The American Prospect

Trump’s Taxes Justin Miller

When an Election Damages Democracy Paul Starr

White Resentment Robert Kuttner

liberal intelligence

Progressive Politics After Bernie

Harold meyerson

Fa l l 2 0 1 6

If She Wins Reshaping the Supreme Court Lincoln Caplan Strengthening Health-Care Reform Jacob Hacker Restoring Democracy Miles Rapoport Thinking Big on Infrastructure Gabrielle Gurley Aiding Families, Boosting the Economy Katie Hamm & Sarah Jane Glynn

Writing New Rules for Trade Jared Bernstein & Lori Wallach

contents

volume 27, number 4 Fall 2016

5 prospects When Elections Fail by Paul Starr

notebook 9 Could Clinton Tame Congress? by Eliza Newlin Carney 12 the Hardened Divide in American Politics by Sam Wang 14 Voting Rights: Will Court Protections Deliver? by Allegra Chapman 17 Going Local in the Fight Against Inequality by James A. Parrott

Features 20 trump’s Riches and the Real Estate Tax Racket by Justin Miller 26 Progressive Politics After Bernie By Harold Meyerson 32 special report: A Governing Agenda 33 A New Era for the Supreme Court by Lincoln Caplan 42 Stronger Policy, Stronger Politics by Jacob S. Hacker 48 From a Contentious Election to a Stronger Democracy by Miles Rapoport 55 Aiding Families, Boosting the Economy by Katie Hamm & Sarah Jane Glynn 58 the New Rules of the Road: A Progressive Approach to Globalization by Jared Bernstein & Lori Wallach 62 Infrastructure: Can We Finally Think Big? by Gabrielle Gurley 68 Challenging the New Curse of Bigness By K. Sabeel Rahman 76 the Progressive Tax Reform You’ve Never Heard Of by Michael Stumo 81 Race and the Tragedy of Quota-Based Policing by Shaun Ossei-Owusu 85 Rethinking School Discipline by Rachel M. Cohen 91 Roberts Rules for Protecting Corporations by Moshe Z. Marvit

culture 97 Hidden Injuries by Robert Kuttner 105 Making the Most of Your Luck by Peter Dreier 108 The Costs of Being Poor by Adam D. Reich 111 Rationalizing Trump by Adele M. Stan Cover photo by Carolyn Kaster / AP Images

1

from the Editors

I

n more senses than one, taxes ought to be more conspicuous in this year’s election.

Donald Trump has managed to hide his. If revealed, they would likely show two awkward things. First, as Prospect writing fellow Justin Miller shows in his important piece (“Trump’s Riches and the Real Estate Racket,” page 20), Trump’s tax returns would almost surely document that he pays nothing. And second, they would also tell us a lot about his investments, debts, and potential conflicts of interest.

As Miller reveals, the tax code is loaded with special-interest provisions for real-estate developers and investors, which any competent accountant can use to eliminate tax obligations. Full disclosure of Trump’s returns would give the American people a valuable lesson in how they have been bamboozled. The issue is not just tax equity, but lost revenue that might be spent on national needs—for example, infrastructure.

How to raise revenue for an infrastructure program at the needed scale is a key element in Prospect deputy editor Gabrielle Gurley ’s “Infrastructure: Can We Finally Think Big?” (page 62). One logical Miller candidate for additional revenue, a higher motor-fuel tax, is blocked because of legislative cowardice. Another source, the use of debtfinancing in a climate of very low interest rates, is frowned upon because most politicians still think in terms of restraining public debt without considering the return on public investment.

Hillary Clinton’s proposed $275 billion infrastructure program, which includes a new infrastructure bank, is a good down payment. But even Clinton wants the program to be paid for, not debtGurley financed, by closing corporate loopholes. Specifically, she supports a proposal by Senator Chuck Schumer of New York (co-sponsored with Republican Senator Rob Portman of Ohio) to offer U.S.-based corporations a one-time deal: Bring offshore profits home, and pay corporate taxes at just 5 percent to 8 percent, far below the stated rate of 35 percent.

That would bring in some revenue, but as a solution to the problem Stumo of offshore tax evasion by multinational corporations, it’s far from the best remedy. The right reform would be an approach described on page 76 of this issue by Michael Stumo , who heads the Coalition for a Prosperous America.

As Stumo explains, multinationals like Apple (and Starbucks) play a shell game of booking profits in nations that have low or non-existing corporate tax rates. As tax scandals go, this one is matched only by the real-estate scams, and it costs the U.S. Treasury hundreds of billions of dollars.

The remedy is simplicity itself. Let’s tax corporations based on where their final sales occur. If half of Apple’s sales are in the United States, half of the corporate tax payable would be owed to the U.S. Treasury, no matter what internal accounting games Apple plays. Not only would this close a flagrant loophole, as Stumo explains, it would end the international competition to cut tax rates. Tax havens like the Cayman Islands could lower their tax rate to nothing, and it would have no effect on what companies owe in the United States.

This reform goes by the technical name “sales factor apportionment,” or SFA , but don’t let the wonkery deter you. The actual reform could not be simpler.

Taxes, as Justice Oliver Wendell Holmes famously wrote, are the price we pay for a civilized society. Closing indefensible loopholes is the price we pay to have enough revenue to fund our national needs. That’s a bargain.

2 WWW.Prospect.org Fall 2016

co-editors Robert Kuttner and Paul Starr co-founder Robert B. Reich Executive editor Harold Meyerson Senior Editor Eliza Newlin Carney Deputy Editor Gabrielle Gurley art director Mary Parsons managing editor Amanda Teuscher associate Editor Sam Ross-Brown Writing Fellows Rachel M. Cohen, Justin Miller, Shaun Ossei-owusu proofreader susanna Beiser editorial interns Mariam Baksh, Manuel Madrid, Sadhana Singh Digital Engagement intern Bushra Sultana contributing editors Marcia Angell, Gabriel Arana, Jamelle Bouie, Alan Brinkley, Jonathan Cohn, Ann Crittenden, Garrett Epps, Jeff Faux, Michelle Goldberg, Gershom Gorenberg, E.J. Graff, Bob Herbert, Arlie Hochschild, Christopher Jencks, Randall Kennedy, Bob Moser, Karen Paget, Sarah Posner, Jedediah Purdy, Robert D. Putnam, Richard Rothstein, Adele M. Stan, Deborah A. Stone, Michael Tomasky, Paul Waldman, William Julius Wilson, Matthew Yglesias Publisher Amy Marshall Lambrecht Director of Business Operations Ed Connors Development Manager Justin Spees Publishing assistant Stephen Whiteside board of directors Michael Stern (Chair), Sarah Fitzrandolph Brown, Lindsey Franklin, Jacob Hacker, Stephen Heintz, Robert Kuttner, Mario Lugay, Ronald B. Mincy, Miles Rapoport, Janet Shenk, Adele Simmons, William Spriggs, Paul Starr Fulfillment Palm Coast Data subscription customer service 1-888-MUST-READ (1-888-687-8732) subscription rates $19.95 (U.S.), $29.95 (Canada), and $34.95 (other International) reprints permissions@prospect.org

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Prospects

When Elections Fail

by Paul Starr

O

ne of the great advantages of liberal democracy is the potential for self-correction. If an election works out badly, the next one offers an opportunity to make a better choice, and in the meantime constitutional guarantees keep the winners from abusing their power. But sometimes elections fail so disastrously as to threaten irremediable damage to a society’s foundations. The United States faces that risk this year.

Systemically damaging election failure can happen in several ways. Elections may be rigged or manipulated and, even when they haven’t been, the suspicion that they have may impair a new government’s legitimacy and create a constitutional crisis. Elections can fail when they put strongmen in power who have no respect for constitutional norms and threaten democratic institutions. They can fail when the outcome is so dispiriting that people give up on democracy and believe that only an authoritarian government can solve their problems.

Although democracy is often equated with elections, the two are not the same. After squelching their opponents, authoritarians often use elections to give themselves a stamp of popular legitimacy. The liberal elements of liberal democracy—independent media, freedom of association, an impartial system of justice and administration—are not just requisites for free elections; they are also indispensable to democracy as a means of limiting the damage

when elections fail. The checks and balances of our Constitution that seem frustrating at times because they serve as brakes on popular sentiment also reduce the risk that a bad decision by the voters at one moment will do irreversible, systemic harm.

An economic collapse, defeat in war, or some other crisis may be the most likely situations to drive a nation’s voters to make a desperate choice. But while this is an anxious time in America, it is not a moment of national desperation, though it could become one. The country faces the risk of systemically damaging election failure—threats to electoral integrity and government legitimacy, constitutional norms, and trust in the democratic process—because of the Republican Party’s nomination of Donald Trump.

Trump has raised the specter that if he doesn’t win, he may not accept the results because the political system is “rigged” and the election may be stolen through voter fraud. The voter-fraud issue is phony—there is no evidence of significant voter impersonation.

But many of Trump’s supporters echo the views they hear from their candidate and party. A Quinnipiac poll in mid-September asked, “If your candidate loses in November, would you think that the outcome was legitimate or would you think that the election was rigged?” Nearly half the Trump supporters (46 percent) think the election would be rigged, while only 11 percent of Clinton’s supporters think so.

Of course, the actual purpose of spreading the myth of voter fraud is to tilt the election by justifying special ID requirements and other laws and policies that reduce the African American, Latino, and youth vote. Trump has also called for his supporters to patrol voting places on Election Day, an old tactic aimed at intimidating minority voters.

Another kind of threat to electoral integrity is entirely new in the American experience— intervention by a foreign power aimed at supporting one candidate or sowing general distrust of the election’s outcome. Some people are incredulous that Russian hackers who work in concert with Vladimir Putin’s government could have been responsible for the breach of the Democratic National Committee’s email system and efforts to get access to state voter registration files in Arizona and Illinois. But there is a well-established pattern of Russian actions of this kind in Europe, and Trump has given Putin an interest in an American election that no Russian leader ever previously had because no major-party American presidential candidate has previously been pro-Russian.

The Russian interest arises not just from the admiration that Trump has repeatedly expressed for Putin, but also because Trump has cast doubt on whether as president he would defend NATO allies in eastern Europe against Russian intervention. As a businessman, Trump has also

depended, as one of his sons has said, on Russian capital, and as a candidate he has had a remarkable penchant for advisers with Russian connections. That Trump openly invited Russian hacking into Clinton’s email—before saying, implausibly, that he was just being “sarcastic”—was an astonishing example of disdain for democratic norms. And he may get his wish, or something like it.

As Dana Milbank of The Washington Post has speculated, the trove of hacked documents may provide the material, possibly doctored, for an “October Surprise” damaging to Clinton or to public confidence in the integrity of the election.

In praising Putin as a strong leader, Trump has shown utter indifference to the Russian leader’s use of power, professing to know nothing about the murder of Putin’s opponents and investigative journalists in Russia or to see anything wrong in Russia’s seizure of Crimea. Trump’s own actions during the campaign— inciting violence against protesters at his rallies; attacking the judge in the Trump University case; saying that as president he would use the IRS to get back at the owner of The Washington Post—also give no basis for believing he would restrain himself once he sat in the Oval Office.

If elections fail in most countries, it is only their problem. If an election fails in the United States in the way it may fail in 2016, it is a problem for the whole world.

Trump views the alliances built

Fall 2016 The American Prospect 5

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Prospects

since World War II as a protection racket in which countries either pay up or get no defense from the United States—treaty commitments and the fate of other democracies be damned. In Iraq, he says, we should have just taken the oil—a reversion to oldfashioned imperialism that would validate hostility to the United States. He calls for the use of torture against suspected terrorists and killing their families—forget the Geneva Conventions and other legal niceties.

After 1945, the United States helped to build a system of alliances and international law that has kept the peace in Europe and contributed to advances in democracy and human rights around the world. America has not always upheld those values in its actions abroad. But a Trump victory would endanger what has been achieved and do systemic damage to democracy not just in America but internationally.

But wouldn’t other institutions— the courts, Congress, the federal bureaucracy—prevent Trump from carrying out his ideas? In a government so prone to gridlock, some say, Trump would find himself foiled at every turn. That confidence, however, is unwarranted.

In international relations, to begin with, the power of the presidency is effectively unlimited. As commander in chief, the president can take the country to war. Presidents have abrogated and suspended treaties in the past; Trump could do so with little fear that the Supreme Court would direct him to comply. The nuclear arms pact with Iran is only an executive agreement; Trump could cancel it.

It’s a comforting thought that the military and the CIA would defy Trump’s orders to use torture, but I wouldn’t count on it.

By signaling American intentions, presidential statements about foreign affairs in speeches and news conferences often constitute actions in themselves.

Trump’s mere suggestion that he

would not defend countries in eastern Europe would encourage Putin to test NATO’s resolve.

Last April, in an interview on Fox, Trump told Chris Wallace in regard to the Japanese arming themselves with nuclear weapons, “Maybe they would in fact be better off if they defend themselves from North Korea.” He later reversed himself, but a president has only to raise doubt about America’s commitments to trigger nuclear proliferation.

While presidential power is

agreements, followed by retaliation by other countries, could create economic turmoil.

The turmoil itself would be an opportunity for Trump, as it often is for right-wing populists. After coming to power through appeals to intense nationalism and hostility to minorities and foreigners, they often use foreign conflicts or trouble at home as a way of maintaining support and justifying crackdowns on their domestic opponents.

There is also a more immediate potential for a constitutional

compliance would be far greater as president than it has been as a candidate.

Since Trump’s authoritarianism is hardly a secret, his candidacy itself reveals something deeply disturbing about the Republican Party in particular and America in general. No candidate like Trump was ever supposed to have a chance at the presidency.

But for some time now, Republicans have been playing with fire, stoking hostility to government and doubts about its legitimacy.

When elections fail, everything depends on democracy’s other institutions—the courts, civil service, parties, media, civil society. not as great in other areas, it is still formidable. Under existing laws, Trump would have sufficient discretionary authority to bar immigration from predominantly Muslim countries (see Sasha Abramsky, “Don’t Assume Trump’s Bias Is Mere Bluster,” The American Prospect, Summer 2016). Trump would also have the legal authority to carry out mass deportations of undocumented immigrants. And he could appoint an attorney general (Chris Christie?) and other officials who would be able to undertake investigations of political opponents and critical media and who might cast aside the informal norms that restrain the government’s staggering prosecutorial power and its capacity to disable the opposition.

Perhaps the greatest dangers to democracy and civil liberties would arise from the repercussions of Trump’s policies. Many of the actions that Trump has called for have the potential to ignite crises. Canceling the Iran pact could precipitate another crisis in that region. Anti-Muslim policies could stimulate more terrorism. Mass deportations and the cancellation of trade

crisis if this year’s election produces a disputed outcome. Imagine a repeat of the battle over the Florida vote in the 2000 election, except that with only eight justices, the Supreme Court might now be deadlocked. That could leave the election outcome to a lower court with even less legitimacy to determine the fate of the nation. Al Gore averted a constitutional crisis in 2000 by simply giving way, but it is hard to imagine Trump doing the same, and Clinton might not either.

If Trump becomes president, would Congress keep him in check, particularly under the pressure of crises that Trump himself might produce? If Trump wins, Republicans are likely to hold both houses, and the odds are low that they will conduct the equivalent of the Watergate hearings to check abuses of presidential power. This year, we have already seen how little fight Republican leaders put up against Trump once he was the presumptive nominee, despite the contempt he had shown for many of them and for what we had long been told were the party’s true principles. His ability to intimidate others into silence and

Trump is the culmination of that pattern. After years of unrelenting contempt for public institutions, democracy in America may now be much more fragile than many of us previously understood.

When elections fail, everything depends on democracy’s other institutions—the courts, civil service, parties, independent media, civil society—but those institutions are not self-driving vehicles.

While constitutional checks and balances create brakes on elected leaders, people have to apply the brakes. In the first instance, the brakemen are the judges and others with independent power in the government and major private institutions. Not only can they refuse to go along with illegitimate decisions; they can also embolden wider public resistance.

In one of his great free-speech opinions, Justice Louis Brandeis wrote that the founders of the American Republic “believed liberty to be the secret of happiness and courage to be the secret of liberty.” When democracy is going well, it is easy to forget how vital courage is. When elections fail and all seems to fall apart, nothing is more important.

—September 20, 2016

Fall 2016 The American Prospect 7

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notebook

Could Clinton Tame Congress?

How a Democratic Senate might shift the legislative dynamics

by E l i z a N e w l in Carne y

steve brodner

W

hen the market research firm YouGov asked Donald Trump supporters in August what they thought of Hillary Clinton, 93 percent said she was “corrupt,” 92 percent called her “dangerous,” and a striking 84 percent branded her downright “evil.”

Such visceral GOP hostility spells gridlock on Capitol Hill should Clinton win the White House. Republicans are almost certain to retain control of the House—which may well tilt even further right, as moderate

Republicans retire or struggle to retain their seats. Predicts David Wasserman, House editor of The Cook Political Report: “Calls to impeach Hillary Clinton will begin well before she takes office.”

This gloomy scenario bodes poorly for the ambitious policy agenda Clinton has pledged to enact with Republican help, including infrastructure investments, immigration changes, and an overhaul of criminal sentencing laws. These are areas where some Republicans, at least in

principle, say they want action— unless their goal is to deny Clinton any legislative wins.

One factor could improve Clinton’s odds, however: a Democratic Senate. Democrats are by no means certain to win. Polls in late September show Republicans better positioned to keep the Senate than they were six months ago.

Nevertheless, if Democrats can win even a 50-50 Senate, with the vice president as tie-breaker and Democrats in control of committees and Senate agenda-setting,

that would give a President Clinton an important boost.

If her party doesn’t win the Senate, Clinton will likely confront the same scorched-earth obstructionism that Majority Leader Mitch McConnell of Kentucky has employed to block President Obama at every turn. Clinton’s campaign pledges of free public college, paid family leave, and a campaign-finance overhaul are anathema to GOP lawmakers. If Republicans still run both chambers of Congress, budget showdowns and anti-Clinton investigations will be a constant, divisive distraction.

Should Senate Democrats prevail, however, Clinton will enjoy fresh leverage over a GOP House, in the following areas:

Fall 2016 The American Prospect 9

notebook

Confirmations. A Democratic Senate could approve one or more Clinton Supreme Court nominees, install her cabinet without delay, and help her fill lower-court vacancies. Republicans can resort to the filibuster, but it is not possible, practically or politically, to demand a 60-vote supermajority on every issue.

Hearings. Senate committees controlled by Democrats could call their own hearings to counter GOP probes.

They could pursue such issues as Russia’s role in email hacks and election disruptions, as well as Republicansponsored efforts at the state level to block the right to vote. They could use hearings to shine a spotlight on areas of social need, such as child poverty, work and family, as well as continued gouging by big banks, as Democratic senators did in the heyday of progressive legislation. This in turn could move public opinion.

Agenda-Setting and Scheduling. A Senate majority would hand Democrats control of that chamber’s floor schedule and the power to spotlight popular Clinton initiatives. Senator Charles Schumer, a no-nonsense pragmatist who represented New York alongside Clinton when she served in the Senate, would be the new majority leader.

Schumer would give Clinton a platform to showcase her budget, economic agenda, and immigration plan, helping rally voters as Democrats gear up for a tough 2018 midterm election that threatens to put Republicans back in charge.

“The Senate Majority Leader has very considerable power to bring bills to the floor, to determine the timetable by which they are brought to the floor, or to bottle them up,” says William Galston, a Brookings Institution senior fellow who served in the Bill Clinton White House. The majority leader also “can determine what people are going to be talking about,” he adds. “You can lead with the pieces of your agenda that you believe enjoy the most broad-based support, and dare the opposition party to block them.”

Desperately Seeking Bipartisanship

Highway to Heaven? Infrastructure spending is one of the few areas of potential bipartisan collaboration.

Clinton has pledged to invest $275

10 WWW.Prospect.org Fall 2016

billion over five years in upgrading the nation’s roads, bridges, waterways, energy grid, and public transit systems. At least some rank-and-file Republicans are eager to fund bridges and roads for their own locales, and the issue unites business groups, labor unions, and local legislators.

With a Senate majority, Democrats could hold infrastructure hearings and run a messaging campaign that puts pressure on the House. “I think if she’s president and Democrats control the Senate, that there’s the best chance in decades that we actually get something done,” says Marcia Hale, president of Building America’s Future, a bipartisan infrastructure coalition of elected officials.

The rub is how to pay for it. One obvious revenue source—a gas tax increase—is a nonstarter with Republicans. Clinton has called for a national infrastructure bank that would offer $25 billion in federal loans and loan guarantees. A frequently discussed revenue source is a corporate tax overhaul. Obama has proposed paying for infrastructure improvements via a one-time, 14 percent tax on companies’ foreign profits, an idea that has drawn interest from both Schumer and House Speaker Paul Ryan of Wisconsin.

Debates over tax rewrites, however, are notoriously divisive, and invariably draw intense lobbying from competing interests. Given Obama’s repeated face-offs with congressional Republicans over government shutdowns and defaults, Clinton may be lucky if she can simply keep the government up and running, let alone revamp the complicated tax system.

The Budget. Obama faced humiliating Republican wins on the budget, and ended up moving in a fiscally conservative direction that precluded spending initiatives at a time when the economy was still fragile. A Democratic Senate could give Clinton more leverage than Obama has had.

A key budget fight looming in 2017 will be over budget sequestration, the across-the-board spending caps first imposed as part of a 2011 fiscal austerity plan. A two-year budget deal that provided relief from the deep spending cuts imposed by sequestration will expire next year.

Like Hillary Clinton, Barack Obama worked cordially with Republicans as a senator— but they demonized him once he became president.

Clinton would be better positioned than Obama in two respects. First, the final legislative bargaining would be between Republican House conferees and Democratic Senate counterparts, rather than all-Republican conferees versus the White House.

Second, Obama had not only Republicans to contend with, but fiscally conservative Democrats in key posts, such as now-retired Senator Kent Conrad of North Dakota, then the ranking Democrat on the Budget Committee, undercutting his bargaining leverage. These legislators are mostly gone, and deficit-reduction fever has burned itself out on the Democratic side. A freshly installed Democratic Senate would favor new program initiatives, not further spending cuts.

Until now, Senate Republicans have held the purse strings of the nondefense portion of the sequestration relief package, shortchanging federal labor, health and human services, and education programs. If Democrats control the Senate Appropriations Committee, however, those programs could get a bigger share of sequestration offsets.

In a Democratic Senate, “the dollars allocated under those caps get spent in a way that aligns with progressive priorities, [which] has not happened before,” says Winnie Stachelberg of the Center for American Progress. Under Republicans, adds Stachelberg, Obama’s budget was not even dead on arrival—it was dead the moment it left the Office of Management and Budget. Senate Democrats could showcase a Clinton budget and invite cabinet secretaries to testify about it on Capitol Hill.

Immigration Reform. A key area that will put Clinton’s plans for bipartisan cooperation to the test is immigration. Clinton has promised to introduce immigration legislation during her first 100 days, and has cited it as a reason “why we need to elect a Democratic Senate, so we have some friends.” In 2013, Senate Democrats helped push through a sweeping immigration overhaul spearheaded by a bipartisan “Gang of Eight” senators that included Schumer. Schumer “would love to take the ball and run

notebook

with it” again next year, says Frank Sharry, executive director of the immigration advocacy group America’s Voice. But Sharry says immigration advocates are angling for a fresh approach built around pressuring the House to take action first.

“It was a center-right bill drafted by a Gang of Eight, designed to put pressure on the House, and it didn’t work,” says Sharry of the 2013 bill, which was blocked in the House. Now immigration advocates are looking “for a different approach that compels action in the House first, or at least simultaneously with Senate action,” Sharry adds. “Because otherwise it’s all an exercise in spinning our wheels.”

Clinton could signal to House Republicans that if they don’t act, she will take executive action. Though key Obama executive actions were blocked in court, the Supreme Court balance is changing. Even without a friendlier high court, immigration advocates argue that Clinton could take administrative steps to stop detaining families, to explore detention alternatives, and to limit deportations mostly to those with criminal records.

“The role of an empowered Democratic Senate has been critical in getting the administration to use their executive tools, and critical to putting legislation in play,” says Sharry.

“And without it, a Clinton administration would have constant battles with a Republican Congress over any measures to treat immigrants more humanely.”

j. scot t applewhite / ap images

Vodka and Bourbon

Some Democrats speculate that Clinton might enjoy better relations with congressional Republicans than Obama has, pointing to her success as a senator on numerous bipartisan initiatives that won her GOP fans. As a senator, Clinton’s bipartisan successes included legislation to bring broadband service to rural communities, and in 2005 she worked with Senator Bill Frist of Tennessee, then the majority leader, on legislation to modernize medical records. She was confirmed as secretary of state on a roll call vote of 94 to 2.

“Some of them half expected to see horns growing out of her head,” recalls

Then-Secretary of State Hillary Clinton huddles with Sen. John McCain, on Capitol Hill in Washington, 2013.

Democratic strategist Jim Manley, a former Senate leadership aide to Harry Reid, “and they came to learn that she was, in fact, a nice person.

Warm, gracious, and someone they could do business with.”

Clinton is better known for her social instincts than Obama, whose reputation as aloof and disengaged from Capitol Hill rankled not only Republicans but members of his own party.

She famously engaged in a vodka drinking game with Republican Senator John McCain of Arizona on a congressional trip to Estonia in 2004.

“She was a serious senator who developed a lot of friendships with Republicans during her years in the Senate,” says Galston.

“If she could drink vodka with John McCain, she can drink bourbon with Mitch McConnell.”

Maybe, but it’s a long way from drinks to bipartisan legislation.

Obama also worked cordially with Republicans as a senator, and that did not prevent them from demonizing him once he became president.

Hillary Clinton also served as first lady when Bill Clinton was striking landmark deals with Republicans on trade, deficit reduction, family leave, expanding the Earned Income Tax Credit, and welfare reform, even though then-House Speaker Newt Gingrich loathed the president. Some of them (trade, welfare) required Clinton to move to the right, but others (EITC, family leave) enacted longstanding progressive goals. Bill Clinton was superb at combining the power of the bully pulpit with legislative inside baseball. In the end, Gingrich blinked first over government shutdowns.

Even if Bill is present as a tactical role model and legislative strategist, however, the electorate is far more ideologically divided today and Republican legislators even more ferociously partisan than in the 1990s. Hillary Clinton’s campaign promises to raise

the minimum wage, expand family leave, rein in Wall Street banks, and make college tuition free are a study in contrasts with this year’s GOP platform, which pledges to cut taxes for the wealthy, roll back environmental regulations, and privatize Medicare.

Ryan Redux

A key player will be Paul Ryan, the likely House speaker in the next Congress. Ryan is known for his interest in public-policy details and his on-again-off-again willingness to work across the aisle. He has broadly endorsed changes in immigration, tax policy, even poverty programs. He backs expanding the EITC, and has endorsed a so-called 10-20-30 antipoverty plan introduced by House Democrat Jim Clyburn of South Carolina, which would give 10 percent of federal economic recovery money to communities that have had a 20 percent poverty rate for 30 years.

There are two problems, however.

Careful analysts of Ryan’s anti-poverty proposals, such as the Center on Budget and Policy Priorities, say the proposals are mostly a phony cover for slashing federal aid. His proposed merger of key anti-poverty programs into one big block grant would amount to a net reduction in aid to the poor, the center has found.

Politically, the far-right House Freedom Caucus—which helped oust Ryan’s predecessor, Ohio Republican John Boehner—will probably be even bigger and more influential in the next Congress. GOP gerrymandering has left sitting House Republicans in perpetual fear of primary challenges from the right. That means that even Republicans who might want to work with Clinton in principle will be reluctant to give her any victories. On immigration, however much Ryan might want a bipartisan success, the House Freedom Caucus will invariably balk.

“If Ryan would take whatever Republicans would come with him, and let it be primarily a Democratic bill in the House, he’d stop being speaker shortly thereafter,” predicts Thomas Mann, a longtime Congress expert at the Brookings Institution.

Clinton, for her part, would face strong pressure from her party’s left

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The Hardened Divide in American Politics When did hyper-partisanship begin?

Pre-election polling data point to the mid-1990s.

by Sam Wang

A

lthough news reports and commentators during this year’s presidential election have focused on twists in the race and shifts in polls, the real story about campaigns since the mid-1990s is how little movement there is during a general election. American voters are much less open to persuasion by the other side than they used to be.

With increased partisan polarization among voters, how states vote from one election to the next also changes much less than it previously did.

That’s the reason we can talk about “red states” and “blue states” and focus on only a few battlegrounds. Election outcomes aren’t foreordained, but all the movement has been taking place within a relatively narrow range.

The volatility of public opinion during an election year can be measured using the standard deviation, a number that describes how far sentiment has departed from the average. Like the stock market, presidential races may be volatile (high standard deviation) or placid (low standard deviation). As the figure below shows, low-variability campaigns suddenly became the norm in the mid-1990s.

Six of the seven least volatile races in the past 64 years have occurred

since Bill Clinton’s re-election in 1996.

During the general election in 2008, for example, the Obama-McCain margin spent about two-thirds of its time within 2 percentage points of its average. Compare that remarkably low level of variation to 1980, when the Reagan-Carter margin had a standard deviation of 12 percentage points—six times as volatile. Shown in red is an even more precise measure of volatility that I developed in 2004—the state poll Meta-Margin—which confirms the stasis of recent campaigns.

What happened between 1992 and 1996 to make presidential campaigns more stable? For one thing, Americans started voting more predictably on the basis of national party affiliations and doing so for both the presidency and Congress. Starting from the mid1990s, the presidential popular vote and the national congressional vote have come into close alignment, differing by an average of only 2.9 percent.

Earlier, there was some truth to the dictum that “all politics is local,” as Tip O’Neill, the Democratic speaker of the House from 1977 to 1987, famously put it. But today all politics is national, and it has been that way ever since 1994, when Newt Gingrich and the House Republicans swept into power with a

The Decline of Presidential Campaign Volatility 16% 14%

sta n dard d ev iati on

flank. Backers of Vermont Senator Bernie Sanders argue that Clinton should force Republicans to go on the record on votes to reject the TransPacific Partnership, and on environmental regulations, paid family leave, gun safety, voting rights, campaignfinance restrictions, and other progressive priorities.

“She’s campaigning on expanding Social Security, not cutting it,” MoveOn.org Executive Director Ilya Sheyman told The New York Times. “It will be incumbent on a President Clinton very early in 2017 to force Republicans to accept big, bold ideas or else have them pay the consequences.”

But if they don’t control both chambers of Congress, Democrats have limited leverage—no matter how hard liberal activists push. “She may act on them in good faith,” says Barry Burden, a political science professor at the University of Wisconsin, Madison, of Clinton’s progressive policy priorities. “But there may not be much to show the Sanders wing of the party at the end of the day.”

Clinton’s window for action, moreover, may be limited to two years.

Democrats face a daunting Senate map in the 2018 midterms, with five Senate Democrats up for re-election representing red states that voted for Mitt Romney in 2012—Indiana, Missouri, Montana, North Dakota and West Virginia. Those senators may resist the more progressive planks of Clinton’s agenda.

Clinton’s first ugly Hill showdown is likely to occur the moment she assumes office, when she seeks to confirm a successor to the late Supreme Court Justice Antonin Scalia. Senate Democratic Leader Harry Reid of Nevada has suggested that Democrats may need to change the rules to make it easier for senators to overcome a filibuster in order to win confirmation. Yet they may think twice, given that the Senate could well revert to Republicans in 2018.

“I think her team is going to have a tough job on their hands,” says Manley. “In this current polarized environment we find ourselves in, which I don’t think is going to change any time soon, it’s going to be tough for her to overcome the suspicions of some on the right that she should simply be in jail, and not in the White House.”

12% National Polls

10%

State Poll Meta-Margins

8% 6% 4% 2% 0

1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016

electi on y ea r

john ba zemore / ap images

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national platform, the ConNewt Gingrich in 1994 tract with America. helped to nationalize Of course, these develcongressional elections. opments were long in the making. The role of the two parties in the civil-rights revolution in the 1960s brought about a massive regional realignment, which had its final chapter with the Republican takeover of the House in 1994. But other factors in the 1990s, particularly innovations in media and technology, may have contributed to the nationalization of politics, especially among Republicans.

Conservative talk radio and cable news—above all, Rush raphy explains why the terms “red Limbaugh and Fox—began providing states” and “blue states” now make their audience with a strong, one-sidsense to us. Since 2000, only two ed, partisan message on a daily basis. states, Virginia and Colorado, have Local, person-to-person communication has also become more ideological- shifted from being more Republican than average to being more Demoly consistent. As documented by Bill cratic than average; only Missouri has Bishop in The Big Sort and confirmed shifted in the opposite direction. The in detail by later researchers, the last rest have stayed the same. few decades have seen a clustering of To determine when geographic votlike-minded voters with one another ing patterns change in consecutive in the same communities. elections, I use the state-by-state corThe geographic sorting of voters facilitates the creation of noncompeti- relation coefficient, a measure that is based on whether individual states are tive districts. The number of swing above or below average in their partisan districts that can go either way has strength. Correlation coefficients are decreased, a trend that is driven both not affected by national swings in opinby population clustering and partisan ion; in other words, if one party wins gerrymandering. In most districts, an election by gaining an additional 10 general elections for state legislatures percent of voters in every state, there is or the House of Representatives carry no change in this measure. little suspense. Primary elections, The maximum possible value for when turnout is low and dominated by the correlation coefficient is +1.00, the most motivated partisans, deterwhich indicates perfect proportionalmine who gets elected. ity with only an offset for the average The hardening of partisan geog­-

State Pre-Election Polling Averages Show Same Pattern State sizes are weighted according to their number of electoral votes, with darker colors indicating larger polling margins.

2012

2016

(early september)

The hardening of partisan geography explains why the terms “red states” and “blue states” now make sense to us.

national swing. If there is no relationship between state-by-state voting in consecutive elections, the correlation will be zero. Consider two elections won by Democrats. In 1992, the Democrats won 32 states under Bill Clinton after winning just ten states under Michael Dukakis in 1988. That change was principally driven by a nationwide shift in Democratic-Republican vote margins by an average of nearly 13 percentage points. The state-to-state correlation coefficient was +0.90.

In contrast, when Democrats won a landslide victory under Lyndon Johnson in 1964, they didn’t just benefit from a nationwide swing from 1960, when John F. Kennedy won by a narrow margin. The 1964 election shook up the entire map. The state-by-state correlation between 1960 and 1964 was -0.03, close to zero and indicating no relationship.

In recent years, consecutive elections show very little change in stateby-state voting patterns. In the last 15 elections, the five largest election-toelection correlations occurred between 1992 and 2012—and 2016 looks to be similar. The color-coded map below left shows polling margins, with darker colors indicating larger leads.

As of early September, the preelection polling margins between Donald Trump and Hillary Clinton were a near-replica of the RomneyObama race, with a correlation of +0.93. Despite the radical nature of Trump’s candidacy, the distribution of his support reflects the same pattern as the support for George W. Bush, John McCain, and Mitt Romney.

No matter who wins the presidency, these trends suggest that polarization will remain after November.

That’s not to say the current patterns are fixed forever. Although primaries favor each party’s diehards, the fissure that opened this year between GOP party leaders and voters may open the way for surprises—including even future realignments. The 2018 campaign may show what kind of fruit arises from seeds planted in 2016.

Sam Wang is a data scientist and professor of neuroscience and biology at Princeton. He is the co-founder of the Princeton Election Consortium.

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the Department of Justice began filing complaints almost as quickly as state laws were passed.

Voting Rights: Will Court Protections Deliver?

Courts rule photo-ID laws unconstitutional

Federal courts have overturned several state voting restrictions, but the struggle continues on the ground.

by A l l e g r a C h a p ma n

T

he electoral dirty work done by dozens of state legislatures in the wake of the Supreme Court’s 2013 decision Shelby County v. Holder is the focus of determined legal challenges by voting-rights advocates, and decisions are coming down at a dizzying pace. Not every court involved has come down in favor of voters, but there’s encouraging evidence that judges, including conservatives, recognize state laws purportedly passed to ensure “voting integrity” for what they really are: suppressive tactics.

States’ efforts to suppress the vote

Following the Supreme Court’s decision in Shelby County, state legislators representing nearly half the country rolled back effective reforms and erected new barriers to voting.

It was a throwback to the era before the 1960s, when Jim Crow laws finally triggered passage of the Voting Rights Act (VRA).

Section 5 of the VRA , in effect for nearly 50 years, prevented much of the country—mostly Southern states and localities with a history of voting discrimination—from passing laws or rules geared to preventing citizens of color from casting ballots. It wasn’t perfect, but it kept thousands of discriminatory practices from seeing the light of day. When the Supreme Court gutted Section 5 in Shelby County, states previously required to submit proposed voting changes to the federal government for preclearance— along with some never covered by the preclearance requirement—rushed to pass laws meant to disenfranchise African Americans, Latinos, and others, including students, seniors, and the disabled.

North Carolina was the worst offender. The day Shelby County came down, Republican legislators

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introduced omnibus legislation that would’ve been stopped by Section 5. It eliminated same-day registration, preregistration of 16- and 17-year-olds, out-of-precinct voting, and reduced early voting. When the Tar Heel State adopted those voterfriendly measures in 2000, it had ranked 37th in turnout nationally; over a 12-year span, it improved to 11th. The reforms were particularly effective in the black community: 41.9 percent of African American voters turned out in 2000, 71.5 percent in 2008, and 68.5 percent in 2012. The cause and effect were clear. The 2013 bill also included a new hurdle—a requirement that each voter produce at the polls one of a select few types of photo ID. A federal appeals court later concluded that the favored IDs were chosen based on evidence that whites were likelier than blacks to possess them. Public-assistance ID cards— whose holders in North Carolina are typically poor and often black—were not on the acceptable list.

The North Carolina law may have been the most flagrant suppression effort, but it wasn’t alone. Twentytwo states since 2010 passed legislation that either cut reforms that were improving participation or imposed a new photo-ID requirement to reduce it. Without the VRA’s preclearance provision, state legislators, whether in jurisdictions once covered by Section 5 or not, believed they’d gotten a free pass to impose such measures.

Thankfully, Section 2 of the Voting Rights Act remains alive and well; it prohibits any state from implementing voting practices in a “manner which results in a denial or abridgement of the right of any citizen of the United States to vote on account of race or color.” With this in their arsenal, alongside the Constitution’s protections, voting-rights litigators and

Twentytwo states passed laws to kill reforms that were improving participation or imposed new photo-ID requirements to reduce it.

Cases brought under Section 2 can be costly and time-consuming for votingrights advocates to pursue; just as bad, they can be filed only after suppressive state laws have been put on the books— another reason Section 5’s preclearance requirement was so valuable. But the past few months have been fruitful for litigators, as several courts have struck down or modified voting laws— mostly on photo ID—because they discriminatorily prevent some citizens from casting ballots. Starting this trend, on July 19, a federal judge in the Eastern District of Wisconsin (as part of a long-running case) ordered the state to permit citizens who couldn’t obtain IDs “with reasonable effort” to vote in this election upon submission of an affidavit attesting to that difficulty. A “safety net” was needed, the court said, and the affidavit option to Wisconsin’s strict ID law was a “sensible approach [to] prevent the disenfranchisement of some voters … and preserve Wisconsin’s interests in protecting the integrity of its elections.”

The court didn’t address the specific impact the law would have on voters of color, but acknowledged that poor, disabled, and homeless voters, due to disadvantaged conditions, wouldn’t be able to get the required cards without “extraordinary effort”—uncalled for given “there is virtually no voterimpersonation fraud” in the state.

The next day, July 20, the Court of Appeals for the Fifth Circuit—perhaps the nation’s most conservative appellate court—found that Texas’s photoID law, the strictest in the country, had a discriminatory impact on voters of color. The legislature’s intent in passing SB 14, a law permitting voters to present a concealed-carry handgun permit but forbidding the use of student IDs, was not yet obvious, the appeals judges said; as such, they instructed the district court to evaluate, following this election, whether the legislature intended to discriminate. But if the intent was cloudy, the law’s impact was clear; in place since

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the 2014 midterm election, it discriminated against black and Latino voters. Accordingly, the appellate court ordered the district judge to modify it for the November election.

About a week after the Fifth Circuit’s decision, on July 29, the Court of Appeals for the Fourth Circuit addressed North Carolina’s suppression bill. A trial court in April (Common Cause was a plaintiff) had upheld the entire law—despite nearly 500 pages of findings on how it would negatively impact African Americans— but the Fourth Circuit concluded that the lower court had “fundamentally erred.” It found not only that the new law “target[ed] African Americans with almost surgical precision” but also provided “cures for problems that did not exist.” This was particularly the case, given that the state had “failed to identify even a single individual who has ever been charged with committing in-person voter fraud in North Carolina,” the judges wrote.

The appellate court also had proof that North Carolina legislators aimed to limit the black vote: Before introducing the bill, lawmakers sought and received information on racial breakdowns specifying what groups used which reform and who had or lacked specific IDs. Black voters, Republican legislators learned, disproportionately used the first week of the early-voting period, same-day registration, and pre-registration; legislators cut all three reforms in the omnibus legislation. The GOP legislators also learned that African Americans disproportionately voted outside their home precincts, so they cut out-of-precinct voting. They also adopted a photo-ID law that required identification cards often used by whites but less available to blacks—who had overwhelmingly voted for Democratic candidates in the previous two elections. The evidence of discrimination “comes as close to a smoking gun as we are likely to see in modern times,” the Fourth Circuit declared. “The State’s very justification for a challenged statute hinges explicitly on race—specifically its concern that African Americans, who had overwhelmingly voted for Democrats, had too much access to the franchise.”

In a less-publicized but highly

impactful case, the federal district court in North Dakota, on August 1, upended a 2015 photo-ID law for the upcoming election. HB 1333, the court found, particularly burdened the state’s Native Americans, nearly 24 percent of whom lack the required ID. That burden, moreover, wasn’t justified: The secretary of state acknowledged in 2006 that he knew of no voter fraud in North Dakota, and the record submitted to the court confirmed that none existed. To cut a fair balance, the court granted a request by the seven Native American individual plaintiffs and ordered the secretary of state to add on “fail-safe” measures, including allowing voters to submit affidavits as to their identity (a common solution) and letting poll workers vouch for voters they know.

Judges are balancing state efforts to fix a problem against how that proposed solution affects the right to vote, particularly for marginalized and legally protected groups. Judges also are looking at whether the problem even exists, thereby warranting a solution. Sometimes they find the law, so long as it’s not intentionally discriminatory, can stand if the state accommodates those who can’t get the required IDs. As the courts have consistently noted, in-person voter fraud, the kind a photo ID would cure, simply does not occur at the level justifying a tough ID requirement. Every state, moreover, has laws in place to prohibit fraudulent voting, with penalties including steep fines and imprisonment. So why add a law on top of a law that already works? That’s not typically the “conservative” way.

It’s not just about photo-ID laws

In addition to striking photo-ID laws as conceived, courts have ruled for voters on other issues. The Sixth Circuit Court of Appeals, for example, recently upheld a lower court’s decision to strike down a Michigan law that would eliminate straight-ticket voting, a century-old practice in the state. Because black voters disproportionately use the practice, its elimination would discriminatorily impact the African American community, lengthening already too-long wait times to vote

The Fourth Circuit found that North Carolina’s law “target[ed] African Americans with almost surgical precision” and provided “cures for problems that did not exist.”

(sometimes twice as long compared with lines in white communities) in under-resourced polling precincts. As with photo-ID laws, the state legislature’s move here would result in disenfranchisement of tens of thousands of people. On September 9, the Supreme Court, by a 6–2 vote, denied the state’s request for yet another stay, leaving straight-ticket voting in place for this upcoming election.

Changes to voter registration regulations also keep people from the ballot box, especially when states improperly request citizenship documentation through the forms. Federal decisions, addressing moves by Kansas Secretary of State Kris Kobach, have ensured that, at least for this year’s election, citizens may register and vote in both state and federal elections without having to present citizenship documentation that is often hard to obtain, and which federal law does not require. Most recently, the Court of Appeals for the D.C. Circuit, reversing the lower court’s decision, held that Kansas, Georgia, and Alabama may not request documentary proof of citizenship for this election through the federal voter registration form, despite the Election Assistance Commission’s executive director earlier giving the go-ahead.

A never-ending struggle

In voting-rights litigation, the forces that want to restrict voting keep fighting back. For instance, the decision in Wisconsin allowing any citizen who can’t obtain ID with “reasonable effort” to vote after submitting an affidavit won’t be in place for this election.

The Court of Appeals for the Seventh Circuit stayed it, accepting instead another district court’s modifications to the DMV’s “ID Petition Process” (IDPP), the state’s last-ditch attempt to save the law by providing individuals with quick identification. Noting that the current “IDPP is pretty much a disaster,” that it disenfranchised more than 100 people for the April primary, that the DMV had discretion not to issue ID, and that the law disparately impacted voters of color, the district court had ordered modifications for the upcoming election.

But the appellate court relied on

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the state’s assurance that it would “automatically” mail a free photo ID to eligible persons initiating the IDPP process at a DMV office without requiring them to provide “a birth certificate, proof of citizenship, and the like.” The process encapsulates the absurdity of the state’s work-around, demonstrating that Wisconsin’s aim is not to protect against fraud by verifying an individual’s identity but to impose a test the voter must pass to cast a ballot.

If one doesn’t have to submit information confirming citizenship, what aside from erecting a hurdle is the point?

Additionally, even if the ID itself is free of charge, the means to obtain one is not: Individuals with very limited incomes likely don’t have the means to reach the DMV in the first place. On the plus side, the district court’s other holdings—reversing the state’s restrictions on in-person absentee (early) voting, a 28-day durational residency requirement, and bars on the use of expired IDs, among other things— remain in effect for November.

In North Carolina, on the other hand, the appellate court’s ruling knocking down the state’s ID law and restoring reforms will stand. The Supreme Court, on August 31, refused by a 4–4 vote to grant the state’s request for a stay, and thus permit implementation of that “monster” legislation in this upcoming election. The deadlock reflected the ideological split on the high court following the death in February of Justice Antonin Scalia.

Tar Heel voters, as a result, can expect to register and vote on the same day, vote during a period before Election Day, and have the votes counted even if they mistakenly report to the wrong polling place within their county. Voters also will not need to bring photo ID to the polls (unless they are voting for the first time, in which case they should bring some form of ID—utility bill, bank statement, etc.—showing their name and address, as required by the Help America Vote Act).

As for Texas voters, in a settlement reached by the state and challengers to its law, parties agreed that for those with a “reasonable impediment” to obtaining an SB 14–required ID (which will be accepted if not more than four years expired), documents

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including a utility bill, paycheck, or other government document with the voter’s name and address, alongside completion of a “reasonable impediment” declaration, will allow the voter to cast a regular ballot. The deal also prohibits election officials from questioning the reasonableness of the voter’s impediment, and requires the state to develop a “detailed education plan” for voters (costing no less than $2.5 million), and a detailed election official training program.”

Voters in Ohio, unfortunately, won’t be able to register and vote simultaneously during a specified “golden week” period in October, as they once did. The Court of Appeals for the Sixth Circuit cut that opportunity on August 23, and on September 13, the Supreme Court left that decision undisturbed, without noted dissent or explanation. Ohio offers a generous early-voting period, but as appellate Judge Jane Branstetter Stranch noted in her dissent, the cut will disparately impact black voters and is “linked to social and historical conditions of discrimination that diminish the ability of African Americans to participate in the political process.”

Now what?

For the upcoming election, at least two things are needed for appropriate implementation of the courts’ orders and fair access to the polling places.

First, advocates and voters must note and report any hiccups or violations leading up to and on Election Day. In Wisconsin, for example, the photo-ID requirement will be in effect.

Voters without ID who take pains to secure them through IDPP at the DMV, but do not receive their IDs within the promised time period, should inform authorities and call 1-866-OUR-VOTE to report the problem. As the Seventh Circuit noted, the lower court must monitor the state’s compliance, and if the DMV fails to issue cards “automatically” to eligible voters, remedies must be made. This sort of documentation— in Wisconsin and other states requiring compliance with court orders—is also needed to bolster future cases and ensure a fair outcome to voters.

Secondly, the state—and its elections officials and poll workers—must ensure the letter of the law is observed.

Texas officials continue to play a cat-andmouse game on voting rights with the plaintiffs, the courts, and the Justice Department.

It appears Texas has already violated its settlement with the plaintiffs. On September 6, the Department of Justice asked the trial court to enforce the deal, arguing that the state’s education and poll-worker training materials “depart[ed] from it.” According to the DOJ, the state has used language that “limit[s] the opportunity to cast a regular ballot solely to those voters who present SB 14 ID or who ‘have not obtained’ and ‘cannot obtain’” the ID. Texas’s departure from the “reasonable impediment” standard isn’t a mere quibbling with words. An individual, for example, might have a “reasonable impediment” to obtaining ID from a DMV office located 60 miles away if she has no car and can’t afford bus fare; that doesn’t mean she “cannot obtain” it. Texas’s language, as it stands, would prevent her from voting in this election. Complicating matters further, according to a followup brief filed by plaintiffs in the same case, some Texas officials promise to conduct “criminal investigations” of everyone completing a “reasonable impediment” affidavit. This too flies in the face of the underlying agreement.

North Carolina, too, will stay under scrutiny. Twenty-three of its counties, in response to recommendations from the state Republican Party urging “party line changes to early voting,” moved to reduce early-voting hours; nine county boards voted to eliminate Sunday voting altogether. The Fourth Circuit, in blunt language, had ordered the state to resume 17 days of early voting, but the state’s reduction in some voting hours could still fulfill state legal requirements. Cuts in Sunday voting could land an offending county in court, however, as well-publicized “souls to the polls” programs run by black churches make good use of those days, and such cuts would have a disparate impact on African American voters. The State Board of Elections, which has final say-so over the counties’ decisions, announced on September 8 that Sunday voting would resume at polling places that offered it in 2012; other proposed cuts to hours were overruled as well. North Carolina voters should stay tuned; advocates say they’re considering further litigation.

Apart from the recent court orders,

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a smooth election requires that states fulfill a number of administrative tasks—already on their books—so that every eligible voter can cast a ballot and have it counted. Elections officials must make polling places accessible to the disabled, provide interpretations and translations for voters with limited English proficiency (where legally required), and must carry a sufficient number of ballots—among other things. Disenfranchisement isn’t always deliberate; sometimes it results from sloppiness or neglect. And it can be prevented. The Presidential Commission on Election Administration issued 19 common-sense recommendations in 2014 for states to keep the lines moving at polling places. States should review those recommendations again well in advance of this year’s voting to see what adjustments still need to be made.

After the election dust settles : What more is needed?

The courts’ takedowns of photo-ID and other vote-suppressive laws are a welcome response to state legislators’ erection of barriers. But we can’t assume these wins will deter other states from implementing roadblocks to the ballot box—or that any remaining barriers across the country will come down. When the opportunity to vote is lost, moreover, it’s lost for good; there’s no un-ringing that bell. That’s why it’s crucial we restore the protections lost in Shelby. Through updating Section 5 of the Voting Rights Act with a modern formula, one that’s forward looking and doesn’t dig too deep into the past, Congress can both abide by the Supreme Court’s ruling and provide protections to voters in any state. Such legislation has passed with bipartisan majorities in the past (four times in fact), and our next president must urge federal legislators to get the job done. For our democracy to be a truly vibrant and representative one, every voice must be heard, and every voice must count. With a renewed Voting Rights Act, we can achieve that ideal and realize a government truly representative of its people.

Allegra Chapman is the director of voting and elections at Common Cause.

Going Local in the Fight Against Inequality What progressives can learn from de Blasio’s policies in New York City

by James A. Parrott

I

t has been five years since the Occupy movement focused attention on the gap in income between the top 1 percent and other Americans. During Barack Obama’s first term, Democrats made federal taxes more progressive and expanded health insurance for low- and middle-income people. But since those changes were adopted, conservative forces in Washington have stifled further progress toward greater income equality.

Many liberals have therefore focused on local measures, despite some clear limitations to going local. Legally, cities and counties are creatures of their respective states and often face strict statutory limits on what they can do, including laws preempting local initiatives (see Abby Rapoport, “Blue Cities, Red States,” The American Prospect, Summer 2016).

Cities and counties also face competition from other localities that offer tax abatements and other incentives for business, which make it difficult to raise enough revenue to carry out progressive policies in fighting inequality.

The constraints on local governments, however, are often exaggerated. Localities can do a great deal to improve incomes and living standards in low-income communities. And contrary to the conservative insistence that progressive taxation will drive away the wealthiest taxpayers, recent research on “millionaire taxes” by Charles Varner and Cristobal Young of Stanford shows that the rich are generally so tied in to local economic and social networks that they have not moved out of the states that have imposed higher taxes on them.

Today, some cities enjoying strong economies have more leeway for progressive policies than they did in leaner times. With an economic output greater than that of 46 states, New York City has been in a singular

position. It has also had a political leadership committed to reducing inequality since the election of Bill de Blasio as mayor in 2013. But considering all the obstacles to local progressive policies and the difficulties of doing anything about inequality, is de Blasio having a meaningful impact?

New York City is the most economically polarized of the 25 largest U.S. cities. As the nation’s largest financial center, it is home to bankers and hedge fund and private-equity managers, who enjoy sky-high levels of compensation. From 2009 to 2013, as the economy recovered from the Great Recession, the wealthiest 1 percent took nearly half of all New York City income growth, according to an analysis of income tax data by the Fiscal Policy Institute. The top 1 percent’s share of total income rose to 40 percent in 2014, nearly twice the share of the 1 percent nationally.

