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cato institute
Dear Republican Friends: The Democratic Party Is Not Your Enemy
Sep 16, 2024
"I beseech you in the bowels of Christ, think it possible you may be mistaken." —Oliver Cromwell, 1650, imploring his executioners to reconsider
This is a missive directed to Republican voters, wherever it finds them. And here is the message: the Democratic Party is not your enemy.
No, your enemy is former U.S. President Donald Trump. He and the Republican Party care a great deal about your votes, but they don’t give a damn about you. They rely on your fierce loyalty to get elected and then betray you, serving instead the interests of great American corporations and a tiny stratum of immensely wealthy citizens. (The towering achievement of Trump’s presidency was a massive tax cut for precisely these clients.) The betrayal is not readily apparent, of course: It is disguised brilliantly and successfully with distortion, fabrication, and lies.
Donald Trump tells you the Democratic Party is a radical, far left, socialist enterprise and it must be defeated to protect the America we know and love. At his rallies you roar in approval, shouting USA! USA! USA!
Your patriotism is genuine and praiseworthy, but please heed Mr. Cromwell’s plea for open minds: Think it possible—just possible—you may be mistaken about the integrity of Mr. Trump, the Republican Party, and the messaging. Think it possible you are not being protected but victimized.
Let’s look at the evidence.
Mr. Trump is the spokesman and the Republican Party is the front group for corporate oligarchy, a tyrannical form of federal governance put in place decades ago, when corporate money overpowered American democracy. The well-being of the American people no longer takes priority in crafting public policy. Foremost now is the assurance of financial security for powerful corporations: creating new profit streams or enhancing and protecting those in place. This is what the Republican Party hides from view.
We must rid the corrupted Republican Party of its greedy corporate captors, and that means, first, Donald Trump and Republican Senators and Representatives must suffer a smashing defeat in November.
Corporate oligarchy is comprised of the corporations, yes, who contribute millions of dollars to political campaigns eliciting the candidates’ favor and spend billions more in lobbying for quid pro quos. But it also includes individual corporate owners and managers, and conservative billionaires with similar interests who pour personal funds into friendly campaigns. (Think about Elon Musk, say, offering Trump $45 million per month to win this campaign.)
The core ideology of corporate oligarchy is neoliberalism: “Free market capitalism” best provides for society’s needs, and “government regulation” only degrades the process. It is legitimized by conservative think tanks—notably the Heritage Foundation, the Cato Institute, and the American Enterprise Institute in Washington D.C.—and disseminated by sympathetic media—think the Fox News empire and conservative talk radio which blankets the nation with right-wing propaganda 24 hours a day, seven days a week.
The consequences of corporate oligarchy are not trivial.
American people are suffering today the largest increases in food prices in 50 years, while the corporations marketing food products are reaping unprecedented profits. In two years from 2020 to 2022 the Cargill corporation (grains and meat products) doubled its profits, from $3.3 billion to $6.7 billion. In just a single year, from 2021 to 2022, the profits of the Kraft-Heinz company (cheese products, condiments, frozen meals, snacks) rose 448%, from $225 million to $887 million; Cal-Maine Foods (the country’s largest egg producer) grew 718%, to $323 million.
Extortionate consumer prices are not the only outrage imposed by corporate oligarchy. The rampant social and economic injustices in our country today are not the consequences of a functioning democracy: They certainly do not reflect the wishes of the people. Unprecedented inequalities in wealth and income are producing a two-tiered society of opulence and hardship. Homeless colonies blossom coast to coast. A full 31.1 million Americans, almost 10% of our citizens, lack access to healthcare, suffering unnecessary illness and preventable death. A total of 13.5% of American households are “food insecure:” They don't have enough to eat. ChatGPT will tell you it costs up to $60,000 per year to live modestly in America; a minimum-wage worker earns $15,080. Do the math.
Fifty years ago America was flourishing. The middle class constituted almost two-thirds of the population, and it was thriving. A single income was sufficient to raise a family, buy a home, cover healthcare costs, send the kids to college, and retire in comfort. Today, with both parents working full time, this good life is out of reach.
The ravaging of the American people was driven by corporate oligarchy—nothing else, not “socialism,” not the Democratic Party.
Republican friends and neighbors, who is your enemy?
The Republican Party is, because it has been the driving force for the emergence of corporate oligarchy. The process began in 1971 with a lawyer who specialized in corporate mergers, who defended the tobacco industry in the smoking-and-cancer litigation, who advocated segregation in public schools, and who as a Supreme Court justice wrote the majority opinion that corporate political spending was an exercise in free speech.
His name was Lewis Powell, the progenitor of corporate oligarchy.
In 1971 the nation’s campuses were ablaze with protest, against the Vietnam War, against racism, against the savagery of capitalism. Ralph Nader was firing broadsides at American corporate corruption.
