Super PACs Keep Zombie Candidates Alive

Jan 11, 2012Mark Schmitt

Candidates used to worry that their funding wouldn't match their support. Now money keeps them shambling forward long after the voters have fled.

Candidates used to worry that their funding wouldn't match their support. Now money keeps them shambling forward long after the voters have fled.

Robert Farmer, a legendary Democratic fundraiser of the 1980s and 1990s, once described how presidential campaigns ended: "People don't lose campaigns. They run out of money and can't get their planes in the air. That's the reality." Most candidates would run out of money long before they ran out of potential votes or plausible paths to victory. The winner of the nomination would often be the candidate with enough financial reserves to keep going when the others couldn't afford jet fuel, and Farmer's skill was in making sure that his candidates -- Michael Dukakis in 1988 and Bill Clinton in 1992 -- had that advantage.

That was the reality in 1992, but it's not the reality today, especially on the Republican side. On the day after the New Hampshire primary, we now have a phenomenon in which a number of candidates who really have no possibility of winning their party's nomination will keep going only because they can -- because the money is there, either in their own campaign accounts or in a Super PAC committed to supporting the campaign, such as the pro-Newt Gingrich group into which casino billionaire Sheldon Adelson recently dumped $5 million.

So whereas in the 1990s we had candidates who died prematurely -- they ran out of money while they still had a chance -- we now have, in effect, zombie candidates. They're alive and can spend money and attack Mitt Romney even though their actual political lives are over. Rick Perry is not going to be the Republican nominee for president. (He joins a short list of well-financed Texans, including John Connally in 1980 and Phil Gramm in 2000, who spent many millions of dollars to win one or fewer delegates to the Republican convention.) Newt Gingrich is not going to be the Republican nominee. Jon Huntsman, Ron Paul, Buddy Roemer, Rick Santorum -- same deal. But they've got money and nothing to lose, and it seems they've all developed a personal distaste for Romney, so they will throw everything they've got at the nominee -- including attacks on his "vulture capitalism" at Bain Capital -- without regard to the consequences.

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In the old system, money really mattered. It made or broke campaigns. Mostly it broke them. But it was the lack of money that really shaped the system. It was an invisible primary in which many candidates were excluded either before it started or soon into it. In the mid-1990s, Gingrich declared in a congressional hearing, "There's not enough money in politics," comparing political spending to the much larger marketing budgets for cereal and toilet paper. It was a declaration as shocking to the right-thinking reformers as the Sex Pistols' version of "God Save the Queen," but Gingrich was right at the time. The perennial gripe about "too much money in politics," or its promise to "get money out of politics," didn't reflect reality -- lack of money shaped politics as much as money itself. This was an era when losing presidential campaigns ran out of juice on $10 million or so, and candidates failed to mount a competitive race for Congress because they couldn't raise $1 million.

But now the cliché of the past -- that there's too much money in politics -- has become a reality. That's probably going to be true on the Democratic side as well, definitely in the presidential race but probably also in many congressional contests. In a way, money matters less -- more candidates will meet the threshold to be competitive. But it's also moved to a scale where everything changes. Money becomes an end in itself. It shapes the behavior of campaign consultants, who can now become very, very rich. It's increasingly disconnected from candidates themselves or the incentives that might make sense for them. And it reaches beyond the campaign itself -- Gingrich is just one example of a candidate who is essentially in the race for money. His renewed prominence will generate speakers' fees, and book and video sales, that will continue to fuel his lifestyle. Politics no longer comes at a cost; it's a fundraising opportunity.

The post-Citizens United world of campaign finance obviously calls for some rethinking of solutions. My own reform preferences, which center on public financing, are best suited for a world in which lack of money matters as much as overwhelming money. And that's still important. But we also need to confront the challenges of a world in which "too much money in politics" is not just a stale cliché, but the reality. A bunch of zombie candidates attacking Mitt Romney with money to burn might be welcome for Democrats, who can use their research and language in the fall, but it's no more the ideal democratic process than was the old one, when candidates had to quit because they ran out of money, not votes. We need a campaign finance system that both limits the excesses and gives real candidates a means to be heard.

Mark Schmitt is a Senior Fellow and Director of the Fellows Program at the Roosevelt Institute.

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One Week in Money in Politics: Two New Solutions, One Big Problem

Jan 6, 2012Mark Schmitt

Iowa put the full power of SuperPACs on display. So now the question remains: what meaningful reforms should we fight for to stem the tide of unaccountable money?

What a week it's been for campaign finance wonks:

Iowa put the full power of SuperPACs on display. So now the question remains: what meaningful reforms should we fight for to stem the tide of unaccountable money?

What a week it's been for campaign finance wonks:

  • On Monday, the Montana Supreme Court went toe-to-toe with their counterparts in Washington, D.C., upholding the state's longstanding ban on corporate expenditures in ballot initiatives.
  • On Tuesday, the Iowa Republican caucus became the "first SuperPAC election," won not so much by Mitt Romney as by an independent committee that filled the airwaves with $4 million in ads demolishing Romney's strongest rival, knocking Newt Gingrich from a solid lead to fourth place in less than a month. For a few days before his aides set up a SuperPAC of their own, Gingrich, the only Speaker of the House to be fined for ethics violations related to campaign finance, sounded like a convert to reform, claiming that he'd been a victim of "Romney-boating," echoing the "Swift Boat" attacks by an independent committee on 2004 Democratic nominee John Kerry.
  • On Wednesday, New York Governor Andrew Cuomo endorsed a public-financing system for New York state elections, modeled on New York City's matching system, exactly the reform I've been pushing for six years. New York City's admirable system stands in stark contrast to the state's. A the state level candidates get a lower percentage of their contributions from small donors than in any other and the corruption of Albany has been taken for granted for so long that few imagined we'd see the day when a sitting governor, at the peak of his power, would take up the cause of reform.

So where do things stand at the end of this week? Let's start with the SuperPAC problem. What did we learn? Not that SuperPACs -- independent organizations formed to support a candidate, which can take unlimited and corporate contributions -- are a big deal and can spend a lot of money. We knew that. The big news was that "independence" is meaningless, even when SuperPACs obey the letter of the law prohibiting "coordination" with candidates.

Gingrich accused Romney in effect of lying about coordinating with the committee that supported him. As the election law professor and blogger Rick Hasen argued, Gingrich is accusing Romney of doing something that would get him in "very serious legal trouble," and that Romney probably didn't do. But that's the point -- there really was no need for coordination. Romney's allies knew what needed to be done, as did the people in charge of Rick Perry's SuperPAC, Rick Santorum's, Jon Huntsman's, and the several that have been formed to support Barack Obama, Senate and House Democrats, and other Republicans.

