America is about to revive an idea that was left for dead decades ago. It’s called industrial policy, and it’s at the heart of Joe Biden’s plans to restructure the U.S. economy.

When industrial policy was last debated in the 1980s, critics recoiled from government “picking winners.” But times have changed. Devastating climate change, a deadly pandemic, and the rise of China as a technological powerhouse require an active government pushing the private sector to achieve public purposes.

The dirty little secret is that America already has an industrial policy, but one that’s focused on pumping up profits with industry-specific subsidies, tax loopholes and credits, bailouts, and tariffs. The practical choice isn’t whether to have an industrial policy but whether it meets society’s needs or those of politically powerful industries.

Consider energy. The fossil fuel industry has accumulated “billions of dollars in subsidies, loopholes, and special foreign tax credits,” in Biden’s words. He intends to eliminate these and shift to non-carbon energy by strengthening the nation’s electrical grid, creating a new “clean electricity standard” that will force utilities to end carbon emissions by 2035 and providing research support and tax credits for clean energy.

It’s a sensible 180-degree shift of industrial policy.

The old industrial policy for the automobile industry consisted largely of bailouts – of Chrysler in 1979 and General Motors and Chrysler in 2008.

Biden intends to shift away from gas-powered cars entirely and invest $174 billion in companies making electric vehicles. He’ll also create 500,000 new charging stations.

This also makes sense. Notwithstanding the success of Tesla, which received $2.44 billion in government subsidies before becoming profitable, the switch to electric vehicles still needs pump priming.

Internet service providers have been subsidized by the states and the federal government, and federal regulators have allowed them to consolidate into a few telecom giants. But they’ve dragged their feet on upgrading copper networks with fiber, some 30 million Americans still lack access to high-speed broadband, and America has among the world’s highest prices for internet service.

Biden intends to invest $100 billion to extend high-speed broadband coverage. He also threatens to “hold providers accountable,” for their sky-high prices – suggesting either price controls or antitrust enforcement.

I hope he follows through. A proper industrial policy requires that industries receiving public benefits act in the public interest.  

The pharmaceutical industry exemplifies the old industrial policy at its worst. Big Pharma’s basic research has been subsidized through the National Institutes of Health. Medicare, Medicaid, and the Affordable Care Act bankroll much of its production costs. The industry has barred Americans from buying drugs from abroad. Yet Americans pay among the highest drug prices in the world.

Biden intends to invest an additional $30 billion to reduce the risk of future pandemics – replenishing the national stockpile of vaccines and therapeutics, accelerating the timeline for drug development, and boosting domestic production of pharmaceutical ingredients currently made overseas.

That’s a good start but he must insist on a more basic and long-overdue quid pro quo from big pharma: allow government to use its bargaining power to restrain drug prices.    

A case in point: The U.S. government paid in advance for hundreds of millions of doses of multiple COVID-19 vaccines. The appropriate quid pro quo here is to temporarily waive patents so vaccine manufacturers around the world can quickly ramp up. Americans can’t be safe until most of the rest of the world is inoculated.

Some of Biden’s emerging industrial policy is coming in response to China. Last week’s annual intelligence report from the Office of the Director of National Intelligence warns that Beijing threatens American leadership in an array of emerging technologies.

Expect more subsidies for supercomputers, advanced semiconductors, artificial intelligence, and other technologies linked to national security. These are likely to be embedded in Biden’s whopping $715 billion defense budget – larger even than Trump’s last defense budget.

Here again, it’s old industrial policy versus new. The new should focus on cutting-edge breakthroughs and not be frittered away on pointless projects like the F35 fighter jet. And it should meet human needs rather than add to an overstuffed defense arsenal.

Biden’s restructuring of the American economy is necessary. America’s old industrial policy was stifling innovation and gauging taxpayers and consumers. The challenges ahead demand a very different economy.

But Biden’s new industrial policy must avoid capture by the industries that dominated the old. He needs to be clear about its aims and the expected response from the private sector, and to reframe the debate so it’s not about whether government should “pick winners” but what kind industrial policy will help America and much of the world win.

Does Trickle-Down Economics Actually Work?

To the extent the Republican Party has any economic platform at all, it’s trickle-down economics. Unfortunately for the GOP, it’s based on three giant myths. It’s time to debunk them once and for all.

Myth #1: Tax cuts for corporations and the rich create more and better jobs. 

Wrong. Corporations used Trump’s giant tax cut to buy back shares of their own stock and boost share prices. From 2017 to 2018, stock buybacks increased by a staggering 50 percent. Lowe’s spent $10 billion on stock buybacks in 2018, and then fired thousands of workers with no notice or severance. Walmart and AT&T also laid off thousands of workers. 

And contrary to the claim that the tax cut would boost wages by $4,000 a year, a recent analysis found that in the year after the Trump tax cut, wages increased by about the same as they did before it, and then slowed. 

