Read John Judis on how the Republicans torpedoed the auto bailout.

Almost thirty years ago, an automotive CEO appeared before Congress to ask for help.  His company was failing due to poor management decisions, run away gas prices and an overall economic slowdown.  If only he could get enough money to stay in business, his company’s next generation of small, fuel efficient cars would hit the market and lead to the company’s success.  His company employed 40,000 US workers and laying them off would be a disaster at a time when the economy was already struggling.  He’d even work for a dollar a year.  Sound familiar?

Again with the caveat that I haven’t really caught up yet with the transition news of the last week, the confirmations from before surely mean that there’s one man who must not be happy. On the day after Obama’s victory, Dissent‘s Mark Engler celebrated:

Obama rose to the top of a Democratic pool that, as a whole, positioned itself notably to the left of what we had come to expect in the Clinton-Gore years, when top officials scrambled to prove their pro-corporate bona fides and to declare their allegiance to the Democratic Leadership Council. Today’s contenders, while far from perfect from a progressive perspective, campaigned as opponents of an unjust war and of faulty trade agreements such as NAFTA, as advocates of pro-worker labor law reform and of serious national health care.

But he already warned:

To be sure, the .. more contemporary fight to thwart the rightward-pushing forces within the Democratic Party .. is not over. The likes of Robert Rubin and Larry Summers hover over Obama’s victory.

Larry Summers at the World Economic Forum in Davos, 2007

I bet he didn’t realise just how much they’d “hover”. With the appointments of Geithner, Summers and Orszag, I’m guessing Engler must have gotten a lot more worried still. As Ezra Klein noted:

For critics of so-called Rubinomics, [..] watching Rubin’s proteges step into every major economic staffing position in the new administration has been concerning. Watching them do so as Goldman-Sachs, which Rubin once led, and Citigroup, which Rubin recently advised, get buffeted by the subprime collapse is almost perverse.

To be fair, however, the opposition within the Democratic Party between the neoliberal, Rubinite cheerleaders of deregulation and the progressive sceptics of free market solutions no longer has the bitter edge it had in the 90s. And the main reason for that is that experience has taught Summers et al. to be more sceptical themselves.

Consider what The American Prospect’s Robert Kuttner, himself a progressive critic of Rubinomics, wrote about Geithner last September:

CEO’s see the benefit so early they never even notice it.  For the very successful, the key date may have been in May or June.  But for most very successful Americans, when the cool weather rolls in and the Christmas music starts, they have another reason to celebrate: their pay increases.  Their employers haven’t decided to be extra generous in November or December, but their pay will step up by over 6% for a few weeks or months.  The more you make, the longer your pay increases.  Why does this happen?  They exceed the Federal Insurance Corporation of America (Social Security) tax threshold.

I’ve always wanted to be a Sun headline writer.

Soon it will be grape juice of wrath for mistresses, as the Moët’s off the table now multimillionaires are moved to downsize their despicable deeds of decadence. This shocking scoop comes courtesy of the Wall Street Journal (h/t TNR), which has its finger all over the pulse:

According to a new survey by Prince & Assoc., more than 80% of multimillionaires who had extra-marital lovers planned to cut back on their gifts and allowances. [..]

“Rich people are getting hit, and they’re all expressing the need to curtail unnecessary spending,” said Russ Alan Prince, president of Prince & Assoc., a wealth-research firm based in Connecticut. “Lovers are part of the same calculation.” [..]

Fully 82% of men in the study said they planned to lower the allowances to their mistresses, while more than three quarters planned to provide fewer gifts, less expensive gifts and fewer perks, like jet rides, resort vacations and top restaurant meals. [..]

“What we found in talking to the respondents is that the magic of the relationship with their lover fades after a while, so they’re more willing to let them go,” Mr. Prince says.

In my post, after the third presidential debate, about McCain’s efforts to make “spreading the wealth around” sound like the most ominous thing, I quoted Ezra Klein as saying that “for most folks, spreading the wealth around probably seems like a good idea” right now.

This is correct, Brian Schaffner of the CCPS argued yesterday at his new home on pollster.com. Taking as lead how the ABC/WaPo poll hasn’t shown any movement this month on the question which candidate is trusted more on the question of taxes, he digs up data showing so from a 2003 survey conducted by NPR, the Kaiser Family Foundation and the Kennedy School of Government.

Moreover, in case you’re feeling doubtful about those sponsors, the same thing is largely confirmed by Gallup data, which the polling firm’s in-depth look at the issue on Thursday revealed.