Once, long ago, there was some hope that the requirement that such committees remain independent of the candidates they supported would provide a small protection from the worst imaginable results post-Citizens United. Candidates, it was assumed, would rather control their own campaigns, would rather speak for themselves than let someone else do it. But perhaps as a result of an arms race -- everyone needs a SuperPAC because everyone else has one -- candidates have happily shifted a large portion of their communication with voters over to independent groups that they can't control. As long as those groups have no interest other than the candidate (unlike, say, an environmental group that might support a candidate but also want to get its own issues on the agenda), the candidates have nothing to fear from independence. Regulations on coordination, then, are irrelevant.

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Once this truth is out there's not much to stop it, and money in politics is going to look very different in 2012 than it did even a few years ago. Not all of this is a result of the letter of the Citizens United decision. Some of it is just the general tone that the Supreme Court set, some of it is a failure of enforcement by the Federal Elections Commission, and some is the abandonment of any enforcement by the Internal Revenue Service of the political use of 501(c)4 non-profits, which cannot have elections as their "primary purpose." As a result, we have a perfect storm of everything you don't want in money in politics: No limits. No limits on sources of money, including corporations. No disclosure. And no accountability -- candidates aren't responsible for negative ads run on their behalf. (The "I stand behind this message" disclaimer that we've all gotten used to, and that was a throwaway provision in the 2002 McCain-Feingold campaign reform law, has demonstrably toned down negative ads.)

So how do this week's solutions stand up to that perfect storm? Montana's court at least reopens the issue of corporate contributions and tells a clear story about the role of corporate money in a state in which a few corporate interests, such as the "Copper Kings" of the early 20th century, have been battling the public interest for decades. Perhaps the decision will embolden other states or force the Supreme Court to reconsider its decision with a set of facts that reflect real corporate power, not the abstract problem it faced when the corporation in question was just a weasely little nonprofit known as Citizens United. It will surely inspire those who advocate an amendment to the U.S. Constitution to either ban corporate contributions overall, redefine the corporation, or do some other, not quite defined, thing to reverse Citizens United.

But the constitutional amendment is really a distraction. It will take years, decades -- actually, to be realistic, forever -- and in the meantime, money will flow. Reformers' energies will be dissipated, and lots of liberals will be hesitant, with good reason, to amend the First Amendment.

The better solution stems from Cuomo's initiative. We have to change the incentives for candidates to look to small contributors. New York City's system provides a 6:1 match on contributions under $175 and encourages politicians to control their own campaigns, rather than let independent fundraisers call the shots. Cuomo's approach is fully constitutional, even under Citizens United principles. Where such matching systems and similar full public financing systems have been tried (Minnesota, Connecticut, Arizona), they work, and outside money or fake-independent sources have had minimal effect.

Is Cuomo's solution sufficient to take on the magnitude of the "SuperPAC election" as we saw it in Iowa? That's the big question. Once we've swung this far to the control of elections by quasi-independent big-money groups, can a few big changes in the incentives swing it back? It's not clear. But we have to get started. Hopefully in a second term President Obama will join Cuomo and once again be a forceful advocate for public financing, and the FEC and IRS will do their part to enforce the law. It will take a lot of work to unravel the mess that we've just created -- and in the meantime, a lot of people will get elected thanks to SuperPACs who won't want to unravel it. But if we are to have any hope of fixing the economy, enacting reasonable banking regulations, or reversing climate change, this is essential.

Mark Schmitt is a Senior Fellow and Director of the Fellows Program at the Roosevelt Institute.

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The Last Thing Medicare Needs is More Privatization

Dec 20, 2011Richard Kirsch

By enlarging the role of private insurers, the Ryan-Wyden Medicare plan would drive up costs and undermine effective reforms.

By enlarging the role of private insurers, the Ryan-Wyden Medicare plan would drive up costs and undermine effective reforms.

Americans United for Change said it best in a recent e-mail: "You can't put lipstick on a pig," even if a Republican and Democrat are applying the red gloss together. The big hype in federal health care politics last week was the announcement of a joint proposal to mostly-privatize Medicare from Republican House Budget Committee Chair Paul Ryan and Democratic Senator Ron Wyden. But all the hubbub about bipartisanship won't mask the truth: the plan takes Medicare in the wrong direction, building on the program's failures and undercutting its most promising reforms.

The Ryan-Wyden plan is the latest variation on plans, known as "premium support," that dramatically increase the role private insurers play in providing Medicare coverage. The ostensible motivation for the premium support proposals is to control Medicare costs, but all the evidence is that Medicare delivered by private insurance is more costly than traditional Medicare delivered by the government. The real motivation is to control the government's costs, as opposed to health care costs, and to reduce the role of government in the health care system.

The Ryan-Wyden plan would give Medicare enrollees a fixed amount of money to buy an insurance policy from private insurance plans or the traditional Medicare program. It would limit the growth of the premiums to the grown rate of GDP plus 1 percent, less than the traditional growth rate of Medicare and much less than the growth of overall medical costs. Yes, that's right: Medicare does a better job of controlling health care costs than private insurance.

Health care costs have increased at a significantly lower rate under Medicare than in private insurance plans, chiefly because Medicare is much better able to limit how much it pays to doctors and hospitals. The private insurance plans that now cover about one out of five Medicare patients do so at a cost that is 13 percent greater than Medicare pays for the same benefits (cost overruns that are being significantly reduced by the Affordable Care Act). Insurers reap substantial profits from these private Medicare plans, profits that would soar if most of the Medicare population were handed over to the health insurance industry. And because private insurance has failed to rein in doctor and hospital costs as effectively as Medicare, health care providers would be enriched too.

Capping the premiums would not result in lower health care costs, but in shifting costs to people on Medicare, which would result in seniors forgoing the care they need, ending up in the hospital with more serious illnesses, and dying sooner.

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The lipstick on the Ryan-Wyden plan is giving people the option of keeping traditional Medicare. But what we've learned after two decades of private insurance being offered in Medicare is that the insurance companies are very clever at cherry-picking healthier seniors. And the "risk-adjustment" provisions aimed at correcting for this -- paying lower premiums to plans with healthier patients -- have not worked to compensate for insurance company gaming. Under the Ryan-Wyden plan, traditional Medicare, which offers access to hospitals and doctors without the closed panels, pre-approval process, and other obstacles consumers must jump in private insurance, would attract those seniors who are sicker and more expensive. Over time, the burden of serving the seniors who need the most health care would threaten to undermine the public Medicare program.

Controlling health care costs in Medicare -- and in society more broadly -- requires three major strategies. One is not overpaying health care providers, which we continue to do in this country. As Uwe Reinhardt and three other health economists put it succinctly, after comparing the prices we pay and the amount of health care we use in the United States with other developed countries, "It's the prices, stupid."