Tax cuts for rich individuals don’t trickle down, either. The rich simply get richer. Two years before Ronald Reagan’s first tax cut, the richest 1 percent of Americans owned less than 23 percent of the nation’s wealth. A decade later, after two rounds of tax cuts for the rich, they owned over 28 percent. By 2019, after more tax cuts for the rich by George W. Bush and Donald Trump, people at the top owned almost 35 percent of America’s wealth. Meanwhile, average wealth barely budged for the middle class, and went negative for the bottom 10 percent.

It gets worse. During this pandemic alone, America’s 664 billionaires have added $1.3 trillion to their collective wealth and now own over $4 trillion. That’s almost double the wealth of the bottom half  — 165 million Americans.

But nothing has trickled down. Even before the pandemic, wages stagnated.

Myth #2: Tax cuts for big corporations and the rich spur economic growth.

Baloney. Not even Ronald Reagan’s surging economic growth rate was driven by tax cuts. It was driven by low interest rates and humongous government spending. 

George W. Bush promised his 2001 and 2003 tax cuts would pay for themselves (sound familiar?) by spurring economic growth. That didn’t happen. A 2017 study led by one of Bush’s former chief economists found that the tax cuts had no significant effect on growth. In fact, growth declined, slowing to just 2.8 percent from over 3 percent during the Clinton years. The economic expansion under Bush was one of the weakest expansions since World War II.

Donald Trump claimed his tax cut would be like “rocket fuel” for the economy, and would spur annual growth of 3 percent. After its first year, growth slowed to 1.9  percent.

Finally, a recent study analyzing tax data spanning 50 years from 18 advanced economies found that tax cuts for the rich only benefited the rich and had no effect on job creation or economic growth. I, for one, am shocked.

Myth #3: Deregulation spurs economic growth.

More rubbish. The cost savings from deregulation go to corporate executives and major investors, while the costs and risks land on the rest of us. 

Trump’s Environmental Protection Agency rolled back regulations on everything from clean air and water standards to dangerous chemicals in products — benefiting chemical and fossil fuel executives and investors while forcing everyone else to deal with polluted air and toxins. 

His Labor Department loosened child labor laws and scaled back the number of workers eligible for overtime pay. Companies raked in savings, while workers were exploited. 

And with the help of Congress, he rolled back banking regulations put in place after the 2008 financial crisis — to the benefit of rich Wall Streeters and the detriment of everyone else.

Don’t forget Ronald Reagan’s deregulatory agenda allowed for-profit healthcare companies to flourish, contributing to the out-of-control health care costs we’re saddled with today. And that deregulation of the financial sector was a major cause of the 2008 crash, as it allowed banks to make risky bets.

In other words, the Republican trickle-down claim that deregulation helps us all is baloney. Regulations that protect you and me from being harmed, fleeced, shafted, injured, or sickened by corporate products and services are clearly worth the cost.

So don’t fall for trickle-down nonsense. Making big corporations and the rich even richer through tax cuts and regulatory rollbacks doesn’t make the rest of us better off. It just makes big corporations and the rich even richer.

For four decades, the basic deal between big American corporations and politicians has been simple. Corporations provide campaign funds. Politicians reciprocate by lowering corporate taxes and doing whatever else corporations need to boost profits.

The deal has proven beneficial to both sides, although not to the American public. Campaign spending has soared while corporate taxes have shriveled.

In the 1950s, corporations accounted for about 40 percent of federal revenue. Today, they contribute a meager 7 percent. Last year, more than 50 of the largest U.S. companies paid no federal income taxes at all. Many haven’t paid taxes for years.

Both parties have been in on this deal although the GOP has been the bigger player. Yet since Donald Trump issued his big lie about the fraudulence of the 2020 election, corporate America has had a few qualms about its deal with the GOP.  

After the storming of the Capitol, dozens of giant corporations said they would no longer donate to the 147 Republican members of Congress who objected to the certification of Biden electors on the basis of the big lie.

Then came the GOP’s recent wave of restrictive state voting laws, premised on the same big lie. Georgia’s are among the most egregious. The chief executive of Coca Cola, headquartered in the peach tree state, calls those laws “wrong” and “a step backward.” The CEO of Delta Airlines, Georgia’s largest employer, says they’re “unacceptable.” Major League Baseball decided to relocate its annual All-Star Game away from the home of the Atlanta Braves.

These criticisms have unleashed a rare firestorm of anti-corporate Republican indignation. The senate minority leader, Mitch McConnell, warns corporations of unspecified “serious consequences” for speaking out. Republicans are moving to revoke Major League Baseball’s antitrust status. Georgia Republicans threaten to punish Delta Airlines by repealing a state tax credit for jet fuel.

“Why are we still listening to these woke corporate hypocrites on taxes, regulations & antitrust?” asks Florida Senator Marco Rubio.

