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After Gay Marriage,What’s Next for LGBT Rights?

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Campus Rape and Due Process

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contents

volume 26, number 1 Winter 2015

Page 18

Page 32

Page 70

Page 38

columns 5 prospects Can Liberal Democracy Survive? by Robert Kuttner 104 Comment The Crash of the New Republic by Paul Starr

notebook 9 The Democrats in Opposition by Harold Meyerson 14 Atlantic Surging, Virginia Sinking Nathalie Baptiste

Features 18 cover story Blind to the Future by Rachel m. Cohen 24 How Democratic Progressives survived a Landslide by Bob Moser 32 Sex, Lies, And Justice by Nancy Gertner 38 Can Moral Mondays produce Victorious Tuesdays? by Barry Yeoman 46 What to Do When “I Do” is Done by Peter Montgomery 54 When Liberals were Organized by Julian E. Zelizer 62 A Needless Default By David Dayen 70 Special Report What the Free Market Can’t Do by Robert Kuttner, Jeff Madrick, Ann Hagedorn, Joan Fitzgerald, Fred Block, and Roger Lowenstein

Reviews 89 The Great PArty Switch by Alan I. Abramowitz 93 Looking Forward to the Sequel by Sheila Bair 96 Truth in Politics Now by David Greenberg 99 When the Student Movement was a CIA Front by Aryeh Neier 102 Sharing the Wealth by Sasha Abramsky Cover photo by Ian McKinnel / Getty Images

1

contributors

Sheila Bair is a senior adviser to the Pew Charitable Trusts and chairs the Systemic Risk Council. She was chair of the FDIC from 2006 to 2011, during one of the most tumultuous times in banking history. “I am a lifelong Republican, capitalist, and hater of bailouts,” she says.

“The helping hand of government should be there for society’s most vulnerable, not its most powerful.”

Peter Montgomery is a senior fellow at People For the American Way and associate editor for Religion Dispatches.

He writes about LGBT movement priorities postmarriage. “Last year, we saw huge advances in marriage equality as well as brutal reminders of persistent racial inequities,” he says. “It’s a fascinating time to consider both the promise and limits of legal equality.”

Nancy Gertner is a professor at Harvard Law School. She writes about the problem of campus sexual misconduct and due process. “These are issues that I care deeply about as a feminist, as a former judge, criminal defense and civil rights lawyer. I want to understand what it takes to eliminate, or at least, ameliorate the problem, without undermining core values of fair process.”

Alan I. Abramowitz is one of the nation’s leading election forecasters. He reviews Tom Schaller’s The Stronghold and Matt Barreto and Gary Segura’s Latino America.

“Republicans have strengthened their grip on the House in recent years,” he says.

“Schaller explains how they’ve done this; Barreto and Segura explain why this has only made the party’s prospects in presidential elections worse.”

Bob Moser, senior editor at National Journal, looks at the Democratic campaigns that overcame the 2014 Republican wave— and how they managed it. “It’s quite a pattern,” Moser says. “Every single Democrat who won a competitive race for House or Senate did it by running as a progressive populist. It might be the only hopeful development to come out of the midterms, but, hey, it’s something.”

Nathalie Baptiste is a writing fellow at the Prospect. She writes about the effects of climate change in Norfolk, Virginia, and the widespread denial about just how serious the problem is. “The rising sea will wreak havoc on the city and the surrounding area,” she says.

“Elected officials’ reluctance to develop substantial adaptation and mitigation strategies will prove detrimental in the end.”

Aryeh Neier has headed both the ACLU and the Open Society Foundations.

“During a career devoted to protecting rights, I’ve often strenuously criticized the CIA . I don't want to judge too harshly those who collaborated with the Agency more than a half century ago when the Cold War was real. Their mistake was doing so secretly and often not subsequently disclosing their role.”

Jeff Madrick is a contributor to The New York Review of Books, a former economics columnist for The New York Times, and editor of Challenge: The Magazine of Economic Affairs.

“I recently wrote the book Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World,” he says, “because I wanted to set the record straight and call economists to task.”

co-editors Robert Kuttner, Paul Starr co-founder Robert B. Reich editor-at-large Harold Meyerson art director Mary Parsons web editor Adele M. Stan managing editor Amanda Teuscher Writing Fellows Nathalie Baptiste, Rachel M. Cohen web assistant Kristen Doerer proofreader susanna Beiser editorial interns Ayanna Alexander, Katherine Downs, Justin Miller 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, Sarah Posner, Jedediah Purdy, Robert D. Putnam, Richard Rothstein, Deborah A. Stone, Michael Tomasky, Paul Waldman, William Julius Wilson, Matthew Yglesias Director of Business Operations Ed Connors Development Manager Joseph A. Gallant Jr. board of directors Janet Shenk (Chair), Sarah Fitzrandolph Brown, Lindsey Franklin, Jacob Hacker, Stephen Heintz, Randall Kennedy, Robert Kuttner, Mario Lugay, Miles Rapoport, Adele Simmons, William Spriggs, Paul Starr, Michael Stern Fulfillment Palm Coast Data subscription customer service 1-888-MUST-READ (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

Can Liberal Democracy Survive?

by Robert Kuttner

I

n 1932, on the eve of FDR’s presidency, Benito Mussolini proclaimed, “The liberal state is destined to perish.” He added, all too accurately, “All the political experiments of our day are anti-liberal.”

The democracies were doomed, Il Duce declared, because they could not solve crucial problems.

Unlike the dictatorships, which were willing to forcefully use a strong state, the democracies could not fix their broken economies. Parliamentary systems were hamstrung politically. The democracies were also war-weary, conflict-averse, and ill-prepared to fight. The fascists, unlike the democracies, had solved the problem of who was part of the community.

Mussolini’s ally, Adolf Hitler, was further contemptuous of “mongrelization” in American democracy. Who was an American? How did immigrants fit in?

What about Negroes? The fascist states, by contrast, rallied their citizens to a common vision and a common purpose. Hitler was quite confident that he knew who was a German and who was not. To prove it, he fashioned the Nuremberg laws; he annexed Germanspeaking regions of his neighbors.

As Hitler infamously put it, Ein Volk, ein Reich, ein Fuehrer.

Though he was a buffoonish dictator, Il Duce was not such a bad political scientist. In the 1930s, a lot of liberal democrats wondered the same thing, and for the same reasons. As Ira Katznelson wrote in Fear Itself: “Such beliefs and opinions were not

limited to dictators and dictatorships. As Roosevelt prepared to speak [in his first inaugural], skepticism was prevalent about whether representative parliamentary democracies could cope within their liberal constitutional bounds with capitalism’s utter collapse, the manifest military ambitions by the dictatorships, or international politics characterized by ultranationalist territorial demands. Hesitation, alarm, and democratic exhaustion were widespread.”

The democracies did survive, of course, and they flourished.

The New Deal got us halfway out of the Great Depression, and the war buildup did the rest. Fascism was defeated, militarily and ideologically. The collapse of Soviet communism took another halfcentury. Thanks to the wisdom of containment, Stalinism fell of its own weight, as both an economic and political failure.

Not only did the democracies endure—by the 1980s, America had broadened the inclusiveness of its polity. Europe had embarked on a bold experiment toward continental democracy. In the final days of communism, there was triumphalism in the West. Francis Fukuyama even proclaimed, incautiously, in his 1989 essay, “The End of History?” that all societies were necessarily gravitating toward capitalism and democracy, two ideals that were supposedly linked.

Today, it is Mussolini’s

words that resonate. Once again, the democracies are having grave difficulty pulling their economies

out of a prolonged economic slump. Once again, they are suffering from parliamentary deadlock and loss of faith in democratic institutions. The American version reflects a radically obstructionist Republican Party taking advantage of constitutional provisions that Madison (and Obama) imagined as promoting compromise; instead, the result is deadlock. The European variant is enfeebled by the multiple veto

of law. But the Chinese have been superbly effective at combining dynamic state-led capitalism with one-party rule.

What unites regimes as dissimilar as Iran, Turkey, Hungary, Egypt, Venezuela, and Russia is that they combine some of the outward forms of democracy with illiberal rule. The press is not truly free, but is mostly a tool of the government. Editors and journalists are in personal danger of disap-

Regimes as dissimilar as Turkey, Iran, Hungary, Egypt,Venezuela, and Russia combine nominal democracy with illiberal rule. points of a flawed European Union unable to pursue anything but crippling austerity. Once again, several flavors of anti-liberal alternatives are on the march. “All the political experiments of our day are anti-liberal.”

Take a tour of the horizon. Mussolini would not be surprised. The fastest-growing economy, China’s, is nothing if not anti-liberal, and getting steadily more adroit at suppressing liberal aspirations.

The Beijing regime, which has learned the virtues of patience since Tiananmen, waited out the Hong Kong protests and efficiently shut them down. The Hong Kong elections of 2017 will be limited to candidates approved by the communist regime on the mainland. Capitalism was supposed to bring with it democracy and rule

pearing. There are elections, but the opposition somehow doesn’t get to come to power. Minority religion and ethnic groups are repressed, sometimes subtly, sometimes brutally. Dissidents, even if they break no laws, risk life and limb. The regimes in these nations have varying degrees of corruption between the state and economic oligarchs, which helps keep both in power. In Hungary, a member of the EU, which is a union of liberal democracies, Prime Minister Viktor Orbán has expressly invoked the ideal of an illiberal state. In Turkey, Recep Tayyip Erdogan has dramatically increased enrollments in statesupported religious schools and automatically assigned some children to them, against the wishes of their secular parents.

Winter 2015 The American Prospect 5

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Prospects

Turkey is a stalwart member of

NATO. Elsewhere in the Middle

East, our closest allies don’t even go through the motions of democracy; they are proud monarchies.

Israel, our most intimate friend in the region, is becoming less of a democracy almost daily. Israelis are seriously debating whether to formally sacrifice elements of democracy for Jewish identity.

And this tally doesn’t even include the flagrant tyrannies such as the insurgency that calls itself the Islamic State, or ISIL . All the political experiments of our day are anti-liberal.

Ironically, some liberals are pinning great hopes on recent stirrings in a venerable institution of hierarchy, autocracy, secrecy, and privilege that has been the antithesis of liberal for nearly two millennia—the Catholic Church, now under a reformist pope. One has to wish Francis well and hope that his new openness extends to the entire institution, but these reforms are fragile. It has been a few centuries since the Church murdered its rivals, but in my lifetime the Church was very cozy with fascists.

One of the great inventions of liberal democracy was the concept of a loyal opposition. You could oppose the government without being considered treasonous. A leader, conversely, could be tossed out of office by the electorate without fearing imprisonment or execution by successors. In much of the world, this ideal now seems almost quaint, and certainly imprudent. A corrupt or dictatorial regime has much to fear from displacement, including jail and even death at the hands of an opposition in power.

There are a few bright spots.

Some of Africa has managed to have roughly free and fair elections.

South Africa’s young democracy is fragile, but seems to be holding.

Some of the Pacific Rim is moving in the direction of genuine democracy. Many former Soviet satellites in Eastern Europe are functioning democracies, even liberal ones. And

democratic aspiration is far from dead, as events in Ukraine show.

Latin America has more democratically elected governments than it has had in a generation, but it also has several nominal democracies that are illiberal, or prone to coups, or simply corrupt. Mexico, our close NAFTA partner, epitomizes illiberal democracy.

But it is the democratic

heartland, Europe and North America, that presents the most cause for dismay. Rather than the United States serving as a beacon to inspire repressed peoples seeking true liberal democracy, America is becoming more like the illiberal pseudo-democracies and kleptocracies. A dispassionate review of what is occurring in our own country has to include deliberate suppression of the right to vote; ever more cynical manipulation of voting districts in the nation that invented gerrymandering; the deepening displacement of citizenship with money and rise of plutocracy; the corruption of the regulatory process; a steep decline in public confidence in government and in democracy itself; and a concomitant doubt that democratic participation is worth the trouble.

In my piece in this issue’s special report, I address some of these questions in the context of markets versus government, but the challenge goes much deeper.

Obstruction feeds public cynicism about government. Though the mischief and refusal to compromise are mostly one-sided—it is hard to recall a Democratic president more genuinely eager to accommodate the opposition than Barack Obama—the resulting deadlock erodes confidence in democracy and government in general. Why can’t these people just get along and work for the common good? Democrats, as the party that believes in government, take the blame more than Republicans. Government’s failure to address festering, complex problems feeds the dynamic.

This is all the more alarming

because the challenges ahead will require strong government and above all legitimate government.

At best, global climate change and sea level rise will require public coordination and some personal dislocation. Transition to a sustainable economy demands far more intensive public measures, as well as public trust in the hope that changes in old habits of carbon energy use need not result in reduced living standards. The risk of epidemics such as Ebola will require more effective government to coordinate responses that the private sector can’t manage.

The popular frustration with flat or declining earnings for all but the top demands more government intervention. Weak government can’t accomplish any of this.

Mussolini’s taunt burns: The liberal democracies are incapable of solving national problems.

A generation ago, political scientists coined a useful phrase— strong democracy. The Prospect published some pieces making this case, by authors like Benjamin Barber. Others, such as Jane Mansbridge and James Fishkin, writing in the same spirit, called for more participatory democracy. The common theme was that democracy needed to be re-energized, with more citizen involvement, more direct deliberation. What has happened is the reverse. The combination of economic stresses, the allure of other entertainments, the rise of the Internet as a venue for more social interchange but less civic renewal, has left democracy weaker when it needs to be stronger.

The other contention of the fascists—that the democracies had trouble with the vexing questions of community and membership— was never more of a challenge. In Europe, the poisonous mix of high unemployment, anxiety about terrorism, and influx of refugees and immigrants is feeding a vicious nationalist backlash and nurturing the far right. At home, the failure to normalize the status of an estimated 12 million immigrants

lacking proper documents deprives large numbers of residents of normal rights and stokes nativism. Assaults on voting rights even for citizens, coupled with physical assaults by police, make African Americans less than full members of the democracy, despite the civil rights revolution of half a century ago.

Mussolini’s other taunt was that the liberal democracies were too divided and war-weary to fight.

When Hitler remilitarized the Rhineland in March 1936, in defiance of the Treaty of Versailles, the democracies did nothing. They dithered right up until Germany’s invasion of Poland in September 1939. As late as 1940, Roosevelt was more eager to keep America out of another European war than to help the British make a stand against the Nazis.

The military challenge today is more complex. America in this century has vacillated between grandiosity and timidity. It fought the wrong war in Iraq, and then may have pulled out prematurely.

The administration has been weak and divided in its policies toward Syria and ISIL . To some extent this is understandable—these are hydra-headed threats, with no easy solutions. If President Obama is ambivalent, the public is even more so. Yet the greatest military threats to American democracy are not the risks of invasion or terrorist assault, but what we are doing to ourselves. The Obama administration, like that of George W. Bush, has been all too willing to subordinate liberty to security, secrecy, and autocracy, even in cases where these objectives are not in direct contention.

The risk is not that American democracy will abruptly “perish,” but that it will be slowly denuded of its vital content. If we are to reverse the appeal of anti-liberal society globally, we have to repair our democracy at home. The challenge is multifaceted, and will take time.

It should be the great project of the next president and the ongoing work of the citizenry.

Winter 2015 The American Prospect 7

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notebook

The Democrats in Opposition They can become the party of working Americans and win.

Or they can appease Wall Street and lose.

by H a r o l d M e y e r s o n

jo hn r i t t e r

W

here should the Democrats go now? Losing both houses of Congress frees them to function as an opposition party, not just to the Republicans, but to a political economy that serves fewer and fewer Americans.

Whether they will seize that opportunity remains an open question. To many within the party establishment, the Democrats face a choice between moving to the center to win over white electors who have either stopped voting or strayed into the Republicans’ ranks, or moving left to re-energize the Rising American Electorate,

the young and minority voters who powered Barack Obama into the White House. The idea that a progressive populist agenda—one that explicitly champions the interests of the 99 percent against those of the one—could command support in both these constituencies is still alien to many Democratic leaders.

Judging by the Beltway discourse, the question that vexes Democrats most is whether the defection of whites or the absence of minorities played the decisive role in the party’s midterm debacle. The mere existence of this debate reveals the disquieting blindness of some

party leaders to both the economic changes that have blighted Americans’ lives in recent decades and to the political opportunities that await the party that reshapes that economy to create more broadly shared prosperity.

Not that the old debate doesn’t pose some valid questions. Did the Democrats make a strategic mistake, as New York Senator Chuck Schumer argues, in crafting a program—the Affordable Care Act—that chiefly benefits the poor and near poor, disproportionately minorities, disproportionately young, disproportionately

non-voters, rather than one tilted more toward the middle class?

Does the emphasis that Democrats place on raising the minimum wage, commendable though it may be, do anything to help the mass of non–poverty wage workers whose own incomes are also stagnating?

Within the confines of this debate, electoral considerations don’t provide the Democrats with very much guidance. Their 2014 midterm catastrophe was the product both of white working-class rejection and rising-Americanelectorate indifference. Exit polls showed the Democrats losing the white working class by a 30-point margin, and the failure to win such voters clearly doomed Senate candidates like Colorado’s Mark Udall and Iowa’s Bruce Braley.

Democrats are accustomed to losing these voters in Southern states by margins such as this, but to lose them at this rate in Northern states

Winter 2015 The American Prospect 9

like Colorado marked a new low.

At the same time, the Democrats’ debacle was also the result of failure to motivate their core constituents. The key to the Democrats’ losing the governorships of such rock-solid Democratic states as Illinois and Maryland was their failure to give inner-city minority voters a compelling reason to turn out. In the 2012 presidential election, 1,028,870 Chicago residents voted; in last year’s midterm, just 668,033. In Baltimore, the number of voters in those two elections fell from 257,399 to an abysmal 75,212— a decline of 70 percent. Indeed, the Democratic share of the House vote in big cities—those with a population in excess of 500,000—fell from 71 to 61 percent between 2012 and 2014, not because those voters were turning Republican, but because the falloff in minority participation was so steep.

Yet while many of these races featured flawed Democratic candidates, they also shared a common handicap: the failure of the Democrats to tell voters how they planned to re-create broadly shared prosperity. This was part and parcel of an even more serious failure (one the Democrats shared with virtually every governing party in the advanced industrial democracies): their inability, only partly due to Republican obstructionism, to arrest the declining economic fortunes of all but the wealthiest 10 percent. The party’s level of support among white voters reflects that failing. In 2012, President Obama won a majority of only the most highly educated—and disproportionately prosperous—whites: He took just 36 percent of whites with no more than a high school education, 37 percent of whites with some college, and 37 percent of white college graduates with no grad school. Among whites with postgraduate educations, however, he won 52 percent support.

Such voters may be somewhat more liberal than most on social issues, but a gap that wide likely also reflects a divide between those whose lives have remained economically stable and those who have seen theirs shaken by the economic transformations of the past 30 years and overturned by the earthquakes of the past seven.

Hard times have descended on the

10 WWW.Prospect.org Winter 2015

party’s core constituents and swing voters alike. Why, then, do the Democrats have to choose between them?

Why haven’t they come up with a platform that can address the common needs of both? And what would such a platform look like?

In fact, it has proved easier for the Democrats to craft and enact programs to help those left out of our meager welfare state than it has been to develop and implement policies that could assist the larger number of Americans whose cause Schumer purported to champion. Extending subsidized medical insurance to the uninsured or giving legal status to the undocumented parents of Americancitizen children may have proved politically contentious, but did nothing to threaten, or even discomfit, the nation’s economic power centers, on whom Democrats, like Republicans, have come to rely. Championing the 99 percent at the expense of the 1 percent, by contrast, is not a battle that Democrats have been waging—at least not since Franklin Roosevelt’s time.

The economic arrangements put in place by the New Deal created a broadly shared prosperity that enabled Democrats to focus on extending civil and economic rights to those left out of the New Deal’s social contract. That was their mission, their default mode, throughout the second half of the 20th century, and into the 21st. It assumed no need to rework the fundamentals of American capitalism. The system worked reasonably well, at least for most Americans. The Democrats’ task was to help the minority of Americans whom the system failed.

Now that that minority has become the majority, how should the Democrats respond?

Senator Chuck Schumer personifies Democrats’ mixed message—he supports universal social programs but is also closely allied with Wall Street.

The Democrats’ task is greatly complicated by the skepticism, cynicism, and sheer anger that Americans feel toward their government and its endeavors. As pollster Stan Greenberg wrote in these pages in 2007, “Republicans have undermined Americans’ confidence in the ability of government to play a role in solving America’s problems. Democrats will not make sustainable gains unless they are able to restore the public’s confidence in its capacity to act through government.” Since Obama became president, Republicans’ complete opposition to any Democratic initiatives to address the nation’s economic distress has only intensified this disbelief in government’s capacity. Exit polling from this November’s election—which featured a disproportionately Republican electorate—found that 54 percent believed government was doing too much, while just 41 percent felt government needed to do more to help the economy.

Decades of data make clear that Americans’ opposition to big government as an abstract idea is consistently high. When questions are posed about particular government programs that aren’t specifically targeted to minorities or the poor, however, the public tends to deliver favorable judgments. In his 2013 study, The White Working Class Today, Andrew Levison concludes that this on-the-onehand-on-the-other-hand sensibility is particularly prevalent within the white working class, whose ideological assumptions and life experiences often prompt contradictory beliefs.

He cites a 2009 Center for American Progress survey of white workingclass beliefs in which 52 percent of respondents agreed with both of the following statements: First, “government spending is almost always wasteful and inefficient,” and, second, “government investments in education, infrastructure and science are necessary to ensure America’s longterm economic growth.”

It’s not just white workers who are prey to conflicting beliefs.

An NBC/Wall Street

chris usher / cbs news / ap images

notebook

notebook

Journal poll from late November found that 53 percent of Americans were pleased with the outcome of the midterm election. Asked to rank their priorities for the newly more divided government, however, the top three tasks that respondents wanted the government to accomplish were lowering the cost of student debt (more than 80 percent supported that), raising spending on highways and roads (more than 70 percent), and raising the minimum wage (more than 60 percent).

While Democrats must continue to advocate for government to undertake the myriad tasks that the private sector does poorly or not at all, they also must do a better job of balancing the kind of universal programs that most voters, all ideology to the contrary, actually support with ones crafted to help those left out of the 20th century’s social contracts. The Obama administration’s error was not its enactment of the Affordable Care Act; its mistake was the failure to press for a bigger and broader stimulus program. Its even greater problem was not one of its own making: that the economic growth its policies engendered did not accrue to the American people but only to its wealthiest percentile. Fully 95 percent of the income growth since the recession ended, economist Emmanuel Saez’s survey of tax data reveals, went to the top one percent.

Senator Schumer, then, is both right and wrong. Right that the Democrats needed to place greater emphasis on programs that actually address the needs of the nation’s majority. Wrong that it was a mistake to enact Obamacare. And more fundamentally wrong if, as his record as a frequent Wall Street defender suggests, he believes that the Democrats can actually address the needs of the nation’s majority without a full-scale assault on the interests of those who profit from and defend the current economic system.

The Beltway wisdom is that those who favor such an assault constitute a discrete liberal minority of the larger public. The Beltway wisdom is wrong.

The exit poll of November’s midterm voters—36 percent of whom identified as Republicans, while just 35 percent

Hard times have come to hardcore Democrats and swing voters alike.

The party doesn’t have to choose between them in devising its economic policies.

said they were Democrats—included a question as to whether the U.S. economic system generally favors the wealthy or is fair to most Americans.

Fully 63 percent said it generally favored the wealthy, while just 32 percent said it was fair. Even 46 percent of Republicans said it favored the rich.

Not surprisingly, support for such sentiments has grown in recent years.

In 2002, just 34 percent of respondents to an NBC/Wall Street Journal poll agreed that “the economic and political systems in this country are stacked against people like me.” When asked the same question two weeks after this past November’s election, 56 percent agreed.

These beliefs are particularly intense within the constituency that has been abandoning Democrats in droves: the white working class. In 2011, the Pew Research Center’s polling on Americans’ beliefs revealed that 54 percent within that group “strongly” believed that “corporations make too much profit,” while just 28 percent agreed that corporations make “a fair and reasonable profit.”

Asked whether Wall Street hurts the economy more than it helps, or helps more than it hurts, 45 percent of white working-class respondents said it hurts more than helps, while only 20 percent said it helps more than hurts.

At certain periods in American history—the Progressive era during the first Gilded Age, for one—hostility to the corporate domination of government and the economy has extended to the upper-middle class. In other periods, it has largely been confined to liberals and elements of the working class. Polling suggests we have entered a period more like the Progressive era in this regard. In the mid1990s, polling by the Pew Research Center showed that just 59 percent of college graduates believed “there is too much power concentrated in the hands of a few big companies.” Today that figure has risen to 75 percent.

All these data suggest that there would be widespread public support, in swing constituencies no less than in the party’s base, if the Democrats advanced policies that reversed recent decades’ redistribution of income and power from the majority of Americans

to the wealthiest. The results of the midterm elections bear this out.

As Bob Moser documents in “How Democratic Progressives Survived a Landslide” (page 24), his survey in this issue of the 2014 Democratic campaigns that succeeded, Democratic senators who linked their Republican opponents to Wall Street—New Hampshire’s Jeanne Shaheen, Minnesota’s Al Franken, Oregon’s Jeff Merkley—not only won their elections but actually carried their state’s white working-class voters—the same voters who rejected Colorado Senator Mark Udall, who eschewed such populist appeals, by 30 percentage points. far better job explaining what’s changed in America over the past three decades. What has devastated the white working class, held back minorities’ prospects, and imperiled middle-class security isn’t the programs creating a more level playing field for blacks and Latinos.

