Beyond Elections: Why Political Elites Hedge Their Bets

Jun 23, 2011Matt Stoller

Washington's rigged system of special interests ensures that brave politicians and staffers don't stick around long. (Follow Matt Stoller on Twitter at @matthewstoller).

Washington's rigged system of special interests ensures that brave politicians and staffers don't stick around long. (Follow Matt Stoller on Twitter at @matthewstoller).

Political analysts tend to gloss over what I would call hedging behavior on the part of political elites. While elections are somewhat random, the fact that you will be on the losing side of an election at some point is guaranteed. So politicos don't ask: What's the best way to win an election? Rather, they ask: What's the best way to preserve my risk-adjusted position in the political ecosystem of influence and money? This means setting yourself up to win an election if possible, but not in an especially populist manner that could increase the downside of losing or falling into the minority.

Let's take a look at someone that I liked a great deal while I worked in the House, a staffer named Doug Thornell, who worked for Rep. Chris Van Hollen. Van Hollen was the architect of the Democratic response to Citizens United, as well as the Chair of the electoral arm of the House Democrats, the DCCC. Thornell was his communications staffer, and you could always count on him for a quote to go after the GOP's reliance on special interests. Thornell was also one of the Hill's 50 most beautiful people in 2010.

In 2010, Doug Thornell would let the GOP have it.

"For 20 years, John Boehner has been in Washington caddying for powerful corporate special interests and working against middle class families," Doug Thornell said. "He rushed to support President Bush's Wall Street bailout, but when President Obama asked for his support for middle class tax cuts, help for small businesses and aid for those most in need, he turned his back."

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Fast-forward to 2011. Doug Thornell is now working for a group seeking to allow corporations to repatriate profits without paying taxes. His tune on special interests has changed.

“Our broken tax system currently penalizes U.S. businesses that want to bring their global earnings home,” said Doug Thornell, a former House Democratic staffer who is now a spokesman for the Win America Campaign. “The simple truth is there are few policy options left that will inject this amount of money into our economy and cost taxpayers next to nothing.”

You can say "how dare he do this!" But that's actually beside the point. Doug is a highly trained and highly competent communications staffer, and he genuinely did want to help people when he worked for Van Hollen. Where else could he go after the Democrats lost the majority? It's obvious that the career path options in the political class are so limited that they constrain behavior within the institutions themselves.

I sometimes see Wall Street titans or wealthy people bemoaning the corruption in DC. Hedge fund manager Michael Steinhardt, for instance, says that he wants his taxes raised. This may be laudable, but it ignores the basic hedge in DC. If a politician votes against special interests, he will face enormous bitter attacks, and should he lose, he will fade into obscurity. If a politician votes for special interests, the converse dynamic will kick in. In such an environment, you wouldn't expect brave politicians or staffers to last very long. And they don't.

So anyway, this is just a way of explaining that advice along the lines of "here's how to win" tends not to work in DC, because the problem isn't just about how to win an election. Operating in DC is more like being a trader, where the amount of the downside matters as well. If you want to fix that dynamic, then make sure that people like Doug Thornell have places to go where they don't have to work to help Google cut its own tax rate.

Matt Stoller is a Fellow at the Roosevelt Institute and the former Senior Policy Advisor to Congressman Alan Grayson.

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"Standstill Nation" as the New Abnormal? Tom Ferguson Exposes Truth Behind Gridlock.

Jun 20, 2011Tom Ferguson

Gridlock is not a reflection of 'the way things have always been'. It's the result of a GOP-conjured tide of money that emerged in the mid-80s and 90s, leaving us polarized and paralyzed.

Gridlock is not a reflection of 'the way things have always been'. It's the result of a GOP-conjured tide of money that emerged in the mid-80s and 90s, leaving us polarized and paralyzed.

On Sunday, the New York Times closed out its “Week in Review” section after a run of 76 years. With Republicans and most Democrats back singing the praises of deregulation, smaller government, and tax cuts less than three years after that old song brought the world to its knees, we should probably have expected a grateful “Invisible Hand” would drop by to wave goodbye.

And so it happened. Times correspondent Peter Baker celebrated the famous Hand’s magical ability to resolve not economic complexity, but political stalemate. “Mad at Beltway gridlock and can’t take it anymore?” asked the headline. To which Baker answered: “Paralysis (alas) is one way things are supposed to work.” He went on to explain that “for all the handwringing about how the system is broken, this is the system as it was designed and is now adapted for the digital age.” In support of this complacency, Baker enlisted Vice President Joe Biden, who “emerged last week to defend the system’s ability to get things done despite all appearances to the contrary. It may be maddening, it may be drawn out, but he argued, at the end of the day, Washington does what it has to do."

Thus Baker’s argument continued, leavened only by a few careful hedges noting that reality has not as yet conformed to this Panglossian script and that unemployed Americans might assess the government’s paralysis a little differently. At the very end, Baker cautiously put forward a suggestion first broached by Peter Orzag, formerly President Obama’s budget chief before he fled to Citigroup, that the Hand might, like so many other aging Americans, benefit from a prosthesis: legislation that would remorselessly chop government programs unless Congress acted to stop it.