Why? For the same reason Willy Sutton gave when asked why he robbed banks: That’s where the money is.

McConnell told reporters that corporations should “stay out of politics” but then qualified his remark: “I’m not talking about political contributions.” Of course not. Republicans have long championed “corporate speech” when it comes in the form of campaign cash –  just not as criticism.  

Talk about hypocrisy. McConnell was the top recipient of corporate money in the 2020 election cycle and has a long history of battling attempts to limit it. In 2010, he hailed the Supreme Court’s “Citizens United” ruling, which struck down limits on corporate political donations, on the dubious grounds that corporations are “people” under the First Amendment to the Constitution.

“For too long, some in this country have been deprived of full participation in the political process,” McConnell said at the time. Hint: He wasn’t referring to poor Black people.  

It’s hypocrisy squared. The growing tsunami of corporate campaign money suppresses votes indirectly by drowning out all other voices. Republicans are in the grotesque position of calling on corporations to continue bribing politicians as long as they don’t criticize Republicans for suppressing votes directly.

The hypocrisy flows in the other direction as well. The Delta’s CEO criticized GOP voter suppression but the company continues to bankroll Republicans. Its PAC contributed $1,725,956 in the 2020 election, more than $1 million of which went to federal candidates, mostly to Republicans. Oh, and Delta hasn’t paid federal taxes for years.

Don’t let the spat fool you. The basic deal between the GOP and corporate America is still very much alive.

Which is why, despite record-low corporate taxes, congressional Republicans are feigning outrage at Joe Biden’s plan to have corporations pay for his $2 trillion infrastructure proposal. Biden isn’t even seeking to raise the corporate tax rate as high as it was before the Trump tax cut, yet not a single Republicans will support it.

A few Democrats, such as West Virginia’s Joe Manchin, don’t want to raise corporate taxes as high as Biden does, either. Yet almost two-thirds of Americans support the idea.

The basic deal between American corporations and American politicians has been a terrible deal for America. Which is why a piece of legislation entitled the “For the People Act,” passed by the House and co-sponsored in the Senate by every Democratic senator except Manchin, is so important. It would both stop states from suppressing votes and also move the country toward public financing of elections, thereby reducing politicians’ dependence on corporate cash.

Corporations can and should bankroll much of what America needs. But they won’t as long as corporations keep bankrolling American politicians.

How Corporations Crush the Working Class

The most dramatic change in the system over the last half-century has been the emergence of corporate giants like Amazon and the shrinkage of labor unions.

The resulting power imbalance has spawned near-record inequalities of income and wealth, corruption of democracy by big money, and the abandonment of the working class.

Fifty years ago, General Motors was the largest employer in America. The typical GM worker earned $35 an hour in today’s dollars and had a major say over working conditions.

Today’s largest employers are Amazon and Walmart, each paying far less per hour and routinely exploiting their workers, who have little recourse.

The typical GM worker wasn’t “worth” so much more than today’s Amazon or Walmart worker and didn’t have more valuable insights about working conditions.

The difference is those GM workers had a strong union. They were backed by the collective bargaining power of more than a third of the entire American workforce. 

Today, most workers are on their own. Only 6.4% of America’s private-sector workers are unionized, providing little collective pressure on Amazon, Walmart, or other major employers to treat their workers any better.

Fifty years ago, the labor movement had enough political clout to ensure labor laws were enforced and that the government pushed giant firms like GM to sustain the middle class.

Today, organized labor’s political clout is minuscule by comparison. 

The biggest political players are giant corporations like Amazon. They’ve used that political muscle to back “right-to-work” laws, whittle down federal labor protections, and keep the National Labor Relations Board understaffed and overburdened, allowing them to get away with egregious union-busting tactics.

They’ve also impelled government to lower their taxes; extorted states to provide them tax breaks as a condition for locating facilities there; bullied cities where they’re headquartered; and wangled trade treaties allowing them to outsource so many jobs that blue-collar workers in America have little choice but to take low-paying, high-stress warehouse and delivery gigs. 

Oh, and they’ve neutered antitrust laws, which in an earlier era would have had companies like Amazon in their crosshairs.

This decades-long power shift – the ascent of corporate leviathans and the demise of labor unions – has resulted in a massive upward redistribution of income and wealth. The richest 0.1% of Americans now have almost as much wealth as the bottom 90% put together.

The power shift can be reversed – but only with stronger labor laws resulting in more unions, tougher trade deals, and a renewed commitment to antitrust.

The Biden administration and congressional Democrats appear willing. The House has just passed the toughest labor reforms in more than a generation. Biden’s new trade representative, promises trade deals will protect American workers rather than exporters. And Biden is putting trustbusters in critical positions at the Federal Trade Commission and in the White House.

And across the country, labor activism has surged – from the Amazon union effort, to frontline workers walking out and striking to demand better pay, benefits, and safety protections.

