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The Red Scare and Average Joes

With precious little to distinguish himself from the Bush years, except possibly more intransigence than even W. when it comes to moving off failed domestic and foreign policies, John McCain is losing the battle of reason in this election — which says that the Bush era has been a disaster and more of the same would be an even bigger disaster. And so he has staked his hopes for the presidency on the pull of visceral emotionalism. For weeks, McCain and Sarah Palin have spent considerable energy insinuating that Barack Obama is a dark (literally and figuratively), unseemly character who just might be a one-man sleeper cell. A recent example of these tactics is the Republican National Committee mailer blowing around Virginia last week with a jumbo jet on its cover and ransom-note-style typography exclaiming Terrorists Don’t Care Who They Hurt, followed, of course, by a photo of Obama and the declaration: “Barack Obama. Not Who You Think He Is.” Pressed by a Missouri TV reporter, McCain said he’s “absolutely” proud of the mailer, which for me is further evidence that he’s not who I thought he was when I was kind of rooting for him back in 2000.

With Obama’s poll numbers and projected electoral-college vote increasing in something like direct proportion to McCain’s appeals to “real America’s” latent racism and the fear trigger they hope is Barry’s middle name, McCain and Palin have lately been trying to seduce another part of our lizard brain, the one that recoils at the mere whisper of — dare I say it? — socialism.

Assuming you read that word and didn’t immediately start shitting Little Red Books, there’s something worth examining in the McCain campaign’s desire to boil the archetypal Joe the Plumber and the prosecutorial Joe McCarthy up into a strange brew they hope will get an anxious electorate drunk enough to put the Arizona senator in the White House, where he can presumably finish the business of ruining the country. Leaving aside the McCain strategists’ desperate desires to add the red hue of socialism to the apocalyptic vision they’re trying to paint in our subconscious should Obama win, what’s worth looking at is the idea of socialism itself. What does it mean these days when the most strident socialist state left in the world, North Korea, is a tragic oddity, and the largest one, China, is our biggest benefactor. Neither is capable of raising the old red scare of the Soviet bear. So what are we talking about when we talk about socialism, since lately we’re talking about it so much?

McCain and Palin can’t get through a stump speech without extolling Joe “the Plumber” Wurzelbacher as a stand-in for the average Joe, whose entrepreneurial dreams will be dashed under Obama’s tax plan. As an archetype, Joe doesn’t hold up so well. He isn’t a licensed plumber, isn’t about to buy the company he works for — or anyone else’s – and owes more than a grand in back taxes. (No wonder he doesn’t like them.) Under Obama’s plan, of course, he would actually receive a tax cut since he doesn’t make anywhere near $250,000, the income level that would see a modest rollback to Clinton-era tax rates. When Joe said the plan “sounds like socialism to me,” conservative dogs on TV, radio and the blogosphere went off. The phrase they’ve been sinking their teeth into like a pork chop has been Obama’s reply to Joe, that when you spread the wealth around, it’s good for everyone.

I asked John Despres, an economist who started in the Bureau of the Budget back when color TV was spreading as fast as the Domino Theory, and who worked in the Carter, Reagan and Clinton administrations, what is going on here.

“McCain is saying that the transfer of wealth or income through the tax code is class warfare and socialism,” Despres explains. “It’s being used as an epithet to conjure up fears that we’re on a slippery slope, and that this is a hidden agenda Obama has to take away people’s economic freedom and manage their lives like a socialist state.”

And there you have it, the red scare in an easy sound bite. Obama wants to redistribute the wealth. Massively, according to the more frothing conservatives. And wealth redistribution is nothing more than socialism. And socialism is bad, right? Especially the fashion sense. Better dead than dressed like Kim Jong-il, I always say.

Of course, a progressive tax code is a far cry from a socialist state and has been a fundamental premise of free-market capitalist thinking, well, forever. To quote one such thinker: “It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue but something more than in that proportion.” That was Adam Smith, from The Wealth of Nations.

 

It’s a notion that has been in place here since the Civil War, and was codified in the Constitution in 1913 by the 16th Amendment. In other words, Joe Biden was right, it is unpatriotic for the wealthy to not want to pay a proportionate share of taxes. Not to mention it’s a little odd to hear Sarah Palin harping about wealth redistribution considering that richer (and usually blue) states like, say, California, perennially see a disproportionate spreading around of their wealth to poorer (and usually red) states, like, say, Alaska, in the form of federal budgets that keep Palin’s “real America” in schools, highways and social services. In fact, most years Alaska ranks first as the biggest recipient of government cheese — or wealth redistribution.