While New York City workers have seen some wage gains in the past two years, median family income in 2014 was still nearly 6 percent below prerecession levels.

Poverty was also higher in 2014 than in 2008. Especially telling is the estimate by University of Washington researchers that 42 percent of all New York City households lack sufficient income to meet minimum basic family needs such as shelter, food, child care, and health care. Among black and Asian households, nearly half don’t make enough to meet that standard, and the incomes of three out of every five Latino households fall short of sufficiency.

If the dividends of economic growth had been more equally shared, the difference would have been enormous.

Median family income in 2014 would have been $97,000, two-thirds higher than it actually was, if median incomes

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had grown since 1990 as fast as the city’s economy (as measured by the increase in per capita gross product).

Running for mayor in 2013, de Blasio highlighted New York’s “tale of two cities,” the city of the rich and the city of the struggling. Since taking office, he has acted in concert with a progressive city council led

by Speaker Melissa Mark-Viverito to lift low wages, expand benefits for low-wage workers, institute universal pre-kindergarten, increase affordable housing, and bolster funding for programs serving the poor. In several areas, such as taxes, state law circumscribes local autonomy, and Governor Andrew Cuomo and the Republicancontrolled state senate have blocked de Blasio’s initiatives. Most notably, they prevented the city from instituting an income tax surcharge on the 1 percent to pay for universal pre-K. Even with those constraints, New York City hasn’t had such a progressive government in a long time. In his first year in office, de Blasio mandated five paid sick days for all workers at businesses with five or more employees. He increased the living-wage level required for workers at companies receiving city subsidies and expanded coverage to the employees of business tenants in subsidized developments.

He also pushed aggressively for an increase in the state minimum wage, or the authority from the state to set a higher wage floor in New York City.

At first, Governor Cuomo chided de Blasio for proposing a higher wage level for the city. But as the Fight for 15 campaign built momentum, Cuomo changed course, using his executive authority to establish a wage board that recommended a $15 floor for all fast-food workers in the state, with a faster phase-in for New York City.

By early 2016, the governor proposed and aggressively pushed for the enactment of a minimum-wage increase for all workers that would reach $15 by 2019 in New York City and later in the rest of the state. Since de Blasio has been mayor, Cuomo has alternated between thwarting de Blasio’s proposals and seeking to outdo them. In one area, the mayor still occupies the high ground. Unlike Cuomo, de Blasio has included funding in his latest budget

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for nonprofit agencies under city contract to enable them to keep up with rising minimum wages.

While public-sector workers have met hostility from elected officials elsewhere in the country, de Blasio has resolved almost all of the city’s contracts with its own workforce.

Michael Bloomberg had left office after 12 years as mayor without having settled contracts affecting all 340,000 city employees. In contrast, de Blasio reaffirmed the principle of collective bargaining for public employees and was able to fully cover the cost of labor contracts containing modest wage increases and significant health insurance savings.

To date, de Blasio’s crowning achievement as mayor has been the expansion of universal pre-K to serve all 4-year-olds, mainly from lowincome families. More than 68,000 children have been enrolled, more students than in the entire public school systems in Boston or San Francisco.

In addition to substantially increasing funding of a range of human

Bill de Blasio visits Governor Andrew Cuomo, who has alternated between thwarting de Blasio’s proposals and seeking to outdo them.

services such as homelessness prevention and immigrant, youth, and senior programs, de Blasio and his social services commissioner, Steve Banks, reversed two decades of punitive welfare policies. Banks had been a Legal Aid attorney who frequently sued the city to compel better treatment for vulnerable populations.

The city’s economy and its privatesector jobs have continued to grow faster than the nation’s under de Blasio, business confidence and investment evidently undiminished by a progressive in City Hall. Construction activity and private employment are at record levels and thriving tech, professional services, cultural, and tourism industries have helped make the current economic expansion the first in New York since the 1960s that has not been driven mainly by Wall Street. Strong revenue growth has certainly aided de Blasio in enacting much of his agenda, but he has also built up budget reserves to cushion any eventual slowdown.

De Blasio’s most ambitious policy is his plan to preserve and create 200,000

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units of affordable housing. Rents have risen much faster than wages in New York since 2000. Two-thirds of city households are renters and one-third of all renters pay more than half of their income in rent, including nearly half of all low-income renters.

In its first two years, the de Blasio administration financed the preservation and construction of more than 40,000 affordable apartments and put nearly $7.5 billion in the city’s tenyear capital plan for affordable housing. Many of the new units already built or under construction have benefited from a long-standing lucrative tax break known as “421-a,” which also subsidized a lot of high-priced condo units and padded the profits of developers. The tax break expired earlier this year and it’s not clear whether or in what form it might continue.

De Blasio is relying heavily on a new regime of mandatory inclusionary housing passed by the city council.

Developers building housing in areas rezoned for denser development will be required to set aside a portion of units for low- or moderate-income families.

(One option would be to require 30 percent of units be affordable for families with incomes at 80 percent of area median income, or about $62,000 for a three-person family. Set-aside requirements are lower for lower-income families.) The plan relies on rezoning low-income neighborhoods such as East New York and East Harlem and has triggered concerns about displacement and gentrification.

Rezoning areas for greater density enables developers to make a lot more money; mandatory inclusion of affordable housing enables the city to require that some of that additional value go to low-income families.

Housing advocates argue that the city can increase affordability requirements even further. Some would like to see the city buy up land in advance of rezoning so that it can directly capture more of the city-induced wealth creation, or use a community land trust to permanently insulate housing from market pressures. De Blasio’s efforts to limit displacement of existing tenants and encourage greater community participation in planning may help ensure that the program

genuinely advances its equity goals.

De Blasio has also provided funds for long overdue repairs at the city’s public housing projects, and his appointments to the Rent Guidelines Board permitted rent increases of just 1 percent in three years for more than 1.1 million rent-stabilized housing units— the smallest three-year increase in the city’s history of rent stabilization.

De Blasio’s policies stand out when

New York City’s experience under de Blasio affirms that progressive mayors can reduce inequality, especially by helping low-income people.

compared with those of his immediate predecessors and Governor Cuomo.

While they helped make New York one of the safest large cities in the country and contributed to the city’s economic growth, Rudy Giuliani and Michael Bloomberg were not concerned about social and economic inequalities.

Giuliani initiated and Bloomberg continued punitive welfare policies that denied or revoked benefits for many poor families and prevented recipients from pursuing a college education.

De Blasio has ended those practices, overhauled employment policies to foster skill development, and used temporary assistance to keep people in their homes and prevent evictions and greater homelessness.

While unrelenting in his drive to shrink welfare rolls, Giuliani’s generosity in handing out sizable tax breaks to Wall Street firms and other large corporations cost the city an average of $125 million each year he was in office. He also agreed to give the New York Stock Exchange nearly $1 billion to build a new trading floor, though the deal fell through after the September 11 attacks. (The stock exchange never tried to revive the deal, since computerization soon dramatically shrank the need for trading space.)

Bloomberg raised regressive property and sales tax rates in the city while instituting multibillion-dollar property tax breaks for the Hudson Yards district, even though Senator Charles Schumer, among others, argued that such tax breaks were unnecessary because the city was already subsidizing the district through a subway line extension. In contrast, de Blasio firmly rebuffed JPMorgan Chase when the mega-bank sought $1 billion in subsidies to build a new headquarters in Hudson Yards. That would have been

on top of $600 million in reduced taxes from the discount scheme Bloomberg had put in place.

The contrast between de Blasio and his predecessors is especially evident on issues affecting low-wage workers. Bloomberg steadfastly opposed the expansion of living-wage requirements, and he severely undermined union labor standards for thousands of low-paid child-care workers and school-bus drivers. Through his housing development and rezoning agenda, Bloomberg enriched developers without putting much priority on affordable housing.

While Cuomo’s support for the $15 minimum wage and paid family leave is to his credit, his budget and tax policies appear to have been inspired by anti-tax conservatives.

The governor’s cap on local property tax increases (the lesser of 2 percent or inflation) and his cap of 2 percent on state spending growth have limited the potential for progressive policies. Revenues have been growing—at about the same 4 percent to 5 percent annual rate for both the city and state—but de Blasio and Cuomo have responded differently. De Blasio has increased municipal spending by 5.1 percent annually, while Cuomo has adhered to his self-imposed 2 percent spending cap and used the projected revenue growth exceeding 2 percent to cut taxes. The beneficiaries of those reduced taxes include Wall Street giants and buyers of yachts and private jets. Cuomo also plans to let New York’s “millionaire tax” expire at the end of 2017 to provide a $3.7 billion windfall to the richest 1 percent.

New York City’s experience under de Blasio affirms that progressive mayors can reduce inequality, especially by helping low-income people. The city could do more with a supportive state government, not to mention changes in national policy affecting unions, financial market regulation, and other issues. But New York City under de Blasio ought to be a model for progressive leaders in other cities.

James A. Parrott is a New York City economist. He teaches at the Roosevelt House Public Policy Institute at Hunter College.

Fall 2016 The American Prospect 19

Trump’s Riches and

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W

the Real Estate Tax Racket charles rex arboga st / ap images

hen Mitt Romney released his tax returns in 2012, the average American got a rare inside look at how the wealthiest avoid taxes. Americans learned how private equity and hedge fund managers get huge tax breaks, such as the carried-interest loophole that allows ordinary income to be treated as capital gains.

Now, Donald Trump has created an uproar by being the first presidential candidate since Richard Nixon to refuse to release his tax returns. He claims, implausibly, that he can’t do so because he is under an IRS audit. Many speculate that there’s a different reason—Romney has even blasted him, saying his returns would show a “bombshell of unusual size.”

One thing is certain. If Trump’s full tax returns are ever released, the country would get an up-close look at how Trump’s empire sits upon a real-estate tax racket, composed of a princely pile of tax breaks, loopholes, and deferrals that make wealthy real-estate developers even wealthier by eliminating most of their taxes. For Trump, it’s a point of pride: “I fight like hell to pay as little as possible,” he said in August 2015.

B y J u s t in M il ler

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The industry where you really can make billions and pay no taxes

Take property taxes. Trump often employs

a tricky two-step. In the 1990s, he bought 147 acres in Westchester County, New York, and built a pristine 18-hole golf course, complete with a 101-foot-tall waterfall and a $20 million-plus, 75,000-square-foot clubhouse. In his financial disclosure report filed with the Federal Election Commission this year, Trump valued the golf course and palatial clubhouse at more than $50 million and said he made $10.3 million from it last year and early this year.

However, when it came time to pay property taxes, he claimed that the property and clubhouse was worth just $1.36 million—a 97 percent cut from his FEC disclosure figure.

Right before an ABC News investigative report was set to highlight the discrepancy, Trump’s lawyers bumped up the valuation to $9 million.

That’s still far short of the at least $14.3 million the city assessor estimated it at. On top of that, in 2008, Trump even got a 55 percent valuation reduction—from $38 million to $16 million.

He’s a repeat offender. As a USA Today investigation found, Trump’s companies have been

Fall 2016 The American Prospect 21

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But manipulating property valuations or utilizing odd deductions to limit tax burdens are merely ancillary tactics for real-estate moguls.

The real scandal is in the federal tax code, which is so far tilted in favor of real-estate development that it essentially amounts to an elaborate racket for the country’s wealthiest real-estate barons.

The federal tax code favors income from capital gains over income from salaries and wages by taxing at a much lower rate. This creates a perverse incentive to pursue intricate tax schemes that allow you to translate ordinary income into capital gains income—and there’s arguably no

Big Swinger: Golfers can continue to use this driving range on 11 acres of land in California that Trump promised to leave “undeveloped,” entitling him to claim a charitable tax break.

better way to do that than investing in real estate.

“The Declaration of Independence may tell us that all men are created equal, but the government definitely favors us real estate investors!” boasts the Trump University book entitled “Commercial Real Estate Investing 101.”

Nearly all real-estate operations are run

through tax-friendly limited liability corporations. With a standard corporate structure, the government levies taxes twice—on the corporation’s own profits and on employees’ incomes.

Not so with LLCs, which pass through all profits to the owners as income, to be taxed once. All told, Trump has at least 240 LLCs, including the

flagship Trump Organization, and a web of others set up for individual real-estate properties.

So how would a big-time real-estate developer like Donald Trump manage to whittle down his income tax bill to nothing? Well, it’s not that hard. Those who satisfy the IRS’s threshold for being a “real estate professional”—which likely includes Trump—are allowed to write off an unlimited amount of paper losses against other income. And the tax code offers a bonanza of so-called losses for developers to write off.

Real-estate developers, like Trump, often take out big loans to finance their investments.

“I’m the king of debt. I’m great with debt.

Nobody knows debt better than me,” Trump said in a June interview. Indeed, a New York Times investigation found that Trump-owned companies hold at least $650 million in debt— more than twice the amount that could be surmised from his public filings.

Congress allows all interest paid on investments to be deducted. So all interest Trump pays on that debt can be deducted each year against the money he rakes in from his Trump ties, furniture, TV appearances, licensing deals, and so on. Based on that estimated level of $650 million in debt, using an average interest rate of 4 percent, Trump’s interest deductions would be worth $26 million a year.

Then comes an even more powerful tax advantage for real-estate developers. Congress also allows developers to deduct the supposed depreciation of their property values over the course of 27 to 40 years, depending on the property type, despite the fact that real estate generally increases in value over time.

Consider his $150 million purchase of the National Doral Miami golf resort in 2012, which he secured with the help of a $125 million loan from Deutsche Bank. Over a 39-year depreciation period for commercial real estate, Trump is able to deduct about $3.85 million a year, even though his own money backs just 17 percent of the property value (and even though the true value of the resort is increasing).

It would only take seven years for Trump to write off his entire cash investment in the resort—and write it off almost another five times through the full 39-year schedule.

Suppose Trump has $2 billion in property purchases and capital investments (that’s a modest 20 percent share of Trump’s purported

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involved in more than 100 lawsuits or other battles over unpaid taxes or how much he owes.

Trump’s deal with New York City in 1980 to build the Grand Hyatt Hotel required him and his partners to return a portion of the profits to the city. However, as the ABC News investigation found, when the city audited Trump in 1989, it discovered that his team had understated total profits by more than $5 million—thus bilking the city out of almost $3 million. “This wasn’t just a good business deal,” the city auditor who reviewed the deal said.

“This wasn’t just business thinking. This was manipulation. ... It was an example of extraordinary flim-flammery.” All told, The New York Times found that Trump has used his political connections to secure nearly $900 million in tax breaks, grants, and subsidies to build up his real-estate empire in New York City.

In Chicago, home to the 92-story Trump Tower, he paid high-powered lawyers to manipulate Cook County’s notoriously complicated assessment laws, allowing him to pay different rates for the condo units at the top, the hotel rooms in the middle, and the retail, common areas, and parking on the ground floor. Trump hired no less than Ed Burke, head of the Chicago City Council, as his attorney. Burke used his political connections at the county assessor’s office to get the ground-floor assessment level lowered by 70 percent in just four years— between 2009 and 2012—lowering Trump’s property tax bill by just over $14 million, according to a Chicago Sun-Times investigation.

The Wall Street Journal uncovered that in 2005, Trump won a nearly $40 million federal income tax deduction simply by pledging not to build houses on one of his New Jersey golf courses, taking advantage of tax law that allows property owners to impose permanent conservation measures in exchange for charitable tax deductions. He’s used similar tax breaks at his Mar-a-Lago Club in Palm Beach, Florida, his Seven Springs estate in Westchester County, New York, and on a coastal California golf driving range. In New Jersey, Trump gets tax breaks simply for having goats and hay production on his golf courses.

These tactics are commonplace among the elite class of wealthy developers who can afford to hire an army of tax lawyers to exploit obscure tax breaks and do battle over property tax bills.

$10 billion in assets), and it has all depreciated over the course of 39 years. Trump then would be able to write off a heaping $50 million in depreciation deductions each year.

Trump claims that NBC paid him $65 million a year in 2011 and 2012 for his reality TV show Celebrity Apprentice. Taking him for his word (NBC says that figure is dramatically inflated), the federal income tax owed on that would nominally be almost $23 million. With all his real-estate depreciation and interest deductions, he’d likely pay no income tax.

“When you put together depreciation on buildings, and do it with borrowed money, you get a negative tax rate. You just can’t help it,” says Robert McIntyre, director of the tax fairness group Citizens for Tax Justice.

Again, without access to Trump’s full tax returns, these exercises are pure speculation.

But as renowned tax expert and Pulitzer Prize– winning New York Times journalist David Cay Johnston outlines in his new book, The Making of Donald Trump, the tax returns that have been uncovered show him paying nothing. By digging through casino regulatory reports, Johnston found that in 1978, while living a lavish lifestyle in Manhattan, Donald Trump paid no income tax. By utilizing the tax perks for real-estate developers, he was able to file a negative income of more than $400,000.

The next year, he reported a negative income of $3.4 million, also paying no income taxes.

Johnston found that Trump also reported a negative income in 1984, though he was forced to pay state and city back taxes after an audit several years later found that he could not substantiate many of his massive deductions. Reports on Trump’s financials by the New Jersey Division of Gaming Enforcement also showed that Trump paid no income taxes in 1991 and 1993—in fact, his losses were so large that he was apparently able to apply them to future tax seasons, likely meaning he paid no income tax for several more years.

Claiming a negative income not only saves money, but creates an investment opportunity.

For instance, a $23 million income tax break from his years on Celebrity Apprentice, Johnston explains, would have essentially amounted to an interest-free loan from the government, which Trump could turn around and invest in a new real-estate partnership for, say, 20 years.

With a 10 percent annual net return, Trump could pay off that tax bill in the future after having netted about $130 million. Year after year, he could do the same thing: invest that tax break and reap the rewards while deferring any tax payments far off into the future.

nesses and rentals in which one materially participates—to take unlimited deductions against other income. Dentists and doctors could no longer use real estate to avoid income tax, but real-estate tycoons like Trump who had millions in income flowing from other business ventures could.

Of course, not everyone can write off

unlimited amounts of paper losses—like depreciation of buildings or interest on a loan— against traditional income. No, that’s reserved almost wholly for a narrow class of real-estate “professionals.”

It wasn’t always that way. Before 1986, those in the upper tax brackets commonly became passive investors in real-estate partnerships as a tax shelter because everyone was allowed to write off real-estate losses against their regular income. Doctors, dentists, and lawyers loved it because it was an easy way to dramatically lower their tax burden; real-estate developers loved it because it provided a steady stream of

The huge pools of depreciation that realestate investors can write off are theoretically supposed to be recaptured and taxed once the property is sold. But there’s a huge loophole that often keeps that from happening: the “likekind” exchange. The Trump University commercial real-estate book approvingly describes it as “like an IRA account on baseball steroids.”

When a real-estate developer wants to sell a property, they are required to pay a capital gains tax on any profit. But developers can use an obscure tax provision called a 1031 like-kind exchange, named for its section in the tax code, to keep that profit from being recognized by

Most people can’t take unlimited tax deductions for artificial paper losses in properties they own. The tax code reserves that privilege for “real estate professionals.” investment. But using real-estate investment as a tax shelter led to an artificial surge in the market, resulting in lots of unnecessary development, and produced outcries of tax unfairness.

The landmark Tax Reform Act of 1986 closed those tax shelters by strictly limiting the amount of deductions passive investors in real estate could take against real income. Seemingly, it was a blow to the real-estate industry, as it not only cut off the spigot of eager investors, but it also spread out the depreciation schedules that Reagan had drastically shortened a few years earlier. Trump said in his book The Art of the Deal that he thought the law would be a “disaster for the country, since it eliminates the incentives to invest and build.”

But as things turned out, the change was a bonanza for real-estate insiders. In the early 1990s, Congress enacted a special carve-out that largely allows only those who qualify as “real estate professionals”—characterized as spending 750 hours a year in real-estate busi-

the IRS. This provision was originally intended to exempt small family farmers from capital gains taxation when replacing or upgrading assets like livestock or property. Over the past 100 years though, the provision has been expanded and co-opted by wealthy individuals like art collectors and commercial realestate developers. The IRS recognizes all U.S. real-estate property as “like-kind,” which gives developers tremendous latitude to trade up for more profitable properties, while at the same time avoiding capital gains taxes on whatever profits are made from selling the old property.

Just swap comparable properties—and both owners magically avoid the tax.

“It’s become a very well-oiled, lucrative machine for deferring taxation on gains of assets,” especially for rich real-estate developers, explains Lily Batchelder, a New York University law professor and former economic-policy aide to President Barack Obama and chief tax counsel for the Senate Finance Committee.

Fall 2016 The American Prospect 23

For example, a developer could trade a new development on the edge of town for a highrise luxury apartment building downtown and avoid taxes so long as certain technical criteria are met. A whole cottage industry of brokers has cropped up to facilitate these deals. The broker finds a buyer for a property and receives the cash payment, then uses that money to buy a property that the original seller finds fitting as a replacement. Cash never changes hands between the buyer and seller. “It’s almost like online dating: Find two businesses that match so they can defer taxation,” Batchelder says. A real-estate investor can make these exchanges again and again, like a game of leapfrog with property, all while avoiding capital gains taxes otherwise owed.

The like-kind exchange is a critical tool for building up wealth while avoiding taxation.

And if a developer passes their property on to an heir upon death, all capital gains will be wiped out thanks to a massive loophole in the estate tax. The developer will have completely

real-estate income totaled about $180 billion.

However, there is long-standing concern that real-estate investors are evading billions of dollars in federal taxes by either not reporting the profit or misreporting it as a long-term capital gain, which is taxed at a lower 15 percent rate.

Jerry Curnutt, a former tax specialist investigating investment partnerships for the IRS, has been sounding the alarm on this type of tax evasion for years, which David Cay Johnston first reported on for The New York Times back in 2007. Curnutt won awards at the IRS for finding new ways to single out partnerships that were evading taxes. While it’s easy for real-estate investors to evade these taxes, Curnutt said it’s just as easy for the IRS to detect it, by directing IRS auditing resources to 1231 gains and focusing only on real-estate partnerships that have just sold or traded property, since that’s when all the profit finally shows.

As of 2013, there were about 1.67 million real-estate partnerships, involving rough-

As of 2013, there were about 1.67 million realestate partnerships involving roughly seven million partners. The IRS is only able to audit a tiny percentage of them in any given year. avoided any sort of taxation on what could easily be hundreds of millions made in capital gains over a lifetime. As one law professor described it to Vanity Fair, “The trick in real estate is to keep all the balls in the air as best you can, until you die.”

Without his federal tax returns, it’s unclear whether Trump has relied on like-kind exchanges. He tends to hold on to properties for longer than most investors while profiting off lucrative licensing deals that plaster his name on the building, a strategy that doesn’t clearly lend itself to using like-kind exchanges.

Still, tax experts say they’d be surprised if he’s never made a 1031 exchange.

If the time does actually come where a realestate partnership decides to sell a property once and for all, the partnership is supposed to report the profit from those years of tax breaks on interest and depreciation as something called a 1231 gain, which is taxed at a 25 percent capital gains rate. In 2005, this type of

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ly seven million partners, according to IRS reports. The IRS is only able to audit a tiny percentage of real-estate partnerships in any given year. But Curnutt’s research has found that most of the cheating occurs among a small slice of real-estate partnerships that have a small circle—three to six—of investors. For reasons unknown, the IRS still has not adopted Curnutt’s auditing method. Meanwhile, the conservative crusade against the IRS has led to a depleted operating budget and, therefore, precious few resources are allocated to complex auditing techniques like those required to keep tabs on the real-estate industry.

After retiring from the IRS in 2000, Curnutt reached out to the states, including New York, where much of the tax evasion takes place, to help identify it. Only Pennsylvania took him up on his offer. Over the course of six years, Curnutt helped the state assess $49 million in taxes on unreported gains against real-estate partnerships, and also helped the tax depart-

ment build a case involving $700 million in unreported income.

It’s estimated that in peak years, real-estate investors in New York could be evading as much as $700 million in state taxes and as much as $40 million in local taxes from New York City. Reformers allege that governors like Andrew Cuomo have hesitated to implement such auditing techniques because it would expose rampant tax evasion in the real-estate industry, which is also one of the most prolific contributors to state politicians like Cuomo.

While the tax-avoidance in real estate thrives on blinding complexity, tax experts have a few core ideas for real-estate reform that would reduce real-estate favoritism while greatly increasing federal tax revenue: adjust real-estate depreciation schedules to better match economic realities; scale back interest deductions to limit the incentives for debt financing; limit real-estate like-kind exchanges; give the IRS adequate resources to stop real-estate tax avoidance.

In his last few budget proposals, President Obama has proposed dramatic reforms to like-kind exchanges. He wants to limit the total amount a taxpayer could defer to just $1 million—a change that the Treasury Department estimates would bring in almost $20 billion in tax revenue over ten years. That’s more than what could be brought in by closing the carried-interest loophole, which is the primary tax-reform goal for progressives.

In the context of brewing negotiations over a mega tax-reform bill in 2014, the former House Ways and Means Committee chair, Republican David Camp, went even further, proposing to do away entirely with like-kind exchanges. A complete elimination could bring in an estimated $40 billion in tax revenue over ten years. The former Senate Finance Committee chair, Democrat Max Baucus, supported eliminating the exchanges just for real estate.

Reformers also recommend revising depreciation schedules for real estate. “If you want to have an income tax,” Batchelder explains, “then depreciation should mirror the economic decline of value in assets as closely as possible.

It’ll never be perfect, but right now the code very intentionally allows taxpayers to depreciate much more quickly than economic reality.

charles rex arboga st / ap images

You could slow down the depreciation schedule to better mimic economic reality.”

Robert McIntyre contends that allowing developers to finance real-estate investments mostly with debt while allowing them to write off depreciation on the full value of the property is insane. Depreciation deductions, he argues, should be limited to the percentage of the property that is financed with the developer’s own equity.

Republicans have started pushing a policy shift that would limit or get rid of interest deductions on investment and instead allow investors to expense the cost of a new investment right off the bat. They argue that this would do more to spur spending on capital while weeding out businesses that rely heavily on debt financing—including highly leveraged developers like Trump.

The Donald, of course, wants to keep his interest deductions. But he also wants immediate expensing of investment when that serves.

That’s a combination that even the most conservative tax policy advisers balk at. “If you want to create a recipe for an abusive tax shelter, take those elements and bake for 15 minutes,” Douglas Holtz-Eakin of the American Action Forum, a conservative economic advocacy group, told The New York Times.

“The combination of expensing and interest deductions allows businesses to profit from the tax law—not by making productive investments but simply by arbitraging two provisions of the revenue code,” Steven M. Rosenthal, senior fellow at the Tax Policy Center, wrote in response to Trump’s plan.

And while Trump received plaudits for pledging to close the carried-interest loophole, his tax plan offers an even more favorable endrun: a 15 percent tax rate for all corporate and business income, including “pass-through entities” like real-estate LLCs. The capital gains rate for profit on sale of assets is 20 percent.

For decades, the real-estate industry has been a formidable force both in Washington, D.C., and in local municipal politics. According to the Center for Responsive Politics, in 2014, the industry spent more than $95 million on federal lobbying, more than triple what it spent in 1998. In 2012, the industry gave $162 million to candidates, committees, and outside groups; $75 million went to congressional races—near-

ly $35 million of that going into incumbents’ coffers. In 2014, the average congressional Democrat received just under $55,000 from the industry. The average congressional Republican took in more than $65,000.

Many of these reform proposals have run up against fierce resistance. The Real Estate Like-Kind Exchange Coalition has launched an aggressive lobbying campaign to help protect the exchange provision while Congress crafts a massive tax bill that likely won’t

1981 to 1994, was reportedly once so fed up with the brazen tax welfare for real estate that he threatened to make the whole sector taxexempt, which actually would have increased investors’ tax bills since they’d no longer be able to write off unlimited losses against traditional income.

Tax fairness has been put back in the public eye in recent years, aided by rampant corporate inversion practices by popular American companies like Apple and the spotlight on wealth

Depreciation Man: Trump talks about the construction progress of the 92-story Trump International Hotel & Tower during a news conference in Chicago, with his lieutenants Donald Jr., Eric, and Ivanka Trump standing by, 2007.

see the light of day until at least 2017. Much like they argued that limiting passive investor breaks in 1986 would spell doom for the business, the real-estate industry argues that the provision is an essential underpinning to economic growth—especially in commercial real-estate development.

Members include industry power players like the Real Estate Roundtable, the National Association of Realtors, and the Federation of Exchange Accommodators, which is the trade association for like-kind brokers. The Federation spent $500,000 in 2015 alone lobbying Congress and the Treasury Department to stop like-kind exchange reforms.

Dan Rostenkowski, the Democratic chair for the House Ways and Means Committee from

inequality perpetuated by policies like the carried-interest loophole. But there remains a feverishly anti-tax political environment in Washington, D.C., that, thanks to Grover Norquist and his ilk, makes anything perceived as a tax increase a non-starter.

“Not a chance, not in today’s landscape,” says Rosenthal of the Tax Policy Center. “A majority of Congress believes any tax change is a job killer. We’re ruled by sloganeers. I don’t see that changing in the near term.”

But forcing Trump to disclose his taxes would not only be salutary for the 2016 campaign. It would shed greater light on the singlemost abusive industry when it comes to tax favoritism, and help shift the political equation in the direction of reform.

Fall 2016 The American Prospect 25

Progressive Politics After Bernie The Sanders campaign mobilized the largest democratic left the nation has seen in decades. Can its follow-up organization and other liberal groups roll its revolution on?

By Haro ld M e ye rs o n

A

round the time that the Republicans came to Cleveland for their July national convention, a group of Bernie Sanders supporters on the city’s west side resolved to continue organizing. “When we realized Bernie would fall short,” says Steve Holecko, a retired teacher who was a mainstay of the campaign’s office, “we decided to stay together. …

Cuyahoga County didn’t have an organization with the word ‘progressive’ in it, so we formed the Cuyahoga County Progressive Caucus.”

For those who want to see what Sanders termed a revolution continue as an ongoing political force, the Cuyahoga County Progressive Caucus (CCPC) is doing many things right. It has held a number of events on Cleveland’s east side, the heavily African American part of town, working with the area’s state senator, Sanders supporter Nina Turner, to develop a common civic agenda. Frustrated by the Cleveland City Council’s opposition to raising the minimum wage to $15, the group is working with other organizations to recruit council candidates for next year’s city election, and planning training sessions to equip recruits with political skills. One of CCPC ’s partner organizations is the Northshore Labor Federation—that is, the Cleveland AFL-CIO. “We want to be an electoral force in the Cleveland area,” says Holecko.

One of the complications is the lukewarm (and for some, downright cold) view of Hillary Clinton many Sanders militants have. Cleveland’s CCPC, divided on this question, is not coordinating with the Clinton campaign in this critical swing state, despite the fact that by

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mid-September, Donald Trump was running ahead of Clinton in Ohio polling. To be sure, the group, which mobilized more than a thousand volunteers for the primary, is involved in voter registration efforts in tandem with the Democratic Party, and Holecko anticipates that most of the council candidates it supports next year are likely to be Democrats.

But the only way to keep Cleveland’s Bernie cadres together between now and November, Holecko is convinced, is by steering clear of Clinton (and, for that matter, of Green Party presidential candidate Jill Stein). The vast majority of Sanders supporters, according to every poll, support Clinton, but when it comes to Cleveland’s hardcore volunteers, Holecko says, “one-third are ‘Bernie or Bust.’ We’ve kept together so far by saying this year we’ll focus on issues and registration.”

The experience of the west-side Sanderistas may be emblematic of the Sanders movement as a whole—portending a future for the American left that could be either promising or self-subverting. The sheer number of people, particularly millennials, who responded to Sanders’s critique of current American capitalism suggests that today’s young people could become a powerful generational force pushing the nation leftward, much as the young people of the 1930s and 1960s did well into their maturity.

Whether this is the destiny with which they’ll fully rendezvous, however, depends heavily on whether the ongoing institutions of the Sanders Left—unions, community-organizing groups, electoral formations such as the Working Families Party, and the Sanders

campaign’s own creation, Our Revolution— can keep mobilizing their own ranks and build strong ties to other progressive constituencies.

But that task would likely be immeasurably more difficult if the anti-Clinton sentiment of some Sanders supporters and institutions contributes to the election of Donald Trump.

It’s far too early to predict which of these alternative futures Sanders World will create, though time is fast running out for the 2016 election. A number of its leaders—notably Sanders himself—emphatically lay out the catastrophic consequences for both the nation and the left should a large slice of the left be complicit in a Trump victory. Others disagree, though as the polls tightened in mid-September some were beginning to hedge their non-endorsement stances. While many of the national organizations that backed Sanders—the Working Families Party, the Communication Workers of America, People’s Action, MoveOn.org— have endorsed Clinton, others, like the digital group People for Bernie (which will soon change its name) and National Nurses United, have declined to do so, though neither are they backing Stein. As the following preliminary survey should indicate, whether the Sanders forces can realize their potential is as yet far from clear.

No one looking at the votes Sanders

amassed during the Democratic primaries can dismiss the potential leftward pressure that his supporters could exert on the nation’s discourse and policy—not least because so much of his support came from millennials, who were the heart and sinew of his campaign.

d a m i a n d o va r g a n e s / a p i m a g e s

Generation Sanders: Millennials are the most left-leaning generation since the 1930s. But can they bring their pro-Bernie zeal into more humdrum local campaigns?

Sanders won 71 percent of primary voters under the age of 30; as one Harvard University survey concluded, it wasn’t a stretch to speak of Generation Sanders in American politics.

Of all the nation’s progressive constituencies, however, it’s millennials among whom Clinton has been polling weakest (not that they’re voting for Donald Trump). They are also the progressives with the least affinity for traditional organizational culture—though as both Black Lives Matter and the Dreamers make clear, that hasn’t been an obstacle to forming organizational cultures of their own.

Public opinion surveys in the years leading up to the 2016 campaign, and any examination of the economic lives of the young, pointed to their potential as a progressive force. Weighed down by student debt and an economy that disproportionately created non-standard, lowpaying jobs, a higher percentage of people in their 20s and 30s were still living with their parents, one Stanford study concluded, than at any time since 1940. Other polls registered their substantial disenchantment not just with the economy but the economic balance of power; in several polls, millennials responded more positively to socialism than to capitalism.

Yet while young people in both the 1930s and

1960s had formed or flocked to groups and movements that embodied their distinctive brands of radicalism and reform, the young people who turned out in such high numbers for Sanders in 2016 had not formed a broad movement of their own. That was one reason why the political world was so stunned by their level of Sanders support.

The failure of Occupy Wall Street to build any organizations save a few tiny study and agitation groups, even as the polling showed so many millennials continuing to support its perspectives, was emblematic of Generation Sanders’s approach to organized politics—until the Sanders campaign came along.

For hundreds of thousands of the young, then, that campaign marked their first immersion into the actual practice of politics. Two youth organizations profited directly from this immersion by seeing boomlets in their membership: the Young Democratic Socialists and Young Progressives Demanding Action. Both groups have declined to endorse Clinton, even though mid-September polling showed Clinton’s lead over Trump dwindling particularly among millennials, many of whom are moving away from the former secretary of state to Stein and Libertarian Party candidate Gary Johnson.

To what degree Clinton’s weakness among

young voters is the result of those voters’ leftism—more precisely, in this instance, their infantile leftism—and to what degree it reflects their susceptibility to the media- and GOPdriven narrative that she’s as or more devious than Trump, we cannot say. At minimum, these groups could work on turning young voters away not just from Trump but from Johnson, to whom the polls show they’re flocking in far greater numbers than to Stein. The positions of both Trump and Johnson on environmental issues alone—the former denies the existence of global warming, the latter would abolish environmental regulations—should suffice to bring many young voters into Clinton’s camp.

The ongoing neutrality of these and other such groups in November’s election, on the other hand, would surely undermine their growth and credibility—and pose larger threats to democracy itself—should Trump prevail.

The organization best positioned to keep activating Sanders campaign workers was the one that emerged most directly from that campaign.

True to his socialist heritage, Sanders had made sure to tell his backers in every stump speech he delivered that in joining his cause,

Fall 2016 The American Prospect 27

28 WWW.Prospect.org Fall 2016

of the Sanders campaign, only take smaller donations but be able to donate directly to candidates. Another limiting factor of 501(c)(4)s is that federal elected officials—a category that includes one Senator Bernie Sanders—can’t have dealings with them. Critics nonetheless fear, however, that “Bernie people,” including Bernie himself, will make choices—such as the decision to form as a 501(c)(4)—that other progressives find bewildering.

Some of these anxieties have been allayed by the composition of the group’s 11-member board, which includes such progressive stal-

Uneasy Marriage: Interim Democratic chair Donna Brazile and Sanders campaign manager and now Our Revolution president Jeff Weaver at the Democratic Convention

warts as former NAACP president Ben Jealous, radio commentator Jim Hightower, and Ohio State Senator Turner, and is chaired by Larry Cohen, the former president of the Communications Workers of America and founder of Labor for Bernie, who is widely regarded as a tireless and independent-minded organizer. At its first meeting, the board pledged to report all sizable contributions—which, for a 501(c) (4), is not legally required.

Cohen acknowledges that the organization is still in its shakedown cruise period, and that in direct proportion to the historic novelty of its mission, its current structure is experimental and provisional. “We need a big dose of humility,” he says. For now, at least, Our Revolution

conceives its role as something of a switchboard: It endorses candidates—this year, state and local candidates—on its website, provides links so Sanderistas can volunteer or contribute to those campaigns, and messages Berniebackers in the districts where those candidates are running. Besides candidates, it is also urging supporters to help out in a handful of ballot measure campaigns this November—chiefly, for a California initiative that will put a ceiling on drug prices, and one in Colorado that would establish a single-payer health system.

Our Revolution’s staff vets the candidates the group endorses, and Cohen is frank that most of those candidates are recommended by groups that played a role in Sanders’s campaign, like the Working Families Party, Friends of the Earth, or National Nurses United, or

by Sanders campaign leaders in the various states. In initially opting for its “switchboard” model, the organization seems to be following, if at a distance, the model of some digital organizing groups, focused chiefly on millennials not easily reachable through more traditional organizational structures. “Young people can optimize their organizing campaigns with digital tools,” says Winnie Wong, the co-founder of People for Bernie, an online organization that preceded, was independent of, and now has outlived the Sanders presidential campaign. “So much of the Bernie Revolution was organized online.”

Still, most volunteers whose first contact with Sanders was digital eventually found their way to brick-and-mortar campaign offices. For now, Our Revolution is steering clear of that kind of organizing: Cohen says it has no plans to open offices around the country, nor to hire staff to coordinate local activities. Some left activists think this ultra-light footprint is a mistake. “They think you can do things at the local level just with volunteers, without any structure or staff of their own,” says one. “You can’t build a left that way.”

Sanders backers have taken some heat for funneling large sums of money into this summer’s failed primary campaign of Tim Canova against former Democratic National Committee chair and full-time Sanders nemesis Debbie Wasserman Schultz for her Florida congressional seat. This September, however, Our Revolution played a key role in enabling

tom williams / cq roll call via ap images

they were only beginning their participation in a long-term effort to revolutionize the relationships of power. Just as Sanders’s hero, five-time Socialist Party presidential standard-bearer Eugene V. Debs, had asked his supporters not just to vote Socialist but to join the party, so Sanders pledged to establish some permanent entity through which the faithful could roll the revolution on.

This August, Sanders unveiled that entity— Our Revolution. The organization began life with one asset of a size and scope no other left or center-left group active in electoral politics could match: access to the list of Sanders campaign donors, volunteers, and supporters, which may include as many as five million names. It also began life with one daunting challenge: No presidential campaign—indeed, hardly any American political campaign— had ever created in its aftermath an ongoing organization that had a sustained, significant effect on politics.

The organization created in the wake of Barack Obama’s historic 2008 victory, Obama for America, never really proposed actions that engaged the imagination or involvement of the millions of activists who’d campaigned for him.

Jesse Jackson’s Rainbow Coalition was tied too closely to the political needs of its founder—the shoals on which other such organizations had run aground. Were this not challenge enough, Sanders and his comrades understood they had to build a political organization that holds and renews the enthusiasm of young people for battles less world-historic than a presidential contest. Having fired up the better part of a generation, they readily admit that they don’t have a magic formula to keep that fire burning.

Though the Sanders list of supporters alone is enough to make Our Revolution a potential powerhouse in American politics, it is still very much feeling its way. Its challenges were compounded during its birth pangs when a number of young staffers, in a widely publicized move, left the group to protest some of its early decisions—in particular, to make Jeff Weaver, Sanders’s campaign manager and longtime aide, the organization’s president; and to make the group a 501(c)(4), able to take large donations but unable to donate directly to candidates’ campaigns, rather than a political action committee that could, in the spirit

Massachusetts State Senator Patricia Jehlen to defeat a conservative challenger backed by wealthy charter school advocates in the state’s Democratic primary, while also enabling progressive Assembly candidate Mike Connolly to narrowly upset a more conservative longtime incumbent in a district partially overlapping Jehlen’s. Alerted by Our Revolution, Sanders backers provided the districts—both in Cambridge—with precinct walkers and donations.

As Our Revolution directs its energy into more state and local races, Sanders supporters may encounter challenges they didn’t run across in the senator’s presidential campaign.

“When it comes to funding, among other things, Bernie’s campaign experience will not be easily replicated at the local level,” says Bob Master, the co-chair of New York’s Working Families Party and the political director of the northeastern region of the Communications Workers of America, the largest union to have endorsed Sanders. “There’s a unique level of hope and expectation in a presidential [election], not to mention the avalanche of media attention, that virtually never occurs in local races. Translating the Bernie energy and excitement to local races in the future will pose a real challenge.”

“Building local and state-based organizations that can be pragmatic and achieve concrete legislative victories,” Master continues, “is much harder than the magic of a presidential campaign. It takes organization and consistency and even compromise sometimes. I feel confident that the Bernie generation will stay involved in politics, and push American politics to the left, but it will take time and hard work to figure out how to make the transition to the less glamorous work of state and local elections.”

Another test for Our Revolution, and the entire Sanders left, is whether it can become an effective progressive pressure group on the Clinton administration should she prevail in November. Our Revolution is already organizing a national campaign against the TransPacific Partnership (TPP) should it come to a vote in Congress in the closing months of the Obama administration or the opening months of its successor. The group has alerted its massive list to upcoming anti-TPP activities and is keeping it abreast of ongoing developments.

There is broad agreement not only on the Sanders left but also among a number of cen-

ter-left organizations that the failure of liberal groups to pressure the Obama administration in its opening months for more progressive policies—most certainly, on reducing the number of home foreclosures—was a serious mistake that should be avoided if and when Clinton takes office. With Sanders and Massachusetts Senator Elizabeth Warren as their congressional point persons, the left is already opposing the appointment of advisers adhering to a Wall Street perspective to top administration positions, and working to ensure that the progressive commitments of the Democratic platform—for a new Glass-Steagall Act, for instance—are followed through on by Clinton and congressional Democrats. (How much those Democrats can do, however, will largely depend on who controls the House and Senate.)

A clear focus not just of Our Revolution but also of such groups as the Working Families Party and People’s Action is to mount primary

Cohen, however, says this can’t be a deciding criterion as Our Revolution moves forward. “We can’t build a movement looking at the rearview mirror,” he says. In the future, their candidates and allies “won’t be limited to Bernie people.”

While it’s too early to know whether

Our Revolution can carry the revolution forward, the Sanders campaign unmistakably energized a broad range of other progressive groups in the nation. Policies they’d advocated and ideas they’d floated for decades with limited success suddenly were winning the backing of millions of voters. With the limits of the possible suddenly less constricting (unless, of course, Trump is elected), many groups on the liberal-left are considering what and how they must change to better mobilize the progressives whom Sanders brought out of the woodwork.

People’s Action, which employs 600 organizers in working-class communities in 29

If the anti-Clinton sentiment of some Bernie supporters contributes to a Trump victory, the wedge driven between them and other progressives will be sharp and deep. challenges, beginning in 2018, against congressional Democrats who oppose such reforms as a new Glass-Steagall. Planning for such campaigns is already under way. This strategy is plainly informed by the success that the Tea Party has had among Republicans: By ousting incumbents who’ve dismayed Tea Party members, the GOP right-wingers have found a way to move the majority of the remaining legislators in their direction. As Democrats deal with issues like financial reforms and employee rights, the party’s left seeks to make a comparable example of those legislators whose allegiance is more to the corporate sector than to consumers and workers.

One further challenge Our Revolution will face in coming years—a challenge some supporters may view as a compromise—is whether to endorse candidates who didn’t support Sanders this year. To date, the organization has endorsed only office-seekers who supported Sanders.

states, focusing on issues of economic justice, has intensified its electoral work—not just for Clinton, but in tandem with the Working Families Party, focusing on congressional challanges in the 2018 elections. “We bring a large base of voters; they bring a long history of building political formations,” says George Goehl, People’s Action’s co-executive director.

“I’m most encouraged about the number of people doing grown-up politics, preparing serious efforts to primary corporate Democrats.”

For its part, the Working Families Party— the union- and progressive-backed electoral operation that, name withstanding, works chiefly within the Democratic Party and has elected more anti-corporate Democrats than any other group in decades—is investigating whether its methodical organization-building can be supplemented by the kinds of organizing that sprung up around the Sanders campaign. “We’ve taken to heart the notion that

Fall 2016 The American Prospect 29

there’s a much bigger appetite for the kinds of things we believe than anyone knew,” says Dan Cantor, the party’s executive director. “We’re not abandoning what’s worked for us, but we’re experimenting with new kinds of organizing as well. Every week, half a dozen people contact us and say they want to build a Working Families Party where they live. We want to give them the tools to do precisely that, and that requires rules, responsibilities and realism.

We’re looking for that sweet spot in mass political organizing where natural creativity can flourish alongside a focused, strategic plan.”

“The challenge,” Cantor continues, “ is how to combine the experience and intelligence of the organized left with the energy and vitality of younger and less-experienced but very smart people. We’re proud that the Working Families Party has electoral muscles, so to speak, and inside clout. But what Bernie and Black Lives Matter have shown is that an outside strategy works by changing the narrative. The WFP began in an era of very little social ferment.

Now there’s energy in the air and it’s our job to channel some of it into politics. A party is not a social movement, but a party like this should express those movements in the contest for governing power.”

National Nurses United, by contrast, sees its role more as nurturing that social movement.

The organization whose support for Sanders and opposition to Clinton was the most visible and voluble of any left group, the Oaklandbased union “sees electoral work chiefly as a tactic for organizing movement campaigns, not as the main focus of our activity,” says NNU’s political director Michael Lighty. The union doesn’t shy from those political campaigns it supports: It’s the main backer of the California initiative that would limit the price of prescription drugs, and is also supporting the congressional and state legislative campaigns of Sanders supporters around the nation.

Lighty hopes that the organizing potential of two pro-Bernie groups—People’s Action, with its working-class activists, and People for Bernie, with its largely young social-media activists—could, separately or together, “create something more powerful” than the current left. Wong notes that People for Bernie’s Facebook page is getting even more views now—despite the fact that Bernie is no lon-

ger running—than it did during some crucial stretches in the spring primaries. What the pages present to readers (many, if not most, being Sanderistas) are curated reports and comments from progressive perspectives on a host of issues, events, and public figures—but not Clinton, and not Jill Stein.

By mid-September, Trump’s rising prospects and the corresponding anxiety they produced across the left were prompting some movement toward Clinton within the Bernie-or-Bust universe—“and it’s not due to anything Hillary has done,” says a leader of one sit-it-out group. Organizations that haven’t endorsed Clinton include the Democratic Socialists of America and Progressive Democrats of America. Most of these— like NNU, the two largely campus-based youth organizations (Young Democratic Socialists and Young Progressives Demanding Action), the CCPC, and People for Bernie—feel that endorsing Clinton is too divisive, or too painful, or both.

circumstance that most erodes solidarity is qualified success, which brings with it some power and some compromise. By winning 45 percent of the vote in the Democratic primaries, Bernie Sanders both exercised and won power. As a direct consequence of his campaign, Clinton and the Democratic Party platform now call for an expansion, not a reduction, to Social Security, for free tuition at public colleges and universities, for a new version of Glass-Steagall, and for a rejection (or, in the case of the platform, a rejection of the key provisions) of the Trans-Pacific Partnership.

To experienced political activists, these were clear victories. To many political novices, they were compromises that, taken alongside Sanders’s endorsement of Clinton, signaled a betrayal of the revolution. And Sanders’s army was comprised disproportionately of novices—not just because so many young people responded to his attacks on the plutocratization of Ameri-

Recognizing the Tea Party’s success at changing the GOP, liberal groups are already planning primary challenges to pro-corporate Democrats in 2018.

What could really shatter Sanders

World, however, and most certainly limit its ability to build a more powerful progressive force, would be its enabling a Trump victory by the refusal of some of its leading organizations to back Clinton. Not only would key constituencies and the organizations that represent them—racial and religious minorities, immigrants, workers, the poor—suffer most if Trump were to prevail; they would be unlikely to join in coalition with those organizations that couldn’t bring themselves to mobilize against the first quasi-fascist to win a major-party nomination.

Nor would young people who now resist voting for Clinton necessarily look back on that refusal fondly once a Republican-dominated Supreme Court further suppressed minority voting and curtailed reproductive choice.

There comes a time in the life of all revolutions when circumstance erodes solidarity, when cracks, splits, and factions emerge. The

can life, but also because so many progressive groups, assuming the nomination was hers for the asking, backed Clinton, thus leaving experienced progressives largely missing from the Sanders campaign, and from his delegations to the party’s national convention.

If the Sanders revolution is to realize its transformative potential, its adherents will have to recognize that its radical program can advance only if it wins the backing of the broader progressive universe—not just the Sanders-faithful arrayed in the rearview mirror. Its ability to move forward depends on its own strategic decisions and on the political space that a Clinton victory would create for the left, or, conversely, that a Trump victory would close off. “We can’t win the political revolution from a bunker,” says Goehl of People’s Action, “and that’s where we’ll be if Trump wins. We can be engaged in both defeating Trump and building a movement at the same time. We have to be.”

Fall 2016 The American Prospect 31

A Governing Agenda The next administration faces a long roster of neglected national needs and an opportunity to set a new agenda. Herewith some suggested priorities.

32 WWW.Prospect.org Fall 2016

A New Era for the Supreme Court

The transformative potential of a shift in even one seat

By Lin c o ln Cap lan

csa printstock / istock by get t y images

T

he 2016 term of the Supreme Court beginning in October marks its 48th year in a row under the leadership of a conservative chief justice appointed by a Republican president. That is more than one-fifth of the Court’s history. Saying that the Court is a political institution is now like saying there is a global economy: It is simply a fact.

The Court has gotten increasingly more conservative with each of the Republican-appointed chief justices—Warren E. Burger (1969–1986), William H. Rehnquist (1986–2005), and John G. Roberts Jr. (2005–present). All told, Republican presidents have appointed 12 of the 16 most recent justices, including the chiefs. During Roberts’s first decade as chief, the Court was the most conservative in more than a halfcentury and likely the most conservative since the 1930s.

In the five terms before Justice Antonin G. Scalia’s death in February, for the first time in American history the Court issued the majority of its ideological 5–4 rulings along party lines. The five conservative justices, appointed

by Republicans, were Roberts plus Justices Anthony M. Kennedy, Scalia, Clarence Thomas, and Samuel A. Alito Jr. They regularly made up the majority. The four liberals, appointed by Democrats, were Justices Ruth Bader Ginsburg, Steven G. Breyer, Sonia M. Sotomayor, and Elena Kagan. They were regularly in dissent. Politics in some major cases appeared indistinguishable from law and threatened the Court’s legitimacy.

It’s no exaggeration to say that the Court has been at least as influential in the rightward shift of American law and policy as elections and the presidents and legislatures they elected. Often, interactions between Court decisions and executive and legislative politics result in constraints on government’s ability to address pressing problems and increase government’s perceived ineptitude.

Conservative decisions since the 1970s have undermined American democracy. They have turned an often unfair election system into a rigged one by elevating the role of money in politics, allowing state and local governments to make it harder for citizens to vote, permitting flagrant gerryman-

dering, and striking down the heart of the Voting Rights Act. In those ways and in others, they have also deepened American inequality. They have made it more difficult for individuals to bring civil-rights claims against government agencies as well as corporate officers and corporations. They have changed the meaning of equal protection as it applies to race under the Constitution, from anti-segregation, antistigma, and anti-subordination to anti-classification, so it is not easy for government to help a disadvantaged minority by taking race even modestly into account.

Key Court decisions have favored the interests of corporations over individuals and gutted the power of labor unions. They have amplified corporate power by narrowing the reach of antitrust remedies and by expanding the rights of corporate “persons” under the First Amendment, and have shielded corporations, banks, and their executives from criminal prosecution. They have weakened the rights of ordinary criminal suspects by using cramped readings of constitutional protections and expansive readings of lawand-order statutes, like the 20-year-old Antiterrorism and Effective Death Penalty Act, one of America’s worst laws.

The Court has given new life to states’ rights doctrines used to kill reforms in multiple areas. Many key rulings have been opportunistic, favoring federal preemption when it served substantively conservative or corporate goals, and states’ rights when that view was convenient.

The Court has narrowed reproductive rights, other rights of women, and affirmative action. The Court overturned or gutted settled law in countless areas, including with a reinterpretation of the Second Amendment that undercut gun control by all levels of government.