It’s the massive transfer of income from more than 90 percent of Americans to the wealthy, from labor to capital, or, in American English, from workers to big-time investors.

The Economic Policy Institute has taken economist Emmanuel Saez’s research on U.S. income tax returns and produced an account of just how America-altering that transfer of income has been. Between 1935 and 1980—that is, between the year in which both Social Security and the National Labor Relations Act were enacted and the year Ronald Reagan was elected as president—of all the income growth (excluding government benefits and transfer payments) that Americans reported on their taxes, fully 70 percent was income accrued by the bottom 90 percent of American households. Another 11 percent came from households in the 90th to 95th percentiles, and 12 percent in the households in the 95th to 99th percentiles. The wealthiest one percentile claimed just 7 percent of all the new income generated during those years.

The returns from 1997 through 2012 (the most recent year for which tax data are available), however, reveal a totally and terribly different

Democrats must do a

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America. During these years, the share of new income accrued by the 90th to 95th percentiles shrank from the 11 percent of the mid-20th century to just 9 percent. The share that came from the 95th to 99th percentile grew from 12 percent to 19 percent. And the share claimed by the wealthiest one percent exploded—from 7 percent in the pre-Reagan years to a mind-boggling 72 percent.

The income coming from those three groups adds up to 100 percent.

All the income growth in the post-1997 United States went to the wealthiest 10 percent of Americans, most to the top one percent. The bottom 90 percent of Americans claimed none of it— indeed, their tax filings show that their incomes declined during this period by an average of $2,868.

The dividing line that Democrats should focus on, then, isn’t the one Chuck Schumer draws between the poor and the middle class. It’s the line between the 99 percent and the one percent. That doesn’t mean that Democrats should abandon their quest to help the excluded and the poor, their efforts to legalize undocumented immigrants, reform discriminatory police practices, or provide health coverage to those who can’t afford it.

It does mean that their primary focus must be to champion the interests of American workers—and of income derived from work over income derived from investment.

As if reversing the shift in income from labor to capital weren’t challenge enough, the task before American progressives is to do so without estranging potential supporters who believe, as a series of surveys conducted by Stan Greenberg demonstrate, that governmental efforts to promote full employment through stimulus and public works programs only create make-work jobs and a larger public deficit. The Obama administration’s inability to augment its own stimulus program once Republicans won the House in 2010 and the failure of its stimulus program (and of everything else) to slow the ongoing upward redistribution of income have surely contributed to this skepticism.

While Democrats must continue to support public programs that meet

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Who gets the income growth?

1935–1980:

70%

went to the bottom 90%

1997–2012:

72%

went to the top 1%

■ Bottom 90% ■ 90–95% ■ 95–99% ■ Top 1%

social needs to which the market is either indifferent or opposed, the primary focus of their agenda has to be on the internal dynamic of the market itself—specifically, on interventions that give workers more power and income. Such policies should command broad public support extending well beyond the party’s core constituencies. Indeed, they already have.

In the November midterms, for instance, voters in four solidly conservative states—Alaska, Arkansas, Nebraska, and South Dakota—voted overwhelmingly for ballot measures that raised their states’ minimum wage standards. Their support for a higher minimum wage, it should be noted, didn’t carry over to support for Democratic candidates, partly because Republican candidates, knowing the measures would pass, endorsed them, and partly because the issue doesn’t affect most voters directly. But there are a host of similarly pro-worker measures Democrats can back that are far less likely to win Republican support, and yet that matter to a wider range of voters.

Some, to be sure, involve enacting labor laws that disproportionately benefit the Democrats’ base. A number of states and cities have enacted paid sick day laws, while four states have passed legislation making domestic workers eligible for overtime pay and time off. San Francisco recently enacted a Retail Workers Bill of Rights, requiring employers to give their employees their schedules two weeks in advance so that they can make plans for dropping off their kids, cooking dinners, and taking courses. The cities and states in which these statutes have thus far been enacted are all liberal, but the appeal of such legislation isn’t likely confined to America’s bluest regions any more than raising the minimum wage is. Retail workers in Alaska and Nebraska, like their San Francisco counterparts, surely don’t like having to scramble to find someone to pick up their kids because their manager has called them in with just two hours’ advance notice. It takes no great imaginative leap to envision voters in Alaska and Nebraska backing such measures as well.

But the main challenge before Democrats is to devise and enact policies that help a far broader range of workers than those in the lowest-paid sectors. Restoring workers’ right to form a union without fear of being fired—a right established by the National Labor Relations Act, but eviscerated by court rulings and negligible penalties on employers who violate it—would be a good place to start.

Efforts to strengthen this right failed, however, during the administrations of each of the last four Democratic presidents (Johnson, Carter, Clinton, and Obama) even when the Democrats controlled both houses of Congress. With unions clearly too weak to affect the flow of income from labor to capital (currently, just 6.7 percent of private-sector workers belong to unions), Democrats must devise laws that do what unions in the mid-20th century did: create a prosperity that’s broadly shared.

When unions were strong, the nation’s median household income rose even more than the nation’s productivity increases, but since the 1970s, it has lagged far behind.

Now that unions are weak, Democrats should advocate lowering taxes on corporations that increase their employees’ wages at the same rate the nation’s annual productivity increases, and raising taxes on corporations that don’t. They should advocate lowering taxes on corporations that divide their boards between shareholder and worker representatives, as the Germans do, and raising taxes on corporations that don’t. They should back higher tax rates for corporations that offshore their work. They should require studies of all pending trade agreements that assess the effect of those agreements on domestic median incomes, and support only those that raise them. That should certainly be the criterion by which Democrats judge the pending Trans-Pacific Partnership and other trade accords.

They should support tax reform that shifts the burden from labor income to investment income— demanding that a reduction in payroll tax rates (something that Republicans may back in the coming congressional session) be offset by higher taxes on

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capital gains and dividends, which would shift the funding of Social Security and Medicare to a source of income that continues to grow. Taxing income derived from investments in American-based multinationals at a rate lower than that of labor performed entirely within the United States tilts the tax code in favor of domestic disinvestment; Democrats should insist on raising the rates on investment income above the rate on income derived from work.

None of these are fights that the Democrats are likely to win anytime soon, much less in the next two years.

But if they become the collective centerpiece of the Democrats’ agenda, the talking points that elected officials and party leaders make again and again, they will reposition the Democrats as the party that can plausibly help the clear majority of working Americans, not just those in the lowest-paying jobs. Backing policies such as these enables the Democrats to reframe the economic debate—making them relevant again to the white working and middle class, and drawing a much clearer distinction between themselves and the Republicans.

Perhaps the clearest and quickest way Democrats can draw that distinction is to distance themselves from Wall Street. Massachusetts Senator Elizabeth Warren’s opposition to the Obama administration’s nomination of Wall Street banker Antonio Weiss to a top position at the Treasury Department should signal a new direction for the party. In both the Clinton and Obama administrations, the top economic positions went to Wall Street bankers and their protégés, who backed the repeal of the law that had separated governmentinsured depositor banking from investment banking, declined to regulate the derivatives that brought the economy down in 2008, and bailed out the big banks while doing little for underwater homeowners. Democrats should require their 2016 presidential candidates to shun Wall Street in their economic appointments. Wall Street may be a mega-source of funding for many Democrats, but putting Wall Street off-limits is the sine qua non for any Democratic reinvention that has a

chance of winning back working- and middle-class support.

Such Wall Street aversion has a distinguished Democratic pedigree.

Raymond Moley, Franklin Roosevelt’s most influential adviser during his 1932 presidential campaign and the first year of his administration, recounted in his diary a talk he had with Roosevelt during the transition between his election and inauguration, in which FDR was considering whom to appoint as his Treasury Secretary. Some advisers were arguing for Senator Carter Glass, who insisted he needed a top executive at J.P. Morgan as his deputy. According to Moley, Roosevelt rejected Glass because, he said, “We can’t have anyone from 23”—the street address of J.P. Morgan’s headquarters being 23 Wall Street. After the role that the great banking houses played in the Crash of 1929 and the ensuing Depression, Roosevelt believed it would be bad politics and economics to elevate a Wall Street banker to a top economic post. It would be similar bad politics and economics to do so today, and Democrats should pressure their 2016 presidential candidates to take a “Nobody from 23” pledge.

Is it fantastical to think that this pushback against Wall Street has appeal beyond the party’s most liberal supporters? Those few remaining Democratic senators who primarily represent white working-class electorates don’t consider it fantastical in the slightest. Five Democratic senators joined Warren in voting against the cloture motion that allowed the 2015 omnibus appropriations bill to come to a vote in December. Warren opposed the measure because of a clause, written

by Citibank lobbyists, that allowed Wall Street banks to roll back one of Dodd-Frank’s provisions prohibiting publicly insured banks from trading in derivatives. She was joined in

Top economic adviser Raymond Moley with FDR: No one at Treasury from J.P. Morgan!

opposition by three staunch progressive populists—Franken, Ohio’s Sherrod Brown, and Vermont’s Bernie Sanders—and two colleagues generally considered to constitute the right flank of the party’s Senate delegation, Missouri’s Claire McCaskill and West Virginia’s Joe Manchin. West Virginia has a higher share of working-class whites in both its population and its electorate than any other state.

Yet Manchin and McCaskill clearly believed that defining themselves and their party by opposition to Wall Street was an act that would win their constituents’ approval. Similarly, former Virginia Senator Jim Webb, who is considering, like Sanders, a presidential run in 2016, sounds remarkably like Sanders in his condemnations of the Democrats’ refusal to break with Wall Street’s priorities.

For Webb, Manchin, and McCaskill, the problematic Democratic policies include some environmental regulations and expansions of government programs targeted to minorities (or “special interests,” as Webb has termed them)—the very policies their white working-class electorates oppose. But when it comes to curtailing Wall Street’s stranglehold on the economy, they are almost as one with Warren and Sanders.

Ultimately, the changes to American capitalism will require the Democrats to find new ways for government to bolster Americans’ economic prospects and security. The rise of the gig economy and the declining levels of pay and benefits that people receive from their work will demand that government provide a greater share of the economic stability that used to come with jobs and careers.

Democrats should not shy from this challenge, but it must be embedded in a broader campaign to shift power and income away from activist shareholders, overpaid CEOs, and financial elites and back to American workers.

Winter 2015 The American Prospect 13

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Atlantic Surging, Virginia Sinking Rising sea level in Norfolk threatens the town, the Navy, and a state in denial.

by N ath a l i e B a p t i s t e

S

tanding at the Elizabeth River looking at the Naval Shipyard and neighboring Portsmouth, the climate change carnage looming over Norfolk, Virginia, may not be immediately noticeable. The water is calm, and on this mild day in November, dedicated boaters cruise downstream. Nestled between the river, the Chesapeake Bay, and the Atlantic Ocean, Norfolk is paradise for anyone who loves living near the water.

But paradise comes with a price.

The combination of sea level rise, tidal flooding, and subsidence—the sinking ground—has made Norfolk a prime example of what climate is going to do, and has already done, to our coastal cities. The city and surrounding region is on the front line in the battle against climate change, but opinions within city limits on just how bad the flooding is and what to do about it appear to be mixed.

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The stakes are high in Norfolk, which is home to the headquarters of the Navy’s Atlantic Fleet. Ignoring the problem will prove costly and dangerous, but for some, tidal flooding and sea level rise are problems for a future generation. The more serious form of denial on climate change is not that of the science-deniers; it’s the everyday denial on the part of ordinary people, communities, and leaders who can’t or won’t acknowledge what is lapping at their feet, because the reality is so frightening and the required scale of change is so immense.

In the 1970s, Norfolk averaged less than two flooding events per year. That number has since tripled. But even when the water isn’t making roads impassable, the signs of climate change are still there: the rusted base of a street sign, debris lines that form when the water carries litter onto the grass, salt patches where nothing grows, and

The Norfolk Naval Station: The carriers will float, but the base could go under.

a walkway that’s underwater so often that no one bothers to use it anymore.

Norfolk’s longtime mayor, Paul Fraim, is one of the first mayors to seriously consider the possibility of having residents abandon certain areas of their city to avoid the constant flooding. Climate change, he says, poses a threat to the city that “we can no longer afford to ignore.” But despite Fraim’s acknowledgment of the reality of rising water, denial in his city is widespread.

Since 1970, the sea level has risen

eight inches in Norfolk. By 2030, scientists expect the sea to rise another six inches. The flooding that endangers Norfolk, says Dr. Hans-Peter Plag, director of the Mitigation and Adaptation Research Institute (MARI) of Old Dominion University, is clearly the consequence of climate change.

Global temperature increase is rapidly melting ice sheets in the Arctic, which leads to a rise in global sea level. Combine a rising sea with the natural tidal cycle and you get tides that move further inland, causing tidal flooding in a previously unseen way.

Sea level rise isn’t the only contributor to flooding in the Hampton Roads area. Coastal Virginia is also subsiding; the ground itself is sinking. The

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subsidence is a natural phenomenon, but add it to the rising sea level and the problem gets worse.

The fact that the region is sinking means that rain events—which have increased in intensity by 11 percent since 1948—also flood the roadways and disrupt daily life for residents, the military, and businesses alike. Nor’easters— storms with high wind and rain—have a habit of being slow-moving, and a large one can spell disaster for the region.

Hurricanes and their associated storm surges also flood the city.

Climate scientists, city officials, and the military have come together at Plag’s institute, MARI, to map out a plan for how to adapt to and mitigate the effects of climate change. The institute acknowledges the considerable uncertainty about exactly what is going to happen by planning for a variety of outcomes. “Scientifically, we cannot exclude the possibility that there will be a very rapid and large sea level rise this century,” says Plag.

MARI’s ultimate goal is to compile research to share with various sectors of the Norfolk community to figure out what to do about the frequent flooding of the city. But no one needs to wait 50 years to see what climate change will do to Norfolk: “We’re already in a situation where some areas are getting very difficult to live in because we have the frequent flooding,” says Plag.

What sets Norfolk apart from the other coastal cities is that it is home to the largest naval base in the world.

Built in 1917, during World War I, Naval Station Norfolk boasts 75 ships, 134 aircraft, 14 piers, and 11 aircraft hangars.

With almost 30,000 civilians employed at the naval shipyard, the U.S. Navy is the main economic driver in the region.

The sea level rise will not only have an economic impact on Norfolk, it will imperil a major military installation.

Retired Rear Admiral David Titley, whose 32-year career as a naval officer included serving as the branch’s chief oceanographer, has been very outspoken on the issue. The Navy put Titley in charge of assessing the impact climate change will have on their branch of the military. As a meteorologist who has studied weather patterns for decades, he’s highly qualified.

In a statement to the U.S. Senate

The sea level has risen eight inches in Norfolk since 1970 and will rise another six by 2030.

Independently, coastal Virginia is also subsiding.

submitted in July 2014, Titley stressed the need for immediate action on climate change. “The time for action is NOW,” he said. “Projected climate change may cause increased instability around the world; we are not prepared for the pace of climate change.”

Last October, the Pentagon released a report on climate change detailing the threats to national security and how the Department of Defense plans to respond. It argued that changes in climate will fuel disease outbreaks, political instability, and even terrorism. The report identified four primary climate change results that will directly affect military operations: rising global temperatures, changing precipitation patterns, increasing frequency and intensity of extreme weather events, and, of course, rising sea level.

For the Navy, anything that can diminish its ability to deploy its resources is considered a security concern. While the report said that climate change posed immediate threats to national security, the Navy’s public assurances strike a distinctly less ominous tone.

In statements for public consumption, the Navy equivocates. “We feel as if this is going to be a mid-century problem for the Navy,” says Bob Freeman, the public information officer with the U.S. Navy’s climate change task force. Even so, the Navy is attempting to assess the risks to their coastal installations, but it’s not easily quantified. While climate scientists

agree that sea level is rising, there are variations across regions and no exact level has been pinpointed. “The Navy has been struggling with this idea for about five years,” Freeman says. “How do we prepare for sea level rise when we have no way of predicting it?”

Compounding the problem of unpredictability, Freeman continues, is the lack of resources needed to assess military vulnerabilities. “We’re still under sequestration. We’ve got budget cuts, we’ve got all these geopolitical problems.” And those geopolitical issues are tapping into the Navy’s resources.

Officially, the Navy doesn’t think it’s time to batten down the hatches just yet. “I get cold calls from journalists who think we’re building dikes to keep out the sea, but we’re not there yet. We’ve got decades before we need to start thinking about that,” Freeman insists.

If the public needs to take climate change more seriously, for now the Navy won’t be sounding the alarm. do feel a sense of urgency. On the morning of Veterans Day 2014, there’s a light rain in the Hampton Roads region—light enough that being without an umbrella isn’t a problem. But in front of the Unitarian Church of Norfolk, a large puddle has already begun to form—from just about an hour of light rain.

The church sits directly in front of what is called the Hague, a body of water that is connected to the Elizabeth River. High tide, or even rain

Some Norfolkers

A Norfolk Naval Station parking lot during a hurricane

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alone, causes the roads leading to the church to flood until they become impassable. Recurrent flooding has even created a new shoreline; the frequency of salt water washing over the grass has caused the grass to stop growing. As you approach from the shoreline, salt-encrusted soil extends along the front of the property, then comes grass, and in the grass behind the new shoreline stands a sign: Church Property For Sale.

Brian Brennan is the director of religious education at the church. A tall man with a warm disposition, he’s very vocal about his opinion on climate change, tidal flooding, and what it all means for the Unitarians occupying a building constantly embattled by the rising seas.

Across the street from the church, Brennan gestures at the dirt and salt mix in front of the Hague. “Once upon a time, there was grass there,” he says.

He doesn’t mean 100 years ago, or even 30 years ago, but five.

In 1973, the Unitarians purchased the building from the Presbyterians and have been here ever since.

The church, like the nearby Chrysler Museum of Art, sits on top of an old riverbed; historic maps reveal that the neighborhood, Ghent, was actually built on what used to be part of the Elizabeth River. During severe rain the area essentially reverts back to a river.

“Nature finds its way back,” Brennan says when back inside, watching the light but steady rain through the window of the minister’s office.

Moderate rains can trigger nuisance-level flooding, but nor’easters cause the bigger problems. In November 2009, a severe nor’easter sent floodwaters into the church basement where the power station is located.

The church was without power and heat for a month.

“That’s not the first time something like that happened,” Brennan says.

“And I don’t think anybody sensible would say that it’s the last time it’s going to happen.” Quick and easy solutions are few and far between.

The church can’t be lifted, and moving the power station would require a new building to house it. That would be almost as expensive as building a better-situated church.

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The church has had a for sale sign on its front lawn since June 2014. The official reason for moving is space; the building simply isn’t big enough for all the congregation wants to accomplish. But the constant flooding from high tides and rain is what Brennan describes as “the exclamation point to a sentence.” An October nor’easter forced Brennan to ask members of the church to leave during an afternoon meeting. High tide was at 5:30 P.M., and by 2:00 water was already covering the road in front of the church and coming into the parking lot.

According to Brennan, the congregation sees the flooding as a nuisance.

The church website links to a tidal schedule, so members of the congregation know if they’ll have to park their cars further away and splash through floodwaters to get to church for Sunday service or a meeting. They’ve become accustomed to water making access to the church a challenge and have accepted it as the norm.

The members of the church, however, love the location and rightly so. The building is beautiful; the Ghent neighborhood is dotted with rehabilitated Victorian homes and overlooks the Elizabeth River. It’s the hip and fashionable arts district of Norfolk. “To see the hardcore denial that goes on here makes me recognize how difficult the process is going to be everywhere else,” Brennan says.

Because scientists predict that sea level rise will continue, a realistic option for the church would be to take the building down so the land reverts to nature and turns back into wetlands. That isn’t an option for the thousands of homes currently in flood plains. “The simple, practical solution is to move,” Brennan says with a chuckle—he realizes how that plan isn’t exactly feasible either. What do you do with one million residents?

When Mary-Carson Stiff, of Wetlands Watch, wanted to purchase a home in Norfolk with her husband, she found that realtors were hesitant to talk about flooding histories and flood insurance. After all, two things that will make a potential buyer sour on a house are finding out that it floods constantly and that the

Wetlands Watch, an environmental group, has created a phone app to monitor those Norfolk neighborhoods that flood when it rains.

flood insurance premium is hefty.

For homeowners in flood-prone areas, flood insurance is a must-have.

But when the stakes are high in a city like Norfolk, flood insurance politics can get messy quickly.

Right now, flood insurance premiums for a home in a flood plain can be as high as $4,000 per year. Amendments to the National Flood Insurance Program will cause flood insurance premiums to increase by 18 percent in early 2015. Realtors throughout the community are worried because homes with such high premiums that are set to go even higher are going to have a hard time selling.

Unfortunately, it’s virtually impossible to find out flood insurance costs until the sale is closing. Worse yet, many of the homes in the flood plains don’t have insurance because they don’t have mortgages. These homes have usually been passed down within a family.

Despite all this, Stiff is still satisfied with her decision to buy her house; even though it is in a flood plain, when her neighborhood floods, her home stays dry. She doesn’t think that many residents are worried about buying homes—in Norfolk, it’s a given that homeowners need flood insurance.

But the future of the housing market in Norfolk remains in the balance.

That homes in cities threatened by flooding have seen a rebound in the market indicates that “the real estate markets are NOT pricing in the very real risk—in some cases, inevitability—of sea level rise in these communities,” Dan Immergluck, a professor at Georgia Institute of Technology’s School of City and Regional Planning, said in an email. “Just as in the financial crisis, they are assuming there will always be buyers willing to pay more for their property.” Buyers expect that they will be able to sell the homes in the short term or that they will sell them at a profit to the next buyer, who will also ignore the effects of climate change.

While some homeowners may not be too worried about floods, Mayor Fraim has been extremely vocal on the topic of climate change and tidal flooding in the city. However, when I reached out to him and the city council for comment, the city’s public relations officials seemed a bit hesitant to

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schedule an interview and in the end directed me to the city’s website. What happened to the mayor who seemed to be a leading voice for local action on climate change?

In the summer of 2014, Senator Tim Kaine hosted a forum with Virginia public officials to discuss the realities of climate change and next steps for mitigation. Fraim offered his usual talking points on climate change but also added some things he wasn’t pleased about.

Apparently, the amount of press attention Norfolk had garnered as a prime example of the dangers of climate change was beginning to annoy the mayor. He said he wanted people to be prepared, but he didn’t want alarmists scaring away businesses.

“It’s not like we’re all out there buying canoes,” Fraim said at the forum.

The city is now opting for smaller steps to address problems, such as reminding residents through radio spots not to clog storm drains with leaves or grass clippings. Some residents have their doubts about city officials’ commitment to mitigation.

“The water keeps coming and the city continues to do this,” Brennan says, covering his eyes and looking away. He’s particularly concerned that the city has decided to build a light rail line through a well-known flood-prone area.

Environmental groups have stepped in to supplement the city’s modest

Newly reclaimed wetlands now stand where a park once stood in a flood-prone Norfolk neighborhood.

efforts. Wetlands Watch has created a smart phone app called Sea Level Rise.

The app’s developers traverse the town during significant flooding events to map the areas that are underwater; constant mapping will eventually lead to firm knowledge of exactly where and when flooding occurs.

After all, a major rain event effectively shuts the whole city down. While children in other cities get snow days, children in Norfolk get flood days. Stiff of Wetlands Watch believes that crowdsourcing the information on flooding would do a lot of good and that the city could benefit from a system similar to Snow Emergency Routes in other cities. If such a system were implemented when a flood emergency is declared, residents would be able to quickly move their cars, reducing the number of motorists who get stuck in floodwaters.

(Saltwater is also terrible for brakes.)

While the city hems and haws over what to do about climate change, the Chesapeake Climate Action Network (CCAN) is acting now. Director Mike Tidwell acknowledges that many locals may not accept “the avalanche of scientific evidence” on the man-made causes of climate change, but says that all Norfolkers have “an awareness that things have changed. They’ll tell you that that kind of flooding did not happen ten years ago and it’s getting worse.”

The real question is how to pay for the projects that will keep Norfolk

viable. The city needs an estimated $1 billion to address all the problems caused by the rising sea. Where to get that money is a constant topic of debate in the region. CCAN’s proposal is outlined in the Virginia Coastal Protection Act, which will be introduced in the state legislature later this year.

The bill proposes that the state of Virginia conform to the EPA’s carbon rule by joining the Regional Greenhouse Gas Initiative, which caps carbon pollution from power plants and requires companies to buy emissions permits at auctions. Joining RGGI will generate $209 million a year for the state by 2020; the Protection Act will require that half of that revenue be used for coastal protection.

“One thing that we say over and over again in Virginia is that there are two things that are not going to go away no matter how much people might wish,” says Tidwell. “Those things are sea level rise and the president’s carbon rule.” Though the bill will be presented to Virginia lawmakers, the likelihood of it being passed in a Republican-controlled chamber remains slim.

One would be hard-pressed to find someone in Norfolk who disagrees that the sea is rising and flooding the city on a near-regular basis. But for a region that is supposed to be leading the charge on what will be a disastrous situation in a few decades, the sense of urgency just isn’t there.

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Blind to the

Future Chris Christie and the Republican default on public investment

By Rac hel M . Coh en

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ome day not long from now, if you are traveling by rail in the Northeast, you may be stuck in a train waiting to enter a tunnel under the Hudson River between New York and New Jersey. Perhaps your grumbling seatmate curses Amtrak, New Jersey Transit, or politicians generally. But one leader in particular will deserve to be singled out on such occasions: Chris Christie, who, as governor of New Jersey in 2010, blocked a joint federal-state project to build a new passenger rail tunnel.