Let’s try to clarify why Congress is actually gridlocked. The bottom line is, alas, a bottom line. It is not complicated. And it has nothing to do with any design for a digital age, as Baker proposes.

In the mid-1980s, a group of insurgent Republicans broke with the long established norms governing how the U.S. House of Representatives transacted business. Led by Newt Gingrich, it derided older Republican House leaders as timid, unimaginative, and too inclined to compromise with Democrats. Self-styled “revolutionaries” launched vigorous public attacks on Democrats as they trumpeted their own agenda of deregulation, budget cuts, lower taxes, and a baker’s dozen of social issues, from abortion to opposition to all forms of gun control.

Result? The House boiled over. Statistical measures of Congressional behavior show that party line votes jumped sharply.

Gingrich and his allies were painfully aware that transforming the GOP’s gains at the presidential level into a true “critical realignment” of the political system as a whole required breaking the Democratic lock on Congress. So they shattered all records for Congressional fundraising in their drive to get control of the House. Their success in this and their parallel campaign to rally major parts of the media to their standard are what polarized the system. The GOP insurgents emphasized fundraising, not just through the usual publicly reported vehicles like the national party committees, but also GOPAC, a political action committee that Gingrich had controlled since 1986, which operated mostly in secret.

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In 1992, in the midst of a recession, the Republicans lost the White House. But their dreams of a sweeping political realignment did not die. In fact, by clearing centrist Republicans out of their perches in the White House, the loss probably helped Gingrich and his allies.

Completely undaunted, Gingrich, Republican National Chair Haley Barbour, and National Republican Senatorial Committee Chair Phil Gramm orchestrated a vast national campaign to recapture Congress for the Republicans in the 1994 elections. With the economy stuck in a “jobless recovery” and Democratic fundraising sputtering, the Republicans won control of both houses of Congress.

The tidal wave of political money they conjured allowed Gingrich, Gramm, Barbour and Co., to brush aside older, less combative center-right Republican leaders and persist in their efforts to roll back the New Deal and remake American society in the image of free market fundamentalism. Once in power, the Republicans institutionalized sweeping rules changes in the House and the Republican caucus that vastly increased the leadership’s influence over House legislation. They also implemented a formal “pay to play” system that had both inside and outside components.

On the outside, DeLay and other GOP leaders, including Grover Norquist, who headed Americans for Tax Reform, mounted a vast campaign (the so-called “K Street Project”) to defund the Democrats directly by pressuring businesses to cut off donations and avoid retaining Democrats as lobbyists. Inside the House, Gingrich made fundraising for the party a requirement for choice committee assignments. Senate Republicans, led by Phil Gramm and other apostles of deregulation, emulated the House.

And so, alas, did the Democrats. Watching the Republicans restructure their national political committees into giant ATMs capable of financing broad national campaigns left the Democrats facing the same dilemma they had in the late seventies, as the GOP’s Golden Horde first formed up behind Ronald Reagan. Democrats could respond by mobilizing their older mass constituencies. Or they could emulate the Republicans and just chase money. That battle had been settled in favor of so-called “New Democrats” (see Thomas Ferguson and Joel Rogers, "Right Turn"). Dependent for many years on campaign money from leading sectors of big business where regulation kept recreating divisions – notably finance and telecommunications (Ferguson, "Golden Rule") – the Democrats reconfirmed their earlier decision to go for the gold.

They followed the Republicans and transformed both the national party committees and their Congressional delegations into cash machines, with leaders in each chamber, but especially the House, wielding substantially more power than at any time since the famous revolt that overthrew Speaker Cannon in 1910-11. As the Republicans moved further and further to the right, the Democrats did, too, constrained only by the need to preserve something of their mass base.

A feedback loop running between Congress and the mass media intensified the whole process: Congressional leaders of both parties now focused intently on creating sharper party profiles (“brands”) that would mobilize potential outside supporters and contributors. So they spent enormous amounts of time and money honing messages that were clear and simple enough to attract attention as they ricocheted out through the media to an increasingly jaded public. And they and the Republican leadership staged more and more votes not to move legislation, but to score points with some narrow slice of the public or signal important outside constituencies. For the same reasons, they made exemplary efforts to hold up bills by prolonging debate or, in the Senate, putting presidential nominations on hold.

Contrary to what popular pundits may say, there is nothing “normal” or constructive about a Congress dominated by centralized parties. We should not accept a Congress presided over by leaders with far more power than in recent decades, running the equivalent of hog calls for resources, trying to secure the widest possible audiences for their slogans and projecting their claims through a mass media that was more than happy to play along with right thinking spokespersons of both parties. The idea that putting government programs on an automatic chopping block is a step forward is equally outlandish. This is hardly government “doing what it has to do.” It may be what it is paid to do. But no one should confuse this with public policy that serves the interests of all Americans.

Thomas Ferguson is Professor of Political Science at the University of Massachusetts, Boston and Senior Fellow at the Roosevelt Institute. This essay is adapted from his “Legislators Never Bowl Alone: Big Money, Mass Media, and the Polarization of Congress,” presented at the Institute for New Economic Thinking’s Bretton Woods Conference.