In an important study, the scholars Lee Epstein, William M. Landes, and Judge Richard A. Posner analyzed about 2,000 Supreme Court decisions from 1946 to 2011. They found that the five conservatives of the Roberts Court until Scalia’s death were among the ten most conservative of the 36 justices who served in that span. The two justices in those 65 years most likely to favor business were Alito and Roberts, in that order. The Roberts Court was the most pro-business

Fall 2016 The American Prospect 33

When Richard M. Nixon campaigned for president in

1968, he made the Supreme Court a major issue. His main TV ad portrayed the country as out of control, with crime on

34 WWW.Prospect.org Fall 2016

the rise. The Republican platform promised law and order in place of lawlessness, which Nixon blamed in part on Court decisions providing constitutional safeguards to criminal defendants, in his view at the expense of public safety.

Nixon practiced dog-whistle politics, as Michael Graetz and Linda Greenhouse recount in their new book The Burger Court and the Rise of the Judicial Right. He told a Southern audience, “I think some of our judges have gone too far in assuming unto themselves a mandate which is not there, and that is, to put their social and economic ideas into their decisions.” He linked crime with race and race with the judges who had gone too far. He pledged to appoint “strict constructionists” who would tighten up criminal law in particular.

In his first term as president, Nixon got the opportunity to appoint four justices: Warren E. Burger as Chief Justice in 1969; Harry A. Blackmun in 1970; and Lewis F. Powell Jr. and William Rehnquist in 1972. Burger was chief until 1986.

A prevailing view of the Burger Court is that, as a result of the influence of moderate justices—Potter Stewart, Byron White, and Sandra Day O’Connor, plus Blackmun and John Paul Stevens, who drifted left and became moderate liberals in key cases—it did not reverse the direction of Supreme Court law in the Warren era. The legal scholar Vincent Blasi called this period “the counter-revolution that wasn’t.”

But as Graetz and Greenhouse show, the Burger Court began to move Supreme Court law to the right in prominent areas—with some weighty exceptions. The Court started to become a conservative institution again, as it had mainly been before the Warren Court.

Two of the most profound shifts came in civil rights and criminal justice. After Brown v. Board of Education, in which the Court ruled that segregated public schools were unconstitutional, two cases vie for place as the secondmost important civil-rights case affecting schools: San Antonio Independent School District v. Rodriguez in 1973 and Milliken v. Bradley in 1974. Both addressed the issue of remedies for inadequate schools and, by 5–4 votes, both rejected Brown’s deep commitment to equality.

The first, brought by mostly Mexican American parents from a poor school district in Texas, was about the large discrepancy between the funding for and quality of public schools in poor and rich districts in the state, because of the reliance on local property taxes for about half the funding for public education. Spending per student by the poor district was three-fifths the amount of spending by the rich one: The property tax rate in the poor district was 24 percent higher, but the average value of property per student was 88 percent lower.

A special panel of three federal judges found the Texas financing system unconstitutional and ordered Texas to change its system so the amount spent on a child’s educa-

ch a rt s o u rc e: ca lcul at ed by le e ep st ein f ro m t he u .s . s up r em e co u rt datab a s e

Court since World War II—and, by the reckoning of Courtwatchers, the most pro-business since the pre-1937 Court.

There have been critical exceptions to the Court’s overall conservatism, of course. The most dramatic recent one was the 5–4 ruling in 2012 when Chief Justice Roberts joined the Court’s four liberal members to uphold the heart of the Affordable Care Act, the individual mandate requiring almost all Americans to obtain health insurance or pay a penalty. In its most recent term, the Court swung back toward the center in important areas of law.

Yet with President Barack Obama’s two relatively liberal appointees, Justices Sotomayor and Kagan, a possible third new justice in Judge Merrick B. Garland, and the prospect of one or more other appointments in a Hillary Clinton administration, the Court could be on the verge of a Outcomes in Supreme Court Cases Percentage liberal, 1954–2016 new liberal era, one that 80% could put key areas of law and policy on a different path from what the con70% servative Court did.

Court reversals on many 60% issues, from the meaning of equal protection under 50% the Constitution and the measurement of racial discrimination under federal 40% statutes, to the scope of the First Amendment’s proWarren Burger Rehnquist Roberts 30% tection for corporations 1954 1969 1986 2005 2016 and the breadth of its ban on government favoring a particular religion, could significantly change policy without congressional action.

With Justices Ruth Bader Ginsburg at 83, Anthony Kennedy at 80, and Stephen Breyer at 78—all possible retirees in the next four years—the Court should be among the most important issues in this year’s presidential and senatorial elections. If Donald Trump is elected and chooses one of the conservative judges he included on his short list of possible Supreme Court nominees, the Court majority could shift further to the right for another generation. But Democrats have a historic opportunity to change the balance of power on the Court. When Hillary Clinton campaigns with Democratic candidates for the Senate this fall, she is likely to stress that the Supreme Court and the future direction of American justice are at stake and that, to get liberal justices appointed, it is as important for the Democrats to retake the Senate as it is to hold the White House.

Governing

dennis cook / ap images

Agenda

tion did not depend on the neighborhood’s wealth. With Powell writing for the majority, the Court rejected the lower court’s main holdings. It found that the system provided every student with public education, while fostering local involvement through local determination of tax rates and education quality.

The 49 other states used the same system, so the ruling “momentously influenced the future of public education in America,” Graetz and Greenhouse write. “Rodriguez guaranteed that the resources of public schools would remain grossly unequal throughout the land” unless a ruling in state court prohibited that. The highest courts in many states called for funding increases, but no state ruling achieved what Rodriguez would have if decided the other way. The Supreme Court ruling “eviscerated the most promising alternative avenue for claims based on racial discrimination.”

The second contender, Milliken, with Burger writing for the majority, rejected the remedy of busing students across the line between a segregated urban school district and an integrated suburban district. In Detroit, a federal district judge had found that the school board segregated the city’s schools—by where it located them and how it drew school boundaries and attendance zones, among other ways. He ordered that the Detroit school district consolidate with some suburban districts and that they bus students between city and suburban schools. The U.S. Court of Appeals for the Sixth Circuit upheld the order.

The gist of the Supreme Court’s decision overturning those rulings was that the remedy to address Detroit’s segregation had to match the extent of the violation to the Constitution. Coming only 20 years after Brown, it marked the end of the startlingly brief period in which the Court, because of basic principles of fairness, promoted integrated schools.

In criminal justice, the Warren Court established and extended rules for police to follow: the ban on unreasonable searches and seizures under the Fourth Amendment, the privilege against self-incrimination under the Fifth Amendment, the right to counsel, and others. The Burger Court retained these rights and, in some cases, strengthened them. But as Harvard Law School’s Carol Steiker has explained, while the Court maintained these rules of conduct and reassured the public about the judiciary’s commitment to these rights, it significantly cut back on the consequences when police violate the rights—rules of decision for courts to use in enforcing the law.

The Burger Court made dog-whistle rulings, Steiker found, with the public hearing the reassuring message about the affirmation of rights, while police heard the consequential message that sometimes there is no penalty for a violation of them because, for example, it is judged harmless. There was no counter-revolution about rights for criminal defendants, but there was, Steiker wrote, a “counter-revolutionary

war against the Warren Court’s constitutional ‘remedies.’”

Under landmark rulings of the Warren Court, a key result was the exclusion of evidence obtained in violation of a right: The exclusionary rule became a staple of cop shows on TV. Steiker calls the results of some later Burger Court decisions “inclusionary rules”—“radical” cutbacks of Warren Court holdings that “permit the use at trial of admittedly unconstitutionally obtained evidence or that let stand criminal convictions based on such evidence” and brought retrenchment in criminal justice. The Court became, Steiker wrote, “less sympathetic to claims of individual rights and more accommodating to assertions of the need for public order.”

The Rehnquist Court continued to maintain rights

for criminal defendants while hollowing out remedies, in further retrenchment. With Rehnquist’s ascension to be chief justice, Scalia’s appointment to fill Rehnquist’s seat, and Thomas’s replacement of Thurgood Marshall, by 1991 the Court was more conservative than it had been under Burger.

With Sandra Day O’Connor and Anthony Kennedy, there was a conservative majority of five that brought about what the legal scholars Jack M. Balkin and Sanford V. Levinson called “a fundamental shift in constitutional thought and constitutional doctrine.”

The new conservative majority ruled that states violating certain federal rights were immune from federal court judgments ordering them to pay money to compensate the victims of those violations, if the federal statute authorizing those lawsuits was based on the constitutional power to regulate commerce. They extended that logic to state court judgments, saying that private parties could not sue states for violations of the same federal laws there either—that

Shifting Right: President Reagan announces the resignation of Chief Justice Warren Burger, far right, and nominates Justice William Rehnquist, second from right, to the post of chief justice and Antonin Scalia, left, as a member of the Supreme Court.

Fall 2016 The American Prospect 35

The five conservative justices supported

States’

Rights when

convenient— and federal preemption when that was expedient.

would be an affront to states’ dignity. Previously, citizens could sue states when they violated the citizens’ constitutional rights. The Supreme Court had ruled in earlier decisions that, to reach significant national goals, Congress could waive the immunity of states in those kinds of suits.

The same five justices limited the power of Congress to pass civil-rights legislation: It could do so only if remedies matched the violations being corrected or prevented. In fact, the premise that race-specific remedies were warranted only when racial segregation was the result of state action overlooked a good deal of state action in the North that had produced segregated housing and thus schooling patterns.

The conservative majority extended this states’-rights logic to patents, when it struck down laws making a state liable for the intentional infringement of patents; to women who were victims of rape and related violence, when it struck down a law allowing them to sue the people who attacked them; to people who were victims of age discrimination, when it struck down a law allowing state employees to sue the state they worked for; and, eventually, to people who were victims of discrimination because of a disability, when it held that states were immune from lawsuits under the Americans with Disabilities Act. Balkin and Levinson observed that this was part of a “transformation in constitutional doctrine,” which involved “a fairly consistent application of a core set of ideological premises”—limits on federal power, promotion of states’ rights, and very narrow construction of federal civilrights laws, among other emphases.

In most of the 5–4 rulings that restricted the power of Congress and strengthened the sovereignty of states, the majority included three justices whom Reagan appointed (O’Connor, Scalia, and Kennedy) and one he elevated (Rehnquist), with the fifth vote supplied by a justice appointed by George H.W. Bush (Thomas). Major changes in the law of federalism came after Reagan left office, but they followed the Reagan administration blueprint. They resulted from the administration’s emphasis on ideology as an essential criterion for federal judicial appointees, especially to the Supreme Court.

The Rehnquist Court’s 2000 ruling by 5–4 in Bush v. Gore was “not dictated by the law in any sense,” the University of Chicago’s David A. Strauss later wrote: The five conservatives flouted judicial restraint and states’ rights, by stopping the Florida Supreme Court from interpreting Florida law and halting the recount of the presidential election before it was finished. After determining that George W. Bush would be elected president, they declared their handiwork a non-precedent. (“Our consideration is limited to the present circumstances.”) That outcome led to the Roberts Court.

When Bush appointed Samuel Alito to replace Sandra Day O’Connor, the Supreme Court immediately shifted further to the right. O’Connor had been a member of the

36 WWW.Prospect.org Fall 2016

Rehnquist Court’s federalism five, but she was a moderate conservative. Alito was a movement conservative, as the Reagan administration called its young lawyers. At a discussion last February at the Center for American Progress, William Yeomans of American University’s Washington College of Law, speaking ironically, described Alito’s jurisprudence as pragmatic and flexible—so that he could use doctrines as necessary to arrive at the set of ideologically driven conclusions reflecting the conservative legal agenda.

Yeomans focused on Alito favoring restrictions to the exclusionary rule and defendants’ rights more generally; opposing privacy and the right of women to choose to have an abortion; opposing affirmative action in particular and race-consciousness in government programs in general; supporting a restrictive reading of the commerce power; favoring much more skeptical review of federal regulation; and enthusing about expansion of gun rights, among other positions.

By some measures, Rehnquist was the most conservative member of the Court since 1937. But in 5–4 cases where the split was based on ideology, Roberts was the fourth-most conservative justice between 1937 and 2012—and only the 22nd-most conservative in cases where there were three or fewer dissenting votes. Epstein, Landes, and Posner, who did the study leading to these conclusions, wrote about the chief justice: “Thus he is a reliable conservative in the most closely contested cases but moderate when his vote can’t change the outcome. This is consistent with a chief justice’s interest in being on the winning side in most cases; otherwise it looks as if he can’t control his Court.”

Roberts’s vote with the Court’s liberals in June of 2012 to uphold most of the Affordable Care Act was a momentous exception to his usual conservative voting, but on the grounds that the law was authorized under Congress’s power to levy taxes and was not valid under the Constitution’s Commerce Clause. Some commentators saw in Roberts’s vote his concern for the legitimacy of the Court, which he has stressed since his first year as essential to maintain so it is seen as a court rather than a political institution. The Court would have trashed its legitimacy if it had intervened in such an intensely political issue and, in the extreme opposite of judicial restraint, had overturned the act. But in Roberts’s opinion in the case, critics also saw a sly and sinister expansion of conservative doctrine on the question of what sort of laws violate the Commerce Clause, which might be invoked in the future to strike down statutes passed to protect the general welfare. A more liberal Court would almost certainly reject Roberts’s effort to resurrect a pre-1937 view of the Commerce Clause.

The signature ruling of the Roberts Court is the

5–4 decision in 2010 in Citizens United v. Federal Election Commission, where the conservative majority ruled that

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money equals speech and that limits on the independent spending of corporations, unions, and other organizations in political campaigns infringed on their right to free speech under the First Amendment.

A federal district court had ruled that the main federal law regulating campaign finance applied to a 90-minute campaign film, defining it as “a broadcast communication,” so corporate funds could not pay $1.2 million to a cable operator to let subscribers stream the film for free.

The group, called Citizens United, made the film attacking Hillary Clinton as a candidate for president in 2008.

The questions the case framed for the Supreme Court were: Did the statute’s curb on broadcasts funded by corporations apply to video on demand? Did an exemption for some nonprofits from the statute’s rule limiting corporate spending cover ideological nonprofits like Citizens United?

Rather than address those questions about the meaning of the statute, however, the Court decided to address whether, to prevent corruption in politics, the Constitution allows limits on independent spending by corporations and other organizations.

Citizens United represents judicial activism in the service of judicial supremacy of an extreme kind, swinging for the fences: The Court’s conservatives reached the constitutional issue they wanted to—upending a well-established principle of election law and unleashing a huge new avalanche of so-called independent expenditures by corporations in American politics.

Citizens United’s protection of the moneyed class in public life can be linked to a series of other decisions the Roberts Court has made protecting that class in the marketplace. For instance, the Court has taken an expansive view of the Federal Arbitration Act to permit clauses in contracts written by corporations that require their employees or customers to pursue any grievances they have in private arbitration rather than a public court. These also undermine class-action remedies.

But one in this line of cases, in 2013, called American Express v. Italian Colors, was an antitrust case, making it easier to see the broader importance of this area of law.

American Express required merchants that wanted to accept its corporate and premium charge cards to accept as well basic American Express credit cards, at a fee 30 percent higher than fees of other credit cards.

The merchants each sought damages of about $5,000, but it would cost each merchant hundreds of thousands of dollars to try to prove an antitrust claim. The arbitration provision in their contracts kept them from sharing the cost or from consolidating their claims, so each was left with no way to press a claim. Italian Colors Restaurant and others argued that, by using its power in the market for the corporate and premium cards to require merchants to accept

the third card’s higher costs, the company was subjecting them to a “tying arrangement,” violating federal antitrust law. The plaintiffs argued that, because of the strength of this claim, they should be allowed to proceed as a group.

The Supreme Court, by 5–3, ruled that the merchants could not bring a class action against the company even on antitrust grounds: Each had signed a contract that required them to bring complaints through individual arbitration.

The University of Texas Law School’s Joseph R. Fishkin and William E. Forbath, in their work in progress called The Constitution of Opportunity, write, “What drives the Court’s view of arbitration and the [Federal Arbitration

Act], in the end, is not a deeply considered understanding of congressional intent but a deeply rooted view about the place of private contract ordering in relation to public law.” The Court should have seen that the merchants were challenging a monopolist’s use of its power to get around anti-monopoly law. Instead, the conservative majority did not see the monopoly, treating American Express and each merchant as equal parties who had willingly entered into the contract with the arbitration clause, rather than as unequals, with Amex dictating the terms.

Shifting Back: Justices Sonia Sotomayor, Ruth Bader Ginsburg, and Elena Kagan in the justices’ conference room prior to Kagan’s investiture ceremony

Some of the Court’s swing back toward the cen-

ter in important areas of law during its most recent term reflects the death of Justice Scalia, but also was the result of Justice Kennedy marking lines he was unwilling to cross and continuing his role as the occasional but crucial swing vote on the side of the Court’s liberals.

The most important ruling of the term was about abortion. By 5–3 in Whole Woman’s Health v. Hellerstedt, on

Fall 2016 The American Prospect 37

End Of An Era: Supreme Court Justices Elena Kagan, Samuel Alito, Jr., Ruth Bader Ginsburg, Anthony Kennedy, John Roberts Jr., Clarence Thomas, Stephen Breyer, and Sonia Sotomayor at a memorial for Justice Antonin Scalia in February

of abortion from the state provisions. But it was really a decision not to turn further to the right, a signal that the Court was satisfied with the restriction-favoring balance it struck a generation ago, which allowed states to enact all but the most extreme restrictions on women’s access to abortion. Texas had taken full advantage. From 1992 until 2011, the rate of abortion in the state dropped by 43 percent (in the same period, the rate throughout the U.S. dropped by 34 percent).

A key question was how the Court would apply the legal standard of that generation-old case, Planned Parenthood v. Casey: Would it retain respect for a woman’s right to choose an abortion or to carry her pregnancy to term, along with deference to a state that wanted to protect life throughout a pregnancy? Or would it let Texas’s anti-abortion politics further change American law, by restricting

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the Court’s protection of a woman’s right to choose and the dignity that represents?

With the replacement of the liberal Marshall by the conservative Thomas at the beginning of the 1991–1992 term, it had seemed quite possible in Casey that the Court led by the conservative Rehnquist would overturn Roe v.Wade and declare that there was no constitutional right for a woman to choose an abortion. The papers of Blackmun showed that Rehnquist drafted an opinion that would have overturned Roe. Instead, Kennedy joined O’Connor and Souter, to make a moderate plurality of three. Out of respect for stare decisis—standing by a decision made—they reaffirmed “the essential holding” in Roe: Women retained the constitutional right to choose. With abortion, they wrote, “the liberty of the woman is at stake in a sense unique to the human condition and so unique to the law.”

But the justices employed a different way of analyzing statutes regulating abortion. Roe had strongly protected the right to choose by requiring a state to meet a high standard in justifying any abortion-related regulation. Casey shifted the responsibility of proving a law was unconstitutional to supporters of abortion, with a test about “undue burden”—a legal restriction with “the purpose or effect of placing a substantial obstacle in the path of a woman seeking an abortion of a nonviable fetus.” Breyer’s 2016 opinion clarified that test, by focusing on how to calibrate the effect. He introduced a balancing of burdens and benefits.

One of the Texas provisions required that a doctor performing, or inducing, an abortion must have admitting privileges at a hospital within 30 miles. The other required that an “abortion facility” meet the “minimum standards” for ambulatory surgical centers under Texas law—specifications about the size of the nursing staff, the dimensions of the building, and so on.

Neither requirement conferred any benefit, Breyer wrote. Doctors providing abortions were already required to have admitting privileges at a local hospital or a working arrangement with a doctor who did, “to ensure the necessary back up for medical complications.” And, as the factual record in the case showed, “abortion in Texas was extremely safe with particularly low rates of serious complications and virtually no deaths occurring on account of the procedure.”

r e x f e at u r e s v i a a p i m a g e s

the term’s last day, the Supreme Court struck down two provisions of a Texas statute that made it much more difficult for many women to have an abortion, without any medical benefits for them from these so-called healthand-safety provisions. Kennedy cast the critical vote. As the most senior of the justices in the majority, he chose Stephen Breyer to write for it. Breyer wrote the Court’s most significant statement about abortion in 24 years.

The ruling was widely greeted as strong evidence of a turn to the left by the Court, because it protected the right

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In addition, the factual record showed, ambulatory surgical centers would not significantly lower the already low risks of abortion. Between 2001 and 2012 in Texas, five deaths occurred as a result of abortions—“or about one every two years,” Breyer wrote. The risk of death during childbirth nationally was 14 times as great. On the other hand, the record was full of evidence about substantial burdens. When Texas began to enforce the admitting-privileges requirement, the number of clinics in the state providing abortions was cut in half, from about 40 to about 20.

Breyer concluded: “In the face of no threat to women’s health, Texas seeks to force women to travel long distances to get abortions in crammed-to-capacity superfacilities.

Patients seeking these services are less likely to get the kind of individualized attention, serious conversation, and emotional support that doctors at less taxed facilities may have offered.” All of this was likely to be “harmful to, not supportive of, women’s health.”

Before a second central 2016 end-of-term decision, Fisher v. University of Texas, proponents of affirmative action were braced for the worst, given previous rulings signaling its end. But the Court decided that a Texas admissions plan that took race into account was constitutional.

Kennedy was the author of the 4–3 decision. In 2003, he had dissented in the most recent previous case upholding the use of racial criteria in higher-education admissions.

In 28 years on the Court, he had never voted for an affirmative-action program. This time, he wrote that universities deserve some leeway in pursuing multiple goals in assembling a student body—like ending racial stereotypes and preparing students for a diverse society—as long as a university’s goals are “sufficiently measurable to permit judicial scrutiny of the policies adopted to reach them.”

This came on the heels of Obergefell v. Hodges, the celebrated case at the close of the 2015 term, with Justice Kennedy writing for a 5–4 majority, in which the Court ruled that the fundamental right to marry under the Constitution applies to people of the same sex. But Kennedy’s votes in the same-sex marriage, affirmative action, and abortion cases, while welcome and, in my view, correct, should not be taken as signs of a shift to the left by the Court as a whole.

Last term, the Court’s decisions in general were measurably more conservative than they were the term before. And the decisions of that term in general, while seemingly more liberal than in any term of the Republican Court going back five decades, were also strikingly narrow and, in critical cases, notably less liberal than they were reported as being.

In 2015, in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Kennedy joined the liberals in upholding a key part of the Fair Housing Act, which protects against discrimination in renting, buying, or getting financing for housing. The relevant part

prohibits policies adopted for an ostensibly neutral reason that have a “disparate impact,” or discriminatory effect, on housing opportunities for minorities. Texas’s extreme goal was to get the Court to narrow the statute by saying a plaintiff would have to prove that the discrimination was intentional. To keep that from happening, it was very likely that the liberals who joined Kennedy in the housing decision had to agree to a weak endorsement of disparate-impact lawsuits and to new limitations on them, which Kennedy spelled out. As in his affirmative-action opinion this past June, Kennedy’s strongest language in the housing opinion warned against overuse of the race-conscious remedy and encouraged vigilance against policies that reduce citizens to “nothing more than their race.”

The justices comprising the majority on the most

conservative Court in 80 years did not move to the left during the last two terms. But when Justice Scalia died in the middle of last term, leaving the Court with equal numbers of conservatives and liberals, the Court and its dynamics changed instantly. It entered a zone of uncertainty—for the justices, about the Court’s center of power; for the country, about the Court’s political character. One of the most significant decisions of the term was its 4–4 tie in the major case about Obama’s 2014 executive order on immigration. The tie illustrated how uncertain the Court’s near-term future is.

The central question of the immigration case was whether, by giving immigration officers the option of deferring the deportations of some immigrants in this country illegally, the Obama program gave them legal immigration status and a path to citizenship. In immigration law, “legal status” refers to the status of being accepted in the U.S. under federal law—as a documented immigrant, a non­ immigrant with a temporary visa, or someone on parole in the immigration system. The Obama executive order, the government said explicitly, did “not confer any form of legal status in this country” and the deferred deportation policy could “be terminated at any time at the agency’s discretion.”

“Unlawful presence” is the status of immigrants who have not been formally admitted to the country or granted parole, or who have stayed longer than the time they were granted.

“Lawful presence” describes the circumstance of an immigrant lacking legal status, when the government chooses not to enforce the law against him or her—as the government put it, “to countenance that person’s continued presence in the United States” until it decides not to. Lawful presence does not mean legal presence. It is not a synonym for legal status.

But in the lawsuit brought by Texas and eventually 25 other red states, a federal district judge in Texas accepted the bumper-sticker argument that lawful presence equals legal status and barred the program from going into effect

Even before the death of Justice Scalia in February, the Court had

Begun Moving

to the center.

Fall 2016 The American Prospect 39

throughout the United States. The U.S. Court of Appeals for the Fifth Circuit upheld that decision twice by 2 to 1.

The Supreme Court upheld it as a result of its 4–4 split. At every step of the way, the judges appointed by Republicans voted the way Republicans favored and the judges appointed by Democrats voted the way Democrats favored. A case about the most ideologically charged subject in American life turned into one in which politics and law could not be differentiated, making law seem another venue of politics and the judges who made the legal decisions seem like politicians in robes.

A liberal fantasy is that a Court with a new liberal

A liberal majority could make a profound difference in cases about

Money and

Power in commerce and in politics.

majority would reverse what the old conservative majority did in the Shelby County case of 2013, when it struck down the heart of the Voting Rights Act. The 1965 law required preclearance of changes in voting systems by states, or parts of states, with histories of discriminating against black and other minority voters. Chief Justice Roberts, writing for the majority, contended that preclearance was no longer necessary, because voting practices had changed. But as soon as the Shelby County decision came down, states and localities began reverting to discriminatory tactics.

Even so, it would be extremely unusual for the Court to reinstate a provision of law that had been struck down as unconstitutional by a prior Court—and impossible for the Court to do that in this case, unless the Justice Department tries to force the issue by insisting on preclearance from designated jurisdictions, in defiance of the Shelby County ruling. That has not happened and is highly unlikely to.

Otherwise, there is no way for the Court to reach the issue.

And unless Democrats take back both houses, Congress is not going to revise the Voting Rights Act anytime soon.

Nonetheless, a federal judge can require preclearance under another section of the Voting Rights Act that remains good law, if the judge finds that voting discrimination was intentional. This issue is coming up in cases about “voter denial,” the number of which has surged, among other reasons, because Shelby County struck down the means of blocking denials. A liberal majority would likely uphold that requirement. A conservative majority would be unlikely to find intentional discrimination often, but it would also be unlikely to strike down that part of the law. Stanford Law School’s Pamela S. Karlan, who worked on voting-rights cases in the Obama Justice Department, argues in a forthcoming law-review article that “a nascent revival of judicial concern with poverty” is strengthening the tools judges have for rooting out and rejecting manipulations of voting rules that exclude poor minority voters. A liberal majority would likely uphold this use of such tools.

A conservative majority would be unlikely to.

The summer decision by the U.S. Court of Appeals for

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the Fourth Circuit that struck down key parts of a North Carolina voting law was a reminder that the Voting Rights Act, coupled with the Constitution, contains provisions that need no strengthening to keep states from imposing requirements that would make it difficult for people to vote who are poor or members of a minority group. Based on a “massive record,” the Fourth Circuit held that the state’s legislature, “with almost surgical precision” and “with discriminatory intent,” enacted five restrictions designed to deny African Americans the right to vote. The Supreme Court’s 4–4 decision not to stay the circuit’s ruling so some of the restrictions could go into effect made explicit the difference that Justice Scalia’s death made in this area of civil rights. While there was a point of disagreement among the Court’s remaining conservatives, the four voted in favor of the state’s request. But none of the four liberals—all of them dissenters in Shelby County—provided the fifth vote needed to grant the stay.

A liberal majority on the Supreme Court would likely make a profound difference in cases about the relationships between money and power in commerce and in politics. It is unlikely that the Court will reconsider its ruling about forced arbitration in Italian Colors anytime soon, but it will have opportunities to consider the logic of that decision applied to employment contracts, because there is a fundamental split in the federal circuits about that.

Until this year, the uniform view among four federal circuit courts was that employers, like credit-card issuers, banks, cellphone-service providers, and many other companies selling to consumers, could make individuals give up legal remedies, like the option of taking the company to court. But in May, in an important opinion written

by Chief Judge Diane P. Wood, the Seventh Circuit held that an employer couldn’t force an employee to give up the remedy of a class action. The opinion said that doing so violates a section of the National Labor Relations Act guaranteeing employees the right to form unions, bargain collectively, and “engage in other concerted activities” for their “mutual aid or protection,” like bringing class-action lawsuits. The labor law doesn’t conflict with the Federal Arbitration Act, the judge wrote, since the arbitration law has a clause saying that it cannot violate contract law.

Since the labor law makes the arbitration agreement illegal, that part of the contract is unenforceable. The issue is important enough, and the circuit split serious enough, that the Supreme Court is likely to consider the matter. A liberal majority is likely to uphold the view of the Seventh Circuit. A conservative majority is not.

Also in May, the Consumer Financial Protection Bureau proposed rules that would prohibit mandatory arbitration clauses denying consumers their day in court. The rules are based on a comprehensive report the agency released

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in 2015, which found that credit cards accounting for more than half of card debt and banks holding almost half of insured deposits included clauses in their contracts with consumers requiring the use of arbitration to resolve problems with the companies—and reducing consumers’ likelihood of getting financial redress. This is the most prominent example of a federal agency restricting forced arbitration, and each of the restrictions will almost certainly be challenged in court. Soon enough, the Supreme Court will likely review the bureau’s rules. A liberal majority is likely to uphold the CFPB’s view. A conservative majority is not.

It is unlikely that, anytime soon, the Court will reverse what the conservative majority did in Citizens United and reinstate the limits on independent spending by corporations, unions, and other organizations in political campaigns. But liberal groups are talking about how to limit the influence of super PACs, which, as Fred Wertheimer of Democracy 21 commented, are “the biggest single problem” to come out of that case. In 2010, two months after Citizens United, the U.S. Court of Appeals for the District of Columbia Circuit struck down the $5,000 limit for contributions from individuals to independent political groups.

The court said that the only interest that could justify the limit is “preventing corruption or the appearance of corruption” and, in Citizens United, “the Court held that the government has no anti-corruption interest in limiting independent expenditures.” That was because the Court narrowed the definition of corruption to mean only quidpro-quo corruption—a direct exchange of an official act for money. But the Supreme Court did not review the appeals court decision, and what the country has learned in the past six years about the consequences of Citizens United could lead a Court with a liberal majority to take a case about, say, a state ballot initiative calling for a $5,000 limit for contributions from individuals to independent political groups.

In 2014, in McCutcheon v. Federal Election Commission, the Court applied its narrow definition of corruption to aggregate limits on contributions from individuals to political candidates, political parties, and political action committees and struck down those limits on the grounds that they did little to nothing to combat that form of corruption, “while seriously restricting participation in the democratic process.” In dissent, however, Justice Breyer wrote about his view of the Court’s decision: “Its conclusion rests upon its own, not a record-based, view of the facts. Its legal analysis is faulty: It misconstrues the nature of the competing constitutional interests at stake. It understates the importance of protecting the political integrity of our governmental institutions. It creates a loophole that will allow a single individual to contribute millions of dollars to a political party or to a candidate’s campaign.”

Breyer’s prediction about the loophole and the millions

from single individuals that are gushing through it has come true, with the effect he explained in his dissent: “Where enough money calls the tune, the general public will not be heard.” He elaborated, “Corruption breaks the constitutionally necessary ‘chain of communication’ between the people and their representatives.” He explained why “the kinds of corruption that can destroy the link between public opinion and governmental action extend well beyond” what the old conservative majority set out in Citizens United: They include what Breyer called “privileged access to and pernicious influence upon elected representatives.”

A test of contribution limits before a liberal majority would provide the opportunity for the Court to define corruption again as it was defined for 34 years until Citizens United. It would provide the opportunity for the Supreme Court to begin redefining itself as a safeguard, not of the moneyed class and its prerogatives, but of popular self-government and American democracy.

The Court is attuned

to the verdicts of politics and to efforts of citizens to move public opinion and change the law. The Court’s 2015 ruling in the same-sex marriage case was the product of a 20-year citizen campaign, in politics and law. The Court’s 2008 ruling that guarantees a right of individuals to own guns for personal use was the product of a 30-year citizen campaign.

Citizens have the power to determine what the Constitution stands for today. They can do that through extended efforts, like the successful same-sex marriage movement or the growing movement to overturn Citizens United by constitutional amendment. They can do that with their vote for president.

If she is elected, Hillary Clinton will have the chance to transform the Court and its application of the Constitution. She would likely appoint justices who believe that the Court must protect the rights of employees and consumers as well as those of corporations, and must protect the rights of individuals as well as the security of the state. She would likely look for justices who favor equality as well as liberty, real pragmatism over ersatz originalism, and law as a fair process rather than a raw assertion of power. Her election would give the Court a progressive majority, for the first time in half a century.

Dangling Man: President Obama introduces federal appeals court judge Merrick Garland as his nominee for the Supreme Court during an announcement in the White House Rose Garden in March 2016.

Lincoln Caplan is a senior research scholar at Yale Law School, and a former editorial writer about the Supreme Court for The New York Times. He is the author of American Justice 2016: The Political Supreme Court, from which this article is adapted.

Fall 2016 The American Prospect 41

Stronger Policy, Stronger Politics

More than ever, we need a public option—and other changes— to fulfill the promise of the Affordable Care Act.

By Jac ob S. Hac ker

Y

ou’ve heard of a beautiful failure. What about an ugly success? That may be the best way to describe the Affordable Care Act. It has covered millions of Americans—just this year, 250,000 Louisianans signed up for Medicaid in the six weeks after the state expanded the program under the law. And the ACA has widened health coverage without spiking costs; indeed, expenditures are way below initial expectations.

But even if we could forget its shambolic launch, the ACA has hit some increasingly serious obstacles. Enrollment in the new marketplaces created by the law (aka “exchanges”) is below expectations, and the number of plans competing in them is falling, particularly outside dense urban areas. Premiums are set to rise sharply, and these increases could further destabilize the most troubled exchanges by driving away current or potential enrollees, especially the young and healthy.

Federal subsidies for most enrollees in the exchanges will protect them from premium increases, but that still won’t give them the kind of coverage that middleclass Americans with good jobs generally have. In many exchanges, the only available plans put tight restrictions on their enrollees’ choice of doctors and hospitals. Indeed, with their predominantly lower-income enrollees, limited offerings, and narrow-network plans, many of the exchanges look more and more like Medicaid, the health program for poorer Americans, and less and less like Medicare, the health program for older and disabled Americans that enjoys broad middle-class support.

Medicaid is an immensely valuable program. But the continuing problems in American health care—prices that remain out of control, costs that look set to start rising more quickly, uneven access to care of uneven quality, and the insecurity created by our patchwork system with its big remaining gaps in coverage—are too large for a small set of scattered players in the market to address effectively. Nor will such arrangements create the broad political constituency necessary not just to defend current reforms but to improve them.

In short, health-care reform is at a crossroads. Every

42 WWW.Prospect.org Fall 2016

major social policy in the past—even Social Security—has required modifications to adapt to changing conditions and respond to unexpected outcomes. To state the obvious, the ACA hasn’t entered this phase of constructive adaptation. On the one side, Republicans have demonized the law and aggressively undermined it. In the states they control, they have refused to expand Medicaid and hindered enrollment in the exchanges, and in Congress they have blocked efforts to fix problems in the law.

On the other side, the law’s supporters have emerged from their foxholes; yet many still shy away from acknowledging the need for further reform. Some defenders are reluctant to highlight problems lest they undermine the law’s still-shaky public standing or open the door to destructive changes. Others on the left aren’t loudly calling for an upgrade of the ACA because they believe it was far too timid—a “good Republican program” was Bernie Sanders’s faint praise in 2013. As a result, there remains an enormous gap between those who say, “This is actually pretty good” (realistic but not inspiring), and those who say, “Let’s replace it with Medicare for All” (inspiring but not realistic, for reasons I’ll discuss).

What reformers need, in other words, is a positive agenda that’s both inspiring and realistic—an agenda that won’t just address some of the real shortcomings of the 2010 law, but also create political pressure for ongoing improvements. The top imperative is clear: The exchanges must become an attractive source of affordable, quality coverage for a broad range of Americans, including the middle class.

The key to a persuasive vision that attracts broad popular support is bringing back the public option—a public plan modeled after Medicare that can serve as a backup and benchmark for private plans. Too often the public option is seen as distinct from the exchanges. Yet it’s critical to creating regulated marketplaces that work. The public option can make the exchanges more attractive to consumers, especially where private plans with broader networks are scarce. By doing so—and by working alongside Medicare to restrain prices while improving quality—it can help keep premiums in check, bring healthier people into the pool, and thereby stabilize the foundation

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for a functioning marketplace that includes private plans.

No less important, the public option can serve as a focal point for efforts to improve the ACA , uniting reformers behind an ambitious but achievable vision. It’s more than a policy mechanism. It’s the message of a movement for the ACA’s continuing expansion.

Making It Stick

Let’s be clear: Continuing improvement of the ACA was always going to be needed. While some of the law’s tribulations have come as a surprise, the basic challenge was apparent even before Barack Obama’s signature on the legislation was dry. The ACA wasn’t designed to be ideal.

It was designed to be passable—acceptable to enough stakeholders to be enactable in a polarized Washington.

Its central liability today was its central advantage back in 2010. By minimally disrupting existing coverage, it minimally threatened most of the currently insured. That was the way to get more people covered and to create a secure source of fallback coverage for everyone. Unfortunately, it wasn’t the way to build a program that would create a strong base of support among the overwhelming majority of Americans with employment-based coverage.

Political scientists have intensively studied when and how policies develop strong support coalitions over time.

The formula for success turns out to have three main ingredients: visibility (you know it’s there), traceability (you know who’s responsible for it), and collectivity (you see yourself as part of a group benefiting from it). Basically, voters should be able to see a benefit; reward politicians for delivering it or punish them for threatening it; and act collectively—ideally in an organized group—in doing so. Without these ingredients, voters tend to see policies less as solutions to immediate problems than as symbols of ideological priors. Instead of moving toward greater investment and enthusiasm, they dig in to their respective partisan camps.

Judged on that basis, the ACA is missing some ingredients. The Medicaid expansion has been high-profile and the exchanges have reached around 12 million Americans (about half the initial projections made by the Congressional Budget Office). Yet the middle-class “deliverables,” as advocates called them back in 2010, have proved mostly invisible or opaque. There’s little evidence, for example, that the millions of young Americans helped by the requirement that insurance companies cover dependents up to age 26 have changed their views of the law or their political activities in response.

To be sure, all Americans are much more secure because of new rules and marketplaces that will let them buy coverage if they get ill or lose their job. But this is a “what if?” scenario and thus cannot be counted on as a basis of active

support. The same is true of slower medical inflation. To recognize it, voters have to think about counterfactuals, which is inherently difficult. Moreover, even when voters do recognize these broad benefits, it’s simply not that easy to trace them back to the law.

The upshot is that many Americans don’t feel they have a lot at stake in the ACA’s success. They may have strong partisan commitments; they may even acknowledge the law has done good things. What they don’t generally feel, however, is that the law is substantially benefiting them.

And that’s a big problem: If the ACA is going to foster the self-reinforcing political pressures that helped other successful social policies become entrenched, a broad crosssection of Americans must come to see the law as critical to their own well-being and be willing to act collectively to back up that view.

To those who know my prior work, it will come as no surprise that I see the public option as the way to achieve these goals. The idea is simple. It is popular. And it actually saves serious money, freeing up the resources needed to deliver on the promise of reform. With committed backing from progressives, the public option could be the centerpiece of a broad campaign to respond to public concerns, put critics on the defensive, and expand the boundaries of the possible. Rallying behind the promise of a Medicarelike plan, this movement would demand the public option not as a stand-alone policy but as an essential component of a larger upgrade of the ACA .

That upgrade should start with the law’s most troubled component, which is also the most crucial component for building middle-class support: the exchanges.

A Better Exchange

The exchanges were supposed to be the centerpiece of the ACA: the primary source of subsidized coverage for uninsured people not poor enough to receive Medicaid.

Their enrollment, however, is well below expectations— lower than needed not just to ensure the stability of the exchanges but also to create a strong constituency in support of the law.

We’ve seen this movie before. Medicare has long allowed beneficiaries to choose to receive their benefits through regulated private plans—the system is now called “Medicare Advantage.” Two decades ago, however, private plans were pulling out of Medicare in droves, almost a third of beneficiaries didn’t have access to even one, and many predicted a “death spiral” for the remaining plans.

That didn’t happen, and a big part of the reason, as Sabrina Corlette and Jack Hoadley of Georgetown University’s Health Policy Institute show in a timely new study, is that Congress amended the program to stabilize the plans.

The results were swift: Within a few years, enrollment shot

The public option can serve as a focal point for efforts to

improve

theuniting aca, reformers behind an ambitious but achievable vision.

Fall 2016 The American Prospect 43

Exchanges serving roughly one in five people will offer

Only one

insurer

in 2017. If that doesn’t make the case for the public option, I don’t know what does.

up, and nearly every Medicare beneficiary had access to at least one private plan.

Now, part of the reason that private plans regained ground was that Congress gave them a hefty subsidy above the cost of treating comparable patients within traditional Medicare. But another reason was a major improvement in Medicare’s program for adjusting what plans were paid to reflect the true risk of enrollees. Indeed, despite a ratcheting down of the subsidies since 2010 (savings that offset part of the cost of the ACA), private plan participation in Medicare has grown. Moreover, there’s good evidence that the best Medicare Advantage plans deliver core benefits at least as efficiently as Medicare does, suggesting the subsidies are not necessary to maintain their participation.

The key lesson from the Medicare experience is that policy-makers need effective tools to make sure that health plans are not devastated when they end up with disproportionate numbers of high-cost patients. The tools in the ACA have proved inadequate, and some of the provisions authorizing their use are expiring since they were envisioned only as transitional. Congressional Republicans have also succeeded in curbing one such support for the market. An essential next step, then, is to strengthen and extend the “risk-adjustment” and reinsurance provisions of the law, which will require new legislation, and to put new federal dollars on the table to stabilize the most troubled markets.

Another crucial (and far more obvious) response is to increase the subsidies for enrollees in the exchanges, especially for middle-income people. These premium subsidies were always too low, and given the below-projected costs of the program—and the savings that could come from adding a public option—the case for increasing them now is overwhelming. Indeed, it’s imperative if the ACA is going to have a strong middle-class constituency. Increased subsidies should be coupled with a massive increase in outreach efforts, particularly to younger Americans, to bring in more affluent and healthy stakeholders. This, again, will require investments now that pay off later.

Reformers should also seek to make it less attractive for people who buy coverage individually to buy it outside the exchanges. As Henry Aaron of the Brookings Institution has pointed out, one way to improve the exchanges is to do what Washington, D.C., and Vermont have done: require that individual insurance plans sold outside the exchanges also be offered on the exchanges, making it impossible for insurers to stay out of the subsidized market (with its relatively poorer and less-healthy population) while still serving the rest of the individual market. This single-market requirement would have two big benefits: Insurers would be more reluctant to quit the exchanges if that also meant not offering any individual policies, and

44 WWW.Prospect.org Fall 2016

a wider selection of offerings in the exchanges would then bring in more people, especially if those offerings include the public option.

The Best Option

Nearly every argument for the public option looks stronger today than it did in 2010. Insurance markets have grown more consolidated. Provider groups have become more concentrated and more resistant to private insurers’ efforts to hold down prices. The co-ops added to the law as a sop to public-option advocates have abjectly failed, as those advocates predicted they would. And now there’s a growing chunk of the nation without any insurance competition in the exchanges. As a result of the withdrawal of major national commercial insurers, exchanges serving roughly one in five people will offer only one insurer—call it a private single payer. If that doesn’t make the case for the public option, I don’t know what does.

The public option isn’t only about coverage; it’s also about costs. A growing body of evidence shows that the prices paid by Medicare are more reasonable than the higher (and wildly variable) prices paid by private insurers. Medicare’s administrative costs are much lower than those of private plans. The program has spearheaded major innovations in reimbursement policy—for example, with its recent move toward the bundling of payments for particular episodes of care. By penalizing hospitals for readmissions, Medicare is getting them to pay more attention to the quality of care they provide.

The ACA leans heavily on Medicare to provide cost savings, not only through cost reductions in the program itself but also through the diffusion of its practices into the private sector (which has been going on for decades).

But there are real risks to placing all the cost-control eggs in the Medicare basket. For one, Medicare serves distinct populations: older and disabled Americans. More important, using Medicare as a means to create cost savings and sustain the ACA has already provoked considerable political resistance among Medicare’s beneficiaries, whom Republicans have targeted with frightening (and generally false) claims about the ACA’s effects. A sizable public plan for non-elderly Americans would save money directly and create greater scope for federal efforts to promote innovation in the services used mostly by younger Americans.

There’s another big advantage to the public option too often neglected. When exchanges are reliant on the good graces of insurers, those who run the exchanges are reluctant to push too hard to ensure plans perform well, lest they exit the program altogether. At the extreme, policy-makers may tolerate behavior they’d never allow otherwise. When Aetna recently pulled back, it signaled a key reason was the federal government’s move to block its proposed merger

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Agenda

with Humana. The public option gives policy-makers the greatest possible scope to pursue tough policies that are necessary to make an increasingly consolidated industry work.

To be sure, the obstacles that derailed the public option in 2010 haven’t gone away. The biggest is how to ensure provider participation in the plan. The public option should be based on Medicare, albeit with broader benefits (comparable to the mid-range silver plans on the exchanges).

It should use Medicare’s infrastructure for payment and quality assurance. And it should pay providers at Medicare’s levels, plus some bonus to encourage participation (say, 10 percent, and perhaps more in states where Medicare payments are exceptionally low relative to what private insurers pay). That’s going to make the public plan highly competitive. It’s also going to make providers more reluctant to sign up for it, as well as increase the incentive for insurers to lobby against it.

But these problems have solutions, too. For insurance companies, fixing the exchanges means many more people buying their products and better management of the market to protect them if they end up with less-healthy patients. Sure, they would prefer to have all this and no public option too, but they should be offered a package deal. Most plans should be able to thrive alongside a public option, just as they have in Medicare Advantage. Though the traditional Medicare program has been much more innovative than commonly believed, it’s never going to be an HMO. Its strength is in being a big player that can leverage its reach to make major systemic changes. That role leaves plenty of room for private plans to develop models that some people value even more. Remember: Virtually all private insurance companies are eager participants in Medicare Advantage. They’ve already accepted a public option in return for a lucrative market.

It’s tempting to argue for the public option as a failsafe in areas where there are only a few private insurers, as President Obama advocated last July in a high-profile article in the Journal of the American Medical Association.

But this approach would have numerous problems. The public option should not be commissioned and decommissioned based on the private offerings from one year to the next, and once it’s offered in an exchange, it should remain there to ensure continuity of coverage. Moreover, only providing a public option as a fallback creates the very uncertainty that insurers are citing when they pull out of the exchanges today. Better to stabilize the regulated private market and add the public option in all the exchanges.

The provider side poses steeper hurdles. The concentration of providers’ groups means many are demanding—and getting—rates far higher than what Medicare pays. Nonetheless, providers continue to accept Medicare patients at historically high levels, and most efficient providers more

than break even treating them (which is why charges of “cost-shifting” are wrong-headed—the main problem is inefficient systems). Still, it would be prudent to require that providers who take Medicare patients also take those covered by the public option. Medicare-participating providers are not allowed to turn down Americans younger than 65 who are permanently disabled or have end-stage kidney disease (both non-elderly populations covered by Medicare). Why should they be allowed to turn down younger Americans who are enrolled in the public option?

As a first step, we should limit so-called out-of-network charges to a multiple of Medicare’s rates, as California is

currently considering. (The California bill limits payments to 125 percent of Medicare’s rates while capping patients’ out-of-pocket obligations.) This is similar to what Medicare does to limit charges by non-participating providers, and it will ensure providers have little incentive to remain outside the public option. Applied to all insurers, it will also reduce the major problem of “surprise medical bills” (when, for example, in-network hospitals use outof-network specialists) that threatens even well-insured patients today.

California’s example brings up a final point: States will have a fundamental role in the struggle for a broader, stronger, and better ACA . Already, they have the ability to apply for special waivers to expand Medicaid through unconventional means—for example, by allowing newly eligible populations to buy insurance through the exchanges (with ample subsidies and cost-sharing protections). Starting next year, they can also apply for state “innovation” waivers to try new approaches to uni-

Health Care On The Menu: As part of the 2016 effort to boost health insurance coverage, Barack Obama has lunch with Milwaukee residents who wrote to him about the Affordable Care Act. In July, the president called for a public option in areas of the country with little or no private competition in the ACA’s health insurance exchanges.

Fall 2016 The American Prospect 45

versal coverage, including creating their own public plans.

These waivers have risks, of course, and states must be held to high standards. But a high-standards federalist approach—which is roughly how Canada’s system of provincial plans works—has virtues, too, allowing states to experiment in ways that can inform other states’ (and national) policies. Perhaps most important, new state approaches create the opening for strange political bedfellows—the final imperative to discuss.

Looking for Love in All the Wrong Places

A highstandards

federalist

approach

allows states to experiment in ways that can inform other states’ (and national) policies.

Successful policies have strong backers—the kinds of backers who will campaign for a public option. Successful policies also build unlikely alliances, swinging opponents into the pro column over time. It’s not just that policies need support from the other side when political winds change.

It’s also that unlikely allies—even reluctant allies making the best of a bad situation—have the greatest impact on the potentially convincible. When a GOP governor or prominent corporate leader backs the ACA , it signals that a good Republican or genuine business representative can support a reform identified with the other side.

In the near term, the biggest opportunities for such alliances involve Medicaid. Nineteen states continue to refuse to expand their programs, leaving an estimated three million to four million Americans caught in the gap between qualifying for Medicaid and qualifying for subsidies in the new exchanges. They do so despite full federal funding for the initial expansion (and 90 percent in perpetuity), despite tens of billions in potential reimbursement for doctors and hospitals in their state, despite the resulting slower growth in their economies, and, above all, despite the enormous hardship they are creating for low-income people. While Republican governors have proved more willing to buck the GOP line than Republican legislatures have, there’s little sign that most of the holdout states will relent absent serious new pressure.

Fortunately, it’s not hard to see where that pressure could come from. The Supreme Court said that all Medicaid funds could not be conditioned on states expanding their programs. But new federal legislation that put in place significant but not draconian penalties for states that failed to increase Medicaid eligibility would likely pass constitutional muster—especially if a Democrat-appointed justice were to assume the seat left open by the death of Antonin Scalia. The pot could be sweetened by extending full federal financing of the expansion for additional years. If holdout states not only had to forgo big benefits but also had to pay higher costs, the incentives to comply would become overwhelming.

A second potential source of unexpected support is the business community. Most employers have been only

46 WWW.Prospect.org Fall 2016

tangentially affected by the ACA—they were either already offering insurance that more or less met the law’s standards, or they weren’t providing it at all and still don’t have to. As a result, they have largely accepted the 2010 law but without any great enthusiasm.

Where could business support come from? One possibility is smaller employers. The ACA created new options and subsidies for firms below the 50-worker threshold (the point at which firms face penalties if they don’t insure their workers). But these provisions have largely failed to encourage small employers to use the ACA’s infrastructure to provide coverage. A major problem is that small-business owners are unaware not just of the option of enrolling their workers through the marketplaces but also of the availability of tax credits they would receive to lower the cost.

Better advertising the benefits of the ACA to small businesses would certainly help. But we should go further.

Under the current law, if an employer doesn’t provide coverage, workers have to seek out plans on their own. A far better system would ask all employers whether they cover their workers, and automatically enroll those workers when they don’t. Workers could still opt out if, for example, they had insurance through a spouse or acknowledged they would have to pay a tax penalty for going without coverage.

But this relatively simple step of automatic coverage could radically change the system: The default for workers without employment-based coverage would change from no insurance to insurance through the exchanges. Employers of these newly covered workers would then be required to make a modest contribution to the cost based on employees’ wages (higher when they’re higher) and firms’ size (lower when it’s smaller, with no charge for employers with 50 or fewer workers—just as in the ACA today).

Of course, this will be a heavy lift. But it’s the best way to ensure workers get coverage as well as foster a deeper business stake. And it’s the right policy. Liberals and conservatives agree that employment-based coverage has real downsides. It makes workers excessively worried about leaving or losing a job, places a burden on smaller businesses that provide coverage, and probably deters entrepreneurship as a result. The ACA has proved that big employers still have plenty of incentives to offer coverage.

Yet the share of small employers providing it continues to decline, and large employers may move away from guaranteed coverage in the future even if there’s a penalty. If they do, automatic enrollment in the exchanges ensures their workers don’t fall through the cracks—while, again, bringing more big, diverse groups into the exchanges.

Figuring out how to better integrate employers into the ACA wouldn’t just be good for the law’s political entrenchment. It would ensure that the system could evolve and adapt as the economy changed. Creating that potential

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is precisely why reformers need to fix not only the policy features of the ACA but also its politics.

The Fierce Urgency of Now Fixing the ACA’s politics won’t be easy. A president can

strengthen the law without new legislation. States can improve what they’re doing without national policy changes. But the big steps I have called for—expanding the exchanges, adding a public option, rewriting the Medicaid rules, bringing in employers—will require new federal legislation. That means their prospects will depend critically on what happens in this year’s elections.

Thankfully, it won’t depend as critically on whether reformers can get 60 votes in the Senate. Now that the ACA is law, a good deal of what needs to be done can be accomplished through the budget process, which isn’t subject to a filibuster. Budget legislation must meet other rules, most notably that it doesn’t raise the deficit. This means increased premium subsidies or changes in Medicaid rules will require offsetting revenues or spending reductions, or both. As I’ve argued, at least some of this fiscal space could come from the public option.

Yet even without the 60-vote hurdle, Democrats are going to have to create serious cross-pressures on Republicans, especially if the GOP continues to hold the House.