The reason that Medicare costs less than private insurance is that it already does a better job of limiting what it pays to providers. It would gain new powers to do that under the Affordable Care Act (ACA). The ACA established a new body called the Independent Payment Advisory Board (IPAB), which will function as a kind of military base closing commission for Medicare. If the growth in Medicare costs exceeds the same target amount as in the Ryan-Wyden plan, then it would institute cost control measures that would go into effect unless Congress intervened. Since cutting eligibility and benefits are not part of the IPAB mandate, cost savings would have to come from the actual drivers of cost: the prices paid for services and the way health care services are delivered.

Which brings us to the second major strategy is reorganizing health care delivery: focus on quality, not quantity. In addition to increasing the authority of the IPAB, the ACA invests in new health care delivery systems, called Accountable Care Organizations, which are modeled after the health care systems in the United States that do the best job of providing quality care at a lower cost.

The third major strategy to control overall health care costs inside the health care system is to provide health care to all, including access to affordable prevention and primary care. That, of course, is the thrust of the major provisions of the ACA, which when implemented in 2014 will provide access to basic health coverage, including free prevention, at a price that is affordable to almost all Americans. This year, under the ACA, Medicare started providing free preventive care; millions of beneficiaries have already taken advantage of it.

If there is any place where the idea that free markets are always the most efficient runs into a insurmountable wall of facts it is health care. The overwhelming evidence both within the United States and around the world is that free market health care costs more and reduces access to care. That may not stop anti-government ideologues in the United States, backed by the medical insurance industry, from pushing for privatization of Medicare. But finding a Democrat willing to go along doesn't make that pig any prettier.

Richard Kirsch is a Senior Fellow at the Roosevelt Institute and a Senior Adviser to USAction, whose book on the campaign to win reform will be published in 2012. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

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How the GOP Became America's Socialist Party

Dec 6, 2011John Stoehr

karl-marxModern Republicans are all for the redistribution of wealth -- but only when it's going from the bottom to the top.

karl-marxModern Republicans are all for the redistribution of wealth -- but only when it's going from the bottom to the top.

Senate Republicans defeated two measures last Thursday that would have extended cuts to the payroll tax. One was a Democratic proposal; the other was a GOP countermeasure. The first aimed to cut taxes for employers and employees and paid for it with a surtax on millionaires. The second cut taxes but balanced it by laying off federal workers.

I think this is what it means to be through the looking glass. It's one thing for Republicans to oppose a Democratic bill. That's to be expected, even if it means they are now on record as voting to raise taxes on 160 million middle class Americans who are the engine of a sputtering economy. But to kill your own bill, one that cuts taxes and reduces the size of government -- well, that's more than just loopy. It's an identity crisis.

Simply put: These conservatives aren't conservative. The Republicans Party has gone so far to the right that it has arrived on the other side of the political spectrum.

Conservatism, as a worldview, has privileged stability and community. It upholds the rule of law, religious values, and respect for tradition. I'm not talking about the Tea Party's or Karl Rove's kind of conservatism. I'm talking about the old-fashioned Edmund Burke kind that holds that social change must be gradual and deliberate, approached cautiously if not opposed outright. When it comes to the economy, conservatism has been historically skeptical. Capital tends to consolidate. Civic institutions keep that tendency, and its power, in check.

Adam Smith, the father of laissez-faire capitalism, wrote in The Wealth of Nations that markets can destabilize and even destroy communities. Government's task, therefore, is "erecting and maintaining certain public works and certain public institutions, which can never be for the interest of any individual, or small number of individuals, to erect and maintain."

Ironically, Karl Marx agreed. In fact, one can argue that Marx is more conservative than today's American conservatives. In The Communist Manifesto, Marx wrote that capitalism's cycles of boom and bust are a "disturbance" to "social conditions" that lead to "everlasting uncertainty and agitation." Human relations, with their "ancient and venerable prejudices and opinions" are "swept away," he said.

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One thing we can all agree on is that we are experiencing historic levels of "uncertainty and agitation" and that it stems from an economy gone off the rails.

Republicans spend a lot of time establishing their conservative bona fides by emphasizing the need for budget cuts and hard choices. But if they were conservative in the true meaning of the word, they would aim first at establishing stability in communities in upheaval. Cutting payroll taxes, extending unemployment insurance, and reforming a health care system badly in need of repair since the Clinton era are means of doing just that.

But Republicans say no -- except to the 1 percent.

Occupy Wall Street has raised awareness of the enormous gaps in income that have emerged in the past 30 years. The compliment to income inequality is wealth redistribution: Over the years, a series of public policy choices as well as banking and tax legislation has redistributed wealth upwards. The repeal of Glass-Steagall, preferred trade status with with China, the Bush tax cuts, Medicate Part D, and the $7.7 trillion that the Federal Reserve loaned to big banks since 2008 -- all of these have sucked wealth from the bottom for the benefit of the rich.

Up or down, it's all the same when government is responsible for moving wealth around. John McCain called it by name in the 2008 presidential race -- for the wrong reasons. It's socialism. Of course, not all socialisms are the same. Marx wanted the equal distribution of wealth and collective control of the means of production. Obama has merely expressed the need for greater economic fairness. But for today's Republican Party, there's only one direction: up.

Last week, they killed a payroll tax cut bill (Obama's) to protect millionaires from paying more taxes. They killed another (their own) to protect millionaires from losing Medicare coverage. If this effort to maintain the upward redistribution of wealth isn't a kind of socialism, nothing is.

Obama was vulnerable to the socialist charge even before he became president. It would be refreshing to see that charge leveled in the other direction for a change. The difference, in light of current Republican behavior, is that it would be true.

John Stoehr is the editor of the New Haven Advocate and a lecturer at Yale University.

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The Super Committee Post-Mortem: Get Ready for More Gridlock

Nov 30, 2011Bo Cutter

Both parties continue to trip over the low bar Americans have set for them, and we can look forward to more of the same for the next four years.

Both parties continue to trip over the low bar Americans have set for them, and we can look forward to more of the same for the next four years.

The super committee fell below even my own low expectations. I knew they would not come up with anything resembling an actual deal, but I thought they would at least agree on something, even if that something combined a minimum of anything real and the maximum of fakery. But no, they failed to agree on anything. However, the capacity of this sorry Congress to never fail to miss a chance to miss a chance should not be a surprise. So what are the consequences?

The consequences of sequestration itself -- the automatic cuts that were supposed to be the doomsday scenario forcing some deal -- will be mostly zilch. The actual cuts do not go into effect until 2013. The domestic cuts will make government a little bit worse, but not a lot, and the defense cuts will all be reversed. President Obama has said he will veto any effort to reverse the defense cuts, but they won't come to him as a single, separate package and that's an empty threat anyway. The defense sequestrations will be bundled in the defense appropriation for next year, and I'm willing to accept bets that the president will not veto a defense appropriations bill in the midst of a reelection campaign. In any case, Secretary of Defense Leon Panetta is on record opposing these cuts, and Leon is not someone with whom the White House wants to have a public debate.

