II. The McKinley Blueprint

In the months after last November's elections, the Bush Administration rattled progressive sensibilities with shock and awe on the home front--a barrage of audacious policy initiatives: Allow churches to include sanctuaries of worship in buildings financed by federal housing grants. Slash hundreds of billions in domestic programs, especially spending for the poor, even as the Bush tax cuts kick in for the well-to-do. At the behest of Big Pharma, begin prosecuting those who help the elderly buy cheaper prescription drugs in Canada. Compel the District of Columbia to conduct federally financed school voucher experiments (even though DC residents are overwhelmingly opposed). Reform Medicaid by handing it over to state governments, which will be free to make their own rules, much like welfare reform. Do the same for housing aid, food stamps and other long-established programs. Redefine "wetlands" and "wilderness" so that millions of protected acres are opened for development.

Liberal activists gasped at the variety and dangerous implications (the public might have been upset too but was preoccupied with war), while conservatives understood that Bush was laying the foundations, step by step, toward their grand transformation of American life. These are the concrete elements of their vision:

§ Eliminate federal taxation of private capital, as the essential predicate for dismantling the progressive income tax. This will require a series of reform measures (one of them, repeal of the estate tax, already accomplished). Bush has proposed several others: elimination of the tax on stock dividends and establishment of new tax-sheltered personal savings accounts for the growing "investor class." Congress appears unwilling to swallow these, at least this year, but their introduction advances the education-agitation process. Future revenue would be harvested from a single-rate flat tax on wages or, better still, a stiff sales tax on consumption. Either way, labor gets taxed, but not capital. The 2003 Economic Report of the President, prepared by the Council of Economic Advisers, offers a primer on the advantages of a consumption tax and how it might work. Narrowing the tax base naturally encourages smaller government.

§ Gradually phase out the pension-fund retirement system as we know it, starting with Social Security privatization but moving eventually to breaking up the other large pools of retirement savings, even huge public-employee funds, and converting them into individualized accounts. Individuals will be rewarded for taking personal responsibility for their retirement with proposed "lifetime savings" accounts where capital is stored, forever tax-exempt. Unlike IRAs, which provide a tax deduction for contributions, wages are taxed upfront but permanently tax-sheltered when deposited as "lifetime" capital savings, including when the money is withdrawn and spent. Thus this new format inevitably threatens the present system, in which employers get a tax deduction for financing pension funds for their workers. The new alternative should eventually lead to repeal of the corporate tax deduction and thus relieve business enterprise of any incentive to finance pensions for employees. Everyone takes care of himself.

§ Withdraw the federal government from a direct role in housing, healthcare, assistance to the poor and many other long-established social priorities, first by dispersing program management to local and state governments or private operators, then by steadily paring down the federal government's financial commitment. If states choose to kill an aid program rather than pay for it themselves, that confirms that the program will not be missed. Any slack can be taken up by the private sector, philanthropy and especially religious institutions that teach social values grounded in faith.

§ Restore churches, families and private education to a more influential role in the nation's cultural life by giving them a significant new base of income--public money. When "school choice" tuitions are fully available to families, all taxpayers will be compelled to help pay for private school systems, both secular and religious, including Catholic parochial schools. As a result, public schools will likely lose some of their financial support, but their enrollments are expected to shrink anyway, as some families opt out. Although the core of Bush's "faith-based initiative" stalled in Congress, he is advancing it through new administrative rules. The voucher strategy faces many political hurdles, but the Supreme Court is out ahead, clearing away the constitutional objections.

§ Strengthen the hand of business enterprise against burdensome regulatory obligations, especially environmental protection, by introducing voluntary goals and "market-driven" solutions. These will locate the decision-making on how much progress is achievable within corporate managements rather than enforcement agencies (an approach also championed in this year's Economic Report). Down the road, when a more aggressive right-wing majority is secured for the Supreme Court, conservatives expect to throw a permanent collar around the regulatory state by enshrining a radical new constitutional doctrine. It would require government to compensate private property owners, including businesses, for new regulations that impose costs on them or injure their profitability, a formulation sure to guarantee far fewer regulations [see Greider, "The Right and US Trade Law," October 15, 2001].

§ Smash organized labor. Though unions have lost considerable influence, they remain a major obstacle to achieving the right's vision. Public-employee unions are formidable opponents on issues like privatization and school vouchers. Even the declining industrial unions still have the resources to mobilize a meaningful counterforce in politics. Above all, the labor movement embodies the progressives' instrument of power: collective action. The mobilizations of citizens in behalf of broad social demands are inimical to the right's vision of autonomous individuals, in charge of their own affairs and acting alone. Unions may be taken down by a thousand small cuts, like stripping "homeland security" workers of union protection. They will be more gravely weakened if pension funds, an enduring locus of labor power, are privatized.

Looking back over this list, one sees many of the old peevish conservative resentments--Social Security, the income tax, regulation of business, labor unions, big government centralized in Washington--that represent the great battles that conservatives lost during early decades of the twentieth century. That is why the McKinley era represents a lost Eden the right has set out to restore. Grover Norquist, president of Americans for Tax Reform and a pivotal leader in the movement's inside-outside politics, confirms this observation. "Yes, the McKinley era, absent the protectionism," he agrees, is the goal. "You're looking at the history of the country for the first 120 years, up until Teddy Roosevelt, when the socialists took over. The income tax, the death tax, regulation, all that." (In foreign policy, at least, the Bush Administration could fairly be said to have already restored the spirit of that earlier age. Justifying the annexation of the Philippines, McKinley famously explained America's purpose in the world: "There was nothing left for us to do but to take them all, and to educate the Filipinos, and uplift and civilize and Christianize them, and by God's grace do the very best we could by them, as our fellow men for whom Christ also died.")

But the right employs a highly selective memory. McKinley Republicans, aligned with the newly emergent industrial titans, did indeed hold off the Progressive advocates of a federal income tax and other reforms, while its high tariffs were the equivalent of a stiff consumption tax. And its conservative Supreme Court blocked regulatory laws designed to protect society and workers as unconstitutional intrusions on private property rights.

But the truth is that McKinley's conservatism broke down not because of socialists but because a deeply troubled nation was awash in social and economic conflicts, inequities generated by industrialization and the awesome power consolidating in the behemoth industrial corporations (struggles not resolved until economic crisis spawned the New Deal). Reacting to popular demands, Teddy Roosevelt enacted landmark Progressive reforms like the first federal regulations protecting public health and safety and a ban on corporate campaign contributions. Both Roosevelt and his successor, Republican William Howard Taft, endorsed the concept of a progressive income tax and other un-Republican measures later enacted under Woodrow Wilson.

George W. Bush does not of course ever speak of the glories of the McKinley era or acknowledge his party's retrograde objectives (Ari Fleischer would bat down any suggestions to the contrary). Conservatives learned, especially from Gingrich's implosion, to avoid flamboyant ideological proclamations. Instead, the broader outlines are only hinted at in various official texts. But there's nothing really secretive about their intentions. Right-wing activists and think tanks have been openly articulating the goals for years. Some of their ideas that once sounded loopy are now law.

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