They need to portray the ACA’s limitations as a preventable illness rather than a chronic condition—the outcome of Republicans’ attacks on the law and unwillingness to support attractive remedies. They need to own the ACA’s formidable successes and make Republicans own its fixable shortcomings, especially Republicans in more moderate districts and states.

Which is why all advocates of universal insurance—even those who believe that Medicare for All is the goal—need to embrace and build on, not scorn, the ACA . It’s attractive to think the only way to get to “real” reform is to bury the law and create something else. But the history of health reform in rich democracies suggests otherwise. The British National Health Service was built on a far more modest national insurance program. Most European systems moved from programs focused on wage earners to universal or near-universal programs that turned once-private sickness funds into quasi-public institutions. In Canada, provincial programs (initially just for hospital care) were stepping stones to today’s comprehensive (though still provincially based) system.

Our own history tells the same story: LBJ had two-thirds Democratic majorities in 1965, and he could only create universal federal insurance for the aged (Medicare) and targeted coverage for the poor (Medicaid)—the two groups conspicuously left out of the employment-based system.

Even Social Security started small and grew big. For its

first 15 years, the federal old-age insurance program was caught in limbo, with its opponents successful blocking the increases in coverage and funding necessary for it to successfully compete with state assistance programs for the indigent aged (set up alongside the federal program in 1935).

As late as the early 1950s, these state relief initiatives were reaching three times as many people, and Social Security faced a serious conservative push for “repeal and replace.”

It expanded only when Republican Dwight Eisenhower, under pressure from Democrats and labor unions, decided that it was a better way to deal with retirement insecurity.

The reasons for Eisenhower’s decision are instructive.

Conservatives were divided, because they worried that the assistance programs were a fiscal burden on the states and an invitation to dependency (because those programs didn’t require contributions). Meanwhile, corporations had built their private pensions on top of Social Security and wanted the public program to pay out more so they could pay out less. Of course, Eisenhower also knew Social Security was popular. But the massive popular support and “elderly lobby” we now associate with the program was mostly an effect, rather than a cause, of the big expansion that he supported. In a very real sense, Social Security built its own support.

If the ACA is to take its place alongside Social Security, it will need to start building its own support, too—and everyone who believes in reform must pitch in to make that happen. If the law is increasingly sidelined, we won’t go back to the status quo ante; the right will be emboldened and the most promising stepping stone for broadened coverage and effective cost control will be lost. Forget Medicare for All. Reformers will be lucky to hold on to what has already been achieved.

Much will hinge on what happens this fall. With a GOP president and Congress, the problems facing the ACA could open the door to destructive changes. If Democrats instead have the White House and a stronger position in Congress—a Senate majority, perhaps, and maybe a House one, too—destructive changes are still a big risk. But there’s far greater scope for moving the debate in the positive direction it needs to go if the virtuous cycle of self-reinforcing improvements is to begin—to launch a concerted campaign for fixing the exchanges, adding a public option, creating effective pressures on GOP governors to expand Medicaid, and making the exchanges the default source of coverage for those without workplace insurance.

If that potential is realized, we may look back at 2017 as a turning point much like the GOP capitulation on Social Security in the early 1950s: not the end of the debate but the beginning of the right debate about how to ensure affordable, quality health care for all Americans. The ugly success could turn out to be a beautiful success, after all.

Jacob S. Hacker is a professor of political science at Yale University, where he is director of the Institution for Social and Policy Studies.

Fall 2016 The American Prospect 47

From a Contentious Election to a Stronger Democracy

Strengthening democracy is the key to all other reforms.

By Miles Rap o p o rt

R

eviving our democracy will be a paramount challenge for the new administration. The intertwined issues of race, inequality, and democracy have been at the center of the 2016 campaign.

Hillary Clinton put it well at the Democratic National Convention in July: “Our economy isn’t working the way it should because our democracy isn’t working the way it should.” The close primary challenge to Clinton

by Senator Bernie Sanders was driven by the widespread feeling that big money is crowding out the voices and views of the people. Fights over voting rights have roiled states around the country. And in a perverted way, these issues have fed Donald Trump’s appeal, too. Many Americans feel unheard and unrepresented. Trump conflates real issues of the dominance of money with the paranoid message that voter registration and voting tallies are “rigged” as well.

Fifteen years ago, in the wake of the debacle election of 2000, The American Prospect published a special report entitled “Democracy’s Moment.” Today is another such moment, when we urgently need to reclaim our democracy in order to restore both the legitimacy of government and its capacity to solve problems. But the promise of democratic revival will be realized only if an effective fight is made. That will require serious presidential leadership, congressional courage, state and municipal experimentation, real change in the Democratic Party, and, most of all, the active engagement and sustained pressure of an organized democracy movement.

At the center of these efforts are three key areas: the need for expanding access to registration and voting; measures to keep money from crowding out citizens’ voices; and reforming gerrymandering and redistricting. These are not just “good government” or “process” issues. They are intimately connected to the ability of government to engage citizens and solve problems.

Reclaiming our democracy is connected to achieving real debate and progress on key substantive issues. These include raising the economic floor, protecting and rebuilding the middle class, crafting inclusive immigration poli-

48 WWW.Prospect.org Fall 2016

cies, making college truly affordable, winning police and criminal justice reform, addressing the consequences of globalization, and protecting our planet. If politics can be about these deeply felt issues, people will be less cynical about democracy and government, and more willing to participate. In turn, the increased participation made possible by making the process more accessible, less manipulated, and less dominated by big money will dramatically change the dynamics of issues as well as elections, and enable far more substantive victories going forward.

I. Fighting Voter Suppression and Expanding Access

Immediately after the Supreme Court’s Shelby County v.

Holder decision in 2013, which overturned federal preclearance authority for voting-system changes in jurisdictions with records of discrimination, almost every state previously covered by Section 5 of the Voting Rights Act raced to put voting restrictions in place that made it harder for communities of color, poor people, and young people to vote. In the name of “preventing fraud,” and even of saving money, restrictive measures were successfully passed in 22 states.

Since then, hard-fought political and judicial fights have been waged. While the terrain is still sharply contested, important victories have been won in preventing these suppressive practices from being fully implemented. One emblematic fight was in Alabama, where the legislature passed a strict photo-ID requirement for voter registration and the Motor Vehicles Department closed down almost all of its offices as a “cost-saving measure.” The fight ensued, and the state reopened most sites, but on a more limited basis. In North Carolina, the omnibus voter-suppression law passed in 2013 has been rolled back in court, provision by provision, in rulings by the Fourth Circuit that were recently affirmed by the U.S. Supreme Court.

Cynical purging of voter rolls is a problem in several states.

In Georgia, Ohio, and Virginia, lawsuits by Dēmos and Common Cause are in process, challenging aggressive purging procedures employed by secretaries of state, which erase

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hundreds of thousands of potentially eligible people from the rolls and violate National Voter Registration Act requirements. In Georgia, between October 2012 and November 2014, Georgia Secretary of State Brian Kemp purged more than 370,000 voters from the rolls for failure to vote, a number that far exceeded the number of all new voters registered.

In Ohio, Secretary of State Jon Husted purged 144,000 voters from the state’s three largest counties in 2015.

Even when they are not manipulated for partisan purposes, voting systems in many states are outmoded, inefficient, and underfunded—and vulnerable to attack.

Improving administration and coordination, and winning stronger standards and enforcement, is less sexy but really important. When the Help America Vote Act (HAVA) was passed in 2002, the Election Assistance Commission (no authority in that title!) was designed to be weak, and partisan obstructionism over recent years has rendered it virtually useless. States have found ways to cooperate, such as through the Electronic Registration Information Center (ERIC). But there is a desperate need for national standards, for new investments in voting machines and technologies, better training and pay for poll workers, all with absolute safeguards against hacking and fraud. The issues now arising about the potential for sophisticated foreign hacking should force far more attention to these administrative security issues, and also be the pivot to open a real discussion of professionalizing and standardizing our elections, as well as protecting them from electronic attack.

As these fights over voter suppression in the states have raged, Republicans in Congress have refused even to hold hearings on restoring the full protections of the Voting Rights Act. This is a turnaround by House and Senate Republicans on the law. In the VRA’s most recent reauthorization, in 2006, the Voting Rights Act passed 98–0 in the U.S. Senate, 390–33 in the House, and was signed into law by then-President George W. Bush. Better than almost anything, this shift shows the need for a major push on a Democracy Agenda in 2017.

However, the struggles on the state level have not been only defensive. There is an affirmative voting-access agenda as well—real reforms have been achieved, and significant groundwork has been laid for dramatic advancements in the future.

Expanding Voter Registration. Thirty-one states and the District of Columbia have adopted online registration, often with bipartisan support. Same-day registration, which has been shown to increase participation by 5 percent to 7 percent, is now law in 13 states and the District of Columbia. In three other states—California, Hawaii, and Vermont—the law has been passed but not yet implemented. In North Carolina, the attempt to rescind same-day registration has been one of the policies blocked

by recent court actions. Preregistration of 16- and 17-yearolds brings young people into the system so they can be prepared to vote at 18, and more than half the country now offers the reform, in red and blue states alike.

Restoring Voting Rights. Significant progress has been made in several states toward restoring the voting rights of citizens with felony convictions. Maryland last year passed legislation restoring the right to vote to individuals upon completion of prison sentences, without having to wait until after probation or parole. When Governor Larry Hogan vetoed the bill, the House and Senate overrode him in February, restoring the voting rights of 40,000 people.

In Virginia, despite strong opposition, Governor Terry McAuliffe recently restored the rights of 13,000 people, as the beginning of a larger process.

Expanding the Use of the NVRA. One creative approach has been the use by advocates of the provisions of the National Voter Registration Act (NVRA, often called “Motor Voter”), which requires state agencies—not just DMVs, but all agencies that offer federal benefits—to affirmatively offer people voter registration. Dēmos and Project Vote have led efforts to push state agencies to do their job, and more than three million additional voters have been registered at social-service agencies in 16 states that have changed their procedures, with the biggest gains being in Missouri and Ohio.

Automatic Voter Registration. AVR is a process in which the state, through state agencies (DMVs for now, but potentially others as well), places eligible voters automatically on the rolls. Oregon first passed the reform in March of 2015, and roughly 12,000 new voters per month have been added to the rolls—three times the registration rate before the state adopted AVR. California quickly followed Oregon, and Vermont, West Virginia, and Connecticut (by administrative order) have since adopted it, with some variations.

The Illinois legislature passed AVR with strong bipartisan support just this May, but Governor Bruce Rauner vetoed the bill. With an override unlikely, advocates are uniting behind an effort for a veto-proof majority in 2017.

Expanding Early and Mail-in Voting. Early-voting opportunities have expanded significantly, and are now practiced in most states, either in precincts or at central vote centers. Voting by mail has been expanded as well.

Both Washington and Oregon have gone almost exclusively to mail-in ballots, and Maryland recently expanded both mail-in and early-voting options. Colorado has built one of the most expansive systems, offering mail-in and early voting, with same-day registration available as well.

Even when they are not manipulated for partisan purposes,

Voting

Systems

in many states are outmoded, inefficient, and underfunded—and vulnerable to attack.

II. Fixing the Rigged System of Money in Politics

Despite the obvious and profound negative effects of our campaign-finance system, efforts to change the way money

Fall 2016 The American Prospect 49

Small-donor matching systems of

Public

Financing can limit the power of big money and bring new people into politics

operates in our politics have been stymied at almost every turn. The campaign finance laws created after Watergate held for a while. But over the last 40 years, they have been undercut by a conservative legislative offensive, a relentless legal assault, terrible rulings from the Roberts Court, skillful evasion, partisan gridlock, and bipartisan political resistance at the state and national levels. Even though there is agreement among large majorities of voters of all party affiliations on the magnitude and impact of the problem, this has not produced the political will for the kind of major change that is needed.

Small-Donor Matching. Despite the money-is-speech doctrine, real gains can and have been made at the state and local level, mainly through systems of small-donor public financing. Maine, Arizona, and Connecticut, along with such cities as New York, Los Angeles, and Albuquerque, have succeeded in winning reforms that reduce or end reliance on the traditional donor class. Recently, reform coalitions have won new small-donor systems in Seattle and Montgomery County, Maryland. There are ballot initiatives set this November for Washington state, South Dakota, Miami-Dade County, and Howard County, Maryland, and a successful advisory referendum in Chicago in February has set up the possibility for progress there.

These systems have been shown to produce real change.

In Connecticut, whose system was adopted in 2005 and has been in place since the 2008 election cycle, candidates for governor, other state offices, and the legislature who opt in to the voluntary system raise a threshold amount in small donations, and then stop fundraising altogether, utilizing a state grant sufficient to run a serious campaign.

Participation rates by Republicans and Democrats alike are very high—almost 75 percent in 2016—and there is strong bipartisan consensus that the system has been successful in changing how campaigns are run and—importantly—who can seriously contemplate running. It has also dramatically reduced the role of lobbyists, bundlers, and other moneyed players who traditionally dominated the halls of the State Capitol in Hartford.

In New York City, a strong matching program (6 to 1 for qualifying donations raised by candidates) coupled with term limits has been a powerful engine for change.

It allowed a diverse and energetic pool of candidates to emerge, and set the stage for significant progressive victories at the city council and mayoral level. Efforts to expand the system statewide have so far met stiff resistance in the Republican Senate, but the expansion effort continues while the city system enjoys strong popular support.

The Courts and a New Jurisprudence. This is where major change could really begin. The new president will likely have multiple appointments to the Supreme Court. A new high court, looking objectively at what has happened

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to campaign spending and fundraising in the real world, could reverse the Citizens United and McCutcheon cases, and could and should go back to the original fundamentally flawed ruling in Buckley v. Valeo from 1976. That ruling laid down two horrible premises. First, that campaign spending is constitutionally protected speech. And second, that the only acceptable principle for limiting campaign spending is to prevent corruption or the appearance of corruption.

But there is an obvious additional principle that is simple common sense, which is that a set of rules can be adopted and justified to ensure that every voice is heard in our democracy, not just ones that can buy the biggest bullhorn. Laws based on this equity principle could be passed, and cases can be developed and brought as assiduously and strategically as those on the right have done in their big-money crusade. If judges are chosen and confirmed who prioritize restoring democracy, a major shift can happen without a constitutional amendment. They need only read retired Justice John Paul Stevens’s testimony to Congress in April 2014: For years the Court’s campaign finance jurisprudence has been incorrectly predicated on the assumption that avoiding corruption or the appearance of corruption is the only justification for regulating campaign speech and the financing of political campaigns. That is quite wrong. … Like rules that govern athletic contests or adversary litigation, those rules should create a level playing field. … Just as procedures in contested litigation regulate speech in order to give adversary parties a fair and equal opportunity to persuade the decision-maker to rule in their favor, rules regulating political campaigns should have the same objective.

Disclosure. In addition to small-donor public financing, the voluntary nature of which abides by the Buckley and the Citizens United decisions, another set of reforms has expanded disclosure, to stem the tide of money from unrevealed and secret sources and shine the proverbial sunlight on how campaigns are paid for. Massachusetts, Rhode Island, New York, and Colorado are among states that have strengthened their disclosure requirements.

Federal Reforms. Several pieces of reform legislation have been introduced in Congress. These have been stymied by Republican control of both houses, but that could soon change (see below).

III. Ending Gerrymandering and Fair Redistricting

In congressional delegations and many state legislatures, the partisan breakdown bears little resemblance to voter preferences. While it is difficult to argue exact correlations between craven district-drawing and the gap between the

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congressional party vote and the congressional delegation makeup (given unopposed races and other factors), the general relationship is very clear. In Pennsylvania, where Democrats received half the votes for Congress in 2012, the congressional delegation to the House is 13–5 Republican. In Michigan, the Democratic vote was more than 50 percent, and it is Republican by a 9–5 margin. In Florida, where Democrats received 45 percent of the vote, the delegation is Republican by 17 to 10. In Virginia, the vote was nearly half Democratic, while the congressional delegation is 8 to 3. And in North Carolina, the Democratic vote was more than half, and the delegation is 10 to 3.

While this is not only a Republican offense (in Maryland, Democrats got 63 percent of the congressional vote, but the delegation is 7–1 Democratic), the preponderance of major recent examples are of Republican making. These are remarkable disparities, and similar ones can be shown for state legislative representation. (It is worth noting that in North Carolina in 2014, about half of the state legislative candidates ran unopposed.)

While scholars have pointed out that the country is resegregating in its residential patterns, numbers this large can only be the result of conscious racial and partisan intent. And whereas gerrymandering once was a gentlemanly, bipartisan arrangement to protect incumbency, the more recent abuses have been to ensure partisan control of legislatures and to create absurd and permanent majorities in congressional delegations that do not reflect the state’s voting preferences by a long shot. The outcome was a direct result of “Operation REDMAP,” a successful Republican plan to target legislative races in 2010, specifically to ensure control of the redistricting process.

This kind of gerrymandering isn’t only about politics; it is also about race. The most egregious abuses are accomplished by “packing” and “cracking” black and Latino voters, either by putting them into very compact districts, or by spreading them across multiple districts while at the same time ensuring white and conservative dominance.

Ironically, the defense of the redistricting plans most often offered is that they are not about race, but about partisan preferences. These are intertwined and unacceptable goals, both. In addition, the counting of prisoners as “residents” of rural districts where prisons are placed, rather than from the communities where they lived before their incarceration, is, given the racially skewed prison population, another way of limiting the power of communities of color. Again, some progress has been made recently, with states including California, Delaware, New York, and Maryland changing the way prisoners’ residence will be counted.

The good news on gerrymandering overall is that citizens around the country have been fighting back. Recent cases

have been fought and mostly won in states as diverse as Alabama, Maryland, North Carolina, Wisconsin, and Florida.

Florida produced a major victory after a long fight when the state supreme court, generally regarded as conservative, ruled in 2015 that blatant partisan gerrymandering violated the state constitution, and required new districts to be drawn. This year, all of Florida’s districts have new boundaries, and significantly more are competitive. The number of competitive congressional seats rose from ten to 14, and in the State Senate, competitive seats rose from 14 to 20. In addition, districts are far more compact, adhere better to existing geographical boundaries, and give communities of color enhanced opportunities to elect candidates of their choosing.

In North Carolina, the courts have required congressional and state legislative maps to be redrawn this year to reduce the racially discriminatory districting process.

When the legislature drew the new maps, they assured the public that the new maps, which would retain the 10–3 Republican majority in that state’s congressional delegation, were not racially motivated, but rather based on partisan considerations. The maps are now being contested

by Common Cause and others in a new lawsuit.

In addition to the court cases, efforts to form independent redistricting commissions have been gaining steam.

Arizona and California led the way years ago, in California through a ballot initiative for an independent Citizen Redistricting Commission to draw the lines. The results have been a legislature and congressional campaigns that are both more competitive and more reflective of the state’s population than ever before. And the Supreme Court last year upheld the Arizona Redistricting Commission against an argument from Arizona legislators that the citizens had “usurped” power from the legislature. Another approach, utilized by Iowa for a number of years, gives power to nonpartisan legislative staff to draw the districts with the assistance of a citizen advisory commission. The legislature can veto a plan, but cannot make changes.

In addition to changing who draws the district lines, a second area for reform is the question of what criteria to use. Criteria that have been proposed by reformers include: keeping communities of interest together, expressly protecting the rights of communities of color to have opportunities to elect candidates of their choice; prohibiting favoritism for incumbency or party advantage; requiring districts to be compact and contiguous; keeping cities and counties whole; and potentially even requiring districts to be politically competitive. In Florida, the key to the success of the reform community in the court victories was a constitutional amendment adopted in 2010 that prohibited drawing districts that diminished the ability of minority voters to elect representatives of their choice, or plans designed

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for partisan advantage. Secondary standards included compactness, contiguity, and equality of population.

In Ohio, a rare bipartisan coalition supported a successful ballot initiative last November that prohibited the drawing of state House and Senate districts for political advantage, and added protections that will prevent one party from dominating the process. The vote was more than two to one, and advocates will continue to push to add congressional districts to those covered by the new law.

In North Carolina, following the court victories, the End Gerrymandering Now coalition, with strong bipartisan support, including in the much maligned North Carolina legislature, has real possibilities for victory in the next year. In Michigan, Pennsylvania, Virginia, and Missouri, efforts are afoot to enact fair redistricting criteria as well.

On gerrymandering, too, a federal approach is needed.

The Redistricting Reform Act, sponsored by Representative Zoe Lofgren based on California’s experience, sets standards and mandates independent commissions for the drawing of districts. The Voting Rights Act could be effectively used to win fair districts free of racial bias, if it were reauthorized. And, looking at the Supreme Court, there are four cases (Harris v. McCrory in North Carolina; Whitford v. Nichol in Wisconsin; Shapiro v. McManus in Maryland; and Common Cause v. Rucho in North Carolina) that could clearly be headed to the Court. The Court upheld the Arizona process, but it needs to take a step further, using one or more of these cases, and give critical guidance to states around the country as they develop their redistricting plans after the 2020 census.

What It Will Take to Win

Policy ideas are critical, but without a political strategy, they can just be words on paper. And saying we need a strategy is very different than really developing a successful one. Here are some of the keys to success.

I. Presidential Leadership

Hillary Clinton, strongly influenced by the Sanders campaign and by democracy organizations, has stated strong support for voting rights and for changing the campaignfinance system. But she will need to prioritize democracy issues with a serious focus, and it will not be easy. On the one hand, there is clear public support for all these issues, which resonate with voters who believe the system is stacked, and that their voices don’t count. With voters of color in particular, there are decades experiencing active attempts to keep them away from the polls and to minimize their representation through racially based gerrymandering.

On the other hand, there will be major countervailing pulls. There will be the press of crises, foreign and domestic. There will be the demands of other major issues and

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constituencies whose issues have been unable to move for so long. And there will be the lure of opportunities for unlimited and interested fundraising, and doing political business as usual. Pay-to-play politics is so deeply ingrained in our political culture that breaking free from it would be an extraordinary challenge and accomplishment.

What would real presidential leadership look like? One major marker is sustained attention by the president and consistent talk about these issues, utilizing the presidential pulpit in her inauguration speech, in her travels around the country, and in her legislative priorities. But what are other concrete steps that can be taken?

The President and the Congress. Legislatively, there are a number of important pro-democracy possibilities.

If the Senate turns Democratic, there is real potential.

Senators Sanders, Chuck Schumer, Dick Durbin, Patrick Leahy, Cory Booker, and Elizabeth Warren all have real commitments to a democracy agenda. The dynamics in the House are far less predictable, but even if it remains in Republican hands, there may be some real opportunity in the unsettled post-election months.

First and foremost should be moving the Voting Rights Advancement Act, sponsored by Representative John Lewis and Senator Leahy. Nothing would bring the Democratic Party together in the Congress, and send a signal that the issues of race and representation will not be afterthoughts, more forcefully than this. In addition, moving the bill would call out the Republicans, particularly the House leadership, to demonstrate that the racism so shamefully present in this year’s presidential campaign does not represent Republicanism in this new moment.

Speaker Paul Ryan, James Sensenbrenner, Tom Cole, and other House Republicans have stated publicly that they support restoring the Voting Rights Act. Yet they have caved to the right wing of the caucus. House Judiciary Chair Robert Goodlatte refused to hold a committee hearing on its restoration, perhaps to appease the Tea Party and white nationalist elements of his Roanoke-area district.

Will this pattern simply continue, or might this be an opportunity to lead in a different way? And if the leadership can’t or won’t move, this would seem to be a perfect vehicle for a discharge petition that might alter the voting dynamic in the House in major ways.

In a similar vein is the Democracy Restoration Act, which would require restoration of the voting rights of citizens with felony convictions upon release from prison.

This could affect several million people around the country, and connects to the momentum on criminal justice reform, an issue already with bipartisan support.

On the campaign-finance side, Democratic senators this year introduced the “We the People” package of reforms, which Hillary Clinton said she supports. It

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includes strengthening disclosure and lobbyist reporting and revolving-door provisions, reforming the Federal Election Commission, and introducing a constitutional amendment to overturn Citizens United. Unfortunately, the package did not include a small donor–based public financing system for Congress. But the Durbin bill in the Senate (the Fair Elections Now Act) and the John Sarbanes bill in the House (Government by the People Act) create, in slightly different ways, such a system for congressional races. In addition, the Tom Udall-sponsored EMPOWER Act would restore the viability of the presidential public financing system. As of now, these bills have very little Republican support, and will be far more challenging to move than the Voting Rights Advancement Act. But the situation has gotten so clearly out of hand, and there is such strong support from voters across the spectrum, that it may be possible that with both presidential and congressional leadership, a new chemistry on the issue can be developed, at least enough to make the debate serious.

One important question the campaign-finance issue raises is where the Democratic Party wants to be on these fundamental issues of how the system runs. The Voting Rights Advancement Act and the Democracy Restoration Act have a very clear logic to them from Democrats’ political point of view. Fighting for an expanded electorate, increasing the representation of the new American majority, and opposing the forces of reaction on racial issues are clearly enough in the party’s self-interest. Even the restoration of voting rights for people with felony convictions, though it might have raised the specter of being “soft on crime” at one point, has moved into the Democrats’ advantage zone. But the issue of really changing the campaignfinance rules, like the issue of the Trans-Pacific Partnership and the rules of globalization, goes to the heart of what the Democratic Party stands for, and risks raising the old progressive-versus-Democratic Leadership Council conflicts that were so central to the Bill Clinton era. It seems as though this election season has shown the wisdom of clearly standing for the 99 percent, and for strengthening the Democratic Party’s commitment to fighting for racial and economic equity. But the pulls of the business lobby and the donor class will be a powerful siren call.

Executive Actions. There are a large number of executive orders, appointments, and other actions that could be taken by the president.

An executive order could require federal contractors to disclose their political contributions, which would have a major impact, since most of America’s largest corporations have federal contracts. This has been discussed at great length with the Obama White House, but has not been done. Such an order would dovetail well with a strong order on ethics and revolving doors.

The president has the authority to mandate that exchanges under the Affordable Care Act be designated as voter registration sites under the NVRA , and to consider other potential strengthening of NVRA provisions.

The president and Congress need to make sure that the 2020 census is adequately funded so that a full count of our diverse population can truly be made. And the census must count prisoners from the communities from which they come, and not from their involuntary rural addresses.

The Justice Department has a strikingly important role to play. Obama has ramped up the intensity and performance of the department’s Civil Rights Division in challenging voter-suppression efforts in states and municipalities, through Section 2 of the Voting Rights Act. President Hillary Clinton could go even further. The DOJ has had limited involvement in challenging purging procedures that violate the NVRA and in enforcing other NVRA provisions, which could have a major impact on the voting rolls, including ensuring that state agencies are doing all they should. And the DOJ should maintain regular, consistent contact with civil-rights organizations and the democracy community overall.

Appointments to key positions will also have a major impact. While major attention has been paid to the importance of potential Supreme Court appointments, the appointment of judges in other jurisdictions could be instrumental in rewriting jurisprudence on campaign finance and in protecting the right to vote. And President Clinton’s appointments, not only to the FEC but to the Securities and Exchange Commission and the Internal Revenue Service, will all have major bearing on issues related to disclosure and political financing in general.

All of these actions would benefit tremendously if President Clinton were to create a serious program within the Domestic Policy Council to move a democracy agenda. It would be a critical boost to moving a legislative agenda and promoting its priority. It would also be an effective focal point for organizing the strategic elements of support for a multifaceted democracy agenda—cataloguing and promoting the variety of executive actions that could be taken, and coordinating with the broad range of constituency organizations and coalitions that have taken up democracy as a top-priority issue. Overall, it would be an effective and strategic way of demonstrating and concretizing presidential leadership.

The justice department still has the power to bring cases against

Voter Suppression under section two of the voting rights act.

II. States as Continuing Laboratories

Beyond change at the federal level should Clinton be successful and gains are made at the congressional level, there will also be new opportunities for states to play their “laboratories of democracy” role. Republicans hold 68 of

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even if federal legislative

Progress

istheslow, states

continue to be laboratories of enhanced democracy.

Miles Rapoport is a longtime democracy advocate who served as secretary of state in Connecticut, and president of both Dēmos and Common Cause.

99 legislative chambers, and fully control redistricting in 18 states. But there are 11 states where Democrats have the possibility of retaking control, including six Senate chambers—Colorado, Nevada, Virginia, New York, Washington, and West Virginia—where a shift of one seat would flip control, opening up possibilities on democracy issues as well as others.

New York is a very clear case in point. Over the last several years, a broad and strong coalition, led by Citizen Action of New York, Common Cause New York, major unions, and the Working Families Party, fought for a strong smalldonor public financing system at the state level, modeled after the New York City program. The effort had strong legislative champions and passed the state Assembly. While the governor was the most unreliable of allies, the pivotal barrier was the Republican control of the New York State Senate, which is now evenly split between Republicans and Democrats. A major victory by Clinton could very possibly flip the Senate to Democratic control, which would give a major boost to the “Demand Democracy” campaign that is poised to renew its efforts in 2017. Given New York’s outsized role in national campaign finance, a victory there could have significant national implications.

III. Now More Than Ever, a Democracy Movement

Over the past decade, we have seen the intensification of strong grassroots action for democracy. To have any real hope that the president, Congress, state legislatures, the Democratic Party, and others will move these agenda items, there must be outside pressure, with real people, real numbers, and strong organizational coordination.

Based on a number of developments, there is real hope that this can happen.

New social movements, organizations committed to fighting for racial equity, and organizations in the movement for immigrant inclusion have strongly connected to democracy and voting issues. For instance, the recent “Vision for Black Lives” platform adopted by Black Lives Matter and associated organizations strongly supported not only voting rights but also publicly financed elections.

Organizations and movements that have not always given priority to democratic reforms, including the labor and environmental movements, have realized that democracy must be restored and enlivened if their issues are to have a real chance to win. Grassroots community and citizen organizations like People’s Action, PICO National Network, the Center for Popular Democracy, and the Gamaliel Foundation network have added these issues to their agendas more than ever before.

In addition, coordination among established organizations, and newer ones, in the money-in-politics field,

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the redistricting field, and in the voting-rights field has strengthened significantly over the last several years. This year’s combined effort under the banner of “Fighting Big Money,” led by Every Voice, Common Cause, Public Citizen, and others, has been a successful example, as were Democracy Spring and the Democracy Awakening. Civil-rights and voting-rights organizations, including the NAACP, the Advancement Project, and the Lawyers’ Committee for Civil Rights, have worked well in a coordinated way to stand up to the onrush of voter suppression. And the Democracy Initiative, with 60 organizations from all of these issue areas, is an entity solely committed to advancing this collaboration.

And, of course, the Sanders campaign mobilized tens of thousands of activists and influenced millions of people on the connected issues of economic and political inequality, and highlighted the assaults on our democracy in a way that energized the fight for reform. The campaign’s offshoot, Our Revolution, will certainly be in this fight as well.

The key will be in building a coordinated campaign for democracy that has the breadth of issue makeup, the diversity of organizations, and the ability to coordinate and move effectively together on behalf of the Democracy Agenda. Racial justice, economic equity, and real democracy are inextricably intertwined, and the movements to achieve them will need to consistently make those links clear, and work together to move the president and Congress on all three in reciprocal ways. The movement will need a federal focus and a state focus, and will need to recognize that focusing on policy wins in the short term is essential, while continuously bearing in mind that these issues need to be made front and center for candidates running in the 2018 election as well. Candidates for office need to win or lose based on their commitment to these issues, and electing champions for democracy will be a critical component of the work ahead. All the while, the movement will need to be looking further ahead to the incredibly consequential election of 2020.

This election has the potential to open up an extraordinary moment in the life of our democracy, including in the way we practice democracy itself. Or it can be another missed opportunity, superseded by other issues and undone by a failure to creatively assemble the elements necessary to win and coordinate them in the most effective and inclusive ways. The elements for success are present in extremely propitious ways, but it will take determined leadership by the president, congressional leaders, state legislatures, and a real grassroots movement to seize this new Democracy Moment. If it can be done, the benefits of fighting and winning on these issues now will reverberate for a long time to come.

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Aiding Families, Boosting the Economy

It’s time we saw support for child care and paid leave as central to both economic growth and family well-being.

By Katie Hamm and Sa ra h Ja ne Glynn

F

or many people, economic policy brings to mind issues like taxes, trade, and interest rates—the subjects that dominate the financial news. Child care and family leave go into another basket typically conceived of as “women’s issues” and implicitly treated as irrelevant to economic growth and prosperity.

But this framing gets things badly wrong. About half of all workers are women, and women are the breadwinners or co-breadwinners in roughly two-thirds of families with children. Policies that affect the ability of women to work outside the home affect the ability of the economy to grow.

Conversely, the failure to invest in such policies holds the economy back. And, of course, the same policies that would benefit women in the labor force would benefit men as well.

In just the past year, according to new census data, middle-­c lass and poor families have seen significant growth in income. But when viewed over the entire period since the 1970s, the incomes of the majority of families have been nearly stagnant. The major exception has been dual-earner couples, most of whose additional income has come from women joining the labor force and working more hours. In fact, income inequality would have grown 53 percent faster if married women had not increased their labor force participation since 1963.

We might have had more growth and less inequality, however, if public policy helped workers manage commitments inside and outside the home. The U.S. Department of Labor estimates that if women in the United States had the same rate of labor force participation as women in Germany or Canada—countries that provide paid leave and child-care assistance—more than five million additional women would join the labor force, boosting economic output an extra $500 billion each year. A 2015 Washington Post poll found that three-quarters of mothers and half of fathers have either left the workforce or switched to a less demanding job at some point to care for their children. Parents who leave the workforce for child care pay the price throughout their career. For example, a median female wage earner out of the workforce for five years beginning at age 26—the average age at first birth in the United States—will lose $467,000 in wages, wage growth poten-

tial, and retirement assets over the course of her lifetime.

These issues are ripe for addressing at the national level. Hillary Clinton has made them a central concern of her entire career and her presidential campaign. Donald Trump has said he would also provide help for child care and mandate paid maternity leave. The differences between their positions are enormous, but if the presidential campaign is any indication, now is the time to focus public discussion on new policies that could serve both economic growth and family well-being.

The federal government once came close to enact-

ing a national program of child-care assistance. That was in 1971, when Congress passed legislation that President Richard Nixon vetoed at the behest of social conservatives on the grounds that it discriminated against stay-at-home mothers. Since that time, conservative opposition has prevented the United States from adopting the kinds of measures that help working families in other rich democracies.

The only explicit work-family federal legislation is the Family and Medical Leave Act (FMLA), signed into law in 1993 by Bill Clinton as one of his first priorities as president. The FMLA provides job protection to workers if they need time off to care for a new baby or a seriously ill family member, to address their own serious health condition, or to deal with a family member’s military deployment.

Although the law has helped millions of workers keep their jobs, it provides no guarantee that the leave will be paid, and strict eligibility requirements exclude about 40 percent of workers.

As a result, even workers who do qualify for job-protected leave under the FMLA often have to return to work more quickly than is advisable because they cannot afford to take off more time without pay. One in four mothers who take FMLA leave, for example, report that they returned to work within two weeks of giving birth—even though medical professionals typically advise between six and eight weeks of recovery time. State programs in California, New Jersey, Rhode Island, and, beginning in 2018, New York do provide for paid family and temporary disability leave, but the other 46 states have no such protections.

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than $15 per hour, and low wages aren’t their only problem.

Many of them work in industries such as fast food, retail, janitorial, home health care, and other services that have erratic and unpredictable schedules. Parents with these jobs face both irregular work and volatile income, and they are the least likely to have any paid time off for any reason.

Among all private-sector employees, 61 percent have paid sick days and 11 percent have paid family leave, but among those in the lowest earnings quartile, only 31 percent have paid sick days and just 5 percent have paid family leave.

Parents need reliable child care to stay employed, but those in low-wage employment have few resources to pay for it. Child-care costs now exceed median rent prices and college tuition at public universities in most states. A family with two children in a child-care center can expect to pay almost $18,000 per year, which amounts to nearly 30 percent of the median household income. Among families who pay for child care, poor families allocate 36 percent of monthly income to child care.

Child care imposes heavy burdens on middle-class parents as well, usually falling on them long before they reach peak earning potential at a time in their lives when many are starting a career, paying off student loans, facing high rents, and perhaps trying to save money to buy a home.

Despite having more education than their counterparts did in 1984, today’s 30-yearolds have about the same real earnings.

Child-care costs keep rising—they were up 37 percent between 2000 and 2012—but incomes haven’t grown correspondingly.

These are the realities that a new president and Congress should be addressing.

ily security than they were earlier. Stay-at-home mothers are much less common today than they were when Nixon vetoed child- care assistance 45 years ago. In 2012, just 28 percent of children had a stay-at-home mother, compared to nearly half of children in 1970. Sixty-five percent of children under age six have either a single working parent or two working parents. Meanwhile, 12 million children under the age of five—or roughly 60 percent—are cared for by someone other than their parent.

Low-income parents face special difficulties. Poor and near-poor families account for about half of America’s children. By poor, we mean those with incomes beneath the federal poverty level ($24,250 for a family of four in 2016); the near-poor have incomes between the poverty line and twice that level. Forty-two percent of Americans make less

Few were surprised to see work-family policies

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included in the 2016 Democratic Party Platform, as these have been Democratic priorities for decades. Hillary Clinton, in particular, has long championed early-childhood programs and family-friendly policies. What was less expected was Donald Trump’s focus on child care as a policy priority. But the proposals the two candidates have offered are not really comparable.

Let’s take Trump’s first. Under a proposal that he made last summer, families could take a tax deduction for their child-care expenses, up to the average cost in their state. In September, after being criticized that this deduction would do little or nothing for the low- and moderate-income parents most in need, Trump added a $1,200 “rebate” for poor families and a tax-free savings account that the govern-

j e f f m o r e h e a d / c h r o n i c l e -t r i b u n e / a p i m a g e s

High Fives: Nationally, it’s not yet time to celebrate child-care assistance and universal pre-K, but for once those are top priorities in a presidential campaign.

One other federal program provides child-care assistance to low-income families, but it is extremely limited.

The Child Care and Development Block Grant reaches just one in six eligible children, and the average annual assistance is less than $5,000, which pales in comparison to the actual cost of child care. Higher-income families can take advantage of a tax credit, but the maximum amount of assistance is just over $2,000—again falling short of the $10,000 price tag most families find at child-care centers.

While conservative opposition has blocked a strong national program, changes in society and the economy have made work-family solutions even more critical to fam-

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ment would match up to $1,000. Both approaches are too little to meet the burdens that low-income families face.

Trump also proposes to provide six weeks of paid maternity leave. While offering few details, he has said that the state unemployment insurance system would administer the new benefit, which would not require new funding because it would be paid for by cracking down on unemployment insurance “fraud.” The program would offer no paid time off to fathers, adoptive parents, or workers who need leave for other reasons such as the need to care for seriously ill or aging family members. Limiting the program to maternity leave could adversely affect women workers. Since on average women already experience a “motherhood penalty” of 7 percent per child in their earnings, a program solely for maternity leave would likely exacerbate the gender wage gap.

Trump’s proposal to introduce paid maternity leave without any new funds is also cause for concern. The current unemployment insurance system is badly underfunded, and many states are barely getting by. During the Great Recession, 36 states depleted their reserves and had to borrow more than $50 billion to finance benefits.

Only 18 states currently have the minimum recommended reserves yet would now be expected to absorb the costs of paid maternity leave.

Clinton’s proposals for child-care assistance are better targeted at the low- and moderate-income families in need and would be financed out of general revenues. Through a combination of tax credits and subsidies, she proposes to limit the cost of child care to 10 percent of a family’s income, a commitment that could be carried out in various ways.

For example, the Center for American Progress, where we work, has proposed a refundable tax credit to purchase child care for families earning up to four times the federal poverty level ($97,000 for a family of four). The tax credit would be tied to state quality ratings of child-care programs so as to promote child development and school readiness.

Clinton would also expand early-learning programs starting at birth and make preschool universally available to all four-year-olds, just 29 percent of whom currently receive public preschool. She has proposed investing in programs that provide parenting support as well as a program called RAISE—Respect and Increased Salaries for Early Childhood Educators—which would address childcare workers’ chronically low wages and limited opportunities for professional development. Another component of Clinton’s approach helps parents who are studying for a college degree. She is calling for an increase in federal support for on-campus child-care programs from the current level of $15 million to $250 million, and an additional $1,500 child-care subsidy to go to parents in college.

Long a proponent of paid family and medical leave,

Clinton also advocates legislation to provide up to 12 weeks of partially paid leave for the same qualifying conditions as under the FMLA . Clinton would finance the program by increasing taxes on those with incomes of over $250,000. As under the existing state programs, workers taking leave under Clinton’s plan would receive at least two-thirds of their normal wages, up to an as-yet-to-bedetermined ceiling.

Another option for paid family leave is the FAMILY Act, a social insurance proposal supported by other Democrats that, like the Clinton proposal, would pay workers on leave two-thirds of their normal wages for up to 12 weeks after the arrival of a new child, or when needed to care for a seriously ill family member or to address the worker’s own serious health concern. Sharing the cost of the program, employers and employees would each pay a tax of 0.2 percent of wages, which for a worker earning the median wage would amount to $1.65 per week.

While neither presidential candidate has yet addressed fair scheduling issues, progressives in Congress have proposed a bill, The Schedules That Work Act, which would give workers the right to request more flexible or predictable work schedules and protect them from retaliation for making those requests. The legislation would also require schedules to be posted at least two weeks in advance and provide additional pay to workers who are subject to “justin-time” scheduling. Under just-in-time schedules, firms send workers home early from shifts when business is slack and require them to call in and report to work on short notice when the company needs them. These practices contribute to income volatility and make it difficult to create budgets, arrange child care, hold a second job, or attend school while working.

Despite support from both Clinton and Trump, workfamily policies will face significant political hurdles in Congress, especially if Republicans continue to control at least one chamber. Aside from concerns about his own work-family balance, House Speaker Paul Ryan has yet to offer support for policies such as paid leave, child care, and fair scheduling.

Child-care expansion and the creation of a comprehensive national paid family and medical leave program are two of Clinton’s most ambitious policy proposals to help working families. As a seasoned politician and pragmatist, she has also offered incremental steps that may provide a basis for striking a compromise with Republicans. Despite the obstacles, she would have one thing on her side if she is elected: The majority of voters, even those who identify as Republicans or independents, show strong levels of support for government intervention to provide paid leave and childcare assistance. In this case, what is good for the economy and good for families would also be good politics, too.

Clinton’s proposals for child-care assistance are

better

Targeted

at the lowand moderateincome families in need.

Katie Hamm is the senior director of early childhood policy at the Center for American Progress Action Fund. Sarah Jane Glynn is the director of women’s economic policy at the Center for American Progress Action Fund.

Fall 2016 The American Prospect 57

The New Rules of the Road: A Progressive Approach to Globalization The new president needs a fresh approach to trade.

By Jared Bern s tein a nd Lori Wa l la ch

W

hile political and media elites wonder why international trade has emerged as a top election issue this year, we were not surprised. Our question is more, “What took so long?”

Obviously, the anti-establishment candidacies of Senator Bernie Sanders and Donald J. Trump were instrumental in elevating the issue, but it is not hard to identify the energy source behind the current debate: The inherent inequities in the “trade” agreements pushed by the United States for the last 30 years have finally surfaced, and the voices of the people and the communities long hurt by those deals are finally being heard.

The important question for progressives is, “What now?”

How can we tap this moment such that we bring lasting change to an area of tremendous portent—globalization?

Globalization isn’t going away.

The first thing to realize is that, despite Trump’s nostalgia for a bygone era when the United States was insulated from global trade, stopping or slowing trade is not at issue.

Global trade volumes—imports plus exports—have grown from 25 percent of global GDP in the mid-1960s to 60 percent today. In the United States, that same metric has grown from 10 percent to 30 percent (with imports a larger share than exports over almost that whole time; i.e., we’ve run trade deficits). We view that expansion as potentially positive, as it is through expanded trade that we seek new markets for U.S. products, expand the supply of goods and services, and provide emerging countries with opportunities to grow by trading with wealthy countries.

But trade and contemporary free-trade agreements (FTA s) are far from synonymous. Today’s FTA s, of which the Trans-Pacific Partnership (TPP) is Exhibit A, are not mainly about cutting tariffs to expand trade nor are they about jobs, growth, and incomes here in the United States.

Rather, they’re about setting expansive “rules of the road” that determine who wins and who loses.

With 500 official U.S. trade advisers representing corpo-

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rate interests having been given special access to the policy process while the public, press, and largely Congress have been shut out, it is not surprising that corporate interests have thoroughly captured the negotiating process and ensured they are the “winners” under these rules. Their message to the rest of us has been: “Don’t worry, this will be great for you, too. And, hey, if it isn’t, we make it all better with adjustment assistance and some training.” The fact that the hollowness of such false promises is finally evident to the broad electorate provides an opening to come up with new rules of the road.

The new rules must prioritize the economic needs of low- and middle-income families while preserving the democratic, accountable policy-making processes that are essential to creating and maintaining the environmental, consumer, labor, and human-rights policies on which we all rely. In what follows, we briefly outline our “Out with the bad, in with the good” reform of FTA s. We also recognize that achieving such inclusive policies will require a new policy-making process to replace the current system of opaque negotiations, a system heavily influenced by hundreds of official corporate trade advisers while the “fast-track” process limits Congress’s role and largely shuts out the public.

Initiatives that must be part of the new “rules of the road”

Enforceable currency disciplines: When the rules are fair, Americans can benefit from expanded trade. But when trade partners are free to lower the value of their currencies to gain trade advantages, the negative effects are twofold.

First, with the “terms of trade” artificially tilted against us, countries with large and persistent trade surpluses subsidize a flood of imports into the United States while unfairly pricing our goods out of their markets. Second, the capital flows that facilitate this imbalance have given rise to underpriced credit, bubbles, and, ultimately, recessions. Therefore, we must include enforceable rules against such practices in the core texts of our trade agreements

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and enact domestic legislation that triggers automatic action against currency manipulators, rather than simply triggering reports or dialogue.

Enforceable and substantive labor and environmental rights and standards: Global commerce absent a floor of

enforceable international labor and environmental standards can produce a race to the bottom between nations in wages, working conditions, and environmental and health safeguards. Globally accepted labor and environmental standards exist, but they lack effective enforcement.

An efficient way to address this problem is to change the sequencing of FTA s in this space: Instead of enacting FTA s with a future commitment to enforce labor and environmental standards, any benefits to partner countries in terms of market access must be conditioned on confirmation that labor and environmental rights are not only provided on paper through changes to those countries’ laws, but are being enforced with real changes on the ground before the FTA takes effect, with benefits being halted if conditions deteriorate.

Rewarding those who play by the rules: In order for the benefits of our trade agreements to flow to the workers in the countries that sign the pacts and play by the rules, we must have clear “rules of origin” that can’t be easily gamed. Under the TPP, for example, a car assembled in a TPP country could enter the United States with dutyfree privileges even if a majority of the car’s parts come from China. By tightening “rules of origin” so that only goods with a solid majority of member-country content are treated as originating from member countries, the benefits of the deal will more appropriately flow to its signatories and their workers.

Selecting appropriate trade partners: The goal of U.S. trade agreements should be to facilitate trade flow, create jobs, and raise wages. Having the right trade partners is as important as having the right rules of the road. Here again, sequencing matters. Bad actors that violate worker and/or human rights or have long records of currency cheating will not become good actors if we simply invite them to trade more with us. Sadly, there is considerable empirical evidence from past U.S. trade initiatives with China, Vietnam, Russia, and other nations that supports this view.

Therefore, we must select trade partners based on their countries’ records of compliance with the terms of past trade agreements, international labor and environmental standards, and human rights and other criteria. While no country has a perfect track record, there is a wellunderstood continuum of compliance, and known bad actors should be barred from the negotiating table until they’ve made proven, effective efforts to begin cleaning up their acts.

Initiatives that should not be part of the new rules of the road

Investor-state dispute resolution: We understand and respect the view that, absent some form of investor protections, developing economies may lose potential investments when the risk is high. But the current investor-state dispute settlement (ISDS) process overly privileges international investors while sacrificing hard-won institutions of sovereign democracy. And the data show that countries with these agreements do not attract more investment.

By allowing investors to bring disputes to a panel of three corporate lawyers that can judge the actions of sovereign governments, the current ISDS system shifts multi­ national corporations’ investment risks onto the public.

It exposes the entire panoply of a nation’s policies and its treasury to broad liability if a private panel finds that state actions harmed individual investors’ offshore activities.

And this exposure is growing, as a recent explosive fourpart investigative series by Pulitzer Prize–winning journalist Chris Hamby revealed. Other research reveals considerable speculation by financial investors in ISDS cases. Such investors either purchase companies with the express purpose of filing an ISDS claim or directly bankroll cases in order to claim a share of the fine. (Investors refer to this practice as “third-party funding of international arbitration against foreign sovereigns.”) Gus Van Harten, a law professor who has studied these activities, finds that investors “can get an award for billions of dollars when that award would never come out in domestic law. It’s just a jackpot for speculators.”

Investment risk must be borne by the investors themselves; it is their skin, not ours, that should be in the game.

Operationally, this means that international investors must self-insure against the risk engendered by trading with countries that have legal systems they do not trust.

Surely, today’s innovative capital markets could handily price such insurance, which some investors already use.

The corporate empowerment agenda underlying ISDS is perhaps most apparent in the context of the proposed Transatlantic Trade and Investment Partnership (T-TIP) between the United States and the European Union. It’s evident that its purpose is not to safeguard bona fide investors from the capricious decisions of unstable governments, but to enable them to end-run the democratically established standards of signatory countries that have fully developed and transparent systems of law.

Rules that limit consumer product protections: We must eliminate the rules in our trade agreements that require us to import food and other products that do not meet our safety standards. We must also eliminate limits on border safety inspection and on labeling regimes that provide consumers with the information they need to make knowledgeable choices in the marketplace.

Let’s choose partners

based on

compliance

with human rights, labor, and environmental standards— and prior trade commitments.

Fall 2016 The American Prospect 59

Trade is one area where America’s next leader can make

Real

Progress, because the president defines trade policies and goals.

Patent and copyright protections: Trade agreements are not an appropriate instrument for requiring countries to establish “rent-seeking” protections for intellectual property rights. Given that the World Trade Organization already requires countries to enact lengthy patent and copyright protections, future trade agreements must not further limit the competition that brings down medicine prices and ensures affordable access to life-saving drugs.

Nor should they limit the ability of governments to negotiate prices with pharmaceutical firms for bulk purchases of medicines (to be used through government health-care programs such as Medicare and Medicaid). Extensions of copyright terms through trade pacts undermine access to information, and in the case of specific terms in pacts like the TPP, can undermine internet freedom.

Rules that limit financial regulation: Inadequate oversight of financial markets was a widely recognized cause of the Great Recession. This realization created the political space, against an extremely well-funded opposition lobby, to pass the Dodd-Frank financial reform package. We must not allow trade agreements to undermine this process or foreclose future improvements, and must therefore eliminate rules limiting financial regulation. Specifically, we must avoid bans on the use of capital controls and other macro-prudential safeguards and reject constraints on domestic regulatory policies that limit the size of financial institutions. We must also ban especially risky financial products or require firewalls to limit the spread of risk across financial products.

Rules that privatize public services and limit servicesector regulation: Our current trade agreements limit

federal, state, and local governments’ abilities to maintain essential public services, establish new ones, and regulate services provided to consumers. These limits must be eliminated. Trade pacts must include requirements that all service providers that operate within the United States—whether domestic or foreign—comply with U.S. environmental, land-use, safety, privacy, transparency, professional qualification, and consumer-access laws and regulations.

The negotiation Process must change

Ideas like these will not become reality without a new trade policy-making process. A more transparent process with opportunities for meaningful engagement, accountability, and oversight by the public and Congress—rather than the current regime that privileges the commercial interests that have long captured these negotiations—is needed.

Transparency: From the choice of prospective trade pact partners, to the formulation of initial U.S. negotiating positions, to years of back and forth on agreement texts, to final trade-offs to conclude a deal, the trade agreement

60 WWW.Prospect.org Fall 2016

process is uniquely secretive and exclusive. Trade negotiators from the countries in on the deal hammer out the agreement in private, with strict rules against releasing information or preliminary drafts to the public—including elected officials. Negotiators can meet with outside interest groups, and they do, but these groups are rarely allowed to see the agreement in progress and thus have no way of knowing if their input is heeded. In fact, the process in the United States has gotten worse over time, as in recent years trade documents have been subjected to nationalsecurity classification rules.

This must end. At issue is not the nuclear codes but the formulation of policies that will affect the everyday lives and economic prospects of all Americans. The draft texts that U.S. negotiators propose and the texts of agreements after each negotiating round must be made publicly available. The argument for the current process is that, were negotiators to be more transparent, stakeholders and political bodies would constantly be challenging their decisions and they’d never make progress. But this is clearly an untenable, undemocratic position: “If the people or their congressional representatives knew what we were doing, they’d never leave us alone!”

Democratic, open, and accountable policy-making:

Our current process for making trade agreements was designed in the 1970s, when trade agreements focused mainly on traditional trade matters such as cutting tariffs and opening quotas. Whether or not providing an exclusive, privileged role to commercial interests in such negotiations was a good idea then, it is not today. It has enabled wholesale corporate capture of the process and thus the morphing of “trade” agreements away from a focus on trade and toward a focus on harmful non-trade, often protectionist, policies.

Even if the scope of “trade” negotiations were refocused on actual trade expansion and the use of trade agreements to implement the types of policies we recommend, the current advisory system is indefensible. The vast majority—85 percent according to The Washington Post—of those who gave input to our trade negotiators on the TPP were from “corporate interests and their related trade associations.”