Today, few outside the New York metropolitan area know much about Governor Christie’s decision to veto the Access to the Region’s Core plan (ARC), a $9.8 billion project in the works for nearly 20 years that would have doubled cross-Hudson rail capacity when completed in 2018. Christie gained notoriety for one Hudson River tieup in September 2013, when his aides and allies closed traffic lanes at the George Washington Bridge as political retribution against a local Democratic official. But compared to “Bridgegate,” as that twisted tale came to be known, Christie’s veto of the new rail tunnel is a far more serious scandal. For the sake of short-term political gain, Christie sacrificed the long-term interests of his state and the nation. The story of the blocked tunnel is also evidence of a wider problem: Republican leaders’ refusal to deal with failing infrastructure for fear of raising taxes and antagonizing anti-tax groups on the right.

Transportation authorities have long agreed on the need for new rail tunnels under the Hudson River. Built more than 100 years ago, the two existing tunnels are inadequate to handle projected ridership growth and have suffered serious deterioration. Tunnel traffic already operates at 95 percent capacity during morning rush hour, with a train entering Midtown Manhattan from New Jersey every two minutes. As a result, the tunnels are the biggest choke point along the Northeast Corridor between Boston and Washington, D.C., limiting the potential for passenger rail to expand as the region’s population grows and congestion on the highways increases.

The tunnels’ age and deterioration also pose significant risks of disrupted travel in the near future. In October, Amtrak reported that the seawater that poured into the tunnels during Hurricane Sandy contained chlorides and sulfates that significantly damaged the concrete bench walls, the wiring in the signal, electrical, and mechanical systems, and the tracks themselves. Closing just one of the tunnels for repairs, however, would reduce tunnel traffic by a stunning 75 percent, since the remaining tunnel would have to accommodate trains running in both directions.

No one knows for sure when that might become necessary.

Rail transportation between New Jersey and New York is vital to the economy of both states as well as the nation,

not to mention the 160,000 passengers who ride trains through the tunnels every day, mostly to and from work.

But in October 2010, without offering any alternative plan, Christie killed the ARC tunnel and used the $1.25 billion in state funds previously set aside for the project to plug a hole in his budget and avoid a tax increase. It was a move that served Christie’s presidential ambitions—as long as the public doesn’t understand just what he did and why it ought to disqualify him from national leadership.

The ARC of the Past Construction of the ARC tunnel had already begun when

Christie was elected governor in November 2009. The groundbreaking five months earlier was a rare moment of elation for transit advocates and policymakers who had been pushing for the project for nearly two decades. At the groundbreaking ceremony, Peter Rogoff, who had just been confirmed to lead the Federal Transit Administration (FTA), contrasted ARC with projects that previously had been “either debated to death or simply ignored.”

The new ARC tunnel would allow an additional 25 trains an hour to enter New York City and was projected to increase daily passenger trips between New Jersey and New York to 254,000. The tunnel’s economic benefits had long been documented. According to the Government Accountability Office, the project would have generated 44,000 permanent jobs as well as 5,700 construction jobs. Easy access to New York City, the region’s commercial hub, is critical to New Jersey’s economic growth.

The Regional Plan Association, an urban research and advocacy organization for the New York metropolitan area, estimated that increased rail capacity would raise the value of homes within two miles of New Jersey train stations by a total of $18 billion, reducing pressure to raise property tax rates.

The costs of the ARC tunnel were to be split three ways.

The federal government and the Port Authority of New York and New Jersey would each contribute $3 billion.

(Jointly controlled by the two states, the Port Authority is a self-sustaining public authority, with revenues from its bridges, tunnels, airports, and marine terminals.) New Jersey would pay $2.7 billion since the tunnels were largely for New Jersey Transit riders and the state would reap sizable economic benefits. The federal contribution marked the largest funding commitment ever pledged for a transit project in the nation’s history.

When he became governor, Christie faced a choice.

On the campaign trail, he had supported the ARC project and pledged to reduce taxes. But as governor, he would be unable to do both.

New Jersey’s dedicated Transportation Trust Fund was broke. The fund was designed in 1984 to finance roads,

Winter 2015 The American Prospect 19

bridges, and other infrastructure projects by floating bonds that would be paid off with the proceeds of the state’s gasoline tax, tolls, and other earmarked revenue. But in 2010, New Jersey’s gas tax hadn’t been increased since the 1980s.

At 14.5 cents per gallon, it was (and is) by far the lowest in the region. Pennsylvania’s gas tax, in contrast, is 41.8 cents per gallon, while New York’s is 50.5 cents. In 2009, New Jersey’s gas tax was 47th in a ranking from highest to lowest among the 50 states. (It is now 49th.)

Many had expected New Jersey to raise its gas tax to meet its obligations for the ARC tunnel and other transportation investments. But Christie was emphatically opposed. In January 2011, after killing the ARC tunnel, he declared, “With rising gas prices right before us, the idea of raising taxes in this economy is something that this administration simply will not do under any circumstances.”

At the time he killed the tunnel, Christie claimed that the project would force New Jerseyans to pay $2 billion to $5 billion in cost overruns. According to a 2012 study by the Government Accountability Office, however, the projected range of costs for the ARC project was effec-

Christie’s decision has implications well beyond New Jersey. Passenger rail development along the Northeast Corridor depends on expanding the Hudson River tunnels. tively unchanged between the time Christie took office and when he canceled it. Federal and state officials had long said that costs might run from $9.5 billion to $12.4 billion. If costs did rise toward the higher figure, the GAO report concluded, there was no evidence that New Jersey would have to shoulder those overruns alone.

Despite bipartisan support for the tunnel, some criticized the design, which would take New Jersey Transit riders to a new station under Macy’s department store in Herald Square, a short walk from Penn Station. The plan had been a compromise negotiated with state and city officials in New York.

After Christie announced the cancellation, state and federal officials pressured him to reconsider, but he allowed only two weeks for further discussions. Federal representatives made several trips to New Jersey to try to work out a solution. Both New Jersey Transit and the FTA proposed ways to save the project, including trims to the project’s scope and alternative financing measures such as public-private partnerships. But Christie wouldn’t budge.

“Christie’s behavior was so rash, so hurried, and he was

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so unwilling to listen to other points of view, even from his own transit agency,” says Martin Robins, the initial ARC project director and director emeritus at the Alan M. Voorhees Transportation Center of Rutgers University.

Perhaps Christie was unwilling to listen because killing the ARC project had an additional advantage besides avoiding a gas tax increase. It also enabled him to redirect more than $3 billion that had already been put aside for the tunnel.

Diverting the Tunnel Money

In a commuter state like New Jersey, transportation spending is a hot political issue. Christie’s Democratic predecessor, Jon Corzine, had set off a political firestorm in 2008 when he tried to pass a plan that would have used dramatic increases in highway tolls over a 12-year period to cut the state’s $32 billion debt in half and pay for transportation improvements. Although the plan was defeated, Corzine did succeed in doubling tolls on the New Jersey Turnpike.

While the revenue wasn’t enough to resolve the state’s longterm fiscal problems, it included $1.25 billion earmarked for the future ARC tunnel.

Christie took that money as well as $1.8 billion from the Port Authority’s ARC capital fund and used the more than $3 billion in total to pay for road and bridge projects in the state. Critics insisted that Christie did not have the legal authority to redirect those Port Authority funds to state infrastructure repairs, but he did so anyway. (The Securities and Exchange Commission and the Manhattan District Attorney are currently investigating the legality of the diversion.)

Christie’s use of the funds was part of a larger pattern regarding the Port Authority. He crammed more than 60 political appointees into what had long been a highly professional, independent agency. It was through those appointees that lanes on the George Washington Bridge were closed in 2013 to send a message to a local official who refused to endorse Christie for re-election.

Under the Port Authority’s rules, a governor of New York could have refused to go along with the diversion of the tunnel money. But Christie’s move came just as Andrew Cuomo was elected governor. “By January 2011,” Robins said, “the first thing on Cuomo’s desk was Christie’s demand to the Port Authority that $1.8 billion be given to New Jersey for highway projects, and [Cuomo] approved it.” The ARC tunnel was generally considered a New Jersey project, and Cuomo may have wanted Christie’s cooperation with projects such as rebuilding the World Trade Center in New York.

But the diversion of the tunnel funds meant that besides forfeiting $3 billion in federal money, New Jersey would no longer have Port Authority funds or its own capital set

aside for a future tunnel. As the editorial board of The StarLedger—New Jersey’s largest-circulation newspaper—put it this past August: “If this were about fiscal responsibility, New Jersey’s tunnel money would have been set aside until a better project came along. Instead, commuters and taxpayers are left with no tunnel, and no tunnel fund—and no solid prospects for building either one.”

The implications of Christie’s decision go well beyond New Jersey because passenger rail development along the Northeast Corridor depends on expanding the Hudson River tunnels. Peter C. Goldmark Jr., who served as executive director of the Port Authority from 1977 to 1985, points out that except for the interstate highway system, America’s transportation infrastructure lacks a “systemic” owner. “Each piece of an artery like the Northeast Corridor needs the political and often financial support of the states,” says Goldmark. “So any single governor has a huge ability to slow down or shut down a ‘piece’ of what is really a system.”

“ARC was a carefully crafted project over two decades, two governors, and two mayors,” observes Richard Leone, who was chairman of the Port Authority from 1990 to 1994. “It’s tough to get a package approved by the state, and then approved in Washington, and whether right or wrong, [Christie] should have had to make a case that it was really worth abandoning, or that he had a better use for the funds. [The money] was essentially used to fill potholes in the budgets.”

And to help propel Christie’s rise onto the national stage.

The political advantages for Christie from cancelling the ARC tunnel reflect a deeper malady: the role of anti-tax conservatives in blocking public investment to meet future needs or even to maintain vital systems in good repair.

Today, the basic elements of America’s transportation infrastructure—roads, tunnels, bridges, and passenger rail lines—are in abysmal shape. According to the American Society of Civil Engineers’ 2013 Report Card, one in nine of the nation’s 607,000 bridges are “structurally deficient.” The Federal Highway Administration estimates that

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The National Politics of Public Investment Cancelling the ARC tunnel had national political ramifica-

tions. The federal funds for the project came partly from the stimulus program that Barack Obama and congressional Democrats had passed in response to the Great Recession. “The Obama administration really wanted [the ARC project] to go on,” a senior New York transportation official recalls. “It was the definition of ‘shovel ready,’ so basically the poster project of the American Recovery and Reinvestment Act.” Christie’s cancellation of ARC earned him points with the Republican Party and conservative anti-tax groups.

“I refuse to compromise my principles,” Christie boasted to prominent Republicans at a conference hosted by the George W. Bush Institute in 2012. “No matter how much the administration yells and screams, you have to say no.

You have to look them right in the eye, no matter how much they try to vilify you for it, and you have to say no.”

Mike Proto, the New Jersey communications director for Americans for Prosperity, the Koch-funded anti-tax group, says that Christie’s decision to kill the ARC project “was one of the best he’s made.”

annual investments of $20.5 billion would be needed to eliminate the nation’s bridge backlog by 2028—$8 billion more per year than is currently spent.

Infrastructure spending as a percentage of GDP, according to the Congressional Budget Office, has dropped from 3 percent prior to the 1980s to less than 2 percent today.

In addition, average state gas taxes, the most important source of state transportation funding, have not kept up with inflation. The Institute on Taxation and Economic Policy, a nonpartisan state and federal tax policy think tank, found that, on average, a state’s gas tax rate has effectively fallen by 20 percent since the last time it was increased.

Stagnant earnings for working-class and middle-income Americans have also undermined support for public spending and have created an opportunity for anti-tax groups to gain a greater following. Yet Americans were poorer during the 1930s than they are today, and the country still undertook public works on a massive scale. In fact,

A rusty metal wall seals up work on the ARC tunnel.

Construction had already begun when Governor Christie killed the project in 2010.

Winter 2015 The American Prospect 21

as the economic historian Alexander Field argues in his book A Great Leap Forward: 1930s Depression and U.S. Economic Growth, the infrastructure investments during that period had an enormous payoff in higher growth in subsequent decades.

Public investment has a long history in the United States, dating back to New York State’s construction of the Erie Canal (opened in 1825), federal land grants to support the transcontinental railroad (a project of the Republican Party in the 1860s), and federal financing of

Then the 2010 midterms brought a wave of Tea Party Republicans to Congress and state governments. Newly elected Republican governors in Wisconsin (Scott Walker), Ohio (John Kasich), and Florida (Rick Scott) positioned themselves against federally funded passenger rail projects, which they denounced as wasteful initiatives that would drain state budgets. All three governors proudly rejected millions of dollars in federal grants for rail projects that had been previously awarded to their states.

The shift of the Republican Party’s center of gravity from the Northeast to the South has also affected the party’s views of transportation. Public transit—passenger rail in particular—is far less developed in the South and has less support there than in the Northeast and urban centers in the Midwest.

As a result, Republicans have grown more opposed to projects like the ARC tunnel, which would help increase passenger-rail capacity in the Northeast. In 2012, House Republicans introduced a transportation bill (including cuts in Amtrak subsidies and increases in truck weight limits) that Ray LaHood, secretary of transportation during Obama’s first term, called “the worst transportation bill I’ve ever seen during 35 years of public service.” LaHood himself had been a seven-term Republican congressman from Illinois before he agreed to serve in Obama’s cabinet.

The increased opposition to public transit in the Republican Party is the context for understanding Christie’s cancellation of ARC. Although his decision broke with the long tradition of Northeast Republicans, he was positioning himself well within the mainstream of today’s national Republican Party.

From the Hudson River side of Manhattan, the Northeast Corridor tracks run under the James A. Farley Post Office building to Penn Station, the busiest train station in the United States. Under the proposed Gateway plan, the Farley Post Office would become part of a renovated Moynihan-Penn Station.

the interstate highway system (created under a Republican president, Dwight Eisenhower, in the 1950s). Until relatively recently, public investment in transportation has been an area of bipartisan agreement. Especially in the Northeast, many Republican officials in the tradition of former New York Governor Nelson Rockefeller joined Democrats in supporting the development of infrastructure, including public transit.

Nationally, however, the Republican Party of the 1860s, the 1950s, or even the 1980s is not the Republican Party of today. Since the 1994 Republican “revolution” under Newt Gingrich, many areas of policy that were previously bipartisan have become polarized, and one of those is transportation. With fewer Rockefeller Republicans and more Tea Party types, the efforts of transportation advocates to find Republican allies have become more difficult.

In September 2010, Republicans lined up against Obama’s $50 billion transportation stimulus package.

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The partisan politics of transportation show up in differing policies and attitudes toward public transit and the automobile. Consider what happened to transportation costs and spending in New Jersey when Corzine gave way to Christie. Corzine had raised highway tolls (and would have raised them more) to finance transportation projects, including the ARC tunnel. Together with Cuomo, Christie did approve an increase in tolls for vehicles on cross-Hudson bridges and tunnels. But he canceled ARC, used the bulk of the money for roads, and pledged not to raise the gas tax. Three months after Christie assumed office, New Jersey Transit raised its fares by 25 percent.

Nationally, passenger rail has recently undergone significant growth after a long period of decline that came with the rise of the auto and air travel. Between 1946 and 1964, the annual number of rail passengers dropped from 770 million to 298 million. By 1965, according to the GAO, only 10,000 rail passenger cars were left in operation, 85 percent fewer than in 1929. But that trend has reversed.

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Derailing Passenger Rail

Amtrak has now been carrying record numbers of passengers; ridership grew by 55 percent from 1997 to 2012.

Yet passenger rail still faces an obstacle in public opinion. Many people, particularly conservatives, have a double standard in judging subsidies for rail versus subsidies for roads. Americans are socialists when it comes to financing roads. Government is just expected to build them and make them free for people to drive on. Most streets and highways don’t even have tolls. Yet year after year, Amtrak gets criticized for needing substantial federal subsidies to maintain expensive—and obligatory—long-distance routes.

“We spend an awful lot of money building and maintaining a system for people to travel on with cars and trucks … but mass transit is always seen as this expensive add-on,” says Leone.

“We tell ourselves this little myth that our gas taxes fund everything,” says Phillip Longman, a policy expert at the New America Foundation. Indeed, as the Tax Foundation, a tax policy research group, found, gas taxes and tolls cover only a third of all state and local road spending.

mate-proof” infrastructure so that it can withstand future storms and rising sea levels. Climate-proofing will require even heftier investments than previously envisioned.

But there is another kind of climate—the political climate—that stands in the way of addressing these needs.

Neither the federal government nor the state has committed the necessary capital for rail and other infrastructure development. The federal stimulus dollars are gone, the funds that New Jersey previously earmarked for ARC have been spent, and New Jersey’s Transportation Trust Fund has been depleted.

In New Jersey, the state government’s finances have spiraled downward under Christie’s leadership. New Jersey’s credit rating has been downgraded eight times. The state pension system has lost billions of dollars under management by one of Christie’s political appointees. After Christie withheld legally required state contributions to the pension fund, the fund’s trustees filed a lawsuit against the governor to demand that the payments be made. And Christie’s support at home has been slipping. A Rutgers University poll last October found that more New Jersey voters held

Getting Rail Back on Track

In the wake of Christie’s decision to cancel the ARC tunnel, the challenges facing passenger rail in the Northeast are steep. As Amtrak officials point out, even if the ARC tunnel had been built to handle commuter rail between New Jersey and New York, Amtrak would have still needed additional capacity under the Hudson River to accommodate the burgeoning travel demand along the Northeast Corridor. With ARC, Amtrak wouldn’t have faced the same degree of time-sensitive pressure for tunnel construction, but the long-run need is for even bigger investments.

Amtrak’s proposed alternative, known as the Gateway program, would include a new two-tube rail tunnel under the Hudson River, with a price tag that could reach $16 billion. The full Gateway program also calls for an expansion of Penn Station and the development of other transportation arteries into New York and would not be completed until 2030. Amtrak estimates that the new tunnel could be built by 2025 if funds were appropriated immediately.

Amtrak officials are not sure, however, whether the existing tunnels will hold up for another decade in light of the damage from Hurricane Sandy. “We don’t yet know what the rate of deterioration will be for the existing tunnels in terms of reliability of service,” says Stephen Gardner, the vice president of Northeast Corridor development for Amtrak.

“We can see the damage, but we don’t know what that will mean for future operations.” Currently, Amtrak says, repair work on the tunnels is being done during 55-hour weekend periods, but “longer-term closures cannot be avoided.”

The damage from Sandy highlights a new issue that policymakers must take into account: the need to “cli-

If funds were appropriated immediately, a new tunnel could be built by 2025. But officials are not sure whether the existing tunnels will hold up for another decade. an unfavorable impression of Christie than a favorable one.

Still, many Republicans in the country consider Christie a real leader, a “tough guy” who stands up to big interest groups (like schoolteachers!). After friendly gestures toward Obama in 2012, Christie won re-election as governor the following year with 60 percent of the vote, including 32 percent of registered Democrats. Since then, Christie has been cultivating support from the Republican base.

As chairman of the Republican Governors Association, he spent significant amounts of time throughout the 2014 midterm election season campaigning for Republicans in 37 states, all the while expanding his own personal national donor network.

Enthusiasm among Republicans for Christie may not be as robust as it once was, but he remains a serious contender for the party’s presidential nomination. After all, Republicans around the country are not going to ask why the governor of New Jersey canceled a rail tunnel under the Hudson River. And Christie will be long gone from state politics when people in the region are left to suffer the consequences of that decision.

Winter 2015 The American Prospect 23

How Democratic progressives survived a Landslide

They ran against Wall Street and carried the white working class.

The Democrats who shunned populism got clobbered.

By Bo b Mo s e r

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o p p o s i t e : b i l l n o l l / i s t o c k ; t h i s pa g e : c a r lo s o s o r i o / a p i m a g e s

A

nn Kirkpatrick was surely toast in 2014. The two-term Democrat represented one of the most sprawling and politically unpredictable House districts in the country, an Iowa-sized expanse of northern and eastern Arizona dotted with fiercely conservative small towns, heavily Democratic small cities like Flagstaff and Sedona, and 12 Native American tribal lands with varied political loyalties. An affable Anglo who grew up on the Fort Apache Reservation, where her father ran a general store, Kirkpatrick owed both her wins—in 2008 and 2012—to presidential-year turnout in the half-minority First District; without it, in 2010, she lost. No Democrat, in fact, had won a midterm election in this district, which was once represented by John McCain, since 1950.

After pulling off a 9,000-vote squeaker in 2012—Mitt Romney more than doubled her margin of victory as he also carried the district—Kirkpatrick landed immediately on the National Republican Congressional Committee’s list of the seven top Democratic targets for 2014. Which meant she would be facing not just another likely Republican wave, not just another whiter and older midterm electorate, and not just a powerful and well-connected opponent—Andy Tobin, Republican speaker of the state House—but a Dresden-level air assault from outside groups as well.

If you asked the political wizards of Washington, Kirkpatrick’s only hope would have been to sing from this year’s midterm hymnal: Run away from Obama and the “Democrat” label as hard and fast as humanly possible; vow to “fix” the Affordable Care Act rather than defend it; hit your opponent for being “anti-woman”; promise nothing but “bipartisanship” and deficit-reduction if you’re sent back to Congress—oh, and run a superior field operation to draw out the minority voters you’ve been ignoring with your Republican-Lite campaign. Model your campaign on Michelle Nunn’s “I’m as Republican as my opponent” run for Senate in Georgia, say, or Senator Kay Hagan’s Obama-dodging effort in North Carolina—two campaigns that Democratic strategists considered pure genius all the way to Election Day. (In a National Journal “Insider’s Poll” taken just before the midterms, both Democratic and Republican leaders deemed those the “best” Democratic campaigns of 2014 by a wide margin.) And if you must choose an issue to run on, follow Nunn’s and Hagan’s lead and try something inoffensive like “education,” or debt reduction. Just don’t wade into any pesky details.

Few Democrats in Congress were as well positioned as Kirkpatrick to undertake a campaign of Clinton-style triangulation. She voted “just” 89 percent with President Obama, according to the Sunlight Foundation—one of the lower partisan-purity tallies on the Hill. But Kirkpatrick had tried the “no-D Democratic” approach before,

in 2010, when she spent the campaign on the defensive after voting for Obamacare, insisting she was actually a model of “independence” and pledging fiscal responsibility and aisle-crossing. She got whomped. So this year, Kirkpatrick made the curious strategic decision to run as herself: a deal-cutter who brings millions in grant money to her cash-starved district; an opponent of EPA regulations when they threaten local jobs, and an environmentalist otherwise; and, most important, a progressive populist on such defining issues as immigration reform, corporate taxation, and health-care reform. She’d talk about her independent streak, sure—because it’s real—but the meat of her campaign would be about what government can, and should, be doing for local folks in need. And rather than focus her efforts on conservative white voters, she would spend much of the campaign on tribal land, which accounted for 25 percent of Kirkpatrick’s total votes in 2012.

(By contrast, her Republican opponent won only 3 percent of his votes on the reservations.) She’d invest in the most targeted effort to turn out Native Americans that anyone had seen. In sum, Kirkpatrick would—disaster alert!— play the role of herself in the campaign, and try to reassemble the minority coalition that elected her in 2008 and 2012.

This was not supposed to work in 2014. Nor were the defiantly populist campaigns of Senators Jeanne Shaheen of New Hampshire, Al Franken of Minnesota, and Jeff Merkley of Oregon—along with Representative Gary Peters in Michigan, who logged untold miles on his motorcycle as he defended the seat being vacated by retiring Democratic Senator Carl Levin. Like Kirkpatrick, these Democrats were being challenged by hand-picked Republican opponents—chosen for their “winnability”—and would be bombarded from spring to fall by outside dark-money groups that would invest millions to make the vulnerable Democrats look like the mirror images of Barack Obama himself. But while other top-of-the-ticket Democrats ran to the middle, these candidates planted their feet where they were. In the case of Kirkpatrick, the foot-planting

The One and Only Freshman Democrat: Michigan Senator Gary Peters, who ran as a progressive populist

Winter 2015 The American Prospect 25

would be literal as well as symbolic, and it would be a turning point in her unlikely campaign.

As soon as the state House speaker secured the Republican nomination in late August, the bombardment commenced in earnest. The NRCC started with a slickly produced spot that showed, from the waist down, a welldressed woman in high heels wheeling a suitcase back and forth. “When Ann Kirkpatrick comes back to Arizona from Washington, she carries a lot of baggage—President Obama’s baggage,” the voiceover began. The ad hit the congresswoman for “refusing to fix Obamacare,” and for voting to raise the debt ceiling. “She’s not independent; she just votes the party line,” the narrator concluded.

Kirkpatrick’s response was quick, funny, and defiant: a spot set on the orangey moonscape of her district, featuring a pair of boots the congresswoman had bought when she was 18 with money she’d saved from waitressing. “I still wear ’em,” she said. “They come in real handy in D.C.” Those boots were made for stomping out “perks” that members of Congress tried to give themselves, Kirkpatrick said—like paying members during shutdowns, or providing them with government-funded health care for life, both of which she had loudly opposed.

