Passing on the Risk to the Taxpayer

By RALPH NADER —[print_link] Dateline: March 30, 2010

A society not alert to signs of its own decay, because its ideology is a continuing myth of progress, separates itself from reality and envelops illusion.

One yardstick by which to measure the decay in our country’s political, economic, and cultural life, is the answer to this question: Do the forces of power, which have demonstrably failed, become stronger after their widely perceived damage is common knowledge?

Economic decay is all around. Poverty, unemployment, foreclosures, job export, consumer debt, pension attrition, and crumbling infrastructure are well documented. The self-destruction of the Wall Street financial giants, with their looting and draining of trillions of other people’s money, have been headlines for two years. During and after their gigantic taxpayer bailouts from Washington, DC, the banks, et al, are still the most powerful force in determining the nature of proposed corrective legislation.

“The banks own this place,” says Senator Richard Durbin (D-IL), evoking the opinion of many members of a supine Congress ready to pass weak consumer and investor protection legislation while leaving dominant fewer and larger banks.

Who hasn’t felt the ripoffs and one-sided fine print of the credit card industry? A reform bill finally has passed after years of delay, again weak and incomplete. Shameless over their gouges, the companies have their attorneys already at work to design around the law’s modest strictures.

The drug and health insurance industry, swarming with thousands of lobbyists, got pretty much what they wanted in the new health law. Insurers got millions of new customers subsidized by hundreds of billions of taxpayer dollars with very little regulation. The drug companies got their dream—no reimportation of cheaper identical drugs, no authority for Uncle Sam to bargain for discount prices, and a very profitable extension of monopoly patent protection for biologic drugs against cheaper, generic drug competition.

For all their gouges, for all their exclusions, their denial of claims and restrictions of benefits, for all their horrendous price increases, the two industries have come out stronger than ever politically and economically. Small wonder their stocks are rising even in a recession.

The junk food processing industry—on the defensive lately due to some excellent documentaries and exposes—are still the most influential of powers on Capitol Hill when it becomes to delaying for years a decent food safety bill, using tax dollars to pump fat, sugar and salt into the stomachs of our children, and fighting adequate inspections. Over seven thousand lives are lost due to contaminated food yearly in the US and many millions of illnesses.

The oil, gas, coal and nuclear power companies are fleecing consumers and taxpayers, depleting and imperiling the environment, yet they continue to block rational energy legislation in Congress to replace carbon and uranium with energy efficiency technology and renewables.

Still, even now after years of cost over-runs and lack of permanent storage for radioactive wastes, the nuclear industry has President Obama, and George W. Bush before him, pushing for many tens of billions of dollars in taxpayer loan guarantees for new nukes. Wall Street won’t finance such a risky technology without you, the taxpayers, guaranteeing against any accident or default.

Both Democrats and Republicans are passing on these outrageous financial and safety risks to taxpayers.

Congress, which receives the brunt of this corporate lobbying—the carrot of money and the stick of financing incumbent challengers—is more of an obstacle to change than ever. In the past after major failures of industry and commerce, there was a higher likelihood of Congressional action. Recall, the Wall Street and banking collapse in the early 1930s. Congress and Franklin Delano Roosevelt produced legislation that saved the banks, peoples’ savings and regulated the stock markets.

From the time of my book, Unsafe at Any Speed’s publication in late November 1965, it took just nine months to federally regulate the powerful auto industry for safety and fuel efficiency.

Contrast the two-year delay after the Bear Stearns collapse and still no reform legislation, and what is pending is weak.

Yet the entrenched members of Congress, responsible for this astonishing gridlock, are almost impossible to dislodge even though polls have Congress at its lowest repute ever. It is a place where the majority is terrified of the corporations and the minority can block even the most anemic legislative efforts with archaic rules, especially in the Senate.

Culturally, the canaries in the coal mine are the children. Childhood has been commercialized by the giant marketers reaching them hour by hour with junk food, violent programming, video games and bad medicine. The result—record obesity, child diabetes and other ailments.

While the companies undermine parental authority, they laugh all the way to the bank, using our public airwaves, among other media, for their lucre. They can be called electronic child molesters.

We published a book in 1996 called Children First!: A Parent’s Guide to Fighting Corporate Predators in the Media. This book is an understatement of the problem compared to the worsening of child manipulation today.