Our trade negotiators’ response to this imbalance has been to add new committees—for instance, on the environment—which are comprised of industry and public-interest advocates. Predictably, these committees simply deadlock on recommendations, while the committees focused on other industries and issues remain corporate-dominated.

Rather than tinkering with the advisory system’s composition, we should eliminate it entirely. If proposed U.S. texts and draft texts from negotiations are made publicly available, the main official advantage of the committee system—access to that information—would disappear. U.S.

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positions on trade deals can be formulated the way other U.S. federal regulations are: through the on-the-record public process established under the Administrative Procedure Act to formulate positions, obtain comments on draft texts throughout negotiations, and seek comments on proposed final texts.

Replace the fast-track process: To obtain agreements that benefit a wider array of interests, we need a process that formalizes the transparency and inclusiveness of the reforms described above. That includes establishing explicit criteria with which to select future negotiating partners, setting mandatory negotiating objectives based on the guidelines laid out above, and, rather than the executive branch unilaterally deciding when a “deal” is done, requiring Congress to certify that objectives have been met. A congressional vote on an agreement’s text before it is signed and entered into is essential to ensuring an open public debate.

We need a new model of globalization. Both the process and substance of FTA s has become unacceptably undemocratic and dominated by a narrow group of corporate interests. It has taken decades for the fundamental injustice and inequity of this reality to achieve political salience, and now that this has occurred, the results are not pretty.

Many voters who have long been arrogantly dismissed by political and economic elites as simply too short-sighted to recognize their own interests are rising up against both those established elites and globalization itself.

Yet there is nothing inevitable about this version of globalization nor the current U.S. trade agreement model.

Developing countries can raise their living standards through trade with wealthier nations, and advanced economies like our own can benefit from access to export markets and the increased supply of goods that trade can bring.

But we will not see better outcomes unless we derive and implement a new set of rules of the road.

Could these ideas come to fruition in the next administration? While it is hard to imagine a Congress that is both gridlocked and heavily financed by multinational business interests embracing progressive change in this space, trade policy is uniquely influenced by the executive branch. And for interests promoting trade liberalization, the old model simply has no future. Thus the only way forward on international commercial agreements and trade liberalization will require a rethinking of the rules. In the context of a choice between nothing or a new thing, a new administration empowering government agencies that promote labor, consumer, and environmental goals and riding herd over a refocused Office of the U.S. Trade Representative, headed by a trade representative committed to reforms, has the potential to transform trade policy in the spirit of the above ideas. Congress would then have to approve the new approach, but if these new trade goals proved to be popular with an electorate unhappy with the current rules of the road, this could be one area where the new Congress might follow the new president’s lead.

Importing Ideology? A Hanjin Shipping Company container ship approaches the Talmadge Memorial Bridge on the Savannah River, Savannah, Georgia, on March 9, 2016.

Jared Bernstein is a senior fellow at the Center on Budget and Policy Priorities.

This article represents his own views, not CBPP’s. Lori Wallach has been director of Public Citizen’s Global Trade Watch since 1995.

Fall 2016 The American Prospect 61

Infrastructure: Can We Finally Think Big? The defining challenge of the next president’s infrastructure agenda will be persuading Congress to come along for the ride.

By G abrielle G u rley

T

he Great Depression stimulated America’s first major investments in modern infrastructure.

Undertakings like the Hoover Dam, LaGuardia Airport, the Lincoln Tunnel, the Golden Gate Bridge, and thousands of lesser-known road, rail, sewer, waterway, levee, and energy projects put millions of people back to work and transformed the American landscape. These marvels of American 20th-century infrastructure have long since ceded pride of place to European and Asian 21st-century state-of-the-art projects. Today, New Deal–era and even older assets barely keep the United States moving; many, if not most of them, have long since passed their useful lifespans.

The Great Recession brought the country to another crossroads on infrastructure. But where the New Deal went full throttle on innovation, President Barack Obama’s Rooseveltian instincts were curbed by 21st-century economic realities, obsession with deficits, and Republican intransigence. Most of the hundreds of billions in American Recovery and Reinvestment Act (ARRA) projects went to aid for cash-strapped states and to tax cuts for the middle class, not to long-term infrastructure. To stave off economic Armageddon, getting people back to work fast was the prime directive and shovel-ready was the mantra. “Timely, targeted, and temporary” meant uncomplicated highway projects. According to Casey Dinges of the American Society of Civil Engineers, only about $100 billion went to infrastructure, and about half of that went to transportation.

The gulf between the aspirational New Deal and the modest ARRA leaves Obama’s successor with a conundrum. The country’s infrastructure deficit demands a three-pronged response over the next decade: An accelerated maintenance program in sectors from aviation to waterworks, in tandem with the building of the next generation of infrastructure investments worthy of a major international economic power. There is also the need of financing a green transition.

In 2013, the American Society of Civil Engineers’ quadrennial “Report Card for America’s Infrastructure” showed that the United States needed to invest $3.6 trillion by 2020, in 16 sectors, to raise the country’s overall

62 WWW.Prospect.org Fall 2016

score above a D+. It is doubtful that the next report card, due out in early 2017, will show substantial gains.

State and local office-seekers, not presidential candidates, are the ones who usually debate how much to spend on filling potholes, upgrading drinking and wastewater pipelines, and financing public improvements generally.

But the subject came roaring into the 2016 presidential election with a ferocity that hasn’t been seen since Franklin Roosevelt bested Herbert Hoover. Moreover, in a presidential campaign noted for its unparalleled hostility, both Hillary Clinton and Donald Trump agree that the United States must spend more on infrastructure.

Despite Republicans’ continued insistence that Americans are weary of tax-and-spend Democratic policies, a 2015 American Public Transportation Association/Mineta Transportation Institute study found that 75 percent of Americans support increased spending on public transit infrastructure.

This November, voters will consider state ballot initiatives totaling $200 billion on public transit investments alone.

Though voters may back the next president on increased infrastructure spending, Congress is not a willing partner.

State transportation policy-makers greeted the passage of the five-year, $305 billion Fixing America’s Surface Transportation Act (the FAST Act) with enthusiasm, not because of its size (spending increases were small) but because states finally could count on a reliable stream of federal funds after years of short-term, sometimes last-minute, authorizations.

But keeping infrastructure assets in good repair is beyond the capacity of most states and localities. New York and New Jersey and their shared Port Authority are looking at a price tag of more than $20 billion on new Hudson River rail tunnels. New York will spend about $8 billion on LaGuardia Airport renovations and on rebuilding and completing the new Tappan Zee Bridge—which is being constructed on the cheap, just like its predecessor. New Jersey must find nearly $1.5 billion to renovate the Bayonne Bridge. States respond by stretching out investments, so projects such as New York’s Second Avenue Subway line that could be completed in years take decades—a tactic that adds costs by snarling traffic and inviting overruns.

Unfortunately, neither Clinton’s five-year, $275 billion

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plan nor Trump’s “at least double her numbers” calculation begin to address the trillions needed in leaky pipes, corroded tracks, decrepit trains, and faulty wiring, much less 21st-century smart grids, protections against sea-level rise, and innovative green investments.

julio cortez / ap images

In a world of low interest rates, federal, state,

and local officials should be moving aggressively to finance infrastructure investments. But so far, the perverse deficit obsession that is the legacy of the Great Recession has discouraged new debt financing, even for infrastructure. Of the dozens of transportation ballot initiatives before voters across the country this November tracked by the Center for Transportation Excellence, only a few questions involve bond issues; most of the others rely on increasing taxes.

In California, Proposition 53 proposes to strip state lawmakers’ authority to issue revenue bonds for projects above $2 billion. The measure, led by a multimillionaire grower and deficit hawk, Dean Cortopassi, is evidently aimed at blocking California’s debt-financed high-speed rail and the construction of two tunnels to convey water from northern to southern California.

Former Pennsylvania Democratic Governor Ed Rendell, a senior adviser to Clinton’s infrastructure policy team (which includes former Federal Aviation Administration Administrator Jane Garvey and former U.S. Department of Transportation Deputy Secretary John Porcari) recommends $2 trillion in government and private-sector spending on a ten-year infrastructure-revitalization program.

In the first 100 days, if Clinton is elected, Rendell would like to see a menu of short-term options, such as reviving the Build America Bonds program, strengthening a transportation financing program, ending prohibitions on new interstate highway tolls, and calling for an infrastructure bank. Longer-term proposals might include revisiting a capital budget for the federal government, an idea that has been repeatedly rejected. Trump has not, at the time this story went to press, provided a detailed infrastructure program.

The Obama administration’s Build America Bonds program, enacted as part of the stimulus, was quite popular.

Rendell says there was a “gold rush” on the program before it ended. According to a 2011 U.S. Treasury Department report, the program issued $181 billion in bonds to states, the District of Columbia, and two territories, and saved them $20 billion in borrowing costs. Most municipal bonds are tax-exempt, but under the Build America Bonds program,

the federal government paid a portion of the interest payments for the state or locality, reducing the payments they made. But the program added to the deficit and got shelved.

In 2011, Obama proposed allocating $10 billion to capitalize an infrastructure bank, setting financial parameters for carefully selected projects, and using private capital and local funds to leverage federal costs. Projects would be self-financing and selected by a seven-member board of governors, a framework akin to a Federal Reserve System for infrastructure. House Republican leaders declared the proposal dead on arrival.

There are many questions and not enough clear answers:

Would the bank work like a revolving loan fund with payback required? What master planning process should determine priorities for investments in transportation, water, and energy? How would the bank avoid (or perhaps co-opt) pork-barrel pressures? Can the president deploy a sophisticated political strategy to sway Congress?

An infrastructure bank bill would be a jurisdictional nightmare, says Beth Osborne, a Transportation for America senior policy adviser and former U.S. Department of Transportation official. “It is going to die in Congress because every committee has jurisdiction, but nobody has jurisdiction and nobody owns it,” she says. “That’s a bad legislative strategy.”

Rendell believes that the politics can be overcome. “If somebody lucidly and clearly explains how we can do this

Roebling Wept: Building the new Tappan Zee Bridge over the Hudson on the cheap

Fall 2016 The American Prospect 63

Eight Projects We Need Hudson River “Gateway” Tunnel Rail Project: The Hudson Rail Tunnel is the only passenger rail link between New York’s Pennsylvania Station and Amtrak’s Northeast Corridor between Boston and Washington, D.C., the country’s most heavily

64 WWW.Prospect.org Fall 2016

traveled rail line. Hurricane Sandy flooded the Hudson River tunnels in 2012, which made a bad situation infinitely worse. Roughly 450 trains travel through the tunnel every weekday.

The tunnel opened in 1910.

Chicago Region Environmental and Trans-

portation Efficiency Program (CREATE): Consisting of 70 projects in northeastern Illinois, this freight and passengerrail project aims to alleviate bottlenecks where the rail tracks intersect with roadways, and passenger and freight lines with each other. Freight transport suffers lengthy delays—it can take more than a day for

a Build America Bureau that debuted in July. The bureau coordinates with the Office of Infrastructure Finance and Innovation that oversees the popular Transportation Investment Generating Economic Recovery (known as TIGER) grant program. By shaking up the Transportation Department’s organizational chart, in part to respond to past concerns about a lack of efficiencies and a lack of transparency, the department aims to improve coordination, provide more assistance to applicants, and get funding out the door faster. But there was one big step back, too: Congress slashed the well-regarded TIFIA program’s annual funding from $1 billion in 2015 to just under $300 million in 2016, rising only slightly in succeeding years—a 70 percent cut.

Interest costs for a new debt-financed infrastruc-

ture initiative will never be lower than they are right now.

With the Federal Reserve poised to raise rates, the next president faces a narrowing window of opportunity to move an agenda predicated on low borrowing costs. On the revenue side, there are only a few options that can pass political muster. Removing federal prohibitions on interstate tolls should be one of them. Since states handle tolling, federal deficit issues do not come into play. Such a shift also might compel state officials to start conversations about whether to continue to rely on a fuel tax or switch to a vehicle-miles-traveled or other user fee based on the amount of driving an individual does. “If you were looking to make a federal investment that would generate new revenues that states could then use to wean themselves off federal money, that would be the way to do it,” says Jim Aloisi, a former Massachusetts secretary of transportation.

Similarly, prodding Congress to use taxes collected for specific purposes in those areas would solve other problems.

U.S. ports are constrained by poor water and land access.

Increases in the size of ships and cargo volumes as a result of an expanded Panama Canal promise to create further

freight rail to traverse the Chicago area, since passenger trains have priority.

Delays through Chicago have cascading effects on freight transport through the rest of the country. As of June 2016, 27 of the projects have been completed; others are at various stages of completion, or are waiting for additional funding.

Mississippi River

Flood Control: Baton Rouge, which experienced historic flooding this summer, had federal floodcontrol projects that were never finished after massive floods in 1983. In December 2015, Missouri experienced historic flooding and nine levees were overtopped.

Levees received a D- from the American Society of Civil Engineers. The extent

fotolia

without impacting the federal deficit and without putting it up for a revenue vote, I think you’ve got a chance,” he says. But it’s hard to imagine winning support for an infrastructure bank—which does involve borrowing—without challenging the premise that debt-financing is always bad.

“We have to build some faith that what pays back the bonds that we use to finance infrastructure is going to be the increased economic activity that results from having a better economy that is better served by the kind of infrastructure that makes commerce possible,” says George McCarthy, the president of the Lincoln Institute of Land Policy, an independent Cambridge, Massachusetts, think tank.

If the basic set of assumptions is not changed, then the government will be thrown back on incremental expansions of existing approaches. That could include deeper coordination among existing federal loan programs, such as the Transportation Infrastructure Finance and Innovation Act (TIFIA), the Railroad Rehabilitation and Improvement Financing program, and the Water Infrastructure Finance and Innovation Act, so they could operate in concert as an “infrastructure bank lite,” says Robert Puentes, president and CEO of the Eno Center for Transportation.

“Infrastructure investments are off to the side, where they are unconnected to things like social-mobility goals or economic or environmental goals, [but] infrastructure is the common thread that cuts through all these things,” says Puentes. “If you are looking at doing housing, transit, and water investments in the same cities, by combining and coordinating them you get better bang for the buck, because we all know that these things are all connected anyway.”

On the transportation front, the FAST Act moved existing loan programs forward in the “lite” direction by steering them (along with an existing bond program and a new grant program) into

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bottlenecks. Only about half of the harbor maintenance tax established to fund navigation channel–maintenance activities like dredging by the U.S. Army Corps of Engineers (a much maligned but indispensable infrastructurebuilding agency) goes to those activities, since Congress has directed those revenues to other federal budget programs.

The best short-term federal revenue opportunity is the one that is the most controversial and consistently dead on arrival: increasing the federal fuel tax and linking it to inflation. The tax has not been raised since 1993. Congress keeps the Highway Trust Fund solvent with transfers from general revenues.

According to a 2013 Congressional Budget Office report, increasing the gasoline and diesel-fuel taxes by 35 cents a gallon and indexing them to inflation would generate roughly $450 billion over ten years. McCarthy of the Lincoln Institute argues that the United States is “backpedaling.” Low gas prices have stimulated rather than suppressed American driving habits. “If we care about climate, we should make it more costly to burn fuel, and just suck it up,” he says.

Eight states—Georgia, Idaho, Iowa, Michigan, Nebraska, South Dakota, Utah, and Washington—passed gas-tax increases in 2015. This year, Maryland and Washington state also authorized increases. Given the urgency on infrastructure spending, state lawmakers’ fears about voter retribution may have already peaked. A 2015 American Road and Transportation Builders Association analysis found that in 2014, 95 percent of Republican state lawmakers and 88 percent of Democratic state lawmakers who voted to approve state gas-tax increases in 2013 and 2014 won their 2014 re-election races.

“Why is there such a different perception on the political implications of casting a vote like that in Washington?” says Dinges of the American Society of Civil Engineers.

“It’s been so long since they had a vote like that, how do they even know?”

of the national levee system is unknown and there is no national levee safety program. An increase in severe storms promises to exacerbate this issue.

Smart Grid: The 2009 stimulus prodded the United States toward an automated, digital, 21st-century answer to the country’s antiquated electricity distribution framework. It is a

complex task—the private sector oversees much of the infrastructure, another group of companies and independent organizations transmits the power, and state utilities regulate prices.

Major concerns include getting consumers to switch to smart meters and continuing research into energystorage options, especially from renewable energy

Paradoxically, the demise of earmarks created a kind of black market in horse-trading that is even less transparent.

Unlike their state and local counterparts who can link a sales-tax increase to a specific project, federal lawmakers aren’t able to spell out how a higher fuel tax benefits certain projects. The complexity of funding in sectors like transportation does not help members of Congress make a case for taxpayers to pay more, says Osborne of Transportation for America. “That just sows confusion, and confusion is not a good thing when you are asking people for money,” she says.

Yet federal lawmakers might think differently about a yes vote if they were able to see their state’s top maintenance and brand-new projects funded by a fuel-tax hike.

Rendell would pitch allowing every state to submit a list of the most important rehabilitation and new projects that could get kickstarted with a fuel-tax increase.

Identifying the right mix of financing plans and sustainable revenues is only a first step. Scarce federal funds should flow to the most critical national projects in transportation, water, energy, and other sectors. Ideally, those would be undertakings that capture politicians’ attention and excite voters enough to pay for them. But which ones? A Treasury Department–commissioned, third-party report-in-progress aims to identify between 25 and 50 of the country’s most economically significant transportation and water infrastructure projects. (Typically, the transportation and water sectors involve more public dollars than others, such as energy, which is largely private.) Such a plan—one that links a national infrastructure strategy and well-vetted projects to sound financing and funding plans—along with a new president supporting a political course of action to move the whole enterprise forward, stands a better chance of getting serious attention from a skeptical public.

One piece of Obama’s stimulus legacy that offers a proven template for selecting and funding projects is the

sources like wind and solar.

Interstate 10 Improvements: The fourth-longest U.S. interstate highway route runs from California to Florida.

California and Arizona have launched major projects to relieve congestion in Los Angeles and Phoenix, and communities in other states along the 2,500-mile route are also

pursuing new initiatives.

Alabama officials are particularly eager to begin construction of a new span over the Mobile River.

Targeted High-Speed Rail: As President Obama discovered, high-speed rail is a national priority bogged down in congressional parochialism and regional resentments. The next administration should

Interest costs for a new debt-financed infrastructure initiative

Will Never

Be lower than they are right now.

scale back, not abandon, his grand vision. There are four long-distance U.S. routes that merit investments. California currently suffers from buyers’ remorse over its expensive, slow-developing San Francisco-to-Los Angeles high-speed route. It’s an understatement to say that the project would transform transportation patterns on the entire West Coast.

Fall 2016 The American Prospect 65

Decaying infrastructure

REduces

Productivity

and increases the nation’s vulnerability to natural disasters.

Department of Transportation’s TIGER grant program.

Successful and popular (especially since it does not require state or local matching funds), the competitive annual grant program has bipartisan appeal, distributing more than $5 billion to various levels of government in all 50 states and several territories. It gives preference to projects of national, regional, or metropolitan-area significance, involving both private and public entities that span multiple communities and regions, and displays creative and collaborative problem-solving. There is a fierce and unmet demand for these grants. In 2016, the department received 585 project applications, adding up to $9 billion. Officials distributed $500 million to 40 projects that support nearly $2 billion in investments. Competition assures that funding goes to communities and entities that have done their homework. But it also highlights the need to assist communities that may not have the money or the people power to pull together a federal application.

The 2007 Minnesota bridge collapse, last year’s Phila-

delphia Amtrak crash, the ongoing Washington, D.C., subway maintenance crisis, and the Flint drinking-water debacle failed to create national urgency on infrastructure investment. Business leaders wring their hands over waning American competitiveness, but their appeals fail to make the connection to America’s outmoded infrastructure. European and Asian capitals may have sleeker buses that travel in dedicated lanes and high-speed intercity connections, but many Americans have not experienced public transportation outside the U.S.—only about 40 percent of Americans have passports —so extolling transit systems thousands of miles away from Main Street does not move the needle. Obama’s interest in generating excitement about infrastructure with initiatives like high-speed rail led Congress to parry his moves for reasons that had more to do with politics, ideology, and race than with America’s international competitiveness deficit.

A proposal for a route from Oklahoma City to South Texas via Dallas, Austin, and San Antonio presents an intriguing opportunity to relieve growing congestion in the Southwest. Currently, the Federal Railroad Administration and the Texas Department of Transportation are studying the route. This project is certain to draw more

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interest, especially if a privately financed Dallas-toHouston bullet train project falls apart. The Dallas-toHouston bullet train, which would be the first of its kind in the country, has local and political support. But a mounting rural offensive against the line over potential eminent-domain takings and ongoing doubt that the project can be

constructed and operated without public subsidies poses hurdles. Aside from coordinating environmental studies, the federal government has bowed out of that project, leaving Texas to mediate the feud.

Thanks to the largest loan in Department of Transportation history, Amtrak plans to deploy brand-new trains on the

Political scientist Richard Neustadt said that presidential power is “the power to persuade.” To promote his Interstate Highway System, Dwight Eisenhower appealed to national unity. “Together, the united forces of our communication and transportation systems are dynamic elements in the very name we bear—United States,” Eisenhower said in 1955. “Without them, we would be a mere alliance of many separate parts.” But Eisenhower ultimately managed to gain congressional support for the highway system—and a Highway Trust Fund to help maintain it— not by extolling the virtues of transportation or national unity but by linking it to national defense. Eisenhower’s success provides a road map: yoking important infrastructure investments to a credible rationale for them that gives federal lawmakers political cover and gives voters a mission they can get behind.

But the coarsening of contemporary political discourse has tarnished a president’s persuasive powers. Today, decaying infrastructure increases the nation’s vulnerability to natural disasters, terrorism, and other threats—national security issues that many federal lawmakers are eager to trumpet until it comes time to act. Whether a plan for substantive investments backed by sustainable funding actually gains traction in the first 100 days of the new administration depends on the new president’s ability to convince Congress that infrastructure matters now. Sustained infrastructure investments could begin to allay economic insecurities by using improved physical capital to build the human capital that is key to rebuilding the middle class.

Nevertheless, what stands between the new executive and infrastructure investment is not funding or lack of interest of average citizens; it is the disconnect between Congress and the rest of the country on spending priorities. Part of the problem is that some of the people who have come to Washington to make law repeat the canard that government is the problem and cannot not be trusted, regardless of the evidence that Americans rely on all levels

Northeast Corridor from Boston to Washington, its busiest and only profitable route. For the most part, those trains will run on existing power, rail beds, and bridges, spotlighting more poor American infrastructure choices.

Amtrak got a small annual boost under the FAST Act, but the nearly $30 billion the company needs for a

complete Northeast Corridor overhaul is unlikely to materialize in the near future. Vice President Joe Biden said it best: “Why in this country are we so boneheaded to not understand the essential value of a rail system that is modern throughout the whole country? Why do we argue about whether or not it makes sense?”

Governing

ross d. fr anklin / ap images

Agenda

of government to stave off or at least mitigate catastrophes, from hurricanes to recessions.

The next president has to hammer home strong messages over the cant from Washington partisans who are content to let America crumble. Launching transformative infrastructure investments begins with a philosophical shift that reworks attitudes toward government in order to identify the mechanisms required to unleash the trillions needed to start that work. States and localities do not have the resources, funds, or big-picture point of view to consistently deliver world-class infrastructure projects.

Building infrastructure in the 21st century means tying a national economic program to infrastructure projects that provide good middle-class jobs for construction workers, planners, procurement specialists, and others, preferably before another decade goes by.

“There was a time when America was great as a result of good leadership, sound planning, and the ability to actually get people to see beyond short-term, narrow selfinterest to longer-term kinds of benefits,” says McCarthy of the Lincoln Institute. “The middle class was created with infrastructure; people just don’t understand that. …

We need a leader who can actually get people to see it.”

Despite natural and man-made disasters like Katrina and Flint, too few Americans have grasped the fact that we face an infrastructure emergency. Unlike the Great Depression, the financial collapse and the Great Recession created a psychology of public-sector austerity rather than a 1930s-style wave of new public investment.

What continues to escape America is the will to power forward, instead of being forced into action by a slowrolling catastrophe. Can the next president cajole 535 lawmakers to think differently and imagine Eastern and Gulf coastal cities being hardened against sea-level rise with newly created wetlands, state-of-the-art flood barriers, drainage systems, permeable surfaces, and new construction, elevated and set back from shorelines? Or interior

Nuclear Waste Repository: In 2015, Great Britain added identifying radioactive waste storage sites to its roster of national infrastructure priorities. In the United States, the unique properties and requirements of handling spent nuclear fuel have typically meant that nuclear waste disposal gets evaluated apart from

industrial hazardous waste disposal. But the problem is immense and has been virtually ignored since President Obama halted the controversial siting process for a national nuclear waste depository at Yucca Mountain, Nevada, in 2010.

The focus has shifted to short-term aboveground storage alternatives until an underground reposi-

cities and towns keeping tabs on well-maintained levees?

Surely, in a wealthy country, drinking water can be clean and the pipes that convey it lead-free. The power grid can be smart—fully automated and backed up, with vastly improved transmission and distribution facilities and a vigorous cyber-security program that monitors threats, designs responses, and prepares the public for outages of all types. It’s not a stretch for the United States to have

smooth and well-paved highways everywhere, mass transit that works, modern air-traffic control, or high-speed rail hugging the coasts from Maine to Florida and Washington state to southern California.

The price tag for these wonders easily runs in the tens of trillions of dollars. Yet what seems fiscally utopian is urgently needed. Can the next president provide the leadership to narrow that gap?

tory gets sited, but those facilities are more expensive and more dangerous than underground storage.

Meanwhile, nuclear power plants continue to store waste on site, an expensive and increasingly risky proposition.

Coastal Resilience Projects: About half of Americans live within 50 miles of coastlines, and Hur-

ricanes Katrina and Sandy demonstrated that these American communities are unprepared for severe storms that destroy lives, property, and infrastructure.

With federal assistance, states and localities are exploring ways to “harden” coastal environments to absorb and recover from flooding by nourishing marshlands, restoring

Showing Its Age: Work is ongoing to connect Loop 303 with Interstate 10 in Goodyear, Arizona.

beaches and dunes, and similar efforts. A more difficult set of projects will involve important public conversations on eminentdomain issues: Americans may finally have to cease building in certain areas and abandon regions that regularly suffer damage only to be rebuilt, often with public funds, in order to save lives and communities beyond.

Fall 2016 The American Prospect 67

Challenging the New Curse of

Bigness Most of today’s abuses call for antitrust remedies from the Progressive Era— if we just get serious about enforcement.

B y K . Sa beel R a h ma n

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opposite: sc anr ail / istock by get t y images; t h i s pa g e : h a r r i s & e w i n g c o l l e c t i o n / l i b r a r y o f c o n g r e s s

I

n a January speech on the excessive economic and political power of big finance, Bernie Sanders declared, “If Teddy Roosevelt, the Republican trust-buster were alive today, he would say, ‘Break ’em up.’ And he would be right.” Hillary Clinton invoked the same legacy. “It’s time to take a page from Teddy Roosevelt’s book and get our economy working for Americans again,” Clinton wrote last fall in an op-ed that called for expanded antitrust enforcement to counteract increasing corporate concentration.

The abuse of private power was the central concern for progressive reformers a century ago—and the same issues resonate today. From railroads to oil to finance, men like Andrew Carnegie, Cornelius Vanderbilt, John Rockefeller, and J.P. Morgan had centralized control over these core industries. Some used direct corporate ownership; others established networks of companies via trusts or interlocking boards of directors.

These industries, like their modern successors, were the necessary infrastructure of the economy. That made citizens vulnerable to concentrated power: Farmers had to pay extortionate prices to ship their produce; small businesses couldn’t get credit on reasonable terms; potential rivals with better or cheaper products couldn’t compete. The result was not just concentrated economic influence but excess political influence, as these titans got favorable policy treatment that redoubled their power.

Responding to these threats of the first Gilded Age, Progressive Era reformers developed a variety of tools. The best known of these were antitrust laws designed to break up dominant corporations. But there was much more. In many states and localities, reformers defined and regulated public utilities; some state and local governments went further, creating public entities.

These three strategies—antitrust, public utility regulation, and public options—formed the backbone of Progressive Era economic reform, and informed the early New Deal. But over the last four decades, each of these tools has been blunted. Today we are seeing the costs of these policy reverses in new forms of abusive private concentration. From too-big-to-fail finance to new concentrations of power among internet and tech giants like Google, Amazon, and Uber,

the problem of bigness is again a central concern. In this new Gilded Age, addressing the problem of private power requires looking back at the strategies of Progressive Era reformers, reviving and adapting these concepts and tools of antitrust, public utility, and public options to address the new forms of private power dominating today’s economy.

The Progressive Legacy and Its New Application

A key adviser to candidate and later President Woodrow Wilson before Wilson appointed him to the Supreme Court in 1916, Louis Brandeis memorably called the problem of private power “the curse of bigness.” Brandeis, like other reformers of the time, saw the problem as encompassing more than economic efficiency or consumer welfare; at its core, the curse of bigness raised fundamental concerns of economic and political liberty. The problem was that these corporate entities accumulated a kind of semisovereign power, but without any of the checks or balances we expect of political authorities. As Brandeis argued, the result was that “there develops within the State a state so powerful that the ordinary social and industrial forces existing are insufficient to cope with it.” For Brandeis and his fellow reformers, such private power required a variety of strategies to be curtailed.

Antitrust. A vibrant, dynamic, and free economy, Brandeis argued, depended on robust competition, but paradoxically competition and liberty alike could only be protected through extensive regulation against concentration. By breaking up large firms into smaller entities, antitrust law would prevent exploitative monopolies, and ensure a free and competitive market for businesses and consumers alike. While some commentators have since dismissed Brandeisian antitrust as a naïve yearning for a pre-industrial age, the reality is that Brandeis and other Progressive Era reformers were not anti-bigness; rather they sought to develop policies that would hold corporate power accountable, ensuring that bigness served the public good.

Public Utility Regulation. This pragmatism is exemplified by the tools that these reformers developed to complement antitrust. Even Brandeis sought to preserve some forms of consolidated production where it would serve the

For Louis Brandeis, the private power of large corporations raised fundamental concerns about economic and political liberty.

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public interest. Unlike the trusts that served economic elites rather than the public, some monopolies in industries like transportation or other social necessities could be permitted—so long as these concentrations were closely overseen by regulation.

Starting in the late 19th century, state and local governments developed the idea of public utility regulation, imposing new legal obligations on private monopolies—for example, requiring railroads to engage in fair pricing and to serve all comers equally. These obligations had a deep history in the common-law tradition of “common carriers” and “public callings,” where industries like transportation or innkeeping were seen as providing a service to the public at large, and therefore were laden with special legal obligations to serve all comers without discrimination, to accept reasonable and fair prices, and to undertake a service once offered.

These common-law obligations were gradually absorbed into the emerging legal doctrines pertaining to highways, rivers, ports, and innkeepers, and then served as an intellectual touchstone for these new experiments with state and municipal utilities. As historian Bill Novak has argued, for Progressive Era reformers, “utilities” encompassed much more than water and electricity and railroads. Progressives created state- and city-based utilities in a wide range of goods and services, covering everything from transportation and telecommunications to milk, fuel, and banking. Leading reformers and scholars, from Brandeis to Robert Hale to John Commons, suggested that such public utility regulation could be justified not only in industries that possessed economies of scale in production, but also in those industries that provided social necessities, where the vulnerability of citizens, businesses, and communities to exploitation by the private provider was most threatening and troubling.

Public Options. In some instances, these regulatory obligations would not be enough, and reformers instead sought to provide a service directly through a government-chartered entity. During the Progressive Era, the first municipally owned utilities in electricity, water, and transportation were chartered as state-run entities charged with operating and providing the service for the public at

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large. Rural electrification co-ops began with government enabling legislation and subsidy.

This idea of “yardstick competition”—where a state-run provider would offer not only a basic version of the service, but also a competitive benchmark on pricing, quality, and access that would drive private firms to match or better this baseline—motivated Franklin Roosevelt’s own push for public electric utilities like the Tennessee Valley Authority.

The Great Reversal

Starting in the 1970s, each of these three strategies of antitrust, public utility regulation, and public options was gradually undermined through the resurgent political power of busi-

Reviving Public Options: FDR used yardstick competition. Public providers like TVA drove down prices and kept the private sector honest. ness, given legitimacy by influential critiques from the rising conservative law and economics movement. First, scholars argued that regulatory agencies were likely to be “captured” by industry interests. Second, the new economic models promised more scientifically objective metrics for regulation based on economic efficiency and consumer welfare, rather than the vague, moralized goals of freedom from corporate dominance espoused by Progressive Era reformers. Third, these theories posited self-correcting “free” markets, in which the absence of regulation would ensure efficiency and innovation.

In the antitrust context, the focus on efficiency and consumer welfare led to a shift away from concerns of concentration toward a more narrow focus on consumer prices. In this view, falling prices indicated healthy market innova-

tion. So long as companies did not use market power to charge higher prices, mergers and increased concentration would be permitted.

Antitrust enforcement actions fell, as courts and regulatory agencies took a more permissive stance on concentration. Public utility regulation and state-run public options also fell out of favor. These critiques warned that regulated utilities would be incentivized to overinvest, driving up their base rates by gaming the formulas for determining fair prices— ultimately undermining consumer welfare.

Deregulation and privatization swept industries from airlines to electricity. This dismantling of regulations was not just a conservative project. Fearing inflation and inept or captured

ap images

President Roosevelt inspects the Chickamauga Dam near Chattanooga, his first visit to this unit of the Tennessee Valley Authority, November 21, 1938.

public agencies, many Democrats in the Carter era took these critiques on board—as did Clinton-era policy-makers, to varying degrees.

Decades later, we are witnessing the repercussions of these intellectual and policy shifts.

On the surface, many headline industries of the internet economy suggest a healthy level of technical innovation, rising consumer choice, and falling prices—measures that would seem to indicate a vibrant economy. But the reality is a revival of corporate power and abuse that echoes and evokes the Progressive Era abuses and reforms. As The Economist recently reported, many sectors of the economy are increasing in concentration, while new firm entries have declined. Corporate profits are

at a new high; today, American companies enjoy a near-record rate of return on investment, around 16 percent. While high profits are generally good for an economy, research by two of Obama’s economic advisers, Jason Furman and Peter Orszag, suggests that profits at this level imply that American companies are extracting wealth from workers and consumers, rather than creating it.

The problem is not just market concentration, but entrenchment: Established firms are getting savvier about securing their market position, which in turn makes it easier to deflect rivals and extract rents. As Robert Reich, David Dayen, and others have documented, the corporate winners of the current

economy are not small startups and innovators, but rather corporate giants skilled at locking in their market share.

In agriculture, seed and agrochemical giant Monsanto retains its dominant position in part by requiring in its contracts with farmers that they plant only Monsanto seeds, and by tailoring their seeds to work best with Monsanto fertilizer products. The airline industry, liberated from regulation, has continued to consolidate; four providers now carry 80 percent of passengers. Coincidentally, airfare prices have stayed level even as services, amenities, and fuel costs have all gone down. Or consider the battles over cable and internet providers like Comcast, which can leverage their control over access to telecom services in neighborhoods to jack up prices, sell additional bundled services like voice and internet access, and keep out competitors from operating in the same regions. More recently, critics have raised concerns about Google’s leveraging of free or cheap services to establish market dominance in search and information provision, which it then uses to favor its own content in searches.

These concerns—market dominance and entrenchment, price discrimination and consumer lock-in—would be familiar to reformers of Brandeis’s era. At the same time, we also face new variations on old forms of private power. New industries unheard of in Brandeis’s day—from cable giants like Comcast to online platforms like Google—use novel strategies of market power. If the Progressive Era strategies of antitrust, public utility regulation, and public options are to be effective in meeting today’s economic inequities, they will have to be revived, adapted, and combined.

A New Antitrust— and an Old Problem of Finance

Antitrust offers an important corrective to the trend toward concentrated markets, as some policy-makers are beginning to argue. This spring, Congress held a hearing on competition policy during which members of both parties raised concerns about economic concentration, calling for more robust enforcement of antitrust laws. In April, the Obama administration issued a new executive order requiring agencies to develop new methods of detecting market entrenchment and anticompetitive behavior,

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d o u g s t r i c k l a n d / c h at ta n o o g a times free press / ap images

and to refer violations to the Department of Justice and the Federal Trade Commission.

Using existing antitrust laws, the FTC and the DOJ could scrutinize the merger boom more closely, in particular focusing not just on horizontal mergers but on vertical integration as well.

These agencies might take a closer look at how patterns of investment, especially among hedge funds and other financial firms, might be centralizing investor control in problematic ways. They might also block mega-mergers that have tended to be approved in recent years, like the Charter– Time Warner Cable merger this year or the Comcast-NBC merger of 2009, which was approved in 2011. Con- The TVA Today: A control room at TVA headquarters in Chattanooga, where the city uses public power to offer fast, cheap Internet gress could similarly update antitrust statutes to require more expan- to cordon off derivatives-trading also represents facilitate postwar economic growth and relativesive review of market competition effects a variation on this firewalling approach. And the ly high incomes for workers in the financial secfor mergers and market concentration. Volcker Rule—at least as originally proposed, tor. To restore finance as a stable but restrained Reviving antitrust tools can help address the before it was watered down in Congress and public utility today, we might expand capital vexing problem of too-big-to-fail financial firms. then subjected to intense industry lobbying in requirements to force banks to become more Rather than regulating such firms with expand- its implementation—contemplated an absolute risk-averse and limited. Or, as Morgan Ricks ed oversight from the Fed, the firms can be bro- size limitation on financial firms to less than 10 suggests, we might close loopholes in the shadow ken up into smaller entities that would pose percent of the total market of deposits, plus a banking sector, bringing firms that depend on no systemic threat to the economy should they ban on proprietary trading. cash-like sources of financing, like repo agreeThese antitrust approaches can be combined ments or money-market mutual funds, under fail, capping bank size by some metric, such as share of total deposits. Meanwhile, the problem with public utility concepts to address more fully the same New Deal–style arrangement, providof contagion and systemic risk—the danger that the problems of modern financial regulation. ing deposit insurance in exchange for limiting risk in one area of the financial system can trig- In addition to tackling bigness and contagion, risk-taking activity, to prevent future panics. ger a collapse in other areas, eventually freez- finance at its core might be considered a public ing basic lending and liquidity, as happened in utility. New Deal banking regulations imposed Public Utility Regulation September 2008—can be addressed by erecting ceilings on savings rates and created federal and the Internet firewalls separating these different domains of deposit insurance to make banking a low-prof- The best example of the public utility concept finance. This firewalling or insulating strategy it (but still remunerative), stable, dependable revived today is the net neutrality debate, which also has Progressive Era antitrust roots, evoking service. In effect, banking became a privately raises anxieties that would have been familiar the efforts to prevent market dominance from run public utility, subject to price and conduct to Progressive Era reformers. In the modern spilling over into adjacent sectors. The Glass- limits, in exchange for backstops and govern- infrastructure of the internet, for end users Steagall Act, part of FDR’s emergency banking ment-supported insurance that ensured its to access the content provided by companies legislation in 1933, famously separated invest- uninterrupted—but non-exploitive—function- like Netflix, Google, or YouTube, they depend ment and commercial banking. Today, Senators ing. This system of “boring banking”—a system on internet service providers like Verizon and Elizabeth Warren, Bernie Sanders, and others that lacked the complex array of wildly profitable Comcast to faithfully and equally transmit have called for a reinstatement of Glass-Steagall and risky securities that marked the pre-1980s data from content providers. This creates a as a firewall against risk contagion. The efforts financial system—proved more than adequate to potential risk of blocking, prioritization, or

rent extraction: The broadband providers can slow down content they disfavor—for example, because of relationships with competing content providers like cable networks—or speed up access to content from providers like Netflix willing to pay them higher fees (so-called “paid prioritization”). Like the railroads of old, Comcast could extract higher fees from firms like Netflix desperate to transmit their data to users faster, and in the process screen out the viability of smaller startup content providers unable to pay extractive rates.

In the end, it was Progressive Era ideas of public utility that shaped the policy response to this problem of internet monopolies.

Common-carriage norms had already been absorbed into the laws governing the telecom industry, enabling the Federal Communications Commission to require fair prices, equal access, and nondiscrimination for telephone companies. After a series of legal and political battles, the FCC ultimately issued its final net neutrality rules in 2015, reclassifying broadband internet providers as “telecom” firms subject to these common-carrier requirements, while issuing rules against blocking, slowing down, or interfering with internet traffic.

As the FCC noted in its initial 2011 rule, these public utility–style regulations were necessary because internet service providers were so dominant that ordinary market competition and consumer choice could not check practices like paid prioritization: There are so few alternative channels for transmitting data that most consumers or content providers have nowhere else to go.

This reality captures neatly the way in which public utility regulation as a tool to counteract private power necessarily complements antitrust tools. In some cases, goods and services can’t be provided effectively through small-scale market competition; in these settings, we need regulatory oversight to ensure these consolidated firms still serve the public good.

Furthermore, the FCC argued that these public utility–style regulations were not an inhibition to innovation and dynamism, but instead would promote a more socially useful form of innovation. Innovation by content providers like Netflix or YouTube depends on low barriers to entry and no restrictions on transmitting content to end users; to allow companies like Verizon and Comcast to block

access to some content, or to fast-track other content in exchange for higher fees would undermine market innovation. Allowing paid prioritization would allow Verizon and Comcast to extract innovation-inhibiting rents in the name of “innovation.” Just as antitrust can be understood as promoting beneficial competition, this public-utility approach similarly drives companies to innovate in more socially beneficial and desirable ways.

A New Threat: Platform Power

While finance and internet service providers are closely analogous to the corporate titans of the Progressive Era, today’s reformers must also grapple with the concentrated private power

Platform Monopolies: Companies like Google and Amazon function as marketplaces and data repositories, allowing abusive market power. in a new domain—the information economy, dominated by internet-based tech giants, from Google to Facebook to Amazon to Uber. These companies—among the most valuable and fastest-growing in the world—seem a godsend for consumers and economic growth, expanding choice, reducing prices, and creating new conveniences driving productivity. But the danger arises not from their sheer size and valuation but from their fundamental business model.

These businesses all share a common structure: They operate online interfaces that function as marketplaces and clearinghouses—in short, as platforms—linking producers and consumers of goods, services, and information. This gives these firms a unique kind of “platform power,” influencing production, distribution, and access.

By controlling the platforms that link buyers and sellers, producers and consumers, these companies are able to use their leverage to extract disproportionate fees from either end, whether it is Google extracting a disproportionate share of ad revenue from content providers dependent on the search engine to attract viewers, or Uber extracting a high cut of drivers’ revenues. This platform power can be checked by adapting and combining antitrust and public-utility principles.

First, these platforms represent a kind of monopoly power: Users are locked into a single platform, which then leverages this user base and vast store of underlying data to grow even bigger, colonize adjacent markets, and eventually, once other competitors are no longer a threat, raise prices. In the 1990s, Microsoft leveraged its overwhelming dominance as the default PC software platform to attempt to colonize related services like internet browsing.

Similarly today, Google’s dominance in search sets up possible entries into other informationbased markets, like insurance and travel. This dominance is only increased as Google enters markets such as online streaming and cable boxes to capture valuable user data. Uber’s dominance in ride-sharing is already driving the company’s turn to shipping and logistics.

This path to dominance is subtle in part because it can masquerade as being consumerfriendly: Initially, the aggregation of services and users on the platform simply makes the platform more desirable and useful for consumers, but once competitors are sufficiently weakened, these platforms can increase prices as monopolies or monopsonies. These challenges fit fairly closely to antitrust concerns about market share, pricing, vertical integration, and stifling of innovation, and could be addressed by expanded antitrust enforcement by agencies like the FTC. By imposing higher scrutiny of firms seeking to colonize adjacent markets, a modern antitrust approach to platform power could work not just by breaking up concentrations, but rather by erecting “firewalls” that limit the spillover of dominance from one industry to another.

A second problem arising from platform power is the risk of discrimination of various kinds. Through their underlying algorithms shaping how users access information, goods

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or services, these platforms can engage in algorithmic price-fixing, charging different prices to different consumers based on their inferred income level, race, gender, or geographic location. Civil-rights advocates are increasingly raising concerns that the algorithms governing platforms like Uber and Airbnb are creating subtle forms of racial discrimination against minority buyers and sellers. There is also the related concern that these platforms can invisibly alter the kinds of services and information that users can access in the first place. This is an especially troubling concern in the context of information platforms like Google and Facebook. Google has already been investigated once by the FTC for manipulating its search results to favor its own properties. Fair search results are increasingly make-or-break for businesses trying to reach consumers. The platform’s influence on information can even have electoral consequences. A recent study found that Google and Facebook, by reordering search results and newsfeed content, can have large impacts on voter behavior in elections, shifting up to 20 percent of undecided voters—a problem internet scholar Jonathan Zittrain calls “digital gerrymandering.” Most troublingly, these results can arise even in the absence of an employee intentionally skewing the results, emerging instead from how the algorithms adapt to the frequencies of queries. Facebook’s growing dominance as a communications platform shaping access to news and other kinds of written media magnifies these concerns.

Here we might adapt public utility regulations to assure the equal transmission of content, nondiscrimination, and equal access to services, akin to the net neutrality barring of paid prioritization. Some reformers have suggested that regulators like the FCC or the FTC create a category of “information fiduciaries,” requiring that platforms use the aggregation of data in ways that serve the interests of the end user as a way of mitigating fears of discrimination and invasion of privacy. But a broader response would establish public utility obligations backed by expanded regulatory oversight—for example, by auditing the underlying algorithms of Google’s search or Uber’s ride-sharing systems to ensure nondiscrimination and fair access.

Through such regulatory oversight, we might also require an “interoperability” standard to

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prevent lock-ins, essentially requiring platforms to disclose application program interfaces and to enable other services to plug in—a sort of digital equivalent to the interconnection requirements in telecommunications regulation.

New Public Options

The public option approach provides a critical complement to these revived uses of antitrust and public utility regulation. Platform power might also be countered by public options, which would provide more equitable and accessible alternatives that compete with private companies and induce higher standards for nondiscrimination, fair prices, and openness.

Frank Pasquale has suggested the potential

Net Neutrality: The FCC’s fair access rule fits an old regulatory concept— nondiscrimination —to the new economy. need for a public option in search engines to balance Google. A public competitor to Google may seem a little far-fetched, but consider the wide and growing use of what is termed peer production in the digital universe—not-forprofit collaborations, the best known of which is Wikipedia. Venture capitalist Nick Grossman has suggested that we subject platforms like Uber to competition from rivals that are “thinner,” offering only the basic service that treats consumers and workers fairly.

Public options can also complement net neutrality regulations by addressing the “digital divide,” the severe lack of broadband access for rural and minority urban communities.

Market competition is insufficient to incentivize private broadband providers to build the infrastructure to reach these communi-

ties. In response, several cities have begun using municipally chartered utilities to provide cheap, high-speed internet access to these communities. Chattanooga, Tennessee, for example, now offers its own government-provided broadband service that is more affordable and oriented to reach schools, libraries, and minority communities through its Electric Power Board municipal utility. The potential power of this strategy is apparent in the cable and internet industry’s continued efforts to shut down these public alternatives. This policy was initially challenged in court by Comcast, and the Tennessee state legislature passed a law preventing municipal broadband provision. At the same time it issued its net neutrality ruling, the FCC overturned these state laws to open up the field for municipal broadband providers to address gaps in access, quality, and pricing. But here too the municipal broadband push has faced difficulty, as the Sixth Circuit Court of Appeals just invalidated this FCC ruling, effectively restoring the state laws prohibiting municipal broadband as well as the market power of cable and internet companies.

Similarly, the idea of a public option can complement the efforts to regulate finance in today’s economy. In addition to concerns about financial crisis and systemic risk, there is also a pervasive problem of discrimination and limited access to financial services among poor and minority communities. Here, public options, where the government provides a basic form of savings, checking, and credit without the harsh fees that often trouble poorer communities, could offer a solution. In the 19th century, Populists called for “postal banking,” where the Post Office provided basic financial services without the extractive fees charged by big financial firms. This idea is making a comeback today as a way to address financial inclusion—and in the process, provide some competitive pressure on private banks to offer more accessible services.

The combination of public options with public utility regulations represents a broader strategy for ensuring equal access to moral necessities and preventing exploitation by private actors, applicable to a variety of policy debates and sectors. Take health care as an example. The modern term “public option” was first used in early proposals for the Affordable Care Act, in which a public insurance alternative like Medicare

o l e s pata / a p i m a g e s

Sleight Of Hand: Do you see the low-tech bike or the high-tech monopolist?

could crowd out less-efficient private insurers— a strategy echoing FDR’s yardstick competition.

As Nick Bagley has recently suggested, private insurers could also be regulated as public utilities to prevent discriminatory pricing and slow the explosive growth of health-care costs. The combination of these approaches would go a long way to ensuring equal and fair access to health care for all.

Or consider the growing concern over affordable housing. Escalating housing costs play a major role in increased inequality, and tenant vulnerability to landlords is a major concern.

Public housing is vastly oversubscribed, and HUD’s Section 8 program for housing vouchers reaches only 17 percent of eligible people.

While some housing activists are renewing calls for housing as a basic right, we might make more progress through a combination of public option strategies, such as expanding Section 8, and public utility regulations, such as robust nondiscrimination and antiharassment protections for buyers and tenants.

Enduring Progressive Principles and Tools

Even if they could not imagine the dangers posed by internet platforms, Progressive Era reformers like Brandeis and Hale would not be

surprised to see how readily their frameworks adapted to a very different economic and social context. For Progressive Era reformers, these three strategies of antitrust, public utility regulation, and public options were complementary tools for combating concentrated private power.

These tools were not meant just for sectors with increasing returns to scale and tendency toward concentration; they also emerged in sectors where private actors might start to centralize control over social necessities—goods and services upon which businesses, individuals, and communities were so dependent that private provision might create dangerous forms of extraction, exploitation, or exclusion.

This fluid view of when to invoke these strategies explains why they can so readily adapt to our modern concerns, from Comcast to Google to too-big-to-fail finance. It also represents an important recovered insight for today’s progressives: A progressive economy depends on first identifying those industries that provide essential necessities for economic and social citizenship, and those that also have a particular risk of domination by private actors. These tools were not intended, as is often caricatured, to assert the primacy of government over markets to the exclusion of innovation, dynamism, and economic progress. Rather, these tools

prevent extraction and exploitation from taking place under the guise of “innovation”—and in so doing encourage the right kinds of socially productive and equitable market innovation and dynamism. As such, these tools are also oriented toward a distinctly progressive vision of economic freedom. Freedom is a term that is most often bandied about by conservatives in their attack on “big government.” But for Progressive Era reformers, freedom meant something else: It meant the freedom from the private domination of robber barons, monopolies, and market forces preventing access to necessities; it meant the freedom to be a fully capable—and creative—member of society, capable of innovating and contributing by virtue of fair and equal access to basic needs and services assured by public utilities and public options. Such freedom depends on government to construct markets that operate fairly and equitably.

Recovering this progressive vision is critical to overcoming the legacy of late–20th century conservatism. But it is also a lesson for liberals. Since the Reagan era, some liberals have sought to “reinvent” government by absorbing conservative critiques of capture and failure, espousing more market-friendly views of economic regulation, and narrowing economic regulation to those projects that could be justified in economic and consumerist terms. In the years since the financial crisis, progressives have been seeking a more robust response to the challenges of private power and unchecked markets. The vision of progressives responding to the first Gilded Age offers a richer foundation for progressives responding to today’s second Gilded Age. K. Sabeel Rahman teaches administrative and constitutional law at Brooklyn Law School and is a fellow at New America and the Roosevelt Institute. He is the author of Democracy Against Domination.

Fall 2016 The American Prospect 75

The Progressive Tax Reform You’ve Never Heard Of How ending profit shifting can fix corporate tax cheating and satisfy Republicans B y Mic hael S t u mo

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ch a rt s o u rc e: ki m b er ly a . cl au s i ng , t h e ef f ect o f p rofi t shi fti ng on the co rp o r ate ta x b a s e i n th e u ni t ed states a n d b eyo n d, worki ng pap e r, octob e r 201 5

I

magine we started a coffee business, Really Great Coffee USA, Inc., ten years ago. We had venture-capital backing to build our global coffee supply chain. We established prime retail locations across America and other countries, creating a world-beating brand that signifies quality, taste, and happiness.

Really Great Coffee, Inc. (RGC USA), has gone public. We as founders are now very wealthy because of our innovative and profitable business model—also because our tax and legal advisers had wonderful solutions to avoid U.S. corporate taxes. The U.S. statutory rate is 35 percent of taxable income, but because of various shelters it is effectively just over 27 percent. But even that 27 percent rate only applies to earnings booked as U.S. income. So the true rate can be far lower.

Early on, RGC USA set up subsidiaries in tax havens—countries with low populations and absurdly low tax rates. Our valuable brand and our coffee preparation patents are owned by RGC Luxembourg, a subsidiary created for the express purpose of avoiding taxes. Our lawyers wrote a contract saying that RGC USA must pay 6 percent of each sale to RGC Luxembourg for royalties. (Luxembourg has an effective corporate tax rate of just 1.1 percent.) And there are others to choose from.

Our tax advisers said RGC USA can buy the world’s best coffee beans, but that our subsidiary in the Cayman Islands should roast the beans, mark them up, and sell them to our Bermuda subsidiary. Our lawyers set up these subsidiaries and wrote another contract for RGC Cayman Islands to sell high-priced roasted coffee beans to RGC Bermuda. They said the high price was justified due to our special roasting processes, which may or may not exist. The effective tax rate in the Cayman Islands is less than 5 percent.

