Michael Hudson – Is This the End of the Unreformable Democratic Party?

This all reminiscent of the analyses after Trump’s victory. Democracy is dead in the USA, as is the case in most EU nations. If you vote for the Left or the Populist Right, the same neo-liberal policies resulting in a further transfer of wealth upwards prevail. There really appears to be no alternative.

Michael Hudson is the author of Killing the Host (published in e-format by CounterPunch Books and in print by Islet). His new book is J is For Junk Economics.  He can be reached at mh@michael-hudson.com

Cross-posted from Counterpunch


History has been rewritten almost daily this week, almost immediately as it occurs. A Wall Street Journal editorial on November 4 spun its view of what is at issue for the Democratic Party: “Voters warn Democrats to walk away from the Sanders-Pelosi agenda.” The Democrats’ own leadership quickly agreed with this take, playing the blame game against the Progressive Caucus for insisting on economic reforms that opinion polls have reported are precisely what voters say they want.

But these are not the policies that the party’s major donors want. What really is at issue is just whom the Democratic Party (and their duopoly partners the Republicans too, of course) supports: corporate lobbyists and the Donor Class, or wage-earning voters seeking economic policies that benefit them as employees, consumers and debtors.

Can there really be doubt as to what is causing the apathy of voters to support the Clintonite Virginia candidate Terry McAuliffe? Was his loss really because voters opposed Sanders and the Congressional Progressive Caucus as radical extremists for supporting the policy platform that President Biden himself ran on and which got Democrats elected? Was it that Democrats are not sufficiently supporting their Wall Street and corporate donors and lobbyists, and that somehow voting for McAuliffe might empower Bernie Sanders, AOC and the Squad?

Democrats calling themselves “centrist” or “moderate” insist that the Progressives surrender to the Manchin-Sinema rewrite of the original version of the Build Back Better (BBB) act and make it into a grab-bag benefiting the Five Percent instead of the 95 Percent by replacing its most popular proposals with giveaways to the wealthy – as if this will win elections. Or at least, win campaign financing for the party.

One of the most popular proposals in the original BBB act was twelve weeks of paternity/maternity, sick and caregiving leave, child support and pre-schooling support. Such aid is provided by nearly every advanced nation for its citizens. But the Democrats assigned Senator Joe Manchin the task of opposing this as an anti-corporate move to subsidize employees getting paid without working. Nancy Pelosi and the House leadership obliged by removing it altogether, but then agreed to a rather stingy four-week support program. Even so, Joe Manchin will not commit himself to support the downsized BBB bill when it is sent over to the Senate, saying that he wants “to work with Republicans on paid leave in separate legislation.”[1]

In today’s U.S. political duopoly the role of the Democratic Party is to protect the Republicans from attacks from the left. What the Republicans and centrists want is the “hard” business infrastructure program, not its pro-labor elements. The Progressives rightly warn that their only opportunity to get the pro-voter BBB version approved by Congress is to tie it to Biden’s bipartisan infrastructure bill. Their fear is that Manchin will make good on his preference to wait a half year (meaning “never” in political time) before submitting the BBB that was downsized first from $6.5 billion to $3.5 billion, and now to a reported $1.8 billion.

Another popular element criticized as being too pro-labor to appeal to voters is dental and vision care for Medicare recipients, and payments for hearing aids and home health care. As medical and health insurance costs squeeze family budgets, most voters also back negotiating drug prices to stop the price gouging by the pharmaceutical companies. Governments throughout the world have long been doing this. But the “centrists” threatened to exclude it, and finally proposed some reduction in the most exorbitant monopoly prices by promising a give-back to their drug-company donors in the form of more patent protection (for research initially funded by the government itself). The aim is to prevent other drug companies from producing low-priced generic versions after the patents expire.

Student debt relief has been drastically cut back, along with plans two free years of community college. One after another, Biden’s campaign promises are being broken – with Biden himself disowning them and showing impatience at how long it is taking the Progressives to surrender to “reality”.

Already thrown overboard at the start of the Biden Administration was his promise to raise the minimum wage. The Senate parliamentarian pretended that this could not be submitted as a “reconciliation” agenda, on the ground that it did not affect federal revenue. That was nonsense, of course. Raising the minimum wage would reduce federal subsidies to families below the poverty level – a subsidy that has long saved Walmart and other minimum-wage employers dollar for dollar by enabling them to pay less than the actual living wage, as food stamps and other transfer payments make up the gap.

Joe Manchin sheds crocodile tears over the government paying for pro-labor policies, but shows no concern about giveaways to the wealthy, to the corporate interest or for military spending – or for tax cuts for the highest income brackets. It is as if only pro-voter policies add to the national debt.

