Protestors against the Republican tax bill in Westfield, New Jersey, this month.CreditBryan Anselm for The New York Times
At the 1992 Republican National Convention, Pat Buchanan famously declared that American politics had become a “cultural war.” In the years since, social issues and identities have become more important in dividing Democrats from Republicans.
Traditionally, the two parties fought mostly over economics. But now cultural issues like abortion and gun control divide Americans more sharply along regional lines than economic policies. One impact of the rise of the culture war in the 1990s was to reorder the popular coalitions of the parties — for example, by attracting evangelical Protestants to the Republicans while propelling secular voters toward the Democrats. This also redefined their geographic constituencies.
But while it has been fueled by widening divisions over social issues within the American electorate, this regional realignment has left a much larger imprint on the direction of federal economic policy than on the nation’s prevailing cultural zeitgeist.
You might say that the winner of the culture wars is neither Democrats nor Republicans. In legislative terms, American corporations have claimed the biggest victories so far.
The growing sectional divide — the coasts and a handful of Midwestern and Mountain West states vote blue, while voters in the culturally conservative heartland of the South and interior West largely vote red — is magnified by winner-take-all electoral rules that concentrate representation in the hands of local partisan majorities. The Alabama Senate race was an exception, but this largely produces a stable arrangement of “red” and “blue” states and districts that seldom deviate from their normal partisan alignments regardless of the individual candidates seeking office.
On balance, the trend of rising geographic polarization has worked to the advantage of Republicans in both houses of Congress. The Republican Party has captured more seats in culturally conservative red America than it has relinquished in culturally liberal blue America, allowing it to control at least one legislative chamber in all but four years since 1994 after six decades of near-permanent minority status.
Senate Republicans especially benefit from the equal representation of thinly populated states in the nation’s midsection, which once regularly elected moderate Democrats like Ben Nelson of Nebraska, Tim Johnson of South Dakota and Max Baucus of Montana but increasingly favor Republicans in congressional races. Red states now substantially outnumber blue states; in the 2016 election, Donald Trump carried 30 states to Hillary Clinton’s 20 despite his loss in the national popular vote, while the outcome of every Senate race matched the state presidential result — a foreboding sign for the future fortunes of Senate Democrats.
The contemporary geographic coalitions of the parties primarily reflect the nation’s roiling cultural conflicts, but the representatives chosen via today’s electoral map are equally polarized over economic policies — and it is pocketbook issues, not social matters, that dominate the business of Congress. Increasingly unfettered by a declining bloc of dissident party moderates from the Northeast and Pacific Coast, ascendant red-state Republicans have prioritized an ambitious conservative economic agenda encompassing regulatory rollbacks, repeal of the Affordable Care Act and substantial cuts to federal taxes — like the tax bill passed last week — and entitlement programs. Departures from this small-government approach, such as the No Child Left Behind and Medicare Part D programs enacted during the George W. Bush presidency, have fallen out of fashion among post-Tea Party Republican leaders increasingly devoted to the pursuit of ideological purity.
Political analysts often argue that the rise of the culture war has had an acrimonious effect on American politics by expanding the battlefield of partisan disagreement to include a set of policies that provoke moral fervor, like abortion and gay rights, or activate fundamental personal identities such as religion and ethnicity. These divisions, they suggest, do not lend themselves to negotiation and compromise as readily as differences over economics, where horse-trading and difference-splitting are more feasible solutions.
But the growth of cultural conflict has polarized Democratic and Republican politicians on economic issues as well, by providing the two parties with increasingly distinct and insulated electoral constituencies, and bitter debates over health care and tax reform have generated just as much partisan rancor in the current Congress as any other policy domain.
The numerous Republican victories in congressional elections during the past 25 years have not managed to prevent the cultural change that has occurred over the same period, from declining religious observance and increasing support for same-sex marriage to the decriminalization of marijuana and the rise of the Black Lives Matter movement. Cultural conservatism remains essential to defining the Republican Party’s regional base, but its substantive fruits can be found more in the implementation of conservative economic measures than in the repeal of liberal social policies or reversal of leftward social trends.
Despite a 2016 campaign waged largely on cultural themes, the Republican tax bill represents the biggest legislative accomplishment of the current Congress — and, quite possibly, of the entire Trump administration. Though Mr. Trump once presented himself as a populist enemy of Wall Street, and though many corporations have come to adopt liberal positions on issues like immigration, gay rights and affirmative action, big business and wealthy individuals stand to benefit the most from tax cuts approved by congressional majorities elected on the basis of right-of-center cultural views.