Not since Jim Webb’s 2006 Senate campaign, when he trooped across Virginia in his son’s combat boots from

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Iraq, preaching an anti-war message, had footwear done so much for a Democrat. On the trail across her motley district, everybody wanted to see Kirkpatrick’s boots up close—they’re now held together by duct tape—and to hear from the lady who used them to stomp on fat cats. The congresswoman didn’t disappoint, especially when it came to the issue that was tying the tongues of Democrats everywhere. The Obamacare attack ads flew fast and furious, but Kirkpatrick didn’t flinch, pointing out that the law had benefited thousands of her constituents. “I talk to people almost on a daily basis who now have coverage they never had before,” she said in a September debate. “Thank heavens.” (Thank heavens for Obamacare? Smelling salts for the consultants, quick!) By being so unblinking and unapologetic about supporting the ACA , she put herself in a position to turn the issue on Tobin, who had opposed Arizona’s Medicaid expansion as House speaker. “He fought Medicaid expansion, and 21,000 people in my district just signed up for Medicaid,” she told a Phoenix radio host in September.

Kirkpatrick also celebrated pork, touting the transportation and infrastructure projects she’d brought and would continue to bring to the district. For good measure, in September and October, she rolled out three big chunks of grants, amounting to $20 million, for projects and services—tribal diabetes programs, STEM learning centers,

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These Boots Are Made for Winnin’: Arizona Representative Ann Kirkpatrick (shown above right at a 2012 campaign event) was supposed to lose but didn’t.

regional airports, wind energy development, a hybrid bus fleet for the Navajo, and new roads for the Hopi. Kirkpatrick’s message was contrarian but clear: Government is not the people’s enemy—unless you hand it over to people who are only out to please big-money interests.

On November 4, while Republicans won big in Senate and House races across the country—and ran the table in Arizona’s statewide elections—Kirkpatrick’s unconventional campaign paid off handsomely. She won by five percentage points, nearly double her margin of victory in 2012, despite $6 million in outside spending against her. She was one of just two Democrats on the NRCC ’s original target list to survive. The other was Rick Nolan, a congressman from the once staunchly Democratic, now conservative-trending, Iron Range of Minnesota. In one of the most expensive House campaigns in the country, Nolan held off a wealthy young businessman with one of the fieriest populist campaigns in the country. “He is, no mistake about it, a onepercenter who is there to represent the one percent, not the 99 percent,” Nolan had roared as the campaign commenced, and he spent the election year fulminating about trickledown economics, pushing campaign-finance reform, and criticizing the Affordable Care Act for being too corporatefriendly. To the amazement of Democratic strategists in both D.C. and Minnesota who roundly criticized Nolan’s stubborn refusal to moderate himself, he survived.

After every election, the losing side naturally tends to brood over where and how things went wrong. For Democrats this year, there’s no shortage of theories about the party’s avalanche of key losses in Senate, House, and statehouse contests. Perhaps it was wrong to sideline President Obama so thoroughly. Perhaps they shouldn’t have run away from the Affordable Care Act. Perhaps they still haven’t found the formula for turning out young and minority voters in midterms. Maybe it was just a bad map that couldn’t be overcome. Or maybe there had been, as the pundits chorused, no “coherent national message” for Democrats to run on.

You can find shards of truth in these tidbits of conventional wisdom, but it’s a gauzy, overgeneralized kind of truth. It’s more instructive to take a long look at what did work in 2014—at the candidates and campaigns that overcame the Republican drift. How did Democrats beat their odds in Arizona, Minnesota, New Hampshire, and Michigan even as they fell short in Iowa, Wisconsin, Florida, and Colorado? The closer you look, the clearer the picture becomes: They did it the way Kirkpatrick did. They ran with their populist boots on.

The most-watched elections of 2014—the ones that

would determine whether Democrats could hold on to their Senate majority for Obama’s final two years—resulted in the party’s most notable cluster of beat-downs. Only five

Democrats managed to defy the Republican surge in what were thought to be closely contested states. Four of them ran campaigns that were virtual doppelgangers—and that veered from the Democratic script just as dramatically as Kirkpatrick’s and Nolan’s.

The lone Democrat to prevail in a Senate campaign that was a toss-up from start to finish, Senator Jeanne Shaheen of New Hampshire, is hardly a dusty-boots sort of populist. But as she faced a troublesome challenger with a Wall Street ATM—former Massachusetts Senator Scott Brown—Shaheen did her best impression of a New England Huey Long. Despite Obama’s 38 percent approval rating in the state, Shaheen lauded Obamacare and doggedly focused her campaign on the ways that she could meet the specific economic needs of her constituents—“working to protect this shipyard, build that bridge, get a bill passed that helped this New Hampshire business,” as The Boston Globe put it.

Brown, who couldn’t hope to out– New Hampshire his opponent, did his darnedest to “nationalize” the race.

Rarely did he open his mouth without repeating his claim that Shaheen had voted with Obama “more than 99 percent of the time.” (This was an exaggeration, but only a slight one.) Brown and Republican groups’ ads continually pictured the senator beaming next to the president, and he attacked her for working in tandem with Obama to stagnate the economy, to create the summer’s border crisis with undocumented children, to mis-underestimate the perils of ISIS—you name it, Jeanne was to blame. In the run-up to Election Day, Brown campaign yard signs bearing the message “Stand with Obama, Vote for Shaheen” were ubiquitous across the state.

Even though Brown had to fight against the “carpetbagger” label that accompanied his convenient relocation to New Hampshire after losing his Senate seat in Massachusetts to Elizabeth Warren—“New Hampshire is not a consolation prize,” Shaheen said—his strategy was sound: In recent decades, New Hampshire has tended to blow with the national political winds more than most states.

“Localizing” one’s race, as Shaheen did, was another stratagem highly recommended by the Washington cognoscenti in 2014, and plenty of Democrats tried it. The idea was simple: If your voters don’t like Obama and those Washington Dems, maybe they’ll still punch their ballots for their own Dem who’s nothing like the rest of them. With a few exceptions in House races, this worked no better for Democrats this year than it did for Republicans in the Bush backlash of

The populist progressives who carried purple states in 2014 identified both the culprits —Wall Street, the Koch Brothers—and the solution: activist government.

Winter 2015 The American Prospect 27

2006. In the Iowa contest to fill Senator Tom Harkin’s vacated seat, Democratic Congressman Bruce Braley emphasized getting things done for his state by working across the aisle with Republicans and not “letting the extremists from either party get in the way.” What he didn’t do was make it personal for voters, as Shaheen and Kirkpatrick did with their “this bridge, that health clinic” campaigns.

Braley’s surprising loss to upstart Republican Joni Ernst, like Senator Mark Udall’s equally surprising defeat in Colorado, could not be chalked up to an overdose of centrist timidity; Braley and Udall both campaigned on a bumper crop of liberal priorities. But as Richard Kirsch, a senior fellow at the Roosevelt Institute, pointed out after the election, there was something missing: The two Democrats “ticked off a list of progressive issues—from minimum wage to pay equity to protecting Social Security—without providing any framing story to link them together. [They] left out who the villains were in the story.”

Shaheen didn’t make that mistake. A 60-second radio spot she aired in mid-September took dead aim at the villains in working-class and middle-class Americans’ bleak economic story. It’s worth quoting the whole script:

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Wonder why Scott Brown lost re-election in Massachusetts? Well, he was working for Wall Street, not the people. Scott Brown blocked a major financial reform bill until he could water it down and save Wall Street $19 billion. Scott Brown really delivered for Wall Street, said The Boston Globe. Even after the bill passed, news reports show Brown was ‘secretly serving the interests of Wall Street, working behind the scenes to help the big banks, not consumers.’

Wall Street thanked Scott Brown by giving him more campaign contributions than any other candidate—$5.3 million. Now, Scott Brown wants New Hampshire to send him to Washington. Wall Street’s once again spending millions to help. Scott Brown says he really cares about New Hampshire. Come on, don’t be fooled. No matter where he lives, Scott Brown will always put Wall Street first. And that’s good for Scott Brown, but not New Hampshire.

In case you weren’t counting, that was seven “Wall Streets” in 60 seconds—all of them closely accompanied by a “Scott Brown.” While Republicans spent the year tying

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The Survivor: New Hampshire Democrat Jeanne Shaheen, who indissolubly linked her GOP opponent to Wall Street

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Democratic candidates to the word “Obama” and its close variant, “Obamacare,” Shaheen and the three other populist progressives who won their Senate races lifted up the “Wall Street” chant at every opportunity. In Oregon, a typical ad for Senator Jeff Merkley: “It is Jeff leading the fight to hold Wall Street and big banks accountable when they prey on working families and small businesses.” And here’s Minnesota’s junior senator, Al Franken, in one of his spots: “I work for all Minnesotans. Wall Street wasn’t happy about that. But I don’t work for Wall Street. I work for you.”

The populists also pounded relentlessly on those living embodiments of Republican Wall Street-iness, the infamous Koch brothers. In Michigan, the Kochs spent big (we’re talking more than $5 million) to boost Republican Secretary of State Terri Lynn Land, who was running against Democratic Representative Gary Peters. Peters portrayed this as his payback for daring to stand up to the Koch brothers; the previous summer, he’d played a major role in forcing Koch Carbon to remove massive piles of petroleum coke—a byproduct of oil-refining—it had dumped in Detroit, and which had blown black clouds of dust into neighboring Windsor, Canada. “I feel like I’m not really running against Terri Lynn Land. I feel like I’m running against the Koch brothers,” Peters told a campaign rally in Detroit this summer. “They care about their agenda, which is weakening environmental laws. It’s about being anti–middle class, about tax breaks for millionaires.”

Populism ain’t populism, after all, without an enemy—in particular, an enemy who’s coming for you, who wants to pollute your beloved river, outsource your job, keep your wages low, let the bridge you drive over every day crumble in disrepair, or prevent your kids from getting proper health care or decent public schooling. The populist progressives who won Senate races in purple states in 2014 had the “coherent message” that Democrats elsewhere— both progressives and moderates—lacked. There was a problem, symbolized by Wall Street and the Koch brothers, and there was a solution, which was activist government.

Running against the Kochs, Merkley said, “created the contrast: I’m running saying I want to see a ‘We the people’ democracy, by and for the people and not by and for billionaires. That’s very different from my opponent, who signed on to a by-and-for-billionaires agenda.” Franken, Merkley, and Peters’s campaigns garnered little attention from the national media, precisely because they worked so well (with help, to be sure, from the disappointing campaigns of their highly touted and well-funded opponents). But the way they won should not be overlooked: All three breezed to victory in states that the Republicans had believed, with reason, they could take in 2014.

And in a year when Democrats, nationally, hit rockbottom with white, working-class voters—losing by 30

percentage points—the populists either won majorities of these voters (Shaheen, Merkley, and Franken) or came damn close (Peters). Exit polls showed Shaheen winning her state’s dominant white vote 51-48; Franken winning his even more comfortably; and Merkley running up a 16-point edge among whites. While white folks dismissed centrist candidates like Hagan, Nunn, and Arkansas Senator Mark Pryor (who couldn’t bring himself to wholeheartedly endorse the state’s minimum-wage referendum, which passed as he lost), the populists won them over with heaping doses of “class warfare” that could not have been more explicit. Econom ic popu lism is a tougher sell in the South, of course, thanks in part to the region’s weak labor traditions—and thanks even more to the fact that racial politics have often trumped economic concerns, especially in deepest Dixie.

But mushy moderation has failed to convert many Republicans or Republican-leaning independents, even as it gives Democraticleaners nothing special to get excited about.

The lone centrist who won a close Senate contest in 2014, Virginia’s Mark Warner, only proved the rule. Unlike Peters, Franken, Merkley, or Shaheen, Warner had been considered a lock to win by a landslide, just as he had in 2008, and he’d led by double digits in the polls for most of the fall.

Warner is one of the most popular members of Congress back home, logging a 63 percent approval rating. Many of his admirers stayed home on Election Day, however, when he came within a whisker of losing to underfunded, roundly ignored Republican Ed Gillespie. (When Democrat Jim Webb won Virginia’s Senate race in the 2006 midterms, turnout was 53 percent statewide; this year, it was 42 percent.) Warner had given his supporters no reason to bother. The senator spent much of his campaign courting white voters in rural Virginia with messages of mushy moderation—and those voters, who had lifted Warner into the governor’s office in 2001 and into the Senate in 2008, soundly rejected him this time. Six years earlier, Warner had tallied 61 percent of the state’s rural votes; this time, he took 39 percent.

The Democratic Wing: Elizabeth Warren campaigns with Oregon Senator Jeff Merkley.

Winter 2015 The American Prospect 29

Warner’s great issues were Obamacare tweaks and bipartisan debt reduction—the farthest things possible from the concrete, government-can-help-you sales pitches of his populist counterparts. It was a campaign “designed to win in the late ’90s,” muttered a disgruntled Democratic operative. As Bloomberg’s David Weigel pointed out, the problem wasn’t bipartisanship per se—others, including Kirkpatrick and Peters, touted their aisle-crossing to good effect—it was the kind of bipartisanship Warner promised, on an issue—debt reduction—that’s abstract and directly relevant to no one’s real life, that nearly doomed him. Only Warner’s baked-in popularity saved him from the most embarrassing defeat of the cycle.

There’s considerable irony in all this, of course. The rationale for New Democrat–style centrism, co-created and honed to an art by Bill Clinton, was to win back white voters who’d been drifting into the Republican camp since the 1960s. (OK, there was one other rationale: to convince Wall Street to give money to Democrats.) But by following the Clinton formula in countless campaigns since he left office, Democrats have steadily lost more and more white votes. The reason is obvious enough for those with eyes to see, as Senator Bernie Sanders told NPR after the election: “People look out and they say, ‘Gee, the wealthiest people are doing phenomenally well.’ And where are the Democrats?

Do people see the Democratic Party standing up to Wall Street? Any of these guys going to jail? Not really.

The average person is working longer hours, lower wages, and they do not see any political party standing up and fighting for their rights. What they see is a Republican Party becoming extremely right-wing, controlled by folks like the Koch brothers. But they do not see a party representing the working class of this country.”

When white voters do catch a glimpse of a candidate who speaks in plain English to working- and middle-class worries, frustrations, and fears—and, crucially, offers a solution—it’s a whole different matter. White voters have tuned out New Democrats. But they are increasingly receptive to those who sound a lot like Old Democrats.

By following New Democrat– style centrism, originally crafted to win back white voters, Democrats have steadily lost more and more white votes.

The Democratic Party’s salvation in 2014 was sup-

posed to be the party’s superior turnout machine. Building on the combination of high-tech voter-targeting and oldfashioned door-knocking that gave Obama an edge in the purple states in both his elections, the Democrats rolled

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out a $60 million “Bannock Street Project” for the midterms. The name was inspired by the location of Denver field headquarters for Senator Michael Bennet of Colorado, who ran a state-of-the-art ground game that helped him weather the Tea Party storm of 2010—and who chaired the Democratic Senatorial Campaign Committee in 2014.

Guy Cecil, Bennet’s turnout mastermind in Colorado, took charge of the national project this time, pledging to invest more in the field than Democrats had in previous midterms. Bannock Street sent some 4,000 staffers into ten key states, pursuing an ambitious goal: Come as close as possible to replicating the Obama coalition in a midterm year. At least in the states with toss-up Senate races.

In some respects, in some places, it worked: In battleground states where Democrats invested heavily in field operations, including North Carolina and Colorado, turnout was higher than in 2010—up four points to 41 percent in North Carolina, up five points to 53 percent in Colorado.

That’s a feat, considering that turnout nationally was the lowest since 1942, a paltry 36 percent. In states like Virginia and Maryland, where Democrats didn’t invest, turnout was abysmal. But Democratic senators still lost to Republican challengers in North Carolina and Colorado, despite the relatively high voting numbers in both states. The races where Democratic field operations actually spelled the difference between victory and defeat were few and far between—Connecticut, perhaps, where unpopular Governor Dan Malloy ran the most unstintingly populist (and pro-Obama) campaign in the country and narrowly prevailed. But even there, turnout was modest, at 42 percent.

Voters came out in healthier numbers in other states where the DSCC focused its resources: 49 percent in New Hampshire, nearly 70 percent in Oregon (with its mail-in balloting), and 51 percent in Minnesota. We shouldn’t read too much into those raw numbers; these states typically out-vote most others. And it wasn’t just Democrats who were getting their voters out; Republicans were making a far stronger effort than they made in 2012 to limit the Democrats’ advantages in the field.

As Rob Collins, executive director of the National Republican Senatorial Committee, told The New York Times, GOP strategists “devoured news reports about the [Bannock Street] project and scoured Federal Election Commission filings to learn as much as they could about how their rivals were structuring their turnout operations in battleground states.” The Koch brothers’ super PACs invested millions in field operations this time around, too.

Just as the skyrocketing, post–Citizens United spending on both sides has basically resulted in a partisan draw— with both parties becoming smarter about where to put their money, and when, and into what—neither Democrats nor Republicans are likely to have a decisive advantage in

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field operations and voter technology going forward. Even when one party does best the other, a superior turnout machine can only swing an election that’s exceedingly close. In 2014, “the Republicans could have been printing their voter file list from a Commodore 64, and it would not have fundamentally changed the election,” Cecil said in the aftermath. “This was not a field election.”

The Democrats’ biggest turnout problem wasn’t so much with African Americans or Latinos. What stung the Democrats, as usual, was under-30 voters’ profound lack of interest in the proceedings—they made up 12 percent of voters in 2014, down a bit from 2012, and woeful when you consider that they make up 21 percent of the eligible voting population. Single women voted less overwhelmingly for Democrats than they did in 2012, as did Latinos. All of which means that Republicans fared marginally better among some key Democratic blocs, even as the Democrats continued to fare worse among Republican-leaning groups—particularly that biggest and baddest voting bloc of all, white people.

Beyond their super-duper turnout machine, the other Democratic edge in 2014 was going to stem from a strategy borrowed from Karl Rove’s evil-genius idea in 2004 to put same-sex marriage—then still sweepingly unpopular—on ballots in battleground states. Ballot measures would draw the Democratic faithful to the polls this year, as once they did the Republicans. This year, Democrats floated minimum-wage increases in four red states (Alaska, Arkansas, Nebraska, and South Dakota) and Illinois, along with background checks for guns in Washington state and a paid sick-leave mandate in Massachusetts. The measures all passed, but they did little to benefit Democratic candidates at the top of those states’ tickets. Republicans won the big races for Senate or governor in six of those seven states. In Arkansas, incumbent Democratic Senator Mark Pryor won just 39 percent of the vote, while the minimumwage hike garnered 65 percent in favor. Clearly, plenty of Republicans said yes to higher pay while punching their ballots for the party that opposes it.

Turnout went down in other states where progressive measures had been expected to rev up more Democratic voters. In South Dakota, a successful minimum-wage initiative couldn’t prevent turnout from dropping from 62 percent in 2010 to 54 percent. And while Oregon’s 70 percent might look like powerful evidence that a marijuanalegalization measure stimulated turnout as hoped, it also represents a drop from 2010, when 72 percent of registered Oregonians mailed in their ballots.

The great lessons of 2014—drawn from the Democrats who lived to fight another day—proved to be mostly oldschool and plainly commonsensical. Timid, consultantscripted Democrats lost. Democrats who spent the campaign posturing as moderate Republicans lost. Bold, aggressively

populist candidates—the few, the loud, the proud—won.

Of course, don’t try telling that to the ’90s nostalgists who continue to dictate so many Democrats’ election strategies no matter the results. Even as some of the votes were still being counted, Politico published a “Blueprint for Democratic Victory” by the high priest of triangulation, Democratic Leadership Council founder Al From. He advised his party that the way to look forward after the 2014 debacle was to look backward—to the supposed glory days of DLC hero Bill Clinton and his loyal band of Wall Street funders.

Unsurprisingly, perhaps, From refused to acknowledge the reality that Clinton Democrats were approximately as popular as lepers in 2014, and that the candidates who followed his formula—which was most of them—were whipped in

virtually every competitive race for Congress or governor.

Democrats’ “principal strategy this year,” From asserted, all facts to the contrary, “was a turnout strategy—to ‘fire up the base’ and turn out groups of voters—young millennials, African Americans, Latinos, Asians, and women—who tend to vote Democratic. That strategy worked spectacularly in 2008 and 2012 with Barack Obama at the top of the ticket. Much of our campaign message was part of that strategy, directed at those Democratic constituencies.

But this year, with the president not on the ballot and his approval ratings down, turnout favored the Republicans.”

Rage on, Mr. From, against the dying of the light.

Forgot to Give Democrats a Reason to Vote: Virginia’s Mark Warner, who barely survived

Bob Moser is senior editor at National Journal and author of Blue Dixie: Awakening the South’s Democratic Majority. He is the former executive editor of The American Prospect.

Winter 2015 The American Prospect 31

Sex, Lies, and Justice Can we reconcile the belated attention to campus sexual assaults with due process?

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ampus sexual assaults are horrifying, made all the worse because the settings are bucolic and presumed safe—leafy campuses, ivy-walled universities. Assaults are reported in dormitories, off-campus apartments, and fraternity houses, in elite and non-elite institutions, from one end of the country to the other. Title IX (of the Education Amendments of 1972) was supposed to promote equal opportunity in any educational program receiving federal money.

But until recently, Title IX was dormant and largely ignored. The enforcer, the federal government, had been a paper tiger. Universities were not reporting, much less dealing with, either

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sexual harassment or explicit sexual violence.

Sexual misconduct impairs a woman’s ability to function as an equal in an academic environment—and by extension menaces all women.

Unless a woman is safe, all the other guarantees of equal treatment are irrelevant.

In 2011, the government’s approach changed dramatically: A “Dear Colleague” letter on sexual violence was sent to colleges and universities from the Department of Education’s Office for Civil Rights (OCR), pointedly reminding them of their obligations under Title IX and presaging aggressive enforcement. By August 2013, the public face of the department’s enforcement efforts was Catherine Lhamon, assistant sec-

retary at the Office for Civil Rights, a zealous advocate, formerly head of impact litigation at Public Counsel, a public interest law firm; before that, she was assistant legal director of the ACLU of Southern California. At a July 2014 meeting of college administrators, Lhamon made the threat of disciplinary action unmistakable: While no school accused of violating Title IX had ever lost its federal funding, “do not think it’s an empty threat,” she warned them. A department website announced the campaign against sexual violence on campus, notalone. gov. President Barack Obama, in a January 25, 2014, speech, assured his listeners that “anyone out there who has ever been assaulted:

victor juha sz

B y Na ncy Gert ner

You are not alone. We have your back. I’ve got your back.” Even the department’s language changed, no longer referring antiseptically to a complainant and an accused but rather to victims or survivors, and perpetrators.

To feminists—I among them—it was about time that pressure was brought to bear on educational institutions. Too often colleges and universities had excused or turned a blind eye to the crimes of serial sexual predators. The media, after often dismissing the claims of rape victims, was finally more sympathetic, covering accounts of sexual violence from the University of Virginia to Yale and Harvard.

This kind of sustained attention was precisely what was needed to come to grips with the problem. Nothing less would have done the trick. Indeed, nothing had worked before. It was as if women, especially young women, had to speak especially loudly and especially often to finally be heard—a not unfamiliar concept.

The problem was that the issues surrounding campus sexual assault were more complicated than the public debate reflected. How were universities and colleges to deal with the range of campus sexual encounters—a continuum from violent rape, to sex fueled by alcohol impairing all involved, to the expectations about women and men in the so-called “hookup culture,” to consensual sex followed by second thoughts. (At least one feminist scholar, Catharine MacKinnon, has expressed skepticism that a woman could ever voluntarily have sex, given the disparate power relations between men and women in society.) There are plenty of bright lines such as forcible rape—but also blurry ones. Genuine ambivalence and ambiguous signals seem almost inherent in courtship and sexuality, especially in first encounters.

Where should the Title IX violation line be?

What was a reasonable adjudication process?

What was the role of the criminal justice system in cases in which university conduct codes overlapped with possible prosecutions?

Further, how were colleges and universities to balance the interests of the complainant with those of the accused? Just as the complainants must be treated with dignity and their rights to a fair resolution of their charges be respected, so too must those accused of sexual misconduct. You don’t have to believe that there are large numbers of false accusa-

tion of sexual assault—I do not—to insist that the process of investigating and adjudicating these claims be fair. In fact, feminists should be especially concerned, not just about creating enforcement proceedings, but about their fairness. If there is a widespread perception that the balance has tilted from no rights for victims to no due process for the accused, we risk a backlash. Benighted attitudes about rape and skepticism about women victims die hard.

It takes only a few celebrated false accusations of rape to turn the clock back.

I come to this issue— campus sexual assault—from all sides. This is not because I was a federal judge for 17 years, where “considering all sides” was part of the job definition. I left the bench in 2011 to teach at Harvard Law School, among other things. I am an unrepentant feminist, a longtime litigator on behalf of women’s rights, as my memoir, In Defense of

her prior sexual experiences. So little did the law trust a woman’s account of rape that some states required that a woman’s accusations be corroborated by independent evidence, a requirement to which no other crime victim was subject. The definition of the crime focused on the woman’s conduct, whether she had resisted “to the utmost;” a simple “no” did not suffice. To the extent that the man’s conduct was considered at all, the statutes required that he use force before his acts amounted to rape; drugging a woman, or having sex with one wholly incapacitated by alcohol, was not enough. And date rape was never prosecuted no matter what the circumstances.

But I was also a criminal defense lawyer. I understood more than many how unfair the criminal process could be, how critical the enforcement of a defendant’s rights were to the integrity and, even more, to the reliability of the criminal justice system. I understood

How were colleges to deal with the entire sexual continuum, from violent rape to ambiguous, alcohol-fueled casual hookups?