I’d like to think America is at a tipping point similar to where it was some 120 years ago, when the ravages and excesses of the Gilded Age precipitated what became known as the Progressive Era. Then, reformers reined in the unfettered greed and inequalities of the day and made the system work for the many rather than the few.

It’s no exaggeration to say that we’re now living in a Second Gilded Age. And today’s progressive activists may be on the verge of ushering us into a Second Progressive Era. They need all the support we can give them.

Joe Biden is embarking on the biggest government initiative in more than a half century, “unlike anything we have seen or done since we built the interstate highway system and the space race decades go,” he says.

But when it comes to details, it sounds as boring as fixing the plumbing.

“Under the American Jobs Plan, 100% of our nation’s lead pipes and service lines will be replaced—so every child in America can turn on the faucet or fountain and drink clean water,” the president tweeted.

Can you imagine Donald Trump tweeting about repairing lead pipes?  

Biden is excited about rebuilding America’s “infrastructure,” a word he uses constantly although it could be the dullest term in all of public policy. “Infrastructure week” became a punchline under Trump. 

The old unwritten rule was that if a president wants to do something really big, he has to justify it as critical to national defense or else summon the nation’s conscience.

Dwight Eisenhower’s National Interstate and Defense Highway Act was designed to “permit quick evacuation of target areas” in case of nuclear attack and get munitions rapidly from city to city. Of course, in subsequent years it proved indispensable to America’s economic growth.

America’s huge investment in higher education in the late 1950s was spurred by the Soviets’ Sputnik satellite. The official purpose of the National Defense Education Act, as it was named, was to “insure trained manpower of sufficient quality and quantity to meet the national defense needs of the United States.”

John F. Kennedy launched the race to the moon in 1962 so that space wouldn’t be “governed by a hostile flag of conquest.”

Two years later, Lyndon Johnson’s “unconditional war on poverty” drew on the conscience of America reeling from Kennedy’s assassination.  

But Joe Biden is not arousing the nation against a foreign power – not even China figures prominently as a foil – nor is he basing his plans on lofty appeals to national greatness or public morality.

“I got elected to solve problems,” he says, simply. He’s Mr. Fix-it.

The first of these problems was a pandemic that’s killed hundreds of thousands of Americans – Biden carries a card in his pocket updating the exact number – and its ensuing economic hardship.

In response, Congress passed Biden’s $1.9 trillion American Rescue Plan – the most important parts of which aren’t $1,400 checks now being mailed to millions of Americans but $3,600 checks a child paid to low-income families, which will cut child poverty by half.

Now comes his $2 trillion American Jobs Plan, which doesn’t just fund roads and bridges but a vast number of things the nation has neglected for years: schools, affordable housing, in-home care, access to broadband, basic research, renewable energy, and the transition to a non-fossil economy.

Why isn’t Biden trumpeting these initiatives for what they are – huge public investments in the environment, the working-class and poor – instead of rescue checks and road repairs? Why not stir America with a vision of what the nation can be if it exchanges fraudulent trickle-down economics for genuine bottom-up innovation and growth?

Even the official titles of his initiatives – Rescue Plan, Jobs Plan, and soon-to-be-unveiled Family Plan – are anodyne, like plumbing blueprints.

The reason is Biden wants Americans to feel confident he’s taking care of the biggest problems but doesn’t want to create much of a stir. The country is so bitterly and angrily divided that any stir is likely to stir up vitriol.

Talk too much about combatting climate change and lose everyone whose livelihood depends on fossil fuels or who doesn’t regard climate change as an existential threat. Focus on cutting child poverty and lose everyone who thinks welfare causes dependency. Talk too much about critical technologies and lose those who don’t believe government should be picking winners.  

Rescue checks and road repairs may be boring but they’re hugely popular. 61 percent of Americans support the American Rescue Plan, including 59 percent of Republicans. More than 80 percent support increased funding for highway construction, bridge repair and expanded access to broadband.

Biden has made it all so bland that congressional Republicans and their big business backers have nothing to criticize except his proposal to pay for the repairs by raising taxes on corporations, which most Americans support.

This is smart politics. Biden is embarking on a huge and long-overdue repair job on the physical and human underpinnings of the nation while managing to keep most of a bitterly divided country with him. It may not be seen as glamorous work, but when you’re knee-deep in muck it’s hard to argue with a plumber.  

What if We Actually Taxed the Rich?

Income and wealth are now more concentrated at the top than at any time over the last 80 years, and our unjust tax system is a big reason why. The tax code is rigged for the rich, enabling a handful of wealthy individuals to exert undue influence over our economy and democracy. 

Conservatives fret about budget deficits. Well, then, to pay for what the nation needs – ending poverty, universal health care, infrastructure, reversing climate change, investing in communities, and so much more – the super-wealthy have to pay their fair share. 

Here are seven necessary ways to tax the rich.

