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This Lies Behind Our Economic Boom and Political Bust

by Brian T. Lynch, MSW

Last year the wealthiest nation in the history of the world generated $8.7 trillion in new wealth, more than the next 10 countries combined. That works out to over $65,000 per household. How much of that worker generated new wealth did you receive in your pay raise last year? If your family income was $60,000 last year, and if you were rewarded with just 5% of the new wealth that you helped create, plus a cost of living adjustment to keep up with inflation, your family income today should be over $63,500? Is that true for most of you? Probably not, because that second bar graph on right suggests personal household income is not growing much.

Some people looking at this will say:
“Yea, rich people will get richer, but low unemployment and new manufacturing jobs will add a lot of wealth where there was none before. Right”?
That hasn’t been the case overall for the past 40 years. The great wealth creation last year isn’t a one-off event. It happens nearly every year. And every year since the mid-1970s workers do not receive any (or very little) share in the rising hourly GDP (New Wealth).

Prior to 1974, we all receive productivity raises nearly every year on top of any cost of living adjustments (a COLA, as it was called). Since then we stopped receiving productivity raises and lost public sector health coverage, pension plans, and other benefits. We have received cost of living raises since then, but productivity raises have been minimal. Therefore, while our wages keep up with inflation, they aren’t keeping up with new personal wealth. Put another way, our collective wages are a smaller and smaller percentage of our National GDP.

If wages continued keeping up with hourly GDP since 1974, the median household income today (fam of 4) would be over $115,000/year instead of nearly half that. The national GDP is nearly three times greater today than it was in 1974, yet inflation-adjusted have barely risen. These are uncontested facts. Chronic wage suppression (and I do believe this is deliberate) accounts for most of our economic ills today.

Imagine how much easier it would be to raise money for our schools and local services if everyone in town had twice the income they make now. How much money would we save on government aid to the working poor (daycare, housing, medical care, etc.) if everyone had twice the income and didn’t need financial subsidies? Imagine how the economy would be buzzing if everyone had lots more discretionary income to buy things, thus boosting the demand for production. The only downside is that the wealth of the richest 1% wouldn’t be growing quite as fast. The decline of the middle-class, the lack of good paying jobs, the increase in public assistance, the rise in taxes and decline of other government services are all symptoms of income inequality. The cycle of wealth accumulation followed by catastrophic wars and social collapse is a very old story with a many-centuries-old history.

Are you still with me, because this next part is important.

There has not been a big partisan difference on the issues of a fair distribution of wages or wealth. Both political parties remained silent on the subject for decades, until the 2014 election. Both parties talked about job growth, but not wage growth. Both talked about growing the economy but not about our shrinking pensions and benefits packages and stagnant wages. They talked about bolstering the middle-class but didn’t mention our growing poverty class for almost three decades.

Republican legislators (not most rank and file members) have been far more pro-corporate in pursuing the interests of the wealthy elite over time. Republican party elites also shamelessly pandered to value voters and the far-right fringe to win elections but never delivered on their promises. Main Street Republicans were used and abuse to the elite of their party could pursue the corporate donor interests.

On the other side of the aisle, Democratic Party leadership (not every legislator) also pandered to big corporations, to the rich and to their more liberal base while being complicit in their silence on income inequality and many other matters important to their voters. No one in government was addressing the shrinking middle-class or their shrinking wages relative to the size of the ever-growing US economy. No one was listening to any of us!

Hence, we had a political revolt in both parties during the 2014 elections. Rank and file members of both parties weren’t listening to each other either as powerful special interest, foreign and domestic, made sure we didn’t get together to compare notes. Donald Trump rose up among conservatives to shake things up in the GOP. Bernie Sanders rose up among liberals to shake up the Democratic establishment.

So here we are today, like opposing armies glaring at each other across the battlefield in a war we never wanted. Both sides have been ignored by our leaders. Both sides have been told the other side is the cause of our decline. Both sides have been given false reasons for our growing dissatisfaction. And yet the real reasons for this sluggish Main Street economy, which is slowly squeezing us into poverty, are reasons that we all share in common.

It is the failure of our politics to address the unfair distribution of wages and wealth. It is hundreds of policies that favor the profitability of big businesses over the best interests of our people. It is the corruption of special interests representing the ultra-wealthy and buying elections. We would all do far better if we could just lower our guard, put our less consequential differences aside for now and join in common cause to take charge of our economic well-being.
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Fair Share Campaign Financing

By Brian T. Lynch, MSW

RahmAndWilson

On April 21, 2018, the Chicago Tribune reported that Mayor Rahm Emanuel added $1.7 million to his campaign in a single day. The explanation that followed encapsulates what’s wrong with our campaign finance laws. As in other states, the Illinois campaign donation system is set up like a board game, specifically a corporate board game.