Of course, this is about more than the tax code. Obama has said he believes in the right to universal health care, free college tuition, a living minimum wage and other social safety nets. The slippery slope.

“It’s correct,” Despres says, “that Obama favors a larger and stronger role of the state in dampening the swollen inequalities in income and basic services that have developed over the years.”

Is that the sort of creeping socialism that spells the death knell of free enterprise and individual initiative? Not quite. Despres clarifies that socialism is state ownership of the means of production in which any property that produces goods and services is owned by the state. Some call that hard socialism or pure socialism. What we’re talking about is more akin to the social democracies we see in Western Europe, where there is a higher level of social services and taxes. “The U.S. has a certain amount of that,” Despres says. “I dare say the Bush administration has advanced the social-democratic model.”

For evidence, he cites the Drug Benefit Program, which, under the Bush administration, expanded Medicare benefits to include coverage for prescription drugs. Nor has Bush, says Despres, “dismantled or shrunk the role of the state in providing Social Security benefits.” In fact, pending legislation would expand the term of Social Security benefits as greater numbers of American apply for unemployment benefits in our sinking economy.

There are also corporate tax incentives, subsidies and the mother of all state-sponsored interventions in the free market, U.S. farm subsidies. Those alone have shoveled $177.6 billion in taxpayer dollars to farming interests — $55 billion from 2003 to 2006. The top 10 percent of these conglomerates receive 68 percent of the handouts. It’s arguably the largest corporate welfare program in the history of the world.

And, of course, if you want to label any governmental interference in the workings of the free market as socialism, what would you call the $700 billion in taxpayer money now being spent to shore up our financial markets and infuse capital into our unregulated banking system, a way of doing business that has brought us to the brink of disaster?

“What’s happened in the last few weeks has been to enormously aggrandize the role of the state in regulating and owning,” Despres says. “It’s opened the door in principle to do what the Brits are now doing, to buy not just minority, but majority shares of financial institutions in the private sector. When it’s corporate welfare, it’s not referred to as socialism.”

So, when the government intervenes on behalf of corporate interests, it’s okay, but not when it does so on behalf of the country’s average Joes? It wasn’t always this way. After World War II, the GI Bill paid returning vets’ college tuition, gave them a year of unemployment compensation, favorable small business loans and low-interest, zero-down payment home loans. In the process, many credit the GI Bill with establishing America’s middle class, our suburbs and the idea that higher education isn’t just for the wealthy. These days, some would call such intervention socialism. In the past, it was called good government.

What’s happened to our economy in recent weeks, though, is a reckoning on a global scale. It’s one in which Joe the Plumber as a metaphor for creeping socialism is more an example of McCain’s cognitive dissonance than a red scare. It’s a reckoning in which we see Alan Greenspan admit to a flaw in his entire way of thinking. “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity (myself especially) are in a state of shocked disbelief,” Greenspan said in testifying before Congress last week. It’s one in which Henry Paulson, the U.S. Treasury secretary, admits, “raw capitalism is a dead end.” And French president Nicolas Sarkozy says, “The idea of an all-powerful market without any rules and any political intervention is mad ... self-regulation is finished. Laissez faire is finished.”

 

Days before Greenspan went before Congress with hat in hand, the Paris-based Organization for Economic Cooperation and Development (and before you get your Francophobia in an uproar, the U.S. is a member) published a report that showed that among it 30 members, the U.S. has the third-worst level of economic inequality and poverty. We look down on only Mexico and Turkey. According to the report, “Since 2000, income inequality has increased rapidly, continuing a long-term trend that goes back to the 1970s. ... Rich households in America have been leaving both middle- and poorer-income groups behind. This has happened in many countries, but nowhere has this trend been so stark as in the United States.”

By comparison, in the socialist bastions, according to our way of thinking, of Scandinavia and Western Europe, where social spending on working-age people averaged 7 to 8 percent of their economy, the proportion of working people in poverty is 5 to 8 percent. Here, where we spend only 2 percent of our GNP on social benefits, 12 to 15 percent of working-age people — all the plumbing Joes out there — live in poverty. The report says that 17 percent of Americans live in poverty.

Trickle-down, laissez faire hasn’t worked. American-style deregulated capitalism is dead. In fact, it has brought the world to its knees. The proof is all around us in the form of shrinking family budgets, zero liquidity and rising unemployment. Clearly, we need a new way of thinking, one in which McCain’s adherence to trickle-down theories seems increasingly mad.

So, what’s next? If middle-class tax cuts, free education, health care, a living wage and basic safety nets are socialism, I say count me in. Let’s just call it compassionate capitalism.


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