Table of Contents Title Page Copyright Page Acknowledgments Introduction Using a Big Lie to Torpedo Financial Reform What We’ve Lost Class War and the Great Risk Shift A One-Sided War The Lies That Corporate America Tells Us Chapter - CONSERVATIVES DON’T WANT GOOD GOVERNMENT The Right’s Roadmap for Economic Disaster A Murderer’s Morality The Seductive Lure of the Ownership Society Ownership: A Conservative Spin on a Progressive Concept Is Big Business Passing Itself Off as “Small Business”? Chapter - IT’S NOT YOUR FAULT THERE AREN’T ENOUGH GOOD JOBS What Happened to the American Dream? Movin’ On Up?: Our Upwardly Mobile Economy Is a Myth Blame the “New Economy” for Hindering Upward Mobility Is the Value of Education Declining? Chapter - THERE IS NO FREE MARKET Why the Free Market Works for Nikes but Not for Fire-Fighting Living in a Libertarian Fantasy Land There’s Nothing Free about the Free Market The Veil Lifts, Exposing the Hypocrisy of the “Free Marketeers” Chapter - HOW COULD ANYONE BELIEVE THE BIG BANKS ARE VICTIMS? Fannie and Freddie: Tempted by Easy Profits How Wall Street Turned Home Mortgages into Economic WMDs Wall Street Rules Were the Titans of Finance Really Too Big to Fail? Chapter - TAX CUTS AREN’T A SOLUTION TO EVERY PROBLEM Shrink the Government and Drown It in a Bathtub Conservatives’ Favorite Programs Don’t Count as Wasteful Spending The Poor Don’t Pay Taxes Tax Cuts for the Rich Will Also Help the Rest of Us Government Is Always Big, Whether Republican or Democratic, but Who Foots the Bill? Abusing the Laffer Curve The Reality: Undertaxation The Gradual Collapse of America’s Infrastructure No, Tax Cuts Don’t Always Generate Jobs and Prosperity Chapter - REPUBLICANS HAVE NEVER CARED ABOUT THE DEFICIT Everyone Wants Big Government (at Least, the Parts They Like) The Reality: Conservatives Spend Like Drunken Sailors The Reality: There Is No Entitlement Crisis The Real Crisis: Health Care A Trillion Here, a Trillion There: Pretty Soon You’re Talking about Real Money The Gazillion-Dollar Fake Entitlement Crisis Enter the Doomsayers How More Government (of One Sort) Brings Greater Individual Liberty and Chapter - AMERICA HAS NO RESPECT FOR FAMILY VALUES The Myth of the Pipeline: Why Women Aren’t Poised to Shatter the Glass Ceiling Chapter - OUR HEALTH-CARE SYSTEM IS A HUGE RIP-OFF How Conservatives Framed the Debate Americans Can’t Afford the Status Quo So, What’s Wrong with Us? How the Public Option Was Killed by “Big Health” and Its Conservative Friends Insurance Reform, Accomplished Health-Care Reform, Not So Much The Health-Care Economy Chapter - OBAMA IS NOT A SOCIALIST What about Meddling in the Free Market of Ideas? Call It Corruption: Unscrupulous Ties between Business and Government The Corporate Civil Rights Movement Socialism or Corporatism: Which Is the Greater Threat? Chapter 10 - GREEN JOBS ARE A GREAT IDEA Why Do We Pick Up after Our Dogs? A Calamity of Light Regulation Screw Regulations! Bring On Private Enforcement! The “Green-Collar Economy”: How Environmentalism Can Create Jobs and Spur Growth The Big Race to a Green Energy Economy Why a Gallon of Gas Should Cost $10 Chapter 11 - THE EUROPEANS ARE ALL RIGHT The Facts Beg to Differ Keeping Score: Europe vs the United States The Incredible Shrinking Americans Chapter 12 - “ILLEGAL” IMMIGRATION ISN’T HURTING YOUR PROSPECTS They’re Taking Our Jobs! They’re Draining Public Services! The Fallacies of Anti-Immigrant Data: “Hate Research” and the Borjas Exception They Just Need to Enforce the Laws! The Utter Futility of “Enforcement Only” Immigrants Take Jobs Americans Won’t Do! Illegal Immigrants or Illegal Jobs? Deflecting Illegal Immigration The Real Costs of Stupid Immigration Laws Chapter 13 - BLACKS STILL KEPT BACK The Culture of Poverty Racism Still Exists The Lingering Effects of Institutionalized Racism The African American Economy, Before and After the Crash Chapter 14 - UNIONS STILL MATTER Who Needs Unions?: The Artful Spin of the Right’s Propaganda Machine The Union Busters: Corporate America’s Weapon against Organized Labor Organized Workers Balance Corporate Power and Strengthen Our Labor Markets Will the Right Kill Labor’s Signature Legislation? Whither the $20-an-Hour Wage? Chapter 15 - THERE’S NOTHING FREE ABOUT FREE TRADE “Free Trade” Is a Corporate Power Grab What Is a Trade Barrier? Democracy vs “Free Trade” The Hypocrisy of Free Traders Corporate America Says You Can’t Have a Green Economy Notes Index Copyright © 2010 by John Wiley & Sons, Inc All rights reserved Published by John Wiley & Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada Cartoon credits: page 20 © Tom Tomorrow; page 59 © Lloyd Dangle; page 158 © Matt Bors No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the web at www.copyright.com Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions Limit of Liability/Disclaimer of Warranty: While the publisher and the author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose No warranty may be created or extended by sales representatives or written sales materials The