If you are an actual carbon based person in Illinois you cannot donate more than $5,600 to a political campaign, unless you own a business. If you own a business you can contribute twice that amount on behalf of your business. And if you register as a political action group you can donate nearly 10 times the individual contribution limit, up to $55,400. These campaign limits are entirely lifted if one candidate in a race decides to give their campaign $100,000 of their own money.

That’s what happened in Chicago. Emanuel’s Republican opponent, Willie Wilson, boosted his campaign with $100,000 of his own money. Twenty-four hours later the Mayor added a million dollars to his campaign from just three wealthy donors plus another $700,000 from other donors.

In the Citizen’s United decision the US Supreme Court said, in effect, that money is a form of free speech. This may be true in some intellectual perspective of the court, but if true in the real world, how can there be a $5,600 free speech limit on voters? How can there be any limits at all?

In our Republic we have this bedrock principle that says, “One person, One vote.” Everyone has an equal say in who represents their interests. Corporate governance operates on a different principle that says, “One share, One vote.” You get one vote with every share of the company you buy. The bigger your financial stake is, the greater your say is within the company. Wealthy shareholders like this system because their voting power is proportional to their financial power.

The concept of one person, one vote is an anathema to them in our democracy. They feel their greater financial stake in the economy should also entitle them to a greater political say in our government. This is why they have rigged the campaign finance system.

As a thought experiment, try imposing the “One person, One vote” principle to campaign financing. One person’s donation limit in Illinois is $5,600. That means one vote is equal to that amount or less, mostly less. Most voters don’t contribute to political campaigns. Even if they do, the individual donation limit may be well beyond their means. The median income for a family of four is close to $56,000 a year, so a maximum political donation would cost them 10% of their annual income. Even a 1% donation would be well beyond their means. One tenth of one percent of their income, or $56 dollars, might be feasible for most voters, and this amount is 100 times the current limit.

If you go with the “$5,600 limit equals one vote” rule, then being a business owner gives you three votes, one personal vote and two votes for your business. Join another business owner to form a political action committee you get eight votes, five votes for your half of the PAC, three for your business and one personal vote.

Then Willie Wilson upsets the apple cart in Chicago by donating $100k to his campaign. Now just three wealthy donors get a total of 180 votes or more for Mayor Emanuel’s campaign. The actual impact on how a candidate might responds to donors is enhanced by the fact that tens of thousands of voters contribute nothing. Additionally, because individual donor limits are 100 times what the average voter can afford, the impact of those three big donors in the mayor’s race is more like 180,000 votes. So, if you are Rahn Emanuel, who are you going to listen to?

Money is not free speech. Money is power.

If we agreed to pair the power of money to the power of the vote, then one voting share should have the same price tag for every eligible voter. It should not favor businesses or the wealthy as it does now in our corporate governance style of campaign finance. This also means only eligible voters should be able to donate; No PACs or businesses. If a businessman or organization wants to lobby for a special interest, they should lobby directly with the people to gain influence rather than lobbying our politicians. It would mean that fair share campaign finance limits would either be equal and affordable for everyone, or without donation limits but with maximum transparency so every voter can see exactly which candidates the big donors are buying.

Of Tax Breaks and Budget Holes

(Recent letter to the editors of my local newspapers)

Dear Editor:

I don’t think most people in New Jersey get it yet. When politicians tell us revenue collected for a better 911 system had to go for other law enforcement priorities, they aren’t being honest.  Their “spending priorities” mask tax revenue  lost to off budget deals for special interest tax breaks.  These special  tax breaks loosely translate into campaign donation or political clout for New Jersey politicians.

Special tax deals don’t show up as a liabilities on a budget line. They show up as holes in the budge that must be plugged. They show up as insufficient revenue to pay for state pensions, or daycare assistance, or NJ Transit funding, or the Transportation Trust Fund.  Every time a dedicated funding stream is raided to plug a spending gap we should demand to know what created the revenue gap in the first place.

I believe we are intentionally distracted by dramatic spending conflicts to conceal the real action behind the revenue side of the ledger.  It’s time to claw back all those special interest tax breaks and make the rich and powerful pay their fair share of taxes.  Let’s require that all future budges contain a detailed accounting of all the tax breaks currently in effect.