The consequences of the inevitable blame game now going on will be a lower level of trust and confidence for everyone involved -- Democrats and Republicans, the Congress and the president. No one comes out a winner here, although my guess is that on the margin President Obama is hurt the worst. Why? People know who he is and they know this thing failed. People have no idea who the congressional members of the super committee were. The entire leadership of Congress stayed as far away from this as possible, and if you believe that was an accident then you were probably also visited by the tooth fairy last night.

There are record levels of political dark arts currently being performed as the Republicans try to blame President Obama for this failure. They argue that he should have intervened to save the super committee process, but both sides set it up to fail. Its only purpose was to rescue them all from the debt limit debacle, not to accomplish anything. I've been clear that I think President Obama missed an enormous strategic opportunity by not endorsing Simpson-Bowles and Domenici-Rivlin a year ago, but as far as I can tell, the congressional leadership on both sides like where they are and have zero interest in doing anything.

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The consequences for the presidential campaign we are about to have inflicted upon us are both straightforward and bleak. This campaign, which will take up the next full year, has nowhere to go but negative. No ideas will be debated and no one will try to establish a mandate. Both sides are locked into positions that have become caricatures of real issues.

President Obama should be worried about this. My own current guess is that he will win reelection -- Americans may have declining confidence in him, but the Republican clown-a-week show is terrifying them. But other than a resume enhancer, what will reelection be for? What will he do with it? The Republicans will probably retain the House and win the Senate, and the presidential campaign will not establish any direction or mandate. The next four years could get ugly.

But sequestrations, blame games, and political campaigns are all ephemeral Washington stuff. The real principal consequence of the failure of the super committee is its opportunity cost. Absent another economic crisis, we will now wait at least a year before we even begin to grapple with the several genuine economic problems our nation faces. We will have no debt reduction, no tax reform, no infrastructure initiative, no serious effort to reduce unemployment either in the short or long run, no economic stimulus, no entitlement reform, no energy policy, and no climate policy. Instead, we're going to have a campaign about socialism versus selfish billionaires.

When I'm feeling apocalyptic, I think of historian Niall Ferguson's question: "What if collapse does not arrive over a number of centuries

but comes suddenly, like a thief in the night?" But that's not really where we are. We can wait a year; things will just continue on their current mediocre deadlocked course. Trust in government will continue to decline along with the capacity of government to do anything, and trust in the current political parties will decline further and faster. The opening for the radical center is getting bigger and bigger.

Roosevelt Institute Senior Fellow Bo Cutter is formerly a managing partner of Warburg Pincus, a major global private equity firm. Recently, he served as the leader of President Obama’s Office of Management and Budget (OMB) transition team. He has also served in senior roles in the White Houses of two Democratic presidents.

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The Enshrined Entitlements of America's Wealthy

Nov 29, 2011Suzanne Mettler

tax-chalkboard-150Thirty years ago, Republicans criticized tax expenditures for distorting the market. Now both parties view them as sacrosanct.

tax-chalkboard-150Thirty years ago, Republicans criticized tax expenditures for distorting the market. Now both parties view them as sacrosanct.

The super committee on deficit reduction has now disbanded without even having managed to agree on scaling back tax expenditures. These social welfare policies that are hidden in the tax code bestow their greatest benefits on high-income taxpayers, as I have shown elsewhere. They amount to over 7 percent of GDP, more than what we spend on either defense, Social Security, or Medicare and Medicaid combined, not to mention domestic discretionary programs, which cost far less than any of these.

Its inaction means that regular spending priorities -- with the exception of those that policymakers explicitly agreed in advance to shelter -- will now be made subject to automatic, draconian cuts. But tax expenditures, which no one has even mentioned, will remain completely immune to such reductions. This is because these policies enjoy a protected status granted to no other entitlement programs. Unlike other forms of direct spending, they are not subject to the annual budget process; they grow undeterred and lawmakers do not take account of their costs.

While in recent weeks lawmakers did at least advance (unsuccessfully) some proposals to reduce tax expenditures, what remains remarkable is that the privileged status of these policies has not provoked greater scrutiny. Certainly this owes in part to the continuing efforts of vested interest groups to build bipartisan support for their pet tax breaks. Their generous campaign contributions, showered on members across the political spectrum, combined with their intensive lobbying, help to explain why even in today's fiercely divided partisan climate, neither Democrats nor Republicans have expressed much willingness to challenge tax expenditures. Making matters worse, Grover Norquist and other conservatives have promoted the idea that any reduction in such policies amounts to a tax increase rather than a spending decrease.

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When viewed with even a small dose of historical perspective, the unquestioned immunity of tax expenditures to reductions is incredible given what's at stake. Moreover, it demonstrates how dramatically our politics have changed in a space of less than two decades. From the Reagan era through Bowles-Simpson, bipartisan commissions charged with finding means of reducing spending have agreed that such policies should be scaled back as a means to increase federal revenues. Fiscal conservatives of yesteryear criticized tax expenditures for interfering with market forces. Far from epitomizing laissez faire economics, such policies actively involve government in altering market forces, subsidizing some industries to the exclusion of others. As a result, they promote the consumption of goods and services in some areas, such as health care and housing, generating artificial increases in prices.

Consider that the most recent political leader to sign into law large reductions in tax expenditures was Republican President George H.W. Bush. The 1991 deficit reduction package contained an amendment to limit the value of itemized deductions for wealthy households to the middle income rate of 28 percent, rather than 35 percent or higher. Such curbs remained in place throughout the 1990s but were terminated in 2001, when the second President Bush signed his first tax cuts into law. When President Obama proposed essentially reinstating such reductions, his proposal was portrayed by Republicans as if it were a tax increase on ordinary Americans and by some Democratic leaders as a threat to charitable giving (because it would limit the tax break that the most affluent would attain when they contribute to philanthropies and foundations).

Today's conservative defense of tax expenditures illuminates the transformation in their approach to governance over the past 30 years. Whatever they say, in practice they are no longer protectors of limited government power and spending. Rather, they are advocates of particular uses of government power and largesse -- specifically of measures that channel benefits to their wealthy supporters and favored industries.

The relative silence about tax expenditures among Democrats -- and their embrace of the approach to channel benefits to low- and middle-income people -- demonstrates how much they have succumbed to the Republicans' governing philosophy. Rather than fight the unfairness and fiscal irresponsibility inherent in tax expenditures, they have decided instead to try to direct them toward the priorities that matter to them. Under both Presidents Clinton and Obama, substantial tax breaks have been created and expanded for low- to moderate-income Americans. But in the long run, this way of governing threatens to undermine public support for government generally. As I show in my book, The Submerged State, the hidden design of these policies is such that even recipients themselves often fail to recognize that government has provided for them. When people can't see what government does in their own lives and at great expense to the nation, they gain little confidence in its effectiveness and have little reason to support it. As tax expenditures shrink both our federal revenues and our confidence in government, our ability to act collectively as a nation for the sake of the public good grows increasingly diminished.