Women, reflects. Rape, I insisted, is a crime to which women—including me—feel uniquely vulnerable, no matter who they are, no matter what their class, their race, their status. No one should have been surprised that I supported stronger enforcement of Title IX, more training for investigators, more services for complainants, systematic assessments of the state of enforcement on college campuses, and other tough remedies.

What surprised many, however, was that I was one of 28 Harvard professors who signed a letter opposing Harvard University’s new sexual harassment and sexual assault policies, policies introduced ostensibly in response to pressures from the Department of Education.

When I was a lawyer, I understood how inadequate the law was in addressing sexual violence at all. I worked for changes to the retrograde definition of rape in statutes around the country and their disrespectful treatment of rape victims, laws that were a throwback to medieval conceptions about women. I lobbied for rape shield laws that limited the defense counsel’s cross-examination of a woman about

what it meant to have a defendant’s liberty hanging in the balance, how long terms of imprisonment could wreak havoc on the lives of defendants and their families. I appreciated the stigma of the very accusation, which persists—especially today on the Internet—even if the accused is exonerated. And I understood the racial implications of rape accusations, the complex intersection of bias, stereotyping, and sex in the prosecution of this crime.

I reconciled the pressures pushing me in opposite directions by choosing not to represent men accused of rape, while bringing civil lawsuits for women against the universities or the building owners that failed to provide them with adequate security, or against psychiatrists and psychologists who sexually abused them. I steered clear of prosecutions for rape—except for one case.

A young man, a freshman at a local college at the time the incident happened and a friend of a former roommate of mine, was referred to me.

(In my memoir, I call him “Paul.”) He’d had sex with a classmate, his very first sexual encounter;

Winter 2015 The American Prospect 33

he believed his classmate had consented. And while we can never know what went on between them, the facts—her actions, her words, the testimony of others—made her charges wholly unconvincing. A few examples: She went out of her way to invite him to her parents’ home a short time after the sex to stay for the weekend.

Nine months after their sexual encounter, she claimed to have been raped and mentioned his name following the breakup of a different relationship and her hospitalization for depression.

She accused Paul during a conversation with her father, but accused another male student while speaking to a classmate. Witnesses reported nothing out of the ordinary that evening, no evidence of drinking, no impairment, not even anxiety about what had occurred. Her account itself was improbable, internally inconsistent, and contradicted by the evidence and the testimony of her own classmates. While from decades of work on rape and my women’s rights advocacy,

sided with perpetrators and blamed victims.

While I believed that Paul had been wrongly accused, and would be exonerated, true to my practice I declined to represent him. I asked one of my law partners to step in, and then watched with horror as the prosecution unfolded.

The atmosphere surrounding date rape had changed more dramatically than I had appreciated, at least in Massachusetts. The district attorney, though he fully understood the weaknesses of the case, felt compelled to bring the charges lest he face political repercussions, for being yet another politician ignoring a woman’s pain. Even the grand jury ignored their serious doubts about the case and indicted Paul.

As I later learned from one of its members, they felt comfortable indicting Paul because I was rumored to be representing him and they assumed he would be acquitted. And the judge—with life tenure—likewise felt the pressure. The judge was critical; my partner decid-

All the functions of the disciplinary proceeding—investigation, fact-finding, prosecution, and appellate review—are in the same compliance office.

I understood that this young woman could be telling the truth—that her behavior in the days and weeks after the sex, and even her multiple accounts of what went on, could be explained by post-traumatic stress disorder, or simply embarrassment—her account seemed unlikely.

By the late 1980s, when the accusations against Paul were brought, the women’s movement had succeeded in making some of the changes for which I and others had fought. The popular media finally reported on the horror of date rape and its consequences. District attorneys and police belatedly began to prosecute the offense. The definition of rape changed in states across the country, although progress was far from uniform. Gone was the mandatory corroboration requirement and limitless attacks on a woman’s “chastity,” whatever that meant in the late 20th century. Still, we were a long way from adequately dealing with these issues. There were many jurisdictions where change came slowly or not at all, where prosecutors and even courts not so subtly

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ed to waive the jury when a program on date rape was aired on the eve of the trial. While the judge expressed his skepticism throughout the trial—every single comment of his pointed to reasonable doubt about Paul’s guilt—his verdict was “guilty.” He did not say so explicitly, but the message seemed clear. If he acquitted Paul, he would be pilloried in the press. “Judge acquits rapist,” the headlines would scream. But if he convicted Paul, no one would notice.

I took over the appeal. The brief my firm filed was what I described as a feminist brief: Just because the legal system has moved away from the view that all rape accusations are contrived does not mean it must move to the view that none are. This conviction was not just technically imperfect, I argued, it was a true injustice.

I was successful. The Massachusetts Supreme Judicial Court reversed Paul’s conviction on a procedural error, the trial court’s evidentiary rulings. The prosecutor could have retried the case, but, thankfully, chose not to do so.

After decades of feminist advocacy (the case

establishing the right to choose abortion in Massachusetts, the first introduction of Battered Woman Syndrome in a defense to a murder charge, and on and on), I was picketed by a women’s rights group when I spoke on a panel following the reversal of Paul’s case; I was a “so-called women’s rights attorney,” one sign announced, simply because I had represented a man accused of rape. When I explained why, including the fact that I believed he was innocent, a demonstrator yelled, “That is irrelevant!”

The experience was chilling; to the picketers, a wrongful conviction and imprisonment simply did not matter. Paul would have been incarcerated, but for my firm’s advocacy and the appellate court’s independent review. Still, advocacy and appellate review could only go so far: Though the charges against Paul were dropped, he was expelled from the college he had been attending; he struggled to reapply years later and finally get his degree. Worse yet, he continues to suffer from the stigma of the accusation to this day, many, many decades later.

As a federal judge, I did not have much occasion to address the issues with which I had been so concerned as a lawyer. Rape is principally a state, not federal, crime. I did deal with accusations of sexual harassment in the workplace, fully appreciating the extent to which sexual harassment obstructs equal opportunity and discriminates against women.

I wrote articles decrying the state of civil rights enforcement in the federal courts. And on the criminal side, while I did everything I could to mitigate the harsh effects of onerous drug sentencing, I had no problem sentencing sex traffickers as harshly as the law allowed.

Still, I could not forget Paul’s case. It shaped the context in which I saw the university sexual assault controversy. As in the ’80s, women mobilized against institutions that had woefully failed to deal with sexual violence and sexual harassment. While the movement had successfully raised public awareness about violence and harassment in homes, on the streets, and in workplaces, many police, prosecutors, and courts were stuck in an earlier era of victim blaming. And progress seemed to have stalled at the doors of the academy, where at least some institutions still dissuaded women from bringing complaints while they shielded alleged perpetrators.

c a r o ly n k a s t e r / a p i m a g e s

In the summer of 2014, Harvard issued

its new Sexual Harassment Policy and Procedures. They contained both new procedures for when students are accused of Title IX violations and new definitions of the covered conduct. While ostensibly in response to the Office for Civil Rights’ pressures, they were released without OCR’s approval. In some respects, they go beyond what the 2011 “Dear Colleague” letter spelled out.

OCR has clearly mandated that universities and colleges evaluate accusations of rape under a preponderance of the evidence standard. A preponderance of the evidence is in fact the lowest standard of proof that the legal system has to offer. In effect, if the evidence leans in favor of the victim to any degree, say 50.01 percent, that is sufficient. OCR’s rationale was that this was the standard for suits alleging civil rights violations, like sexual harassment.

True enough, except for the fact that civil trials at which this standard is implemented follow months if not years of discovery—where each side finds out about the other’s case, knows the evidence and the accusations, and has lawyers to ask the right questions. Not so with the new Harvard regime, which has no lawyers, no meaningful sharing of information, no hearings. It is the worst of both worlds, the lowest standard of proof, coupled with the least protective procedures.

The new standard of proof, coupled with the media pressure, effectively creates a presumption in favor of the woman complainant.

If you find against her, you will see yourself on 60 Minutes or in an OCR investigation where your funding is at risk. If you find for her, no one is likely to complain.

But Harvard’s new policy goes further than OCR’s mandated preponderance standard.

Harvard establishes a fact-finding process that takes place entirely within the four corners of a single office, the Title IX compliance office.

The Title IX officer has virtually unreviewable power from the beginning of the proceeding to its end. The officer deals directly with the complaining witness, advises her, determines if the case should be investigated, proceeds to an informal or to a formal resolution. If there is a formal investigation, the Title IX officer appoints and trains the “Investigative Team,” which consists of one investigator, who is also

an employee of the Title IX office, and a designee of the school with which the accused is affiliated. The investigative team notifies the accused of the written charges, giving him one week to respond. While he has a short deadline, there is no time limit for the complainant’s accusations, no period of time within which she must complain—what the law calls a statute of limitations.

Thereafter, the team interviews the parties and, if it deems appropriate, witnesses identified by the parties as well as any others it decides to consult. The team issues a final report on a preponderance standard and work-

hardly an impartial entity. This is, after all, the office whose job it is to see to it that Harvard’s funding is not jeopardized on account of Title IX violations, an office which has every incentive to see the complaint entirely through the eyes of the complainant.

Nothing in the new procedure requires anything like a hearing at which both sides offer testimony, size up the respective witnesses, or much less cross-examine them. Nothing in the new procedure enables accuser and accused to confront each other in any setting, whether directly (which surely may be difficult for the accuser) or at the very least through their

Saluting Survivors: President Obama embraces the campaign against campus sexual assault.

ing jointly with the Title IX officer—who was in fact involved in the investigation throughout— may provide recommendations concerning the appropriate sanctions to the individual schools.

There is an appeal, but it is to that same Title IX officer and only on narrow grounds. While the final sanction is determined by the individual school, the fact-findings on which that sanction is based—this critical administrative report—cannot be questioned.

As the letter of the 28 faculty members noted, this procedure does not remotely resemble any fair decision-making process with which any of us were familiar: All of the functions of the sexual assault disciplinary proceeding— investigation, prosecution, fact-finding, and appellate review—are in one office, we wrote, and that office is a Title IX compliance office,

representatives. Nor is there any meaningful opportunity for discovery of the facts charged and the evidence on which it is based; the respondent gets a copy of the accusations and a preliminary copy of the team’s fact findings, to which he or she can object—again within seven days, a very short time—but not all of the information gathered is necessarily included.

Everything is filtered through the investigative team, which decides the scope of the investigation, the credibility of witnesses, and whom to interview and when.

Nothing in the OCR’s 2011 “Dear Colleague” letter called for a proceeding remotely like this.

Indeed, the letter underscored the need for an “adequate, reliable and impartial investigation of complaints, including the opportunity for both parties to present witnesses and other evidence,”

Winter 2015 The American Prospect 35

and to have access to any information that would be used at the “hearing.” And while the 2014 White House “Not Alone” report mentioned that some schools had a “single, trained investigator” doing “the lion’s share of fact finding,” as in Harvard’s policy, it did not—and I would argue, should not—require such an approach.

Nor is there any meaningful role for lawyers in the Harvard policy. The parties may use a “personal adviser” who can be a lawyer, but that adviser may not speak for their advisees at the only relevant stage in this policy, the interview with the investigative team, “although they may ask to suspend the interviews briefly if they feel their advisees would benefit from a short break.”

(Indeed, this description sounds like a grand jury proceeding, which is notoriously one-­sided, controlled entirely by the prosecutor with no role for the defendant’s lawyer, within the hearing room.) Harvard makes no provision for representation of the accused, particularly for students unable to afford counsel, as the letter of the 28 professors notes. Richer students will have lawyers; poorer students will not. Nothing should prevent a university with Harvard’s resources from providing lawyers for those who cannot afford them, as, for example, Columbia University does. In contrast, the complainant has advisers and advocates from the Title IX

36 WWW.Prospect.org Winter 2015

office at the outset of the proceeding, advocates especially provided for under the policy. The respondents are left to their own resources.

As the 28 law school faculty members’ letter noted, even the definition of the misconduct is skewed. The new Harvard standards governing sexual conduct between students when both are impaired or incapacitated are “starkly one sided” and “inadequate to address the complex issues involved in these unfortunate situations involving extreme use and abuse of alcohol and drugs by our students.”

“Impairment” and “incapacitation” are not the same, under the law. Sex with an individual who is incapacitated or unconscious, who does not understand what is happening, is plainly egregious, and is rape by any modern definition. But “impairment” because of alcohol is surely a different matter. Worse yet, the policy is not equally applied: The accused’s “impairment” based on drugs or alcohol is not at all relevant; it is not an argument for his “diminished capacity” as it might be under the criminal law of some jurisdictions. Instead, the policy treats him as if he were fully sober, fully responsible for his acts. The complainant’s “impairment” is another matter. If both parties are drunk, but not unconscious, not incapacitated, and only impaired by their drinking, and they have sex,

r ya n m . k e l ly / t h e d a i ly p r o g r e s s / a p i m a g e s

Greek Tragedy: The Phi Kappa Psi fraternity house at the University of Virginia has been the scene of numerous protests.

only he is responsible under Harvard’s policy.

In fact, there is no reason to believe that the students themselves define what Professor Janet Halley of Harvard Law School calls “drunk/drunk” cases as rape at all. While 10 percent of female MIT undergraduates in a recent study identified themselves as having “been sexually assaulted,” 44 percent reported having sex while being incapacitated by drugs or alcohol. Plainly, some of the students did not regard sex under those circumstances as sexual assault. The unfairness of this policy is nowhere clearer when the misconduct allegations are also the subject of a criminal investigation. The policy requires that the respondent be advised to get a lawyer—again on his own dime—before he provides any statement, but the investigation may well proceed at the discretion of the Title IX office. And should that investigation continue—given his silence—he stands a good chance of losing the disciplinary proceeding and being subject to academic sanctions. At the same time, should a legal prosecution end with dismissed charges or an acquittal, there is no provision for a reconsideration of the academic sanctions.

Sexual assault advocates will argue that this is as it should be. It will be traumatic for the complainant to confront her accuser, even if only through her representatives rather than directly.

It will be traumatic for the complainant to be asked to repeat her story over again. A speedy resolution is critical to her recovery, they would suggest. These arguments, however, assume the outcome—that the complainant’s account is true—without giving the accused an opportunity to meaningfully test it. However flawed, the way we test narratives of misconduct—on whichever side—is by questioning the witness, by holding hearings, by sharing the evidence that has been gathered, by giving everyone access to lawyers, by assuring a neutral fact-finder. While we know from the Innocence Project that even these “tests” can produce wrongful convictions, they are at least more likely to produce reliable results than the opposite—a one-sided, administrative proceeding, with a single investigator, judge, jury, and appeals court.

Indeed, the Office for Civil Rights has agreed to investigate a claim of a wrongful accusation of sexual assault at Brandeis. A male student was found guilty of assaulting his

ex-lover, also a man. He claims that the school’s investigation was skewed, that he was not permitted to respond fully to the accusations, that his accuser had counsel while he did not, and that his counter allegations were not sufficiently credited in Brandeis’s investigation.

In effect, the complainant is arguing that a flawed, unfair process undermines his Title IX rights to equal participation in university life.

While all of the details of the Brandeis complaint are not clear at this time, to the extent that Harvard’s new procedures mirror those of Brandeis, Harvard may also be vulnerable to wrongful-accusation charges.

Some will say that all of this shows that a university has no business at all dealing with sexual misconduct accusations, which amount to a crime. The police should be called; the sanction should not simply be suspension or expulsion but prison. And in a criminal trial, there is no question about due process; the accused has the benefit of all the rights guaranteed in the Constitution. Indeed, Yale Law Professor Jed Rubenfeld argues that recourse to university remedies rather than a criminal prosecution for rape trivializes the offense, and may even enable serial predators to get away with their crimes.

Yet women are right to be skeptical about the criminal justice system—about full-blown criminal trials and appeals and the toll they take on witnesses and accusers, about the higher standard of criminal proof, beyond a reasonable doubt, which, though justified by the risk of imprisonment, can leave many claims unredressed. To be sure, there is overlap between the two—when a student accused of misconduct under Title IX is also vulnerable to a criminal prosecution—but they cannot be mutually exclusive. In any event, Title IX’s definition of sexual misconduct and sexual harassment is appropriately broader, more nuanced than even the recent statutory definitions of rape. While the colleges and universities abandoned their role as parens patriae (de facto parents) decades ago, in a sense, Title IX has invited them back in, policing sexual activities and misconduct— although, according to some commentators, not paying enough attention to the conditions that make that misconduct possible, like alcohol and drugs. Still, just because prison is not a risk hardly means that Title IX disciplinary proceedings are without serious consequences

for those accused, and surely does not justify a process as one-sided as is Harvard’s.

There are plainly other options, other ways of protecting the rights of both students who bring complaints and of those they accuse. Oberlin’s policy offers an instructive counter-example.

This is all the more interesting, since Oberlin has a reputation as a left-wing and politically correct college. Indeed, the college was widely ridiculed last year when a professor proposed a conduct code requiring teachers to give “trigger warnings” when a class included material that might upset some students. (Oberlin quickly shelved that proposal.) Yet Oberlin’s procedure on sexual misconduct may be a model for other schools.

Oberlin has devised a symmetrical due process proceeding. In language suggested by the students, the parties to the case are termed “reporting party” and “responding party” rather than victim and perpetrator. After a preliminary assessment, designed both to provide

Feminists should be concerned about fair

process, even in private institutions where the law does not require it, because we should be concerned about reliable findings of responsibility. We put our decades-long efforts to stop sexual violence at risk when men come forward and credibly claim they were wrongly accused.

We put our work at risk when the media can dredge up the shibboleths about false accusations of rape, a collective “We told you so” tapping into old attitudes. The recent feeding frenzy around Rolling Stone’s account of a gang rape at the University of Virginia campus shows just how much damage can be done by the claim that a rape report was flawed—damage to the women making the accusations, to the men who are accused, and to the cause of combating sexual violence.

There is no question that we have to confront sexual misconduct on campus and elsewhere as aggressively and comprehensively as we can.

Feminists should be concerned about fair process to establish reliable findings of responsibility, and to prevent media claims of false accusations of rape. support to the complainant and to determine whether there is reasonable cause to move to a fact-finding panel, a disciplinary proceeding may be called. Both parties may present information, call witnesses, and, in lieu of a crossexamination, may forward questions that they want the panel to ask the other party. The three panelists are trained administrators, none of whom is part of the Title IX office. “That would be a conflict of interest,” says Meredith Raimondo, Oberlin’s Title IX director. In the event that punishment is meted out, the responding party has the right of appeal to the dean of students, who is also not affiliated with the Title IX office. If the complainant feels the outcome is unfair, she may also appeal. This policy was created by a task force that included students, faculty, and administrators meeting over the course of 18 months. “We feel there can be great harm when the process is seen as biased against reporting parties,” says Raimondo, “and there can be great harm when it is perceived to be biased against responding parties.”

There is no question that we have to lift the protection offered the star athlete, confront the administrators more concerned with the man’s future than with a woman’s trauma, challenge the atmosphere of impunity at fraternity houses and social clubs. And we can do so without turning every disciplinary proceeding into a full-blown trial, without imposing the maximum due process protections, on the one hand, or an administrative Star Chamber, on the other. It isn’t necessary to jettison every modicum of a fair process to redress decadeslong inattention to these issues. It never is. As I argued in Paul’s case, we should not substitute a regime in which women are treated without dignity for one in which those they are accusing are similarly demeaned. Indeed, feminists should be concerned about fair process, not just because it makes fact-findings more reliable and more credible, but for its own sake.

Nancy Gertner is a professor at Harvard Law School and a retired federal judge.

Winter 2015 The American Prospect 37

North Carolina’s protest movement has galvanized the state’s progressives, but couldn’t stop 2014’s Republican tide.

Its leaders say they’re only just beginning.

Can Moral Mondays Produce

Victorious Tuesdays?

By Barry Yeo m a n Phot os b y J e n n y Wa r b u r g

38 WWW.Prospect.org Winter 2015

D

erick Smith arrived at the kickoff site for North Carolina’s 2014 Moral March on a raw February morning. He zipped his brown thermal hoodie up to the neck and soaked in the view from Raleigh’s Shaw University. It was a human kaleidoscope: Shriners in fezzes; physicians in white smocks; fast-food workers carrying signs saying, “America can’t survive on $7.25.” Lesbians and gay men with rainbow flags stood alongside alumnae sorority sisters. Scanning the crowd, Smith saw a checkerboard of black, white, and brown faces. They extended, it seemed, to the horizon.

The Reverend William Barber II addresses 2014’s first Moral Monday rally outside the North Carolina state legislature.

The marchers, estimated in the tens of thousands, had gathered to protest the recent demise of North Carolina’s moderate political tradition. The previous year, the state’s Republican legislative majority had slashed school budgets and jobless benefits, turned away federal Medicaid dollars, and passed harsh restrictions on voting. New laws made it easier to carry a gun and harder to get an abortion, and shifted the state’s tax burden toward the lowest-paid workers. The dramatic policy changes spawned a series of protests called Moral Mondays, at which 945 people were arrested in 2013.

Smith, a political scientist at North Carolina A&T State University in Greensboro, was well-versed in his state’s history, including its first great experiment with interracial organizing: the Fusion movement of the 1890s, when Populists and Republicans briefly took over North Carolina’s government.

The Fusionists boosted education funding, capped interest rates, and made it easier for African Americans and poor whites to vote.

But the Fusion government didn’t survive the end of the century: It was violently crushed by white supremacists in 1898. For Smith, Moral Mondays represented an even broader movement—with greater potential for lasting change—than the Fusionists.

The march kicked off. Smith and his friends angled for the front so they could hear the speakers, particularly the Reverend William Barber II, president of the state’s NAACP. Barber, who is 51, founded the Moral Monday movement and lent it a booming rhetorical gravitas. “Every moment in history has its own prophet,” said the Reverend Nancy Petty, a Baptist minister,

introducing Barber that day. “And North Carolina has raised a prophet in these times.”

A giant of a man wearing a red and gold stole, Barber invoked the Bible as the standard for the way North Carolina’s elected officials should—but often don’t—behave: “Micah 6:8 says, ‘What doth the Lord require but to do justice, love mercy, and walk only before God?’ That’s a high standard. Isaiah 10 says, ‘Woe unto those who legislate evil and write oppressive decrees and rob the poor of their rights.’ That’s a high standard.” This was familiar scripture for Smith, who grew up in Baptist churches during the 1960s and ’70s. But “until I heard it in the context of social justice,” he says, “it didn’t really ring true.”

Barber, speaking in a deep baritone, telegraphed the movement’s plans for 2014—“a fresh year of grassroots empowerment, voter education, litigation, and non-violent direct action.” The stakes were high: Every legislative seat was up for grabs in November, and there was no telling how much more damage a GOP majority might do, particularly with Republican Pat McCrory in the Governor’s Mansion. Democratic U.S. Senator Kay Hagan also faced re-election. Barber was suggesting that meaningful change would come not through partisan politics, but rather from a multi-issue movement, fueled by faith, that worked simultaneously in the legislature, the courtrooms, and the streets.

The electoral wave that delivered con-

trol of the U.S. Senate to the Republicans in November took some North Carolinians by surprise. Long lines at early-voting sites and urban precincts triggered hopes that Kay

Winter 2015 The American Prospect 39

Hagan might hold onto her seat, even after a campaign that had alienated the Democratic Party’s base. Those hopes were stoked by the worldwide attention given to the Moral Monday protests, the targets of which included Hagan’s Republican opponent, state House Speaker Thom Tillis.

“The arguments made by Moral Monday [have] coursed through the veins of North Carolina’s body politic for well over a year now,” the British paper The Guardian had opined in October. “And it is giving the Republicans the shivers.” The shivers turned out to be unwarranted, at least in the short term: Tillis edged out Hagan by just under 1.6 percentage points, and the GOP maintained the lock on state government that it had won in the 2010 legislative and 2012 gubernatorial races, though the Democrats did win back some legislative seats.

The NAACP ’s Barber vowed to press on, insisting he had lost no momentum. “Election

and fraternal groups like Masonic Lodges.

“What’s really exciting about the Moral Monday movement,” says political scientist Patrick Barrett, administrative director of the Havens Center for the Study of Social Justice at the University of Wisconsin-Madison, is that it’s “creating a movement that gets people out of their silos, where they’re isolated and weak. People are beginning to understand [that] my liberation is tied up in your liberation; I can’t get anywhere unless you do. That’s an incredible glue.”

For all its breadth, Moral Monday has a distinctly religious, and particularly Christian, feel to it. To be sure, Barber places Jewish and Muslim leaders front-and-center at rallies and explicitly welcomes non-believers. But he is also the main act at those assemblies, where he leads hymns and preaches in the rousing cadences of Southern black Protestantism. “If we do our part, God will show up,” he said at an

day leaders say their words are deliberately intended to reclaim the religious high ground.

The biblical words may help blunt the fact that the movement’s demands are uncompromising: They include living wages, universal health care, and a moratorium on prison construction. In North Carolina, where Democratic leaders hew to a moderate, pro-business consensus, such positions seldom receive such a public airing.

The combination of radical demands and traditional language attracts people who had never considered getting arrested for a cause.