advice and strategies contained herein may not be suitable for your situation You should consult with a professional where appropriate Neither the publisher nor the author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages For general information about our other products and services, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002 Wiley also publishes its books in a variety of electronic formats Some content that appears in print may not be available in electronic books For more information about Wiley products, visit our web site at www.wiley.com Library of Congress Cataloging-in-Publication Data: Holland, Joshua The fifteen biggest lies about the economy : and everything else the right doesn’t want you to know about taxes, jobs, and corporate America / Joshua Holland p cm Includes bibliographical references and index ISBN 978-0-470-64392-1 (pbk.); ISBN 978-0-470-64392-1 (ebk); ISBN 978-0-470-91280-5 (ebk); ISBN 978-0-470-91282-9 (ebk) United States—Economic policy—2009- United States—Economic conditions—2099- Rights and left (Political science)—United States Conservatism—United States—History—21st century I Title HC106.84.H65 2010 330.973—dc22 2010028343 Acknowledgments Without all of the support my family has given me over the years, I wouldn’t be able to a job I love I’m deeply appreciative I owe a special debt of gratitude to my father, John Holland, who read the following chapters and offered me spot-on feedback Without his help, I doubt that this book would have been possible I’m also grateful to Don Hazen, my boss at AlterNet, for giving me the chance to work on this project, to Eric Nelson at Wiley for making it happen, and to Wiley’s Rachel Meyers, whose “copyediting” turned out to be much more than that Thanks also to Tom Tomorrow, Lloyd Dangle, and Matt Bors, for their razor-sharp editorial cartoons, and to Larry Beinhart for the perfect excerpt to accompany chapter INTRODUCTION How our conventional wisdom fails us Hope and change were in the air on that cold January day when Barack Obama was sworn in as the nation’s first African American president But there was also a darker shadow looming Our economy lay in ruins, and the American people were mad as hell They had every reason to be Unemployment was approaching percent and rising They’d seen their retirement funds dry up and their home values tank They’d funded an enormous bailout of the banking industry, only to see Wall Street’s movers and shakers earn fat bonuses just as they had in better times The wisdom of the pundits, the experts, and the prognosticators—the high priests of the global economy—turned out to be woefully wrong The nation’s elites had been exposed as disastrously incompetent managers, yet their own positions of comfortable privilege had, by and large, remained secure Everyone agreed that things were bad, but who was to blame? What exactly had happened to our sense of economic security? Since that day, many Americans, from across the political spectrum, have gone from hopping mad to spitting mad Progressives not only became disenchanted with the GOP’s obstructionism, but also blamed the administration for dropping the ball Many felt that the hopey-changey promises that candidate Obama had made on the stump had been abandoned Some said that the administration hadn’t really fought the good fight it had promised or hadn’t fought it well But the really juicy anger was on the Right—the kind of dramatic, often over-the-top anger the media love, complete with misspelled signs suggesting that the new president was a “socialist” who hadn’t been born in this country The “Tea Parties” had arrived, and they captured the imagination of the chattering class during 2009 and 2010 The pundits debated whether they represented a spontaneous uprising of “ordinary,” apolitical people awoken from their slumber by the coming of the econopocalypse and the bailouts given to Wall Street and Detroit Were they salt-of-the-earth moderates inflamed by fear of runaway government spending, or were they a bunch of wing-nuts who had no coherent ideological beliefs but were simply responding to some good old-fashioned racist dog whistles? What was striking about these debates is that they often began with the premise that whatever else the Tea Partiers might be, their economic concerns were valid Yet it was apparent that although their economic pain and anxiety were all too real, their analysis of what caused it was nothing short of insane It was a “movement” whose members lived in a parallel universe, embracing wild conspiracy theories about how ACORN and MoveOn.org had brought down the global economy to advance their “radical” agendas They saw creeping socialism in the most benign government programs It was a movement whose views reflected the simmering paranoia of its intellectual muse, Fox News host Glenn Beck More important, it was a movement that had only a tenuous grasp on the role that government plays in our society In 2009, an enraged constituent at a town hall meeting in South Carolina yelled at Republican