In a 24/7 entertained society frenetic with sound bites, Blackberries, iPods, text messages and emails, there is a deep need for reflection and introspection. We have to discuss face to face in living rooms, school auditoriums, village squares and town meetings what is happening to us and our diminishing democratic processes by the pressures and controls of the insatiable corporate state.

And what needs to be done from the home to the public arenas and marketplaces with old and new superior models, new accountabilities and new thinking.

For our history has shown that whenever the people get more engaged and more serious, they live better on all fronts.

Only the Super-Rich Can Save Us!, a novel.

Very much like most instruments created by humans—a knife, a car, even a weapon—a government is good or bad depending on whom it serves and whom it victimizes.

By Howard Zinn

Excerpted from the book Howard Zinn on History (Seven Stories Press, 2000, paper

THE DECLARATION OF INDEPENDENCE, which is the quintessential document of democracy, discusses the origin and purpose of government. It says that we are all endowed “with certain unalienable rights, that among these are life, liberty, and the pursuit of happiness.” It further says that “to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed.” Well, if governments have the responsibility to secure for all of us our rights to life, liberty, and the pursuit of happiness, that is a big order, calling, it may well be argued, for “big government.” This essay discusses the hypocrisy surrounding the cries of politicians-Democrats as well as Republicans-to do away with “big government.”

I have seen some of my most stalwart friends flinch before the accusation that they-in asking, let us say, for a single-payer health care system-were calling for “big government.” So insistent has been the press and the political leadership of the country-in both parties- that “big government” is a plague to be avoided, that otherwise courageous people on the Left have retreated before the attack. It’s an issue, therefore, that deserves some examination, using a bit of history.

When Clinton, in his 1996 campaign, announced happily that “the era of big government is over,” he was suggesting that the United States had gone through an unfortunate phase which was now ended. He was repeating the myth that there once was a golden past where the “free market” reigned and the nation followed Jefferson’s dictum: ‘that government is best which governs least.” Big government has been with the world for at least five hundred years, and became very big in this country (Jefferson never followed his own pronouncement, as he doubled the territory of the government with the Louisiana Purchase).

It was the rise of the modern national state in the 16th century that introduced big government, to centralize the tax system and thus raise enough money to subsidize the new world-wide trading organizations, like the Dutch East India Company and the British East India Company. Both of these companies were granted government charters around 1600, giving them monopoly rights to maraud around the world, trading goods and human beings, bringing wealth back to the home country.  The new national states now had to raise armies and navies, to protect the shipping trade (especially the slave trade) of these powerful companies, to invade other parts of the world, to forcibly take land, for trading and settling, from indigenous people. The state would use its power to drive out foreign competitors, to put down rebellions at home and abroad. “Big government” was needed, for the benefit of the mercantile and land-owning classes.

Adam Smith, considered the apostle of the “free market,” understood very well how capitalism could not survive a truly free market, if government was not big enough to protect it. He wrote, in the middle of the 18th century:

Laws and governments may be considered in this and indeed in every case as a combination of the rich to oppress the poor, and preserve to themselves the inequality of the goods, which would otherwise be soon destroyed by the attacks of the poor, who if not hindered by the government would soon reduce the others to an equality with themselves by open violence.

The American colonists, having fought and won the war for independence from England, faced the question of what kind of government to establish. In 1786, three years after the treaty of peace was signed, there was a rebellion of farmers in western Massachusetts, led by Captain Daniel Shays, a veteran of the war. The uprising was crushed, but it put a scare into those leaders who were to become our Founding Fathers. After Shays Rebellion, General Henry Knox warned his former commander, George Washington, about the rebels:

…they see the weakness of government; they feel at once their own poverty, compared to the opulent and their own force, and they are determined to make use of the latter in order to remedy the former. Their creed is that the property of the U.S. has been protected from the confiscations of Britain by the Joint exertions of all, and therefore should be the common property of all.

The Constitutional Convention in Philadelphia for 1787 was called to deal with this problem, to set up “big government,” to protect the interests of merchants, slaveholders, land speculators, to establish law and order and avert future rebellions like that of Shays.

When the debate took place in the various states over ratification of the Constitution, the Federalist Papers appeared in the New York press to support ratification. Federalist Paper #10, written by James Madison, made clear why a strong central government was needed, to curb the potential demand of a “majority faction” for “an equal division of property, or for any other improper or wicked object.”