RGC Bermuda then grinds the roasted beans and sells them to RGC USA with a generous markup. Our lawyers said we do not need to justify the price, other than to agree with RGC Bermuda that the price is “fair and reasonable.”

RGC Bermuda makes a lot of money—the effective tax rate in Bermuda is zero.

These purely internal transactions are accounting fictions, and we save a fortune in taxes. Our advisers called it “transfer pricing” and “profit shifting.” RGC USA reports virtu-

ally no taxable income to the Internal Revenue Service on U.S. sales. But we can and do report very high company profits to our shareholders because our RGC Luxembourg, RGC Cayman Islands, and RGC Bermuda make a lot of money.

Our tax advisers said that shifting our profit on U.S. sales to our foreign subsidiaries is perfectly legal tax “management.” We can defer taxes until we bring the money back to the United States. We do not plan to repatriate these profits anytime soon. In fact, RGC USA can borrow the money from our foreign subsidiaries, use the money to grow, pay interest to those same subsidiaries, and deduct even more from our U.S. taxable income. Our duty is to our shareholders, not the IRS. “Profit shifting” is the biggest lawful tax

avoidance strategy in the United States and the world. Tax professor Kimberly Clausing of Reed College estimates that 31 percent of corporate tax revenue was lost due to profit shifting in 2012. In other words, the IRS collected $242 billion in corporate tax revenue that year, but should have collected another $111 billion if profit shifting to foreign jurisdictions did not exist.

The problem rapidly accelerated from 2004 to 2012, and continues to increase dramatically.

In 2016, it is possible that more than 40 percent of potential corporate tax revenue will be lost.

Some reformers on the Democratic side may be missing the mark when focusing on tax loopholes, tax breaks, and statutory rates while preserving the taxation of U.S. corporations’ worldwide income. Most developed countries tax income generated in their country; this is called a “territorial” income tax system. While

Effective Corporate Tax Rates Tax Haven Comparison

27.1%

25% 20% 15% 10% 5% 0

2.4%

2.3% 0% Netherlands

Bermuda

4.2% 1.1%

Ireland Luxembourg

Singapore

3%

4.4%

U.K. Switzer- United Caribland States bean

the worldwide taxation system we have may, at first, seem like a good idea to progressives who want U.S. multinationals to be taxed properly, our system is having the opposite effect, and it can’t be corrected through tinkering.

Professor Clausing of Reed College puts it this way: Unlike most trading partners, the U.S. system purports to tax the worldwide income of multinational companies at the statutory rate of 35 percent, granting a tax credit for taxes paid to other countries.

Yet, because U.S. taxation is not triggered unless income is repatriated, multinationals can avoid residual tax by indefinitely holding income abroad. … As a result, the U.S. “worldwide” system of taxation is substantially more generous to foreign income than many alternative systems of taxation.

Republicans want lower statutory corporate tax rates (and some want to eliminate the corporate tax entirely). They also advocate “territorial taxation,” which taxes only that corporate income generated in the United States. They rightly point out that most developed countries have territorial taxation and that we apply a territorial, not worldwide, tax on foreign companies doing business here. This is indeed unfair to U.S. companies. But the Republican goals are unworkable without addressing the problem of profit shifting to tax havens.

Representative Sander Levin of Michigan is the ranking Democratic member of the taxwriting Ways and Means Committee. In a 2011 speech, Levin said of the GOP ’s push for a territorial system: We need to move beyond the current easy rhetoric about a move to a territorial system because it does have the potential to encourage American corporations to shift more of their income, and possibly jobs, overseas. If we are going to consider a territorial system, we will need to strengthen our transfer pricing rules, address the allocation of expenses, and consider provisions to deal with tax havens.

Put simply, if Congress were to adopt a territorial system to tax only U.S.-originated revenue

Fall 2016 The American Prospect 77

without addressing profit shifting, corporations would continue to artificially book income in tax havens. Tax revenue would continue to plummet. There is a remedy that fixes profit shifting, adopts a territorial tax, and solidifies tax revenue, by adapting a variation of the corporate tax system already used at the state level.

This approach is called “sales factor apportionment” (SFA). Here’s how it works. SFA would apportion U.S. corporate tax on worldwide company income based upon the ratio of U.S. sales to worldwide sales. Despite the complex name, the principle is very simple. SFA disregards all internal corporate transfer pricing between subsidiaries, so a “sale” to a true customer outside the company is all that matters.

In other words, the internal profit shifting in our RGC example becomes not only useless but stupid, as it lacks a business rationale. SFA also achieves the Republicans’ territoriality goal in a way that is good for the country while achieving the Democrats’ goal of eliminating tax avoidance and maintaining tax revenue. In fact, the U.S. states adopted this system long ago, to avoid artificial income shifting from high-tax to low-tax states. So it is hardly an alien concept, because U.S. companies already comply with it.

The U.S. corporate tax rate is indeed high among developed economies, but is so ineffective that it collects less revenue as a percent of GDP than foreign countries with lower tax rates. SFA ends the charade.

A progressive multinational tax reform

program should have three objectives: end the egregious tax avoidance practiced by many global companies; level the playing field between domestic and multinational companies; and stop the pernicious practice of “tax inversions” whereby U.S. companies abandon their U.S. citizenship to move to low-tax countries, while continuing to operate and manage from the United States. The current multinational tax system fails on all three counts.

How would SFA work for the U.S.? Really Great Coffee, Inc., has operations in the United States, Canada, and Mexico. Let’s assume its actual sales to consumers (not internal subsidiaries) are 50 percent in the United States, 30 percent in Canada, and 20 percent in Mexico. If RGC USA earns $10 million in a given year, that $10 million would be allo-

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By taxing global income based on where sales occur, we stop fake accounting and competition to cut rates. cated, or apportioned, to those three countries.

Since Mexico contributed 20 percent of sales, it would be allocated $2 million of profit that it could tax. The Mexican corporate tax rate would apply. Canada could impose its tax on $3 million of profit. The United States would tax $5 million of RGC ’s profit.

Sales are used as a proxy for economic activity, rather than “income” as it is defined now.

While income is simple in theory, in practice the theory fails because income is revenue minus costs and, as we have seen, the cost part of the equation is readily manipulated by transfer pricing. Sales of goods and services are the true source of income, and the location of sales is much easier to determine and harder to manipulate in most circumstances.

For example, when Uber began to accelerate its growth, and its valuation climbed from millions to billions, the company had already put in place systems to ensure that virtually all its foreign profits would not be taxed in the United States or anywhere else.

This strategy has become common for many corporations operating globally. Take the case of the emblematic global tech company, Apple.

In May 2013, the Senate Homeland Security Permanent Subcommittee on Investigations laid out Apple’s aggressive tax planning in astounding detail. Despite increasing corporate profits, the committee reported, “the U.S. corporate tax base has continued to decline, placing a greater burden on individual taxpayers and future generations.”

The subcommittee staff detailed in page after page how U.S.-domiciled (incorporated)

companies devise complex webs of subsidiary entities, and transactions between those entities, to avoid the appearance of income being generated in the United States.

This was not a newly discovered problem. The Joint Committee on Taxation, with members of the House and Senate, had said in 2010 that the “principal tax policy concern is that profits may be artificially inflated in low-tax countries and depressed in high-tax countries through aggressive transfer pricing that does not reflect an arms-length result from a related-party transaction.” And in 2007, the Treasury Department under George W. Bush studied the issue of increased corporate tax revenue loss, stating that improper profit shifting was “most acute with respect to cost sharing arrangements.”

Former Senator Carl Levin, who was chair of the Permanent Subcommittee on Investigations, held a hearing in May 2013 that was driven by his staff’s report. Apple, Inc., was featured because subcommittee staff unearthed Apple’s complex entity structure that had everything to do with tax avoidance and little to do with rational business decisions.

Apple CEO Tim Cook testified. Cook talked about all of the jobs Apple creates in the United States and all the economic activity generated.

He then asserted that Apple pays a 30.5 percent tax rate on its U.S. income. That sounds pretty fair until you start digging into what “U.S. income” is. Martin Sullivan, a former Treasury Department economist, told Bloomberg, “Apple has shifted enormous amounts of profits from the United States to an untaxed entity overseas.”

The core of the Apple tax evasion spiderweb was Apple Operations International, Inc. (AOI), its primary offshore holding company that is incorporated in Ireland but has not declared tax residence in any jurisdiction.

“Despite reporting net income of $30 billion over the four-year period 2009 to 2012, Apple Operations International paid no corporate income taxes to any national government during that period,” said the staff report.

Remember that the world believes Apple is headquartered in Cupertino, California. That is economically and practically true. But the graphic shows a web that challenges that premise. There are several Irish companies, which seems strange except for the fact that not only is Ireland a low-tax, low-population island, but

ch a rt s o u rc e: p re pa re d by t h e pe rm a n en t s u b co m m i tt ee on i n vesti g at io n s , m ay 2 01 3 , u s in g m at er i al s r ecei v ed f rom ap p le i nc.

As the EU works to clamp down on tax eva- and is willing to cut its corporate tax to attract Apple negotiated an even lower 2 percent corporate tax rate with the government of Ireland. sion, albeit with only a partial solution, the U.S. the company. The U.K. will not be encumbered Apple Sales International, Inc. (ASI), one of the Treasury Department is trying to block their by the European Commission’s ruling and has Irish subsidiaries, apparently joins its sister com- efforts. Treasury Secretary Jacob Lew wrote a the power to transform itself into a tax-haven pany, AOI, in paying no tax. But it enjoys substan- protest letter to the president of the European country.

You don’t need a high-tech operation to tial profits. Senator Levin’s committee staff found Commission, and followed up with an August avoid taxes. Professor Edward Kleinbard of that ASI “is the repository for Apple’s offshore white paper, warning them against going after the University of Southern California showed intellectual property rights and the recipient of Apple’s back taxes. substantial income related to Apple worldwide Why? Because Apple is a U.S.-incorporated that while Starbucks is hugely successful in the sales, yet claims to be a tax resident nowhere company and its worldwide income is subject United Kingdom, it still showed a loss in the and may be causing that income to go untaxed.” to taxation when repatriated to the United U.K. but a substantial profit in the Netherlands.

A late-August ruling against Apple by the States. The result of the EU ruling, if upheld The RGC example above was relatively simple, European Commission Directorate-General on appeal, is a $14.8 billion windfall to Ireland. and loosely based upon Starbucks’s scheme. for Competition is further proof that Sales factor apportionment would make both Apple’s spiderweb and internal profit shifting simply cannot Apple’s Offshore Organizational Structure Starbucks’s subsidiary structure be solved by better tax enforcement, irrelevant and ineffective. Instead but must be eliminated from the tax Apple Inc. United States of saving taxes, the structures would question. Apple’s Celtic strategy was suddenly be transformed into costly spurred by the Irish government accounting nightmares with no busicutting a special deal granting Apple Apple Operations International (AOI) ness purpose. lower tax rates than other companies.

(Ireland/No Tax Residence)* The Irish tax authorities also allowed Apple to avoid recognizing income Inversions, which have gotten in Ireland, leaving billions of dollars some press attention and have justiApple Operations Apple Distribution Apple Retail Holding Europe (AOE) International (ADI) Europe untaxed by any jurisdiction. fiably aroused indignation, are only (Ireland / No Tax Residence) (Ireland/Ireland) (Ireland / Ireland) Spurred by the European compethe latest variation on the theme of tax avoidance. Because domestic tition chief, Margrethe Vestager, the Apple Sales Apple South Asia Pte Ltd. Apple Retail Belgium companies are taxed globally, but European Commission found: International (ASI) (Apple Singapore) Apple Retail France (Ireland/No Tax Residence) (Singapore/Singapore) foreign corporations are only taxed Apple Retail Germany Apple Retail Italia on their U.S. income, U.S. corpora… that two tax rulings issued by Apple Retail Netherlands *Listed Countries Apple Retail Spain tions are increasingly “inverting” or Ireland to Apple have substantially indicate country of Apple Asia incorporation and Apple Retail Switzerland In-Country reincorporating elsewhere. Bloomand artificially lowered the tax paid country of tax resDistributors Apple Retail UK idence, respectively. berg reported:

by Apple in Ireland since 1991. The rulings endorsed a way to establish More than 50 U.S. companies have reinthe taxable profits for two Irish incorpoIt will directly reduce U.S. tax revenue because rated companies of the Apple group (Apple Apple can claim a foreign tax credit to offset corporated in low-tax countries since 1982, its U.S. tax bill. The $14.8 billion credit would Sales International and Apple Operations including more than 20 since 2012. A lot equal nearly one-twentieth of total U.S. corEurope), which did not correspond to of drug companies are doing it, and lowporate tax revenue in 2015. economic reality: almost all sales profits tax Ireland is a popular corporate home.

The Apple/Ireland/EU/U.S. kerfuffle is the They’re doing it despite a 2004 law that recorded by the two companies were interwrong battle.

When tax codes permit intralegislators had promised would end the nally attributed to a “head office.” … As a company profit shifting between jurisdicpractice, and despite rule-tightening by result of the allocation method endorsed in the Obama administration. the tax rulings, Apple only paid an effective tions, they simply legitimize economic fictions. corporate tax rate that declined from 1% in Whether Ireland’s rate was too low is a side For instance, Caterpillar paid PriceWaterissue. Sales factor apportionment is the only 2003 to 0.005% in 2014 on the profits of reliable way to eliminate fiction layered upon houseCoopers tens of millions to create an Apple Sales International. fiction—because it only considers income from inventory system that transferred the ownerAs an example of the profit-shifting fiction, real sales to real third parties from any part of ship of inventory in Morton, Illinois, to a Swiss Vestager said, “No matter if you buy an iPhone the consolidated company. subsidiary so that the profit on those parts The problem will continue metastasizing. could be booked in low-tax Switzerland rather in Berlin, Rome, or somewhere else, contractually, you are buying from Apple International Post-Brexit Britain immediately signaled that than high-tax United States. it wants Apple to move to the United Kingdom in Cork, Ireland.”

These accounting games present massive

Fall 2016 The American Prospect 79

enforcement challenges to a thinly stretched IRS. The IRS often challenges companies on whether the transfer price between subsidiaries was fair and reasonable according to an “arms-length standard.” The agency tries to determine what the price would have been if it were a real transaction to a true third party.

But even if the IRS wins a case with a finding that the transfer price was unreasonable, the fact remains that income was shifted in an internal tax-avoidance transaction.

The remedy is to ignore these internal transactions as accounting fictions. It’s impossible to fix the problem with better accounting standards or audits. Sales factor apportionment taxation ignores the “origin of income” question among separate subsidiaries, which can be manipulated, by focusing upon the proportion of global sales to real customers in each tax jurisdiction. Apple, for example, would be taxed on a worldwide consolidated basis, disregarding its separate entities. If 50 percent of Apple’s sales occurred in the United States, then 50 percent of Apple’s global profit would be subject to tax here.

Is this system of sales factor apportionment perfect? No. But it is largely tamper-proof if done properly. It has proven to be a workable, effective system among U.S. states and elsewhere.

Why then has it not received more attention from reformers? There are several reasons.

One reason is simple lack of awareness. Most members of Congress, and many of their tax staffers, have not heard of SFA taxation, even though many U.S. states use a version of it. My congressional meetings are usually focused on educating tax staffers about what SFA is and how it works in their states.

A second reason is that tax avoiders do not want SFA because their effective tax rate would increase.

Third, tax experts make a lot of money designing and implementing complex business arrangements. Tax complexity is profitable to them. Apportionment is too simple.

They would lose money.

A substantive reason given by some tax experts, including some in the Treasury, is that international tax treaties will need modification, requiring a long, multilateral negotiation process. Reuven Avi-Yonah, a tax professor at the University of Michigan School of Law,

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If half of Apple’s sales occurred in the United States, half of Apple’s profits would be taxed here. and Kimberly Clausing have rebutted that argument by showing how SFA is consistent with tax treaties. Tax treaties are designed, in large part, to provide mechanisms to handle different taxation systems among countries, including avoiding double taxation or zero taxation of company profits and providing some basic standards and definitions. They are not designed to harmonize all countries’ tax systems or prevent improvement to address new challenges. The United States has made unilateral tax-system changes in the past that were initially resisted but later resolved through informal or formal discussion mechanisms that those very treaties provide.

Lastly, tax haven countries would likely be opposed to SFA , because their strategies to attract wealthy U.S. companies would be neutered.

Who should support it? Everybody else.

U.S. companies that are smaller and pay at or near the full tax rate should be supportive.

Small American corporations pay more than their fair share of taxes, taking up the slack when tax avoiders stiff us. Under SFA , small U.S. companies, big U.S. multinationals, and foreign companies would pay the same tax rate based upon the proportion of their U.S. sales.

U.S. multinationals that currently support lower corporate tax rates and do not aggressively shift profit overseas should also support SFA . A broader tax base would enable statutory rate reduction while preserving revenue.

Pro-export policy-makers and companies that export U.S. products should be supportive, too, because apportionment incentivizes U.S. exports. A Pittsburgh tooling and machining

company that exports 20 percent of its products to Europe or Asia currently is taxed on 100 percent of its income because it does not have RGC ’s tax and legal advisers. Under SFA , that company reduces its U.S. tax bill by 20 percent.

Democrats should support SFA because it fixes their biggest tax revenue–loss problem and because it provides more fairness than any other tax fix. Republicans should support it because it enables territorial taxation and a fix to the tax base–erosion problem that prevents a bipartisan agreement on a lower statutory rate. The “base erosion through profit shifting” problem could be costing us more than 40 percent of our tax revenue this year. No other reform proposal, by any party, comes close to solving this.

The entire deferral debate could be easily resolved. Tax committees are arguing about how to incentivize U.S. corporations to repatriate the money “earned” by foreign subsidiaries.

That question becomes irrelevant for future tax years because we would not tax foreign sales and we would ignore fictitious transfers of income to foreign subsidiaries.

If Apple sells 50 percent of its products in the United States, it owes tax on 50 percent of its worldwide consolidated profit at the U.S. statutory rate. If other countries set low tax rates, that is their problem. And Apple can no longer shift its profit to any other country through fictitious internal transactions.

Though few details have been offered, the June 2016 Blueprint by the GOP does envision a destination-based corporate income tax, which could open the door to serious consideration of SFA .

Sales factor apportionment holds much promise to fix the massive problems we face in multinational corporate taxation. Its advantages should please progressives, Democrats, and Republicans. Progressives are rightly concerned about any tax reform efforts under a Republican-dominated system. But the ability to block partisan Republican legislation, combined with the availability of a good tax reform proposal that is true to progressive values and achieves several Republican goals, should result in serious consideration of sales factor apportionment.

Michael Stumo is the chief executive officer of the Coalition for a Prosperous America.

Race and the Tragedy of Quota-Based Policing Arrest targets compound the risk of racially biased stop-and-frisk.

By S hau n O ss e i- O w u s u

ma x herman / ap images

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riminal justice reform divides into two seemingly irreconcilable camps: Black Lives Matter versus blue lives matter. On one side are racial minorities—often led by women— and allied whites who acknowledge that having black or brown skin can be a death-dealing hazard. These individuals are exasperated about lethal police violence and the resultant lack of accountability. On the other side are cops and their apologists. They reject the idea of police bias, are bewildered at the energy minorities spend protesting police brutality (as opposed to in-group violence), and argue that the only kind of “reform” necessary should tilt toward police.

Despite their sharp disagreements, there may be one issue on which these two groups might agree: the undesirability of quotas in police forces. By police quotas, I mean formal and informal measures that require police officers to issue a particular number of tickets or make a certain number of arrests, often within a specific time frame. Formally, a quota is an explicit policy that is either unabashed (“Officer Winslow, get X citations a month”) or masked with gentler, technocratic tropes like “goals” or “targets.”

Informally, a quota may be an implied prod for police officers to increase their “activity.”

Across the country, police officers’ use of quotas have been investigated, litigated, and legislated against, but the perniciousness of the practice gets lost amid discussions about more imminent dangers such as fatal police shootings or the overreliance on incarceration as a punishment tool.

But this understandable prioritization is

why the use of quotas is especially dangerous: It garners less attention, and like other police practices, exists behind the “blue wall of silence.” This wall consists of a subculture that prohibits cops from reporting misconduct and makes exposing quota regimes difficult.

Moreover, a police quota, as opposed to racial profiling, but sometimes in concert with it, can be the prelude to minorities’ ensnarement in the legal system (à la Ferguson) or the beginning of a fatal police interaction.

The Department of Justice’s Ferguson Report alludes to this interface between racial bias and quotas. The DOJ was clear that “Ferguson’s police and municipal court practices both reflect and exacerbate existing racial bias.” Nevertheless, despite circumstances that suggest that the city’s use of court fees and fines was buoyed by numbers-driven policing, the report mentioned the word “quota” once. In fact, the DOJ was careful to not accuse the city of establishing quotas, despite recommending that it “prohibit the use of ticketing and arrest quotas, whether formal or informal.” This awkward non-acknowledgment-cum-suggestion may have been because

the DOJ did not have incontrovertible proof of a quota system. But it demonstrates the difficulty of piercing the veil of police misconduct.

Some states ostensibly try to prevent the implementation of quotas in policing and have laws on the books prohibiting such systems.

These include New York, California, Illinois, Texas, Nebraska, Pennsylvania, and North Carolina, among others. These laws vary, but have two simple goals.

The first seeks to protect citizens from the ways “activity goals” can force police to manufacture illegality. The other is anchored by labor concerns and seeks to preserve police discretion, which can be jeopardized when cops are forced to robotically meet predetermined measures. For these two primary reasons, the issue of police quotas might close the gap between the left and the right; it could also be a key policy reform issue for both presidential candidates.

For Hillary Clinton, who has been dogged by two-decades-old comments about “superpredators” and has received criticism for a crime bill that her husband signed, pinpointing this quota problem could be a barometer of her commitment to racial justice vis-à-vis the legal system.

Moreover, since it is an issue that has support from police, addressing quotas might allow her to avoid completely alienating the white right.

For Donald Trump, who often fawns over law enforcement, tackling the issue of quotas could show that he cares about the labor conditions of workers he has described as “the most mistreated group in America.” Police unions are a powerful political constituency and have been vocal critics of quota systems, although

Fall 2016 The American Prospect 81

not uniformly. The Illinois Fraternal Order of Police Labor Council captured the anti-policequota sentiment best: “We believe quotas create unnecessary tension between the public and law enforcement. … [Q]uotas turn police officers into tax collection machines instead of professional law enforcement officers.” By addressing the employment consequences that come from failure to meet quotas, Trump could curry more favor with police while offering symbolic or real crumbs to minorities.

Irrespective of who wins, the next president only has to look at the torrent of court cases, settlements, and media accounts that undoubtedly show that quotas are a prevalent police practice and tool.

tive dismissal, the denial of a promotion, or the denial of overtime.”

In violation of this prohibition, the NYPD implemented a “Quest for Excellence” evaluation program in 2011. Referring to one of the program’s key documents, Judge Shira Scheindlin found that it required that supervisors “‘can and must’ set ‘performance goals’ for ‘proactive enforcement activities.’” It also warned, Scheindlin noted, that “officers whose numbers are too low should be subjected to increasingly serious discipline if their low numbers persist” (emphasis added). Deputy Commissioner John P. Beirne admitted that an officer’s failure to engage in such “proactive activities” could result in reassignment, a negative performance evaluation, or other adverse employment action.

Unsurprisingly, New York City’s approxi-

mately 35,000 police officers—the largest force in the country—have been no stranger to quotas.

In 2012, Officer Craig Matthews accused the city of retaliating against him for speaking to commanding officers about an arrest-quota policy in his South Bronx precinct. Matthews claimed that the illegal policy was “causing unjustified stops, arrests, and summonses because police officers felt forced to abandon their discretion in order to meet their numbers.” Retaliation against him included “punitive assignments, denial of overtime and leave, separation from his career-long partner, humiliating treatment by supervisors, and negative performance evaluations.” The city settled for $280,000.

Floyd v. City of New York, the 2013 classaction decision that held that the NYPD’s stop-and-frisk policy was unconstitutional, also captured the nature of quotas in Gotham.

The decision is replete with references to secret recordings that detailed lieutenants’ directives to officers to “get those numbers” and “crush the fucking city,” while reminding officers that they are “not working in Midtown Manhattan where people are walking around smiling and happy. You’re working in Bed-Stuy where everyone’s probably got a warrant.”

Making matters worse, NYPD brass brazenly broke a 2010 labor law that prohibited quotas.

The law prohibits employers from penalizing employees in any manner for failure to meet a quota. The law covers a range of employment actions, including “a reassignment, a scheduling change, an adverse evaluation, a construc-

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New York Police Department brass brazenly broke a 2010 labor law prohibiting punishment of officers for failing to meet a quota.

A pending federal lawsuit brought by several Latino and African American police officers accuses the NYPD of breaking the 2010 labor law, along with a host of state and federal laws.

Of course Los Angeles is never to be outdone by the Big Apple. That city has actually paid more money than New York in settlements in the past decade—approximately $10 million— to officers who claimed that the Los Angeles Police Department illegally required them to comply with ticket quotas. The settlements all derive from allegations that Captain Nancy Lauer ordered officers to write at least 18 traffic tickets per shift and required that 80 percent of citations account for major violations.

Officers who didn’t comply would not get overtime or were given undesirable assignments. Despite the city’s claim that 18 was a goal and not a mandate, a jury awarded two

officers approximately $2 million in damages in 2011. Two years later, the city agreed to pay almost $6 million to 11 police officers in a separate lawsuit regarding the same quota system.

Finally, in 2016, Los Angeles agreed to pay $950,000 to a former police officer who also claimed that he was retaliated against for not participating in the ticket-quota system.

In the Dallas metropolitan area, a local CBS investigation found that the Fort Worth Police Department had a special program funded by a federal grant (the Selective Traffic Enforcement Program) that required officers to make “four traffic contacts per hour.” According to CBS News, an old police memo allegedly indicated that the program sought “to increase speed citations by 14,250; DWI arrests by 200; safety belt citations by 975 and child safety seat citations by 100.” Those with the most tickets at the end of the period received a trophy and a letter of appreciation.

In Atlanta, arrest quotas allegedly served as the source of the bungled drug raid that killed a 92-year-old African American woman named Kathryn Johnston. After obtaining a no-knock warrant based on an informant’s claim that he bought drugs at Johnston’s house, police entered the apartment and killed her. They found no drugs, but planted marijuana in her home and submitted cocaine as evidence that they falsely said they purchased from the home. In a lawsuit by Johnston’s estate against the city, one of the officers involved in the killing testified that Atlanta had a quota policy that was written, distributed, and publicized in his department. Other officers sued the city, claiming police were offered pizza, DVDs, and shorter work days for meeting their targets.

Quotas are real and arguably pervasive,

but so are obstacles to getting rid of them. One problem is denial. Christopher Dunn, a lawyer for the New York Civil Liberties Union who won the $280,000 settlement for Officer Matthews, said via email that police departments “deny that quotas exist and uniformly claim they are doing little more than trying to get cops to do their jobs. In some instances, this is fair; in others, it is not.” When department leaders admit that quotas influence policing, they often prefer terms like “performance standards.” But a claim that there is a substantive difference between

quotas and these performance metrics is pure hooey. As Malcolm Sparrow, a professor at Harvard’s John F. Kennedy School of Government has argued, “In terms of the effect on police operations, the two ideas are virtually indistinguishable.” Notwithstanding these similarities, a disavowal of numbers-based policing poses concerns about how to evaluate cops.

Professor Peter Moskos is a sociologist at John Jay College of Criminal Justice who spent a year as a police officer in Baltimore and wrote a book about his experience. In an interview with the Prospect, he discussed why numbers-

Moskos’s comments suggest that even in the absence of top-down, numbers-based directives, police officers might achieve a minimum number of arrests or citations for career ambitions, rather than public-safety reasons. Disentangling such motivations is no easy task.

There is also the problem of standing to bring lawsuits. Despite the clear implications for civil-rights abuses, in some states it is only police officers who may challenge quota regimes in states with prohibitions, as opposed to civilians. Labor-law scholars point out that police officers would be more likely to rely on

seth wenig / ap images

Black And Blue: Can cops and communities get on the same side?

based policing carries so much cachet. He noted, “There is a fear that cops are lazy and need to be watched like they are little kids.”

Indeed, the stereotype of the donut-dunking, coffee-sipping, underactive police officer is not just a pop-culture trope, but a significant concern for law enforcement leadership, especially considering the inability to closely monitor police work. Importantly, Moskos mentioned that when quotas do exist, they are often selfimposed and can be a product of rewards systems in police departments. “If you want to get transferred, they [leadership] look at numbers.

You have to show, as cops would say, ‘you were working.’ Even if there is no formal quota pressure, there is a belief that all arrests are OK. Part of the culture is, if in doubt, then arrest.”

grievance arbitration to challenge quota-based employment decisions as opposed to litigation. Arbitration is cheaper, faster, and puts the burden of proving the validity of adverse employment actions on the employer—in this case, police leadership. Although remedies are often smaller in such disputes and limited to deleting the employment decision, as opposed to the money damages in litigation, arbitration is more private, which is an important concern for police officers who presumably want to avoid the stigma of being considered a “rat.”

Thus, the potentially powerful tools that are quota laws are sometimes limited in how and where they can be used.

Ideologically, police unions and criminal justice reformers are simply not birds of a

feather. For example, the tenth and final item of Black Lives Matter’s associated “Campaign Zero” platform is “fair police contracts.” Specifically, the group is challenging collectivebargaining agreements that prevent cops from being interrogated immediately after an incident of misconduct or that allow an officer under investigation to review relevant evidence before he or she is interrogated. Curbing such excesses fits into the category of “fair.” But fairness is in the eye of the beholder. Such reasonable reforms will probably not be embraced by unions whose job is to vigorously fight for the interests of their members, regardless of accountability concerns. Police officers, in theory, have the public as their constituency, but police unions owe a duty of loyalty only to their members. Thus, even though quotas are tools that may not serve law-abiding police officers’ interests, getting them and their unions to challenge such schemes as a civil-rights issue is a Hail Mary pass.

Undoubtedly, BLM and cops often have divergent interests. Yet politics can make strange bedfellows, and both groups share deep reservations about numbers-based policing. For example, the National Police Research Platform (NPRP) is a DOJ-sponsored initiative among police leaders and researchers that seeks to gather more reliable information about policing. While officers are reticent about saying the q-word, in various surveys, NPRP found that “8 out of 10 police officers reported that their agency is ‘more interested in measuring the amount of activity by officers (e.g. number of tickets or arrests) than the quality of their work.’” Speaking of eight, the eighth policy solution in BLM’s “Campaign Zero” platform is to “end for-profit policing.”

The first sub-point within this position is to “ban police departments from using ticket or arrest quotas to evaluate the performance of police officers,” with an explicit reference to Illinois’ quota ban.

There is also the challenge of carrying out the oft-expressed goal of quality rather than quantity in arrests. In the magazine The Police Chief, which has the subtitle “The Professional Voice of Law Enforcement” and serves as the official publication of the International Association of Chiefs of Police, Dr. Ronal Serpas writes about using citizen-satisfaction surveys to measure

Fall 2016 The American Prospect 83

police performance. Such qualitative measurements, Serpas argues, capture nuances that are missed in typical quantitative snapshots of policing. In his opinion, such surveys should be the “gold standard of measurement and accountability of U.S. policing” and “can assess crime, neighborhood disorder, perceptions of personal and community safety, officer behavior, officer and departmental cooperation, [and] professionalism.” This is coming from the former chief of the Metropolitan Nashville Police Department and superintendent of the New Orleans Police Department. He is not alone. A glance through literature on police performance shows that much ink has been spent on creating reliable qualitative benchmarks that can be used to measure law enforcement activity.

Again, BLM has its own policy analogue. The second policy recommendation in Campaign Zero is “community oversight.” One sub-point within this position is the establishment of Civilian Complaints Offices that can “issue public quarterly reports analyzing complaints, demographics of complainants, status and findings of investigations and actions taken as a result.” Ambitious, yes, but the group points to San Francisco’s Office of Citizen Complaints as an actual template.

The glue between these opposite strands of police reform is a fuller description of police (mis)conduct. Are cops in fact making traffic stops and arrests simply to justify their bureaucratic existence, or are such encounters translating into improved public safety (such as fewer traffic accidents or reduced crime)? To be sure, poor blacks and Latinos will remain particularly vulnerable to police misconduct no matter what shape law enforcement takes; history supports that proposition. But giving more primacy to the qualitative texture of police interactions—in regard to law enforcement’s behavior and civilians’ experiences—would help illustrate the documented as well as not-so-obvious mechanisms that drive racialized and gendered complaints of police misconduct. Transparency about such data, along with shared governance, would go a long way with law enforcement’s legitimacy issues, while loosening the perceived yoke many racial minorities feel the criminal justice system places on them.

How would a new president do this, especially when existing quota laws are state-based,

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when police union contracts that bargain over labor issues like performance evaluations usually occur on a municipal level, and when criminal justice is generally understood to be a local issue? One answer lies in the Violent Crime Control and Law Enforcement Act of 1994—the same crime bill that contributed to the mass incarceration Bill Clinton apologized for last fall.

When the bill is stripped of its odious elements (like more money for prisons and the discontinuation of higher education for prisoners) as well as more laudable imperatives (like a ban on assault weapons and funding for programs that prevent violence against women), a notable feature remains: the Office of Community Oriented Policing Services (the COPS Office).

This office sits in the DOJ and is responsible

Quotas are illegal but arguably pervasive. Ending them could temper reward systems that easily invite racial discrimination. for advancing the controversial, if not vaunted, practice of “community policing.” In its most basic form, the office provides cash to state and local law enforcement for the hiring and training of police officers, and, according to its website, the development of “innovative policing strategies.” Since 1994, the program has provided a cool $14 billion to lower levels of government.

Kami Chavis Simmons, a former assistant U.S. attorney and now law professor at Wake Forest University, has called attention to how this part of the crime bill does not have any requirement for departments to actually ensure the accountability of the officers that they hire.

Put another way, there could be more conditions tied to this money that might spur better policing. To this end, she suggests an amendment to the statute that ties funding to local government’s compliance with minimum fed-

eral standards. Departments that fail to meet these standards would lose 5 percent of their COPS funding. Money is a motivator, and the loss of potential funding might hasten the pace of police reform and the shape of accountability.

Professor Simmons is interested in applying these standards specifically to police misconduct and constitutional violations—but her model is also applicable to challenging quota regimes.

Accordingly, the federal government might: ■ require the collection of certain kinds of qualitative data related to stops and civilian (dis)satisfaction; ■ induce departments to show they are not relying exclusively on crude numbers to measure police performance; ■ and/or, with the input of civilians and experts, articulate a diverse set of standards, which departments use to consider evaluations.

As a general matter, this might seem trickier for a President Trump or a Republican-controlled Congress. Conservatives are allergic to the specter of federal encroachment into “states’ rights”—that seemingly nonpartisan term that helped buoy slavery and Jim Crow.

But conservatives’ penchant for accountability and reduced government spending, whether real or rhetorical, might make such a scheme appealing. This is especially true for economic conservatives as well as criminal justice reform–oriented Republicans.

In the case of a President Hillary Clinton, she would only have to look toward her husband’s presidency for a guide. Bill Clinton’s gutting of welfare “as we have come to know it” operated in a similar fashion: minimum federal requirements with states having wide flexibility in the design of their own programs. She would again have a model with Bill Clinton, who worked assiduously with Senate Majority Leader Trent Lott and Speaker of the House Newt Gingrich to pass the welfare reform bill.

Curbing the use of quotas is not a magic elixir.

It is not the radical transformation in policing our country desperately needs. Outright and implicit racial bias are potent and pervasive sentiments that outstrip one policy proposal.

But as a discrete police administration issue, tackling the use of quotas could temper reward systems that easily invite racial discrimination and would be a small step in the uphill journey toward eradicating criminal justice inequality.

Rethinking School Discipline Schools are cutting back on expulsions and suspensions, which are doled out disproportionately to minority students. Without adequate funding, though, the new reforms may cause problems of their own.

By Rac he l M . C o he n

e r i c g ay / a p i m a g e s

O

n a Friday morning in early Septem­ ber, all the middle school students at Hampstead Hill Academy, a preK–8 school in Baltimore, filed into the gym. The Ravens were playing on Sunday, which meant that students could take a day off from wearing their navy-blue collared uniforms if they wanted to dress in purple in support of the city’s football team.

The roughly 240 students sat on the gym f loor, forming a big circle. Each week, all sixth-, seventh-, and eighth-graders come together for this half-hour event—to formally recognize the good deeds of their peers and

teachers, to offer apologies to those they had wronged, and to share upcoming personal announcements. Matthew Cobb, an eighthgrade science teacher, helped facilitate the morning’s community circle. Encouraging students to make eye contact with one another and to project their voices, it was an exercise in public speaking as much as it was in relationship-building.

Matthew Hornbeck, the school’s principal, has been leading Hampstead Hill for 14 years. For the past nine, he and his staff have actively incorporated “restorative justice” into their school’s culture, a model that involves

holding structured conversations to facilitate relationships and reconciliation. While Hampstead Hill still has suspensions and detentions, Hornbeck says restorative justice has dramatically reduced the need for them.

Hampstead Hill holds school-wide circles, classwide circles, and when someone misbehaves, teachers hold circles that include the offending student, the victim, and anyone else who may have been affected. “It’s not a silver bullet, it’s not going to save the world, but it’s a huge piece of the puzzle and I think principals would be crazy not to check it out and take it seriously,” Hornbeck says. “It’s not a fad.”

Fall 2016 The American Prospect 85

Every teacher at Hampstead Hill is required to lead at least three class-wide circles per week. These don’t take very long, perhaps 10 to 12 minutes, but the idea is to regularly create the space for students to share their feelings, ask each other questions, and build trust.

Later that Friday morning, Mr. Cobb led a restorative circle for the 20 students in his science class. The day’s question was a silly one: Would you eat a worm sandwich if you could meet your favorite TV star or musician?

One by one, each student went around the room and answered the question. “No way,” Nyya told her classmates. “It would depend on how much time I’d have with the stars, but I would probably do it if I could meet the Dolan twins,” said Hannah. Taras said he’d eat a worm sandwich if Drake were waiting for him at the end.

“I would eat a worm sandwich to meet who, class?” Mr. Cobb asked his students.

“Beyoncé!!!!” they all yelled back, laughing.

change. By the 2015–2016 school year, 23 of the 100 largest school districts in the United States had implemented policy reforms requiring limits to the use of suspension and/or the implementation of non-punitive approaches to discipline, according to Matthew Steinberg, an education researcher and assistant professor at the University of Pennsylvania. Some cities have banned certain types of suspensions, while others have reduced the length of suspensions, or curtailed the types of penalties students could receive for lower-level offenses.

When it comes to exemplary models of discipline reform, Hampstead Hill stands tall. Yet the racially integrated public charter is rather unusual in its ability to devote meaningful resources to implementing restorative justice. The school employs a fulltime psychologist, social worker, guidance counselor, family therapist, and a director of restorative practice. Many cash-strapped schools have none of these, but are still being

African American students are about four times more likely than white students to be suspended. That disparity holds even among preschoolers.

In the era of Black Lives Matter, the move­ment that has spotlighted racist policies afflicting black Americans, a new national focus on school discipline disparities has taken hold.

Activists point to staggering statistics—for instance, that the number of high school stu­ dents suspended or expelled over the course of a school year increased roughly 40 percent betwe­ en 1972 and 2009, while the racial disciplinary gaps also widened. During the 2013–2014 school year, the Department of Education’s Office of Civil Rights reported that black students were 3.8 times more likely than white students to receive an out-of-school suspension. Similar disparities held true even for black preschoolers.

Advocates have pressured school officials and policy-makers to end these suspensions, expul­ sions, and school-based arrests, which they say push too many students into the criminal justice system—a process commonly referred to as the “school-to-prison pipeline.”

Many districts have responded to the calls for

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asked to revamp their policies, and fast.

Much of the liberal and education estab­ lishment has thrown its weight behind school discipline reform. In February, Democratic presidential candidate Hillary Clinton took the stage in Harlem to discuss societal barriers facing African Americans—among them, the school-to-prison pipeline.

“We’ve seen a significant increase in police involvement in school discipline, especially in schools with majority-black students,” she declared. “We’re seeing an over-reliance on suspensions and expulsions.” Investments in school districts, Clinton said, will help leaders reform their school discipline practices. She pledged to commit $2 billion to the effort, and promised to push the Office of Civil Rights to intervene if schools and states refuse to change their ways.

Five months after Clinton’s Harlem speech, the Democratic Party platform adopted at its convention included language to end the school-

to-prison pipeline, and to oppose discipline policies that disproportionately affect students of color and students with disabilities. Embraced by the highest echelons of Democratic politics, the battle against the school-to-prison pipeline has traveled a long way since researchers first coined the term back in 2003.

But challenges remain for progressive reformers. Research has well established that removing students from class has negative impacts on their academic achievement, and there’s broad recognition that suspensions and expulsions do very little on their own to address the underlying issues that cause most students to misbehave. However, good evidence on potential alternatives is fairly thin, and the linkages between school discipline and the criminal justice system are also less clear than advocates tend to acknowledge. While there’s a lot of energy to move forward, to do something about the glaring racial inequities, this same pressure threatens to produce policy change that could inadvertently hurt other students, teachers, and schools. Tackling such deep structural inequities as segregation and resource allocation is likely necessary to really address school discipline disparities—lest we face yet another instance of educators being asked to throw local solutions at systemic problems.

Long before Hillary Clinton gave her

speech on the school-to-prison pipeline, activists, lawyers, and researchers were figuring out how to raise public awareness about the harms of punitive school discipline.

“It’s been incredible to hear the Democratic candidate speak specifically about the school-toprison pipeline. That really didn’t just come out of the year; it was through a movement that has been built over the past decade and a half,” says Judith Browne Dianis, the executive director of Advancement Project, a civil-rights group.

Critics describe the school-to-prison pipeline as the policies and practices that push American public school students—particularly students of color and students with disabilities—out of school and into the juvenile and criminal justice systems. The American Civil Liberties Union says the pipeline begins with overcrowded classrooms, unqualified teachers, and a dearth of funding and supports like school counselors and special education resources.

d a m i a n d o va r g a n e s / a p i m a g e s

A Welcoming Environment: Between 1996 and 2008, the number of public high schools with full-time security guards tripled.

Advocates point to “zero tolerance” poli­ cies—which automatically impose prede­ termined punishments for certain types of student misconduct—as another major factor contributing to the school-to-prison pipeli­ ne. Judith Kafka, an education historian and author of The History of “Zero Tolerance” in American Public Schooling, traces the phrase “zero tolerance” back to a U.S. Customs Service antidrug program from the 1980s, which was soon adopted by states and districts for school discipline. The idea was elevated into federal law in 1994, when Bill Clinton signed the GunFree Schools Act, requiring schools to expel for one year any student found with a gun. Since 1994, most jurisdictions have passed additio­ nal zero-tolerance policies that extend well beyond those mandated by federal law.

By 1997, the National Center for Education Statistics reported that 94 percent of all schools had zero-tolerance policies for weapons or firearms, 87 percent had them for alcohol, and 79 percent had them for tobacco. Critics say that these nondiscretionary policies are regularly used in response to low-level, nonviolent student misconduct. And the greater the number of suspended and expelled students there are, they say, the greater the likelihood there is that unsupervised young people will

engage in negative behaviors, leading them ultimately to the criminal justice system.

The school-to-prison pipeline is also linked to the growth of police assigned to work in schools—known euphemistically as “school resource officers.” According to the Vera Institute of Justice, a research and policy nonprofit, between the 1996–1997 and 2007– 2008 school years, the number of public high schools with full-time law enforcement and security guards tripled. Advocates say this has yielded an increase in school-based arrests, many of them for nonviolent offenses.

Monique Dixon, deputy director of policy at the NAACP Legal Defense Fund, ideally wants to see no police in schools, because they’re too often used to handle disciplinary problems traditionally managed by school administrators.

But, Dixon says, if they are going to be in schools, then they should be evaluated annually on their effectiveness, based on clear data on who is getting arrested, the reasons why, and what available alternatives could have been used. One analysis of federal data revealed that more than 70 percent of students involved in school-based arrests or referred to law enforcement in 2010 were black or Hispanic.

More than four decades of research has shown that black students are suspended at

two to three times the rate of white students.

These disparities have been consistently found in all sorts of studies, across and within school districts.

In 2008, an American Psychological Association task force released a literature review on zero tolerance, concluding that not only do such practices fail to make schools safer or improve student behavior, but they also actually increase the likelihood that students will act out in the future.

“In the 1980s and 1990s, there was a sense that our schools were becoming more violent,” says Russell Skiba, a long-time researcher on school discipline issues, and the lead author of the American Psychological Association report. “A careful examination of the data, though, showed there never really was an increase in youth violence in schools. But it made for a good sound bite for policy-makers to say we’d be tough on school crime.” When better data emerged in the late 1990s and early 2000s, Skiba says it became clear that zero tolerance was ineffective.

After the release of the American Psych­ ological Association’s report, along with the advent of scandalous news stories featuring students expelled for infractions like bringing nail clippers to school, more focus was directed at finding alternatives to zero tolerance. Citing districts like Oakland and Indianapolis, which have revised their codes of conduct to emphasize more preventative approaches to school discipline, Skiba says there’s been tremendous interest in reforming punitive policies over the past three years.

The 2014–2015 school year marked the

first time white students no longer comprised a majority of the nation’s public school students.

And after Eric Garner, Michael Brown, and Tamir Rice were killed by police officers in 2014, followed by subsequent police killings in 2015 and 2016, an increasing number of activists and political leaders began drawing connections between the disproportionate discipline black youth face in school and the unequal treatment of black adults by law enforcement.

This national focus on racism prompted attention from teachers unions, too. In the summer of 2015, the National Education Association passed a resolution committing the

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r achel m. cohen

nation’s largest labor union to fighting institutional racism. The NEA pledged to provide support for programs that end the school-to-prison pipeline, and expand professional development oppor tunities that empha size “cultural competence, diversity, and social justice.”

The American Federation of Teachers also took action following the death of 25-year-old Freddie Gray, forming a Racial Equity Task Force to outline how the union could move schools away from zerotolerance policies, reform discipline practices, and create more supportive environments for youth, especially young black men.

Individual districts prioritizing school discipline reform, like Denver and Baltimore, also began to attract national attention. In 2007, Baltimore hired a new school CEO, Andres Alonso, who worked Talking It Over: Hampstead Hill Academy’s weekly circle, which replaces traditional discipline policies with restorative justice. to overhaul the district’s discipline “That particular study made it crystal “Rethink Discipline” conference, highlighting policies. He scaled back the scope of offenses that could warrant out-of-school suspensions clear, it gave a clear vision of what the progress made by the school districts of and expanded the number of non-punitive school-to-prison pipeline really looked like,” Oakland, Los Angeles, Broward County discipline measures to keep kids in class. The a Department of Education official says. “It (Florida), and others. This past June, Education results were dramatic: During the 2009–2010 made clear that when a child is suspended or Secretary John King went to the National school year, Baltimore issued fewer than expelled from school, their risk of involvement Charter Schools Conference in Nashville to 10,000 suspensions, a decrease of more than with the juvenile justice system goes up, as urge charter school leaders to “rethink” their 50 percent from 2004. does their likelihood of dropping out of school, discipline policies. And this September, the The federal government took notice. In and repeating a year.”

Departments of Justice and Education released The discipline policy shifts by a range of the first-ever federal guidance for districts that 2014, then–Education Secretary Arne Duncan and then–Attorney General Eric Holder came governments have yielded real change: In 2014, employ school police officers. to Baltimore to unveil the first-ever set of California became the first state in the nation In terms of concrete alternatives, advocates national school discipline guidelines, calling to ban “willful defiance” suspensions for its point to models that focus on improving on districts to “rethink” their policies. The youngest students—a category of misconduct relationships within the school building. joint guidance from the U.S. Justice and that includes refusing to remove a hat, to Supporters of these approaches—that have Education departments instructed schools wear the school uniform, or to turn off a cell names like “Social and Emotional Learning” nationwide to examine their discipline data phone. Consequently, the number of California and “Positive Behavioral Interventions and and to end racial disparities. students suspended at least once during the Supports”—say that teaching students positive The government’s rethink was also informed 2014–2015 school year declined by 12.8 percent social skills can help prevent or eliminate such by a key report, the “Breaking Schools’ Rules” from the previous year. Similarly, in Chicago, risky behaviors as drug use, violence, bullying, study, released in 2011 by the Council of State out-of-school suspensions fell by 65 percent and dropping out.

Governments and Texas A&M University. between the 2012–2013 and 2014–2015 school Another popular reform, backed by teachers This study tracked school records for all Texas years after the district revised its policies, while unions and civil-rights groups, aims to train seventh-graders in 2000, 2001, and 2002, and New York City, after a policy shift, issued 31 educators on ways to overcome any racial bia­ analyzed each student’s grades for at least a percent fewer suspensions in the first half of ses they may harbor. Many worry that middlesix-year period, comparing this information the 2015–2016 school year than it did in 2014. class white educators in particular lack the In July 2015, the White House convened a cultural understanding that could help them to the state juvenile justice database.

work more compassionately with poor black and brown students.

The last major alternative is restorative justice, the kind of climate-based improvement program that Matthew Hornbeck has been building in his school over the past nine years.

The amount of high-quality research on the effectiveness of restorative justice is limited, but academics at the Johns Hopkins School of Education are currently engaged in a rigorous evaluation of schools implementing the model.

Cities aren’t waiting around, though: From Chicago to Los Angeles to New York City, many districts have already moved to implement restorative justice pilot programs.

Kathy Evans, an education professor at Eastern Mennonite University, helped start the nation’s first graduate program focused on training teachers to use restorative justice.

“It’s not just that I think restorative justice is more effective, it’s that I think suspensions and expulsions hurt a lot of kids,” she says. “They experience suspensions or expulsions not as a deterrent, but as just one more message that ‘You’re not worthy,’ ‘You’re not important,’ and ‘You don’t matter.’”

“I think reform really comes down to leadership, and how well we’ve managed to get information in the hands of leaders that are willing to take on this challenge,” a Department of Education official told me.

“And it is a challenge. You have had educators who for so many years may not have been trained to manage classrooms without the use of exclusionary discipline, and have become reliant on their ability to send children out of the classroom.”

But even as districts turn away from the harsh disciplinary policies of recent deca­ des, few studies exist on alternative approa­ ches. This is partly because so many reforms are only just emerging, and it will take time for academics to evaluate their impacts. However, some researchers also question how much we can really conclude based on the studies we currently have.

There is, for instance, little evidence that black students and white students within the same school receive different kinds of school discipline. In 2011, Josh Kinsler, an education economist at the University of Georgia, ran

a study that looked at roughly 500,000 stu­ dents across 1,000 elementary, middle, and high schools in North Carolina. He found that within schools, black and white students were treated similarly, but that student disciplinary outcomes varied significantly across schools.

Another recent study released by the Univer­ sity of Chicago Consortium on School Research echoes some of these findings: Researchers found that the specific Chicago public school students attended was a much stronger pre­ dictor of whether they would be suspended or expelled than any individual student characte­ ristic, including race or gender. Chicago schools with high rates of suspensions and expulsions served extremely vulnerable, segregated popu­ lations, while those with low levels of exclusio­ nary discipline did not.

There are also limitations to the “Breaking Schools’ Rules” study, which produced correlational, not causal, findings. “The Texas study … would fail the Department of

went down, the district showed “a steady and substantial increase” in the percentage of students scoring proficient or higher in nearly every subject for six consecutive years. Another recent study found that the impact of Chicago shortening the length of suspensions for more serious misconduct from ten days to five did not seriously disrupt or harm other students.

“We summarily reject this narrative that if you just identify the kids that don’t deserve to be in school then everyone else is going to thrive,” says Kesi Foster, a coordinator with the Urban Youth Collaborative, a youth-led group focused on the school-to-prison pipeline in New York City. “Communities thrive when [people] see that everyone in the community is valued and supported. This theory that some people are disposable is what has led to mass incarceration and continues to ensnare young black people.”

Robust agreement in favor of exploring

less-punitive disciplinary measures has not

By the 2015–2016 school year, 23 of the nation’s 100 largest school districts had reversed their disciplinary policies and decided to limit student suspensions.

Education’s own research evaluation tool,” says Kinsler, referring to a rubric for high-quality research by the Institute of Education Sciences.

Nevertheless, the immediate challenge for school leaders is figuring out how to balance the harm a disruptive student would face from losing more class time with their responsibility to effectively teach the rest of the class. We already know that those students who arrive at school with the most serious challenges, those who need the most instructional support, are also among those who are most likely to be suspended.

Academics with the Civil Rights Project at UCLA say that softening disciplinary practices would be minimal and manageable, and that resolving unequal discipline is necessary to reduce the racial achievement gap. They point to the Denver Public Schools, a district that has made concerted efforts to reduce suspensions and expulsions. Researchers found that at the same time that Denver’s punitive discipline

prevented the emergence of controversy, however, especially as elected officials and districts move to implement broad policy changes quickly.

When the federal government released its school discipline guidelines at the start of 2014, the American Federation of Teachers praised the effort, but warned that new policies would succeed only if additional resources were made available.

It’s been difficult for teachers like Kimberly Colbert, an English teacher in Saint Paul, who feels passionate about social justice and reducing exclusionary discipline. Colbert has taught for 21 years, and has helped lead her local union to push for reductions in suspensions and expulsions. In their recent round of collective bargaining, her union negotiated increased funding for restorative justice pilots. “We’re looking at racism, we’re calling it out, and we’re trying to interrupt it,” she says.