First: Repeal the Trump tax cuts.

It’s no secret Trump’s giant tax cut was a giant giveaway to the rich. 65 percent of its benefits go to the richest fifth, 83 percent to the richest 1 percent over a decade. In 2018, for the first time on record, the 400 richest Americans paid a lower effective tax rate than the bottom half. Repealing the Trump tax cut’s benefits to the wealthy and big corporations, as Joe Biden has proposed, will raise an estimated $500 billion over a decade.

Second: Raise the tax rate on those at the top. 

In the 1950s, the highest tax rate on the richest Americans was over 90 percent. Even after tax deductions and credits, they still paid over 40 percent. But since then, tax rates have dropped dramatically. Today, after Trump’s tax cut, the richest Americans pay less than 26 percent, including deductions and credits. And this rate applies only to dollars earned in excess of $523,601. Raising the marginal tax rate by just one percent on the richest Americans would bring in an estimated $123 billion over 10 years. 

Third: A wealth tax on the super-wealthy.

Wealth is even more unequal than income. The richest 0.1% of Americans have almost as much wealth as the bottom 90 percent put together. Just during the pandemic, America’s billionaires added $1.3 trillion to their collective wealth. Elizabeth Warren’s proposed wealth tax would charge 2 percent on wealth over $50 million and 3 percent on wealth over $1 billion. It would only apply to about 75,000 U.S. households, fewer than 0.1% of taxpayers. Under it, Jeff Bezos would owe $5.7 billion out of his $185 billion fortune – less than half what he made in one day last year. The wealth tax would raise $2.75 trillion over a decade, enough to pay for universal childcare and free public college with plenty left over.

Fourth: A transactions tax on trades of stock.

The richest 1 percent owns 50 percent of the stock market. A tiny 0.1 percent tax on financial transactions – just $1 per $1,000 traded – would raise $777 billion over a decade.That’s enough to provide housing vouchers to all homeless people in America more than 12 times over.

Fifth: End the “stepped-up cost basis” loophole.

The heirs of the super-rich pay zero capital gains taxes on huge increases in the value of what they inherit because of a loophole called the stepped-up basis. At the time of death, the value of assets is “stepped up” to their current market value – so a stock that was originally valued at, say, one dollar when purchased but that’s worth $1,000 when heirs receive it, escapes $999 of capital gains taxes. This loophole enables huge and growing concentrations of wealth to be passed from generation to generation without ever being taxed. Eliminating this loophole would raise $105 billion over a decade.

Six: Close other loopholes for the super-rich.

For example, one way the managers of real estate, venture capital, private equity and hedge funds reduce their taxes is the carried interest loophole, which allows them to treat their income as capital gains rather than ordinary wage income. That means they get taxed at the lower capital gains rate rather than the higher tax rate on incomes. Closing this loophole is estimated to raise $14 billion over a decade.

Seven: Increase the IRS’s funding so it can audit rich taxpayers.

Because the IRS has been so underfunded, millionaires are far less likely to be audited than they used to be. As a result, the IRS fails to collect a huge amount of taxes from wealthy taxpayers. Collecting all unpaid federal income taxes from the richest 1 percent would generate at least $1.75 trillion over the decade. So fully fund the IRS.

Together, these 7 ways of taxing the rich would generate more than $6 trillion over 10 years – enough to tackle the great needs of the nation. As inequality has exploded, our unjust tax system has allowed the richest Americans to cheat their way out of paying their fair share. 

It’s not radical to rein in this irresponsibility. It’s radical to let it continue.

Republicans are outraged – outraged! – at the surge of migrants at the southern border. The House minority leader, Kevin McCarthy, declares it a “crisis … created by the presidential policies of this new administration.” The Arizona congressman Andy Biggs claims “we go through some periods where we have these surges, but right now is probably the most dramatic that I’ve seen at the border in my lifetime.”

Donald Trump demands the Biden administration “immediately complete the wall, which can be done in a matter of weeks — they should never have stopped it. They are causing death and human tragedy.”

“Our country is being destroyed!” he adds.

In fact, there’s no surge of migrants at the border.

U.S. Customs and Border Protection apprehended 28 percent more migrants from January to February this year than in previous months. But this was largely seasonal. Two years ago, apprehensions increased 31 percent during the same period. Three years ago, it was about 25 percent from February to March. Migrants start coming when winter ends and the weather gets a bit warmer, then stop coming in the hotter summer months when the desert is deadly.

To be sure, there is a humanitarian crisis of children detained in overcrowded border facilities. And an even worse humanitarian tragedy in the violence and political oppression in Central America, worsened by U.S. policies over the years, that’s driving migration in the first place.

But the “surge” has been fabricated by Republicans in order to stoke fear – and, not incidentally, to justify changes in laws they say are necessary to prevent non-citizens from voting.