“It felt like to fit in with society, you had to keep your activist tendencies down a little,” says Derick Smith. His students had heard him lecture on the value of dissent, but “I was preaching more than I was practicing.” In 2013, three of Smith’s students invited him to join them at a demonstration in Raleigh, where he tested his comfort zone and refused to leave

Moral Monday’s biblical words may help blunt the fact that its demands—for living wages, universal health care, and a moratorium on prison construction—are uncompromising. time and movement time are not always parallel,” he says. “Part of the trouble with some progressives is they make a vote outcome the measurement of the movement. If you judge that by history, the abolition movement would have never continued because they didn’t win at first. The civil rights movement wouldn’t have continued.” It will take years, Barber says, to build a movement that can outmuscle North Carolina’s conservatives, with their ties to wellfunded groups like the Koch brothers’ Americans for Prosperity.

The Moral Monday coalition may well provide a blueprint for moving beyond the Republican rout. It’s still young, without the organizational infrastructure that will eventually be needed to transform the political landscape in a purple state with rapidly shifting demographics. What it has done, brilliantly, is revive the politics of moral witness while reaching beyond its NAACP base and garnering support from labor, immigrant, environmental, LGBT, and women’s organizations, along with churches

40 WWW.Prospect.org Winter 2015

August voter-mobilization rally. “When Moses stretched out his rod, God showed up. The wind came down. The Red Sea opened. Pharaoh was brought down. When they marched around Jericho, God showed up. The walls fell down.” As Barber turned from Old to New Testament, he grew more spirited: “When a boy gave the Lord a few fish and some cornbread, then God showed up, and a buffet came down.

When Jesus went to the cross, God showed up, and a resurrection happened. When Thurgood Marshall went to the Supreme Court, God showed up. Segregation was brought down.

When Rosa Parks sat down, God showed up.

Jim Crow had to step down.”

Odd as this might sound in more secular quarters, it still reverberates among black and progressive white Southerners, particularly those who remember the civil rights movement. “The Left has a pretty impoverished language for talking about politics,” says Kenneth Andrews, a sociologist at the University of North Carolina at Chapel Hill. Moral Mon-

the legislature until police escorted him away.

“It’s liberating,” he says, “when you no longer have to hide in a sea of moderation.”

Whether the rhetoric of faith can draw in many working-class whites, particularly evangelicals, is at best an open question. North Carolina is polarized around social issues, and the movement’s support of LGBT and abortion rights will particularly be a deal breaker for many. But for those who support at least some of the movement’s goals, the power of Barber’s soaring speeches can be felt across racial lines.

“Language has no color,” says Crystal Price, a 28-year-old fast-food worker from Greensboro whose ancestry is white and Native American.

Price had never paid attention to current events before 2014. “I didn’t really watch the news because it was always somebody dying,” she says. But one night last May she too found herself in Raleigh—singing, praying, and occupying the office of House Speaker Tillis during one of the most dramatic confrontations of 2014.

Price had too much on her mind to think

about politics until last year. She had two small children. She was battling cervical cancer. She was trying to muscle through her $7.25-anhour shifts at Wendy’s. When she met an organizer with Raise Up, a group advocating higher wages and a union for fast-food workers, Price agreed to participate in a one-day nationwide strike. It felt good to join others in protesting working conditions. “I could take my frustration and put it toward a positive thing,” she says.

Raise Up is part of the Moral Monday coalition—a noteworthy alliance in a state with a weak labor movement. In May, Price and some others visited the legislature in the hopes of meeting with Tillis, the Speaker and Republican Senate nominee. She wanted to press him about the state’s refusal to expand Medicaid under the Affordable Care Act, despite the fact that almost all the money would come from the federal government.

Tillis was about to convene the House when Price and 14 others, including clergy and fastfood employees, showed up at his office. They announced their intentions and waited for his return. When he didn’t come back, they told their stories to the Speaker’s assistant. “I don’t have Medicaid,” Price said. “Obamacare—I can’t afford it.” Her chin quivered as she wept.

“And I’m only getting sicker.”

“This woman should not be suffering … because of the lack of Medicaid expansion,” said Stella Adams, a longtime housing advocate active in the NAACP. “We pay federal taxes.

The money is there.” Price bit her lower lip as she listened. “But we’re going to deny her access to health care, access to life? That’s not right.”

It became evident that the night might end in arrests. Price thought about her two children and decided to stay. “If it means a better future for them, then Lord knows, I’d do anything,” she says.

Civil disobedience has been the most headline-grabbing part of the Moral Monday movement. 2014’s protests were more nimble, less predictable, than 2013’s—a response to GOP attempts to foil activists by canceling Monday sessions and changing building regulations.

(A judge halted some of the rule changes.) In Tillis’s office, police implored protesters to quit on their own. As the sky outside grew dark, though, Price and her colleagues settled in.

Crystal Price (right, with sign and yellow card) in the Speaker’s office: “I don’t have Medicaid. And I’m only getting sicker.”

They sang “We Shall Not Be Moved.” They ate pizza. When the mood grew tense, some clowned around. Price held onto her co-worker Amber Matthews’s hand.

At 1:45 a.m., police announced the evictions would begin. Matthews left voluntarily, saying she needed to bring her child to school after daybreak. An officer gave Price the same option. “Go ahead and arrest me,” she remembers saying.

Only 59 activists were arrested in 2014, compared to 945 the year before. In June, two months before the legislature adjourned, the NAACP brought those protests to a close. Summer meant a shift to two new phases: a highstakes court hearing and a statewide voter registration push.

Just before U.S. District Court Judge

Thomas Schroeder opened his July hearing in North Carolina NAACP v. McCrory, Barber brief ly commandeered the Winston-Salem courtroom. Attorneys drinking coffee watched silently as Barber, wearing a clerical collar, gathered several of his organization’s co-plaintiffs into a circle. “We pray, O God, for judgment

to run down like waters and righteousness like a mighty stream,” he said. The co-plaintiffs, four older African American women, held hands and replied with reverent amens.

The four-day hearing would determine the temporary fate of one of the legislature’s most contentious acts: its rollback of more than a decade’s worth of electoral reforms that had helped boost voter turnout, particularly among minorities.

In its June 2013 decision in Shelby County v. Holder, the U.S. Supreme Court cleared the way for jurisdictions with histories of racial discrimination to change election laws without federal approval. Republican lawmakers took quick advantage of that latitude: They shortened North Carolina’s early-voting period, abolished same-day registration and voting, and eliminated the right of 16- and 17-yearolds to “preregister” at their schools. Voters could no longer vote straight-ticket with a single inking. Those who showed up at the wrong precincts, and lacked the transportation to correct the mistake, would have their entire ballots disqualified. Supporters argued the new voter restrictions would provide uni-

Winter 2015 The American Prospect 41

Reverend Barber: “I was not going to be an NAACP president who sat around and waited till the Klan burned a cross.”

formity and prevent fraud, even though North Carolina has experienced almost no reported voter impersonation.

The election law overhaul hit a raw nerve within the Moral Monday coalition. Some of the most brutal violence against civil rights activists in the 1960s occurred during efforts to expand the vote. “This is a blood fight,” Barber told supporters. “How dare they trample on the graves of the martyrs?”

The North Carolina NAACP sued to halt the new law, saying it would deny minority voters “equal and meaningful access to the political process.” The state’s League of Women Voters and the U.S. Justice Department filed similar suits. A trial on all three cases is scheduled for next summer. But Judge Schroeder had agreed to an earlier hearing on whether to block the law for the 2014 general election.

Every morning, the co-plaintiffs showed up at the courtroom in sharp pantsuits and matching hats. Two of them testified. Rosanell Eaton, 93, invoked North Carolina’s legacy of discrimination when she recounted riding a mule wagon to the courthouse in the 1940s, where she was not allowed to register until she

42 WWW.Prospect.org Winter 2015

recited the preamble to the U.S. Constitution by heart. (She said she succeeded on the first try.) State NAACP vice president Carolyn Coleman, 72, talked about how early voting enables African American churches to transport “souls to the polls” after Sunday services. It wasn’t just the faithful who voted on weekends, Coleman added: “There are people who work two jobs, sometimes three jobs, and so this gives them the opportunity to vote at a time that’s more accessible to them.”

Judge Schroeder, a George W. Bush appointee, sat quietly through the witnesses, never betraying his reaction. After four intense days, including testimony from two political scientists, he sent everyone home. He promised to “try to make a decision sooner rather than later.”

The work chugged along through the

summer, in public and in private. Thirty-four young adults fanned out across the state for a “Moral Freedom Summer” of registering voters. Rallies drew thousands in Asheville and hundreds in Durham. A district attorney agreed to drop the charges against most of the 2013 protesters. A Republican mayor,

with Barber’s benediction, walked from North Carolina to Washington, D.C., to protest the closure of a rural hospital.

Barber seemed to be everywhere. He won standing ovations from mail carriers in Chicago and steelworkers in Las Vegas. He appeared on HBO’s Real Time with Bill Maher, where he recounted Crystal Price’s battle with cervical cancer. At his North Carolina appearances, Barber was greeted with an almost messianic veneration. He insisted the coalition had “multiple prophetic persons” besides himself, but it’s hard to imagine Moral Mondays without Barber at the mike, directing protesters to touch one another and say, “Don’t get tired now.”

Barber was born two days after the 1963 March on Washington. He believes the timing of his birth was “not happenstance.” That year, Alabama Governor George Wallace declared “Segregation forever,” and assassins killed civil rights leader Medgar Evers and President John F. Kennedy. Barber wonders how much of that news he absorbed both through the womb and in his crib. He was 17 days old when four African American girls died in the bombing of Birmingham’s Sixteenth Street Baptist Church.

“How did I hear my mother scream when she heard about those children?” he asks.

When Barber was four, his parents moved the family from Indiana to North Carolina to help desegregate a public school. He recalls, as a boy, traveling with his minister father to investigate the killings of black men. He attended Duke University for his graduate divinity degree, and there he heard South Africa’s Archbishop Desmond Tutu describe a God who works in collaboration with humans to prevail over suffering. “God says: You and you and you and you—you are my partners,” Tutu preached. “Will you help me so I can transfigure the ugliness of this world?”

“And I thought,” Barber says, “he was pointing at me.”

Barber’s divinity studies helped launch a career that combined ministry and activism. That, in turn, led to his 2005 election as state NAACP head. “I was not going to be the president that just sat around and waited till the Klan burned a cross,” he says. He set out to build the coalition that would eventually undergird Moral Mondays, and in 2007 it held the first annual march on Raleigh. At

the time, Democrats controlled the legislature and governor’s office, and it was possible to get progressive legislation passed. “The Spirit knew we were going to need the Moral [Monday] movement,” he says. “So the Spirit gave us seven years to perfect our movement, seven years to do the deep organizing and relationship building.”

But that organizing remains challenging, especially outside North Carolina’s urban areas.

Gates County, a soybean- and cottongrowing community of 11,650 people and at least three alligators, butts up against the Virginia border at the edge of the Great Dismal Swamp. There, on a Sunday in August, Martell Jordan nervously rose from his pew inside Lebanon Grove Missionary Baptist Church.

“Good afternoon, church family and friends,” said the 25-year-old college senior, who had been raised in this county and this church. He

would take commitments from church and civic groups. But the most symbolically potent players would be the 34 young organizers.

Jordan, who studies computer information systems at St. Augustine’s University in Raleigh, wasn’t particularly savvy about politics when his aunt encouraged him to apply for the job. He was hired nonetheless, and went through a weeklong civil rights crash course and organizer training that taught him rudimentary skills but didn’t turn him into a polished activist. Jordan learned about the new voting restrictions and about the struggles of other minority groups. Before his training, “I might not have ever thought about LGBT rights.

But seeing how [discrimination] hurts people, how could we not support it?”

Gates County was a strategic location for the NAACP: Its state Senate seat, historically Democratic, went to a Republican by 21 votes in 2012. But engaging people, Jordan learned,

the church service, he set up a table at a blackowned barbershop, visited a pharmacy, and drove along the county’s back roads, knocking on doors with a clipboard in hand. Many of those doors went unanswered. A few people registered. One barbershop patron updated his address, explaining the importance of voting at a time when Christians are persecuted and lesbians are allowed to kiss in public.

On the deck of a modular home—in an area where Jordan said “you see more Confederatetype stuff”—a white couple politely challenged him about the NAACP’s opposition to the state’s new voter-ID rule, which takes effect in 2016 as part of the larger elections overhaul.

“Used to be you knew all your neighbors,” the woman said, explaining her support for the ID law. “Now people walk in and you say, ‘Where in the world did they come from? The Middle East? Or Canada?’”

Jordan explained that some people’s IDs

In grad school at Duke, Barber heard Archbishop Desmond Tutu preach: “God says,‘You and you and you—you are my partners.’”

“And I thought,” Barber says,“he was pointing at me.” had a wisp of a beard and wore a jeweled stud in his left ear. “Back in 1964, young men and women went down into Mississippi and other Southern states and they organized and registered to vote … Some of those organizers never even made it back home.” To honor the 50th anniversary of Freedom Summer, North Carolina’s NAACP had hired young adults like Jordan to sign up voters. He had brought registration forms, he said, and would be available after the service. “One thing I want y’all to remember,” he said to a flurry of amens: “Too many people died just for us to be able to have the right to vote.”

Afterward, Jordan sat at a table and waited.

His elders socialized in the fellowship hall. No one, though, registered to vote.

It had been that kind of summer.

In June, after the legislative protests ended, Barber announced that the coming months would be spent registering and motivating voters, even as lawmakers tried to dampen turnout. The NA ACP announced a goal of 50,000 new registrations that summer, which

could be frustrating. Residents here watch the news on Virginia television stations. They cross the state line to commute to shipyard jobs and to buy groceries. North Carolina politics barely get noticed at all. Jordan figured that he could make a persuasive economic argument in a county where the average per-capita income for African Americans is $15,000. “I tell them about living wages: You need to get registered because you got people trying to fight for your right to live and prosper. People are like, that ain’t ever gonna happen.”

This resistance is not unusual in rural North Carolina. “Where you have greater resources, you tend to have a different mindset about voting,” says Yara Allen, an NAACP field secretary. “In a place like [Gates County], where there are a lot of older people—God bless ’em, we can’t do without them. But maybe they’ve seen that, through the years, things have not been in their favor. So they feel a little hopeless about registering and voting.”

Still, Jordan persisted. In the days before

don’t match their voter registrations—transgender people, for example. This argument was lost on her. “I don’t mean to disagree with you,” she said, “but I don’t see any problem with requiring an ID.” By then, Jordan’s job was coming to an end.

He says he registered about 30 voters during his summer stint. Statewide, Barber says, Moral Freedom Summer organizers signed up about 5,000 new voters. The NAACP says it does not have summer registration numbers for its coalition partners, but State Board of Election statistics hint that the campaign fell short of its 50,000 goal. The movement’s ground-organizing capacities, it seemed, had yet to catch up with its ability to inspire.

Fall approached. Jordan and his peers returned to college. In Winston-Salem, Judge Schroeder turned down the NAACP ’s request for a preliminary injunction, clearing the way for the state to implement its voting-law overhaul. After a brief reversal by the 4th Circuit

Winter 2015 The American Prospect 43

Court of Appeals, Schroeder’s ruling was reaffirmed by the U.S. Supreme Court.

North Carolina’s $100 million U.S. Senate race was now in full swing, though it seemed to exist in a political universe far from that of Moral Monday. Hagan, the Democratic incumbent, touted her moderation—“not too far left, not too far right,” she said in one commercial.

Challenger Tillis, in turn, linked her to President Barack Obama’s policies on health care and immigration.

Moral Monday was drawing the support of the state’s white progressives—in such unlikely spots as the Blue Ridge mountains, where Wanda Woodby had grown tired of North Carolina’s tradition of ideological tongue-biting. On a Monday evening in September, Woodby kicked off a rally in the town square of picturesque Burnsville. “It seems that every time I turn around, you hear, ‘Christian values,’” said the former assistant clerk of court. She mentioned a

involved in the party. She joined committees, attended conventions, and campaigned for candidates. But Woodby grew disillusioned

by Democrats’ timidity and found herself approaching political work with less enthusiasm. “By 2000, I couldn’t bring myself to go to all the meetings and listen to the same thing,” she says. “It was over.”

Around that time, Woodby, a onetime agnostic, rediscovered God and came to see Christianity as another way to address poverty and human suffering. “I thought other people needed to hear the Good News,” she says, so she trained to become a Presbyterian minister and received her ordination in 2004.

At the rural churches where Woodby preached, she noticed how the Great Recession changed parishioners’ attitudes. “When the economy tanked, they saw their children go down the sinkhole,” even after following the rules. These churchgoers, many of whom

Building the branch, though, has been slow.

Whites are reluctant to join what they consider a black organization. African Americans are skeptical of a branch dominated by whites.

Currently the branch has about 160 members.

Woodby says she’s patient; she knows it could take years to inf luence elections or policy.

“We’re in this for the long haul,” she says.

The “long haul” has become a recurring motif among North Carolina activists, including Barber. But as the November elections approached, the NAACP and its allies nonetheless went into overdrive. They sponsored marches to earlyvoting sites from African American neighborhoods and campuses. They held rallies in cities and small towns. Although they expressed disappointment with Senator Hagan’s tepid campaign, they nonetheless hoped for a victory.

That victory didn’t materialize. House

Speaker Tillis, the Republican candidate, won

The direction of Hagan’s campaign seemed to exist in a political universe far from that of Moral Monday. She never kindled any excitement within North Carolina’s Democratic base. stalled attempt by GOP lawmakers to authorize the establishment of a state religion. “My first reaction, when I stopped laughing, was: Do you really want Christianity to be our state religion?

Because you know, if it is, that means you’re going to have to go back to Raleigh and repeal all the legislation you’ve done for the last two years.”

“That’s right!” someone shouted as roughly 175 neighbors whooped and applauded.

Woodby heads the NAACP branch in the mountain counties of Yancey and Mitchell, which over the decades have seen textile mills close and tobacco acreage disappear. The region has historically been isolated—“I was in high school when telephone lines went up the hollers,” says the 64-year-old. Both counties are less than 1 percent African American.

Mitchell is solidly Republican. Democrats have a slight registration edge in Yancey, though the county leans Republican in presidential races.

Woodby’s parents were among those Yancey Democrats. They believed in civil rights and public spending, and as an adult she became

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identified as conservative, seemed to her like natural political allies.

But Woodby didn’t know how to fuse religion and organizing until she watched the NAACP’s Barber on the Internet. “He was saying what I believed down to my DNA ,” she recalls. The notion of a faith-based movement that cares about the poor appealed to her. “You have to take that message out on the public square, because even Jesus did that when he went to the temple.”

Woodby had seen progressive groups form and disband, and wanted to hitch herself to an organization with staying power. She and some others decided to form a local NAACP branch, even though there are only 200 African Americans in the two counties.

Their first rally, in August 2013, seemed to tap into an unspoken frustration with the legislature’s new direction. It drew hundreds of people, many of them non-activists. “This is a small town, so everybody knows everybody else,” she says. “And they were willing to be publicly seen, knowing it was an NAACP event.”

48.8 percent of the vote, enough to unseat Hagan, who won 47.3 percent. In state legislative races, Republicans suffered a net loss of two seats, not enough to threaten their solid majority. (They held onto the Senate seat encompassing Gates County, where Martell Jordan had registered voters.) Activists did take comfort in knocking off several Republicans in Moral Monday strongholds, including state Representative Timothy Moffitt of Asheville, a favorite to succeed Tillis as Speaker.

In retrospect, that the Republicans fared well here, at a time when the entire country was tilting right, should have come as no surprise. GOP voters generally out-flock Democrats during off years, though a comparison of the 2014 and 2010 North Carolina elections shows a slight uptick in African American and Democratic turnout relative to other groups.

The state’s Democratic Party has been in disarray for years. And the voting-law overhaul seems to have had its intended effect: Democracy North Carolina, an electoral watchdog

group with ties to the Moral Monday movement, analyzed 500 poll-monitor reports and concluded that the restrictions—as well as poor preparation for the new law—likely kept between 30,000 and 50,000 people from voting. Tillis’s margin of victory was 45,600 votes.

Then again, the direction of the Hagan campaign was light-years from that of Moral Monday. The senator’s strategy was to woo swing voters by distancing herself from President Obama. She never kindled any excitement within the Democratic base, as Woodby noticed while canvassing in the mountains. “When we were talking to people, the thing that kept coming back was, ‘Why should we support her? She doesn’t believe in these issues either.’”

Barber doesn’t see November’s outcome as a permanent setback. “Squeaking out a 1.6-percent victory when you had all the voter suppression, total control of state government, and millions and millions of money—if the best you can do is less than 50 percent, that does not discourage our movement,” he says. “It actually says to us, if we keep building, we’re going to turn the tide in a major way.”

Barber has demographics on his side: While the African American and Latino share of the electorate has been growing, the white working class is shrinking. According to census data, whites who didn’t graduate college—the group that supported Tillis the most—made up 40 percent of North Carolina’s adult population (25 and older) in 2013, compared to 50 percent in 2000. Tillis’s victory was far narrower than the GOP Senate victories in Georgia, Arkansas, Kentucky, and Louisiana.

For now, Moral Monday’s impact is chiefly felt outside electoral politics. There’s evidence that its politics of moral witness have helped produce small policy shifts: Teachers won a pay increase last year, and some Republicans, including Governor McCrory, are retreating from their hard line against Medicaid expansion.

“Social movements, paradoxically—their greatest influence over candidates and elected officials is when they care least about them,” says Patrick Barrett of the University of Wisconsin. The New Deal, the Great Society, and the creation of Nixon-era regulatory bodies like the Environmental Protection Agency, he says, all ref lected “social disruption” by grassroots movements rather than the stra-

Martell Jordan in Raleigh: Getting people to register to vote in the midterm election could be frustrating.

tegic compromises of electoral campaigns.

North Carolina has not seen this level of disruption—at least not yet. “The Moral Monday protest is still in the tradition of the polite protest, where the prospect of things getting out of control is not really there,” says sociologist Andrews. A charismatic leader like Barber can inspire, as Martin Luther King Jr. did, by convening large gatherings in symbolically important places. But one of the greatest jolts of the civil rights era came from the student sit-ins that started in Greensboro and swept through the South in 1960, channeling youthful energy into something electrifying. The challenge for today’s movement will be finding 21st-century strategies that work as well as the lunch-counter takeovers did a half-century ago.

The movement will also need to scale up. “If there’s going to be a real turn in North Carolina politics, and if you’re going to realize the vision of this Moral Monday movement, there clearly needs to be an investment in the infrastructure that can channel that energy into real power on the ground,” says Chris Kromm, a 2013 arrestee and executive director of the Institute for Southern Studies, a nonprofit that supports

grassroots organizing. “That takes organizers.

It takes sophisticated plans about targeting people,” which seemed lacking during Moral Freedom Summer.

If a more disruptive, and better funded, movement can find its legs in North Carolina, it will derive strength from the unusual degree to which activists here have embraced one another’s causes. “When I first started, I was so simpleminded,” says Crystal Price, the fast-food worker. “I started off with labor rights.

Going to Moral Mondays and listening to other people, they’d stand up for voting rights. OK, I’m a voter. Then the teachers, they stood up. Well, I have children. They go to school. Then the health-care workers stood up for their rights.

Well, my kids go to doctors. I need health care.

I’m going to stand up for you guys too.”

“Everything involves me,” she says. “I live in America. I’m a human being. Everything is my personal issue.”

Barry Yeoman is a writer and radio documentarian based in Durham, North Carolina. He contributes to onEarth, The Saturday Evening Post, Audubon, and Parade.

Winter 2015 The American Prospect 45

What To Do When A parade around the State Capitol in Madison, Wisconsin, celebrating a federal judge’s decision to strike down the state’s same-sex marriage ban

46 WWW.Prospect.org Winter 2015

‘I Do’ Is Done LGBT activists and funders are debating the movement’s post-marriage priorities.

B y Peter Mont gomery

Winter 2015 The American Prospect 47

I

n the year and a half since the Supreme Court struck down a key section of the federal Defense of Marriage Act, federal and state courts have been overturning laws against marriage by same-sex couples at a dizzying pace, sometimes more than once in a single day. Giddy activists have joked about the challenge of keeping color-coded marriage equality maps up-to-date. News stories about gay couples marrying in places like Oklahoma, Utah, South Carolina, and Idaho are now so common they hardly seem surprising.

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The Philosophical and Political Divide

What are those community needs? In October, longtime LGBT strategist Urvashi Vaid received a Spirit of Justice award from GLAD. Vaid ran through a set of issues that are barriers to full-lived equality for many LGBT people, including poverty, racism, misogyny, violence, immigration policies, policing, and detention. While organizations have been working on all those fronts, she said, the LGBT movement lacks sufficient focus on many of these issues, despite the fact that women make up half the LGBT community and people of color a third of it. “The question that confronts the LGBT movement today,” she said, “is whether we are willing to retool our movement to push for the redistribution of economic resources and political power that is needed to change the lived experience of LGBT people in all parts of our very diverse communities.”

Just a couple of weeks later, after Republican victories in the midterm elections, Gregory Angelo, executive director of the Log Cabin Republicans, posed a very different question.

“This is really a time of choosing for LGBT advocates on the left,” Angelo told the Washington Blade’s Chris Johnson.

j o h n h a r t / w i s c o n s i n s tat e j o u r n a l / a p i m a g e s

With the widely shared expectation that the Supreme Court will soon return to the issue of marriage and may strike down marriage bans nationwide, LGBT leaders find themselves asking a question that would have seemed improbable just a few years ago: What should be the priorities of the LGBT movement once legal marriage equality has been achieved?