And so the Constitution set up big government, big enough to protect slaveholders against slave rebellion, to catch runaway slaves if they went from one state to another, to pay off bondholders, to pass tariffs on behalf of manufacturers, to tax poor farmers to pay for armies that would then attack the farmers if they resisted payment, as was done in the Whiskey Rebellion in Pennsylvania in 1794. Much of this was embodied in the legislation of the first Congress, responding to the request of the secretary of the Treasury, Alexander Hamilton.

For all of the nation’s history, that legislative pattern was to continue. Government would defend the interests of the wealthy classes. It would raise tariffs higher and higher to help manufacturers, give subsidies to shipping interests, and a hundred million acres of land free to the railroads. It would use the armed forces to clear Indians off their land, to put down labor uprisings, to invade countries in the Caribbean for the benefit of American growers, bankers, investors. This was very big government.

When the Great Depression produced social turmoil, with strikes and protests all over the nation, the government responded with laws for social security (which one angry senator said would “take all the romance out of life”), unemployment insurance, subsidized housing, work programs, money for the arts. And in the atmosphere created by the movements of the Sixties, Medicare and Medicaid were enacted. Only then did the cry arise, among politicians and the press, continuing to this day, warning against “big government.”

Of course, the alarms about “big government” did not extend to the enormous subsidies to business. When, after World War II, the aircraft industries, which had made enormous profits during the war (92% of their expansion paid for by the government), was in decline, Stuart Symington, Assistant Secretary of War for Air, wrote to the president of Aircraft Industries: “It looks as if our airplane industry is in trouble and it would seem to be the obligation of our little shop to do the best we can to help.” The help carne and has never stopped coming. Billions in subsidies each year to produce fighters and bombers.

When Chrysler ran out of cash in 1980, the government stepped in to help. (Try that next time you run out of cash.) Tax benefits, like the oil depletion allowance, added up over the years to hundreds of billions of dollars. For example, The New York Times reported in 1984 that the twelve top military contractors paid an average tax rate of 1.5% while middle-class Americans were paying 15% and more.

So it’s time to gently point out the hypocrisy as both Democrats and Republicans decry “big government.” When President Clinton signed the Crime Bill to build more federal prisons, when recently he called for billions more for the military budget, he did not refer to his campaign declaration that “the era of big government is over.”

Surely, with only a bit of reflection, it becomes clear that the issue is not big or little government, but government for whom? Is it the ideal expressed by Lincoln-government “for the people,” or is it the reality described by the Populist orator Mary Ellen Lease in 1890: “…a government of Wall Street, by Wall Street and for Wall Street.”

There is good evidence that the American people, whose common sense often resists the most energetic propaganda campaigns, understand this. Political leaders and the press have pounded away at their sensibilities with the fearful talk of “big government,” and so long as it is an abstraction, it is easy for people to go along, each listener defining it in his or her own way. But when specific questions are asked, the results are illuminating.

Again and again, public opinion surveys over the last decade have shown that people want the government to act to remedy economic injustice.

Last year, the Pew Research Center asked if it is “the responsibility of the government to take care of people who can’t take care of themselves? Sixty-one percent said they either completely agreed or mostly agreed. When, after the Republican Congressional Victory in 1994 The New York Times asked people their opinions on “welfare,” the responses were evenly for and against. The Times headline read: “PUBLIC SHOWS TRUST IN GOP CONGRESS,” but this misled its readers, because when the question was posed more specifically: “Should the government help people in need?” over 65 percent answered in the affirmative.

This should not surprise us. The achievements of the New Deal programs still glow warmly in the public memory: social security, unemployment insurance, the work programs, the minimum wage, the subsidies for the arts. There is an initial worried reaction when people are confronted with the scare words “big government.” But that falls away as soon as someone points to the G.I. Bill of Rights, Medicare, Medicaid, food stamps, and loans to small business.

So let’s not hesitate to say: we want the government, responding to the Lincolnian definition of democracy, to organize, with the efficiency that it ran the G.I. Bill, that it runs Social Security and Medicare, a system that gives free medical care to everyone and pays for it out of a reformed tax system which is truly progressive. In short, we want everyone to be in the position of U.S. Senators, and members of the armed forces-beneficiaries of big, benevolent government.

“Big government” in itself is hardly the issue. That is here to stay. The only question is: whom will it serve?

The late Howard Zinn wrote A PEOPLE’S HISTORY, to dispel the cobweb of myths surrounding the origins of the United States.