Schaffner argues that the McCain camp’s insistence that Obama’s proposal to raise taxes on the top 5% of income-earners smacks of class struggle and socialism doesn’t drill into much of a popular perception. It isn’t surprising “that McCain hasn’t gotten much traction by criticizing the fact that Obama wants to increase taxes for high income Americans,” Schaffner writes, because the 2003 survey actually showed that most Americans believe “high income people pay less than their fair share”. Over 60% of Independents, over 70% of Democrats and even a plurality of Republicans  agreed. Barely over 10% of independents and some 30% of Republicans, on the other hand, thought that high income people “pay more than their fair share”:

The Gallup polling data doesn’t directly address the question whether wealthy Americans pay enough taxes, but it does show a majority of Americans believing that “the distribution of money and wealth in this country” isn’t “fair”. Throughout intermittent polls in the last twenty-odd years, an ample majority opined that wealth should be “more evenly distributed among a larger percentage of the people,” while just 27-37% believed that the current distribution is fair:

Two details strike me in this graph. The opinion that “spreading the wealth around” seems like a good idea isn’t just something that’s coming up “right now”, in the face of a financial crisis; it’s actually been pretty consistent through the years. But there’s two kinds of variations over time.

This one comes via Kevin Drum at Mother Jones:

Yes – between the beginning of 2002 and the end of 2006, the United States GDP grew by over 15% – while the median wage flatlined, not going up by a single percent. In short, the country got ever richer – but the middle class saw nothing of that wealth. It was pocketed in its entirety by the wealthiest, with an assist from the tax cuts that the Bush administration heavily slanted in their favour.

Are there any recent historic precedents of such a disconnect, in which double-digit national economic growth was not accompanied by any improvement whatsoever for the average American? Was it this bad under Reagan, or Thatcher?

Pondering these numbers, Drum approvingly quotes an article by Joe Klein on Time’s blog Swampland: “We have had 30 years of class warfare, in which the wealthy strip-mined the middle class.” He adds:

For three decades we’ve artificially kept middle class wage increases far below the growth rate of the economy, and this trend has been even more pronounced over the past eight years. This has created an enormous pool of extra money that’s been — yes — strip mined and redirected to the rich, and fixing this is Barack Obama’s biggest and longest-term challenge.

If we restore the normal growth of middle class wages, it provides a sustainable consumer base for the entire economy; it reduces the demand for endless credit card debt; it brings down income inequality naturally; and it goes a long way toward keeping the financial sector under control and reining in Wall Street salaries without putting in place a bunch of artificial (and probably fruitless) regulations. [..] Stop the strip mining and economic vigor will follow. It’s at the core of everything.

UPDATE: Lane Kenworthy, a Professor of Sociology and Political Science at the University of Arizona, had a blog post earlier this month that traces the trend further back, to the Reagan era: Slow Income Growth for Middle America (h/t to A2K user Hawkeye). The pattern is pretty devastating – and he’s got a telling graph too:

Alex Massie featured an encouraging dispatch from a Democratic operative in Ohio last Wednesday: The Ground Game: The View From Ohio. It’s impressive stuff:

I got placed in Bowling Green, right by Bowling Green State University. [..] The county is a swing county, but that is mostly because there are 50,000 rural families and 25,000 Bowling Green residents combined with 25,000 Bowling Green students. [..] No candidate has carried Ohio without carrying Wood County (BG is the county seat). One would think that this historical oddity would almost mandate a heavy McCain presence, but alas there is none to speak of.

I spent a little bit of time at the Obama state HQ in Columbus yesterday. It was jaw dropping. They had taken over an old mega-church. The first floor was a warren of staffers running around all very young and all very busy. The basement was probably the size of a supermarket, lined with table after table. Each table was staffed by four youngsters, all responsible for a different city, county, task etc. It looked like the command center for a massive army. No windows, no natural light, but filled with kids who probably had no idea it was 8am all hovering over computers, maps, data sheets. There were 600 staffers there, all dedicated to Ohio, at 8am. I’m amazed.

Volunteers phonebanking in San Francisco (Images used under CC license from Flickr user SanFranAnnie)

In another recent dispatch from the trail, the Denver Post emphasised the mindboggling extent to which the ground games of both campaigns are driven by sophisticated micro-targeting:

One of the oddest features about Wednesday’s debate was John McCain’s repeated, dismissive references to how Obama wants to “spread the wealth around”. McCain repeated that line no less than nine times, each time derisively, and nine times is a lot in a debate like this. In comparison, he mentioned “education” six times, and “health insurance” three times (which Obama mentioned ten times).

(By the way, if you’re looking for Wordles of the two candidates’ words during the debate, like the ones I made for the second debate, check out these ones that Flickr user spudart made.)

I was actually looking whether there was a YouTube video splicing together all his “spread the wealth around” lines. Because if I knew how to edit videos, I’d make one. I mean, just go to the wonderful NYT interactive election debates tool, type in “spread” in the neat search box above the coloured bars, and use the forward and play buttons to the right to switch between all the references. It’s wonderfully bizarre. (OK, maybe you have to be a geek.)

Wages have stagnated for a decade .. For most folks, spreading the wealth probably seems like a good idea. (Image used under CC license from Flickr user M J M)

The weird thing about these invocations is that, as Noam Scheiber pointed out, he “repeatedly invoked Obama’s line about ‘spreading the wealth around’ without explaining what makes it so offensive (beyond his own menacing tone).” As Scheiber adds, “it didn’t strike me as self-evidently damning.” Right. I mean, God forbid anyone would want to spread the wealth – give other people a shot at it too. As Ezra Klein adds, “Median wages have stagnated for a decade … For most folks, spreading the wealth around probably seems like a good idea.”