Brian T. Lynch

Note: The readers of this blog are free to copy this letter or model their own letter after it to send to their own local newspapers.

A few other points that had to be left out:

  1. The tighter the state or municipal budget the greater the disparity between those who pay the taxes they owe and those who cheat on their taxes or get special interest tax breaks. Unfair taxation is at the root of revenue shortfalls.
  1. The article makes the point about wealthy corporations and the rich, because they have the means to make cheating on taxes legal (special interest tax loop holes). They also pay the least amout of taxes relative to their income and wealth. But the tax revenue drain also comes from a growing underground cash economy. Just the other day a buildings trade contractor told me he would lower an estimate if I paid cash (I declined).
  1. No matter where people fall on the wealth and income spectrum they feel cheated by a tax system that allows others to pay less than their fair share. Everyone feels entitled to cheat a little on their taxes. Today, cleaver manipulation of the tax code to avoid paying even massive amounts of federal taxes is admired. This is a far cry from when the current progressive tax code was first implemented 101 years ago. Paying taxes was considered a patriotic duty. Considering how strongly people voice their support for our military, coupled with the fact that nearly 50 cents of every federal income tax dollar goes to the military, you would think that it would still be patriotic to pay taxes today.unclesamtaxes

OR AT LEAST YOUR FAIR SHARE OF TAXES

Illegal Immigrant Wages and Impact in New Jersey

by Brian T. Lynch, MSW

I decided I can only respond to certain critics of my blog by breaking down their comments into smaller, more manageable chunks . And then I can only answer their questions that have actual, verifiable answers. Here is a small portion of one of my most recent critics comments from a blog post of mine entitled “America at the Crossroad of Crisis.” His comment reads in part:

“The idea that migrants and even those who are here illegally are not taking away the jobs of “Americans” is superficial bull at best. When labor unions price the services of union members to a point that few can afford such labor then will that not create job opportunities for those willing to work for far less? What is the hourly wage for a carpenter in your state or general locality? What is the rate for an electrician or a plumber?”

First, a clarifying anecdote 

A few years back I hired a middle aged factory worker named Tony to mow my lawn. I mowed my lawn for many years but suffer allergic reactions every time. I finally got smart.

Tony has a part-time lawn service to supplement his factory salary. He hires kids to help him in the summer. He told me that he paid the last young man $12.00/hr to weed-wack and leaf blow. Several weeks into the summer his helper quit to take a part-time job flipping burgers for $7.25 per hours. The kid said landscaping work was too much work.

If you read my blog or articles you know that I am very concerned about the fact the US wages have been suppressed by big business for nearly 40 years.

The US median household income for a family of four is currently about $52,000 per year. Cost of living varies state by state and New Jersey have among the highest. It is also among the wealthiest states. The median income for a family of four in New Jersey is $71,637 per year.

Carpenters

The annual average wage for all carpenters (union or otherwise) is $37,000 per year in New Jersey. Annual carpenter wages range from a low of $28,000 to a high of $66,000 per year.

This means that even union carpenters in New Jersey straddle the US median family income, and all carpenters make below the state median income. Nearly half of all the New Jersey carpenters with a family are not financially independent. Either their spouse must work , or they must moonlight to make ends meet. On their own fulltime wages, many single income carpenters in New Jersey qualify for some form of taxpayer subsidy such as daycare assistance or housing assistance.

Electricians

The annual average wage for all electricians (union or otherwise) in New Jersey is $45,000 per year. Annual electricians wages range from a low of $16,000 to a high of $111,000 per year.

Most electricians are better off in New Jersey than are carpenters or plumbers. Even so, the average electrician in New Jersey makes less than the US median income and far less than the New Jersey median income. On their own fulltime wages alone, some single income electricians in New Jersey still qualify for some form of taxpayer subsidy such as daycare assistance or housing assistance.

Plumbers

The annual average wage for all plumbers (union or otherwise) in New Jersey is $26,000 per year. Annual plumber wages range from a low of $22,000 to a high of $102,000 per year.

Notice how close to the average plumber wages the low end of plumber wages are? That means most plumbers are making close to the lower end of the range in New Jersey. Plumbers do worse economically than carpenters or electricians. Most make far less than the US median wage and only about a third of the New Jersey median salary. On their fulltime wages alone, most single income plumbers in New Jersey qualify for some form of taxpayer subsidy such as daycare assistance or housing assistance.