Republicans continue to allege – without proof – that the 2020 election was rife with fraudulent ballots, many from undocumented immigrants. Over the past six weeks they’ve introduced 250 bills in 43 states designed to make it harder for people to vote – especially the young, the poor, Black people, and Hispanic-Americans, all of whom are likely to vote for Democrats – by eliminating mail-in ballots, reducing times for voting, decreasing the number of drop-off boxes, demanding proof of citizenship, even making it a crime to give water to people waiting in line to vote.

To stop this, Democrats are trying to enact a sweeping voting rights bill called the For the People Act, which protects voting, ends partisan gerrymandering, and keeps dark money out of elections. It already passed the House but Republicans in the Senate are fighting it with more lies.

On Wednesday, the Texas Republican senator Ted Cruz falsely claimed the new bill would register millions of undocumented immigrants to vote and accused Democrats of wanting the most violent criminals to cast ballots too.

The core message of the Republican party now consists of lies about a “crisis” of violent immigrants crossing the border, lies that they’re voting illegally, and blatantly anti-democratic restrictions on voting to counter these trumped-up crises.

The party that once championed lower taxes, smaller government, states’ rights and a strong national defense now has more in common with anti-democratic regimes and racist-nationalist political movements around the world than with America’s avowed ideals of democracy, rule of law, and human rights.

Donald Trump isn’t single-handedly responsible for this, but he demonstrated to the GOP the political potency of bigotry and the GOP has taken him up on it.

This transformation in one of America’s two eminent political parties has shocking implications, not just for the future of American democracy but for the future of democracy everywhere.  

“I predict to you, your children or grandchildren are going to be doing their doctoral thesis on the issue of who succeeded: autocracy or democracy?” Joe Biden opined at his news conference on Thursday.

In his maiden speech at the State Department on March 4, Antony Blinken conceded that the erosion of democracy around the world is “also happening here in the United States.”

The secretary of state didn’t explicitly talk about the Republican Party, but there was no mistaking his subject.

“When democracies are weak … they become more vulnerable to extremist movements from the inside and to interference from the outside,” he warned.

People around the world witnessing the fragility of American democracy “want to see whether our democracy is resilient, whether we can rise to the challenge here at home. That will be the foundation for our legitimacy in defending democracy around the world for years to come.”

That resilience and legitimacy will depend in large part on whether Republicans or Democrats prevail on voting rights.

Not since the years leading up to the Civil War has the clash between the nation’s two major parties so clearly defined the core challenge facing American democracy.

The most dramatic change in American capitalism over the last half century has been the emergence of corporate behemoths like Amazon and the simultaneous shrinkage of organized labor. The resulting imbalance has spawned near-record inequalities of income and wealth, corruption of democracy by big money, and the abandonment of the working class.

All this is coming to a head in several ways.

Next week, Amazon faces a union vote at its warehouse in Bessemer, Alabama. If successful, it would be Amazon’s first U.S.-based union in its nearly 27-year history.

Conditions in Amazon’s warehouses would please Kim Jong un – strict production quotas, 10-hour workdays with only two half-hour breaks, unsafe procedures, arbitrary firings, “and they track our every move,” Jennifer Bates, a warehouse worker at Bessemer, told the Senate Budget Committee last week.  

To thwart the union drive, Amazon has required Bessemer workers to attend anti-union meetings, warned workers they’d have to pay union dues (wrong – Alabama is a so-called “right-to-work” state that bars mandatory dues), and intimidated and harassed organizers.

Why is Amazon abusing its workers?

The company isn’t exactly hard-up. It’s the most profitable firm in America. Its executive chairman and largest shareholder, Jeff Bezos, is the richest man in the world, holding more wealth than the bottom 39 percent of Americans put together.

Amazon is abusing workers because it can.

Fifty years ago, General Motors was the largest employer in America. The typical GM worker earned $35 an hour in today’s dollars and had a major say over working conditions. Today’s largest employers are Amazon and Walmart, each paying around $15 an hour and treating their workers like cattle.

The typical GM worker wasn’t “worth” more than twice today’s Amazon or Walmart worker and didn’t have more valuable insights about how work should be organized. The difference is GM workers a half-century ago had a strong union behind them, summoning the collective bargaining power of over a third of the entire American workforce.

By contrast, today’s Amazon and Walmart workers are on their own. And because only 6.4 percent of America’s private-sector workers are now unionized, there’s little collective pressure on Amazon or Walmart to treat their workers any better.  

Fifty years ago, “big labor” had enough political clout to ensure labor laws were enforced and that the government pushed giant firms like GM to sustain the middle class.

Today, organized labor’s political clout is miniscule by comparison. The biggest political players are giant corporations like Amazon. And what have they done with their muscle? Encouraged state “right-to-work” laws, diluted federal labor protections, and kept the National Labor Relations Board understaffed and overburdened.