representative Bob Inglis to “keep your government hands off my Medicare!” Another woman reportedly sent a letter to the White House stating in no uncertain terms, “I don’t want government-run health care, I don’t want socialized medicine and don’t touch my Medicare.”1 According to Slate’s Timothy Noah, such calls were common during that long, hot summer.2 In 2010, National Public Radio did a fawning profile of “Liberty Belle,” aka Keli Carender, one of the founders of the Tea Party movement When asked why her congressman’s support for healthcare reform had so enraged her, she summed up the Tea Party rhetoric pretty well “I tried to boil down in essence what makes me so angry about it,” Carender told NPR “And it was this idea that he and other people decide what the needs are in society They get to decide But in order to fund those things, they have to take from some people in order to give to the other people.” What NPR didn’t tell its audience is that Carender, an actress, had done six shows for a Seattle theater company that had received a Washington State arts grant, and had worked on a research project funded by the National Science Foundation before that.3 A few weeks later, the Washington Post interviewed Mike Vanderboegh, “a 57-year-old former militiaman from Alabama, who took to his blog urging people who opposed the historic healthcare reform legislation—he called it ‘Nancy Pelosi’s Intolerable Act’—to throw bricks through the windows of Democratic offices nationwide.” He told a Post reporter, “The federal government now demands all Americans to pay and play in this system, and if we refuse, we will be fined, and if we refuse to pay the fine, they will come to arrest us, and if we resist arrest then we will be killed.” The Post also noted that Vanderboegh is disabled and receives a $1,300 check from the tyrannical U.S government each month.4 These activists firmly believe that they’re “speaking truth to power” in a way that those dirty hippies in the 1960s never had But the reality is that much of the organizing behind the Tea Party movement—the ideas, the seed money, the infrastructure that brings their events together—comes from two corporate-funded GOP front-groups These were the people behind the people railing against the perfidy of “the elites.” The first, FreedomWorks, founded by former Republican vice presidential nominee Jack Kemp and former House Republican leader Dick Armey, is generally credited with launching the movement FreedomWorks is no newcomer to the art of “astro-turfing”; in 2005, Newsweek reported that the Bush White House coordinated a series of staged “town hall events” with the group to tout the president’s Social Security scheme The “ordinary Americans” asking the questions at those town halls? They were conservative activists bused in by FreedomWorks to serve as living, breathing props.5 The second group, the “Tea Party Express,” was previously operated as a political action committee (PAC) run by veteran operatives tied to the Republican PR firm Russo Marsh and Rogers According to Politico, the group used “campaign-style advance work and event planning, slick ads cut by Russo Marsh, impressive crowds and a savvy media operation” to make the PAC “among the prolific fundraising vehicles under the tea party banner.” That, in turn, has “meant a brisk business for Russo March and a sister firm called King Media Group.” The two firms had received $1.9 million of the $4.1 million in payments made by the PAC through the spring of 2010.6 These anecdotes capture part of another story It’s a story that’s important to understand as we grapple with some very new economic realities It’s a story about how the conservative movement Napolitano, Janet National Center for Children in Poverty National Labor Relations Board National Right to Work Foundation Nelson, Ben neoclassical economics New Deal “New Energy for America” (Obama) Newman, Nathan newspapers See also media Nixon, Richard Noah, Timothy No Child Left Behind North American Free Trade Agreement (NAFTA) See also trade agreements Norway Novak, Viveca nuclear policy Obama, Barack accusations against labor movement and proposals to reduce pollution tax cuts under oil industry Oil Spill Liability Trust Fund Oklahoma, immigration laws in Olbermann, Keith Olin See John M Olin Foundation Olsen, Ted Oostendorp, Remco O’Reilly, Bill Ornstein, Norm ownership society parenting Paulson, Henry Pawlenty, Tim Pearlstein, Steven Pelosi, Nancy Perfectly Legal (Johnston) Peri, Giovanni Peterson, Peter political action committees (PACs) See also lobbying politics labor’s influence in lack of interest in reforming system of Pollin, Robert pollution externalities of as failure of regulation poor, the population poverty of African Americans causes of of children influences on in U.S vs Europe See also culture of poverty Prager, Devah privatization productivity The Pro-Growth Progressive (Sperling) Proposition 13, California’s protectionism See also “free trade”; trade agreements Public Citizen public transportation Rabalais, Nancy