Suzanne Mettler is the author of The Submerged State: How Invisible Government Policies Undermine American Democracy.

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Six Rebuttals to the Argument that Congress or Fannie and Freddie Caused the Crisis

Nov 3, 2011Mike Konczal

Here are some counter arguments the next time someone claims the government caused the crash.

Sigh. Mayor Bloomberg:

Here are some counter arguments the next time someone claims the government caused the crash.

Sigh. Mayor Bloomberg:

It was not the banks that created the mortgage crisis. It was, plain and simple, Congress, who forced everybody to go and give mortgages to people who were on the cusp... But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody.

It seems there are people who can't accept that some markets, particularly financial ones, are disastrous when completely unregulated -- and thus find any far-fetched excuse to blame the government instead. Since this line of argument continues to pop up, how should one respond to the idea that Congress and Fannie Mae/Freddie Mac caused the housing crisis? Here are six facts to back you up:

1. Private markets caused the shady mortgage boom: The first thing to point out is that the both the subprime mortgage boom and the subsequent crash are very much concentrated in the private market, especially the private label securitization channel (PLS) market. The Government-Sponsored Entities (GSEs, or Fannie and Freddie) were not behind them. The fly-by-night lending boom, slicing and dicing mortgage bonds, derivatives and CDOs, and all the other shadiness of the mortgage market in the 2000s were Wall Street creations, and they drove all those risky mortgages.

Here's some data to back that up: "More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions... Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year."

As Center For American Progress's David Min pointed out to me, the timing doesn't work at all: "But from 2002-2005, [GSEs] saw a fairly precipitous drop in market share, going from about 50% to just under 30% of all mortgage originations. Conversely, private label securitization [PLS] shot up from about 10% to about 40% over the same period. This is, to state the obvious, a very radical shift in mortgage originations that overlapped neatly with the origination of the most toxic home loans."

2. The government's affordability mission didn't cause the crisis: The next thing to mention is that the "affordability goals" of the GSEs, as well as the Community Reinvestment Act (CRA), didn't cause the problems. Randy Krozner summarized one of the better studies on this so far, finding that "the very small share of all higher-priced loan originations that can reasonably be attributed to the CRA makes it hard to imagine how this law could have contributed in any meaningful way to the current subprime crisis." The CRA wasn't nearly big enough to cause these problems.

I'd recommend checking out "A Closer Look at Fannie Mae and Freddie Mac: What We Know, What We Think We Know and What We Don't Know" by Jason Thomas and Robert Van Order for more on the GSEs' goals, which, in addition to explaining how their affordability mission is a distraction, argues that subprime loans were only 5 percent of the GSEs' losses. The GSEs also bought the highly rated tranches of mortgage bonds, for which there was already a ton of demand.

3. There is a lot of research to back this up and little against it: This is not exactly an obscure corner of the wonk world -- it is one of the most studied capital markets in the world. What has other research found on this matter? From Min:

Did Fannie and Freddie buy high-risk mortgage-backed securities? Yes. But they did not buy enough of them to be blamed for the mortgage crisis. Highly respected analysts who have looked at these data in much greater detail than Wallison, Pinto, or myself, including the nonpartisan Government Accountability Office, the Harvard Joint Center for Housing Studies, the Financial Crisis Inquiry Commission majority, the Federal Housing Finance Agency, and virtually all academics, including the University of North Carolina, Glaeser et al at Harvard, and the St. Louis Federal Reserve, have all rejected the Wallison/Pinto argument that federal affordable housing policies were responsible for the proliferation of actual high-risk mortgages over the past decade.

The other side has virtually no research conducted that explains their argument, with one exception that I'll cover below.

4. Conservatives sang a different tune before the crash: Conservative think tanks spent the 2000s saying the exact opposite of what they are saying now and the opposite of what Bloomberg said above. They argued that the CRA and the GSEs were getting in the way of getting risky subprime mortgages to risky subprime borrowers.

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My personal favorite is Cato's "Should CRA Stand for 'Community Redundancy Act?'" from 2000 (here's a write-up by James Kwak), which argues a position amplified in its 2003 Handbook for Congress financial deregulation chapter: "by increasing the costs to banks of doing business in distressed communities, the CRA makes banks likely to deny credit to marginal borrowers that would qualify for credit if costs were not so high." Replace "marginal" with Bloomberg's "on the cusp" and you get the same idea.

Bill Black went through what AEI said about the GSEs during the 2000s and it is the same thing -- that they were blocking subprime loans from being made. In the words of Peter Wallison in 2004: "In recent years, study after study has shown that Fannie Mae and Freddie Mac are failing to do even as much as banks and S&Ls in providing financing for affordable housing, including minority and low income housing."

5. Expanding the subprime loan category to say GSEs had more exposure makes no sense: Some argue that the GSEs had huge subprime exposure if you create a new category that supposedly represents the risks of subprime more accurately. This new "high-risk" category is associated with a consultant to AEI named Ed Pinto, and his analysis deliberately blurs the wording on "high-risk" and subprime in much of his writings. David Min broke down the numbers, and I wrote about it here. Here's a graphic from Min's follow-up work, addressing criticism:

min_updated

Even this "high risk" category isn't risky compared to subprime and it looks like the national average. When you divide it by private label, the numbers are even worse. Private label loans "have defaulted at over 6x the rate of GSE loans, as well as the fact that private label securitization is responsible for 42% of all delinquencies despite accounting for only 13% of all outstanding loans (as compared to the GSEs being responsible for 22% of all delinquencies despite accounting for 57% of all outstanding loans)." The issue isn't this fake "high risk" category, it is subprime and private label origination.

The Financial Crisis Inquiry Commission (FCIC) panel looked carefully at this argument and also ended up shredding it. So even those who blame the GSEs can't get the numbers to work when they make up categories.

6. Even some Republicans don't agree with this argument: The three Republicans on the FCIC panel rejected the "blame the GSEs/Congress" approach to explaining the crisis in their minority report. Indeed, they, and most conservatives who know this is a dead end, tend to take a "it's a whole lot of things, hoocoodanode?" approach.

Peter Wallison blamed the GSEs when he served as the fourth Republican on the FCIC panel. What did the other three Republicans make of his argument? Check out these released FCIC emails from the GOP members. They are really fun, because you can see the other Republicans doing damage control and debating whether Wallison and Pinto were on the take for making this argument -- because the argument makes no sense when looking at the data.

There are lots of great quotes: "Re: peter, it seems that if you get pinto on your side, peter can't complain. But is peter thinking idependently [sic] or is he just a parrot for pinto?", "I can't tell re: who is the leader and who is the follower," "Maybe this email is reaching you too late but I think wmt [William M. Thomas] is going to push to find out if pinto is being paid by anyone." And then there's the infamous event where Wallison emailed his fellow GOP member: "It's very important, I think, that what we say in our separate statements not undermine the ability of the new House GOP to modify or repeal Dodd-Frank."