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The Well-funded Assault on the CFPB

Jun 3, 2011Bryce Covert

Republicans may claim that the Consumer Financial Protection Bureau has too much power, but the money and lobbying has piled up on the other side.

Republicans may claim that the Consumer Financial Protection Bureau has too much power, but the money and lobbying has piled up on the other side.

Rep. Spencer Bauchus may have called the Consumer Financial Protection Bureau "the most powerful agency ever created," but a new piece at The Nation by Ari Berman details the extensive power being marshaled on the other side. While the Republicans who are trying to handcuff its authority claim to be defending small community banks and businesses, the real money is coming from much deeper pockets:

Warren and the CFPB are up against what she estimates to be a $3 trillion consumer financial services industry, which views the bureau as a potentially grave threat to its prosperity. According to the Center for Responsive Politics, 156 groups -- the vast majority representing corporate interests -- lobbied the government about the CFPB in the second half of 2010 and the first quarter of 2011. The list ranged from JPMorgan Chase to McDonald's.

And it goes on further:

The Chamber [of Commerce] has an entire division devoted to fighting Dodd-Frank, the Center for Capital Markets Competitiveness, and a huge budget. In the first quarter of this year, the Chamber spent $17 million on federal lobbying, far more than any other group, with a dozen lobbyists focused on the CFPB alone. In 2009 the Chamber was anything but subtle in its attacks on the bureau. "We're fundamentally trying to kill this," said senior director Ryan McKee.

It's pretty clear why banks of all shapes and sizes would be lining up against this Bureau. For the first time in decades, the CFPB promises to be a watchdog on lenders that looks out for the consumer with some actual teeth. That will likely mean crackdowns on payday lenders, debt collectors, loan sharks, and others. But why would the Republicans be the first line of defense in this fight? After all, they've proposed bills to replace the single job of director with a five-member committee, make it easier to overturn and veto the new rules it writes, and prevent it from using its powers until it has a permanent director. (Meanwhile, they've threatened to block any nominees to that position, effectively kneecapping its authority if that bill were to pass.) All of this is likely to slow down the reforms and regulations that the agency has been tasked with creating.

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As I've pointed out before, the GOP's timing couldn't be worse for the middle class. A recent report showed that these days a single worker needs an income of $30,012 a year to cover basic expenses and save up for retirement and emergencies -- in other words, achieve financial stability -- which is about three times the national poverty level. A single worker with two young children needs $57,756 a year, and a family with two working parents and two young kids needs $67,920. But wages have actually been falling for the first time ever over the past decade, which lead to the median American family's earnings dropping to $47,127 in 2010 -- only enough for a single worker to meet financial stability. When Americans don't have enough income flowing in, they turn to debt to plug the holes. That's a big part of the reason that Americans carry $796.1 billion in revolving debt. With so many relying on credit products, you would think it would be imperative to make sure they're safe. As Elizabeth Warren herself has pointed out, we do more to ensure that consumers can't buy toasters that have a 1 in 5 chance of exploding than we do to ensure that consumers don't take out mortgages that have the same chance of putting a family on the street.

Yet Republicans stand in shoulder to shoulder opposition. As quoted in Berman's piece, Hazen Marshall, a former Republican staff director for the Senate Budget Committee, said earlier this year, "If the House Republicans had their way, they would just repeal the CFPB!" The answer to why they have taken this stance might lie in following the money that he traces so well.

And the fight won't be over even if the current Republican bills are struck down. "Everyone agrees the real fights are yet to come, once the CFPB goes live and begins tackling difficult issues like policing scams in the credit and mortgage markets, and cracking down on overdraft lending fees and shady prepaid credit cards," Berman reports. "'There's bound to be a fight about every single rule-making, supervision and enforcement action,' says [Lisa] Donner of AFR."

Buckle up, it's going to be a long fight. But it's one that's worth having.

Bryce Covert is Assistant Editor at New Deal 2.0.

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We’re not Broke. We’ve been Robbed!

Apr 25, 2011Richard Kirsch

Blame the thieves who are wrecking our economy and ruining our democracy.

Blame the thieves who are wrecking our economy and ruining our democracy.

We're not broke. We've been robbed by the super-rich and big corporations who are raking in the cash and running up the deficit. Our economy is still more than twice as large as any other country in the world. With 4% of the world's population, we generate 24% of its wealth. We spend more on our military than almost all other nations combined and more than twice as much per person on health care as other developed countries. But over the past three decades, the rich have gotten richer while their tax rates have plummeted. While the income of the richest 400 Americans quadrupled -- they now have more wealth than the 155 million Americans on the other end -- their effective tax rates were cut almost in half.

One thing is for sure: corporate America is not broke. Sitting on some two trillion in cash, fattened every quarter by record profits, corporate taxes are at an historic low in terms of the economy and share of federal revenues. And that includes Wall Street, which was rewarded with bailouts, bonuses and bonanza profits for igniting the deepest recession in three-quarters of a century.