Colbert remains hopeful about change,

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but also worried that the expectation to fix everything will fall, as usual, on the shoulders of under-supported teachers. She notes that not every public school has a librarian or a school nurse, and Minnesota has one of the highest student-to-counselor ratios in the United States. Last year, a series of violent school incidents in Saint Paul served as harsh reminders of the daunting challenges that persist. In October, a student showed up to one Saint Paul high school with a loaded handgun in his backpack. Two months later, a student at Colbert’s own school slammed a teacher against a concrete wall, choked him unconscious, and ultimately gave him a traumatic brain injury. A few months later, at a third Saint Paul school, two students assaulted a teacher, punching him in the face, and throwing him to the ground.

“It was really difficult for everybody,” recalls Colbert. “We don’t want to see our colleagues hurt, we don’t want to be hurt, and at the same

losing their discretion. Mark Cannizzaro, the executive vice president for the Council of School Supervisors and Administrators, the union representing New York City principals, says that while the renewed focus on school discipline has been very welcome, his members worry about the degree to which school leaders are losing their authority. He cites a new rule the city’s education department implemented last year, requiring principals to seek permission to suspend students for infractions related to “defying the lawful authority of school personnel.” Local political leaders are also considering a citywide ban on suspensions for students in kindergarten through second grade. Both Cannizzaro’s union and the New York City teachers union have raised objections to this proposal.

“The school leader is the person who knows the community, knows the circumstances, and that person is in the best position to make that discipline call,” says Cannizzarro. “You can’t legislate every type of social interaction into

Many teachers fear that the shift away from discipline hasn’t been matched by an increase in counseling and other policies to reduce classroom disruptions. time we understand that we have students who get angry and have needs.”

These concerns extend beyond Saint Paul.

Several years into various efforts across the country to scale back suspensions and expulsions, more and more teachers are saying they feel they are being put in untenable situations.

In 2013, the teachers unions in California initially opposed the statewide “willful defiance” suspension ban, which many felt went too far in limiting teachers’ discretion. “Some legislators don’t understand, they haven’t been in the environment, so when they say let’s eliminate all suspensions and expulsions, we’ve had to work to make sure the teacher still has authority in the classroom,” says Jeff Freitas, the secretary treasurer for the California Federation of Teachers. “And we need doctors, mental-health specialists—you’re going to take away this [disciplinary] tool without providing strategies? That’s been our struggle.”

Teachers aren’t the only ones worried about

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a code of conduct. We agree that suspensions should be extremely rare, but there are cases where something egregious happens, and there are often few other tools in a principal’s toolkit.”

Kenneth Trump, the president of National School Safety and Security Services, a school safety consulting firm, says the push to ban all suspensions is just zero tolerance by another name.

“Suffice to say that suspending and expelling students from school certainly is not a real solution to the underlying negative behaviors and problems of individual students,” he says.

“That said, there are very legitimate cases when student misconduct poses a serious threat to other students and even the student demonstrating the unsafe behaviors.”

Trump also thinks the public should be more critical of districts that tout dramatic drops in school suspensions. “Have school officials redu­ ced negative behaviors or have they just reduced their discipline numbers? Rarely does behavior

change overnight, nor do even the most suc­ cessful programs have dramatic drops of 30, 50, or greater percent in one year,” he says.

Reports have been surfacing of teachers who say they feel they can’t discipline out-of-control students because their district wants to “keep their numbers down.” Relatedly, many educa­ tors are saying they feel unsupported, and even unsafe, as they try to keep up with new school discipline policies.

Los Angeles was the first city in California to ban suspensions for “willful defiance” and was also hailed for its commitment to roll out restorative justice pilots. But last fall, the Los Angeles Times reported that teachers at only about a third of the district’s 900 campuses had been trained in restorative justice, and that the district was failing to budget suffi­ cient funds for its implementation. The report cited one Los Angeles middle school where teachers felt overwhelmed by their inability to respond to students who pushed, threatened, and cursed at them. Two teachers took leaves of absence as a result.

Change always brings resistance, but finding ways to sustain support from teachers and school administrators will matter greatly moving forward. That means figuring out how to engage local stakeholders so they don’t feel that a series of unfunded mandates are descending upon them.

One challenge will be to find the dollars necessary to invest in non-punitive policies and practices. To be sure, as some advocates point out, when districts need to expand the number of school police officers or implement expensive testing programs, somehow there seems to be far less anguish scraping up the funds. Redirecting school budget line items to better reflect progressive priorities will no doubt be a critical aspect of discipline reform.

But to truly overcome racial dispropor­ tionality in school discipline, leaders will need to do more than just shuffle local dollars around. It will require more than just sending individual teachers to anti-racism trainings.

Important though those things are, the evidence suggests that systemic problems like the concentration of racially and economically segregated schools must also be addressed if the real, if narrower, issue of racial school discipline disparities is to be resolved.

Roberts Rules for Protecting Corporations

The chief justice’s changes to the rules for litigation make suing big business a whole lot harder.

By M o s he Z . M arv it

O

n April 9, 2012, Sandra Robertson was fired from her job at a Fayette County, Pennsylvania, plant run

by Hunter Panels, which manufactures insulation materials. Robertson had worked at Hunter Panels for six years, following a much-decorated 20-year career in the Air Force, and was quickly promoted from traffic clerk to become the only female supervisor at the plant. Despite the fact that she did the same work and had more experience than most of her male counterparts, she earned approximately 20 percent less than they did. Furthermore, male supervisors subjected her to all manner of sexual harassment, from making obscene gestures to referring to her as a “bitch” who was “losing her mind” and “throwing fits.” When she complained about this treatment, she was told to “work harder” at getting along with her harassers.

Upper management at Hunter Panels treated Robertson differently from male supervisors—not providing her resources she needed and even telling her subordinates that they could ignore her. The human resources manager at the plant made it clear that he disliked her, and when she asked him about his mistreatment of her, he ordered her to undergo anger management therapy.

Robertson took the hint and stopped reporting the harassment. However, a few months later, after she had received highly favorable performance evaluations, a group of male supervisors locked her out of the production office and

laughed when they saw her approaching. She complained and was told that she should consider “exiting the organization.” She tried again to bring attention to the harassment that she and other female workers were experiencing, which included being given graphic descriptions of their coworkers’ penises. As a result of her complaints, Hunter Panels fired her, telling her it was due to her “management style.”

Robertson filed a lawsuit in federal court alleging that her employer violated her civil rights by treating her as it did and for firing her when she spoke up. At the trial, Hunter Panels denied many of Robertson’s allegations and argued that Robertson was fired for her “unprofessional behavior” and inability to work with her co-workers. As proof, Hunter Panels presented documents that were dated and placed in her file before Robertson’s complaints to show that she was a problem employee. Unfortunately for the company, Robertson’s attorneys had demanded electronic versions of much of that material in its original form. They had computer experts analyze the documents, and found that the metadata proved the documents had been created after Robertson’s complaints, and then altered to appear as if they were created prior to her complaints.

On April 20, 2015, a federal jury found that Hunter Panels had violated Robertson’s civil rights. They awarded her close to $1 million in compensatory damages, and $12.5 million in punitive damages—the largest award of its kind in the history of the Western District of

Pennsylvania—to send a message to the company that its conduct would not be tolerated.

Robertson and her attorneys were only able to get those documents, and attendant metadata, because of their right to request broad discovery. Her attorney, John Stember, explained that Sandra Robertson’s case “was not a $13 million case when it walked in the door.” It was not until they engaged in significant discovery that they realized the magnitude of the case, because in employment discrimination and other civil-rights cases there is almost always an “information asymmetry” between the plaintiff and the defendant. To balance this asymmetry, the federal courts have, for the better part of a century, allowed a party to get any relevant non-privileged legal discovery.

Though it’s strange to think in these terms, Sandra Robertson was lucky that her employer discriminated and retaliated against her when it did, and not now.

Nine days after Sandra Robertson’s verdict was handed down, Chief Justice John Roberts sent Congress a package of changes to the Federal Rules of Civil Procedure, the most important of which concerned discovery. Though the Federal Rules of Civil Procedure are boring, technical, and abstract, and a discussion of them can make even lawyers’ eyes glaze over, they are perhaps more significant than any other federal law because they are the primary rules that govern how federal courts handle litigation. They control how a

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party brings a lawsuit, the types and scope of pretrial discovery the parties can demand from each other, and how a case generally proceeds through the federal courts. As legal scholars Stephen Subrin and Thomas Main have written, “Procedure is power, of course, so the stakes of choosing one over the other produces different winners and losers.”

Perhaps unsurprisingly, the Republicancontrolled Congress did nothing to alter or reject Roberts’s submission. As a result, according to the procedures set forth in a New Deal–era law called the Rules Enabling Act, the most significant changes to the Federal Rules of Civil Procedure in decades went automatically into effect on December 1, 2015. And aside from the attorney insiders who submitted more than 2,300 comments during the public notice and comment period—with almost all plaintiff attorneys decrying the rule changes and almost all corporate and defense attorneys supporting them—no one seems to have noticed that a huge change that strikes at the very core of our democracy has just occurred.

These changes may effectively close the courthouse doors to many of the hundreds of thousands of Americans who seek relief in federal court each year. Though federal laws provide Americans a broad range of rights, these rights are purely symbolic if the rules prevent litigants from getting their day in court.

The changes to the rules have been part of a decades-long conservative project to limit access to the courts, and thereby limit corporate and government defendants’ exposure to liability. Unable to achieve many of these changes through the usual legislative process, conservatives have turned to the courts. And the courts, acting in an adjudicative capacity, have for the last several decades, largely been compliant in making it tougher to bring lawsuits to vindicate one’s federal rights.

Now, conservatives have found a way to use the Federal Rules of Civil Procedure, precisely because they’re obscure and technical, as a backdoor means to limit Americans’ ability to win legal relief. Elon University School of Law professor Eric Fink said, “I’m not saying there was a conspiracy, but if one wanted to upend the whole system, it would be foolish to do a full-frontal attack. Instead, go after a technical rule that’s so boring I don’t even

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teach it to my civil procedure class, but which affects everything.”

Unlike the depictions of litigation in television and movies, trials are only a small part of lawsuits, of establishing facts on the record.

Discovery is the real lifeblood of a case. Pretrial discovery is the means by which parties gather information so they can fully prepare and understand the case, assess its value, and often settle it—as 90 percent of cases are— before a long and costly trial. Discovery evens the playing field by trying to give each side equal access to relevant information.

Traditionally, the rules of discovery have been broad, allowing each side to demand any relevant non-privileged information, either in the form of documents or depositions, which are testimonies taken before trial under oath.

Someone who alleges employment discrimination, for instance, can depose under oath highlevel individuals at the company and gain access to relevant emails, conversations, employment policies, financial documents, treatment of other employees, and any other relevant information that she would need to get to the truth and make her case. This process can be disruptive to a company’s business, it can be invasive, and for a large multinational company, it can prove to be expensive, but it is absolutely necessary to be able to prove wrongdoing.

In most lawsuits, one side is in control of the vast majority of the information—indeed, plaintiffs’ attorneys often describe the process of bringing a lawsuit as “flying blind”—and the only way to make the system work is to allow broad discovery. In opposing the rules changes, the NAACP Legal Defense and Education Fund’s Jonathan Smith said that the NAACP was “deeply concerned” about the changes to discovery, explaining that “as discrimination has become more subtle and sophisticated, civil rights plaintiffs face an even higher burden as they are often required to establish discrimination through circumstantial evidence.

Thus, civil rights plaintiffs use the discovery process to ferret out and expose discriminatory policies, practices, and actions.”

The new rules enacted on December 1 do exactly the opposite by changing the standard from one where a party can get anything that is “relevant” and not privileged to a “proportionality” test. This new test shifts the focus from

getting at the truth of the matter to whether the costs and burdens on the defense are too great to get at the truth. Gone is the presumption that a plaintiff is entitled to the information that affects her case. Now she must also prove that it is not too much of a burden on the other side to provide this information.

The new rules list six factors for proportionality, of which the first two (importance of the issues at stake and amount in controversy) are perhaps the most important and problematic. The problem is that judges are now being directed to decide early on in a case, when they know virtually nothing about it or how it will develop, whether to limit access to information based on the importance and amount at stake, when it is the very information at issue that often reveals the importance of the case and the dollar amount at stake. One cannot separate the procedure from the substance, and limiting the procedure will have a naturally limiting effect on the substance. In the case of Sandra Robertson, if her discovery requests had been denied or limited, she likely would not have prevailed in court as she did.

Wealthy parties have always had superior access to justice, but the courts have now formalized and codified the class disparities that exist in so many areas of American life. As of December 1, 2015, if two employees—one a minimum-wage worker and the other a salaried white-collar worker—both bring the same suit against the same employer, the white-collar worker will be entitled to more discovery and therefore has a far better chance to win her suit and get relief—because the lower-paid worker’s suit will be worth less than a higherpaid worker’s. This factor is now central to the initial inquiry.

To understand what happened last December, it is important to understand the process by which the rules are changed, and how conservative judges have tried to use this obscure process to limit access to courts, in contrast to clear legislative intent. The December 1 changes mark one of the most significant sets of changes to the rules in decades—“the brass ring for those seeking litigation retrenchment,” as one legal scholar put it. Compounding the problem has been a parallel private process that is corporate-sponsored, which

some are claiming extends the rules beyond even what the conservative judges could get through the public process.

In 1934, Congress delegated to the federal courts the authority to set the rules of procedure in a piece of New Deal legislation known as the Rules Enabling Act. In the first sentences of the act, Congress gave the Supreme Court the power to make the rules, but also said that the “rules shall neither abridge, enlarge, nor modify the substantive rights of any litigants.” The Court thus has a duty to at least try to keep the rules neutral and in line with the intent of the laws.

The Rules Enabling Act created a procedure wherein an Advisory Committee, composed primarily of practitioners and academics chosen by the chief justice of the Supreme Court, would make suggestions to a Standing Committee. If the Standing Committee felt that the suggested changes were appropriate, it would issue a proposed rule, which the general public could comment on. After some period of comment and revision based on the comments received, the Standing Committee would send a final rule to the Supreme Court for approval.

The Supreme Court would then send the rule to Congress, and if Congress did nothing, then the rule automatically became law.

By 1938, the Federal Rules of Civil Procedure had been drafted and passed. After a great deal of debate, policy-makers, judges, and scholars wrote into these rules a system of simple pleading and broad discovery so that the courts would be open to all. They recognized the inequalities that exist in society, and that if the courts were to provide any remedy to violations of rights, people had to have easy access to courts and information. In describing the rules of discovery, a unanimous Supreme Court wrote, in what has become one of the seminal cases of the New Deal era, that under these rules “civil trials in the federal courts no longer need be carried on in the dark. The way is now clear, consistent with recognized privileges, for the parties to obtain the fullest possible knowledge of the issues and facts before trial.”

The original Advisory Committee had no judges and was composed only of practitioners and academics who gave real-world input on problems of practice and suggested solutions.

This trend changed under Richard Nixon’s appointee for chief justice, Warren Burger,

to the point where now judges dominate the committee. The chief justice is charged with choosing and renewing appointments to both committees—and can exercise more control over judges than he can over outsiders. Since Burger’s appointment in 1969, chief justices have been conservatives who have utilized their control of this process to advance limiting rules.

Starting with the rise of the new conservatism of the 1970s, the right has consistently attempted to curb private enforcement of rights by limiting access to justice, as a database created by professors Stephen Burbank and Sean Farhang clearly documents. They identified all congressional bills from 1973 (the first year of the Library of Congress Database) through 2010 that sought to limit the abilities of people to get their rights heard in court by reducing or eliminating attorneys’ fees, reducing plaintiffs’ damage awards, shifting fees, reducing the availability of class actions,

was at the forefront of such retrenchment. A young John Roberts, then working in Reagan’s Justice Department, promoted the idea of limiting attorneys’ fees in order to minimize litigation against the government, but warned against the political results of trying to pass it. Similarly, Reagan’s counsel, Fred Fielding, understood that a fee cap bill would have its greatest impact on “civil rights litigation, welfare entitlement suits, environmental litigation, and the like.”

Fielding was “deeply concerned that it will be viewed and portrayed as yet another Administration effort to limit the delivery of legal services to minorities, the poor, and the aged.”

The political failures did not dissuade conservatives from their goals of limiting rights; instead, they just chose to do it through the non-democratic arena of the courts. In a pair of decisions from 2007 and 2009—one against a corporation (Bell Atlantic Corp. v. Twombly) and one against the government (Ashcroft v.

Conservatives have found a way to use the rules, precisely because they’re obscure and technical, as a backdoor means to limit Americans’ ability to win legal relief. increasing sanctions against attorneys, or other methods. These bills did not attack civil and other rights head on, but instead tried to convert them into mere symbolic laws that protect rights, but provide no clear remedy.

What Burbank and Farhang found was that the number of provisions that tried to suppress litigation spiked from an average of 70 per congressional session during Jimmy Carter’s presidency to 257 per session in Ronald Reagan’s first term as president, to 463 in Reagan’s second term, to 1,038 in 1995 and 1996, when the Newt Gingrich–led Republicans took control of the House and Senate.

Few of these attempts were successful, however. In the almost 40 years that the database covers, only 11 of these bills passed. People don’t like having their rights taken away, and democratic politics made it difficult for such bills to pass in the open—a reality recognized by policymakers in the Reagan administration, which

Iqbal)—the Supreme Court heightened the pleading standards that plaintiffs have to meet. Similarly, in a pair of decisions from 2011 (Wal-Mart Stores, Inc. v. Dukes and AT&T Mobility LLC v. Concepcion), the Supreme Court severely restricted people’s access to class-action lawsuits, often the only vehicle for many to go up against large corporations, especially when the issue is complex or the amount at stake is relatively small. Supreme Court scholar Erwin Chemerinsky has written, “One crucial aspect of the Roberts Court’s decision-making has been its systematically closing the doors to those suing corporations, to those suing the government, to criminal defendants, and to plaintiffs in general.”

What occurred in the December 1, 2015, rules changes was the culmination of decades of a conservative agenda being pushed through the bizarre rules process, where judges are actually making new law, and then interpret-

Fall 2016 The American Prospect 93

ing that selfsame law when it comes before them in cases.

The origins of the rules changes go back

to a May 2010 invitation-only meeting at the Duke University Law School to examine what some said were problems with the rules and to consider possible amendments. One would expect any conference that addresses the cost and delays of the judicial system to consider empirical studies that show that such costs and delays exist. At the Duke 2010 conference, dozens of papers were indeed presented, but almost all of them were based on surveys about perceptions of the system as problematic, rather than revealing real data on the problems.

Most traded in the anecdotes, rumors, and horror stories that are common in discussions about litigation, rather than taking a broad look at the system and its effectiveness.

However, one study stood out. In prepara-

and 27 percent for defendants. Therefore, the median costs for discovery were $3,000 and $5,400 for each side, respectively, which includes not only production of materials, but also the costs of an attorney reviewing them.

Furthermore, discovery accounted for only 1.6 percent of the reported total monetary amount sought by plaintiffs and 3.3 percent of the costs for defendants. This was hardly evidence of a system out of control.

However, recognizing that there is no “right” amount to spend on discovery—if someone feels a case is baseless or frivolous, then even one dollar is too much—the study asked lawyers the normative question of what the proper ratio of the costs of discovery to the total litigation costs would be. Plaintiff attorneys said that in an ideal world, discovery should constitute approximately 33 percent of the total litigation costs, and defendant attorneys said 40 percent.

Since the actual amounts the FJC found were 20

Under the new rules, if a minimum-wage worker and a salaried worker bring the same suit against the same employer, the salaried worker has a better chance to win. tion for the Duke 2010 conference, the Advisory Committee solicited a massive study from the Federal Judicial Center (FJC), which is the federal courts’ research agency. The FJC conducted a survey of both plaintiffs and defense attorneys who had closed cases in the last quarter of 2008 in order to get a sense for how much of a burden discovery was on litigants. If the system had indeed been broken for decades and needed radical reform, then a strong neutral empirical study detailing the scope of the problem was necessary. And the FJC was supposed to provide such a study.

For a conference organized around the principle that discovery was out of control, the FJC ’s findings had to come as a disappointment. It reported that the median entire costs for litigation, including attorney fees and discovery, were $15,000 for plaintiffs and $20,000 for defendants. Of this amount, discovery represented 20 percent of the costs for plaintiffs

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percent and 27 percent, respectively, what parties actually spend on discovery is significantly less than what they think should be spent. There could have been no clearer indication than this that peoples’ perception on the matter was false and that the practice of discovery worked well.

Furthermore, the study showed that the time it took to litigate most cases had remained surprisingly stable over the decades.

These median statistics do not tell the whole story, of course. The study found that in the top 5 percent of cases—those that involved at least $5 million—the median total cost of litigation was $300,000. It’s this small percentage of cases, where both the stakes and litigation costs were extremely high, that seems to be behind the case for changing the rules. Indeed, a survey conducted of Fortune 200 companies by the corporateand defense-side group Lawyers for Civil Justice found that average discovery costs for their cases ran between $600,000 and $3 million.

The Fortune 200 companies have trillions of dollars in market value, so although these figures are substantial, it is difficult to know if they really represent a problem for these companies or whether they are large in relation to the cases at issue. But it was the Fortune 200 crowd and others at the top who were driving the rules change. Seattle University School of Law professor Brooke Coleman, in a new paper, terms the new rules the “one percent procedure.”

Despite decades of empirical studies by the FJC and others that have found that the system of discovery serves its intended purpose without high costs or delays, the Advisory Committees since Burger’s time have taken their cues from anecdotes and horror stories rather than the facts. In 1998, the chair of the Advisory Committee, Judge Paul Niemeyer, repeated a statistic that seemed to originate with Vice President Dan Quayle’s Council on Competitiveness: “Over 80 percent of the time and cost of a typical lawsuit involves pre-trial examination of facts through discovery.”

The problem with this zombie statistic was that it was completely baseless. Indeed, Niemeyer followed up the 80 percent statistic with an acknowledgment that it was baseless. “While I am not aware of any empirical data to support this claim, the fact that the claim was made and is often repeated by others, many of whom are users of the discovery rules, raises a question of whether the system pays too high a price for the policy of full disclosure in civil litigation.”

Judges are supposed to be uniquely skilled at distinguishing fact from hearsay.

The 2010 Duke conference ended with a call for more cooperation and education among lawyers. The 28-page report submitted to Chief Justice John Roberts did not portend that the rules were about to go through a major change.

Individuals who attended the conference were therefore surprised when, in August 2013, the Advisory Committee revealed a set of proposed rules that went far beyond what most had imagined. The proposed rules cut the number of interrogatories (written questions) parties could pose; they cut the time limits for depositions; they got rid of the forms that were included since the 1930s and embodied the accessibility of the courts; and they imposed

tom williams / cq roll call via ap images

the proportionality standard. The proposed rules proceeded as if the conference and FJC study never occurred and simply assumed there was a system badly in need of repair.

Comments, many in the form of multi-page responses that described personal experiences and adduced statistics, flooded in, with the vast majority of attorneys on civil-rights and consumer-rights cases, and those representing prisoners and other plaintiffs, arrayed against the new rules, while the vast majority of defense attorneys favored them. At hearings in Washington, D.C., Dallas, and Phoenix, more than 120 speakers testified, largely breaking along the same lines. The judges coordinating the rules changes, along with defense and corporate attorneys, tried to argue that the new rules represented nothing new: They merely had taken an implied proportionality standard from a different spot in the rules, moved it up, and fleshed it out. Plaintiff attorneys countered that attempts to cast the rules changes as anything but a huge giveaway to corporate and government defendants were belied by the obvious camps that had formed.

At the same time that this was playing out in the public, Duke Law School was organizing a private invitation-only conference to draft “guidelines” on the new rules, at its newly formed Center for Judicial Studies. The center has the laudable goals of training judges and organizing conferences where academics, judges, and practitioners can exchange ideas about the judicial system. Though the Duke guidelines purport to represent simple guidance put out by a private third party on how to understand and interpret a major change in the rules of the court, several prominent scholars have cried foul. Chief among these critics is Suja Thomas, a law professor at the University of Illinois Law School.

In late summer of 2015, while the Duke guidelines drafting process was already well under way, Thomas sent a letter to federal judges David Campbell, Jeffrey Sutton, and a handful of others. In addition to their roles as federal judges, Campbell was the chair of the Advisory Committee on the Federal Rules of Civil Procedure and Judge Sutton was chair of the Standing Committee of Rules and Practice on Procedure.

Therefore, these two judges, along with Chief Justice John Roberts, represented the high-

est levels of rule-making within the judiciary.

In the polite tones that are necessary in addressing federal judges, Thomas sought to bring to their attention the Duke guidelines process, and that current and former members of the federal Advisory Committee were taking part in it. Justice Charles Evans Hughes, who served as chief justice of the Supreme Court in the 1930s when the Rules Enabling Act was passed and helped guide the drafting of the initial rules, had made clear that the Supreme Court found it “objectionable” to have mem-

rently in those positions with the Duke center.)

At the time of the drafting of the guidelines, the Duke center Advisory Council was composed chiefly of the general counsels and heads of litigation from corporations such as Merck, Pfizer, Bank of America, ExxonMobil, Home Depot, GE, State Farm, and Altria (the world’s largest tobacco company and parent company of Philip Morris). The corporations occupy all the “Gold” and “Silver” sponsor spots the center reserved for its largest financial contributors.

Less than two months after her first letter,

Chief Justice John Roberts: The new rules, he wrote, “engineer a change in our legal culture.”

bers of the Advisory Committee take part in a private effort to interpret the rules. The chief justice had explained that such efforts “would have the appearance of an official explanation and interpretation of the rules.” Thomas was informing these judges in charge of the rules process that such “objectionable” behavior was taking place on their watch.

Thomas didn’t know it at the time, but she didn’t need to make Sutton and Campbell aware of her concerns—because they were a part of the very process she was questioning.

Sutton was serving on the Advisory Council for Duke’s judicial center, and Campbell was serving on the center’s board. (Neither are cur-

Thomas extended her critique in a follow-up letter to Sutton, Campbell, 13 chief federal judges across the country, as well as Chief Justice Roberts, and the chairs and ranking members of the Senate and House Judiciary Committees. She pointed out that the Duke center, which had significant corporate sponsorship and was chaired by the general counsel of Bayer, had drafted an 11-page set of private guidelines to interpret one sentence in the new rules, and was using federal judges to teach these guidelines to other judges in federal courthouses across the country, in a process they were calling the “Roadshow.”

The public and private processes had

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become entangled in such a way that corporations and others on the defense side were getting to write the rules of the game. Not surprisingly, the guidelines reflect their authors’ viewpoints. They further limit plaintiffs’ rights by encouraging judges to limit discovery early in the process. Attendees of the “Roadshow” have explained that the presentation of the guidelines further encourages “cost sharing,” wherein plaintiffs would have to pay for the defendants’ efforts to produce discovery.

Thomas’s concerns were that the Duke process and resulting guidelines have taken on the imprimatur of official interpretations to the rules. They were drafted in part by judges who are current and former members of the official Advisory Committee; they have been used to train a high percentage of federal magistrates and judges prior to the enactment of the actual rules; and they are currently being used in the “Roadshow” by current and former members of

es for decades and cannot imagine one of them not understanding the difference between the official rules and the Duke guidelines.

However, when I’ve requested information about what individuals who drafted these private guidelines said, or the transcripts of the Roadshow, Rabiej has denied the requests by pointing out that these are federal judges—an objection that seems germane only if they’re on official business.

The current fear by some civil procedure experts is not only that the guidelines go further than the official rules have gone in limiting discovery, but that there is now what appears to be an officially sanctioned private corporate-dominated process for shifting the rules to the right. Many are concerned that this process has only just begun.

The new federal rules have been in

effect for less than a year, but already one can

The right-wing agenda has prevailed through a bizarre rules process, where judges actually make new law and then interpret that law when it comes before them in cases. the federal Advisory Committee that drafted the official rules to train judges and attorneys in federal courthouses.

Confused by the difference between the Advisory Council, which is run by Duke and sponsored by corporations and has federal judges serving as its mouthpiece, and the Advisory Committee that speaks for the federal judiciary, which has some of those same federal judges as members? Confused where the official rules that stem from the Duke 2010 conference end and the unofficial guidelines that stem from the Duke 2013 conference begin? This is exactly Thomas’s point. She argued that the trainings were improper and that if they continued, a “congressional hearing on this matter is warranted.”

John Rabiej, the director of the Duke Center for Judicial Studies, insists that there was nothing untoward about this arrangement.

In an interview and subsequent communications, he said he has worked with federal judg-

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see they were not the minor adjustment that so many judges and defense-side attorneys claimed during the process. Chief Justice John Roberts devoted almost the entirety of his annual year-end report on the federal judiciary to the rules changes, noting that “[m]any rules amendments are modest and technical, even persnickety, but the 2015 amendments to the Federal Rules of Civil Procedure are different.” These changes were major, and were aimed, in Roberts’s words, at “engineer[ing] a change in our legal culture.”

There is no comprehensive way to determine the effect the new rules have had in the months since their passage because each judge handles challenges to discovery differently.

Most handle such matters informally, preferring not to spend time writing carefully crafted opinions for any but the few unique or major cases before them. Several practitioners estimated that at most 10 percent of

such decisions are published, and the number is likely even less. These decisions are virtually unappealable, so whatever the judge decides usually stands unchallenged.

An analysis of such published decisions, however, does reveal that the rules changes have already had a major effect. Between December 1, 2015, when the new rules went into effect, and March 1, 2016, there were 182 published decisions concerning discovery disputes that applied the new proportionality rules. The majority of these decisions did not allow much of the materials sought. Thirty-eight of these decisions analyzed discovery with an eye toward the burdens that one side would face in providing the information sought. During the same time period in 2012 through 2013, by contrast, there were almost no decisions that discussed discovery and proportionality. These numbers clearly show that parties are challenging the right to information, and many judges, following the new rules, are limiting information.

The effects of limiting discovery do not end with the litigants themselves. Many cases lead to changes in corporate and government behavior, and these cases are now much harder to bring. Legal discovery is one of the few means of gaining important information about the inner workings of corporations and government entities. Not only do our laws rely on a private enforcement model, but much of our journalism relies on the same model. The discovery that makes up the backbone of lawsuits also makes up the backbone of many of the nation’s most important exposés.

Justice Roberts has described the new rules as “a good start.” Some suspect that the next step will be an attempt to either change the rules, or interpret them, to require the party asking for discovery to pay for it. If history is any indication, subsequent changes will have enormous impact on people’s access to justice, but will be effected in a process that ensures they receive almost no public attention.

Moshe Z. Marvit is an attorney and fellow at the Century Foundation, and co-author with Richard D. Kahlenberg of Why Labor Organizing Should Be a Civil Right: Rebuilding a Middle-Class Democracy by Enhancing Worker Voice.

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Hidden Injuries The decline of the white working class and the rise of the Tea Party and Donald Trump By Robert Kuttner

daniel rosenthal / l aif / redux

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F

ive years ago, the sociologist Arlie Hochschild set out to better understand what she called the “deep story” of the mostly white, mostly downwardly mobile Americans who made up the fervent constituency of the Tea Party, and now of Donald Trump.

These are the people who ostensibly vote against their economic self-interests, as Thomas Frank contended more than a decade ago in What’s the Matter with Kansas?

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They loathe a government that often redistributes and regulates in their favor.

What was at work here?, Hochschild wanted to know. What was their “narrative as felt”? Her odyssey took her to an ideal locale to fathom the apparent cognitive dissonance of the right-wing populist backlash—the swampy region around Lake Charles, Louisiana, a town of 75,000 all but ruined by the petrochemical industry.

In ten extended trips to southwest Louisiana, Hochschild proceeded with great humility, sitting around kitchen tables, taking drives, going to church, listening respectfully to the life stories of 60 people, accumulating 4,690 pages of transcript. Despite their political differences, she grew to like, even admire, most of them, for their generosity and fortitude.

Hochschild’s account, Strangers in Their Own Land, is novelistic

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as well as an exemplary political ethnography. Her tale is at once baffling, demoralizing, and a wake-up call for liberals. It is the clearest narrative exposition yet of the social basis of the Trump backlash and of right-wing populism generally.

“Virtually every Tea Party advocate I interviewed for this book,” she writes, “has personally benefited from a government service or has close family who have.

Several have elderly disabled parents and had them declared indigent in order to enable them to receive Medicaid.” Louisiana, like most red states, is a net recipient of federal aid; the lower you go on the income ladder, the

Fall 2016 The American Prospect 97

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more pronounced is that cost-benefit tilt in your favor.

Places like southwest Louisiana also desperately need government protection from predatory industry.

A region that these adults remember as a paradise of plentiful fishing, hunting, swimming, and boating on lovely bayous is now a substantially uninhabitable landscape, due to the predations of companies like Union Carbide and PPG. Water cannot be safely drunk and is dangerous to swim in. The fish are mostly gone or toxic to eat. Methane seeps out of the earth.

Birds are dying. Nearby, along the Mississippi River, is an 85-mile strip of more than 150 chemical plants, widely known as Cancer Alley because of the elevated cancer rates linked to toxic waste. One of Hochschild’s interviewees, Mike Schaff, lost his home and neighborhood to a giant, 30-plusacre sinkhole in Bayou Corne that was created when salt domes rented for toxic storage by chemical companies gave way. The locals are indeed strangers in their own land.

Touring the lost world of a 77-yearold Cajun man named Harold Areno, in Bayou d’Inde, Hochschild is introduced to scenes of dead cypress trees, blind turtles, and species of fish and game that either no longer exist or are toxic. As she grasps the personal impact and environmental catastrophe caused by insufficiently policed chemical dumping, Hochschild writes, “I feel as if I’ve come upon the scene of a slow-motion crime.”

Yet to a person, her interviewees hate the Environmental Protection Agency, and vote for political leaders who want to shut it down. Even Mike Schaff, who personally crusaded against the chemical companies at risk to his own livelihood, votes Tea Party.

How can this possibly be? These people, after all, are not stupid. More to the point, she finds, they are good, worthy, likable folk, quick to help a neighbor in distress. To summarize a complex human story that deserves to be read in all its rich detail, here’s what she finds: People hereabouts don’t trust government, state or federal, and not without reason. They’ve watched,

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close-up, as the government of Louisiana, one of the most chronically corrupt, has given the oil and chemical industry a free pass. The federal EPA may be somewhat better, but it is even more remote, and seems to care more about protecting obscure species than saving bayous. But the government is great at extracting taxes, often to help people who don’t deserve it, and at adding nuisance regulations.

If the government had been doing its job, their homes would not have been turned into a ruined landscape of toxic waste. The most fervent recruits to the Tea Party, as Alec MacGillis has observed, are not working-class, much less underclass. They are dispossessed middle-class, who see neither political party respecting, much less serving, them. Government promised, didn’t deliver, and tendered visible help mainly to the dependent poor. Genuine benefits like Social Security, Medicare, and Medicaid aren’t enough to tilt the balance.

Unlike hopeful liberals, Hoch­ schild’s Louisiana friends derive their view of government not from what it might be but from what it is, in their own experience. Harold Areno puts it just about perfectly: The state always seems to come down on the little guy. Take this bayou. If your motorboat leaks a little gas into the water, the warden’ll write you up. But if companies leak thousands of gallons of it and kill all the life here? The state lets them go. If you shoot an endangered brown pelican, they’ll put you in jail.

But if a company kills the brown pelican by poisoning the fish he eats? They let it go. I think they overregulate the bottom because it’s harder to regulate the top.

This view sounds almost like something Bernie Sanders or Ralph Nader might say, but it leads to an opposite brand of populism—a sense of both resignation and deep resentment, a feeling that all we can rely on is our own grit; even an acceptance of environmental destruction as the price that must be paid for jobs (though the jobs are becoming

Strangers in their Own Land: Anger and Mourning on the American Right

By Arlie Russell Hochschild

New Press

Hillbilly Elegy: A Memoir of a Family and Culture in Crisis

By J.D. Vance

HarperCollins

unreliable). Jackie Tabor, one of her subjects, tells Hochschild without a shred of irony, “Pollution is the sacrifice we make for capitalism.”

That sensibility is what makes these folks right-wing populists. They hate all things big, including big business and big government, and they correctly see the two as conjoined. Based on their own lived experience, they have no confidence that government, as John Kenneth Galbraith hoped, can serve as a countervailing force against business for the benefit of the people.

Culturally, Hochschild reports, they seek “relief from liberal notions of what they should feel—happy for the gay newlywed, sad for the plight of the Syrian refugee, un-resentful about paying taxes.”

How do the good people of Lake Charles cope if they don’t look to government for help? They have their church. Harold Areno, mourning his lost cypress trees, says thoughtfully, “They say there are beautiful trees in Heaven.” And they have each other— their own sense of community decency and proud self-reliance. They are victims who reject a language of victimhood, Hochschild writes. Government seems not to respect any of this.

Hochschild puts her finger on something that has eluded many analysts who focus on the economics, namely the role of culture. These people feel condescended to. “They … felt culturally marginalized: their views about abortion, gay marriage, gender roles, race, guns, and the Confederate flag all were held up to ridicule in the national media as backward,” she writes. They felt like a besieged minority. One of her interlocutors tells her, “[T]here are fewer and fewer white Christians like us.”

After considering her interviews at length, Hochschild synthesizes what she takes to be the credo of the Tea Party supporters of southwest Louisiana: You see people cutting in line ahead of you! … Through affirmative action plans, pushed by the federal government, they are being given preference for places in colleges and universities, apprenticeships, jobs, welfare

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payments, and free lunches. …

Women, immigrants, refugees, public sector workers—where will it end? Your money is running through a liberal sympathy sieve you don’t control or agree with. …

Unbelievably, standing in front of you in line is a brown pelican.

The credo is not just about economic displacement. It’s about honor.

The Tea Party supporters of Lake Charles are no longer honored, either as whites, or as male breadwinners, or as women homemakers.

Regional honor? Not that either.

You are often disparaged for the place you call home. … There is a political movement of people such as yourself who share your deep story. It’s called the Tea Party.

Hochschild emails her rendition of what she calls “The Deep Story” to the people who have become her Louisiana friends. One emails back, “I live your analogy.” Another says, “You’ve read my mind.”

Her subjects go out of their way to tiptoe around race, though it is tacitly present. There was a time when government delivered enough that people like them could feel that government was on their side. Their grandparents voted for Huey Long, and for FDR .

Once, Louisiana regularly elected Democrats. For most of the 20th century, they enforced racial segregation. Now, government seems to be an alliance between the lowest classes, racial minorities, and the culturally avant-garde. The government not only insists on race-mixing but expects welcoming smiles.

As it happens, the number-three

book on the nonfiction bestseller list, as of this writing in late September, is Hillbilly Elegy, a first-person memoir by a 31-year-old who could have been one of Hochschild’s interlocutors, except for the fact that he hails from Appalachia rather than Louisiana.

Author J.D. Vance’s people came from the hill country in eastern Kentucky.

His parents set out for Ohio, looking for work. But his is the ultimate dysfunctional family. His mother ends

Hillbilly Elegy is a bait and switch—a

conservative

infomercial disguised as an affectionate memoir.

up bouncing from one toxic boyfriend or husband to another, becoming a drug addict and an abusive parent.

Vance flees to his estranged father, but leaves. Ultimately, he is saved by his grandparents, known as Mamaw and Papaw, who give him a semblance of a stable home life and decent if rugged values, for his last three years of high school.

He gets into Ohio State, but realizes he is ill-prepared. So he defers admission and joins the Marines.

They make a man of him, and he manages to avoid combat with a public-affairs job. Vance comes home, excels at Ohio State, and is accepted at Yale Law School.

Hillbilly Elegy turns out to be a very sly piece of work that professes to express great nostalgia and compassion for the hillbilly way of life. (“Americans call them hillbillies, rednecks, or white trash. I call them neighbors, friends, and family.”) But Vance is on the trail of a bait and switch. Despite the down-home charm, he ends up sounding condescending to his neighbors and kin.

Vance not only excelled at Yale Law; he is now at a Silicon Valley hedge fund. And, according to Vance, you could be, too—if you weren’t so goldurned lazy. If you weren’t selling your food stamps, blowing off jobs, deserting your kids, and getting stoned on Oxycontin.

In the end, it’s not about rapacious corporations and collapsing smalltown economies. It’s about values.

For all of his idyllic reminiscences of small-town Appalachia, good old boy Vance, now also a columnist with National Review, is Charles Murray with a shit-eating grin. Hillbilly Elegy is a conservative infomercial, disguised as an affectionate memoir.

Here are extracts of Vance in an extended, three-page reverie of hillbilly self-hate, describing his extended family and neighbors. He tacks back and forth, offering a dollop of occasional structural analysis, but in the end firmly coming down on the side of values and character: We spend our way into the poorhouse. We buy giant TVs. … We purchase homes we don’t need,

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refinance them for more spending money, and declare bankruptcy, often leaving them full of garbage in our wake. Thrift is inimical to our being. …

We scream and yell at each other like we’re spectators at a football game. At least one member of the family uses drugs. …

Our kids go to foster care but never stay for long. …

We don’t study as children, and we don’t make our kids study when we’re parents. … Sometimes we’ll get a job but it won’t last. We’ll get fired for tardiness, or for stealing. … We talk to our kids about responsibility, but we never walk the walk. …

Our eating and exercise habits seem designed to send us to an early grave. … We eat Pillsbury cinnamon rolls for breakfast, Taco Bell for lunch, and McDonald’s for dinner. We rarely cook, even though it’s cheaper and better for the body and soul. Exercise is confined to the games we play as children.

And so on. But, as Tonto memorably asked, “What you mean, we?” Is “we” his extended family? Appalachian hillbillies generally? Workingclass Americans? Or an extrapolated rant against his mother?

Some elegy! His cartoon may describe some hillbillies, but the exaggeration is breathtaking. People don’t lose jobs because the jobs disappear but for tardiness and stealing?

We never walk the walk as parents.

Never? This muddle of memoir and faux social science comes from a graduate of Yale Law School.

What does come through loud and clear is the self-hate, projected onto his extended family. And then, in a sleight of hand, Vance exempts himself from the “we”: “I knew even as a child that there were two separate sets of mores and social pressures.

My grandparents embodied one type: old-fashioned, quietly faithful, selfreliant, hard-working. My mother and, increasingly, the entire neighborhood embodied another: consumerist, isolated, angry, distrustful.” Values to the rescue.

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Yet if Vance is not worth taking seriously as a pop sociologist, he is very worth reading as primary data. The fact that there are so many people like Vance spells trouble for liberals. Kentucky, after all, is the state that did an exemplary job of expanding Medicaid under the Affordable Care Act, securing health insurance for hundreds of thousands of Kentuckians, and the grateful citizens then elected a Republican governor who pledged to discontinue it, because they evidently hated government in general more than they liked their Medicaid.

The fact that Vance’s story is set in Appalachia, where there are few black people, tells you that white rage, while partly about race, is not just about race. His neighbors are losing out economically. Yet Barack Obama supercharged the white backlash, as the ultimate case of a black man who rose far above the station of downwardly mobile whites, adding to their sense of displacement and resentment. Vance adds this apt description: President Obama came on the scene right as so many people in my community began to believe that the modern American meritocracy was not built for them. …

He is a good father while many of us aren’t. He wears suits to his job while we wear overalls, if we’re lucky enough to have a job at all.

His wife tells us that we shouldn’t be feeding our children certain foods, and we hate her for it—not because we think she’s wrong but because we know she’s right.

Like Ronald Reagan, Vance uses anecdotes. He tells the story of a tile warehouse where he once worked that paid decent wages—$13 to $16 an hour—and a fellow he calls Bob who kept missing work and finally got fired. “Despite this relatively stable situation, the managers found it impossible to fill my warehouse position with a long-term employee.” He adds, “Too many young men immune to hard work. Good jobs are impossible to fill for any length of time.”

Vance somehow missed the entire retail sector, where employers such as Walmart, McDonald’s, et al., find

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Right-wing populism is not just

masses against elites,

but native white masses against both unresponsive elites and rising “others.”

plenty of men and women with solid work ethics to accept a good deal less than $13 an hour. Yet he is onto something. His neighbors seem to internalize their sorry economic condition. Appalachia displays one of the hidden injuries of class, which is low self-regard. Many of the people he writes about share the poor opinion of themselves that Vance excoriates.

They don’t respect themselves when they have to go on food stamps, they respect others who use food stamps even less, and they respect the purveyor of food stamps least of all. That would be the government.

Why do we liberals lose so many downtrodden white people like Vance and Harold Areno—both the ones who manage to transcend their structural disadvantages and the ones who don’t? Vance’s own grandmother, he says, sometimes sounds “like a European-style social democrat.” But she is becoming the exception. Just how much of the story is economics, how much race, how much culture?

One of my favorite singer-songwriters is John Prine, a country boy whose parents grew up in Muhlenberg County, Kentucky, a few hundred miles from the kin of Vance. Prine is a rarity—a hillbilly lefty. He, too, writes of drug addiction (“There’s a hole in daddy’s arm where all the money goes”) with a compassion that eludes Vance. In “Paradise,” the name of a Kentucky mining town that was torn down in 1967, Prine writes:

And daddy won’t you take me back to Muhlenberg County Down by the Green River where Paradise lay Well, I’m sorry my son, but you’re too late in asking Mister Peabody’s coal train has hauled it away The good people of Lake Charles, Louisiana, could sympathize with the sentiments, and likewise Vance’s cousins in the ruined coal country of eastern Kentucky. But in general, they don’t extrapolate from their own situation to progressive inferences or progressive politics. Their brand of populism tends to be that of the Tea

Party and Donald Trump, not Harry Truman, much less Bernie Sanders.

John Judis, in The Populist Explosion, has written a terrific short book that sheds further light on these vexing questions. His is a brisk tour of the horizon, of the right and left versions of populism, their history and current state, with a useful comparison of the populist upsurge in the United States and in Europe. His general insight: Populism gains adherence whenever mainstream parties let ills fester. Populist parties “often function as warning signs of a political crisis.”

That surely describes the state of the political establishment in both the U.S. and Europe: On both sides of the Atlantic, the major parties favored increased immigration, only to find that in the United States voters were up in arms about illegal immigration and in Europe about immigrant communities that became seedbeds of crime and later terror. The populist candidates and parties gave voice to these concerns. In Europe, the major parties on the continent embraced the idea of a common currency only to find it fall into disfavor during the Great Recession. In the United States, both parties’ leaders embraced “free trade” deals only to discover that much of the public did not support these treaties.

Have you heard this linguistic riddle? What is the difference between envy and jealousy? Answer: Envy is about two people; jealousy is about three people. In the same spirit, Judis draws a useful distinction between right-wing populism and left-wing populism.

Leftwing populists champion the people against an elite or an establishment. Theirs is a vertical politics of the bottom and middle arrayed against the top.

Rightwing populists champion the people against an elite that they accuse of coddling a third group, which can consist, for instance, of immigrants, Islamists, or African American

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militants. Leftwing populism is dyadic. Rightwing populism is triadic. It looks upward, but also down upon an out-group.

As Judis tells the story, there have been three great bouts of populism in America, the third of which has culminated in the Tea Party and Trump.

All three resulted from worsening economic circumstances experienced by the common people and not remediated by major parties. The first was the original populist revolt of the 1870s and 1880s, produced by the rendezvous of falling farm prices, extortionate local merchants, and monopolist rail operators, causing free farmers to fall into debt peonage.

The rise of the robber barons intensified the sense of injustice. The populists failed as a party in the 1890s, but much of their program was eventually enacted.

In the 1930s, populist demands for redress were effectively co-opted into the New Deal, in which the president of the United States rhetorically embraced a kind of left-wing populism (“I welcome their hatred”) and delivered practical benefits. Following the assassination of Huey Long and the long period of uplift of the American white working class, the New Deal was institutionalized and populism pretty well fizzled—until it was revived by Alabama Governor George C. Wallace.

In Judis’s typology, the first two bouts were left-populism—masses against elites. The populism of the 1880s had its racists, but it also had abortive efforts to build bi-racial coalitions. The Roosevelt brand of populism didn’t need to be racist in its appeals, because the New Deal itself scrupulously (or maybe unscrupulously) maintained the Southern system of segregation as part of its bargain with Southern Democrats. As Richard Rothstein has documented, the New Deal even extended state-enforced residential segregation to the north, via its public housing and mortgage programs. One of the dirty secrets of America’s quasi–social democratic era was that the social contract excluded blacks, as Ira Katznelson so powerfully demonstrated.

But the latest bout of populism, which has slowly gathered force since the late 1960s, is not just masses against elites—it is native white masses against both unresponsive elites and rising “others,” first blacks, later immigrants, as well as gays and feminists—following Judis’s model of a triad, not a dyad. Historically, right-wing populism was contained as long as working- and middle-class whites felt they were getting their fair share, and as long as government took seriously grievances of class. The lost sense of fair play that opened the door to a new era of right-wing populism was a blend of economic, racial, and cultural grievances, compounded by the demands of new cultural insurgents. And in a collision of bad luck, the upsurge of black demands for long-deferred rights beginning in the 1960s happened to coincide with the start of a prolonged economic shift that undercut the white, blue-collar middle class. Today’s backlash is an intensified echo of the one in the Wallace-Nixon era.

For Judis, the distributive aspects of the downturn that ended the postwar boom reflected a power shift. In the 1970s, the Keynesian/New Deal model of how to run an egalitarian economy gave way to a very different power constellation that embraced neo-liberal policies. Business was resurgent, labor unions weakened.

The process was cumulative. The elements—budget balance, tax cuts, deregulation, liberal trade—undermined both the living standards and the political influence of working people and increased the power and wealth of financial elites. During the same period, cosmopolitan liberals and the national Democratic Party embraced multiculturalism. Wall Street liberals fought regulation and taxation, but didn’t mind either the “amnesty, acid, and abortion” trinity against which Spiro Agnew railed, or a measure of redistribution to the bottom. The Democrats became a party of the well-educated, the cosmopolitan affluent, the socially liberal, in coalition with minorities and the dependent poor. Some white working-class voters were still in the coalition, but as unions declined,

The Populist Explosion: How the Great Recession Transformed American and European Politics

by John B. Judis

Columbia Global Reports

Trump and the Roots of Rage: The Republican Right and the Authoritarian Threat

by Kevin O’Leary

Amazon Digital Services

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increasing numbers of workaday whites felt deserted.

Was this shifting coalition a good idea? For decades, analysts such as Thomas Schaller, Ruy Texeira, Stan Greenberg (and John Judis in an earlier incarnation) have been forecasting that the growth of demographic groups that favor Democrats—the well-educated, the young, ethnic and racial minorities—portends a Democratic-majority nation. Schaller titled his book Whistling Past Dixie.

Presumably, Democrats could stop obsessing about winning back the South because they didn’t need it.

And anyway, thanks to the influx of Northerners and Hispanics, the South was becoming more like the rest of America.

But what if the opposite is true?

What if the sense of class and racial and cultural hurt so vividly on display in Lake Charles and in J.D. Vance’s Appalachia is creeping northward?

Kevin O’Leary wrote of this trend in a recent Prospect article that was the germ of his new book, Trump and the Roots of Rage, taking George Wallace as the harbinger. Wallace, who carried five states in 1968 and whose vote in several northern states exceeded the margin by which Richard Nixon beat Hubert Humphrey, “spoke the language of the white working class first in the South and then across the nation. In doing so, Wallace perfected an angry rhetoric that was implicitly racist while being explicitly critical of the federal government and the ‘liberal elites’ who dominated Washington.”

Harold Meyerson wrote of a complementary, equally alarming trend in a seminal article, “How the American South Drives the Low-Wage Economy,” published in the Prospect’s Summer 2015 issue: The South today shares more features with its antebellum ancestor than it has in a very long time.

Now as then, white Southern elites and their powerful allies among non-Southern business interests seek to expand to the rest of the nation the South’s subjugation of workers and its suppression of the voting rights of those who might oppose their policies.

Fall 2016 The American Prospect 101

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As the Southern political economy invades the north, the economy may well be generating downwardly mobile white people faster than the society is producing more racial and ethnic minorities and well-educated liberals. At best, it’s a close contest.

In The Politics of Resentment,

political scientist Katherine J. Cramer conducts hundreds of interviews with residents of rural Wisconsin, seeking to learn why the state that elected Robert La Follette, William Proxmire, and Russ Feingold has Scott Walker as its governor. She finds “people making sense of politics in a way that places resentment towards other citizens at its center.” In particular, rural Wisconsinites in the northern part of the state, most of whom have lost income and economic security in recent decades, feel that the big cities are taking too much at their expense.

The state’s biggest city happens to be Milwaukee, a city with a large black population. The other large city, Madison, combines the ultra-liberalism of a Cambridge or a Berkeley with the role of state capital. Smalltown Wisconsin increasingly abhors Madison for both reasons. As the rest of the economy has lost income and economic security, the public employees who once had a pay package that seemed merely normal now seem to be enjoying privileges financed by the tax dollars of people who are worse off. “The teachers union,” says a man named Harold. “They were in there like the cat at the bowl of milk. Then they turned it to cream. Then they turned it to ice cream.” Harold, it turns out, is a former member of the United Automobile Workers, a union that epitomizes the shrinking bluecollar economy.

Race and the perception of racial favoritism compound the problem.

“They give everything to Milwaukee,” says one of Cramer’s subjects.

The old liberal formula of tax, spend, and regulate has ceased to be effective or persuasive. Government itself is the enemy.

The comments quoted by Cramer could have been from Hochschild.