Immigrant Annual Wages

It isn’t easy to find solid data on the annual incomes of undocumented immigrants, but there are many independent studies and scholarly works that found undocumented immigrants are not taking away our jobs or costing us taxpayer money (references upon request). Even the very conservative US Chamber of Commerce agrees.

It is estimated that undocumented farm workers in the US make between $10,000 and $12,000 per year. The authors of that analysis also noted that, unlike most workers, wages for an undocumented worker almost never rise over time. This fact agrees with my own experiences. I have many acquaintances who are undocumented aliens. They live in the shadows, don’t complain and don’t get raises. It is almost certain that undocumented aliens makes less than $23,000 per year, and probably much less.

Another study in Chicago found that the average wage of undocumented aliens in that city was $7.00 per hour, which is $1.00 below that states minimum wage.  I haven’t found a similar study for New Jersey’s undocumented aliens yet, but suspect their average wage is at or near the minimum wage as well. Note that minimum wage in New Jersey is the federal minimum wage rate of $7.25 per hours. A person working 40 hours per week for 52 weeks would make just over $15,000 per year.

New Jersey has the fifth largest number of undocumented aliens in the county. Many work at minimum wage and many also work below minimum wage. Almost all work more than 40 hours per week, so their annual family incomes are not directly comparable to the annual family incomes of others who work more traditional hours. Also, the number of employable adults in immigrant household are often more than in traditional families. For these reasons, the household incomes of undocumented aliens is a skewed measure. What immigrants lack in wage rates they make up for in the number of hours the spend work.

Given the huge wage rate disparity between undocumented immigrants wages and the wages of even the lowest paid, non-union plumbers, none of whom work for minimum wage, it seem unlikely that foreign born workers are taking away many US jobs. It is my experience, living next to a town that is 75% Latino, that most undocumented immigrants have jobs that no one else born here wants for wages that most Americans would never accept. As a result of their discounted labor we enjoy discounted farm produce, discounted nursing home care, discounted restaurant meals, etc.

Immigrants in New Jersey

Immigrants and their children are growing shares of New Jersey’s population and electorate.

(Source: https://www.americanimmigrationcouncil.org/research/new-americans-new-jersey)

· The foreign-born share of New Jersey’s population rose from 12.5% in 1990, to 17.5% in 2000, to 21.6% in 2013, according to the U.S. Census Bureau. New Jersey was home to 1.9 million immigrants in 2013, which is more than the population of the entire state of Nebraska.

· 53% of immigrants (or over 1 million people) in New Jersey were naturalized U.S. citizens in2013 —meaning that they are eligible to vote.

Immigrants Economic Impact on New Jersey

  • Unauthorized immigrants comprised 5.8% of the state’s population (or 525,000 people) in2012, according to a report by the Pew Hispanic Center
  • The 2014 purchasing power of New Jersey’s Latinos totaled $46 billion—an increase of 415% since 1990. Asian buying power totaled $46.3 billion—an increase of 727% since 1990, according to the Selig Center for Economic Growth at the University of Georgia.
  • Immigration boosts housing values in communities. From 2000 to 2010, according to the Americas Society/Council of the Americas, the value added by immigration to the price of the average home was $3,730 in Bergen County; $6,121 in Middlesex County; $1,875 in Essex County; $2,050 in Monmouth County; $2,096 in Hudson County, $2,509 in Union County, and $1,896 in Camden County.
  • New Jersey’s 67,755 Asian-owned businesses had sales and receipts of $29.9 billion and employed 115,024 people in 2007, the last year for which data is available. The state’s 68,374 Latino-owned businesses had sales and receipts of $10.2 billion and employed 48,059 people in 2007, according to the U.S. Census Bureau’s Survey of Business Owners.
  • From 2006 to 2010, there were 101,251 new immigrant business owners in New Jersey, and they had total net business income of $6.2 billion, which makes up 22.4% of all net business income in the state, according to Robert Fairlie of the University of California, Santa Cruz.
  • In 2010, 28% of all business owners in New Jersey were foreign-born, according to the Fiscal Policy Institute. In 2013,35.3% of business owners in the New York-Northern New Jersey-Long Island metropolitan area were foreign-born, according to the Fiscal Policy Institute and Americas Society/Council of the Americas. Furthermore, 49% of “Main Street” business owners—owners of businesses in the retail, accommodation and food services, and neighborhood services sectors—in the New York-Northern New Jersey metro area were foreign-born in 2013.

