Liberals and ‘libertarian populists’ are wrong: politics isn’t a zero-sum fight between corporations and the poor

August 12, 2013

In the course of reviewing Mark Liebovich's 'This Town' and George Packer's 'The Great Unwinding,' Frank Rich writes that for all the do-gooders working in Washington to make policy friendlier to the poor, "the country’s actual poor...might question just how much power these altruists have in a Washington when the corporate fix is in."

The conventional wisdom on Washington is that corporations win every fight and everyone else -- particularly the poor -- get shafted. It's an argument that's long held sway on the left, and it's also the core of the emergent "libertarian populism' rhetoric on the right. But like much conventional wisdom, it's wrong, or at least incomplete.

Rich focuses on the Obama years, so let's hold our analysis to that. Here's new spending on Medicaid and Children's Health Insurance Program -- the two main programs that deliver health coverage to poor people -- due to the Affordable Care Act:

That's $710 billion in new Medicaid and CHIP spending -- and depending on how many states end up expanding their rolls, and how well enrollment goes, it could mean 15-20 million low-income people with comprehensive health insurance.

But as they say on the game shows: That's not all! Here are new subsidies to buy health insurance for people who make a bit more than poverty wages, but less than a comfortable middle-class income:

That's more than a trillion dollars in money going mainly to the working poor to help them buy health insurance. Now, the insurance they're buying is private insurance rather than single-payer insurance -- the "corporate fix" was in on that one, so to speak. But so was the fix for the country's working poor.

There's a tendency among some on the left and, with the "libertarian populists," some on the right, to portray the interests of corporate American and the interests of low-income Americans as directly opposed to each other. That's not true. They can conflict, of course -- it's easy enough to imagine a proposal to raise taxes on corporations in order to fund a low-income tax cut -- but they're not always in tension. Sometimes they're even in concert.

A particularly weird example of that has been playing out in recent weeks, as House Republicans try to split food stamps off from the rest of the farm bill. Food stamps are another of these programs that have grown dramatically in the Obama years -- though unlike with the health-care law, the rise in food stamps is a temporary consequence of the recession:

Traditionally, food stamps and Big Ag subsidies pass together, which means Big Ag gets the votes of members of Congress who care about foods stamps and food stamps get the votes of members of Congress who want to subsidize Big Ag. But as you can see, the overwhelming preponderance of the money goes to food stamps:

Splitting the two apart has been of real concern to food stamp advocates, who worry that the program is "being placed in a more tenuous position" going forward. But there's little appetite in the Senate for splitting the programs, or for accepting the House's deep cuts.

Meanwhile, the tax code is more progressive than it's been at any time since 1979 (though it's also not raising enough money). Federal income taxes on low-wage workers are extremely low -- hence conservative concerns about the 47 percent of Americans who don't pay federal income taxes. But taxes on richer Americans have increased in a number of ways, going up by hundreds of billions of dollars through Obamacare, and then hundreds of billions more in the fiscal cliff deal. And multinational corporations, for all their begging and pleading and lobbying, still haven't gotten the tax holiday on foreign earnings that's at the top of their agenda.

So that's the record in recent years: Much more social spending on the poor, somewhat higher taxes on the rich, and plenty of accommodation with corporate interests -- though nothing near complete submission. This is a reality conservatives understand full well, and it motivates a lot of the apocalyptic talk around the "47 percent" and "makers and takers." But it's a reality that many liberals simply dismiss.

Corporate America holds real power in Washington. But to a degree that's often overlooked, so too do the people, and the political party, most concerned with directly improving the lot of the poor. That's the reality of politics right now: Corporate American and the poor can both wield a lot of power at the same time, as they're not typically locked in a zero-sum struggle with each other. If anything, it's the middle class, or perhaps the upper-middle class, that's been left out.

Positing this zero-sum death struggle between corporate America and poorer Americans is the key to the emergent arguments around "libertarian populism." The basic idea there is that if Washington would simply close its doors to corporate pleading then corporations would lose political power and the policy concessions that go with it and lower-income Americans would win economic power. In a zero-sum world, less "crony capitalism" for corporations equals more economic uplift for the poor.

But the "libertarian populism" agenda is more an example of how both corporations and the poor could lose. You can see this reasonably clearly in Ben Domenech's effort to sketch a "libertarian populist" agenda. After ticking through a number of ways to beat back "crony capitalism," he comes to the poor, and writes:

the truth, despite much of the left’s complaints, is that economic mobility has actually remained fairly strong even in this lackluster economy, and America's poor are – in real (consumption) and nominal (when you add wages, transfers and benefits) terms – doing better than ever when compared to previous generations. In fact, most of the biggest problems with today’s economy are the result of government, which has damaged the labor market with awful incentives (disability, overgenerous unemployment, awful retraining programs, minimum wages and other barriers to entry, tax/regulatory discrimination against small businesses, etc.) which need to be eliminated.

So corporations get less and the poor -- who really aren't doing that badly, you know -- get less, too. The savings will presumably be pumped into lower tax rates, particularly for the rich (Domenech himself goes on to argue for a flat tax, which is extremely regressive). I've yet to see a "libertarian populist" who argues for pumping the money into health insurance for the poor, or really anything to directly improve their lives.

Conversely, the liberal agenda -- best embodied in the budget released by the House Progressives -- is a vision of how corporations and the rich could lose even as the poor win (the catch is whether you think their taxes would severely damage the economy).

The country's poor -- and everyone else -- are right to wonder how much power the altruists have in an age when corporations hold so much political sway. The comforting response, however, is quite a lot, at least in recent years.

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Brad Plumer · August 12, 2013