley reforms, which were enacted after the Internet bubble burst and require honest reports from publicly traded companies.

Former House Speaker Newt Gingrich suggested that those repeal initiatives were too mild and that sterner action was called for. “If you want to put people in jail,” he said, “you ought to start with Barney Frank and Chris Dodd.”

Collectively, the eight candidates’ various economic proposals including eliminating everything from the Federal Reserve and government-backed housing lenders to deductions for mortgage interest and health insurance costs would radically alter the U.S. economy, Klein observed.

“The housing sector, which is already weak, would probably freeze,” he wrote. “The financial markets, which depend heavily on the central bank’s management of the economy, would be in uncharted territory.

“The tax code would be completely different. Businesses would no longer be able to offer health care to their employees without paying taxes on it, which would kick the struts out from under the employer-based health-care market that provides insurance to more than 150 million Americans.”

Government’s Role

This frenzy of government-slashing promises from Republican presidential hopefuls comes even as leaders of industry acknowledge the importance of government investments in research and development.

On CBS’s “60 Minutes” last Sunday, General Electric chief executive Jeffrey Immelt said, “this notion that the government has no role has never been true in the history of the United States. You know, really, all of the commercial aviation industry has grown out of defense spending. All of the health care innovation has grown out of the NIH,” the National Institutes of Health.

Immelt could have added many other examples of government priming the pump for businesses, including key breakthroughs for the computer industry from the space program, the Internet created by Pentagon engineers, and America’s transportation and educational systems  once the envy of the world.

However, since Ronald Reagan’s victory in 1980, the American people have been fed a steady diet of anti-government and anti-tax rhetoric. It was Reagan who famously declared in his first inaugural address that “government is the problem.” In the three decades since, his ideology has been taken to even greater extremes.

Meanwhile, the American Left has offered only a trickle of arguments defending the role of government in making the economy more equitable.

Still, that trickle focusing on the deepening inequities of American society has managed to grow into a stream of resistance that is now running through the Occupy Wall Street protests and their attacks on the concentration of wealth and power with the top 1 percent and the worsening depredations on most everyone else.

However, some of those “occupy” dissidents also reject a significant role for government and have vocally abandoned the electoral process. Some say the only hope rests in civil disobedience, while others dream about a third party or even a revolution.

But Americans generally shy away from radical alternatives that would create even short-term suffering, especially when the hoped-for long-term benefits are vague and unarticulated.

It may well be true that today’s rapacious capitalism is unsustainable at least without devastation to the livability of the planet and to the living standards of the vast majority of its inhabitants. But most people will opt to cling to the little comfort and security they have rather than throw it away for some ill-defined, post-modern future that is more frightening than it is promising.

So, the question now confronting the Left is whether it can channel the new momentum from the Wall Street protests into a practical movement for solutions (and convincingly explain those ideas to the broad American public) or whether the Left will fall into familiar patterns of sectarianism, magical thinking and irrelevance.

Daunting Challenge

Despite the fact that the “99 Percent” movement has clearly touched a nerve among Americans who see nearly all the benefits of today’s economy going to a tiny elite at the top, the challenge to translate those sentiments into an effective national movement for change remains daunting.

Just as it may not be enough to rely on street protests and “occupations,” it surely is not enough to rely solely on electoral politics as was shown in the failure of Barack Obama’s campaign to achieve “change we can believe in.” But it is a mistaken analysis to put all the blame on Obama.

True, Obama can be faulted for not thinking bigger about how to change the system and for surrounding himself with leftovers from previous administrations, officials who were more part of the problem than part of the solution.

Obama staffed the government mostly with a collection of Establishment favorites who saw their role as patching up failed projects, both foreign and domestic, from Wall Street to Afghanistan. These were people like Timothy Geithner at Treasury, Robert Gates at Defense, Gen. David Petraeus at Centcom, Larry Summers and Rahm Emanuel at the White House, and Hillary Clinton at State.

Obama also confronted a national news media dominated by pundits and executives who had cheered on the disastrous “group think” of the previous three decades, from a faith in “free trade” and the “new economy” to the hubris about U.S. military might making America the world’s “indispensable nation” unbound by international law.

This “group think” came from both the well-financed propaganda centers on the Right and from influential mainstream outlets like the Washington Post and the New York Times. Despite all the sound and fury about smallish details, there was a broad consensus in the Establishment, a deep faith in the “magic of the markets” and a lock-step unity on the nation’s imperial ambitions.

