Politics of class warfare courtesy of Republicans

Tom DeLay warns us that enhanced tax credits for families earning less than $26,000 will pass only over his dead body – or at least not without further tax reductions for the wealthy. Other Republicans argue that only those who already make a lot of money and pay high taxes should receive tax cuts. Credits or rebates for the poor amount to “class warfare.” Yet if anyone is engaged in class warfare, it is the Republicans. Their tax policies simply aggravate the long- standing government favoritism that built many of these fortunes in the first place.

Republicans remind progressives that the United States is a classless society. Citizens vote their dreams rather than their envy or fears. The conservative rejoinder is effective and correct as far as it goes. Democrats should take it seriously. It won’t do merely to suggest that a tax policy favors the rich when most citizens remain convinced they could become rich.

But for poor or working-class Americans to have a chance to achieve even modest material comforts, they must enjoy equality of opportunity. Although Americans do not demand rigid equalization of lifestyles, they do insist on access to the resources needed to get ahead. Economic policy over the last quarter century has indeed been a form of class war, a war that has increasingly deprived many Americans of reasonable chances to succeed.

The distributional impact of government depends not only on taxes but also on the benefits and burdens of government expenditures and regulatory decisions. The output of our government now increasingly benefits established corporate interests. The U.S. economy is crony capitalism run amuck.

Even some Republicans had the decency to express embarrassment about recent Homeland Security legislation that included special limitations of liability for vaccine manufacturers. But this is only the tip of the iceberg. While Congress was enacting tax relief for dividend recipients, the Federal Communications Commission scrapped most rules pertaining to network TV concentration, just as it has already done for radio.

Beyond the impact on diversity, such changes are an enormous economic windfall to corporate giants that have already benefited from government favoritism. The electromagnetic spectrum was itself a gift of a scarce public resource to private interests. That gift was predicated on a requirement that broadcasters serve the public interest, a requirement now waved.

On top of that gift, the federal government granted these established media spectrum space for so-called HDTV, favoritism so outrageous that even then Sen. Robert Dole protested. Since the 1996 radio deregulation, the number of radio owners has decreased by 30 percent and most radio markets have become oligopolies. Media concentration is not only detrimental to new media entrepreneurs but also harms the small businesses that advertise on local radio.

Federal dollars also increasingly flow to those who have. At the same time the administration hopes to tighten requirements for the earned income tax credit, school lunches and federal housing, it expands defense, agriculture, highway and security outlays. Military contractors often enjoy the benefits of cost-plus contracts.

As the administration talks of its plans to create a free market economy in Iraq, it grants no-bid, monopoly contracts to such favored giant as Halliburton. Agricultural subsidies, defended with the rhetoric of the family farm, provide disproportionate benefits to agribusiness. Publicly subsidized medical research is turned over to major pharmaceutical giants, which then use this research en route to patents of new drugs that yield extraordinary profit margins.

Many of today’s corporate tycoons enjoy their position not because of entrepreneurial success but because they benefit from public largess and federally sponsored research. CEO compensation has reached record levels. A Fortune 500 CEO makes on average 600 times as much as the company’s lowest level worker, up from 50 times some twenty years ago. With corporate performance now substantially more sluggish than during the more egalitarian fifties and sixties, it is hard to argue that CEOs’ mega millions represent compensation for excellence.

Despite widespread instances of public, worker and shareholder manipulation, the administration resists changes in accounting rules, pension funds, and worker rights that would better distribute information and opportunities. Even the most recent foray into compassion by conservative Republicans would paradoxically reinforce these trends. An open-ended prescription drug plan tied to membership in private HMOs is a windfall to both industries and is likely over the long haul to vastly increase the costs of government.

Rather than a commitment to equality of opportunity, this administration is inspired by another strand our history, the Puritan notion that those who are wealthy achieved their success through God’s grace. The task of social policy is to ratify their good fortune and their moral worth.

Life, as some conservatives like to argue, is unfair. Talents, luck and personal history all leave irrevocable residues. Yet social policy need not pile on by exacerbating existing disparities.

John Buell is a political economist who lives in Southwest Harbor. Readers wishing to contact him may e-mail messages to jbuell@acadia.net.