race/racism effects on hiring practices gaps between blacks and whites in immigration issue Rand, Ayn Rapson, David Reagan, Ronald government spending and revenue under labor relations under Reagan Revolution regulations, government benefits of circumvention of corporate of financial industry food safety of labor unions lack of litigation proposed to replace trade agreements’ influence on workplace See also environmental protection Reid, Susan Republicans on government spending and revenue health-care reform and opposing Employee Free Choice Act See also conservatives retirement in “American dream,” funds for Ridge, Tom Rifkin, Jeremy “Roadmap for America’s Future” (Ryan) robber barons Rockler-Gladen, Naomi Romney, Mitt Roosevelt, Franklin D Rosner, Joshua Roubini, Nouriel (“Doctor Doom”) Russo Marsh and Rogers Ryan, Paul Sakamoto, Arthur Salvin, Bill Samwick, Andrew Santucci, Christopher Sawhill, Isabel Scaife, Richard Mellon Scarborough, Joe Schmitt, John Schwarzenegger, Arnold Seattle, WTO talks in services, government attitudes toward cutting desire for freedom increased by immigrants’ taxes paid vs market not good at providing taxes insufficient to provide desired See also social net service sector Shah, Paromita Sherraden, Michael Silva, Christine Simpson, Alan Sirota, David Smith, Lamar social democracies, economies of socialism accusations of health care under social mobility downward effects of accumulated wealth on importance of education in as myth social net cutting effects of freedom increased by immigrants using services of strength of Social Security reforms of in sound fiscal shape See also entitlement programs sovereignty, fear of losing Soviet Union Sperling, Gene Stark, Pete state capture State of Black American reports (Urban Institute) steel industry Stewart, Hale Stiglitz, Joseph stimulus package stock market Supreme Court, giving corporations personhood Snyderman, Nancy Talal, Alwaleed bin Tancredo, Tom Tanton, John tax credits tax cuts under Bush for business under Democrats effects of as end in itself options for amounts and recipients of supposed benefits of using as bait for cutting social programs for wealthy taxes attitudes toward corporate corporations avoiding deferral of excise federal income vs other insufficient to provide desired services paid by immigrants poor also paying progressive vs regressive property relation to economic growth sales tax state and local in U.S vs other countries on wealthy who pays what tax gap (amount owed and not collected) tax increases Tax Policy Center, on Ryan’s “Roadmap,” Tea Parties technology Tett, Gillian Thatcherism The Myths of Free Trade (Brown) Thurmond, Strom Tinto, Christopher Tomorrow, Tom Toyota, circumventing regulation trade immigration and in service vs manufacturing trade agreements business influence on influence on domestic policies as obstacle to green economy pressure to accept Tribe, Lawrence Truman, Harry S Ullico unemployment of African Americans in Europe vs U.S immigration and levels of of social democracies unemployment benefits United Kingdom Universal Savings Accounts, Clintons proposing universities government involvement in increasing costs of need for remediation in value of degree from women’s business degrees from See also education Vanderboegh, Mike Vietnam, U.S protectionism vs violence Voting Rights Act of 1965, wages and salaries declining effects of immigration on effects of labor movement on enforcement of regulations on influences on See also income; income disparities Wald, Mathew Waldman, Michael Walker, David Wallach, Lori Wallison, Peter Wall Street bailout of mortgage lending and Walters, Matthew Warburg, Phillip Waring, Marilyn wars “Washington Consensus,” Waxman, Henry wealth wealth disparity increases in between Mexico and U.S in U.S vs Europe wealthy taxes and Wehner, Pete What’s the Matter with Kansas? (Frank) Whoriskey, Peter Whose Trade Organization (Wallach and Woodall) Why the Real Estate Boom Will Not Bush (Learah) Wiggin, Addison Will, George Winant, Gabriel Wolff, Edward Woodall, Patrick work American attitudes toward disincentives to in Europe vs U.S workforce, women in working class “American dream” of entitlement programs for financial burdens on World Economic Forum, index of competitive democracies by World Trade Organizations arbitration process of coercive tactics of constraining U.S energy policies World War II, Wotton, Sara Young, Don Zipperer, Ben Zoellick, Robert ... upward, and that other people are put at a disadvantage? ?and these things are built into the rules of the system And then what they want to do—in talking about ‘free markets’—is they want to kick... estate to the “death tax.” Forget about a semblance of economic justice; it’s about giving you, the individual, the tools you need to beat your neighbor The Bushies employed that kind of rhetoric to. .. American families face today And in order to understand how we got there, you need to step back a few decades, to a period of seismic economic changes that took place in the 1970s and the 1980s—changes