Perceptive observers will remember that the Tea Party as we know it today was started by an interview from the trading floor, given by CNBC’s Rick Santelli, and only later did the “grassroots”- apologies for the scare quotes, but no better time- come on board. What we had with that movement, which has since been co-opted by a host of interests, was organized money sticking it’s tongue out at Obama’s supposedly progressive agenda.
Fast forward almost 2 years- another election cycle has been completed, and organized money has again gotten its way. Well, kind of. The fruits of there gains, already borne out to a large degree by general lobbying money, will only be truly realized in January when the House switches to the GOP (although I harbor no illusions that much of our policy in the last ten years has not been directed by the same forces). What will they do in the meantime? Well, via Matt Drudge, US News is reporting “Washington Whispers”-sorry, it’s a scare quote kind of night here- that the stock market will plummet if we don’t have certainty on universal tax cuts by December 15th.
“Capital gains tax rate will increase from 15 to 20 percent if the tax cuts are not extended. The last time the capital gains tax rate increased–on Jan. 1, 1987 from 20 to 28 percent–investors realized their gains at the lower tax rate,” said Daniel Clifton at a Washington partner at Strategas Research Partners…
Worse, talk that Congress will simply pass retroactive fixes to the tax system won’t help, since investors will take the sure thing and sell rather than rely on Capitol Hill. “Fixing the issue next year will not negate these negative impacts,” said Clifton.
Now, there is a valid debate to be had over whether any taxes should be raised during a recession. However, it’s likely that the same folks who are demanding continued cuts for high earners and for capital gains also oppose extending benefits to the unworthy unemployed. What’s strikingly dissonant to me is that in American culture, it’s news when organized money threatens to go on strike. However, there’s no coherent mechanism for organized labor or organized people to do the same. Obviously I’m probing at larger questions about the decline of labor and civil society, but it’s undoubtedly true that the power dynamic in the status quo will continue to produce these dissonant stories, and the unjust desserts to which they are attached.
Nick: What’s strikingly dissonant to me is that in American culture, it’s news when organized money threatens to go on strike.
This is what the appeasing the bond market is all about. It goes on all the time. It’s just that this tax cut thing is so blatant and transparent that it calls attention to itself and becomes “news.” Nothing new to see here at all.
The US will continue to be ruled by a plutocratic oligarchy unless and until it gets the money and influence out of politics by reforming campaign finance and lobbying (which constitute legalized bribery), and shuts the revolving door (which underlies the military-industrial-financial-governmental complex).
Tom- It’s not new, but at one point in time (or so I’ve heard), there seemed to be a cycle where capital would lose power during downtimes like this (social structure of accumulation theory illustrates this pattern well). I think you’re right that it’s broken down because of our political conjecture, though. Folks like Hacker and Pierson are probably going to be more useful in the next decade than progressive economists.
Or the IMF. (I jest not.)
Inequality, Leverage and Crises
Michael Kumhof and Romain Rancière
IMF Working Paper WP/10/268, November 2010
This paper looks really interesting- thanks for posting it. It will warrant it’s own analysis in coming days…
This just shows the imbalance in power between those that have money and those that do not. Those with power will do what ever they think they must to keep it. I think that congress men should have to wear patches showing their corporate sponsorship, just so that the asymmetric information would slightly and i mean slightly move to ward perfect information, but hey the free market based on a rational consumer with perfect information works just great
Your comment about patches reminds me of this video showing lobbyists’ physical influence at a hearing on school lunches.
http://www.thedailygreen.com/healthy-eating/blogs/healthy-food/school-lunch-44022302
Of course, no one is wearing nametags…