That is why the true winner of today’s culture war is corporate America.
Trickle Down? Not Now, and Not for a While at Best (Wonkish)
“You all just got a lot richer,” Trump reportedly told guests at Mar-a-Lago. But Republicans will nonetheless keep insisting that the corporate tax cut that is the main item in the tax bill is really for the benefit of workers. They will be aided in this claim by some recent corporate announcements of bonuses or wage hikes that they attribute to the tax cut.
It’s nonsense, of course. Think of the motivation: lots of companies are raising wages at least a bit in the face of tight labor markets; pretending that it’s because of the tax cut is a cheap way to curry favor with an administration that has no hesitation about using regulatory and antitrust decisions to reward friends and punish enemies. It’s basically Carrier all over: make a Trump-friendly splash by declaring that he persuaded you to save jobs, then lay off lots of workers after the cameras have moved on.
But there’s a larger point here: even if you believe economic analyses that suggest corporate tax cuts are good for wages, it shouldn’t happen right away. Any trickle-down should come about because the tax cuts lead to higher investment, which leads over time to a larger capital stock – and it’s the increase in the capital stock, which may take many years, that leads to the wage rise.
I keep finding it helpful to use a diagram representing the economy corporate tax-cutters imagine we have: a one-sector economy with no monopoly power, open to inflows of foreign capital. (Adding the reality of monopoly rents, noncorporate capital, and nontraded goods all reduce the extent of trickle-down.) This stylized economy looks like Figure 1:
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Figure 1
The downward-sloping line is the marginal product of capital, which is equal (in this model) to the pre-tax rate of return r. The after-tax return is r(1-t), where t is the tax rate.
Given an initial capital stock K, GDP is the integral of the area under the r curve up to K. Of this, rK goes to pre-tax profits, of which the government takes a share t and the rest goes to after-tax profits. What’s left, the triangle at the top, is wages.
Now suppose the corporate tax rate is cut to a lower level t’. This raises the after-tax rate of return for any given capital stock. The country faces a long-run supply curve for capital; this curve would be horizontal for a small open economy, is surely upward-sloping for the United States. Still, over time the capital stock rises to K’. This, in turn, leads to higher wages:
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The crucial words, however, are “over time.” For a variety of reasons, it would take a number of years for the capital stock to rise to its long-run level. And in the short run, we wouldn’t expect wages to rise at all. Certainly not in the first week after the tax cut!
So if you suspect that these corporate announcements are political theater, not real economic events, the very model's tax-cut enthusiasts like to cite back you up. There will be negligible wage effects of the tax cut in 2018; for the first few years, it’s basically all Mar-a-Lago.
The Firm of Scrooge & Marley by Bryan J. Neva, Sr.
Ebenezer Scrooge and Jacob Marley were business partners in Charles Dickens' December 1843 novella A Christmas Carol. They ran a counting house or money lending business (akin to a pawn shop today) which took advantage of the poor and desperate by charging usurious interest, driving many into destitution, and sending quite a few into debtors prison. Marley had died seven years prior, but Scrooge never bothered to change the sign.
As we all remember from the story, Scrooge was a greedy, self-centered, miserly old man who hated Christmas, refused to show charity, had a dysfunctional relationship with his relatives, and treated his overworked, underpaid employee Bob Cratchit poorly. He only grudgingly gave Bob a paid day off for Christmas, but he wanted him to come in early the following day to make up for it.
That Christmas Eve, Scrooge is visited by the ghost of his former partner Jacob Marley who warns him that he'll be damned like him if he doesn't mend his ways. Marley tells Scrooge that three ghosts will visit him over the next three nights; he should listen to them if he wants to avoid the same fate as him.
First, "The Ghost of Christmas Past" visits Scrooge and shows him many of his lost opportunities and how his past choices have affected his present situation. Second, "The Ghost of Christmas Present" visits him and shows him how his behavior has adversely affected others as well as all the joy he is missing in life. Third, "The Ghost of Christmas Future" visits Scrooge and shows him what will become of him if he doesn't change for the better. None of his wealth will do him or others a bit of good if he doesn't mend his ways.
On Christmas morning, Scrooge awakens to discover the three spirits had all visited him in one night. He takes the lessons to heart and radically changes his ways. He begins to mend his relationships with his relatives and his employee Bob Cratchit. And from then on treats everyone with kindness, compassion, and generosity embodying the Spirit of Christmas all year long.