The GSEs had a serious corruption problem and were flawed in design -- Jeff Madrick and Frank Partnoy had a good column about the GSEs in the NYRB recently that you should check out about all this -- but they were not the culprits of the bubble.

Mike Konczal is a Fellow at the Roosevelt Institute.

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A Woman with a Plan: The Real Story of Margaret Sanger

Nov 2, 2011Ellen Chesler

Her opponents have smeared her as a racist and classist, but she devoted her life to fighting for equal access to reproductive choice.

Her opponents have smeared her as a racist and classist, but she devoted her life to fighting for equal access to reproductive choice.

Birth control pioneer Margaret Sanger is back in the news this week thanks to GOP presidential candidate and abortion rights opponent Herman Cain, who claimed on national television that Planned Parenthood, the visionary global movement she founded nearly a century ago, is really about one thing only: "preventing black babies from being born." Cain's outrageous and false accusation is actually an all too familiar canard -- a willful repetition of scurrilous claims that have circulated for years despite detailed refutation by scholars who have examined the evidence and unveiled the distortions and misrepresentations on which they are based (for a recent example, see this rebuttal from The Washington Post's Glenn Kessler).

It's an old tactic. Even in her own day, Sanger endured deliberate character assassination by opponents who believed they would gain more traction by impugning her character and her motives than by debating the merits of her ideas. But when a presidential candidate from a major U.S. political party is saying such things, a thoughtful response is necessary.

So what is Sanger's story?

Born Margaret Louisa Higgins in 1879, the middle child of a large Irish Catholic family, Sanger grew into a follower of labor organizers, free thinkers, and bohemians. Married to William Sanger, an itinerant architect and painter, she helped support three young children by working as a visiting nurse on New York's Lower East Side. Following the death of a patient from a then all-too-common illegal abortion, she vowed to abandon palliative work and instead overturn obscenity laws that prevented legal access to safe contraception.

Sanger's fundamental heresy was in claiming every woman's right to experience her sexuality freely and bear only the number of children she desires. Following a first generation of educated women who had proudly forgone marriage in order to seek fulfillment outside the home, she offered birth control as a necessary condition to the resolution of a broad range of personal and professional frustrations.

The hardest challenge in introducing Sanger to modern audiences, who take this idea for granted, is to explain how absolutely destabilizing it seemed in her own time. As a result of largely private arrangements and a healthy trade in condoms, douches, and various contraptions sold under the subterfuge of feminine hygiene, birth rates had already begun to decline. But contraception remained a clandestine and delicate subject, legally banned under obscenity statutes, and women were still largely denied identities or rights independent of their relationships with men, including the right to vote.

By inventing the term "birth control," Sanger brought the practice -- and by implication, women's entitlement to sexual pleasure -- out into the open and gave them essential currency. She went to jail in 1917 for opening a clinic to distribute primitive diaphragms to immigrant women in Brooklyn, New York, and appeal of her conviction led to a medical exception that licensed doctors to prescribe contraception for reasons of health. Under these constraints she built a network of independent local women's health centers that eventually came together under the banner of Planned Parenthood. She also lobbied for the repeal of federal obscenity statutes that prevented the legal transport of contraception by physicians across state lines, which were struck down in federal court in 1936.

Sanger sought and won scientific validation for various contraceptive methods, including the birth control pill, whose development she supported and found the money to fund. In so doing, she helped lift the religious shroud that had long encased reproduction and secured the endorsement of contraception by physicians and social scientists. From this singular accomplishment, which some still consider heretical, a continuing controversy has ensued.

Sanger always remained a wildly polarizing figure, which clarifies the logic of her decision after World War I to jettison "birth control" and adopt the more socially resonant term "family planning." This move was particularly inventive but in no way cynical, especially when the Great Depression brought attention to collective needs and the New Deal created a blueprint for bold public endeavors.

Some have falsely charged that Sanger defined family planning as a right of the privileged but a duty or obligation of the poor. To the contrary, she showed considerable foresight in lobbying to include universal voluntary family planning programs among public investments in social security. Had the New Deal incorporated basic public health and access to contraception, as most European countries were then doing, protracted conflicts over welfare and health care policy in the U.S. might well have been avoided.

Having long enjoyed the friendship and support of Franklin and Eleanor Roosevelt, Sanger also had ample reason to believe the New Dealers would fully legalize and endorse contraception as a necessary first step to her long-term goal of transferring responsibility and accountability for voluntary clinics to the public health sector. What she failed to anticipate was the force of opposition family planning continued to generate from a coalition of religious conservatives, including urban Catholics and rural fundamentalist Protestants, that held Roosevelt Democrats captive much as today's evangelicals have captured the GOP.

The U.S. government would not overcome cultural and religious objections to public support of family planning through its domestic anti-poverty and international development programs until the late 1960s, after the Supreme Court protected contraceptive use under the privacy doctrine created in Griswold v. Connecticut. At this time, Planned Parenthood clinics became major government contractors, since there were few alternative primary health care centers serving the poor. Today, one in four American women funds her contraception through government programs, many of them still run by Planned Parenthood -- a number likely to rise under the Affordable Care Act.

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Sanger's eagerness to mainstream her movement explains her engagement with eugenics, a then widely popular intellectual movement that addressed the manner in which human intelligence and opportunity is determined by biological as well as environmental factors. Hard as it is to believe, eugenics was considered far more respectable than birth control. Like many well-intentioned reformers of this era, Sanger took away from Charles Darwin the essentially optimistic lesson that humanity's evolution within the animal kingdom makes us all capable of improvement if only we apply the right tools. University presidents, physicians, scientists, and public officials all embraced eugenics, in part because it held the promise that merit would replace fate -- or birthright and social status -- as the standard for mobility in a democratic society.

But eugenics also has some damning and today unfathomable legacies, such as a series of state laws upheld in 1927 by an eight-to-one progressive majority of the U.S. Supreme Court, including Justices Oliver Wendell Holmes and Louis Brandeis. Their landmark decision in Buck v. Bell authorized the compulsory sterilization of a poor young white woman with an illegitimate child on grounds of feeble mindedness that were never clearly established. This decision, incidentally, was endorsed by civil libertarians such as Roger Baldwin of the ACLU and W.E.B. Dubois of the NAACP, both of whom Sanger counted among her supporters and friends.

For Sanger, eugenics was meant to begin with the voluntary use of birth control, which many still opposed on the grounds that the middle class should be encouraged to have more babies. She countered by disdaining what she called a "cradle competition" of class, race, or ethnicity. She publicly opposed immigration restrictions and framed poverty as a matter of differential access to resources like birth control, not as the immutable consequence of low inherent ability or character.

