Pro-Growth Policies, but for Whom?
By James Neimeister
Occupy Wall Street has so effectively used “the 99 percent” and “the 1 percent” to define the problem of American income inequality that even conservatives are embracing these terms. For example, in his endorsement of presidential candidate Mitt Romney, New Jersey Governor Chris Christie used an increasingly prevalent analogy to neatly sum up the Republican approach to this issue: the economy is like a pie. Everyone has a slice, and some peoples’ slices are bigger than others. That is a shame, but the Republicans point out that the pie is infinite in size, so if the pie as a whole grows, so does everyone’s slice. But no matter how big the pie is, the relative slice size still matters.
Just because the pie is bigger does not mean that everyone reaps the benefits of growth. The pie can grow without increasing the size of each group’s slice. Furthermore, the Republican platform for economic growth holds that such growth should focus on the wealthiest Americans. Republicans’ bread and butter strategies of tax cuts, deregulation and austerity all intend to grow the economy by concentrating wealth and power in the hands of the most capable (i.e. those who are already wealthy and powerful). The reasoning for these policies is that when the most wealthy and powerful members of society control most of the wealth, society will be more prosperous because only the capable and hardworking become wealthy and prosperous—a conviction as preposterous as it is circular. As such, the pro-growth agenda that Republicans invoke in the name of general welfare paradoxically embraces inequality as a social good.
Republicans embrace tax cuts as a core strategy for economic growth. Tax cuts allow people to keep more of what they earn, allowing them to spend, save or re-invest that money. Special income tax cuts for the rich, who tend to invest more than the less affluent and, incidentally, have more money to invest, and capital gains tax cuts, which also only benefit those capable of investing, are thought to spur investment the most, and therefore the whole economy. Whether tax cuts are the most effective measures for stimulating economic growth, much less equitable growth is a question of econometrics. But Republicans undoubtedly focus on the wealthy with these measures, offering the meager promise that a trickle-down effect follows. Additionally, some conservatives consider tax cuts an effective way to reduce federal spending growth, a crusade they believe is synonymous with the struggle for freedom itself and complementary to attempts to dismantle the regulatory apparatus that monitors the nation’s economy.
Conservatives claim deregulation spurs economic growth by removing barriers that prevent businesses from operating at their full potential. In practice, however, deregulation targets any legislation that would prevent large corporations from further asserting their near-limitless power. Deregulation is heavily influenced by the mistaken belief that markets can solve all problems through competition. This is rarely the case, as even competing firms have rallied together under the banner of deregulation to strengthen their economic stranglehold. The oil industry, for instance, pushed with fantastic success to be able to drill on public, environmentally protected wild lands by claiming it would be not only their right, but also their obligation to extract all the oil this country has to offer. Likewise, the financial industry successfully lobbied to repeal the Glass-Steagall Act, which prevented banks from merging commercial and investment operations. The repeal allowed risky investments made before the 2008 Wall Street crash to endanger ordinary peoples’ savings.
Even Supreme Court justices Clarence Thomas and Antonin Scalia have actively peddled their influence to special interests. They notably struck down campaign-finance laws that protected the free-speech rights of most Americans by limiting the maximum amount an individual could donate to a candidate and prohibiting attack advertisments that only wealthy Americans and huge corporations can afford. Moreover, deregulation has been used as a weapon against American workers, resulting in labor laws that greatly reduced the collective bargaining power unions once had. This has gone even further in states like Wisconsin, Ohio and New Jersey, where Republican governors have attempted to prohibit outright collective bargaining rights for public-sector unions.
Austerity, the last horseman of the apocalyptic Republican agenda, aims solely to cut government spending. While they argue that austerity would increase investor confidence by reassuring the government’s solvency, Republicans can hardly claim to be proponents of solvency after nearly causing a government shutdown this past July, a clash that ended with the U.S. Treasury’s first ever credit downgrade. Austerity measures include discretionary spending cuts, hiring freezes at governmental agencies, pay freezes and layoffs for public employees, full-scale privatizations and even significant cuts to the social safety net and the elimination of entire branches of government. Principally, it aims for the exact opposite of growth. Conservatives claim a government that has grown too large needs to be shrunk. The government has always grown along with the size of the economy in order to attend to a growing set of responsibilities. Attempting to dissemble the government by shirking its responsibilities sounds like anything but a pro-growth strategy. As always, Republicans are just making another excuse to allow private, self-serving interests to encroach on the public sphere.
These Republican policies would undoubtedly benefit the wealthy and powerful at the expense of the rest of America. They may bend over backwards to argue otherwise, but Republicans should not be fooling anyone. On the other side of the aisle, President Obama made the struggle for a more equitable economy the highlight of his State of the Union address, but Democrats still have much convincing to do. They have yet to form a coherent narrative to burst open the warped and self-contained universe in which the Republicans have sealed themselves. Repeatedly foiled by the ungovernable House of Representatives, Democrats have yet to justify their own means of constructing a more equitable economy.
Economic stimulus, near-certain tax increases and reinforced financial regulations will be tough to swallow in an environment so harshly opposed to any government intervention. It remains to be seen whether the Obama administration can achieve anything of lasting consequence. Can they forge a system of capitalism with a human face as long as Wall Street’s shadow hangs over the Statue of Liberty?