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Enough, Already
Cutting the Corporate Income Tax
by RAHUL MAHAJAN

I listened to the State of the Union speech. What I heard, though, was not President Obama’s string of irritating platitudes, but the sound of a nation bent on self-destruction.

I don’t say this lightly. Intellectuals have been talking about the fall of the new Rome for decades, and mostly it has been hyperbolic nonsense. This time feels different. It even makes the darkest days of the Bush-Cheney administration seem like some distant, bygone utopia.

The reason for this change is the emergence of two extremely powerful groups that have not the slightest interest in any notion of the public good and are willing to put all of it in jeopardy to satisfy the shortest of short-term interests.

I’m not talking about the forlorn neoconservatives and their paleoconservative allies. They wrecked Iraq, which may never recover. They ripped the velvet glove off America’s iron fist. They made American foreign policy a byword for destructive incompetence. They were arrogant and senseless. They instituted what looks to be a permanent national security state.

But they couldn’t quite touch, and mostly didn’t try to, most of what was good, or at least adequate, about living in America.

That job falls to two of the most sinister forces in the country: finance companies and the Republican Party, also known as the Tea Party.

Now, as Obama might say, let me be clear. I am not saying that these two groups don’t have the good of working Americans at heart, that they are in it for themselves, or anything that banal. I am saying that their deliberately unenlightened self-interest, fixated on immediate aggrandizement, puts at risk the good of even the most privileged Americans, and that they are quite happy to hang it all on a throw of the dice in which there are no winning rolls, just losing ones. They are as happily jeopardizing their own long-term interests too.

Before the financial crisis, finance companies made 40% of all corporate profit in the United States (see Freefall, by Joseph Stiglitz), up from typical postwar levels under 20%. The reason is that, except for information technology and entertainment, the one remaining bastion of good old American corporate knowhow is figuring out how to fleece suckers–the raison d’etre of the modern American financial service company (see Griftopia by Matt Taibbi).

Their toxic combination of arrogance, ignorance and short-sighted avarice built a vast imaginary economic empire and when at last it collapsed under the weight of enormous stupidity, the collapse caused very real consequences. And yet they are still not grateful to Obama and his administration for working so hard to save themselves collectively from the consequences of their own actions. The administration’s ceaseless labors to repair the damage to credit markets, stock markets, and financial profits (to be contrasted with their half-hearted efforts to address the problems of unemployment, dislocation, and alienation the rest of us have been faced with) have been met with anger, hatred, and constant declarations of victimization by those very lords of the financial earth.

When Stephen Schwarzberg, the found of Blackstone, compared Obama’s idea to make a minor change in taxation procedures for hedge funds (applying income tax rather than capital gains tax to managers’ compensation) to Hitler’s invasion of Poland, one might have written it off as the reaction of a rabid McCain supporter (one of the few on Wall Street during the presidential campaign), but in fact the phenomenon is far more widespread. Daniel Loeb, another hedge-fund founder, probably came closer to a consensus viewpoint among financiers when he warned that the administration seemed focused on “redistribution rather than growth” and that believers in the free market should be frightened. It is funny enough that we live in a country where redistribution is considered an evil in principle; it is beyond farce to characterize Obama as a redistributor.

In fact, in order to avoid both redistribution and economic collapse, Obama put the country even more dramatically into hock with the stimulus–a package of almost $800 billion in spending and tax cuts designed to avoid confronting redistribution. This debt is not one the financiers will have to pay.

All across the country, states and localities are confronting the same problem. Like the federal government, they won’t do anything redistributive. In the absence of that, in particular in the absence of the necessary taxes on the people who can afford it to pay for the things society needs, what’s left is a zero-sum game pitting the good of society against the budget. Where the federal government wrecked the budget so as not to wreck society , local governments are wrecking society so as not to wreck the budget.

Detroit is considering closing half of its public schools, sending the student-teacher ratio in high schools to 62. And it is not as if Detroit’s schools are the envy of the world, so superlative that they can afford to cut back–quite the reverse.

Camden, NJ closed its pubic library system and laid off nearly half of its police and firefighters. And it’s not as if crime in Camden is so low it can afford to let policemen go.

Arizona’s governor has just asked for federal permission to drop 280,000 of the poor from its Medicaid rolls. And most disturbingly in a country awash in guns where an entire political party and most of the broadcast media are dominated by a group of hired liars, and the occasional maniac, who spout nonsense intended to induce paranoia, Arizona (of all places!) has already slashed mental health spending and is planning to cut another $17.4 million.

The issue of mental health brings me to the second pernicious group, the Republican Tea Party. Although the sudden emergence of the Tea Party from the bowels of the radical right and its placement of a remarkable series of stubborn ignoramuses (and undoubtedly some clever but utterly dishonest operators) in positions of real political power is a big story, there are two bigger stories. One is the takeover of the rest of the Republican Party by the Tea Party. Virtually every previous Republican politician is now a fellow traveler or a hostage of the Tea Party; the so-called “moderates” over whom Obama wasted so much time in the health-care debate know very well that if they don’t move sharply to the right they will be primaried and possibly ridden out of town on a rail.

The second is the open articulation and implementation of a strategy of obstruction uber alles. Mitch McConnell said the Republican strategy was to make sure Obama failed, and that is what he did. With a mere 40 or 41 Republicans in the Senate, he managed to keep the Democrats from doing virtually anything to try to repair the damage caused to the country during the Bush years.