The other point here is this, it is much easy to make credible sounding claims on the internet disparaging other demographic groups of people than it is to research and debunk such claims. The person to whom I am responding will never accept the information I provided here for them to consider, but others who read this might be less inclined to believe everything anyone says about “illegal” immigrants in the future. (I hope)

No Fairness in Funding NJ Public Schools

by Brian T. Lynch, MSW

Fairness Formula? Governor Chris Christie is proposing a plan to give an equal amount of State Aid funding to every student in every school districts in New Jersey. Specifically, his proposal would take the higher amounts of State Aid we currently give to very poor districts and distribute it equally across the state to reduce property taxes in the wealthier suburbs. This, he says, is fair.

For those who are not familiar with New Jersey, most school funding is raised through a local wealth tax based on the assessed value of residential and private property. This is a highly regressive way to raise revenue, as you will see below.

We are big on home rule in New Jersey, so each town has its own independent school board. Each towns Board of Education proposes an annual school budget which is voted on in a public referendum.  If passed, the costs are incorporated into the municipal budget and property tax rates are raised if more revenue is needed.  If the school budget fails, town and school officials have to either cut the school budget or make other adjustments to municipal services so property taxes don’t rise.

Here is truism:  Wealthy municipalities tend to grow more affluent over time while poor districts tend to decline even further.

Wealthy towns have better school systems in New Jersey. That is also a fact. So parents who can afford to upgrade their home often move into towns with better schools. Property values rise with the demand for homes in districts with better schools.  Property values decline in districts that have underfunded or troubled schools, so property tax rates must increase in poor districts just to break even on current school spending.  As property values increase in wealthy districts, more property tax revenue is generated.  Some of this additional revenue goes into further improving the schools without the need to increase taxes.  In some cases tax rates may even decline in affluent municipalities as home values rise. The result is that wealthy districts have much better public schools and lower tax rates while poor districts cannot afford to keep up the disadvantaged schools they have.

State Municipal and School Aid was designed to help level municipal tax burdens in New Jersey. State Aid is allocated to local municipalities and school districts to fill in the gaps that exist between wealthy and poor municipalities. This funding solution grew out of a state Supreme Court ruling, Abbott vs. Burke, that found New Jersey school funding did not result in equal education opportunity, as mandated by the State Constitution.

This vicious cycle of migration between rich and poor districts is a big reason for the educational funding disparity. It is the one usually mentioned by NJ state legislators and the press. But this cycle only exacerbates an underlying funding flaw. A wealth tax based on residential property values is incredibly regressive.

I wrote another article about the regressive education taxes in New Jersey last year. The Governor’s new School Aid plan only compounds the problem.

To show just how unfair residential wealth taxes are for funding public schools, consider that people who own million dollar homes almost always have significant other wealth investments and ownership interests that aren’t being taxed to funding public schools.  The rich have far more wealth and investment income. On the other hand, people who own homes in economically depressed areas, people whose homes are well below the state average in value, have few investments or ownership stakes. Many of them have a negative net worth, almost no savings and many of them struggle to pay their monthly bills.

Most economists agree that a flat tax is a regressive tax. It favors the rich, but it is still far less regressive than the property tax scheme in New Jersey.  To illustrate, the table below looks at information from three actual New Jersey municipalities: a poor district, an modestly affluent district and a wealthy district. The number of students in these districts tell you that these aren’t all K-12 districts, but the tax lesson here is still valid whether a district is a sending district or not.

Table 1

WealthTaxComparison

Hammonton and Margate are municipalities in Atlantic County and Stone Harbor is in Cape May County.  In all three districts the average tax bill is below the state average. Hammonton does a pretty good job of keeping per pupil costs down so it’s residents can afford their property taxes.  It is a town where the average home value of $205k is significantly below the state average of nearly $400k. It is not an affluent community like Margate, or a wealth district like Stone Harbor where the average home sells for over a million dollars.

The average tax bill in Hammonton is just under $5,000 per year, almost half the state average. The $14,384 annual per/pupil cost of education is also below the $19,211 state average.  The low tax bill per resident is due, in part, to the fact that Hammonton receives $20 million dollars in State Aid.

Despite all of their frugal budgeting to keep tuition costs down, and despite a good amount of state assistance, look at Hammonton’s general property tax rate.  It is double the tax rate in Margate and more than five time higher than the tax rate in Stone Harbor. Hammonton’s property tax rate is still well above the state average.