We're not broke, but the wealth grab is wrecking our economy. The rich can't spend enough to keep the economy going. The engine that drives it is a strong middle class. The problem isn't that we haven't generated wealth, it's that we've stopped sharing the wealth we've generated. If wages had kept up with productivity over the past 30 years, the median wage would be 60% higher than it is now. If income had increased at the same rate for everyone from 1979 to 2006, the average family would make about $10,000 more a year, but the top 1% would make $700,000 less.

We're not broke, but the power grab of the greedy is ruining our democracy. None of this happened by accident, nor is it the inevitable result of globalization and technological change. While the rich gobbled up a bigger chunk of the United States' economy, that hasn't been true in other developed countries -- including Germany, France and Japan -- that face the same economic pressures. Our politicians have been bought off with campaign contributions and wined and dined by lobbyists, many of whom used to work for or serve in Congress. Democracy is increasingly a myth; politicians respond to the policy preferences of the richest 10% and ignore the choices of the rest of us. The result has been tax, spending, financial and trade policies that have resulted in huge deficits and a crumbling middle class.

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The middle class is not only the engine of our economy, it's the glue of our democracy. A bigger middle class leads to higher voting rates and lower levels of public corruption. When we believe that the system is stacked against us, we're more likely to drop out or cheat.

It's no wonder that despite elite celebration of economic recovery, Americans are deeply pessimistic about the future. Much of the public believes that our best days are behind us. And unless we build a movement for change, they will be right.

Building a movement for change requires both anger and hope. The story I've just told gets people angry. To turn that anger into positive change we need the rest of the story, how we can write a happy ending if we rally together. The fact is, it doesn't have to be this way. We can make other choices that will lead to shared prosperity, opportunity and security for all and a brighter future for our children.

We can create good jobs for everyone in America. There is more than enough vital work to be done and Americans stand ready and eager to do it. We can create tens of millions of jobs, jobs for a green economy and energy independence, jobs to rebuild our infrastructure and create a new one for the information age, jobs to educate our children and take care of our seniors. We can assure that every job -- private and public -- pays enough to support a family, with decent wages, health and retirement benefits and family-friendly leave policies. We can create good jobs in America with the right trade, tax, purchasing and financial policies. Each of these are political choices, within our control.

We can tame the deficit without sacrificing our future by creating good jobs, increasing taxes on the wealthy and closing corporate tax loopholes, cutting unneeded military spending and controlling health care spending through a system that puts quality ahead of quantity and stops overpayments to drug and health insurance companies. There are real budget proposals in Congress that do all that.

We can take our democracy back from the super-wealthy and big corporations if we create a real movement for change. We need to embed the reforms necessary for restoring our democracy -- public financing of elections, slamming the revolving door shut between Congress and corporate lobbyists, a Supreme Court that has the common sense to see that money is not speech and corporations are not people -- in the movement to create shared prosperity and opportunity for all.

We're not broke, but we have been impoverished by an "on-your-own" ideology that denies the best in us. At the end, this is a question of what we believe. When you stood in school and took the pledge of allegiance, was it a pledge for liberty and justice for the few, for the super-rich? Or was it a pledge for liberty and justice for all? That's the pledge I remember taking: liberty and justice in an America that works for all.

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, 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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Conversation With Thomas Ferguson: How Political Money Drives Deadlock

Apr 12, 2011Tom FergusonLynn Parramore

man-on-money-150Lynn Parramore caught up with Roosevelt Institute Senior Fellow Thomas Ferguson at the annual INET conference in Bretton Woods.

man-on-money-150Lynn Parramore caught up with Roosevelt Institute Senior Fellow Thomas Ferguson at the annual INET conference in Bretton Woods. Ferguson, father of the Investment Theory of Politics, explains why polarization has completely gripped Washington -- and why the New Deal is getting rolled back in the process.

Lynn Parramore: What's polarization in politics and how did it start?

Thomas Ferguson: Polarization is a sharp intensification of divisions between the major political parties. The tensions between them now run through the entire system, including the Supreme Court and state and local governments. Congressional polarization is the most visible form right now and surely a key link in the whole process. Both national parties have spent enormous amounts of time and money painting each other in the worst possible terms -- to the point that some Republicans have repeatedly cast aspersions on the patriotism of the Democrats.

The split between the two major parties first widened out in the late ‘70s and early ‘80s. It showed in a sharp increase in the number of votes in Congress along party lines -- that is, votes in which a majority of Democrats opposed a majority of Republicans and vice versa. But notice this, because it is extremely important: While the two parties name call and indeed often stalemate, the center of gravity of the whole political system moves steadily to the right. This is every bit as important as all the public discord and angry rhetoric. Just look, for example, at the current debates on entitlements. In 1954, President Eisenhower famously dismissed critics of Social Security and unemployment compensation as "stupid." Now leaders in both parties are talking about all kinds of big budget cuts, even though many Americans have been out of work for long periods and have watched their savings and the values of their homes sink, while they were forced to bail out the financial sector.

LP: How does polarization affect what Congress does?