The United States Chamber of Commerce was alarmed. It commissioned Lewis Powell to propose a strategy for a corporate counterattack, and he did. On August 23, 1971 the Chamber published what came to be known as the “Powell Manifesto.” The Chamber carpet-bombed the business community with the Manifesto’s message: Corporate America needs to become politically active, quickly and massively. Especially vital was educating the American people about the virtue and vulnerability of “free market capitalism”: it can optimize society’s welfare only if it is uninhibited by “government regulation.” Neoliberalism had to become widely known and appreciated.
Corporate money rose quickly to the challenge, literally creating two of the most influential think-tanks in Washington today and funding a massive redevelopment of the third. The Adolph Coors Foundation and Koch Foundation provided the seed money that created the Heritage Foundation and the Cato Institute, respectively, in 1973 and 1977. The American Enterprise Institute, pre-dating the Manifesto, was greatly enriched by the subsequent flood of corporate money flowing through a dozen conservative philanthropies.
Today these three powerhouses are virtual subsidiaries of the Republican Party, writing policy agendas for Republican presidents (cf. the Heritage Foundation’s Project 2025 written for Donald Trump) and providing revolving-door services: their members move seamlessly into staff positions in Republican administration, and when the party is defeated they return to the think tanks.
The pattern was established early. Soon after Ronald Reagan’s election, the Heritage Foundation submitted to the new Administration a list of 2,000 specific policy proposals aimed, among other objectives, at “reducing the size of the federal government.” By the end of Reagan’s first year in office 60% of them were implemented or initiated. Ronald Reagan said in later years the Heritage Foundation was a “vital force” in the achievements of his presidency.
The most vital achievement was Reagan’s suspension of the long-standing anti-trust laws. A staunch neoliberal, he reduced government regulation to allow free market capitalism to work its wonders. In doing so Reagan exposed the absurd contradiction in the neoliberal creed.
“Free market capitalism” will optimize a country’s economy only if intense competition for customers is present among many, many sellers. That’s Econ 101. Good for society, yes, but bad for the sellers who, historically, connive and conspire to minimize that competition—in the Golden Age of the late 1800’s, say, by the formation of “combines” and “trusts.” The sellers consolidated, becoming fewer and fewer but with greater and greater power to raise prices and reduce wages.
The counteroffensive was political, in the passage of the Sherman and Clayton Anti-Trust Acts—government regulations—prohibiting “the restraint of trade.” Consolidation was made illegal, keeping free markets competitive for society’s benefit.
This we know: “free market capitalism” will benefit society only in the presence—not the absence—of “government regulation.” But neoliberalism gets it entirely backwards.
But Ronald Reagan bought in, virtually halting the enforcement of the anti-trust legislation, sparking a 50-year frenzy of mergers and acquisitions across the spectrum of the American economy.
Virtually every industry was consolidated into far fewer but immensely larger corporations. A quick ChatGPT query shows five grocery chains—Walmart, Kroger, Costco, Albertsons, and Ahold Delhaize—today control more than 60% of the market. (And Kroger and Albertson's are in the process of merging.)
The number of American corporations was cut in half concentrating American industries into literal oligopolies, with pricing power to match. Compared to European countries—where anti-trust laws remain in force—American families pay on average $5,000 more per year for living expenses.
Ronald Reagan’s neoliberalism did this. Republican friends your enemy is not the Democratic Party.
As the dwindling number of corporations expanded their economic clout they chafed at other government regulations—clean air and water, safe workplaces, fair labor practices—but had no means to do much about them. They lacked a corollary political clout.
Wittingly or otherwise the Republican Party provided this, too.
Since 1971, the U.S. Supreme Court has displayed without interruption a conservative majority—justices appointed by Republican presidents. And in that time the Court lit the fuse for corporate oligarchy to explode. It offered corporations the legal means of bribing Congressional candidates and tilting presidential elections as well—with corporate campaign contributions.
In the 1976 case Buckley v. Valeo, the Court declared spending money is the equivalent of free speech. In the 1978 case First National Bank of Boston v. Bellotti, the Court declared corporate contributions to political campaigns were an exercise of free speech, too. Finally in the 2010 case Citizens United v. the FEC, the Court declared as unconstitutional any limits on those corporate campaign contributions.
It did so with this preposterous reasoning:
...this Court now concludes that independent [campaign] expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption. That [corporations] may have influence over or access to elected officials does not mean that those officials are corrupt. And the appearance of influence or access will not cause the electorate to lose faith in this democracy.
The Court with 100% predictability was dead wrong. In 1964—before the genesis of corporate oligarchy—77 percent of the American people trusted the federal government. Today—14 years after Citizens United—only 22 percent retain their “faith in democracy.”