The residents of Margate and Stone Harbor pay a few thousand dollars more per year in property taxes, but they can well afford it. They pay less than the state average in property taxes yet spend far more than average in student tuition.  Even so, Margate currently receives $2.5 million in State Aid while the very wealthy Stone Harbor receives nearly a half-million dollars in State Aid.  Ironically, Under Governor Christie’s plan, each of these three districts would receive substantially more State Aid, but this would come at the expense of the very poor urban districts, the so call “Abbott”  districts, where poverty levels are very high and property values are very low.

If instead of a flat State Aid rate for every student, Governor Christie proposed a flat property tax rate, and used additional revenue from wealth districts to fill funding gaps in poorer districts, how would that effect property taxes in these three communities?

Keeping in mind that a flat tax is still regressive, and that home values are not a good indicator of wealth ownership (it under represents the wealth of the wealthy) the table below shows what property taxes would look like if a flat property tax was implemented based on New Jersey’s average property tax rate.

Table 2

FlatTaxEduFunding

This exercise illustrates just how incredibly regressive the current property tax scheme is.  More affluent towns are paying a lower property tax rate and middle class communities are paying a higher rate. Even a flat property tax rate would double Margate’s tax bill and more than quadruple Stone Harbors tax bill. A flat property tax rate would probably generate enough additional revenue to adequately fund and rehabilitate Abbott district schools and disadvantaged schools throughout the state.  A progressive property tax formula would go even further to fully fund New Jersey’s public schools and give every child their constitutionally protected right to an equally good public education.  Giving the same amount of state aid to both the rich and poor isn’t fair at all. A progressive wealth tax based on residential property values would be.

Below are the URL internet addresses for all of the data presented above.

_____________________________________________________________

http://www.nj.com/education/2015/04/nj_schools_how_much_is_your_district_spending_per.html

http://www.nj.gov/education/data/fact.htm

http://www.state.nj.us/education/data/enr/enr14/stat_doc.htm

http://www.state.nj.us/treasury/taxation/lpt/taxrate.shtml

http://www.state.nj.us/treasury/taxation/pdf/lpt/class2/avgsale15.pdf

http://www.state.nj.us/treasury/taxation/lpt/class2avgsales.shtml

http://www.joeshimkus.com/NJ-Tax-Rates.aspx

http://www.state.nj.us/dca/divisions/dlgs/resources/stateaidinfo.shtml

Bernie vs. Hillary – The Clearest Distinction in a Generations

Part I, The Progressive Era

by Brian T. Lynch, MSW

The distinction between Democratic presidential candidates Bernie Sanders and Hillary Clinton couldn’t be sharper. If this doesn’t seem obvious, it is because Beltway media coverage of the candidates obscures more than reveals. Financial considerations of the for-profit news media creates short time horizons and shallow perspectives. The historical context of current events is often lost. To clearly see how different our choices are between these two Democratic Party candidates we need a little more information.

The two biggest areas of contrast between Bernie Sanders and Hillary Clinton are centered around two words that are very much in the public debate. These words are, “progressive” and “electability.” This essay is broken into two parts, each dedicated to these significant differences.

The Progressive Era

The term “progressive” as it relates to politics is not as vague a term as current usage suggests. The “Progressive Movement” was an historical development leading to a particular political philosophy. Born out of the Gilded Age, it held that the irresponsible actions of the rich were a corrupting influence on public and private life in America. It’s most influential period was between 1900 and 1920, although its influence continued throughout the 20th century. Progressivism was both a political and a social movement. It held that advances in science, technology, economics, and social organization could improve the conditions in which most citizens live, and that government had a role to play in promoting these advances.

Progressivism was a rejection of Social Darwinism (arguably a forerunner of Aya Rand’s Objectivism). It was a reform movement with goals considered radical in their time. Progressives sought to curb the power of big business and US corporations. It brought about laws to regulate fair commerce and break up monopolies. It fought to eliminate bribery and corruption in politics and to bring about political reforms. It fought against the extreme social injustice and inequality of that time, including opposition to child labor, widespread illiteracy, and horrible working and living conditions. It sought to improve lifestyles and living condition of all Americans and to establish health and safety standards both in the workplace and the communities where people lived. The progressive movement was also for the conservation and protection of our natural resources.

Among the activists in the movement were people such as Thomas Nast, Upton Sinclair, Charlotte Perkins Gilman, Eugene Debs, Jane Addams, who founded Hull House and pioneered the field of social work, Booker T Washington, W. E. B. DuBose and many more. They and the muckrakers of the day found a sympathetic ear in Theodore Roosevelt, a Republican President. This is an important point as Progressivism was a sweeping and transformational movement supported by candidates in both political parties. The Progressive Movement ushered in the modern, middle-class oriented society we enjoy today.