As a nurse, Sanger also understood the adverse impacts of poor nutrition, drugs, and alcohol on fetal development and encouraged government support of maternal and infant health. She argued for broad social safety nets and proudly marshaled clinical data to demonstrate that most women, even among the poorest and least educated populations, eagerly embraced and used birth control successfully when it is was provided.

At the same time, Sanger did on many occasions engage in shrill rhetoric about the growing burden of large families of low intelligence and defective heredity -- language with no intended racial or ethnic content. She always argued that all women are better off with fewer children, but unfortunate language about "creating a race of thoroughbreds" and other such phrases have in recent years been lifted out of context and used to sully her reputation. Moreover, in endorsing Buck v. Bell and on several occasions the payment of pensions or bonuses to poor women who agreed to limit their childbearing (many of whom enjoyed no other health care coverage), Sanger quite clearly failed to consider fundamental human rights questions raised by such practices. Living in an era indifferent to the obligation to respect and protect individuals whose behaviors do not always conform to prevailing mores, she did not always fulfill it.

The challenge as Sanger's biographer has been to reconcile apparent contradictions in her beliefs. She actually held unusually advanced views on race relations for her day and on many occasions condemned discrimination and encouraged reconciliation between blacks and whites. Though most birth control facilities conformed to the segregation mores of the day, she opened an integrated clinic in Harlem in the early 1930s. Later, she facilitated birth control and maternal health programs for rural black women in the south, when local white health officials there denied them access to any New Deal-funded services.

Sanger worked on this last project with the behind-the-scenes support of Eleanor Roosevelt and Mary McLeod Bethune, founder of the National Council for Negro Women and then a Roosevelt administration official. Their progressive views on race were well known, if controversial, but their support for birth control was silenced by Franklin's political handlers -- at least until he was safely ensconced in the White House for a third term, when the government rushed to provide condoms to World War II soldiers.

Sanger's so-called Negro Project has been a source of controversy first raised by black nationalists and some feminist scholars in the 1970s and later by anti-abortion foes. Respecting the importance of self-determination among users of contraception, she recruited prominent black leaders to endorse the goal, especially ministers who held sway over the faithful. In that context, she wrote an unfortunate sentence in a private letter about needing to clarify the ideals and goals of the birth control movement because "we do not want the word to go out that we want to exterminate the Negro population."  The sentence may have been thoughtlessly composed, but it is perfectly clear that she was not endorsing genocide.

America's intensely complicated politics of race and gender has long ensnarled Sanger and all others who have sought to discipline reproduction. As many scholars of the subject in recent years have observed, much of the controversy proceeds from the plain fact that reproduction is by its very nature experienced individually and socially at the same time. In claiming women's fundamental right to control their own bodies, Sanger remained mindful of the dense fabric of cultural, political, and economic relationships in which those rights are exercised.

In most instances the policies Sanger advocated were intended to observe the necessary obligation of social policy to balance individual rights of self-expression with the sometimes contrary desire to promulgate and enforce common mores and laws. She may have failed to get the balance quite right, but there is nothing in the record to poison her reputation or discredit her noble cause. Quite the contrary.

The Reverend Martin Luther King, Jr. may have put it best in 1966, when he accepted Planned Parenthood's prestigious Margaret Sanger Award and spoke eloquently of the "kinship" between the civil rights and family planning movements. Here is what he said, since it bears repeating:

There is a striking kinship between our movement and Margaret Sanger's early efforts. She, like we, saw the horrifying conditions of ghetto life. Like we, she knew that all of society is poisoned by cancerous slums. Like we, she was a direct actionist -- a nonviolent resister... She launched a movement which is obeying a higher law to preserve human life under humane conditions. Margaret Sanger had to commit what was then called a crime in order to enrich humanity, and today we honor her courage and vision; for without them there would have been no beginning.

Ellen Chesler is a Senior Fellow at the Roosevelt Institute and author of Woman of Valor: Margaret Sanger and the Birth Control Movement in America.

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We are the 99%: A Progressive Narrative in One Powerful Phrase

Oct 14, 2011Richard Kirsch

Occupy Wall Street's message goes a long way toward crafting a solid progressive story about the economy.

One of the most common criticisms of progressives is that, unlike the right, we don't have simple messages that tell our story. Our young leaders at Occupy Wall Street have come up with a powerful answer: We are the 99%.

Occupy Wall Street's message goes a long way toward crafting a solid progressive story about the economy.

One of the most common criticisms of progressives is that, unlike the right, we don't have simple messages that tell our story. Our young leaders at Occupy Wall Street have come up with a powerful answer: We are the 99%.

For the past several months, I've been working with a group of progressive leaders and communicators on the development of a "progressive economic narrative," a way of telling our story about the roles of the individual, business, and government in creating shared prosperity. The right has a well-developed view, to the point where after several decades it can now be summarized in three brief phrases: free markets, limited government, and individual liberty.

If we as progressives do our job well, we will also get to the point where we have three such phrases that are widely recognized. But that actually takes a long time. (Here are three candidates, but the fact that you may not nod your head readily when you read them is because you can't shorten the process: shared prosperity, government that works for all of us, and liberty and justice for all.)

For now, I'm celebrating the fact that we now have one phrase that tells much of our story: "We are the 99%."

This phrase's power is in the emotions it elicits. It is triumphant, not defeatist. It says, "We have the power and the moral authority, not you!" It conveys action -- we're standing up for ourselves and occupying your turf. It declares our common humanity. It is hopeful.

The progressive economic narrative I've been helping to draft has five conceptual pillars, and understanding them helps illustrate why "we are the 99%" also works intellectually. The first pillar of the narrative defines the progressive view of our economic problem: the crushing of the middle class by the rich and by corporate America. "The 99%" is a great unifying expression of inequality, as it avoids the separations that come from labels like "the middle class," "working class," and "poor." It says we're all screwed together by rising inequality and highlights those who are responsible: the super-rich and big corporations.

The second pillar defines what makes a successful economy: the well-being of our families in a big middle class and the productivity of our nation, not the stock market and corporate profits. "The 99%" is a simple declaration that our economy is driven by the vast majority of people, not a few super-rich.

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The fourth pillar (I'll come back to the third) defines the political problem: our government has been captured by the super-rich and corporate America, corrupted by big money and politics. "We are the 99%" affirms that we have to take our democracy back to ensure that our economy works for all of us, not just the richest few. This has been a consistent message from the Occupy Wall Streeters, who seamlessly link inequality, corporate power, and corruption.

The fifth pillar is a call to action. And here's where the triumphant power of "We are the 99%" works so well. It's no accident that the phrase took root in an action that people could easily do -- posting a picture of themselves with their story -- and was adopted instantly by a movement.

The third pillar explains the role of government in building a successful economy and the relationship of public action to individuals and business. It can be summarized thus: We build a large and prosperous middle class through the decisions we make together, investing in our people, expanding opportunity and security, paving the way for business to innovate, and doing business in ways that create prosperity and economic security for Americans.

