The party of Trump is being torn to pieces by its own crackpot, bigoted leader, and Democrats are eagerly feeding on the carcass. But we can already see that the Democratic Party is astride its own contradictions.
One problem for Democrats is they can’t tell the truth about their own past. Despite bleeding-heart rhetoric, the party has been directly complicit with corporate capitalism in generating the retrograde policies that effectively dismantled the country’s widely shared prosperity. Income inequality, we might say, was partly manufactured in Washington, DC, and both parties did their part.
Of course, economists would explain that faceless economic forces flattened labor wages and generated the awesome gap between fabulous wealth and the everyday people struggling to get by. But these events were not an act of nature. Political actors and political interests were at the wheel and steering at every turn, starting with Ronald Reagan’s reactionary tax cuts and anti-government slogans in the early 1980s. The Democratic Party got walloped by the Gipper, and was so traumatized that it began to imitate the Reagan mantra: “Big government is the problem, not the solution” became Bill Clinton’s famous “The era of big government is over.” Jimmy Carter struck a similar pose with his mania for deregulation.
From Clinton to Obama, Democratic administrations took their cues from Wall Street financiers and the multinational corporations that were gutting US jobs and wages. Dems too often dismissed these dislocations and stagnant wages as unfortunate but temporary. For better wages, workers simply needed more education. But the displaced didn’t need an economist to figure out what was happening to them. They saw it in their pay stubs and swollen credit-card debt. A lot of them voted for the crackpot last fall.
If you strip away the magical claims of Reaganomics (“cutting tax rates will yield more revenue and balance the budget”), you can see that the real purpose of “supply side” theory was to shift the tax burden down the income ladder—away from the high incomes. This is the operative objective: Tax work instead of wealth. That has been the practical result of favoring capital’s returns on stocks and bonds over wage income. The pivot was a landmark political reversal, and it continues to this day.
Returns on capital used to be known as “unearned income,” since it did not involve personal labor by the shareholder. Starting in the Reagan era, cutting taxes on unearned income has become a favorite way for politicians to reward the upper middle class and wealthiest citizens but especially to benefit multinational corporations, which have enormous influence in electoral politics.