They’ve also impelled government to lower their taxes (Amazon paid zero federal taxes in 2018); extorted states to provide them tax breaks as condition for locating facilities there (Amazon is a champion at this game); bullied cities where they’re headquartered (Amazon forced Seattle to back down on a plan to tax big corporations like itself to pay for homeless shelters); and wangled trade treaties allowing them to outsource so many jobs that blue-collar workers in America have little choice but to take low-paying, high-stress warehouse and delivery gigs.

Oh, and they’ve neutered antitrust laws, which in earlier era would have had companies like Amazon in their crosshairs.

This decades-long power shift – the emergence of corporate leviathans and the demise of labor unions – has resulted in a massive upward redistribution of income and wealth. The richest 0.1 of Americans now has almost as much wealth as the bottom 90 percent put together.

Corporate profits account for a growing share of the total economy and wages a declining share, with multi-billionaire executives and investors like Bezos taking home the lion’s share.  

The power shift can be reversed – but only with stronger labor laws, tougher trade deals, and a renewed commitment to antitrust.

The Biden administration and congressional Democrats appear willing. The House has just passed the toughest labor law reforms in over a generation. Biden’s new trade representative, Katherine Tai, promises that trade deals will protect the interests of American workers rather than exporters. And Biden is putting trustbusters in critical positions at the Federal Trade Commission and in the White House.

I’d like to think America is at a tipping point similar to where it was some hundred twenty years ago when the ravages and excesses of the Gilded Age precipitated what became known as the Progressive Era. Then, reformers reversed the course of American capitalism for the next 70 years, making it work for the many rather than the few.

Today’s progressive activists – in Washington, at Amazon’s Bessemer warehouse, and elsewhere around the nation – may be on the verge of doing the same.

The Biggest Deficit You’ve Never Heard Of

America has a deficit problem. But the country’s biggest deficit isn’t the federal budget deficit. It’s the deficit in public investment.

The public investment deficit is the gap between what we should be investing in our future — on infrastructure, education, and basic research — and the relatively little we are investing.

Increasing public investment needs to be a major goal of the Biden administration.

Public investment is similar to private investment in that we invest today because of the payoff in the future. The difference is public investment pays off for all of us, for America. 

In the 1960s, we used to make a lot of public investments. But they’ve been steadily declining ever since.

That decline has been largely driven by so-called “deficit hawks” who argue against more federal spending. But as I’ve been saying for years, reducing the federal deficit just for the sake of reducing it makes no sense. 

Any business person knows that you borrow money for the sake of investing in the future of your business. Those are wise borrowings. Because then you can pay those debts off when they get bigger. 

A national economy works exactly the same way. It doesn’t matter that we’re borrowing money, if we’re investing those monies that we borrowed from abroad — in education, training, infrastructure, factories — but we’re not.

The public return on infrastructure investment, based on 2020 report taking into account the pandemic, averages $2.70 for every single public dollar invested — yet we haven’t made those investments. Our infrastructure today is crumbling.

The return on early childhood education is between 10 and 16 percent — but only a handful of our children have access to early childhood education. 

Public investment on clean energy has an annual return of over 27 percent. But federal tax breaks favor fossil fuels over renewables by about 7 to 1.

The public return on investments in basic research and development are huge. America’s competitiveness depends on them, because no individual company has an incentive to make them. The lithium-ion battery that powers iPhones and electric cars was developed by federally sponsored materials science research, while the Internet itself was borne out of the Advanced Research Projects Administration. 

And yet in recent years, public investment in basic research has declined as well. 

Are you seeing a pattern yet? Federal investments in all these areas have shrunk — even though the payoffs from these investments are gigantic, and the costs of not making them are astronomical. American productivity is already suffering.

Now, some say we don’t need to worry about this public investment deficit because private investments fill the gap. Baloney.

Corporations are focused on getting the best return for themselves, not for America. For most of the last four decades, they’ve made money by lowering their costs, at the expense of working people: capping wages, reducing taxes, and deregulating.

A common assumption is that when American corporations are profitable, Americans are better off. But that’s false. Trickle-down economics is a sham. Tax cuts and subsidies to big corporations and the wealthy don’t build the economy. Economies don’t grow from the top down — they grow from the bottom up, through public investment.

So if private investment won’t fill the gap, how do we fill it? Two ways: tax the wealthy and large corporations, and borrow.

Tax rates on the wealthy and on corporations have continued to drop over the past 40 years, just as the deficit in public investment has grown. In the 1950s, the highest tax rate on individuals was over 90 percent. Even after tax deductions and credits, it was still over 40 percent. But since then, tax rates have dropped dramatically. For the first time on record, the 400 richest Americans now pay a lower effective tax rate than people in the bottom half.
Revenue from corporate taxes has also plummeted.

If wealthy individuals and corporations want all the advantages that come with being American, they have to pay taxes so America can afford the public investments necessary for a high-wage, high-productivity society.

