Posted by: David Offutt | October 18, 2010

The Retreat to a New Gilded Age

The Breakers in Newport, RI, was only a summer cottage.

Years ago, I visited Newport, RI, and toured the Breakers. Built by the son of Cornelius Vanderbilt, the Breakers is one of many summer “cottages” lining Newport’s Atlantic coast – they were occupied only for about 7 weeks of the year by members of America’s plutocracy during the Gilded Age. It is a lavish mansion for which money was no object. No records were kept; so we don’t know how much it cost to build, furnish, or decorate this ostentatious display of unlimited wealth.

The dining hall at the Breakers: "Opulence" is the best word to describe the life of the plutocracy during the Gilded Age.

The late Alistair Cooke, in his book and 1974 TV series “America,” conveyed a peculiar event at the Breakers: “There was a dinner at which the centerpiece was a long, thin sandbox implanted with tiny pails and shovels of sterling silver. The guests were invited on a given signal to dig for favors – for rubies, sapphires, and diamonds.”

Mr. Cooke, no doubt, did not anticipate America’s desire to return to those days before the 20th century when only a few people commanded the vast majority of our nation’s wealth. Of course, our quest for a New Gilded Age began with a vengeance with the ascension of Ronald Reagan to the presidency in the Election of 1980, and many American voters have been yearning for those jaded, golden years of the 1880’s and 1890’s ever since.

Since the end of WWII, the presidency of Harry Truman (a Democrat) produced the highest growth of the gross domestic product, the lowest Misery Index (inflation plus unemployment), and the lowest inflation. - source: Arthur I. Blaustein, "Who Manages the Economy Better - Republicans or Democrats?" (Oct. 9, 2008)

Analyses, including those by Arthur I. Blaustein (Oct. 2008) and Robert S. McElvaine (Nov. 2004),  have verified what’s always seemed apparent: When Democrats control the executive branch, those in the lower, middle, and upper income brackets have all tended to benefit. When the Republicans are in the White House, only the upper income group has benefited. But, even those with the upper incomes do not do as well under Republicans as they do when Democrats are in power. Here’s one obvious explanation: if the lower and middle incomes have money to spend, more of that money goes to those at the top; if the lower and middle incomes have less money to spend, most of their money still goes to those at the top – but there’s less of it.

Trickle-down economics, the idea that economic policies should be designed to benefit the rich so that their money will trickle down to the rest of the people in the form of jobs, historically has never worked. And it doesn’t matter what you call it – Hooverism, Reaganomics, supply-side economics, Bushonomics – it’s the same thing with the same result. When only the rich get richer, everyone else gets poorer.

Since the end of WWII, the presidency of John F. Kennedy (a Democrat) produced the highest growth in industrial production. - Source: Blaustein

George H. W. Bush, when he ran against Reagan for the presidential nomination in 1980, accurately identified Reagan’s economic philosophy as “voodoo economics.”  Herbert Hoover did it to us in the 1920’s, and we got the Great Depression. Reagan did it to us in the 1980’s; and we got the deepest recession, the biggest bank failure, and the worst stock market crash since the Great Depression – and we also got the savings-and-loan debacle that required a huge taxpayer bailout! Incredibly, George W. Bush did it to us again in the 2000’s; and he out-did Reagan with an even deeper recession, bigger bank failures, and a bigger Wall Street collapse and bailout!

Amazingly, voodooism is still popular. How many times have you heard or read that history shows that if you cut taxes on the upper 2 % (those earning more than $250,000 a year) the federal government will actually take in more revenue than before? History teaches no such thing! Reagan immediately initiated tax cuts for the rich and promptly TRIPLED the entire national debt that had been accumulated under all 39 presidential administrations before him! Bill Clinton increased taxes on the upper 2 % and began paying off the huge debt that was left by Reagan. Alan Greenspan of the Federal Reserve believed that the debt might be completely paid off within 6 years if the Clinton tax rates were continued. Instead, Bush cut taxes again, primarily for millionaires and billionaires, and DOUBLED the national debt that still existed!

Since the end of WWII, the presidency of Lyndon Johnson (a Democrat) produced the biggest increase in personal disposable income after taxes and the highest growth in hourly wages. - Source: Blaustein

The one lesson that the Republican Party learned from Ronald Reagan was that voters don’t care about deficits or the national debt. To operate the government, Reagan borrowed heavily from the banks of Japan. To finance his illicit war in Nicaragua, Reagan approved the illegal and secret sale of missiles to Iran. To operate the government and to finance his wars in Iraq and Afghanistan, George W. Bush borrowed from the banks of China. In all these cases, most voters didn’t seem to care!

Now, the Republicans are refusing to support the current Bush tax rates for 98 % of us, as advocated by President Obama, unless the Bush tax cuts on the 2 % of the wealthiest are also continued. Even some conservative Democrats who should know better, like Arkansas’ Sen. Blanche Lincoln, are also leaning that way! Of course, this means that they truly don’t care about the national debt. The debt can never be paid off without returning to the Clinton Era tax rates on the wealthy. But don’t expect them to admit that. The Republican TEA Party will continue to talk about the national debt only because they hope to use that issue to dismantle government programs of the 20th century, like Social Security.

Since the end of WWII, the presidency of Bill Clinton (a Democrat) produced the highest growth in jobs and the largest reduction in the deficit. - Source: Blaustein

So, if the polls are accurate, why are so many middle class voters willing to return to the disastrous policies that gave us the current Great Recession? My older brother John was in town recently for his 50th El Dorado High School class reunion. Correct or not, he gave an interesting explanation. He said that someday the Democratic Party will realize that nobody wants to be middle class. Everyone aspires to be a part of that upper 2 % income bracket, and they want the tax laws and overall policies to benefit the wealthiest at the expense of everyone else.

The Republican TEA-Partiers are promising tax cuts for the rich and a moratorium on government regulation of Big Business, and they are leading in the polls! They, including Republican Representative John Boozman of Arkansas, would like to replace the income tax with a 23 % national sales tax!  I’m convinced that zillionaires Rupert Murdoch of FOX “News” and the Koch Brothers of the TEA Party and Americans for Prosperity are laughing their heads off at how easily they’ve been able to stampede so many Americans into reverse.

If the majority of the voters are determined to consent to a New Gilded Age and return to the late 19th century, there will be consequences: 1. Western Europe will have to give up on us and retake the leadership of western civilization, and 2. China and India will progress full-speed ahead into the 21st century and leave us in their dust.

by David Offutt
A version of this essay was published October 22, 2010, in the El Dorado News-Times as a letter to the editor.

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Responses

  1. That’s the way I see it too! We need President Clinton’s policies put back into practice! Now if only the American voters can be convinced of this and be made to understand that ‘trickle down economics’ never works. However,that takes common sense which is not too common nowadays.

    The President needs to review primary American History facts. I wonder what he received as a grade in the subject matter when he was a high school Freshman!


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