But corporate campaign funding of public officials—some say the corporate purchase—is only one element of corporate oligarchy’s success. The other is the dominance of corporate lobbying, where obligated public officials get their marching orders to favor corporate interests over the public’s. Does corporate lobbying prevail? Corporations outspend citizens’ organizations in hiring lobbyists by a factor of 34:1.
Before the triumph of corporate oligarchy partisan conflict was congenial and productive. Republicans were conservatives, anxious to maintain the status quo which at a given point in time was quite satisfactory. Democrats were liberals, impatient with the status quo which at a given point in time could always be changed for the better. The two points of view were imperative in a functioning democracy and the tension between them produced public policy compromises that served the nation well, avoiding stasis on the one hand and turmoil on the other.
We can regain that form of governance.
Those of us in the rank and file of the political parties have far more in common than today’s bitter divisiveness suggests. We all love our country, cherishing its past and hopeful for its future; we treasure our families, honoring our predecessors and nurturing our children; and we find gratification in productive work and comfort in spiritual practice. We are ordinary Americans and conscientious citizens, millions and millions of us. We are the People, all of us victimized by corporate oligarchy and its patron, the Republican Party. If we put aside the partisan invective and focus on the imperative of restoring democracy, we can do it.
We must rid the corrupted Republican Party of its greedy corporate captors, and that means, first, Donald Trump and Republican Senators and Representatives must suffer a smashing defeat in November. Then, perhaps, the GOP can be rebuilt as the necessary and responsible voice of true conservatism—the indispensable countervailing force it was in the past. Democracy can flourish again.
Republican friends and neighbors, listen up.
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'Long-Delayed Justice': Judge Rejects Right-Wing Effort to Block Student Debt Relief for 800,000+
"The Biden administration needs to actually discharge this debt immediately before more lawsuits or judicial bullsh*t happens," said the Debt Collective.
Aug 15, 2023
A federal judge in Michigan has rejected an effort by a pair of right-wing think tanks to stop the Biden administration from canceling the student debt of roughly 804,000 borrowers who have been making payments on their loans for more than two decades.
In an 18-page decision on Monday, U.S. District Judge Thomas L. Ludington of the Eastern District of Michigan—a George W. Bush appointee—ruled that the Cato Institute and the Mackinac Center for Public Policy lacked standing to challenge the Biden administration's move, which is expected to automatically wipe out close to $40 billion in federal student loan debt—a small fraction of the $1.6 trillion in outstanding federal student loan debt in the U.S.
Mike Pierce, executive director of the Student Borrower Protection Center, wrote in response to the ruling that the lawsuit "was the last barrier to debt relief for more than 800,000 people who had been in debt for decades."
"These borrowers were cheated by predatory companies like Navient and failed by gross mismanagement by [the U.S. Department of Education]," Pierce added. "This is long-delayed justice."
As I'm reading this, I'm struck by just how thorough & devastating this opinion is for @CatoInstitute and @MackinacCenter.
This is an opinion by a Republican-appointed judge hand-picked by the plaintiffs.
He can barely hide his disdain for Cato and Mackinac wasting his time. pic.twitter.com/lAEfRai0S0
— Mike Pierce (@millennial_debt) August 14, 2023
The lawsuit by Cato and the Mackinac Center targeted the Biden administration's recently announced changes to the income-driven repayment (IDR) program, which bases monthly student loan payments on borrowers' income and makes borrowers eligible for debt cancellation after around 20 years of qualifying payments.
The program has long been plagued with issues, failing to deliver promised relief for borrowers. A report published last year by the Government Accountability Office (GAO) found that a tiny percentage of eligible borrowers actually had their debt canceled under the program.
On Monday, President Joe Biden announced that his administration has begun the process of discharging the student loan debt of 804,000 borrowers who have been in repayment for more than 20 years.
"Because of errors and administrative failures of the student loan system that started long before I took office, over 804,000 borrowers never got the credit they earned, and never saw the forgiveness they were promised—even after making payments for decades," Biden said.
The Debt Collective, a group that has implored the Biden administration to use its legal authority to cancel all outstanding federal student loan debt immediately, welcomed the Michigan judge's ruling.
"This is good—but we've seen this playbook before," the debtors' union wrote. "The Biden administration needs to actually discharge this debt immediately before more lawsuits or judicial bullsh*t happens."
The decision comes weeks before federal student loan repayments, which were paused during the Covid-19 pandemic, are set to resume for the first time in over three years.
On September 1, student loan interest will restart, followed by the resumption of payments in October. The Consumer Financial Protection Bureau has warned that millions of borrowers could struggle to make their payments once the pause is lifted.
The debt ceiling deal that the Biden White House reached with House Republicans in May cemented the end of the student loan payment freeze. Shortly after Biden signed the deal into law, the U.S. Supreme Court's right-wing majority struck down the administration's plan to cancel up to $20,000 in federal student loan debt for tens of millions of borrowers.
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