The other way to pay for public investment is through public borrowing. This kind of borrowing doesn’t burden future generations, because it’s used to build a better future for those future generations. 

Remember: There’s a difference between borrowing for the future and borrowing for today. You might not want to borrow to pay for a vacation, but it’s perfectly rational to borrow to purchase a house, because a vacation doesn’t have any future return, while a home does. Right now, the federal budget irrationally treats all government borrowing the same.

The government needs a public investment budget separate from the current spending budget to clarify what we’re investing in and allow us to keep borrowing for investments as long as the returns justify it.

Public investment is the biggest and most important deficit you’ve never heard of. 

Don’t listen to people who claim we can’t afford to invest in the American people. We can afford it. We can’t afford not to. Joe Biden needs to recognize this, and make public investment a central part of his economic strategy. 

A quarter century ago, I and other members of Bill Clinton’s cabinet urged him to reject the Republican’s proposal to end welfare. It was too punitive, we said, subjecting poor Americans to deep and abiding poverty. But Clinton’s political advisers warned that unless he went along, he jeopardized his reelection.

That was the end of welfare as we knew it. As Clinton boasted in his State of the Union address to Congress that year, “the era of big government is over.”

Until last Thursday, that is, when Joe Biden signed into law the biggest expansion of government assistance since the 1960s – a guaranteed income for most families with children, raising the maximum benefit by up to 80 percent per child.

As Biden put it in his address to the nation, as if answering Clinton, “the government isn’t some foreign force in a distant capital. No, it’s us, all of us, we the people.”

As a senator, Biden had supported Clinton’s 1996 welfare restrictions as did most Americans. What happened between then and now? Three big things.

First, COVID. The pandemic has been a national wake-up call on the fragility of middle-class incomes. The deep COVID recession has revealed the harsh consequences of most Americans now living paycheck to paycheck.

For years, Republicans used welfare to drive a wedge between the white working middle class and the poor. Ronald Reagan portrayed black, inner-city mothers as freeloaders and con artists, repeatedly referring to “a woman in Chicago” as the “welfare queen.”

Whites who were putting more hours into paid work than ever – women had streamed into the workforce in the 1970s in order to prop up family incomes decimated by the decline in male factory jobs – were particularly susceptible to the message. Why should “they” get help for not working when “we” get no help, and we work?

By the time Clinton campaigned for president, “ending welfare as we knew it” had become a talisman of so-called New Democrats, even though there was little or no evidence that welfare benefits discouraged the unemployed from taking jobs. (In Britain, enlarged child benefits actually increased employment among single mothers.)

Yet when COVID hit, public assistance was no longer necessary just for “them.” It was needed by “us.”

The second big thing was Donald Trump. He exploited racism, to be sure, but replaced economic Reaganism with narcissistic grievances, claims of voter fraud, and cultural paranoia stretching from Dr. Seuss to Mr. Potato Head.  

Trump obliterated concerns about government giving away money. The CARES Act, which he signed into law at the end of March, gave most Americans checks of $1,200 (to which he calculatedly attached his name). When this proved enormously popular, he demanded the next round of stimulus checks be $2,000.  

Part of the GOP’s incapacity to respond to Biden’s momentous redistribution was due to the Party’s equally momentous distribution upward – its $1.9 trillion 2018 tax cut whose benefits went overwhelmingly to the top 20 percent. Despite promises of higher wages for everyone else, nothing trickled down.

Meanwhile, during the pandemic, America’s 660 billionaires – major beneficiaries of the Trump tax cut – became $1.3 trillion wealthier, enough to give every American a $3,900 check and still be as rich as they were before the pandemic.

The third big thing is the breadth of Biden’s plan. Under it, more than 93 percent of the nation’s children — 69 million — receive benefits. Americans in the lowest quintile increase their incomes by 20 percent; those in the second-lowest, 9 percent; those in the middle, 6 percent.

Rather than pit the working middle class against the poor, this unites them. Over 70 percent of Americans support the bill, including 63 percent of low-income Republicans (a quarter of all Republican voters). Younger conservatives are particularly supportive, presumably because people under 50 have felt the brunt of the four-decade slowdown in real wage growth.

Given all this, it’s amazing that zero Republican members of Congress voted for it, while 278 voted for Trump’s tax cut for corporations and the rich.  

The political lesson is that today’s Democrats – who enjoy popular vote majorities in presidential elections (having won seven of the past eight) – can gain political majorities by raising the wages of both middle class and poor voters, while fighting Republican efforts to suppress the votes of likely Democrats.

The economic lesson is that Reaganomics is officially dead. For years, conservative economists have argued that tax cuts for the rich create job-creating investments, while assistance to the poor creates dependency. Rubbish.

Bidenomics is exactly the reverse: Give cash to the bottom two-thirds and their purchasing power will drive growth for everyone. This is far more plausible. We’ll learn how much in coming months.