TF: When you have divided government -- that is, a president of one party with the opposition controlling one or both houses of Congress -- the process of confirming nominations grinds to a halt. And even if you don't have divided government, members of Congress spend a great deal of time posturing. More congressional votes happen that are not meant to actually pass anything, but rather to send signals to outside groups and supporters. For example, Republicans may craft a bill on abortion that has no chance of being signed into law. But introducing it forces everyone to take a stand. This projects hot button divisions beyond the Congress itself to energize outside constituencies. But polarization's most obvious effect is to deadlock the legislative process. Look, for example, at the way the government has come right to the brink of shutting down over the budget or how climate change legislation has been shelved, as every form of compromise falls through. In the Senate, working control now means not a simple majority of 51, but a "super-majority" of 60, as the minority party routinely threatens to filibuster measures it dislikes.

LP: What's the relationship between political polarization and the media?

TF: The press powerfully amplifies partisanship. Statistical studies of media content suggest that the language newspapers use to describe politics varies systematically. Their news stories tend to employ the favorite buzzwords of one of the political parties rather more than the other. Some papers, for example, may describe inheritance taxes as "death duties" -- a term favored by Republicans. Others just talk about inheritance taxes.

What's interesting is that word choice appears to reflect not the mix of voters in the area covered by the newspapers -- that is, their readers -- but the split in political contributions originating in individual media markets. In other words, the language of the papers reflects the terms each side's partisans prefer, with the balance in each market tilting in favor of the locally dominant bloc of political contributors. Campaign contributors are mostly very affluent; what we have here is a top-down process of language imposition. Congress speaks; America listens, whether it likes it or not, as the papers record the discussion in their locally biased way.

This amplification of polarization in the media, in turn, encourages polarization in Congress. We get a feedback loop running between the media and political institutions.

LP: Does polarization in Congress and the media increase division in the population?

TF: The evidence is that people who hold an opinion on one of the handful of hot button issues that the parties debate in public tend to move toward the party that says it agrees with them. But here's the surprise: generally not that many people do this. When they do, they don't usually change their self-labeling. That is, they don't move from thinking of themselves as moderates to considering themselves conservatives, for example.

LP: So you don't think that culture wars explain polarization?

TF: No. Almost regardless of where you look, you'll find that changes in public opinion between the 1970s and today are relatively small. On many issues, such as gay rights, the shift among the public has gone towards the left, rather than the right. Even the famous ‘liberal label' problem is not nearly as large as people think. The number of people identifying as liberals has dropped by about 5% from the seventies to now. That hardly indicates a massive change in the way people view themselves politically.

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LP: Some argue that we have ‘sorting' among the public that leads to polarization. If I'm surrounded by like-minded people, the thinking goes, I become more extreme in my views. Is this really happening?

TF: The ‘Big Sort' people mostly concede that opinion shifts in the population are not large. So they focus on explaining polarization by looking for some thing or things that shoehorn people into more homogeneous groups that then contend among themselves. The evidence just doesn't support these theories. All the talk about gerrymandering has actually been debunked. There are some stunning cases, but not nearly enough to explain Congressional polarization. And you can simply observe the U.S. Senate: The Senate is about as polarized as the House -- just look at the figures in my INET paper (*see link at the end of this article). Nobody has messed with the boundaries of U.S. states in the last generation. Nor does the obvious fact that Republicans replaced conservative Democrats in the South help very much. Polarization in other areas of the country is very intense; just pointing to all the right wing Republicans from the South and West does not answer the question, given the small changes in popular opinion. It just reframes the question about what really drives this process. It has to be something else.

LP: And what is that ‘something else'?

TF: In a word: money. Since the mid '70s, more and more political money has been moving right and center-right. To understand Congressional polarization, though, you have to focus sharply on the crucial moment, which was 1994. That was the second stage of the Reagan Revolution, when Republicans took over both houses of Congress. Notice the key political players then. You have Newt Gingrich, who was organizing the GOP push in the House; Phil Gramm, who headed Senate fund raising for the GOP; and Haley Barbour, who chaired the Republican National Committee. These people weren't 'bowling alone'. They were free market fundamentalists. They wanted to cut taxes, on high brackets especially. They wanted to push deregulation of the financial and telecommunications industries. They wanted to abolish things like the EPA and the Consumer Product Safety Commission and cut back the FDA, the FTC, and just about every other government regulatory agency. The one area where they liked Big Government was defense.

These anti-government, pro-corporate Republicans broke every record for raising political money. Look at Gingrich and his history in particular. When he started attacking the older Republican leaders in the House as timid and too willing to compromise, money came pouring in. Yes, they supported and allied with evangelical religious groups. But those were always secondary to the main objective, which was to deregulate the economy and roll back the New Deal in all its manifestations.

LP: How did the 1994 Republican victory affect Congress itself?

TF: When Gingrich won control of the House, he installed what amounted to a pay-to-play system internally, which forced individual representatives to compete to hold their positions on key committees and leadership posts by raising funds for the party. The effect on the House was far-reaching, because the seniority system was already pretty much dead as a result of reforms in the seventies. The movement to limit the terms of committee chairs also worked in this direction, because it meant that more posts were coming open on a regular basis. What happened was that the entire Congress became money-driven.