Neoliberal Clintonite centrists vetoed Progressive proposals to pay for their program by passing one of the most popular taxes of all: a tax on financial trading gains, to be collected by closing the carried-interest tax loophole that frees financial speculators and money managers from having to pay income tax on their gains, lowering the rate to the capital-gains tax rate. The heavy hand of Wall Street campaign donors far outweighs what voters want – including reversing the Trump Administration’s income-tax cuts for the wealthiest classes.

While downsizing these early popular elements, Congress has increased its giveaway to the Donor Class in an attempt to win them over. Most egregious is cutting taxes for the wealthiest home owners, especially on the East Coast, by raising the income-tax deductibility of property taxes – the State and Local Tax (SALT) – from $10,000 to $72,500. As Chairman of the Senate Budget Committee, Bernie Sanders sounded exasperated on election-day Tuesday when he explained that this $400 billion giveaway to the wealthiest 5 percent was so large, that “the top 1% would pay lower taxes after passage of the Build Back Better plan than they did after the Trump tax cut in 2017. This is beyond unacceptable.”

Sanders pointed out that “Democrats campaigned and won on an agenda that demands that the very wealthy finally pay their fair share, not one that gives them more tax breaks.”[2]  But the Democratic leadership replied that without favoring the Donor Class, their campaign financing would shrink – a prospect that would lead Senate recipients of lobbying largesse to vote down the BBB.

The Democratic leadership argues that failure to increase subsidies and tax breaks for the economy’s wealthiest rentier layer, and to cute back social spending for wage-earners, will threaten their electoral prospects – by reducing their fundraising appeal to the Donor Class. The mainstream press chimes in with the view that pro-labor policies are so radical that they will frighten most middle-class voters as an attack on property and their own hopes to somehow join the ranks of the rich someday. President Biden is blaming Progressives for “blocking” the program by trying to preserve the policies that most voters actually want, and which he himself ran on in his presidential campaign a year ago.

But most voters are wage-earners, after all. And many need child support and other social welfare spending, and lower drug prices and other living costs. Voter polls in Virginia reported that economic issues were their most important concern, as they are in most of the United States.

The problem is that pro-labor social policies are not what the major lobbyists and campaign donors want for themselves and their clients. This raises the obvious question: Did Democrats lose on Tuesday because their leadership was supporting opposing what their campaign contributors want instead of the Progressive agenda that most voters say they want and what they voted for last November?

Is the U.S. political system a democracy, or oligarchy?

Put bluntly, is the Democratic Party an agent of democracy, or oligarchy? The past month’s Congressional debacle confirms Aristotle description of democracy: Many states have constitutions that are democratic in form, he wrote, but actually are oligarchies.

The reason, he explained, is that democracies tend to evolve into oligarchies as a result of the increasing concentration and polarization of wealth. That gives the leading families control of the political system. (In his schema, oligarchies aim at making themselves hereditary aristocracies.)

The translation of wealth into political control has been accelerating since the 1980s, and almost all increase in U.S. wealth and income in the year and a half since the Covid-19 outbreak struck in spring 2020 has accrued to the One Percent in the form of rising stock, bond and real estate prices. In the non-financial economy, prices charged by the oil, pharmaceutical and IT monopolies have also increased, while housing prices have risen nearly 20 percent in the last twelve months. These sectors are the largest lobbyists and political campaign contributors.

The Democratic leadership policy is to back the candidates who are able to raise the most money. For most candidates the lion’s share come from these lobbyists and special interests, for whom their donations are a business investment. Only a minority of progressive candidates have been able to raise enough in small sums from many individuals to become political players.

The situation is much like that of ancient Rome. Its constitution organized voting according to wealth cohorts, mainly measured by land ownership. The wealthiest Senatorial class, followed by the equite “Knights”, were assigned voting weight overshadowing that of the 99 Percent. In the United States, to be sure, all votes on election day are counted equally, but in practice the One Percent limit the range of policies that can be voted on and then implemented. The first problem is how to be nominated in the first place and vie with rivals in the political primaries. In America, success requires support from the Donor Class. Similarly in Rome, to succeed as a candidate running for office required heavy backing by the wealthy. (Crassus played this role, financing Caesar’s campaign, among others.) Leading politicians tended to be heavily in debt to their backers.

In the United States, the debt is not as crassly monetary. What is owed to donors is political support. The job description for a politician is to deliver voter support to one’s campaign contributors. That is how oligarchies suppress democracy, today as in the Roman Republic.