Rise of Conservative Movement

Fast-forwarding for the sake of brevity skips a lot of important history, but it is fair to say that a strain of Progressive Movement philosophy has been baked into our political DNA. It remains most prominent in the Democratic party while largely disappearing from the establishment wing of the GOP. It’s disappearance is roughly correlated with the rise of our current income inequality and the growing power of the super rich. But a progressive element within the GOP is still not entirely absent even in conservative voters as evidenced by the continuing popularity of Medicare and Social Security among Tea Party Republicans.

On the Democratic side, the progressive vein of the party suffered though a crushing political loss with the landslide victory of Richard Nixon over George McGovern in 1972, followed a decade later by the rise of the conservative movement capped by the landslide election of Ronald Reagan in 1980.

President Reagan’s election marked the beginning of a successful and synergistic partnership between the Republican Party and private corporate wealth. This partnership began a decade earlier with the conscious decision to create ideologically conservative public media platforms and apply modern business marketing techniques to promote conservative causes, including a successful anti-union marketing campaign that turned workers against unions. The power of organized labor was also challenged by newly organized industry advocacy groups. These industry trade groups gave rise to the powerful corporate lobbies we have today. Among the early successes of industry trade groups was a law that created political action committees, or PAC’s where corporations were able to provide substantial campaign contributions to political candidates of their choosing, and their candidates were all conservative and mostly Republican. The influx of money, the marketing prowess and the organizing clout of this marriage between the GOP and big business overwhelmed the Democratic Party. The effectiveness of massively coordinated conservative messaging cannot be overstated. It began the shift of America’s political center to the right. The power of this massively coordinated messaging, rather than the strength of conservative ideas, continues to power this rightward movement of our electoral center today.

DLC Transforms The Democratic Party

To many Democrats it was clear that the Party had to change strategy. Progressive causes were no longer winning elections. The diagnosis, unfortunately, was that the progressive agenda was the problem rather than copious amounts of corporate money, more effective marketing techniques, and the rise of conservative funded media outlets with their focus group tested propaganda.

A Democratic political operative name Al From believed that economic populism was no longer politically viable. He founded an organization named the Democratic Leadership Council (DLC) to move the Democratic Party away from progressive and socialist influences. The DLC sought more conservative alternatives that could appeal to the rightward shifting center of the American electorate. This required a willingness to compromise progressive values and embrace some conservative ideas. It was a strategy that triangulated politicians and the political party base on both the right and the left to win broad appeal for more “centrist” proposals. It also meant shifting Democratic Party allegiance towards big business interests and away from the poor and working classes. (The impact that this shifting focus had on the Democratic electorate will be explored more in Part 2).

More and more Democrats joined the DLS and adopted its ideas, which became known as the Third Way. It’s adherents became known as New Democrats. Their willingness to compromise and pass corporate friendly legislation, in combination with corporate lobbying, brought in the donation needed to fund successful campaigns. The crowning success  of the New Democrats was the popular election of their candidate, President Bill Clinton. From then till now Democratic Party has hitched a ride on the shifting center of the American electorate. The DLC’s New Democrats became the establishment wing of the party.

Under Bill Clinton the New Democrats schemed and compromised their way with Republicans to pass a mixed bag of legislation, from a progressive stand point. Clinton got passed a the Family and Medical Leave Act, welfare reform legislation, legislation to deregulate banks and insurance companies so they can compete with investment banks, to list a few accomplishments. The DLC’s  had to push ever further to the right to follow the shifting electoral center, but it was winning elections again.  To better compete with GOP success, the Democratic party began adopting Republican style marketing strategies and ever closer ties to big corporate donors. Still, the electorate slide to the right continued. The Party was locked into a strategy that kept Democratic candidate competitive but left no room to challenge the conservative movement or corporate media more broadly. There was always the danger that directly confronting the right wing conservatives would dry up the corporate donation that Democratic candidates came to rely on.

It’s work on transforming the Democratic Party done, the DLC dissolved in early 2011, and on July 5 of that year, DLC founder Al From announced on the organization’s website its historical records had been purchased by the Clinton Foundation. The DLC had become the Democratic Party establishment.