The rule was very simple–if the Democrats supported something, McConnell opposed it and he rallied the Republicans in the Senate in lockstep behind him. He opposed things he would have supported, and Republicans filibustered bills that they had co-sponsored in earlier years. Even the most mundane action was subjected to the maximum possible number of holds and delays, bills were read out at full length on the floor, and all of it was in aid of making sure that nothing got done.

McConnell discovered a loophole in democracy, at least in a democracy with so many veto points placed in it by design–if the opposition votes even for bills that it supports, passage and implementation of necessary programs makes the country better off, which often translates into support for the party in power. Thus, the opposition is best off politically if it simply opposes everything–as long as it has the power actually to stop things from being enacted, which the absurd interpretation of the filibuster rule gives it.

Why repeat all of these things that are obvious or ought to be obvious right now?

Because both of these malign forces have gotten away with everything and now Mr. Obama comes in to tell us that we should forget everything, that the last two years never happened, and that we should let him get away with spinning the same starry-eyed bipartisan nonsense with which he inaugurated his presidency.

He actually had the audacity to tell us that things are looking up because “the stock market has come roaring back” and because “corporate profits are up,” while gracefully ignoring the fact that unemployment is still extremely high and the entire political establishment has agreed to do nothing about it for the foreseeable future.

And then what did he talk about? Our enemy is China, and we must be ready to “out-compete” them. Nothing about those in this country who have far more power to harm us and are intervening far more directly to do so. We have experienced another “Sputnik” moment and we must respond with a gusher of meaningless platitudes about education and science; this while speaking in front of a Congress half of whose members think of science as a bigger enemy than China.

And, most importantly, we must freeze the federal domestic budget for five years, thus doing nothing to prevent the massive austerity measures coming from state and local governments, and must lower corporate tax rates while somehow raising revenues, presumably with the same magic incantations that the supply-siders used during their ascendancy in the 80′s and the aught’s. Even though corporate profits are back up, so that clearly the current corporate tax rates have not deterred all that much activity.

To add insult to the injury that was the State of the Union address, all of this happens in the aftermath of Jared Lee Loughner’s attempted assassination and act of political terrorism in Arizona. While Loughner’s political beliefs are relatively unclassifiable, a dozen other violent incidents, many of them involving murder, have clearly involved right-wing messaging and, in the case of an abortive attack on the Tides Foundation, direct right-wing targeting (Glenn Beck has now trained his sights on a 78-year-old retired sociology professor because of paranoid fantasies he has spun from an article she wrote when he was two years old).

And all of this is being done by people who encourage their partisans to carry guns, to believe that guns are what will defend them from the overweening authority of the state, and to believe that Barack Obama, our pro-corporate center-right president, is bringing a socialist tyranny down on our heads. It is true that these killings incited by the right wing (with reckless indifference to people’s welfare, not direct intent to kill) are minuscule in number compared to the daily toll of gun-related violence in this country. But, unlike ordinary criminal killings, these are terrorist acts, and terrorist acts are disruptive far beyond their immediate physical consequences. Fewer than 3000 people were killed on 9/11, about the number of Americans who die in car crashes every month, yet look at how disruptive to the whole world those attacks have been.

Arizona’s extremist right (also known as the Republicans) is planning to respond to Loughner’s act of terrorism by increasing the scope of right-to-carry laws to universities. Imagine teaching a class about slavery and the Civil War or the genocide of the Native Americans to a right-wing student body carrying guns.

If we allow the continuation of phenomenally lax gun-control, the proliferation of pubic carrying, and the constant metastasization of right-wing paranoia, we may see a wave of terrorist acts that dwarfs those that have already occurred. This will have an absolutely chilling effect on politics in the United States.

Yet how are we supposed to react to this? Major authority figures like President Obama and Jon Stewart tell us that assassination has no politics, that the left and the right are the same (when was the last time you heard a prominent left politician tell people to carry guns at political rallies or say that people are looking toward a “Second Amendment solution” to their problems), and that the real problem is not the people whipping up the violence but the people trying to stop it. Even after all this, only marginal figures will break the conspiracy of silence about the importance of gun control.

And now Barack Obama goes to Congress, says not a word about the fact that the Republicans would rather destroy government than allow it to accomplish anything, and once again calls on Republicans to work with him. He is now as lost in his own arrogance as George Bush and Dick Cheney were. Does he really believe that his shameful capitulation in December on a tax cut for the wealthy was some sort of victory? The only time the Democrats managed to pass anything (except for the mediocre health-care bill which they did pass at the expense of allowing the entire rest of their agenda to go hang) was in the lame-duck session when they made a crooked deal with the Republicans to take the last step to gut the long-term fiscal solvency of the country while doing almost nothing to stimulate the economy, in exchange for passing START and repealing Don’t Ask, Don’t Tell.

All this has taught the Republicans is that they can get what they want if they are sufficiently obstructionist. What it has apparently taught Obama is that he can do anything he wants–and he has forgotten that it only becomes true when he decides to want what the Republicans want.

Somehow, major figures on the oppositional liberal left have reacted to this shameful capitulation with bland observations on minor political maneuvering, and with a stunning lack of outrage or serious analysis.

Well, it’s time for someone to say, “Enough! Ya Basta!” If you don’t want to see your country deliberately descend into an abyss of madness and self-destruction, then stop listening to all of the self-congratulatory centrists who are telling you that you are the problem and that you need to stop being so polarizing.

Nero apparently recited from Virgil’s Aeneid while Rome burned. If things continue as they are, we’ll be watching Comedy Central and waiting for Obama to fix things as our Rome burns.

RAHUL MAHAJAN is publisher of the blog Empire Notes and author of two books about the wars on Afghanistan and Iraq. He can be reached at empirenotes1@gmail.com.