Positions on key committees, leadership posts -- they were all being sold. The money collected then was poured into election campaigns, especially for so-called "open seats," in which no incumbents were running and in doubtful races. The vast spending and noisy campaigns heated up the political atmosphere in and out of Washington, as the media transmitted the messages.

The Democrats looked at the Republicans' pay-to-play system and basically decided to copy it. They did this instead of mobilizing their old mass constituencies. Today, as my paper documents, both parties are essentially posting prices for influential committee slots and leadership posts.

The Democrats' decision to emulate the Republicans and follow the money shifts the system's center of gravity to the right, as both parties frantically cultivate investor blocs. The result is the weird political world we live in. Behind the scenes, investor blocs and businesses maneuver for advantages in both parties. The system's center of gravity moves to the right, checked only by the diminishing influence of unions and other mass political groups that retain some resources and influence on the Democrats. You end up with two "money-driven" parties. The parties are not identical, but they have this in common: They cannot possibly campaign only on appeals to investor blocs, so each party reaches out to select public constituencies to scrape together enough votes to win elections, in a sea of public cynicism.

Polarized politics is money-driven politics and political parties are first of all bank accounts, whatever else they do. More precisely, the current polarization of the system is the direct result of the Republicans' attempt to roll back the New Deal and the way the Democrats responded. I regret to say I don't see much chance that it will abate any time soon. The Obama administration's failure to deliver "real change" has given the Republicans a new lease on life. Less than three years after the financial collapse, which handed the presidency and both houses of Congress to the Democrats on a platter, free market fundamentalism is back. Today Republicans look closer to rolling back the New Deal than they ever have. They are unlikely to see much reason to compromise; especially when the Obama administration, in the middle of trying to raise a billion dollars for the 2012 campaign, declines to press a strong defense of investments in people and regulation, not even financial regulation.

LP: Will the tsunami of money released by the Citizens United decision make polarization even more intense?

TF: Alas, the post-Watergate campaign finance reforms have been steadily watered down. The role big money plays in our electoral system was already grotesque before Citizens United, what with "527s," independent expenditures, and other devices for spending without limits. But the Supreme Court's decision sets corporations (and of course, any labor union that still has any resources) free to disgorge funds directly from corporate treasuries to campaigns, as long as the money is spent independently of candidates' own campaigns. Much of this money is likely to be impossible to track in public. But it will find its way into campaigns, raise the stakes, and set off further rounds of campaign spending. It's just going to make the carousel rotate faster. Yes, polarization is likely to persist.

**Read Ferguson's complete INET paper, delivered April 10 at Bretton Woods: "Legislators Never Bowl Alone: Big Money, Mass Media, and the Polarization of Congress ".

**And for details on how money impacted the 2010 elections, see Parramore's November interview with Ferguson: "Money and the Midterms: Are the Parties Over?"

Thomas Ferguson is Senior Fellow at the Roosevelt Institute and Professor of Political Science at the University of Massachusetts, Boston. He is the author of many books and articles, including Golden Rule: The Investment Theory of Party Competition and the Logic of Money-Driven Political Systems.

Lynn Parramore is the editor of New Deal 2.0, Media Fellow at the Roosevelt Institute fellow, co-founder of Recessionwire, and the author of Reading the Sphinx.

**Follow Lynn Parramore on Twitter at http://www.twitter.com/lynnparramore

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Who is Influencing Obama's Budget Proposal? Follow the Funders.

Feb 14, 2011Robert Johnson

How the brave new world of money in politics is compromising America's future.

How the brave new world of money in politics is compromising America's future.

President Obama is a smart man. When Gallup surveys suggest that unemployment is around 10 percent -- and that unemployment plus underemployment is 19 percent of the workforce -- then it's clear that the best way to raise revenues and close the deficit is to put people back to work. President Obama surely knows this. But his actions don't seem to follow this obvious logic. Why is that?

Part of the reason lies in a group of people who pour money into our political system but don't necessarily want the same things that ordinary Americans want. In fact, some of these people benefit from municipal crises, breaking teachers unions, and increasing the fear of the workforce. They fall disproportionately into the group that Harvard professor Lawrence Lessig identified as "the funders" in his recent TedX Talk in San Antonio, Texas. The increasing power of this group produces political contortions by buying results in Congress that do nothing for regular folks. Their influence also steers President Obama to focus on his reelection rather than trying to change the climate of opinion and become America's Great Persuader.  The public has now heard the conservative mantra that government is the problem and not the solution for 40 years. Couple that with the experience of valid rage following the bank bailouts, and it's not surprising that the public overwhelmingly feels that the government has become an instrument of the wealthy and powerful. Strong leadership is needed to challenge this narrative. But the President seems content to conform to the prevailing suspicion of government. He fails to convince the public that the government can have an active response to the jobs crisis -- a response that benefits them, not monied interests.

And that suits many funders in the top 3 percent of the wealth distribution just fine.