Democratic Establishment Today

Today, New Democrats are simply called Democrats. They still claim the title of  progressives, but it is a more relative term today.  Those most closely associated with the former DLC, however, hold important policy positions that are considerably more conservative than before the DLC was founded. For example, former DLC activist oppose single-payer universal healthcare. They are more hawkish. They supported the Iraq War and are in favor of stronger military interventions in areas of active conflict. They are in favor of charter schools and “No Child Left Behind”. They are more aligned with Wall Street and market-based solutions to economic problems. They support free-trade agreements including NAFTA, and now the Trans-Pacific Partnership Agreement (TPP). They continue to fear that economic populism is not politically viable and while they have come late to addressing income and wealth inequality, their are less aggressive in their approach

This is the current state of the Democratic Party establishment, of which Hillary Clinton is the heir apparent. If she doesn’t see that she is an establishment Democrat, it is because a true progressive alternative has not presented itself in a long time. Today’s Democratic Party is progressive in name only. Hillary Clinton revealed more than she realized when she recently said some call her a centrist and she is proud to wear that label. Capturing the electoral center remains at the heart of her campaign strategy.

What she and other establishment Democrats haven’t realized is that they have chased the electoral political center far to the right of actual political sensibilities of most ordinary citizens.  For decades Democratic and independent voters have given up on the electoral process. They are not among the likely voters the Party targets to win elections. And the Party has stopped listening to the families they represent. They haven’t notice just how rigged the economy has become. They have stopped talking about the poor and the term “working class” has disappeared from the Party’s vocabulary. They compete instead, with Republicans on the issues of the GOP’s own choosing while conservative operatives successfully frame every debate to benefit wealthy donors. Establishment Democrats have not stopped to notice just how painful the nearly 40 year decline in wages has been for the middle-class .

The Contrast

Bernie Sanders, on the other hand, has never stopped listening to the people or noticing what is happening to poor and middle class Americans. He retained his progressive values as an independent representative from Vermont. His record on this is clear. He continues to  to promote progressive values and even retains the “socialist” tag that became associated with progressive philosophy in the 1960’s. When Hillary Clinton challenged him in the recent debate by asking what made him the gatekeeper of who is a progressive, Bernie couldn’t reduce his answer to a pithy sound byte. The question is breathtaking for those familiar with the transformation of the Democratic Party over the decades. There are very few champions of true progressives left in politics today. How could anyone answer her in question in a short few words? It requires too much context because so much of the history of the Party has been lost. But once the context is understood, the stark contrast between Clinton and Sanders is between:

1. A candidate who will continue to ride the electoral center wave to the right in exchange for small but more certain gains that improve our lives, or

2. A candidate who awakens the vast number of disaffected voters to challenge right-wing ideology directly, sweep conservatives from office and make way for bold ideas that will greatly benefit most people.

Un-Taxing the Rich is the Root Cause of the Public Pension Crisis

by Brian T. Lynch, MSW

What follows is a letter I wrote to New Jersey’s principal newspaper, which is constantly trying to convince us that the huge pension deficits created by bad public policy decisions (or perhaps by intentional public union busting strategies) can’t be fixed without dismantling the whole system and starting over. All options to do this create great sacrifices by hard working servants of the people who were promised pensions in exchange for lower lifetime wages than the private sector would be paid for comparable work.

What makes this relevant beyond New Jersey’s boarders is that public employee pension systems are under similar financial assaults in nearly every state. It is a pattern so powerful that it has to be part of a bigger plan.

Dear editor:

“Taxing the rich won’t solve pension problems” claims the Star-Ledger in its editorial. Their point is that the “millionaire’s tax” vetoed by Gov. Christie wouldn’t plug the current pension gap.

This is true, but the larger point is that the “un-taxing” of the rich and the wealthiest companies in New Jersey is the real reason we have a crisis. Stack up all the tax money not collected due to corporate tax breaks and tax cuts given away since the Whitman administration until now and it would tower over the cash it would have taken to pay pension obligations from the beginning.

Money is fungible. Whenever tax revenue is deleted from the budget, someone’s ox has to be gored. For decades that ox belonged to State employees. Their pensions is part their wage package and the reason their overall compensation is roughly parallel with the private sector. Not funding it was a deliberate choice.

Another fact hidden in plain view is that revenue deleted from the budget doesn’t have a line item to remind us of what’s missing. We end up blindly subsidizing profitable corporations instead of properly compensating ordinary folks who work for us.

It’s disingenuous for politicians (or the Star-Ledger) to speak of pension reform without also discussing the massive tax breaks that created this crisis. If tax cuts for businesses and people who don’t need it were rescinded, there would be plenty of revenue to fund the pensions.

BLOG NOTE: If this is happening in your state, of if you are from New Jersey and want to do something about the pension mess, feel free to use this as a template for your own letter to the editor or to your representatives in government.