McCain got the quote from Obama’s answer to “Joe the Plumber” (who isn’t actually a licensed plumber, doesn’t actually make $250,000 and wouldn’t have to pay higher taxes under Obama’s plan even if he did buy that company), when they met during a campaign stop. It’s worth watching the whole answer Obama gave. There’s nothing particular controversial in his answer as a whole, and the “spreading the wealth” line came in the context of giving people who are where Joe was earlier in his life tax cuts so they would be helped making it too. But as Campaign Diaries points out, the McCain campaign wants you to see the line as “code words for socialism”.

The thing is that McCain didn’t actually bother to make that argument in the debate. He appeared to think that just repeating the line would make people go, “oh yeah, that’s terrible – spreading the wealth around, how can he say such a thing – he must be a socialist”. This equation strikes me as typically one of those things that only works within the bubble. Maybe because for most people, a $250,000 income is so far removed from their world, they can’t even imagine. After all, it’s just the top 3% who earns that much. It’s five times the median household income, and eight times the median individual income.

It is not far removed, however, from the lives of those reporting on politics for us. For network TV reporters, for pundits and politicians, for anchormen and talk show hosts, it’s not that much. They do know people who make that much, because they are often among the top earners in America themselves. So for them, it hits close to home. And because pundits and anchormen hang out with other pundits and anchormen, their view of what is normal is warped – for a striking example see the video below the fold. And this has serious consequences for the opportunities to market liberal economic policies.

American writer and satirist H. L. Mencken wrote “The demagogue is one who preaches doctrines he knows to be untrue to men he knows to be idiots.” Patricia Roberts-Miller in her book “Democracy, Demagoguery, and Critical Rhetoric” defined demagoguery as “polarizing propaganda that motivates members of an ingroup to hate and scapegoat some outgroup(s), largely by promising certainty, stability, and what Erich Fromm famously called ‘an escape from freedom’.” Hilter was a infamous demagogue, blaming the woes of a post WWI Germany on the Jews. Joe McCarthy looked for Communists around every corner. Today, the American financial system is in its worse crisis since the Great Depression, Americans are facing uncertainty in employment, prices are rising and savings are falling. The time is right for the rise of the Demagogues.

Nimh makes an excellent point about the often overlooked impact of plain old prosaic advertising on poll numbers.

AP

While I agree that advertising dollars are important (and adore the graphs!), the post got me thinking about some of the other factors involved in Obama’s surge. Advertising is an underestimated piece of the puzzle, but still just one piece of the puzzle. So here are some of the other elements that I think are at play:

Obama’s 50-State Strategy

This has a lot to do with the Obama campaign’s relatively large advertising budget — but it’s not just about advertising. Obama’s been spreading McCain very thin in many different ways, as McCain has to spend time and resources defending red states, rather than being able to focus on battleground states. The thinner things are spread, the less McCain is able to campaign effectively (not just advertising but field offices, rallies, paid staff, etc.).

Theodoric (R-York)

The Republicans, it seems, have a solution to every problem.  Or, to be more precise, the Republicans have a solution to every problem.  Like the medieval barbers who thought that the cure for every malady was bloodletting, the GOP believes that the cure for every ailment is tax cutting.  The economy is good?  Cut taxes!  The economy is bad?  Cut taxes!  Taxes are too low?  Cut taxes!  I await the inevitable day when the Republican Party advocates tax cuts as a means of overturning Roe v. Wade, forestalling gay marriage, and putting a massive granite sculpture of the ten commandments in every federal courthouse.  Remember, if we don’t cut taxes, the terrorists have won.

The latest GOP quacksalver to prescribe this nostrum is the Republican Study Committee, a bunch of right-wingers that used the opportunity of the Wall Street bailout to push for a two-year moratorium on the capital gains tax and, in the process, also managed to scuttle the Wall Street bailout.  According to the folks at NRO, the RSC plan would be just the tonic for an ailing economy.  “Private capital will flood into Wall Street with zero capital gains and it will come at no cost to the taxpayer.”

Now, you may be asking yourself: “how many different kinds of crazy is this proposal?”  Well, first of all, assessing lower taxes on capital gains is justified primarily as a means of encouraging investment (it also compensates very roughly for inflation, but a system of indexing could work just as well).  The problem, though, is that, in the short term, cutting capital gains taxes merely encourages the sale of capital assets.  Far from encouraging investment, the elimination of capital gains taxes would instead lead to a fire sale of assets, with the inevitable result that prices would fall.  Moreover, a two-year moratorium won’t encourage the kind of long-range investment that either the economy needs or that Republicans tend to tout as the chief virtue of low capital gains taxes.  Instead, it would, under normal circumstances, simply push more assets into the marketplace and depress prices even further.