With profits so high and so many slack resources, it is sad that President Obama continues on the path of "triangulation" and chooses to "pre-concede" so much to the Republicans. In electoral terms, the breaking of all of the unions at the state and local level will serve to benefit the Republican party in many regions and exacerbate inequality. It is surprising the the President does not resist this for the benefit of his own party's future. But Presidents often fly solo rather than represent their party when reelection looms -- especially in a post-Citizens United world that will be influenced by unprecedented rivers of money.

Looking forward, we can see that our infrastructure is worn out in many, many places. We can also see that a dearth of public goods, education, basic science and infrastructure portend a weakening of the living standard of our nation. President Obama seemed to acknowledge this in his State of the Union address vision. But his budget strategy does not. The current budgets, both Democrat and Republican, appear to be imposing cuts on the lower middle class and poor. We are, as Paul Krugman said in the New York Times on Monday, eating our future.

Unfortunately, the proposed budget appears more likely to contribute to the ongoing widening of wealth and income inequality. And it seems more likely to increase, rather than reduce, the idle resources in our society. This budget logic makes little sense, and the human costs are dreadful. Only the logic of power sheds light on our path of dysfunction in the USA. Andrew Mellon must be smiling.

Rob Johnson is a Senior Fellow and the Director of the Project on Global Finance at the Roosevelt Institute.

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Obama's Budget Speaks to Wall Street, Ignores Voters

Feb 14, 2011Tom Ferguson

Thomas Ferguson explains how the President's budget is way out of focus.

President Obama's budget proposal fails to address the real deficit culprits.

Thomas Ferguson explains how the President's budget is way out of focus.

President Obama's budget proposal fails to address the real deficit culprits.

Addressing long-term budget issues requires bringing US health care costs in line with those of other major countries with better records on providing adequate services to their populations. That is not done by fixing inflexible spending limits, but by allowing the government to bargain with Big Pharma over drug prices and making health insurers actually compete. In the long run, we probably need a single-payer system that eliminates all the wasteful duplication in medical forms, advertising, etc, that pass on costs to the consumer. If you also rein in military spending and regulate banks to prevent another financial crisis from wrecking both the economy and the budget again, much of the deficit problem disappears. Then you can admit the truth of what close students of Social Security already know: That there is no problem with that program for decades, if ever.

The President should have started us down that road today. He didn't. Instead, he's kicking off a race to the bottom with the Republicans that will will wreck America's future and further mystify the public. And don't fool yourself with talk about appeals to "independent voters." Almost no polls ask voters if they would like to tax the wealthy. The one poll that did found 61% opting for that. For the next two years, one number towers over all others: $1 billion. That's what the President's reelection campaign is going to cost. The real audience for the budget proposals is Wall Street, not any set of voters, and certainly not the popular movement that elected him.

**For more, check out a paper co-authored by Tom Ferguson and Rob Johnson: "A World Upside Down? Deficit Fantasies in the Great Recession"

Thomas Ferguson is Senior Fellow at the Roosevelt Institute and Professor of Political Science at the University of Massachusetts, Boston. He is the author of many books and articles, including Golden Rule: The Investment Theory of Party Competition and the Logic of Money-Driven Political Systems.

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SOTU Advice from Millennials: Invest in Our Future!

Jan 25, 2011

Those with the biggest stake in what the President says tonight are the young people who will inherit his decisions. The Roosevelt Institute Campus Network shares hopes for what path our country can and should take.

From Anna Peterson, junior history and mathematics double-major and the Campus Network Chapter Vice-President of Policy Research at the University of North Carolina at Chapel Hill:

Those with the biggest stake in what the President says tonight are the young people who will inherit his decisions. The Roosevelt Institute Campus Network shares hopes for what path our country can and should take.

From Anna Peterson, junior history and mathematics double-major and the Campus Network Chapter Vice-President of Policy Research at the University of North Carolina at Chapel Hill:

"As he talks about investing in the future, I hope to hear the president discuss investment in education. What comes after short-term grants from the stimulus bill and Race to the Top, and how can we give schools the reliable funding they need in the long run? With the reauthorization of the Elementary and Secondary Education Act, education is bound to be on the agenda in the coming year, and I expect the president to emphasize the importance of education for economic recovery and in relation to global competition."

From Toto Martinez, first year political science major at UC Davis and a new member of the Roosevelt chapter:

"I would like to see the president echo some of the rhetoric from his 2008 presidential campaign. Specifically, he should focus on: closing tax loopholes for the wealthy, who pay a lower percentage in taxes than the average working person; fighting, at least, for a public health insurance option and applying anti-trust laws to the private health-insurance industry; campaign finance reform that bans contributions from any unions, corporations, or other special interest groups and only allows for the use of public funds that will keep candidates accountable to the American people; and a massive infrastructure program for the twentieth century that will put millions of people to work, just as Roosevelt did in the 1930s. He should not use 'compromise' as a scapegoat for all of his broken promises, but rather fight for the ideals that made the country strong in the past. He may go down fighting or he may ride a wave back to victory, but above all he must fight for our nation's democratic principles." ~

From Sahar Massachi, fourth-year student of computer science at Brandeis University and previous Summer Academy fellow with the Campus Network:

"Tonight, the Kremlinologists of Washington are expecting to pore over a careful, calibrated, and polished policy document disguised as a speech. They'll analyze every twist and turn of phrase for hints of Obama's plans for the next year. That's kind of sad; it doesn't have to be this way. Imagine a speech that teaches us what a positive and just foreign policy could be like, one that sketches out a story about what life in a progressive America could look like. Imagine a speech that speaks directly to us -- and ignores the expectations of the chattering class. I want to live in a world where Obama educates me about the world as it is, inspires me with a vision for a bright future -- and lays out a theory of how we can achieve that change together."