Centrists and moderates support existing oligarchic trends in economic polarization

Upon taking office, President Biden said that nothing would really change. This was the opposite of Barack Obama’s slogan of “hope and change,” but it was simply more honest. The Biden Administration not only has maintained Donald Trump’s tax cuts for the wealthy, it has increased them under the BBB’s SALT provision. Biden has extended offshore oil drilling rights, and policies benefiting the financial and corporate sectors.

This is called being a “centrist” or “moderate.” If the world is polarizing between the One Percent and the 99 Percent, between creditors and debtors, monopolists and consumers, where is the middle ground? The Chinese have a proverb: “He who comes to a fork in the road and tries to go two roads at once will get a broken hip joint.” Being a moderate means not interfering with the economic trends that are polarizing the U.S. economy between the rentier One Percent at the top and the increasingly indebted 99 Percent.

That is the situation confronting today’s economy. Refusing to take steps to change the dynamics that are enriching the oligarchy means not reversing or even slowing the trends that are polarizing the economy. The Democratic Party leadership has opposed the influence of the Progressive Congressional Caucus from the beginning. This is oligarchy, not democracy. It is not even the largely empty formalities of political democracy, to say nothing of substantive economic democracy.

What really is democracy, after all? It is the ability of voters to get legislated the policies that they want – and which presumably are in their economic and social interests. But the process is manipulated by the DNC’s reliance on the Donor Class. Its political program is simply a marketing vehicle, with no “truth in advertising” regulation.

The question is, can it be reformed? Can democracy succeed without replacing the Democratic Party leadership. Indeed, can it succeed without an altogether different political system from today’s Democratic-Republican duopoly with its common set of donors?

What I cannot understand is why the Progressive Caucus has not insisted on naming their own supporters to the DNC.

The current Democratic impasse shows that no progress can be made without changing the institutional structure of American politics. It seems that the only way to do this is to make sure that the Democratic Party loses so irrevocably in 2022 and 2024 that it is dissolved enough to enable the Progressives to revive the near corpse.

The Democrats’ identity politics – any identity except that of wage earners

The Democratic role is to protect the Republican party from challenges from the left. Its tactic for many decades now has been to use identity politics to replace the traditional economic concerns of voters as wage earners, consumers, debtors and, in a rising proportion of cases, as renters faced with losing their homes if they fall into arrears as rents and housing prices are soaring. Identity politics is a strategy to fragment the wage-earning majority of voters into separate ethnic, racial and gender identities. That distracts attention from their class consciousness whose interests do not match those of the Donor Class that has gained control of the Democrat-Republican duopoly. This control and divergence of interests explains the DNC’s refusal to back progressive candidates.

Instead of appealing to wage earners, the Democratic leadership since the 1960s has aimed at getting voters to think of themselves as hyphenated Americans. Half a century ago it was Italian-Americans, Irish-Americans, Polish-Americans and so forth, with patronage along ethnic lines in the big cities. Today the identity politics has broadened to aim at women, especially white suburban women, whose support they lost in Virgini;, the Hispanic vote, which also faded this week; and support from black voters, whose support has most recently been mobilized by House Majority Whip James Clyburn and what has been called the Black Misleadership Council (though ethnic support for these misleaders finally is weakening as voters learn just who their campaign contributors are). The Democrats’ calculation has been something like, “OK, we’ve written off the working class. But maybe we can get some voters to think of themselves as some other identity.” They’ve pandered to black voters with cultural applause, but not economic benefits. They’ve sought Hispanic support, but that is falling away as the Democrats hesitate to give economic support to low-income workers with families, whom they readily write off when offered enough Donor Class money from corporate lobbyists. But cultural pandering to identity politics fails when voters see their economic condition as being the most important political issue.

Is America a failed state?

As of Friday morning, the BBB is still stymied as Congressional staff ponder over what has become a 2,135-page bill. Little trust is left regarding Manchin’s hint of support in the Senate. The fear is that the bipartisan $1 trillion business-friendly infrastructure bill will be passed, leaving the BBB’s social programs abandoned.

The failure to solve this problem seems to be a duplicitous ploy of President Biden and the Democrats’ quasi-Republican Clintonite core. Why not simply remove Manchin from his committee memberships, and stop federal subsidy of his West Virginia constituency? Instead, they have put him in charge of the environment bill, which he has disfigured on behalf of the lobbying money he receives from the oil and coal sectors.

It is difficult to see what may replace today’s political quandary. The United States does not have a European-style parliamentary system that permits new parties to run and be represented in government. If they did, the Democratic Party would probably go the way of European Social-Democratic parties and shrink to a merely marginal has-been.

But real political and economic democracy is blocked by the existing Constitution and the Senate filibuster requiring a 60 percent majority to pass laws, backstopped by a Supreme Court imposing 18th-century solutions to 21st-century finance capitalism and its neo-rentier economies.

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