America’s Political Class Struggle
Jeffrey D. Sachs
NEW YORK – America is on a collision course with itself. This month’s
deal between President Barack Obama and the Republicans in Congress to
extend the tax cuts initiated a decade ago by President George W. Bush
is being hailed as the start of a new bipartisan consensus. I believe,
instead, that it is a false truce in what will become a pitched battle
for the soul of American politics.
As in many countries, conflicts over public morality and national
strategy come down to questions of money. In the United States, this is
truer than ever. The US is running an annual budget deficit of around $1
trillion, which may widen further as a result of the new tax agreement.
This level of annual borrowing is far too high for comfort. It must be
cut, but how?
The problem is America’s corrupted politics and loss of civic morality.
One political party, the Republicans, stands for little except tax cuts,
which they place above any other goal. The Democrats have a bit wider
set of interests, including support for health care, education,
training, and infrastructure. But, like the Republicans, the Democrats,
too, are keen to shower tax cuts on their major campaign contributors,
predominantly rich Americans.
The result is a dangerous paradox. The US budget deficit is enormous and
unsustainable. The poor are squeezed by cuts in social programs and a
weak job market. One in eight Americans depends on Food Stamps to eat.
Yet, despite these circumstances, one political party wants to gut tax
revenues altogether, and the other is easily dragged along, against its
better instincts, out of concern for keeping its rich contributors happy.
This tax-cutting frenzy comes, incredibly, after three decades of elite
fiscal rule in the US that has favored the rich and powerful. Since
Ronald Reagan became President in 1981, America’s budget system has been
geared to supporting the accumulation of vast wealth at the top of the
income distribution. Amazingly, the richest 1% of American households
now has a higher net worth than the bottom 90%. The annual income of the
richest 12,000 households is greater than that of the poorest 24 million
The Republican Party’s real game is to try to lock that income and
wealth advantage into place. They fear, rightly, that sooner or later
everyone else will begin demanding that the budget deficit be closed in
part by raising taxes on the rich. After all, the rich are living better
than ever, while the rest of American society is suffering. It makes
sense to tax them more.
The Republicans are out to prevent that by any means. This month, they
succeeded, at least for now. But they want to follow up their tactical
victory – which postpones the restoration of pre-Bush tax rates for a
couple of years – with a longer-term victory next spring. Their leaders
in Congress are already declaring that they will slash public spending
in order to begin reducing the deficit.
Ironically, there is one area in which large budget cuts are certainly
warranted: the military. But that is the one item most Republicans won’t
touch. They want to slash the budget not by ending the useless war in
Afghanistan, and by eliminating unnecessary weapons systems, but by
cutting education, health, and other benefits for the poor and working
In the end, I don’t think they will succeed. For the moment, most
Americans seem to be going along with Republican arguments that it is
better to close the budget deficit through spending cuts rather than tax
increases. Yet when the actual budget proposals are made, there will be
a growing backlash. With their backs against the wall, I predict, poor
and working-class Americans will begin to agitate for social justice.
This may take time. The level of political corruption in America is
staggering. Everything now is about money to run electoral campaigns,
which have become incredibly expensive. The mid-term elections cost an
estimated $4.5 billion, with most of the contributions coming from big
corporations and rich contributors. These powerful forces, many of which
operate anonymously under US law, are working relentlessly to defend
those at the top of the income distribution.
But make no mistake: both parties are implicated. There is already talk
that Obama will raise $1 billion or more for his re-election campaign.
That sum will not come from the poor.
The problem for the rich is that, other than military spending, there is
no place to cut the budget other than in areas of core support for the
poor and working class. Is America really going to cut health benefits
and retirement income? Will it really balance the budget by slashing
education spending at a time when US students already are being
out-performed by their Asian counterparts? Will America really let its
public infrastructure continue to deteriorate? The rich will try to push
such an agenda, but ultimately they will fail.
Obama swept to power on the promise of change. So far there has been
none. His administration is filled with Wall Street bankers. His top
officials leave to join the banks, as his budget director Peter Orszag
recently did. He is always ready to serve the interests of the rich and
powerful, with no line in the sand, no limit to “compromise.”
If this continues, a third party will emerge, committed to cleaning up
American politics and restoring a measure of decency and fairness. This,
too, will take time. The political system is deeply skewed against
challenges to the two incumbent parties. Yet the time for change will
come. The Republicans believe that they have the upper hand and can
pervert the system further in favor of the rich. I believe that they
will be proved wrong.
Jeffrey D. Sachs is Professor of Economics and Director of the Earth
Institute at Columbia University. He is also Special Adviser to the
United Nations Secretary-General on the Millennium Development Goals.