This third pillar is essential to explaining how we should solve our problems and refuting the conservative view that the economy is driven by natural forces, best left on its own without government interference. "We are the 99%" opens the door for us to tell that story, but we need to fill in the blanks. When people say that Occupy Wall Street doesn't have demands, we should look at that not as a criticism, but as an invitation to complete the story. Everything about the phrase establishes the point that we build an economy that works for all of us when we make decisions that benefit the 99%.

Helping the American public understand a progressive worldview about the economy starts with our being clear on what we believe and telling that story consistently and widely. The best evidence that we're on the right track is when a simple message captures the hearts and minds of us, the 99%.

Richard Kirsch is a Senior Fellow at the Roosevelt Institute and a Senior Adviser to USAction, whose book on the campaign to win reform will be published in 2012. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

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What Would Our Founding Radicals Have Thought About Occupy Wall Street?

Oct 5, 2011William Hogeland

american_colonial_flagOccupy Wall Street isn't just a threat to financial elites -- it's a challenge to lazy historians.

american_colonial_flagOccupy Wall Street isn't just a threat to financial elites -- it's a challenge to lazy historians.

Among other intriguing and possibly problematic features, Occupy Wall Street, now in its third week and spreading, seems to represent an inchoate attempt at reviving an American radicalism that has deep roots in our founding period. The Tea Party has of course made its own highly explicit and politically successful claim on that period. Because OWS, like the Tea Party, focuses on national economic and financial issues, the new movement offers a disquieting, potentially illuminating alternative to the Tea Party's right-wing interpretation of America's founding economic values.

I began writing New Deal 2.0's "Founding Finance" series last winter in hopes of shining light both on the financial elitism of the famous American founders, who we often wrongly cast as pioneers (or at least half-conscious seed-sowers) of equality, and on what I see as historical tendentiousness on the part of the Tea Party, whose claims on the founding period are meant to support a low-tax, small-government, anti-debt agenda. I've tried to show that this agenda, which may or may not have its merits as policy, in no way accords with the avowed purposes of the founders across their own political spectrum from Hamilton to Madison.

In the series, I've also tried to bring to the fore some routinely marginalized yet highly resonant 18th century economic thought, as well as the actions of those who sought to obstruct wealth concentration and make cash and credit more readily available to ordinary Americans. It's an unsettling fact that our founding democratic, economic activism was not against England but against the homegrown American investing and creditor class that was leading the resistance to England.

I've explored that founding economic radicalism in the debtor riots and "regulations" of the late colonial period; in the overthrow of Pennsylvania during the run-up to the Declaration; in the period after victory over England, when foreclosed Massachusetts debtors, the so-called Shays Rebels, marched on the armory at Springfield; and in the early Federal period, when the so-called Whiskey Rebels of trans-Appalachia, criticizing the new U.S. Constitution on bases very different from those of antifederalist elites, went so far as to fly their own flag, hoping to launch a new, more economically egalitarian country in what was then the American West.

Throughout those struggles, the activists' goal was to pressure and in some cases to use government to restrain the power of wealth and promote economic equality through legislation. They wanted to outlaw monopolies, build debt relief into currency, institute easy-term, small-scale government lending, and take banking charters away from crony insiders. Some wanted progressive taxation on income; some wanted what we call Social Security. Much later phenomena like the Square Deal, the New Deal, and the Great Society, which can seem hypermodern (and even, to the Tea Party, unconstitutionally anomalous), actually have deep American roots. However, those roots are not in the thinking of the famous founders -- New Dealers' claims on Jefferson possibly to the contrary -- but in grassroots, 18th century movements that, while little-known today, were of immense importance during our founding.

So important in their day were those now-buried radical movements, in fact, that much of the famous founders' behavior can't be understood without the context of elite dedication at times to collaborating uneasily with the economic radicals, at other times to squelching them and pushing back their political advances. Many historians of the period ignore that context. Hamilton's biographers, for example, do not deem the people's movement important. Hamilton did; he spent his career trying to kill it. We therefore learn almost nothing important about Hamilton's purposes by reading his biographies. Much founder biography, and much mainstream history, operates on just such comfortably foregone, ultimately useless conclusions.

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In place of founding radicalism, historians tend to emphasize the emergence, from the Revolutionary period through the Jackson era, of a rowdy, fluid, non-deferential, competitive America. They place developing ideas of American democracy almost solely in that 19th century context. But Thomas Paine, the best-known of the radical 18th century egalitarians, would surely have been crushed if he'd glimpsed the kind of society that passed for a democratic one in Jacksonian America.

Paine's intensity gives both liberals and radicals a problem. It was a widely held view in the Washington administration -- and it's been widely held in more or less liberal American history ever since -- that Paine's awful experiences in the French Revolution give us cause to celebrate the failure of Paine-ite radicalism in America. Fair enough: Today, as every day, it would be wise to recall not only crimes against humanity committed by bankers but also those committed on behalf of a supposedly collective, supposedly revolutionary "People," from the French Terror to the Stalinist mass murders and well beyond.

Still, the French Terror, which almost killed Paine, has served as a convenient pretext for exercising historical complacency about the suppression of his and others' fervently democratic visions for America in 1776. Without those visions, anathema as they were to the famous founding elitists -- anathema as they were, for that matter, to Jacksonian capitalism and are today to high-finance "neo-liberalism" -- we might never have declared independence at all.

So from a certain historical point of view, I think Occupy Wall Street rebukes, even more sharply than it rebukes rightist Tea Party claims on the founding, a familiar and complacent history of American democracy -- especially that history's failure to confront our long struggle over the relationship between high finance and government. Occupy Wall Street may be going about things all wrong, as some on what remains of the American left have asserted. I find those assertions hard to dispute. I've been critical of what I suspect may turn out to be a cultural premium, part and parcel of objections to elitism, on intellectual sloppiness and incoherence. That mode was never adopted by the activist 18th century working class, whose objections and demands (pace the lazy snobbism of Hamilton's biographers) took the form not only of action but also of crystal-clear, deeply informed, published resolutions. The 18th century activists remind us that resolutions don't have to be handed down from above; they can filter up and be adopted by majority or by consensus.

The very concept of "up" may be anathema to the new movement. We'll see.

But the most honest answer to any and all objections to Occupy Wall Street may be "So what?" Criticism often comes down to no-cost fantasizing about more appealing actions that nobody has actually bothered to take. When American high finance takes over America, "occupy" is what some American people do, and have always done.

William Hogeland is the author of the narrative histories Declaration and The Whiskey Rebellion and a collection of essays, Inventing American History. He has spoken on unexpected connections between history and politics at the National Archives, the Kansas City Public Library, and various corporate and organization events. He blogs at http://www.williamhogeland.com.

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