Another factor has been that since the 1970s, the American Left largely abandoned the battlefield of the “information war.” Some on the Left bought into the notion that “local organizing” would substitute for communicating with the public through a strong national media.

One consequence of these disparate choices the Right investing heavily in media and the Left often shutting down or selling off its media was that the Right could dictate the national debate while careerists in the mainstream media tilted in that direction to avoid right-wing attacks.

Obama’s Arrival

So, when Obama took office in 2009 in the wake of the financial crisis of 2008 he confronted a shaken Establishment but one that demanded comforting, not challenge. He also faced an unrelenting hostility from the Right and from the Republican Party, which was determined to strangle Obama’s presidency in the cradle.

On the other side, the Democratic Party had been battered and bloodied by the Right’s effective propaganda for three decades. A number of key senators and congressmen had made their peace by joining with the GOP on tough votes. Many others were bought off by special interests.

Scanning this uneven political battlefield, the inexperienced Obama picked mostly familiar, safe names for key jobs and embraced a series of half-measures designed to calm the “markets,” win some bipartisanship in Congress, and avoid offending the pundits who didn’t want to admit they had been wrong on everything from “free trade” to the wars in Iraq and Afghanistan.

In retrospect, Obama’s moderation may have been his political undoing. His stimulus plan was only large enough to get denounced by the Republicans as a “failure.” His health-care plan was seen by the Left as a giveaway to the insurance industry and by the Right as socialism.

His “surge” in Afghanistan while widely praised by Washington pundits infuriated his anti-war base. His failure to hold the Bush administration accountable for torture and other crimes won him no bipartisan reciprocity from Republicans while earning him the disdain of civil libertarians and people who believed in international law.

Perhaps Obama’s biggest single mistake was letting Sen. Max Baucus, Senate Finance Committee chairman, engage in dilatory negotiations on health-care reform with supposedly “moderate” Republicans like Sen. Olympia Snowe of Maine. In the end, Baucus simply wasted crucial time and dissipated Obama’s political momentum.

But part of Obama’s bind was that CNN and other mainstream news outlets consistently blamed him for any “failure” to achieve a new bipartisan tone in Washington. The news media’s careerists knew it was safer to frame stories in ways preferred by the Right, even though it was the Republicans who gleefully destroyed any hopes for collaboration.

In other words, even with solid Democratic majorities in the House and Senate, the political cards in Washington were stacked against the new president. And Obama wasn’t savvy or bold enough to overcome the daunting odds.

The frequent complaint from the Left that Obama squandered the Democrats’ 60-vote Senate majority ignores how brief that period was, with Republicans blocking Sen. Al Franken’s swearing-in until July 7, 2009, and Sen. Ted Kennedy’s death on Aug. 25, 2009, with his seat going to Republican Scott Brown in January 2010.

Then, as many disgruntled progressives sat out Election 2010, the Republicans rolled to a landslide victory, gaining control of the House and narrowing their deficit in the Senate.

Only belatedly after the Republicans further damaged the economy this summer with their brinksmanship over the debt ceiling has Obama acknowledged the mirage of bipartisanship and the need to take the fight to the Republicans.

Yet, despite pitching his $447 billion jobs plan directly to the public with a clear message of “pass this bill” Republican senators apparently saw no political risk in blocking it with a filibuster. House Republican leaders simply have refused to bring the bill to a vote.

The Republicans and the Right apparently believe that their imposing media infrastructure from print to radio to TV to the Internet can overwhelm any progressive message coming from the “Occupy Wall Street” protests and the Left’s woefully underfunded media outlets.

As the Republican presidential debates are making clear, the only dispute on the Right is how severely to slash government and how thoroughly Wall Street, the big corporations and the rich should be freed from any restrictions on their activities.

The fate of the nation and the world may rest on how this imbalanced debate plays out.

[For more on related topics, see Consortiumnews.com’s “How Greed Destroys America” or Robert Parry’s Lost History, Secrecy & Privilege and Neck Deep, now available in a three-book set for the discount price of only $29. For details, click here.]

Robert Parry broke many of the Iran-Contra stories in the 1980s for the Associated Press and Newsweek. His latest book, Neck Deep: The Disastrous Presidency of George W. Bush, was written with two of his sons, Sam and Nat, and can be ordered at neckdeepbook.com. His two previous books, Secrecy & Privilege: The Rise of the Bush Dynasty from Watergate to Iraq and Lost History: Contras, Cocaine, the Press & ‘Project Truth’ are also available there.