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Tom Ferguson Warns Voting Problems are a Cloud Over our Political System

Jan 3, 2011

Our great experiment in democracy doesn't work if citizens don't vote, but recent stats on turnout don't look good. At an event introducing a new working paper on American voting patterns by Walter Dean Burnham, Roosevelt Institute Senior Fellow Tom Ferguson warned that our problems with voter registration, turnout, and vote counting are only getting worse with time. As Burnham's paper shows, voting patterns in America are all over the place -- in the 19th century we had one of the highest turnout rates, but these days we have one of the lowest. And as Tom pointed out, "Once you realize turnout is a variable... things like registration requirements are enormously important."


More at The Real News

Our great experiment in democracy doesn't work if citizens don't vote, but recent stats on turnout don't look good. At an event introducing a new working paper on American voting patterns by Walter Dean Burnham, Roosevelt Institute Senior Fellow Tom Ferguson warned that our problems with voter registration, turnout, and vote counting are only getting worse with time. As Burnham's paper shows, voting patterns in America are all over the place -- in the 19th century we had one of the highest turnout rates, but these days we have one of the lowest. And as Tom pointed out, "Once you realize turnout is a variable... things like registration requirements are enormously important."


More at The Real News

Tom recounts an experience he had in Boston where his driver's license wasn't enough to register -- he needed a piece of mail, and even after that he would have to get a postcard in the mail and return it. It's little wonder, then, that Boston has a low turnout rate, he concluded. Meanwhile, an increasing number of states demand picture IDs to let people vote. The problem? Tom points out, "Huge numbers of people don't carry pictures of themselves around unless they have a driver's license. Lots of people don't have driver's licenses. Who needs to carry their passport to vote?"

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Another increasing problem are laws against felon voting, Tom says. There are many places where felons can't vote while in prison and even after they are released. "In particular in the black community... a huge chunk of those folks get disenfranchised over time," he warns. And these are not small blips, but indicate a shift toward "nonsense" in general, he says. "This is not a small cloud that shadows American voting. It's becoming a fairly large cloud."

So what would Tom do if he were a Republican campaign strategist? What most of them do -- "take a big chunk of the upper income vote. Then you've got to find a way to split the lower-middle and lower-class poor people voting just a touch." Their success at this is exaggerated, though. As ND20 Editor Lynn Parramore pointed out after the midterms, the less money you made, the more likely you were to vote Democrat.

But the outlook is, in a word, bleak. "If it's not quite a cancer on the body politic, it's a lot more than a pinprick," Tom concludes.

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The Lame Duck Session: High Risk, Low Gain

Nov 15, 2010Bo Cutter

Shaping the future with today’s choices.

Most lame duck sessions have results ranging from disappointing to really disappointing to genuinely awful. This one -- which starts tonight -- could set records. It is hard to see how it doesn't instantly become pure political theatre. In this context, President Obama has to be very careful or he will simply be seen as an ineffective player in the food fight.

Shaping the future with today’s choices.

Most lame duck sessions have results ranging from disappointing to really disappointing to genuinely awful. This one -- which starts tonight -- could set records. It is hard to see how it doesn't instantly become pure political theatre. In this context, President Obama has to be very careful or he will simply be seen as an ineffective player in the food fight.

From this perspective, I found E.J. Dionne's Washington Post column today to be from a different universe. Mr. Dionne suggests that Democrats, and I guess therefore the President, pick five issues to fight about: the DISCLOSE Act (campaign contribution disclosures), Don't ask, don't tell, the DREAM Act (immigration), extending unemployment insurance, and the Bush tax cut extensions. Mr. Dionne is not alone here; others are giving similar advice. And it is excellent advice if your aim is yet another rout. But it is terrible advice if you want President Obama to begin his way back.

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Just to be clear, I am for all five of these measures. But I do not have a magic wand that will get them passed; more importantly, neither does President Obama. Right now, in my opinion, the American people are not listening to the President. They will completely tune him out if he says he is for five big measures and then opens himself up for all of the public bargaining they would entail.

The President should state he is for one, at most two, actions: a two-year extension of the Bush tax cuts for all families earning under $500,000 annually and the extension of unemployment insurance. He should also clearly state that he will veto tax extension legislation that goes beyond $500,000 and does not establish some kind of time limit. (I do not think his own Democrats will support a lower ceiling.) And he should, in fact, veto any such legislation, and be prepared to veto more if the lame duck session turns ugly.

His stated immediate aim should be one or two crisp actions, and then he should get the Congress out of town. His longer-term objective should be to establish clearer focus on a very few areas through his actions, not just his words.

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.

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