The most likely candidate for the kind of coordinated, national- and state-level strategy that fueled the marriage equality campaign is a push to get all LGBT Americans covered by laws barring discrimination against them in employment, housing, health care, and public accommodations. Brutal persecution of LGBT people around the globe, often with the collusion or encouragement of American anti-gay activists, is another growing concern.

Those issues are likely to draw support from across the ideological spectrum of LGBT organizations.

Some movement strategists also want to address the effects of economic inequality and institutionalized prejudice on the lives of LGBT people. Efforts to move those issues to the center of LGBT activism, however, may run up against another current: the well-funded effort to make LGBT equality more palatable to Republicans and other conservatives.

Of course, while marriage equality is a reality in 35 states and Washington, D.C., it is not yet a done deal nationally. Lawyers are still staying up all night writing and filing briefs. Equality advocates are still sparring rhetorically, legally, and politically with anti–marriageequality religious and political leaders who are fighting to the bitter end. And even if the Supreme Court overturns remaining bans and all 50 states turn blue on marriage equality maps, Navajo equality activist Alray Nelson wants it to be known that people living in more than 500 tribal nations will still lack marriage rights.

Still, with those cautions noted, the end does seem to be in sight, and that has LGBT funders and leaders looking ahead, considering what lessons can be drawn from the marriage equality campaign, how to keep LGBT activists and supporters engaged in the movement, and where to direct the energies and resources that have poured into campaigns for marriage equality. “I believe it’s not about

pivoting from marriage,” says Freedom to Marry’s Evan Wolfson. “It’s about harnessing the marriage work and success to getting success on other fronts.”

One important accomplishment of the national conversation about marriage is that it has had a humanizing impact on how many Americans view LGBT people, couples, and families.

The marriage movement has been “a powerful vehicle to express the shared humanity of LGBT people,” says Janson Wu, executive director of Gay & Lesbian Advocates & Defenders (GLAD), a Boston-based legal group that has played a key role in both the marriage equality campaign and the broader LGBT equality movement. The resulting advances in overcoming prejudice should support progress on other issues facing LGBT people. “Marriage vocabulary is powerful, connective vocabulary that helps transform people’s understanding,” says Wolfson.

Kevin Jennings, executive director of the Arcus Foundation, agrees that marriage equality campaigns encouraged a humanizing dialogue about LGBT people. The downside, he says, is that marriage has so dominated public conversation that people who aren’t intimately familiar with the LGBT community may think it is the beginning, middle, and end of what the community needs. In reality, he says, “marriage equality will affect a fraction of the LGBT community, and a fraction of a fraction of that movement’s needs.”

“Do you support the left agenda, or do you actually support equal rights for Americans? Those who fall in the latter category are going to be the ones who are going to be com[ing] to the table with Republicans and find[ing] solutions, ways to pass things, like employment protections for LGBT individuals, that also reach consensus among Republicans.”

The philosophical and political divide reflected in these two approaches, sometimes framed as assimilation versus liberation, is as old as the LGBT movement itself. “The tension between the equality frame and the liberation frame has been present since the moment of Stonewall, if not before,” says Andrew Lane, executive director of the Johnson Family Foundation and advisory board chair of the Movement Advancement Project. In recent years, as the movement has focused on gaining access to institutions such as marriage and the military, some progressive advocates have been frustrated about the lack of attention given to less conventional goals.

Doubts about the marriage equality campaign have been somewhat muted by its successes. But some advocates fear that rhetoric used in the marriage campaign could make it harder to ensure that people in less traditional, nonmarital relationships have legal protections. Nancy Polikoff, a professor at American University’s Washington College of Law and author of Beyond (Straight and Gay) Marriage, supports marriage equality but says marriage “doesn’t solve anything for people who aren’t married, people who don’t want to get married, or people who have their lives organized around relationships that don’t resemble marriage.”

She worries that some of the campaign rhetoric about the unique nature and importance of marriage could make it harder, once marriage equality is achieved, to assert the need to protect all forms of family.

Wu and Vaid both say the movement can and must do both equality and liberation work, and identity politics and progressive organizing. But time and resources are always limited, and the pre-existing fault lines within the LGBT movement may become more visible once marriage is no longer dominating the conversation.

Will Money Talk?

These fault lines could be exacerbated by another characteristic of the marriage equality movement: the emergence of major conservative funders such as hedge fund billionaire Paul Singer and activists such as former Republican National Committee chair Ken Mehlman, who helped get the Republican votes necessary to pass marriage equality legislation in New York.

Jeff Cook-McCormac, senior adviser to Singer’s American Unity Fund, says the involvement of conservative funders and

activists has had “a profoundly positive impact” by changing the perception among Republicans that LGBT equality is only an issue for those aligned with the left. He says that while more than 230 Republican state legislators have stood for the freedom to marry, only a small number have lost their seats. Center-right lawmakers no longer need to see support for LGBT equality as a death knell for their career.

But that’s just one piece of the picture. LGBT journalist Michelangelo Signorile has noted that Singer “backed some of the most anti-gay politicians— and defeated others committed to full LGBT equality—by pouring millions into super PACs and the Republican Governors Association.” Signorile worries that publicity focused on Singer’s support for a handful of pro-equality Republicans may be aimed at making moderate Republicans feel better about voting for the GOP. Meanwhile, he wrote in August, “Singer is undermining LGBT rights—and all progressive causes—by helping opponents of equality win more House races and helping Republicans win control of the Senate.”

Cook-McCormac says the involvement of center-right funders and activists “has fundamentally changed the way the gay rights movement does business.” He means helping achieve bipartisan cooperation on pro-equality legislation. But others worry about the potential that donors could push the movement’s broader agenda to the right. That’s a valid fear, says Get­EQUAL’s Heather Cronk, because money always comes with strings.

Urvashi Vaid says of Singer that it is “outrageous to ignore the fact that he is virulently anti-choice and raised millions to oppose the most LGBT-supportive president we have ever had.” She acknowledges that coalition politics is partly about tactical relationships and opportunistic work but is clear that she does not view these conservatives as spokespeople for her or the broader movement.

The marriage movement has been “a powerful vehicle to express the shared humanity of LGBT people,” says GLAD president Janson Wu (top). Longtime LGBT strategist Urvashi Vaid asks whether the movement is now willing “to push for the redistribution of economic resources and political power” needed to change people’s “lived experience.”

From Legal to Lived Equality

Paradoxically, many movement leaders are focused on achieving full legal equality while thinking deeply about the limits of legal equality in improving the conditions that many LGBT people face every day. GLAD’s Wu says the movement’s unfinished business is to ensure that progress extends to the most vulnerable, which would include youth,

Winter 2015 The American Prospect 49

An advocacy group meets at a drop-in center for LGBT young people in Detroit.

Some activists propose the movement take up the struggles of LGBT youth as a primary focus. One UCLA study estimates that 40 percent of all homeless youth are LGBT.

grantmaking to supporting people of color, young people, and trans people.

In Massachusetts, the first state to achieve marriage equality, the post-marriage agenda for MassEquality has focused on some of these same areas. Executive Director Kara Coredini says the organization has leveraged its activist base and lobbying and electoral presence to advance priorities shared with its partner groups, working successfully for a trans-inclusive nondiscrimination bill, a commission on LGBT aging, and LGBT representatives on the first statewide commission on homeless youth.

The central issue is legal versus lived equality, according to Rebecca Isaacs, executive director of Equality Federation, which provides expertise and support to a network of state-based organizations. In an op-ed last June, Isaacs highlighted the limits of the push for same-sex marriage:

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Marriage equality will not keep LGBT young people in their homes and loved by their families. It will not keep them in school and out of the criminal justice system. It will not ensure transgender people access to accurate identity documents or critical healthcare services. It will not make our streets and our communities safe and free from violence. It will not make our military, our prisons, our immigration system, or our healthcare inclusive and just. It will not erase the vulnerability our community feels as we age in a world without an adequate safety net.

Terrance Laney, national public policy chair for Black Youth Project 100, questions the decision to prioritize a push for marriage equality in southern states where HIV is raging among people of color and where state officials rejected the expansion of Medicaid. He says he worries that when the marriage equality fight is over, LGBT people of color will be left “fighting for our lives” without the benefit of a lot of major donors and attention.

LGBT activists concerned with immigrants’ rights are working to broaden support for the idea that immigration is an LGBT issue. Diego Ortiz, communications director for Immigration Equality, says that while marriage equality benefits some people who have been living in exile or separated from their loved ones, LGBT immigrants have other concerns, such as violence in incarceration centers, where trans women are often housed with men or placed in extended isolation. “Asylum saves lives,” says Ortiz. “Sadly, for many people, the road to asylum goes through a detention center.”

Pursuing both legal equality and lived equality requires work on cultural fronts as well as legal and political ones. Changing the law can certainly have a cultural impact—achieving marriage equality in a state often appears to accelerate support for it. But it is still true, in the words of GLAAD President Sarah Kate Ellis, that “you cannot legislate acceptance.” The passage of civil rights legislation 50 years ago has not done away with all the unspoken prejudices and systematic institutional inequities that still limit the lives and opportunities of African Americans. Legislative victories on behalf of women and people with disabilities have not eliminated all the barriers they face. Ellis worries that with recent marriage rulings in conservative states, “hearts and minds are lagging policy,” making it imperative to “close the cultural gap.” That is the kind of work being done via the media and by LGBT activists and organizations working in religious communities with the aim of changing attitudes and even theology.

On November 20, 2014, people around the United States

pa u l s a n c ya / a p i m a g e s

elders, transgender people, people of color, and people with HIV. “Our movement isn’t over until everyone in our movement is protected,” he says.

Disparities between states where LGBT people have won many legal protections and those with few or none have led some movement funders and organizations to focus on “low equality” states such as those in the South. But that doesn’t mean the movement is “done” anywhere, says Kevin Jennings at Arcus. Even in places that are “paradises on paper” with marriage equality and nondiscrimination laws, Jennings points out, LGBT teens are still living on the street. Arcus, he says, has started asking, “Who is least likely to benefit from legal equality?” and has shifted its

and the world commemorated Transgender Day of Remembrance, holding vigils and services in memory of hundreds of transgender people who have been killed, disproportionately trans women of color. Marriage equality, says transgender writer and public health advocate Willy Wilkinson, has not done as much to humanize transgender and gender nonconforming people. “People are dying in the streets and it has nothing to do with putting a ring on it.” Janson Wu affirms that this is an arena where something more than policy change is needed. It is not sufficient to pass hate crime legislation, he says. Cultural change is needed to deepen understanding and acceptance “so we’re not talking about trans women being murdered but about trans women becoming government officials and CEOs and cops.”

Another example of change needed at both policy and cultural levels involves LGBT youth. A 2012 survey of service providers by the Williams Institute at the UCLA School of Law estimated that 40 percent of the homeless youth served are LGBT. Advocacy organizations are pushing Congress to reauthorize the Runaway and Homeless Youth Act with provisions preventing fund recipients from discriminating against LGBT youth. But Ellis worries that legal victories and celebrity coming-out stories can create a false sense of security among young people, who when coming out may be vulnerable to bullying, violence, or family rejection. The Williams Institute study found that nearly seven in ten LGBT homeless youth experienced rejection by their family. As a September story by Alex Morris in Rolling Stone magazine reported, many of these homeless gay teens have been rejected by religious families. Gay businessman and philanthropist Mitchell Gold, founder of Faith in America, thinks the LGBT movement should be talking more about the consequences of “religious-based bigotry.” The face of the gay-rights movement, he told Rolling Stone, should not be “40-year-old well-moisturized couples,” but “a 15-year-old kid who’s been thrown out of his house and taught that he’s a sinner.”

In reality, there can be no single “face” of the inherently diverse LGBT community. While LGBT voting patterns are more progressive than the public at large, issues that divide the public also divide the LGBT community. For example, after the Human Rights Campaign issued a statement decrying the decision of a grand jury in Ferguson, Missouri, not to indict the white police officer who shot and killed an unarmed African American teenager, HRC’s Facebook page was filled with angry denunciations by gay police officers and others defending the decision and vowing never again to contribute. Caitlin Breedlove, codirector of Southerners On New Ground (SONG), which “envisions a multi-issue southern justice movement that

unites us across class, age, race, ability, gender, immigration status, and sexuality,” says it was good to see LGBT groups putting out statements on Ferguson, but that such sentiments need to be backed with more political will to take action against what she calls a “war on people of color.”

A Nondiscrimination Moment?

A push for nondiscrimination laws should receive broad support from across the LGBT community. “After the marriage moment is the nondiscrimination moment,” says Jeff CookMcCormac of the American Unity Fund, the advocacy organization funded by conservative donors. In December, the Human Rights Campaign released “Beyond Marriage Equality,” a 65-page statement making the case for federal civil rights protections in credit, education, employment, federal funding, housing, jury service, and public accommodations.

There is plenty of work to do. Fewer than half the states have laws protecting LGBT people from discrimination, and many people lose those protections when they move across

Advocacy groups want Congress to reauthorize the Runaway and Homeless Youth Act with provisions preventing fund recipients from discriminating against LGBT youth. state lines. No federal law bars discrimination on the basis of sexual orientation, although executive orders protect federal employees and contractors, and the Equal Employment Opportunity Commission has ruled that employment discrimination on the basis of gender identity is prohibited under federal civil rights law as a form of sex discrimination.

The proposed Employment Non-Discrimination Act (ENDA) has long been the vehicle for efforts to put these principles into federal law. But agreement on the specifics has been elusive. In 2007, the Human Rights Campaign angered transgender activists when it supported Senate passage of ENDA even after gender-identity protections were removed to get more votes. And this past year, many LGBT groups and allies such as the American Civil Liberties Union pulled their support from ENDA because the bill included broader religious exemptions than those afforded under federal civil rights law. During the summer, HRC President Chad Griffin expressed continued support for a trans-inclusive ENDA with narrowed religious exemptions but also said it was time for the movement to “dig in” and support a comprehensive LGBT civil rights bill.

Winter 2015 The American Prospect 51

Polling data suggest that a campaign focused on antidiscrimination protections should enjoy wide backing.

Public support is extremely high—so high in fact, that it almost becomes its own challenge: People have a hard time believing that in more than half the states you can still be fired, evicted, or kicked out of a restaurant for being lesbian, gay, bisexual, or transgender. But activists worry that the support, while broad, it not terribly deep, and could be derailed by opposition charges that protections are not necessary, or by the kind of “bathroom panic” disinformation campaigns waged against efforts to extend protections on the basis of gender identity and gender expression.

Some business groups support anti-discrimination legislation. Marc Solomon, Freedom to Marry’s national campaign director and author of a recently published history of the marriage equality movement, told reporters in November that movement leaders should enlist corporate CEOs to push nondiscrimination legislation. And there’s at least some bipartisan support. In 2013, ENDA passed the Sen-

Polls show that public support for protections against discrimination for LGBT people is extremely high.

But activists worry that the support, while broad, isn’t terribly deep. ate in a 64-32 vote with ten Republican senators joining the majority. This year in Missouri, former Senator John Danforth lent his voice to efforts to add sexual orientation and gender identity to the anti-discrimination provisions of the human rights statute; the state senate approved the legislation in 2013, but time ran out on the legislative session. In April, Politico reported that Singer and fellow Republican billionaire Seth Klarman were each making six-figure contributions to an HRC-supported campaign to get ENDA passed in the House.

Still, religious right leaders and their champions in Congress continue to oppose protections for LGBT people against discrimination. The recent midterm elections could block any progress on the issue. But Denis Dison of the Gay & Lesbian Victory Fund says, “I don’t think this was an anti-gay election in any way,” noting that Republicans who won governorships in blue or swing states either were silent on marriage equality or embraced it. He thinks the relative silence is evidence of the fact that many Republicans no longer see electoral advantage in opposing equality. On the other hand, Kara Coredini at MassEquality says

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the state GOP amended its party platform to reaffirm its support for traditional marriage shortly before the tenyear anniversary of the implementation of the state court decision legalizing same-sex marriage.

In 2012, while covering the Republican National Convention for Alternet, I watched religious right activists write anti-gay views into the party platform. But Jim Kolbe, a former Republican congressman from Arizona who came out in 1996, insisted it would be the last year in which the platform would contain anti-gay language.

Given Republicans’ continuing reliance on conservative evangelical turnout operations, I deemed Kolbe’s prediction optimistic, bordering on delusional.

Now, however, there is an organized effort among Republicans to keep anti-gay language out of their 2016 platform. Young Conservatives for the Freedom to Marry has launched a $1 million “Reform the Platform” campaign to replace anti-gay language with a new statement along these lines: “We encourage and welcome a thoughtful conversation among Republicans about the meaning and importance of marriage, and commit our Party to respect for all families and fairness and freedom for all Americans.” The group says 61 percent of conservatives under 30, and 40 percent of all Republicans, support the freedom to marry.

One potential challenge to achieving legal and lived equality comes in the form of religious objections to LGBT equality. Conservative evangelicals and their conservative Catholic allies have made “religious liberty” their rallying cry, with many stating flatly that LGBT equality and religious liberty are incompatible and cannot co-exist. While marriage equality has swept across the country, conservatives have pushed for broad religious exemptions that LGBT activists call “right to discriminate” laws. As part of that campaign, conservatives have tried to make folk heroes out of small-business owners who run afoul of antidiscrimination laws when they refuse to provide services to same-sex couples for a wedding or commitment ceremony.

In 2014, a broad religious liberty bill passed the Arizona legislature, but a massive campaign by LGBT rights organizations, with support from the Arizona business community and some Republican leaders, convinced Governor Jan Brewer to veto the bill. A broad coalition of civil rights, religious, law enforcement, and child welfare groups successfully urged voters in North Dakota to defeat a ballot measure to put broad religious exemption language into the state constitution in 2012. But in recent years, Kentucky and Mississippi did put new religious liberty language on the books. In December, Michigan Republicans rushed a “religious freedom” bill through the state House in order to “balance” a proposed bill to

ross d. fr anklin / ap images

ban discrimination on the basis of sexual orientation.

Many proposed state laws are based on language in the federal Religious Freedom Restoration Act (RFRA), which passed with overwhelming bipartisan support in 1993. The Supreme Court later ruled that RFRA applies only to the federal government and not the states. RFRA requires that if the government substantially burdens an individual’s exercise of religion, the government must show that it is pursuing a compelling interest in the least restrictive way. But the ideologically diverse coalition that backed RFRA disintegrated when conservatives began using such laws, not as a shield to protect individuals’ exercise of religion, but as a sword against the rights of women, LGBT people, and others.

The Supreme Court’s ruling in the Hobby Lobby case last June, exempting closely held corporations from the requirement to provide insurance coverage for contraception based on the owners’ religious objections, is cause for concern to supporters of LGBT equality. The 5-4 majority in the case held for the first time that for-profit corporations can make religious liberty claims under RFRA , and dramatically reinterpreted the law’s core balancing act. Under Hobby Lobby, business owners have only to claim that their religious beliefs are offended by a legal requirement, a radically different standard from proving that the requirement imposes a substantial burden on their exercise of religion. If RFRA is used to challenge a future federal nondiscrimination law, the government could still argue that it has a compelling interest in ending anti-LGBT discrimination, but it is not clear how the Court would rule.

After the Republican victories in 2014, a wave of “religious liberty” bills will likely be introduced at the state and possibly federal level. Brian Brown of the National Organization for Marriage said this past fall that the group would push the new Congress for federal legislation to “protect marriage and religious liberty.”

Finding effective ways to challenge conservative religious liberty arguments will be important to the LGBT movement’s efforts on both legal and lived equality. Otherwise, says the Victory Fund’s Dison, religious liberty arguments could gain traction, in part because most people do not understand that business owners have been subject to laws against discrimination in public accommodation for years, and are seeking to undermine those laws now that they are being extended to LGBT people.

Who gets to set, or claim, an agenda for a diverse, manylayered movement is itself a complicated question. Grassroots activists sometimes complain about the influence of large and well-funded national organizations. Get­ EQUAL’s Heather Cronk says a full equality agenda “has

to be shaped by and deeply informed by the lived experiences of folks in Texas and Mississippi and Montana, not just by the lived experiences of folks in Washington, D.C.” There are some efforts to get broad grassroots input into the future of the movement post–marriage equality. This past fall, more than 60 organizations joined the Arcus Foundation to sponsor My 2024, a project in which LGBT people were asked to share their dreams about what their lives would look like ten years from now. Kevin Jennings at Arcus called it an effort to crowd-source the future of the movement. “We don’t think the future of our movement should be decided by a group of rich people in a conference room in New York City.” The project’s website asks, “Is there

a future for the LGBTQ movement?” and answers, “No, there are thousands of futures. And one of them is yours.”

The multifaceted LGBT community includes people of all religions, economic classes, racial and ethnic backgrounds, and political persuasions. Divisions are inevitable. But Reverend Darlene Nipper, deputy executive director of the National LGBTQ Task Force, says that a push for nondiscrimination laws could appeal to a broadly shared ideal.

Fighting for equal treatment under the law reflects a commitment to the promise of America—that everyone be given “a fair chance and a fair shake to be fully who they are.” If that’s right, nationwide nondiscrimination protections could be the next big thing for the LGBT movement.

The Arizona Capitol stands in the background as LGBT rights supporters celebrate Governor Jan Brewer’s veto of a bill that would have allowed owners of restaurants and other businesses to refuse service to LGBT people on grounds of religious belief.

Peter Montgomery is a senior fellow at People For the American Way and associate editor for Religion Dispatches.

Winter 2015 The American Prospect 53

When Liberals Were Organized Progressives seeking a model for an effective Congress could learn from the nearly forgotten history of the Democratic Study Group.

By J u lian E . Z e lizer

W

hen Republicans took control of the House of Representatives in 1994 for the first time in 40 years, one of Speaker Newt Gingrich’s earliest moves was to end the public funding for the Democratic Study Group (DSG), a caucus of liberal Democrats that had been created in 1959. It was one of Gingrich’s shrewdest maneuvers. As Kansas Republican Pat Roberts, a staunch conservative then and now, wrote in an internal memo, “The demise of the DSG severely damages the power structure of the House Democrats.”

Roberts was right. The DSG is almost forgotten today, but its history suggests lessons for the current generation of Democrats. Since 1994, congressional liberals have failed to replicate a powerful, independent organization like the Democratic Study Group. They have been dependent on a House leadership that is sometimes but not always sympathetic to their goals. The closest thing to a DSG, the Congressional Progressive Caucus, has been a pale imitation of its predecessor, a fragile informal coalition that has lacked the same kind of leadership, money, publications, communications strategy, or clout. As liberals prepare for the start of the 114th Congress and hope for stronger Democratic returns in 2016, they would benefit from looking back at the history

54 WWW.Prospect.org Winter 2015

of the DSG to see just how much a vibrant and robust caucus can offer.

Americans may think of the 1960s as a

liberal heyday. In fact, a powerful conservative undertow persisted, especially on Capitol Hill.

However, liberal Democrats of that era organized effectively—on the streets, in the workplace, and notably in the halls of Congress.

Throughout the 1950s and early 1960s, obstructionist committee chairmen dominated Congress. Southern Democrats, often with safe seats in the one-party region of Dixie, wielded disproportionate power via the committee system. In a conservative coalition with Republicans, they used their power to block key liberal measures on civil rights, education, health care, and union protections.

House Rules Committee Chairman Howard Smith of Virginia, a lanky southerner in his late seventies when President Kennedy took office in 1961, used every available procedural tool to stifle liberal proposals. Once, when “Judge” Smith (an honorific from his onetime service on the bench) said that he couldn’t return to Washington for a vote on a civil rights bill in 1957 because there was a fire in his Virginia barn, Speaker Sam Rayburn quipped, “It’s the first time a man tried to burn down his barn in order to stop the legislative process.” The

Speaker might have derided Smith’s tactics, but Rayburn and the rest of the leadership were deferential to the southern committee chairs.

As a result of such obstructionism, the liberal agenda languished in the 1950s despite a Democratic majority in Congress and a moderate Republican president. Among liberals and political scientists, talk of a dysfunctional and deadlocked Congress was commonplace.

Southern Democrats were famous for parliamentary prowess; liberals were known for their chronic disarray. Missouri Representative Richard Bolling, among the shrewdest liberal strategists of the era, observed, “One of the greatest weaknesses of the North, East, and West group in the Democratic Party is the great lack of legislative technicians. The obscure Congressman from the South knows the tools of the trade pretty well … Ideals are like the stars—you use them to guide you, but you never reach them. Learn the methods that get you there.” The number of liberals in the House had steadily grown during Dwight Eisenhower’s presidency. Toward the end of the decade, a liberal coalition of northern and western Democrats resolved to organize.

On January 8, 1957, Congressmen Eugene McCarthy of Minnesota, Lee Metcalf of Montana, and Frank Thompson of New Jersey released the “Liberal Manifesto,” calling for

their own whip system, with 12 Democrats assigned to check on promised votes. They produced and disseminated first-rate research for members and the press, exposing conservative tactics and offering weekly legislative updates on their key issues. In the committee era of Congress, this kind of information was both novel and crucial, since so much of the legislative process was secretive and committee chairs retained tight control over staff and data. The political scientist James Sundquist described the DSG as “the most elaborately organized ‘party within a party’ in the history of the House of Representatives.”

When the Rules Committee bottled up a civil rights bill in 1960 (though it was extremely mild), members of the DSG sought to force it out of committee through a “discharge petition,” a process requiring 218 votes. Chairman Smith was counting on the fact that the signatures on a discharge petition were kept secret. Engaging in guerrilla warfare, the DSG leaked the names of those who had signed the petition to The New York Times so that civil rights organizations could pressure the non-supporters. The strategy worked, and the bill made it through committee and was passed by Congress. “The importance of the Democratic Study Group,” wrote Robert Remini, the late historian of the House, “cannot be emphasized too strongly in the ongoing struggle to safeguard civil rights.”