Dickens' novella could be seen as an allegory of Christian redemption. The regret over lost opportunities and bad choices drives some to amend their ways and atone for their past sins. Even the worst of sinners can repent and be saved.
Written during the nineteenth-century British Industrial Revolution when laissez-faire capitalism and social Darwinism ruled, Dickens wrote A Christmas Carol because of society's disregard for the poor and oppressed. The character of Scrooge epitomized the greed and selfishness of society and the social repercussions of ignoring the poor and downcast especially children.
Since Dickens' time, we've made some progress, but there's still the nagging human problem of greed and selfishness among the rich and corporations today. If we could identify the bad actors and had the power to send them spirits to haunt them maybe they'd change their ways, but that's just wishful thinking.
The hard truth is that if we want to make our society better, each of us has to do our part starting with ourselves. Individually we need to carry the Christmas Spirit throughout the year by being kind, compassionate, and generous with others. Choosing to love God and our neighbor will go a long way in helping to change the world for the better.
Next, we all need to think long and hard about who we elect to public office. Keeping a non-partisan open mind about candidates who will push that rope of improvement up the hill of progress will help to change our society for the better. We need political candidates who will put the needs of the poor and working class at the top of their priority list rather than special interest groups and corporations. We can't idly stand by when the poor and marginalized are ignored. We have to have a social safety net to care for them. Charities can only do so much. We also need to hold governments and corporations accountable for their bad behavior. Life is not about accumulating money and material possessions; it's about improving the quality of life for everyone.
Corporations need to start looking out for the good of society and not just the wealth of their shareholders. We need a paradigm shift to convince corporations that it's in their own best interests to treat their employees well, pay them livable wages, and provide them with good benefits. And if a paradigm shift doesn't work, legislation needs to be enacted to force these changes upon them.
A Christmas Carol is as true today as it was when it was written. Selfishness and greed are as prevalent today as it was then. Someday each of us will have to give an account to God of how we lived our lives; hopefully, if we lived our lives right our ledgers will be in the black and we'll be welcomed into the Kingdom of God.
Christmas is a season of hope, but when we look at the state of our world today it's very hard to have hope. Even in our mundane lives, our frustrations can lead us to despair which squelches any hope we might have. When we see the degree of violence, anger, crime, division, dysfunction, and selfishness in our world today it's easy to lose hope. It's very hard to look at our future with any kind of expectant hope when we look at all the darkness and despair around us.
When a young, high-school graduate looks at their limited opportunities in life, it's hard for them to have hope. When a twenty or thirty-something person struggles to find a job that pays a living wage, it's hard for them to have hope. When a forty or fifty-something person struggles with the burdens of marriage, children, and a soul-crushing job, it's hard for them to have hope. When a sixty or seventy-something person struggles to make ends meet on a fixed income, it's hard for them to have hope. And when a person's health fails and they're reaching the end of their lives, it's hard for them to have hope.
Hope is like a match that ignites a candle which shines in the darkness and illuminates our way. But hope is something we simply cannot ignite within ourselves, it's actually a gift from God (I Corinthians 13:13). And this wonderful gift of hope will inspire us to look beyond whatever difficulties we are facing and trust in God that everything will eventually work out all right.
The great prophet Isaiah writing to a people who had lost hope over 700 years before Christ wrote these inspiring words (excepts from chapters 2, 11, 25):
They shall beat their swords into plowshares and their spears into pruning hooks; one nation shall not raise the sword against another, nor shall they train for war again. Not by appearance shall he judge, nor by hearsay shall he decide, but he shall judge the poor with justice, and decide aright for the land's afflicted. He shall strike the ruthless with the rod of his mouth, and with the breath of his lips, he shall slay the wicked. Justice shall be the band around his waist, and faithfulness a belt upon his hips. Then the wolf shall be a guest of the lamb, and the leopard shall lie down with the kid; the calf and the young lion shall browse together, with a little child to guide them. The cow and the bear shall be neighbors, together their young shall rest; the lion shall eat hay like the ox. The baby shall play by the cobra's den, and the child shall lay his hand on the adder's lair. There shall be no harm or ruin on all my holy mountain. He will destroy death forever. The Lord God will wipe away the tears from all faces. On that day it will be said: "Behold our God, to whom we looked to save us! This is the Lord for whom we looked; let us rejoice and be glad that he has saved us!"
And this is the great mystery of the Christmas season, that God sent his Son into the world in order to save humanity and give us hope beyond our futile existence.