The political sentiments that result seem Southern. But here they are, in

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The End of White Christian America

By Robert P. Jones

Simon & Schuster

The Politics of Resentment: Rural Consciousness in Wisconsin and the Rise of Scott Walker

By Katherine J. Cramer

University of Chicago Press

Listen, Liberal: Or, What ever Happened to the Party of the People?

by Thomas Frank

Metropolitan Books

one of the great progressive northern states. It’s true that Wisconsin has a history of going right as well as going left. This was Joe McCarthy’s state, too. And that’s the point—populism can go either way, whether the driver is downward mobility, or nationalist anxiety over communists or Muslims.

In Wisconsin, at this writing, Clinton is up just five points over Trump.

Many whites attracted to the populist backlash also feel beleaguered as Christians. As Robert P. Jones, a mainstream scholar of religion and columnist for The Atlantic, writes in The End of White Christian America, both mainline and evangelical Christian denominations consider themselves to be sadly in decline. The statistics, of which Jones provides plenty, bear that contention out. As a share of the population, self-described evangelicals have declined from 22 percent in 1988 to 18 percent in 2014. Mainline Protestants have dwindled more precipitously, from 24 percent to 14 percent.

You might think, with Schaller and Teixeira, that these trends would lead to a declining religious influence on politics. But the sense of an alien, secular society disrespecting traditional faith and values leads to intensified fervor, especially in the red states (and some swing states) where religious conservatives are concentrated. And another paradox: While support for some social issues such as same-sex marriage has grown among evangelicals, the effort to use religious teachings and values to enlist evangelicals to join a progressive pocketbook coalition has failed to materialize. PICO, a respected coalition of progressive faith-based groups, is heavily rooted in mainline Protestant, left-Catholic, and Jewish congregations. One reason, observes Richard Parker, who teaches religion and politics at Harvard’s Kennedy School, is that evangelical teachings stress the direct connection between the congregant and the Lord. The cherished community is the church. The state has no place.

For Tom Frank, the problem is

a Democratic Party that too easily turned away from the ordinary working class in favor of the educated, the successful, and the dependent poor.

In What’s the Matter with Kansas?

(2004), Frank argued that workingclass whites were being duped by conservatives based on cultural appeals on such issues as abortion, gay rights, gun control, and religious fundamentalism; they voted Republican in spite of their economic self-interests. A number of political scientists, such as Larry Bartels, countered that Frank had it wrong. Class was still a prime predictor of partisan preference if you defined it properly, and workingclass whites still tended to support Democrats. But in the subsequent decade, as the economy has become even more precarious and divided, the terrain has shifted. More downwardly mobile whites are not just voting Republican—they are voting Tea Party and Trump.

As Frank argues in his latest book, Listen, Liberal, the problem isn’t just that the Tea Party is gaining these voters, but that the Democrats disdain them. Rather than the “party of the people” epitomized by FDR and Truman, Frank argues, the modern Democratic Party has become “the party of well-educated professionals.”

Frank excoriates Bill Clinton for carrying out essentially Republican projects such as punitive welfare reform, NAFTA , financial deregulation, and the embrace of budget balance.

Obama, in Frank’s telling, squandered an opportunity to have the financial collapse blow up on Republicans by hiring many of the same people who led Clinton astray and placing restoration of money-market “confidence” ahead of drastically reforming the banking system. As a consequence, when the Tea Party backlash came, it was against the Democrats rather than Bush, and against a bipartisan establishment in general.

This is a familiar and apt criticism—I’ve made some of these arguments myself. Frank adds to it by making great fun of the Democrats as the party of technology and innovation, as if that were a substitute for an ideology. He reports on self-celebratory events at which Democrats and tech billionaires make vapid pronouncements like, “To win the future, we must out-innovate, out-educate, and out-build the rest of the world.”

jeff swensen / get t y images

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He writes, “Technological innovation is not what is hammering down working people’s share of what the country earns; technological innovation is the excuse for this development.”

Frank’s analysis, however, is off in some key respects. He doesn’t have much to say about race. Unlike discerning observers of the Tea Party and white backlash such as Alec MacGillis and Tom Edsall, he treats the white working class and the skidding middle class as basically one and the same. In his history of how the Democratic Party went astray, Frank also airbrushes the history that moved the Democrats to where they are today— the divisive role of the Vietnam War, the civil-rights revolution, the rise of identity politics, the impact of globalization on secure blue-collar jobs, and the crushing of trade unions. To read Frank, you would think a group of Democratic Leadership Council strategists, Democratic Congressional Campaign Committee fundraisers, and new-economy theorists sat in a room and decided that the party needed to move upscale, independent of these structural forces.

Frank also leaves out Republican obstructionism, a prime factor in the failure of Democrats to deliver more for the working class. It’s not as if Democrats didn’t try to pass several measures that would have delivered tangible, practical help. The Republicans play a neat game—make it impossible for government to succeed and then reap the gains as people start giving up on government.

Yet despite these flaws, Frank has a point. The plight of working people does not loom as large for the Democratic Party establishment as it once did in the era of Roosevelt and Truman. Today’s liberalism, Frank charges, with its boundless faith in technology, education, and professionalism, is “liberalism for the rich.”

That’s a caricature, but it is how a lot of working people have come to view a lot of Democrats.

The proof is the rise of Trump on the right and Sanders on the left, and the fact that a buffoon like Trump at this writing is in a statistical tie with Hillary Clinton in the polls. Clinton, for all of her experience and clear

competence to be president, represents continuity, and Trump, however bizarre, represents change. With all of the pent-up resentments in the land, this is not a good year to be the candidate of continuity. The fact that Sanders, as a declared socialist, a 74-year-old Jewish transplant to Vermont, and not even a Democrat, came close to edging out Clinton for the nomination attests to the depth and breadth of the feeling that the politics of continuity are not working, that politics and government “are rigged.”

In 2008, Barack Obama, as a barely known 46-year-old African American, could wrest the nomination from Clinton partly because he sounded like the more populist of the two. He was the outsider, and the public was getting sick of insiders. Obama even carried a surprisingly impressive share of the white working-class vote, both in the primaries and in the general election. In North Carolina, fully 35 percent of white people, including more than 55 percent of those with incomes under $50,000, voted for Obama against McCain. Obama represented change. In 2008, Sean

God Help Us: Trump supporters pray at a rally in Erie, Pennsylvania, on August 12, 2016.

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Quinn of the site fivethirtyeight.com told the story, possibly apocryphal, of the voter in Western Pennsylvania who told a canvasser, “We’re voting for the nigger.”

In sum : American progressivism

today is foundering on what we might call the clash of deeply felt injuries.

The insecurity and downward mobility of the white working and middle classes collides with a well-justified upsurge in black consciousness of continuing racial outrages and a demand for their remediation. Feminists and oppressed cultural minorities pile on.

Today’s story is one of dueling cultural and economic wounds, each with substantial basis in reality.

It’s hard to tell white hillbillies, residents of Lake Charles or of rural Wisconsin, to “check your privilege,” when they are far less privileged than their parents or grandparents. It’s liberal and conservative elites whose children are privileged. The charge of political correctness, used so deftly by Trump, resonates with white workaday voters in part because liberals seem to give priority to every other downtrodden group,

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from illegal aliens (sic) to transgender people to brown pelicans. The rainbow parade on display at the recent Democratic National Convention epitomizes everything workaday conservatives of the sort interviewed by Hochschild and Cramer hate about liberals.

Carol Anderson’s fine book, White Rage, is less about the current upsurge of white resentment than it is a concise recapitulation of more than 150 years of black efforts to attain full citizenship and economic uplift, and how each effort was crushed by a reassertion of institutional white power.

The current all-too-successful efforts of the Republican Party to undo the most fundamental of civic rights, the basic right to vote, is evidence that institutional white rage continues.

“White rage,” she writes, “doesn’t have to wear sheets, burn crosses, or take to the streets. Working the halls of power, it can achieve its ends far more effectively, far more destructively. …

The trigger for white rage, inevitably, is black advancement.”

If you need a refresher course in this shameful history, Anderson, chair of the African American Studies Department at Emory University, provides it with passion and precision.

From the reversal of Reconstruction, to the segregation of the North in response to the Great Migration, to the rollback of the Voting Rights Act and affirmative action and the continuing police targeting of black youth, every black effort to advance seems to produce a politics of white reaction and suppression.

Yet in our own time, most non-elite whites are also suffering great insecurity. If the latest upsurge in African American consciousness, Black Lives Matter, has not produced the sympathy and solidarity its sponsors hoped for, part of the reason is that lowerclass whites are also feeling their own sense of deep grievance, not just against blacks but against the system as a whole.

The vulnerabilities and the hatreds of the white working class are an old American theme. Nancy Isenberg begins her history White Trash with a scene from the classic novel and film To Kill a Mockingbird. It is the

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White Rage: The Unspoken Truth of our Racial Divide

By Carol Anderson

Bloomsbury

White Trash: The 400-Year Untold History of Class in America Nancy Isenberg

Viking

courtroom scene in which Mayella Ewell has accused the upstanding Negro, Tom Robinson, of rape. Her father, Bob Ewell, is a bully, a liar, and a classic figure from the white Southern underclass. “They were human waste,” Isenberg writes. She quotes author Harper Lee: “No truant officers could keep their numerous offspring in school; no public health officer could free them from congenital defects, various worms and diseases indigenous to filthy surroundings.

Garbage was strewn everywhere, making the cabin look like the playhouse of an insane child.”

Isenberg, a historian at Louisiana State University and columnist for Salon, has written her book to remind us that “white trash” have been part of the American experience literally from the first colonies. It is a mistake to see America as “born equal,” even apart from the stain of slavery. Especially in the South, the planter aristocracy ruled at the expense not just of blacks, but of lower-class whites.

From the beginning of the colonial era, many in England saw America as a place to jettison the social classes that the poet Emma Lazarus would later celebrate as wretched refuse.

Isenberg quotes one Richard Hakluyt the Younger, in a treatise prepared for Queen Elizabeth I, urging that America become a dumping ground for those whom he termed “waste people.” He urged that the offspring “of wandering beggars that grow up idly and hurtfully and burdenous to the Realm, might be unladen and better bred up.” Isenberg comments, “What Haklyut foresaw in a colonized America was one giant workhouse.”

And indeed, the American colonies, especially the ones of the South, reflected not just the racial hierarchy of slavery but the rigid class structure of mother Britain. The white lower orders, seldom landowners, suffered less than the black slaves but suffered nonetheless. This legacy did not disappear with the American Revolution. But in providing a useful reminder of the continuing injuries of class among white people, Isenberg cherry-picks history. Reading White Trash, you would never know

that the Massachusetts colonial constitution was drastically different from its Southern counterparts, and intended to promote free, yeomen smallholders. Isenberg even mocks Jefferson’s efforts to create a system of broad landownership, the Jacksonian revolution, and omits entirely the Homestead Acts of Lincoln, which extended democratic property ownership throughout the West. Despite the erudition and more than 100 pages of footnotes, Isenberg’s is an almost unrelieved picture of class oppression, when the reality is a back and forth of contention and struggle.

Yet Isenberg is right to underscore that it wasn’t just slaves and their descendants who were oppressed.

And this was especially true in the South. “Confederate leaders knew they had to redirect the hostility of the South’s own underclass, the nonslaveholding poor whites.” The entire history of aborted Reconstruction is one of the planter class fomenting racism so that a potential alliance of blacks and poor whites would never be realized. Isenberg quotes Lyndon Johnson: “If you can convince the lowest white man that he’s better than the best colored man, he won’t notice that you’re picking his pocket.”

Martin Luther King Jr. often observed much the same thing. “The Southern aristocracy took the world and gave the poor white man Jim Crow,” King said from steps of the Alabama Capitol, following the 1965 march from Selma to Montgomery.

“And when his wrinkled stomach cried out for the food that his empty pockets could not provide, he ate Jim Crow, a psychological bird that told him that no matter how bad off he was, at least he was a white man, better than a black man.”

Today, the clash of deeply felt racial and class grievances, compounded by cultural wounds on both sides of the identity divide, is crowding out the progressive brand of populism that America once had and so sorely needs.

It will take uncommon leadership and rare social empathy to redirect the crosscurrents of rage and hurt into a broad popular coalition of uplift against the one group that floats above it all—today’s economic super-elite.

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Making the Most of Your Luck The role of sheer fortune challenges the politics of the fortunate—and the conceits of economics. By Peter Dreier b

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huck Collins is a traitor to his class and proud of it. The great-grandson of meatpacker Oscar Mayer, he grew up in affluent Bloomfield Hills outside Detroit, went to the same elite Cranbrook School as Mitt Romney, and enjoyed the entitlements that come with inherited wealth. But his parents made sure that Collins understood his good luck and encouraged him, as a teenager, to work to earn his own money (often mowing the lawns of his parents’ wealthy friends) and to engage in service projects to help the less fortunate. As a student in the 1970s and early 1980s, Collins felt ashamed of his moneyed background, hid it from all but his closest friends, and had to decide what to do with his life.

Collins became a community organizer. Working with the Institute for Community Economics in western Massachusetts, he helped workingclass families, including mobile-home residents, create housing co-operatives. With the HOME Coalition in Boston, he organized low-income tenants and waged grassroots campaigns to expand funding for affordable housing, sponsored by community nonprofit groups. With the Tax Equity Alliance for Massachusetts, he worked with unions and community groups to push for progressive tax policies.

Then, at age 26, he decided to give away his inherited fortune—a half-amillion-dollar trust fund that his parents had set up for him—and to live on his earnings, as most Americans do.

In the 1980s, Collins began to “come out” about his privileged background and to organize other young people with wealth through the Haymarket People’s Fund, a Boston-area leftwing foundation that gets money from wealthy donors (initially from baby boomers radicalized in the 1960s) and gives it to grassroots organizations working for change. There are now more than a dozen such local foundations around the country that were part

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of a network with the motto “Change not charity.” He co-authored a book, Robin Hood Was Right: A Guide to Giving Your Money for Social Change.

Starting in the late 1990s, Collins co-founded several organizations— Responsible Wealth, Wealth for Common Good, and United for a Fair Economy—to organize wealthy individuals and business leaders, and to educate a wider audience, about ways to bring about progressive change.

Toward that end, he co-authored several books, including Shifting Fortunes: The Perils of the Growing American Wealth Gap; Economic Apartheid in America: A Primer on Economic Inequality and Insecurity; and Class Lives: Stories from Across Our Economic Divide.

When President George W. Bush sought to get Congress to repeal the estate tax—which conservatives cleverly began calling the “death tax”—Collins joined forces with Warren Buffett and Bill Gates Sr. (father of the Microsoft founder) to wage a national campaign to preserve it. Collins and Gates co-authored a book (Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes), enlisted more than 1,500 multimillionaires and billionaires in support, and garnered a front-page story about their efforts in The New York Times. By 2005, they had stopped the repeal effort.

As director of the Institute for Policy Studies’ Program on Inequality, Collins, now 57, continues to organize, speak, and write about America’s widening economic divide.

In his latest book, Born on Third Base, Collins examines the increasing concentration of income and wealth over the past few decades and the troubling “warehousing” of wealth by the “charitable industrial complex.” An estimated $600 billion is now “sitting in charitable foundations and endowments waiting for distribution.” He is critical of most mainstream philanthropy for bolstering the status

Born on Third Base: a One Percenter Makes the Case for Tackling Inequality, Bringing Wealth Home, and Committing to the Common Good

by Chuck Collins

Chelsea Green Publishing

Success and Luck: Good Fortune and the Myth of Meritocracy

By Robert H. Frank

Princeton University Press

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quo—such as wealthy graduates of fancy prep schools making tax-exempt donations to their alma maters. He describes how many private family foundations feather the nests of their board members and lawyers, or serve as public relations operations to enhance the family’s social and political goals.

(Washington Post reporter David Fahrenthold has recently done an outstanding job exposing the self-serving purposes of the Trump Foundation.)

Collins wants to encourage the richest Americans to share the wealth.

He offers ideas to help wealthy people steer their philanthropy toward projects that help build movements rather than build ego-boosting edifices or engage in phony reforms like “corporate social responsibility” programs, which whitewash companies that pollute the environment or exploit workers in overseas sweatshops.

In fact, America has a long tradition of wealthy radicals. A clandestine group who called themselves the “Secret Six” funded much of the movement to end slavery. In the late 1800s and early 1900s, many wealthy benefactors—mostly women like Jane Addams—contributed their time, talent, and money to the Progressive Era battle against slums and sweatshops.

During the great “Uprising of the 20,000” in 1909 and 1910 (the largest strike by American women workers to that time), and after the Triangle factory fire in 1911, upper-class women like Alva Vanderbilt Belmont and Anne Morgan (daughter of J.P. Morgan, the nation’s richest person) raised money for the workers’ strike fund, lawyers, and bail money, and even joined the union members on picket lines. One of the union organizers referred to them as the “mink brigade.”

From the radical uprisings of the 1930s through the civil-rights movement of the 1950s and 1960s, and the environmental and women’s-rights movements of the 1970s and 1980s, a small but dedicated number of rich radicals and reformers became involved, as patrons and activists, in struggles for social justice. During the 2009–2010 battle for health-care reform, Health Care for America Now—a coalition of unions, community and consumer groups, and

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faith-based organizations—led the grassroots organizing effort. HCAN’s major funder was Atlantic Philanthropies, a foundation created by Chuck Feeney, whose fortune came from duty-free shops.

“The wealthy have already hijacked our democracy,” Collins writes. He wants to enlist at least some wealthy to help get it back. For progressive social movements to succeed, Collins says, they need “allies among the reachable wealthy.”

His life’s work is to persuade them to work for a society that raises taxes on the very rich in order to invest in public education, housing, infrastructure, and a social safety net, and to become allies of movements for a higher minimum wage, pro-union labor laws, strict environmental regulations, and campaign-finance reform—in other words, to support efforts to create a more European-style social democracy in the United States.

Collins recounts his meetings with middle-class and wealthy people in churches, community centers, living rooms, and corporate and foundation board rooms, trying to understand their views and feelings and to find the right combination of analysis and agitation to get them to join the progressive causes. At one meeting at a VFW hall in a Boston suburb, he asks 150 retired men, many of them World War II and Korean War veterans, to raise their hands if they purchased their homes with a federally guaranteed mortgage, went to college on the G.I. Bill, or got a loan from the Small Business Administration. Many of them raise their hands.

“I’d still be renting without that,” one of them says. “A helluva good investment,” another responds. He asks if they’ve helped their children or grandchildren pay for college, purchase a home, or start a business. Most of them acknowledge that they are, as one man tells Collins, “the grandpa ATM.” Collins then asks, “How many of your children and grandchildren think of themselves as second-generation beneficiaries of government subsidies?” The men get what Collins is saying, as he sprinkles his talk with statistics about the size and impact of these postwar government programs and the need to help the current generation with a new wave

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of public investments. After the meeting, a World War II veteran named Phillip tells Collins how much harder life is for his children and grandchildren than it was for him—especially finding a balance between work and family and finding themselves deeply in debt.

“People call our generation the ‘greatest generation,’” Phillip tells Collins. “Hell, I guess we were the greatest subsidized generation.”

Collins knows that most of the wealthiest Americans are unlikely to heed his call. But he believes that there are potentially hundreds of thousands of affluent Americans—not only the super-rich but also very prosperous professionals—who share his unease with our nation’s priorities, widening inequality, climate change, and the unnecessary suffering and insecurity around us. He calls them “open-hearted wealthy people.”

“Here’s the dirty secret,” Collins writes. “The current system is built on fear. Fear and insecurity ripple through the households of the American working class, the impoverished, and the precarious middle class in a nation where one job loss, illness, or other misfortune could leave one destitute. And at the very top of the economic class pyramid, the wealthy are afraid, too. They are afraid that they and their children will fall from economic comfort and status. They are fearful of pitchforks and race riots. And they are wounded by verbal attacks as well.”

In Born on Third Base, Collins sounds like a preacher, an agitator, and a therapist. The book is part memoir and part guidebook, to help both one-percenters and 99-percenters find common ground in building a more humane, democratic economy and politics.

The title comes from a quip by football coach Barry Switzer, who observed, “Some people are born on third base and go through life thinking they hit a triple.” At the 1988 Democratic convention, former Texas Agriculture Commissioner Jim

Mink Brigade: Labor activist Flora Dodge La Follette (center) and social reformer Rose Livingston (right) stand in solidarity with a young worker during a 1913 garment strike in New York City. These women are part of America’s long tradition of wealthy radicals.

Hightower used that line to excoriate George H.W. Bush, whose father was a wealthy Yale graduate and onetime U.S. Senator.

During his presidential campaign, Donald Trump claimed that he made it on his own because his father loaned him the “small amount” of $1 million.

In fact, Trump inherited his father’s real-estate empire worth tens of millions of dollars, made by building middle-class housing financed by the federal government. Earlier in Donald’s career, his father paid his son’s debts. He also took several massive loans from his siblings’ trust funds.

But you don’t have to be a billionaire to believe in what Collins calls the “myth of deservedness.” Most successful Americans—from middleclass professionals to the super-rich— believe they owe their success to their own hard work and talent, even if they come from affluent families. Collins doesn’t deny that hard work and talent are important ingredients to success.

But most successful people have benefited from forces outside their control.

Having rich parents is the best predictor of future wealth.

In 2012, President Obama took a lot of flak when he said, “If you’ve got a business—you didn’t build that.

Somebody else made that happen.”

The Romney campaign used that remark to attack Obama for being anti-business and for downplaying the importance of initiative and talent. But the ads conveniently ignored the rest of Obama’s comment—that

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government-funded education, infrastructure, and research helps businesses prosper in “this unbelievable American system that we have.” He noted that “when we succeed, we succeed because of our individual initiative, but also because we do things together.”

That’s essentially the theme of Collins’s book. He writes, “One huge barrier to change is that privileged people don’t always see the countless ways that the deck is stacked in our favor.”

Much of Born on Third Base is devoted to cataloging those ways and encouraging wealthy people to recognize the various forms of privilege that shaped their personal and career trajectories.

Collins examines the unequal opportunities made possible by both family and societal forces, including postwar mortgage subsidies and college tuition assistance that mostly benefited whites and have long-term consequences for subsequent generations, and the various kinds of “enrichment” investments (travel, music lessons, summer camp, visits to museums, and others) that affluent parents can afford but others can’t.

He recounts meetings and interviews with wealthy people who, like him, got involved in progressive causes. Some were not born to wealth but they, too, came to recognize that they didn’t make it on their own.

Collins isn’t into guilt-tripping, which often paralyzes people from taking action. People have no say regarding the families they are born into, but they do have a choice about how to use their wealth, privilege, and talent moving forward.

“It is in no one’s interest to continue operating as if a few privileged people are going to escape on a spaceship or retreat to a mountaintop enclave,” he writes. His book, he writes, “is not a plea for charity or altruism, but an appeal to our real self-interests,” because widening inequalities of wealth, income, and race “are bad for everyone.”

Most of the people whom Collins profiles explain that their wealth made them feel isolated, lonely, disconnected, lacking a sense of community. Several describe how renouncing their wealth for a simpler lifestyle, or simply finding progressive avenues to

direct their philanthropy, freed them from these feelings and gave them a greater sense of purpose.

“The wealthy have already hijacked our democracy,” Chuck Collins writes. His life’s work is to enlist at least some of them to help get it back.

Collins draws on economist Robert Frank’s 2007 book Richistan: A Journey Through the American Wealth Boom and the Lives of the New Rich to explain the different “subdivisions” in the nation’s class system.

That book helped Collins find ways to appeal to people based on their class and professional status, religion, gender, and whether they come from “old wealth” or “new wealth” backgrounds.

Frank’s newest book, Success and Luck: Good Fortune and the Myth of Meritocracy, complements Collins’s Born on Third Base. It is well written and engaging, because Frank includes anecdotes from his own and others’ experience that reveal the major impact that luck and chance have on one’s career and well-being.

He describes how he emerged from two near-death experiences (a heart attack and a windsurfing accident) as a result of luck, and he recounts the serendipity involved in getting his first academic jobs. He reports on research showing that the month that one is born influences one’s chances of becoming a professional athlete or a corporate CEO. For example, 40 percent of professional hockey players are born in the first three months of the year, but just 10 percent are born in October, November, and December. Frank explains that January 1 is the birth-date cutoff for youth hockey teams. That extra year of training gives older kids a lifetime advantage.

Frank acknowledges, “It’s clear that most of the biggest winners in the marketplace are both extremely talented and hardworking.” But he argues that the wealthy tend to underestimate the role that chance plays in success and explores how this discourages support of taxation. Like Collins, he believes that if wealthy Americans understood the role that luck played in their own success, they might be more empathetic and compassionate toward the disadvantaged and more willing to pay taxes to support the common good.

“If being born in a good environment is one of the luckiest things that can happen to anyone,” Frank says, “it is

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failure to appreciate luck’s importance that has done the most to undermine our collective stock of good fortune.”

Frank explores the impact of social background, inheritance, and nepotism on economic success. These stories and research summaries lead up to Frank’s big idea. He warns that America’s economy is severely hurt by a chronic under-investment in public goods—schools, bridges, roads, public transit, and other infrastructures. His solution is a progressive consumption tax to raise sufficient funds to address the nation’s problems without harming the rich. They’ll still be able to afford the lavish lifestyles many have grown accustomed to. Whatever downsizing it requires won’t matter because it won’t change their relative position in the economic hierarchy.

Frank recognizes that most rich people will resist such a scheme, because they believe they earned their good fortune and government has no right to confiscate it through higher taxes. Frank wrote Success and Luck to persuade rich people to recognize the role of luck and privilege in their lives. If they did, they would be more grateful about their success and more willing to share their wealth to promote a more equal economy and more humane country. His book is an important corrective to economists’ tendency to ignore the role of luck—both inheritance and random good or bad fortune.

The two books are good complements. Frank uses logic; Collins uses narrative. As an academic economist, even one well-versed in social psychology, Frank has considerable (perhaps too much) faith in reason as a persuasive force. Collins’s book is more compelling because he’s an activist and an organizer, comes from a wealthy background, and is a better storyteller. For Collins, movements must engage a new generation of wealthy allies who, like the “mink brigade” a century ago, are willing to break ranks and become traitors to their class.

Peter Dreier is professor of politics and chair of the Urban & Environmental Policy Department at Occidental College. His latest book is The 100 Greatest Americans of the 20th Century: A Social Justice Hall of Fame.

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The Costs of Being Poor Two new books explore how difficult the housing market and criminal justice system make it to climb out of poverty. By Adam D. Reich b

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t is easy to think of poverty as a condition rather than as a relationship, to treat the problems of the poor as separate from and unrelated to the profits of the rich. And when analysts do explore the relational dimensions of poverty, they usually deal with the relations of the labor market. Marx saw exploitation as the process by which capitalists profit from their workers, largely ignoring the people on the margins of work whom he called the “lumpenproletariat.” Two new books take us beyond the labor market, revealing the extent to which the deep poor are subject to exploitation in other institutions—by landlords in private housing, and by state and local governments in the criminal justice system.

Combining graceful writing and airtight scholarship, Matthew Desmond’s Evicted explores how poor people’s lack of power in the housing market makes it almost impossible for them to get on their feet. Desmond’s immediate focus, as the title indicates, is the traumatic experience of eviction, faced by one in eight renters from 2009 to 2011 in Milwaukee, the site of his research. The broader subject is the nature of poverty itself: the “gnarled thickets of interconnected misfortunes” that the poor confront and the financial and psychological toll those misfortunes take, as well as the people who benefit from them.

Desmond, an associate professor of sociology at Harvard, wanted to write a book about poverty that, rather than focus exclusively on the poor, examined relationships across class lines. So, over two years, he followed eight families, two landlords, and a host of supporting characters— including social workers, judges, and movers—to understand the lives on both sides of the eviction process. He supplements the ethnography with extensive quantitative, legal, and historical research, evidence that is

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mostly relegated to footnotes and so preserves the power of his prose.

When the rent check eats up more than 50 percent of a family’s income, which is the case for one out of five renters nationwide, it is likely only a matter of time before the family falls behind. As much as the high rent itself, this indebtedness is the source of landlords’ profits. If tenants complain about problems with their units to Milwaukee’s Department of Neighborhood Services—an agency established to protect tenants—landlords are legally forbidden from retaliating against them. Tenants are also legally permitted to withhold rent until repairs are made. But once they fall behind on rent, they lose those rights, since they can be evicted at any time.

Desmond describes in wrenching detail how such economic blackmail unfolds in private, low-income housing.

A tenant’s mother calls the Department of Neighborhood Services to complain about a broken window? The tenant is out. A social worker complains about the broken plumbing in her client’s unit? The tenant is out. Knowing the risks, most tenants do not call the authorities for help. Their debt keeps them silent, strips them of their rights, and—most important for the landlord—reduces maintenance costs and so increases the landlord’s returns, well beyond the costs of a missed month of rent. Sherrena, one of the two landlords whom Desmond observes, makes her “biggest returns” from “her worst properties.” Although Tobin, the owner of a trailer park, regularly has 40 tenants (nearly a third of all units) behind in rent, he evicts only a few. He makes his money “in the middle,” between those who paid their rent on time and those who never paid, because it is in this liminal space that the landlord has the most power over his tenants.

In this story, the government is no help. It appears most clearly in the form of a sheriff, who enforces

Evicted: Poverty and Profit in the American City

By Matthew Desmond

Crown

A Pound of Flesh: Monetary Sanctions as Punishment for the Poor

By Alexes Harris

Russell Sage Foundation

landlords’ property rights behind the barrel of a gun. Even when the government might help, it seems to do harm.

As the book opens, for example, it is unclear whether Tobin will be able to continue operating his trailer park.

Milwaukee’s Licenses Committee has refused to give him a renewal because of excessive code violations, calls to the police from tenants, and rampant drugs, sex work, and violence on the property. Under different conditions, tenants might turn to a licensing authority to pressure Tobin to clean up the raw sewage on the grounds or to figure out ways to help those struggling with addiction. Instead, residents are united with Tobin against the authorities because they realize that the government’s most likely remedy—the trailer park’s closure—would leave them homeless.

The deal that Tobin strikes with the city, to clean up the park by evicting problem tenants, only deepens tenants’ desperation. As Desmond writes, “When city or state officials pressured landlords—by ordering them to hire an outside security firm or by having a building inspector scrutinize their property—landlords often passed the pressure on to their tenants.”

Even worse, Desmond documents the perverse effects of nuisance property ordinances that hold landlords responsible for excessive 911 calls from their properties. When a tenant calls the police to report getting beaten up by her partner or phones for an ambulance because her son is having an asthma attack, she risks losing her home for the sake of her own or her family’s health and safety.

To whom, then, can tenants turn when they are behind in their rent and run into problems? They rarely impose on the family members best equipped to help them, as these ties are far too important to call upon during an everyday crisis. Instead, they often turn to strangers with whom they have “disposable ties” and—to a surprising extent—to landlords themselves. Despite the conflicts between them, landlords and tenants share an uncomfortable intimacy: Sherrena gives a ride home to Arleen even though she has just brought Arleen to housing court to evict her. Tobin

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occasionally bails his tenants out of jail. These are not relations of equality. But it is nonetheless true that the tenants feel greater trust in their landlords than they do in the people and institutions putatively there to protect them from landlord misconduct.

Domination, Desmond’s book reminds us, is often keenest in close relationships. Sherrena dominates her tenants but is also invested in getting her tenants to understand her own struggles. She ruins her tenants’ credit in housing court—a “shove deeper into the pit”—at the same time as she shows them bills she has to pay, in an attempt to garner their sympathy. Most tenants in Milwaukee, Desmond finds, actually think highly of their landlords.

Historically, Desmond explains, tenants organized into tenants’ unions to take on the power of landlords, and the police were also more ambivalent about throwing people out of their homes. In many communities, there was a widely shared sense that evictions were unjust. But in Desmond’s story, there is not even a glimmer of political consciousness or group solidarity. Why not? For one thing, Desmond suggests, “No one thought the poor more undeserving than the poor themselves.” Scott, a drug addict, watches Ned and Pam, two other addicts, get evicted and decides that they deserve what was coming to them—they were addicts, after all. People in the trailer park are reluctant to identify with those around them since they see themselves as likely on their way out, too.

The tenants feel little confidence in one another’s political capacity: They see suffering around them, but no potential for collective action.

The book is smart and beautiful, but it is not hopeful, and it has no real reason for hope. The least compelling chapter is the conclusion, which reads like an obligatory “all is not lost” call to action common in writing about seemingly intractable social problems.

Housing should be a right, Desmond argues. The state ought to provide housing vouchers for everyone below a certain income threshold and should determine—through “fine-grained analyses” and “algorithms”—both how much housing the poor really

The tenants feel greater trust in their landlords than they do in the people and institutions putatively there to protect them from landlord misconduct.

need and how much rent the landlord should be able to charge.

I’m not so sure. I worry, as Desmond does, that such vouchers would merely pad the profits of landlords in the ways that current housing vouchers seem to. Furthermore, such a solution seems to treat housing as more central to well-being than the myriad other gnarled thickets that Desmond spends the bulk of the book untangling: joblessness, welfare reform, drug addiction, health care, criminal justice, domestic violence, food security, racism. Why a housing voucher and not a basic income?

If the problem is power, the more general question is whether change is possible unless constituencies are organized to fight for it. Are tenants necessarily as impotent politically as they appear here? Perhaps the difference between tenants’ more militant history and their passivity in Evicted is that no one has been organizing tenants in Milwaukee. The lack of tenant organizations (and poor people’s organizations more generally) may be as much a cause as a consequence of the poor’s quiescence.

A Pound of Flesh is a very different book from Evicted.

While Desmond’s book is written for the general reader, Harris’s is more traditionally academic. This is an early exploration of a critically important but understudied social problem: the rising financial penalties (fees, fines, surcharges) exacted on those caught up in the contemporary criminal justice system.

For those worried about the toll of mass incarceration in contemporary society, the last few years have brought

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glimmers of hope. For the first time in nearly four decades there is a broad consensus that mass incarceration is a failed policy. Some modest attempts to scale it back have begun, and in the last few years state and federal incarceration rates have actually begun to decline. On the right, the most vocal reformers are fiscal conservatives concerned about the runaway costs of prisons. Some Christian conservatives who believe in redemption and small-government conservatives worried about government overreach have also joined in rethinking criminal justice policy.

Harris, an associate professor of sociology at the University of Washington, effectively dispels the hope of a new era. Or, at the very least, she shows that state fiscal concerns need not lead to the dismantling of the carceral state.

State and local governments have been turning the proverbial “debt to society” owed by those who violate the law into actual, monetary debts. Strapped for cash, governments are trying to balance their budgets by extracting money from those who are least able to pay.

The world of legal financial obligations (LFOs) with which Harris is concerned is murky. States impose different costs at various points in the process of punishment, and no systematic national data are currently available to estimate the prevalence or ubiquity of monetary sanctions.

Enough is known, however, to suggest that the use of such monetary sanctions is on the rise: Whereas 25 percent of inmates had reported receiving LFOs in 1991, 66 reported receiving them in 2004. Within Washington state, the mean sentenced LFO for a single felony conviction is $1,300. Among the subset of adults in Washington involved in the criminal justice system whom Harris interviews, the average amount of LFO debt was over $9,000.

Many of Harris’s findings read almost as satire. In Louisiana, people who are acquitted of charges must still pay $100 to have their records cleared of the arrest. Arizona charges offenders a surcharge on top of any fines and fees, part of which is used for a clean elections fund. Yet Arizonans cannot vote while they have legal debt outstanding; in fact, legal debtors’ voting rights are restricted in more than

Fall 2016 The American Prospect 109

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half of U.S. states. Many states charge prisoners daily rates for staying in their facilities (in Beverly Hills, you can even pay a higher rate for a cleaner, safer cell). Remember the rights people purportedly have to legal defense and a jury trial? These rights are pricey: Two-thirds of states allow judges to require defendants to pay for a public defender. In Washington state, the price of “choosing” to have one’s case tried by a jury has been increasing.

So much is known already about the collateral damage of incarceration that it takes quite a lot to generate fresh outrage. Yet Harris powerfully illustrates the devastating lifelong consequences of monetary sanctions, as the mark of a criminal record is coupled with the lasting stain of ruined credit and the forfeiture of legal rights. Monetary sanctions can even lead people back to jail, a revival of the debtors’ prison among those who owe the state and “willfully” shirk payments (the Supreme Court has found it unconstitutional to imprison people solely for their inability to pay).

The definition of such “willfulness” is, of course, ambiguous. And the bureaucrats with the authority to differentiate between indigence and intransigence—and to decide on what to do with each category—have tremendous power over the future of those involved in the justice system.

Unsurprisingly, this discretion leads to unequal treatment.

While the first part of Harris’s book documents the vast scale and scope of LFOs across the country, the second part explores the dramatic variation that exists even within the state of Washington in the everyday practice of—and justifications for—monetary sanctions.

Alexander County, the state’s wealthiest and most liberal county, has the lowest average fine or fee per sentencing of the five counties in the study ($600) and uses the highest percentage (67 percent) of this money to pay restitution to crime victims. (Harris changed the names of the counties to protect those she interviewed.) People in the county are rarely incarcerated for non-payment compared with elsewhere. In contrast, Warren County, the second-wealthiest but whiter and more conservative county, has the highest average LFO per

Small, ephemeral pleasures take the place of life plans.

Trying to survive replaces efforts to thrive. The sorts of collective action that might change the laws become less likely.

sentencing ($2,530) and uses the majority of this money for county expenses.

Harris explains this local variation by referring to the idea of different “cultures of punishment.” People in different communities understand the purposes of monetary sanctions differently and so use their discretion in different ways. Although I don’t find this explanation convincing, since it just seems to describe existing beliefs, the point about discretion is crucial. The tremendous leeway given to judges, clerks, prosecutors, and defense attorneys in the imposition of LFOs opens the door to huge inequalities. While Harris does not have sufficient data on racial disparities, it seems almost certain that the burden of LFOs falls disproportionately on poor communities of color. In the aftermath of the police killing of Michael Brown, Harris recounts, local and federal investigations revealed a shockingly high burden of LFOs on the black residents of Ferguson, Missouri.

In different ways, both Evicted and A Pound of Flesh convey the feeling of hopelessness that accompanies the domination accrued via debt. Desmond writes, “[T]hose at the bottom had little hope of climbing out even if they pinched every penny. So they chose not to. Instead, they tried to survive in color, to season the suffering with pleasure. They would get a little high or have a drink or do a bit of gambling or acquire a television. They might buy lobster on food stamps.”

Small, ephemeral pleasures take the place of life plans. Trying to survive replaces efforts to thrive. The sorts of collective action that might change the laws governing housing policy or challenge the state’s penal policy become less likely. And the bottom keeps falling out. Harris quotes James Baldwin’s Nobody Knows My Name: “Anyone who has ever struggled with poverty knows how extremely expensive it is to be poor.” As the costs compound, there seems to be no way up and no way out.

Adam D. Reich is an assistant professor of sociology at Columbia University and author of Selling Our Souls: The Commodification of Hospital Care in the United States.

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Rationalizing Trump Coulter threads her way between the Koch brothers, alt-right, and Paul Ryan. By Adele M. Stan b

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nn Coulter was alt-right before the alt-right was a thing. Always one to sense a trend in the right’s rumblings and ride it on the wings of outrage and outrageousness, Coulter, in her latest book, In Trump We Trust: E Pluribus Awesome!, is eager to prove all of that, and then some. But for a moment there, her book launch was off to a rocky start.

A slender volume of repetitious invective against non-white immigrants, In Trump We Trust bases its case for the candidacy of the reality-show star and real-estate player almost solely on his promise to deport all undocumented immigrants, and to build a wall on the U.S. border with Mexico. Then, the week in which Coulter was to begin her book tour, word came that Trump was to make a “pivot” on his immigration stance, perhaps “softening” his promise to create a “deportation force” that would round up an estimated 11 million people and send them back to their countries of origin.

On August 24, Trump told Fox News host Sean Hannity that he might be able to work something out for undocumented immigrants who have been in the U.S. for the better part of their lives. “It’s a very, very hard thing,” Trump said, to contemplate such deportations.

Coulter, whose book had just been published the day before, took to Twitter, heaping scorn upon her candidate.

“Well, if it’s ‘hard,’ then nevermind,” Coulter tweeted.

Her worries ultimately proved, of course, to be unfounded. Within a week, just hours after meeting with Mexican President Enrique Peña Nieto, Trump promised his supporters at a raucous rally in Phoenix, Arizona, that the deportation-force plan was still at the top of his agenda.

Long an opponent of U.S. acceptance of immigrants, especially Muslims and Mexicans, Coulter decided she had finally found her perfect candidate in Donald J. Trump, of whom

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she was an early supporter. Cut from the same cloth, both Trump and Coulter are children of privilege who lunge for attention by transgressing the norms of civil behavior. Trump’s July 2015 announcement of his presidential bid included his now-famous attack on undocumented Mexicans entering the United States: “They’re bringing drugs. They’re bringing crime. They’re rapists. And some, I assume, are good people.” Coulter was in. Trump, she told Hannity during a January appearance on Fox News, “won me over with that Mexican rapist speech.”

Trump’s speech could have come straight out of the pages of Coulter, whose June 2015 book, Adios, America! The Left’s Plan to Turn Our Country into a Third World Hellhole, devotes several chapters to advancing the notion that Mexicans are preternatural rapists. (Trump tweeted that Coulter’s book was “a great read.”)

Coulter has built her career on stoking the resentments of right-leaning whites who fear the cultural changes that emerged after World War II. Name one, and she has found a way to exploit it: Movements for racial equality, women’s rights and LGBT rights, and immigration. Throw in a pinch of anti-Semitism, and you have the Coulter formula.

Employing a contrarian expression of these resentments, Coulter achieved pop-culture stardom. Where other right-wing darlings wore a mantle of Christian propriety, Coulter declared herself a Christian while using louche language and wearing a skimpy dress.

(From the podium of the 2007 Conservative Political Action Conference, she famously said, “I was going to have a few comments on the other Democratic presidential candidate, John Edwards, but it turns out you have to go into rehab if you use the word ‘faggot,’ so [I’m] kind of [at] an impasse …”)

As conservatives decried “a coarsening of the culture,” Coulter jumped on the

In Trump We Trust: E Pluribus Awesome!

by Ann Coulter

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coarsening trend, consequently laying bare the racism, xenophobia, and misogyny of the movement she represents, thereby paving the way for the normalization of the “white nationalist” entities that form the alt-right.

It’s all worked out pretty well for her: Ann Coulter is a wealthy woman, an outcome that Trump surely appreciates.

If Coulter could win the love of right-wing Christian evangelicals, as she did with an anti-LGBT harangue at the 2006 Values Voter Summit, why couldn’t a thrice-married, foulmouthed bully like Trump? A decade later, at the 2016 Values Voter Summit, Trump’s emulation of Coulter found reward. He brought the crowd to its feet at an event that featured speaker after speaker urging evangelicals to vote for him.

It’s not as if Trump figured that he could win the presidency simply with the votes of alt-righties and right-wing evangelicals. Coulter demonstrated that the prejudices to which she speaks exist more broadly among members of the general electorate, harbored by people who might not admit to them when questioned by a pollster.

Just as Coulter and Fox News legitimized right-wing behavior and claims that would have before been relegated to fringe outlets, Trump is doing the same for the alt-right, even hiring as his campaign’s CEO Stephen K. Bannon, who, as chief executive of Breitbart News, boasted of having created “the platform for the alt-right.” Coincidentally, Coulter’s column is carried by VDARE , an anti-immigrant, alt-right website that, according to the Southern Poverty Law Center, “also regularly publishes articles by prominent white nationalists, race scientists and anti-Semites.” On September 9, Richard Spencer, president of the white nationalist National Policy Institute, spoke about Trump at an altright press conference, noting how the movement is “riding his coattails,” adding, “There’s been more interest in us because we were generally pro-Trump, because we’re inspired by him.”

Reading In Trump We Trust, it’s

easy to forget that for all of her bluster, Coulter wasn’t always the anti-establishmentarian she is now. In fact, her

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first choice to head a 2016 Republican ticket was Mitt Romney. Yes, that Mitt Romney. Then she suggested a Romney-Trump ticket, finding them to be almost equally as hard on undocumented immigrants. (Who can forget Romney’s plan to make such people “self-deport”?) When Romney took himself out of the game, Coulter shifted her gaze to Trump, and went to war against the Republican establishment, of which Romney—who made a big speech in March denouncing Trump— is something of a poster boy. But it’s not just the old-school “establishment” that the fickle Coulter now has in her sights.

If anybody can claim responsibility for having turned control of Congress to the GOP, it’s Charles and David Koch, the billionaire principals of Koch Industries, the second-largest privately held corporation in the United States.

They’re the new establishment, and they support comprehensive immigration reform. And they’ve made a show of not supporting Trump.

Leveraging their own capital, both social and financial, the Kochs built a network of political donors to invest in a plethora of organizations and think tanks designed to implement the brothers’ neo-libertarian ideology in the lawmaking institutions of government. By and large, the Koch plan has been working. So vast and well-funded are the various entities of what progressives call the “Kochtopus” that, in significant ways, certain Koch-affiliated outfits now supplant the apparatus of the Republican Party. The current House speaker and the chairman of the Republican National Committee arguably owe their positions to the support of the Koch network.

While the Koch players were only too happy to exploit anti-black racial resentment for the sake of building their base of foot soldiers (Remember all those racist signs about Obama that showed up at anti-Obamacare rallies organized by the Kochs’ ground-organizing group, Americans for Prosperity?), immigration is a different story.

The Kochs, after all, preside over a major conglomerate with a global reach.

For their purposes, comprehensive

Coulter describes House Speaker Paul Ryan as “constipated” for having accused Trump of racism.

immigration reform—yes, with a path to citizenship—is a win-win.

Look between the lines of In Trump We Trust, and you’ll find the battle drawn along fronts rarely named in current political reporting: the Trump insurgency as a challenge to the political empire of the Koch brothers— Coulter’s argument against what she sees as the cravenness of the GOP and its “plutocrats” is a thinly veiled attack on the super-rich siblings.

She sneers at the Koch agenda, complaining that while the Republican Congress has served up tax cuts for the “super-rich,” as well as legislation proposing Social Security privatization and the TARP bailout, “the plutocrats could never give us anything on the border.”

She goes after the politicians whose careers have been championed by Americans for Prosperity and other Koch-linked entities. House Speaker Paul Ryan is described as “constipated” for having accused Trump of racism, and Wisconsin Governor Scott Walker, who owes his entire political career to AFP—and who competed against Trump in the presidential primary—is portrayed as beholden.

Walker, she writes, “was, for one brief, shining moment, terrific on immigration: against anchor babies, for American workers, and for a fence. And then his donors gave him a call, and suddenly, he was for amnesty again.”

For the Koch brothers, immigration is even more than good business. In politics, they’re playing a long game: They know that the GOP, the host body for all of their network apparatus, will slide into minority status without the votes of Americans who are either immigrants themselves, or who descend from those who arrived in the United States in the waves of nonwhite immigrants of recent decades.

Trump, on the other hand, is playing a short game. His gambit is to build his brand, and maybe get elected president in 2016. What he knows is that the same people who harbor racial resentment against African Americans—a base cultivated by the GOP since the passage of civil-rights legislation in 1964—likely

harbor the same or similar against anyone who isn’t regarded as white, be they Mexican or Muslim. These resentniks are the same white voters that the Koch network has organized.

In Coulter’s view, according to In Trump We Trust: Tax cuts are great, but they don’t help Americans who don’t have jobs. A lot of Americans don’t have jobs because Chinese and Mexicans have jobs.

In Trump We Trust is filled with such vituperation. No need to fully recount here her endless spewing of the false “Latino rape-culture” narrative, or nasty attacks on Muslims. In fact, the level of repetition in this slender volume suggests that Coulter may have had all of a column’s worth of material to work with but shrewdly concluded that a column wouldn’t make her any money. Trump, meanwhile, has found gold in mining Coulter’s mal mots, his utterance of which the media feel obligated to report, on account of his presidential-candidate status.

And the Koch brothers? They’ve officially refused to support Trump, but in practice, they can’t. Not if they want to preserve the congressional majorities the Republicans now enjoy. Every time they deliver a voter to the polls on behalf of a candidate beloved of their Americans for Prosperity ground operation, they’re also delivering one who is likely to vote for their nemesis, Trump.

In the pages of In Trump We Trust, Coulter asserts that “Trump did conservatives a favor by forcing Republicans to finally admit they’re for open borders and don’t particularly care what kind of country this becomes.”

Believe it or not, Coulter may have actually done America a favor by exposing the war between the private capitalists vying for control of one of the nation’s two major political parties. Some smart liberal might have the good sense to set a big wedge.

Adele M. Stan is AlterNet’s senior Washington editor, and a weekly columnist for the Prospect’s website.

volume 27, number 4. The American Prospect (ISSN 1049-7285) is published quarterly by The American Prospect, Inc., 1225 Eye Street NW, Suite 600, Washington, DC 20005. Periodicals-class postage paid at Washington, DC, and additional mailing offices. Copyright © 2016 by The American Prospect, Inc. All rights reserved. No part of this periodical may be reproduced without the consent of The American Prospect, Inc. The American Prospect ® is a registered trademark of The American Prospect, Inc. Postmaster: Please send address changes to The American Prospect, P.O. Box 421087, Palm Coast, FL 32142. printed in the u.s.a.

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Art is essential, not extra

By Randi Weingarten, President AMERICAN FEDERATION OF TEACHERS

spent time this past summer with impoverished bohemian artists, a murderous barber and people accused of practicing witchcraft—all during one mesmerizing opera- and musical theater-filled weekend in Central New York. Like me, aficionados of the musical arts from near and far make the annual summer pilgrimage to Cooperstown—not only to the Baseball Hall of Fame, but to The Glimmerglass Festival. The festival’s mission is to offer opera enthusiasts great art in an idyllic lakeside setting, as well as to cultivate such enthusiasm in new and nontraditional audiences—dispatching performers to schools, houses of worship and even one of the state’s highest-security prisons.

Francesca Zambello, the remarkable artistic and general director of The Glimmerglass Festival, calls this her “cultural crusade.” Children as young as 10 from neighboring towns take the stage in the festival’s youth chorus. Promising performers from across the globe get valuable training and exposure through the Young Artists Program, for ages 20 to 30. Colorblind recruiting and casting was a hallmark of the festival’s productions long before “Hamilton” made its debut.

academic results, including being 10 percent more likely to complete a high school calculus course and three times more likely to earn a bachelor’s degree. And they are more civically engaged, with higher levels of volunteering, voting and engagement with local or school politics.

Yet since 2001, due to both budget cuts and the era of high-stakes testing, which skewed the curriculum to tested subjects, there has been a decline in schoolbased arts education. And the Department of Education found that the schools most likely not to offer arts instruction have the highest levels of at-risk students.

I’m encouraged that the movement to expand STEM into STEAM (science, technology, engineering, arts and math) is gaining traction. But we need more than a sound bite; we need substantial and ongoing investment and commitment at every level—federal, state, district and school.

The arts are vital for everyone. Art can soothe us. And it can stretch us—by exposing us to concepts we’ve never imagined before, or by leading us to wrestle with ambiguity, multiple interpretations, or artistic expression that we find jarring. A play, a song, a poetry slam or a sculpture can be the launching pad to stimulate conversations

about humanity. The arts can combat indifference, ignorance and polarization. Art can transport us from the dayto-day and show us that its value does not lie in its utility.

Which brings me back to the high-security prison.

Zambello had seen a documentary on life at the Attica Correctional Facility, and soon she was conceiving an innovative plan to bring world-class music to an institution that, by its very nature, involves more punishment than inspiration. After working with prison officials, Zambello, a minimal crew and the three principal singers from the Glimmerglass production of “Macbeth” did just that. The audience was rapt and, after the finale, leapt to their feet, only to be ordered by guards to remain seated.

The performance was followed by a question-and-answer session and, at the inmates’ urging, concluded with one last song and rapturous applause. (“The best audience we had all summer,” one of the performers said.)

Everyone needs the arts.

The Glimmerglass Festival’s understated logo depicts two small ripples. That’s fitting, given its magical lakeside location, except that the ripples this artistic endeavor is sending forth are anything but small.

The arts must be a part of every community and every school.

Zambello is especially drawn to works that illuminate relevant social issues, one of the ways she makes connections with people who might sooner drink hot sauce than attend opera. Hence, her selections for this summer’s festival include “La Bohème,” “Sweeney Todd” and “The Crucible.” Themes first explored in earlier eras remain relevant today—extreme wealth and poverty, the darkness of revenge, and fear stoked into frenzy that causes people to turn on each other.

Photo by Michael Campbell

These experiences stimulate my mind and feed my soul. And they steel my conviction that the arts must be a part of every community and every school. The arts can anchor a community and connect people who otherwise might not feel a common bond. Culture can also drive economic revitalization; The Glimmerglass Festival’s $8 million budget plants a $21 million footprint in the region. And the benefits of children’s exposure to the arts are numerous and well-established.

The arts can develop confidence and competence in students who haven’t found success in other academic subjects. They promote creativity and self-directed learning. They engage students—who, with access to the arts, have better attendance, report less boredom, and are more likely to stay in school and do better in school. High school students who take arts classes have higher math and verbal SAT scores. Exposure to the arts has even been shown to affect young people’s values, making them more tolerant and empathetic.

For at-risk students who have access to the arts, the advantages are striking. They tend to have better

Photo by Karli Cadel/Glimmerglass Festival

Scene from The Glimmerglass Festival’s world premier youth opera, “Wilde Tales.”

Follow AFT President Randi Weingarten: www.twitter.com/RWeingarten

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