Joseph Ellis: GOP is trying to erase over 100 years of history
By Joseph J. Ellis
Updated 8:04 AM ET, Tue December 5, 2017, CNN
Winners and losers of the Senate tax bill02:37
Joseph J. Ellis is an American historian who won the Pulitzer Prize for "Founding Fathers." He is the author of the forthcoming "American Dialogue: The Founders and Us." The views expressed in this commentary are solely his.
(CNN)As Mark Hanna, a Republican senator best known for helping to steer William McKinley into power, famously said in the 1890s: "There are two things that are important in politics. The first is money. I can't remember what the second is."
Joseph Ellis
The Republican tax plan is still in the process of becoming law, but already several enduring features of the new American landscape it creates are clear for all to see.
It redistributes income upward from the middle class to the donor class at the top, thereby increasing economic inequality. It is as if the captain of the Titanic, upon setting sail, ordered the crew to take on ice.
It significantly increases the national debt, thus exposing all the deficit hawks in the Republican Party as chickens. The current chickens intend to recreate themselves as hawks, duplicitously decry the deficit they have just created, and then demand significant cuts in Medicare, Medicaid and Social Security. The brazen hypocrisy of it all defies paradox.
The way it passed is prime material for a feature film or miniseries entitled "The Decline and Fall of the Senate" or perhaps "Machiavelli was Naïve." Passed in the dead of night without even knowing what is in the bill because the text itself remained an unfinished, partially handwritten draft, this is the kind of scene a documentary scriptwriter would not have dared make up.
Now we know what "Again" means in the Trump campaign slogan, "Make America Great Again." It means the Gilded Age of late 19th-century America. This in turn means erasing most of the 20th century, to dismantle the political legacies of the Great Society, the New Deal, and the Progressive Movement. It means going back to the future when titans named Rockefeller, Vanderbilt, Carnegie and Morgan wielded more power than presidents. It means accepting embedded economic inequality as the natural order.
Although Republicans call themselves conservatives, this is a radical vision, as it repudiates the social contract that laid the foundations for the American dream for much of the 20th century. The contract was most clearly articulated in FDR's 1944 State of the Union address, known as the Economic Bill of Rights speech. As FDR said, "We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence. ... People who are hungry and out of a job are the stuff of which dictatorships are made."
That social contract was a bargain brokered between capitalism and democracy. Corporate America would be permitted to pursue its profits in the marketplace on the condition that wealth was distributed to assure a robust middle class. The economic pie would grow in accord with capitalistic principles, while the pieces of the pie would be shared in accord with democratic principles.
The contract assumed that Jefferson's lyrical phrase "pursuit of happiness" lacked any plausible credibility if ordinary Americans were trapped in poverty and incapable of pursuing much more than survival. It also assumed that a healthy economy required an affluent middle class capable of purchasing and consuming goods and services generated by the marketplace. At the highest rhetorical level, freedom and equality coexisted in a mutually beneficial partnership.
In our new Gilded Age there is no need for negotiation between two sides. Capitalism has bought democracy. There is no social contract because there is no such thing as "we the people," only winners and losers, or in the Ayn Rand formulation, givers and takers. The American Dream has become, well, a dream.
This dystopian outcome has been implicit in the Republican agenda for several decades, ever since the right wing took control of the party in the 1990s. Emboldened by Newt Gingrich's Contract with America, they have called themselves the Tea Party, the Freedom Caucus and various other names. Now, with control of the presidency, the Supreme Court and both houses of Congress, the enactment of the Republican tax plan exposes explicitly the full meaning of this radical agenda.
This is why the Republican leadership in Congress has averted its eyes from the outrageous behavior of a President who is mentally, emotionally and morally unqualified for the job. Trump is their Great Enabler. He remains blissfully oblivious to the fact that he is selling out his base, who are dying by the thousands in the opioid epidemic and are at risk of losing their Medicaid coverage.
The looming midterm elections are expected to be a referendum on the Trump presidency. But now they are also likely to be a referendum on the Republican vision of the American Eden as a second Gilded Age.
There has long been an implicit bargain between the haves and the have-nots in the Republican coalition. Under the same anti-government, the haves get to control the economy while the have-nots control the cultural agenda. One side gets to keep its money; the other side gets to keep its guns, and prejudices. The viability of that awkward coalition is about to be put to the test.
Treasury Secretary Steven Mnuchin, right, and his wife, Louise Linton, hold up a sheet of new $1 bills on Nov. 15 at the Bureau of Engraving and Printing in Washington. (Jacquelyn Martin/AP)
The wealthiest 1 percent of American households own 40 percent of the country's wealth, according to a new paper by economist Edward N. Wolff. That share is higher than it has been at any point since at least 1962, according to Wolff's data, which comes from the federal Survey of Consumer Finances.
From 2013, the share of wealth owned by the 1 percent shot up by nearly three percentage points. Wealth owned by the bottom 90 percent, meanwhile, fell over the same period. Today, the top 1 percent of households own more wealth than the bottom 90 percent combined. That gap, between the ultrawealthy and everyone else, has only become wider in the past several decades.
Let's talk a bit about that wealth gap. Wealth, often described as net worth, describes how much stuff you actually have: It's the value of your assets minus the value of your debts. If you have a $250,000 house but you still owe $200,000 to the bank on it, and you have no other debts or financial assets, that means your net worth is $50,000.
In the United States, the distribution of that wealth is even more skewed toward the top than the distribution of income. For the sake of illustration, let's say that America is a country of 100 people, and all of the wealth in the country — the homes and land and financial assets — is represented by 100 slices of pie.
That works out to an average of one slice of pie per person, which is exactly what everyone would get if we lived in a society where wealth was equally distributed.
But that's not the society we live in, and indeed that's not the society that most of us want to live in either. People generally agree that if you work harder you're entitled to more of the pie, and that if you don't work at all, well, barring certain circumstances, no pie for you.
In 2010, Michael Norton and Dan Ariely surveyed more than 5,500 peopleto find out how they thought wealth shouldbe distributed in this country: How much of the pie should go to the top 20 percent of Americans, and to the next 20 percent, and so on, all the way down to the bottom of the distribution?
On average, respondents said that in an ideal world the top 20 percent of Americans would get nearly one-third of the pie, the second and middle quintiles would get about 20 percent each, and the bottom two quintiles would get 13 and 11 slices, respectively.
In an ideal world, in other words, the most productive quintile of society would amass roughly three times the wealth of the least productive.
The top 20 percent of households actually own a whopping 90 percent of the stuff in America — 90 slices of pie! That's exactly 4½ slices per person, nearly triple their “ideal” share according to Norton and Ariely's survey respondents. Their average net worth? $3 million.
That leaves just 10 percent of the pie for the remaining 80 percent of the populace. The next 20 percent of households (average net worth: $273,600) help themselves to eight slices, while the middle 20 percent ($81,700 net worth, on average) split a measly two slices.
Don't go feeling too sorry for that middle quintile, though — at least they get some pie. The fourth quintile of households gets literally nothing: no pie. But they're still doing better than the bottom 20 percent of households, who are actually in a state of pie debt: Their net worth is underwater, meaning they owe more than they have. Combined, the average net worth of the bottom 40 percent of households is -$8,900.
These figures, staggering as they are, mask a lot of the variation in the top 20 percent. Let's run those numbers again, breaking out some of the richest households separately.
There's the top 1 percent, gobbling up an astonishing 40 slices of American pie. The next 4 percent split 27 slices between them, while the next 5 percent take another 12 slices (a little over two slices per person). The bottom 10 percent of the top 20 percent get, on average, one slice of pie each. But don't feel too bad for them: Their net worth is, on average, about $740,800.
Among rich nations, the United States stands out for the extent of its wealth inequality. The top 1 percent in the U.S. own a much larger share of the country's wealth than the 1 percent elsewhere. The American 1 percent gobble up twice as much pie (40 percent) as the 1 percent in France, the U.K., or Canada, and more than three times as much as the 1 percent in Finland.
This kind of extreme inequality is bad for the economy. The Organization for Economic Cooperation and Development, which represents a number of the world's richest countries including the United States, estimates that inequality has knocked nearly five percentage points off the economic growth in those countries between 2000 and 2015.
In high-inequality countries, people from poor households typically have less access to quality education. This leads to “large amounts of wasted potential and lower social mobility,” which directly harms economic growth, according to the OECD.
If you were designing a tax plan to reduce the extreme inequality in the United States, you'd probably try to find ways to redistribute some of the wealth from the richest households to the poorest ones. But the Senate GOP tax plan does precisely the opposite of that, according to the CBO: In the short term the richest households get the biggest tax cuts, while longer term the taxes of the poorest households actually increase.
Estate tax? Cut. Income tax rate for millionaires? Cut (at least in the Senate bill). Corporate tax rate? Biggest rate cut ever.
In the long term that probably means more of the pie for the super-rich, and less of it for everyone else.
Christopher Ingraham writes about politics, drug policy, and all things data. He previously worked at the Brookings Institution and the Pew Research Center.