Though he never headed the DSG, Mis-

democr atic national commit tee

Savvy Strategist: Representative Richard Bolling of Missouri, an early stalwart of the Democratic Study Group

the government to do more to ensure civil rights, adequate health care, access to education, and affordable housing. The Manifesto blasted the obstructionist tactics of the southerners. With the support of about 80 members from some 20 states, one of the first projects of “McCarthy’s Mavericks” was to provide assistance to liberals who were running in the 1958 midterm elections.

The elections were a huge success for liberals.

Republicans lost 48 seats in the House and 13 in the Senate. The new, younger liberals had little

patience with the Dixiecrats. The road to the Great Society started with them. When Congress convened in 1959, they officially formed as a caucus, the Democratic Study Group.

From its founding, the DSG lobbied the Democratic leadership to appoint liberals to serve on influential committees, to support procedural reforms that would weaken committee chairmen, and to back legislation to expand the role of the federal government. The DSG regularly assembled task forces to develop legislation on key issues. The leaders created

souri Democrat Richard Bolling was a leading figure during its formative years. Born in New York City in 1916, he came from a politically eclectic family. Bolling’s father was a southern conservative Democrat; his mother a Robert La Follette progressive. The family moved back to Huntsville, Alabama, after his father died at a young age. Bolling, who studied in Tennessee at Sewanee and Vanderbilt University, then worked as the Midwest director for the Americans for Democratic Action after serving in World War II. He was elected to the House in 1948 and was mentored by Rayburn. Bolling was considered aloof and gruff; his colleagues never made him their official leader.

But he was respected for his brilliant, strategic mind. He was well-versed in political science literature on the legislative process and frequently wrote articles for both popular and

Winter 2015 The American Prospect 55

academic publications about the need to break the procedural muscle of southern Democratic chairmen and to centralize legislative power in a Speakership that was accountable to the Democratic Caucus. Late in his career, after these reforms were adopted thanks to the DSG, Bolling would have the satisfaction of chairing a much-reformed House Rules Committee.

When John F. Kennedy was elected president in 1960, the DSG lobbied Rayburn to rein in the Rules Committee. After Chairman Smith bragged to reporters that he would “exercise whatever weapon that I can lay my hands on” to block Kennedy’s domestic legislation, the DSG went after Smith’s committee base. The most draconian proposal was to purge Mississippi Democrat William Colmer, an ardent racist, from the Rules Committee for having supported Richard Nixon. While Rayburn feared that this proposal would trigger a fierce and counterproductive revolt from southern Democrats, Rayburn did endorse a milder compromise

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that temporarily enlarged the Rules Committee from 12 to 15 members, thereby enabling the leadership to appoint three liberals to the panel. The House passed the resolution 217 to 212. Twenty-two northern Republicans favorable to civil rights supported the reform.

In early 1964, the civil rights movement created an opportunity for the transformation of domestic policy. Though many presumed he was a southern conservative in liberal clothing, Lyndon Johnson quickly proved willing to push for a bold legislative agenda. John McCormack of Massachusetts, who had become Speaker after Rayburn’s death in 1961, signaled that he liked Johnson’s vision. While the DSG wanted to work with McCormack, they weren’t going to depend on him. During the House debate over the Civil Rights Act of 1964, the DSG, which a Baltimore Sun reporter called the “heart and brains of the liberal Democratic bloc,” played a crucial role in preventing southern Democrats from using last-minute tricks

The Obstructionist: Rules Committee Chairman Howard Smith of Virginia

a b o v e l e f t : r i c h a r d w. b o l l i n g c o l l e c t i o n / u n i v e r s i t y o f m i s s o u r i d i g i ta l l i b r a r y ; lo w e r r i g h t : u n i v e r s i t y o f v i r g i n i a s p e c i a l c o l l e c t i o n s

Progressives In Motion: Richard Bolling (upper left) with Robert Kennedy at a campaign visit to Kansas City in June 1964

to stymie the legislation. The DSG even set up a “buddy system” for senior members to take responsibility for mentoring freshmen.

When Smith sought to block a floor vote on the Civil Rights Act in January 1964, hoping that further delay would give opponents time to mobilize while civil violence might push Republicans away from the bill, the DSG once again rounded up enough discharge votes to scare Smith into believing that he had to let the bill go to the floor or suffer an embarrassing defeat. Bolling wrote of the civil rights battle, “DSG has served to pull together liberal Democrats, who incline to independence and even irascibility, into a semblance of a cooperative group that grasps the importance of legislative technique.”

The Democratic landslide in the 1964 election resulted in huge liberal majorities in the House and Senate. The DSG grew from approximately 125 to 175 members when the 89th Congress convened.

The DSG quickly maximized the moment.

They pressed Speaker McCormack to discipline two racist southern conservative Democrats, John Bell Williams of Mississippi and Albert Watson of South Carolina, who had endorsed Barry Goldwater, by stripping them of their seniority rights and kicking them out of the Democratic Caucus. Watson was a freshman who had been mentored by the notorious Strom Thurmond. Williams was more significant. The 18-year House veteran was second

in line to become the chair of the House Committee on Interstate and Foreign Commerce.

McCormack endorsed this stringent punishment. But after hearing from President Johnson, who feared that other southerners would retaliate, the Speaker backed away from booting them out of the Caucus and instead agreed to strip them of their seniority rights. That proposal won by a vote of 157 to 115.

The DSG also won a “21-day rule,” which allowed a committee chairman or a majority of committee members to bring a bill to the floor if the House Rules Committee had held it up for 21 days or more. In addition, the DSG pushed through a change to the party ratio on all committees to reflect the new balance of power following the election. The proposal even altered the Ways and Means Committee, a fortress that the caucus traditionally didn’t challenge. Ways and Means shifted from fifteen Democrats and ten Republicans, to seventeen Democrats and eight Republicans, enough to allow the committee to be stacked with more pro-Medicare members. Wilbur Mills, the chairman of Ways and Means who had opposed health care expansion, had been outflanked.

“This change means half the battle of enacting the Johnson program is over,” exulted White House legislative liaison Larry O’Brien.

In the following months, liberals took advantage of their huge majorities to pass landmark domestic legislation, including Medicare and Medicaid, the Voting Rights Act, federal aid to education, environmental regulations, and more, all at breathtaking speed. The DSG worked with outside liberal organizations such as the AFL-CIO and the Southern Christian Leadership Conference to coordinate inside strategy with grassroots lobbying. As Bolling explained, his colleagues understood that legislative success was all about the daily grunt work, the “phone-call lobbying, gathering information on when which Members will be in town, consulting the calendar to make sure that a favored piece of legislation requiring urban votes is not scheduled on Yom Kippur.”

Their momentum stalled when the conservative coalition gained ground in the 1966 midterms, capitalizing on a political backlash against racial unrest in cities and the war in Vietnam. But the DSG kept growing. One of the most important personnel additions took

With Congressman Phil Burton and Chief of Staff Dick Conlon in command, the Democratic Study Group emerged as a true powerhouse on Capitol Hill. place in 1968 when DSG Chair Frank Thompson of New Jersey hired his former staffer, Richard Conlon, to become executive director. At a moment when the liberal Democratic coalition was increasingly fractured and strained over the war in Vietnam, Conlon breathed new life into the caucus. A former journalist at the Duluth Herald & News Tribune and fellow at the American Political Science Association, Conlon had been deeply influenced by Senator Hubert Humphrey and his drive for civil rights, and was an opponent of Johnson’s policies in Vietnam.

Conlon redoubled the DSG’s investment in research, assigning four of its 12 staffers as researchers. Their major publication was a fiveto-ten-page fact sheet on each key bill, including a legislative history, a primer on major provisions, and talking points. The weekly legislative report offered more detail, such as the views of the administration, interest groups, and federal agencies. The DSG even offered research services such as weekly bulletins to assist staff with items like sample letters for constituents, and offered campaign services like seminars on strategy. The DSG continued to raise money for liberal candidates who were not priorities of the Democratic National Committee.

One writer would later call Conlon “one of the most important House staffers of the postwar era, a man who played a more significant role in reforming the House than almost every elected representative.” In 1970, the DSG won another major procedural reform with the

Legislative Reorganization Act, which weakened the authority of committee chairs. Its provisions ensured that members would see the report on a bill three days before it was voted on and required the leadership to take recorded votes so that members would be held accountable for their positions.

There was an important leadership change in 1971 when the DSG elected California Democrat Phil Burton as their chair. If Bolling was the brains behind the DSG, Burton was the muscle. He was a tough and curmudgeonly, hard-drinking and fiercely partisan liberal from California. An Ohio native, Burton had been educated at the University of Southern California and the Golden Gate College School of Law. His first election bid for a seat in the State Assembly was blocked by the San Francisco machine boss, William Malone. Burton defeated an incumbent two years later by creating a coalition of African American and Asian American voters. He developed strong ties to all the key liberal groups, such as organized labor, students, Mexican Americans, and leftists frustrated with the anti-communist purges. Elected to Congress in 1964 with the assistance of the DSG, he quickly became one of the most ardent voices of liberalism. As the head of the DSG, Burton displayed his uncanny ability to nurture loyalty. He and Conlon met with liberal legislators and lobbyists, over a hefty amount of whiskey and vodka, at the end of every working day to devise strategy.

With Burton and Conlon in command, the DSG emerged as a true powerhouse on Capitol Hill. Congressional Quarterly said that under Burton’s direction, the DSG had gained “a reputation it has never had before … It was Conlon who drafted and redrafted the reform proposals to make them acceptable to a majority of Democrats in the House. And it was Burton who served as the chief lobbyist and tactician for the ideas, compromising in many places, but insisting that the end product was still a long step toward basic reform of the House … [They] were the most effective leadership team the organization has had in the years it has been pushing for House reform and liberal legislation.”

By the mid-1970s, the DSG would claim approximately 225 dues-paying members, a strong majority of the House Democratic Caucus. At the time, David Cohen of the reform

Winter 2015 The American Prospect 57

Everything came together in 1974 when

Watergate shocked the nation and public pressure for congressional reform intensified. By the time of Nixon’s downfall, the DSG was part of a broad reform coalition that included Common Cause and Ralph Nader’s group, Public Citizen. In the 1974 midterms, the DSG threw its support behind candidates who were running on the theme of government reform in response to Watergate. The agenda included reforming campaign finance and dismantling the power of the committee system.

Democrats picked up 49 House seats, reversing all the gains Republicans had made since Johnson. The class of 75 freshman “Watergate Babies,” such as California Representatives Henry Waxman and George Miller, would not be bound by the traditional rules or norms.

As the new members arrived, the DSG mentored them, explaining the intricacies of the legislative process and helping them hire staff.

The DSG received an unexpected boost when Ways and Means Committee Chairman Wilbur Mills was brought down by a sex scandal. Earlier in 1974, Mills had killed a massive effort by Bolling to reform and reorganize the committee system. Mills’s committee controlled taxation, trade, Social Security, Medicare, and unemployment insurance. Mills had nothing but contempt for the DSG, the Watergate Babies, and everything they stood for. He had been re-elected by the Second District of Arkansas despite having been caught one month before the election cavorting near the Tidal Basin with a stripper named Fanne Foxe, known as the “Argentine Firecracker.” Mills had appealed to his constituents by apologizing and explaining that he had become addicted to booze and painkillers because of chronic back problems. Yet in late November, fresh off his victory, Mills made a fatal mistake. With a packed room of reporters watching, Mills stumbled onto the stage of Foxe’s first public appearance at a Boston strip club called the Pilgrim Theater. As photographers captured the entire incident on film, the DSG led the successful campaign to force Mills to resign

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his chairmanship; Mills announced that he would not seek re-election in 1976.

With one chairman down, the liberals kept going. In January, the Democratic Caucus voted for a series of DSG proposals. They added subcommittees to decentralize power and stripped Ways and Means of its function as “committee on committees,” a role that had allowed its chairman to make committee assignments for the entire party. The Speaker was given the power to nominate all the members of the Rules Committee. The reforms all shifted power away from the committee chairs toward the Speaker, while simultaneously granting power to the caucus rank and file to challenge the Speaker if his actions failed to carry out the views of the members. This was Bolling’s reform design of more than a decade earlier.

The drama reached a climax when the Democratic Caucus turned to the job of voting on who should be made committee chairs. Traditionally, this had been a pro forma procedure.

The party voted for the most senior members to become chair. Nobody asked questions.

But in January 1975, things were different.

As they had done so many times before, the DSG urged members to support only legislators who voted with the position of the Democratic Caucus majority. Public Citizen and Common Cause, using data leaked by Conlon, published lengthy and often blistering reports detailing the political history of each committee chairman, including their records of supporting or opposing bills favored by the Caucus.

The freshmen, under the guidance of the DSG , did something even more dramatic.

Defying everything sacred about the norms of seniority, they called some of the most powerful members to appear before them and justify why they should be re-elected as chairs. House Armed Services Committee Chair F. Edward Hébert of Louisiana couldn’t believe what he was hearing. “The freshmen had been transformed from individuals into a mob of crusading knights out to slay evil dragons,” he said.

After he met with the freshmen, feeling as if he had been interrogated, Hébert dismissed them as “boys and girls.” The freshmen were not impressed. “We may be new kids on the block,” said Gladys Noon Spellman of Maryland, “but we’re not stupid.” Observing the atmosphere in the House, the editors of The

Dynamic Duo: Phil Burton (top) supplied the muscle behind the DSG, while Richard Conlon supplied the tactical genius.

Washington Post concluded, “A revolution has occurred. The seniority system as the rigid, inviolable operating framework of the House has been destroyed.”

When Common Cause described Banking Committee Chairman Wright Patman, the rare progressive who had benefited from the seniority system, as an abusive chairman, Ralph Nader cried foul. “If the winds of reform are not to mock their own echoes,” he said, “they should be directed toward Chairmen Hébert, [William] Poage, and [George] Mahon, and not against

t o p : n at i o n a l pa r k s e r v i c e ; b o t t o m : c- s pa n

organization Common Cause marveled, “In the old days, the DSG was viewed as a band of Young Turks. Now its leaders are matured legislators with a sense of how power relationships work.”

that bastion of progressivism and courage that is Wright Patman.” But Patman went down.

Taking over the role that had been accorded to the Ways and Means Committee since the 1910s, the Steering and Policy Committee—an arm of the Speaker—rejected Poage (Agriculture), Hébert (Armed Services), and Patman (Banking) as chairs. In January, the Caucus voted to unseat Poage by a vote of 152 to 133, Hébert, 144 to 141, and Patman, 152 to 117.

While the other committee chairs survived, the message of these powerful and influential chairmen losing their jobs was clear.

The DSG remained an important player

through the 1980s. During Ronald Reagan’s presidency, when Democrats retained control of the House, the DSG kept pushing the leadership to the left even when there was growing pressure to compromise with a popular conservative president. The DSG worked to resist Reagan’s proposals in 1981 and 1982 to cut Social Security benefits and gut much of the rest of the social safety net. At a time when many nervous Democrats, fearing Republicans would tag them as weak on defense, joined in Reagan’s chorus of the need to boost military spending and authorize military operations in areas like Central America, the DSG continued to just say no. They pushed for deficit reduction, but through military spending cuts and progressive taxation. Conlon and his group continued to promote issues like campaign finance reform. The caucus was doing well with its own funds. Besides public money, the DSG raised money through its research and dues to finance a staff that had grown to about 20. Any legislator in Congress could pay $2,500 a year for their research services, while the dues for DSG members were $200 a year. By 1988, all but six Democratic members were DSG subscribers—and so were 24 Republicans.

Ironically, the DSG was already starting to lose some of its value because it had been so successful. Since the DSG succeeded in opening up the legislative process through sunshine reforms and the spread of power to subcommittee chairmen, there were now many more sources of information for liberals to draw on.

With the 1970s reforms, conservative Democrats had also lost much of their institutional

The DSG was displaced by a proliferation of specialized liberal caucuses and the centrist Democratic Leadership Council. power, a goal that had always been a central objective of the DSG. Power was now centralized under the accountable leadership of the House, which itself had become much more liberal as Democrats shifted to the left.

Nor was the DSG able to continue serving as a central clearinghouse for liberalism. The proliferation of specialized caucuses in the 1970s, many of them devoted to liberal causes (like the Congressional Black Caucus) and many modeled on the success of the DSG, siphoned off support. Every issue seemed to have its own splinter group. Liberals, in a sense, had reverted to their pre-Bolling habits of emphasizing the parts rather than the whole. The House had nurtured this fragmentation in 1979 by certifying certain caucuses to be Legislative Service Organizations eligible to obtain office space, hire staff, and obtain funding for supplies.

Meanwhile, centrist Democrats pushed back against the DSG, seeking to win back “Reagan Democrats” who had drifted from blue to red.

In 1985, in response to Walter Mondale’s 1984 landslide loss to Reagan, Al From and Will Marshall, both of whom had worked for Louisiana Congressman Gillis Long, created the Democratic Leadership Council (DLC). They had the support of elected officials such as Virginia Governor Chuck Robb, Arizona Governor Bruce Babbitt, Georgia Senator Sam Nunn, and others. They also established its DLC-affiliated think tank, the Progressive Policy Institute, with money largely raised from Wall Street.

The goal of the DLC was to push the party away from its left-wing base. Their hope, From said in an early memo, was to stop Democrats from focusing on “wrongheaded, losing strategies” that made them look like the party of “big labor.” Despite having only a minority of House Democrats as members, the DLC was soon emulating the strategic prowess of the DSG. It did not hurt that the DLC could raise substantial sums from business and in turn steer corporate money to more centrist Democratic candidates.

The DLC goals meshed well with California Democrat Tony Coelho, a fundraising juggernaut who took over the Democratic Congressional Campaign Committee in 1981.

Between 1981 and 1986, Coelho worked hard to expand the fundraising base of his party, and like the DLC cultivated big business and Wall Street. “Special interest is not a nasty word,” he explained to one group of lobbyists. The market-based ethos of the DLC agenda complemented his successful fundraising strategy that left Democratic congressional candidates, especially centrist ones, flush with money.

The DLC worked hard to shape public debate and to influence and promote like-minded presidential candidates. The group rejected the kind of economic arguments that Democrats had embraced in the 1930s and 1960s, stressing “market-based” solutions to public problems. The DLC promoted welfare reform and targeted other signature programs of liberalism. On foreign policy, the DLC tended to be more hawkish than their colleagues, trying to dampen the concerns over military intervention that had been spawned by Vietnam. A key electoral goal was to bring back moderate southern Democrats.

When Arkansas Governor Bill Clinton, who had served as chair of the DLC from 1990 to 1991, defeated President George H.W. Bush in the 1992 election, the DLC felt triumphant.

They saw his victory, as well as his survival and repositioning after the 1994 Republican takeover of Congress, as evidence that the leftliberal agenda championed by older groups like the DSG was no longer relevant or politically viable. For example, though the majority of House Democrats and nearly all of the DSG opposed NAFTA in 1993, they could not prevent its passage.

Winter 2015 The American Prospect 59

When Republicans took over the House, they ended the Legislative Service Organizations; funding for the DSG stopped. Notwithstanding all the changes that had rendered the DSG less influential by the time Gingrich made this move, liberals felt they had suffered a major blow to an organization that had been at the center of the epic battles they had been fighting over three decades.

The DSG still attempted to remain active after 1994, even without its public funds. The group raised money by selling its research outfit to Congressional Quarterly. But the DSG was soon incorporated into the Democratic Caucus. Since then, House liberals have tried to remake the magic that happened in 1959.

The closest incarnation to the DSG on the left has been the Congressional Progressive Caucus (CPC), founded in 1991 in response to the centrist inclinations of many Democrats.

Vermont Congressman (now Senator) Bernie Sanders established the group with left-liberal allies like Maxine Waters and Ron Dellums of California. One of the CPC ’s most popular projects has been to publish an annual progressive budget intended to restore progressive taxation and public investment and to bring the nation closer to full employment.

But the CPC has never replicated the success or impact of the DSG. Whereas the DSG constituted a broad spectrum of liberals, with a focus on reforming and changing the processes of politics upon which conservatives depended, the progressive caucus represented a narrower group of members, on the left edge of the House. They have always been short on money, culling together what they can from members of the caucus. Most lobbyists and business associations don’t have much interest in funding their progressive agenda, in contrast to conservative or neoliberal groups whose proposals for tax cuts and deregulation are much more attractive. The DSG had 12 whips when they were only at 80 members; the CPC uses one whip for 68 House members.

When the CPC hired veteran Hill staffer Bill Goold in 2005, the situation was so bad that his first task was to update the group’s website—for the first time since 2001. While the DSG was able to establish itself as a source of key information for congressional leadership,

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Leader Nancy Pelosi has little interest in a new DSG because the House Democratic leadership itself is mostly progressive. non-liberals, and the media, the CPC has never assumed this role.

During her Speakership (2007 to 2011), Nancy Pelosi, who had been a member of the CPC, didn’t feel the caucus offered her much, especially since she and others in the leadership generally supported similar positions.

Indeed, Pelosi and two of her chief allies in the Democratic Caucus, George Miller and Henry Waxman, were protégés of Phil Burton. The leaders saw themselves as the culmination of all those years the DSG had fought for power.

As John Lawrence, former chief of staff to both Pelosi and Miller, told me in an interview, “DSG arose in the context of moderate to conservative domination of the Caucus [and House] and a severe absence of substantive information about legislation coming out of committees … The situation in the Pelosi era was totally different: Progressives controlled the major instruments of the Caucus, not surprising since they were the largest constituent group of Democrats. Committees are open, there are published reports required for all legislation, there are multiple outside organizations that cover committee action and report on pending legislation … So all of the institutional services provided by the early DSG were really being performed by the leadership itself.” Waxman agrees, and says, “The role of DSG as a place for liberals outside of, or in place of, the caucus is not needed today. But a liberal caucus is helpful … I don’t use it to get info that DSG provided then and the caucus does now.”

Yet after 2008, Pelosi was whipsawed between her own liberalism and the need to support an embattled new president who was inclined to compromise. On some issues, she and the House Democratic Caucus tried to push Obama to the left. In December 2009, as Obama was preparing to pivot to deficit reduction long before the economy was in full recovery, Pelosi successfully pressed the House, against White House wishes, to pass a second stimulus bill. (It died in the Senate.) At the same time, with liberals strongly supporting a public insurance option as part of the Affordable Care Act, Pelosi went along when the White House jettisoned the public option, and nearly every Democrat voted for the final bill anyway.

An effective progressive caucus might have come in handy, but none was in evidence. When Pelosi came under pressure from the White House to compromise—as well as from members of her leadership team like Majority Leader Steny Hoyer, a DLC stalwart—the CPC didn’t have much ability to push back. There was no voice as powerful, to the left of both Republicans and occasionally of a Democratic White House, as the DSG had provided in its glory days.

In fact, if anyone has replicated the success of the DSG it has been conservatives rather

than liberals. The Republican Study Committee (RSC) has transformed itself from a group of irrelevant renegades into a powerful force that commands the respect of Speaker John Boehner. The RSC was founded in 1972 by a group of right-wing Republicans who wanted to mimic the success of the DSG. During the 1970s and 1980s, they didn’t have much success doing anything, other than being a “voice of consciousness” for the party in the same way the CPC has acted for Democrats in recent years.

In 1994, Gingrich dismantled not only the DSG but also the conservative caucus through his elimination of funding for Legislative Service Organizations. His goal was not just to weaken the Democrats but to centralize his own power.

Some Republicans, like John Doolittle of California and Sam Johnson of Texas, were furious with Gingrich’s decision and re-established their caucus with outside funding. Their numbers kept growing, and after the 2010 elections they reached 164. Under Boehner, according to a story in National Journal, the Republican

j. scot t applewhite / ap images

Study Committee became a highly influential force that had the power to subvert any bill they opposed or to push items forward on the legislative agenda. Their position has often been decisive. Boehner could only ignore them at his peril. The group celebrated when one of their most prominent members, Louisiana Republican Steve Scalise, was appointed in June as the Republican Whip, a sign of how far this caucus had come.

Democrats would do well to study the immense value that the DSG had offered in the heyday of liberalism. At the height of its power, the DSG was much more than an information service. The caucus provided a vibrant organizational home for a cross section of liberal Democrats and served a number of important functions. DSG leaders were very effective at political organization, developing a strong alternative whip system to that of the leadership and offering campaign help to allied members. When the leadership was willing to work with them, they could provide muchneeded assistance; when the leadership moved in a different direction, they had the prowess to influence the kinds of compromises being made by fellow Democrats. The caucus made procedural and structural issues central to their agenda, realizing that the way the political process worked had a huge impact on the kinds of policies that were possible. Under Richard Conlon, they developed a system of research and communications that proved to be awesome in its impact, gaining the attention of the media, the leadership, and even some of their fiercest opponents. Bolling and Burton were able to develop ties to House leadership and preserved a seat at the table during discussions over the party agenda.

A key question is how such a caucus could function with Democrats in the House minority, where unity and strategic coherence matter immensely. Proponents of the idea say that such an organization could play an important role both in challenging Republican rule and in helping candidates plan for the 2016 campaign, where the coattails of a Democrat like Hillary Clinton could help win back the majority. “DSG was an incubator of ideas and policy framework,” Mike Wessel, who worked for former Democratic Majority Leader Richard Gephardt, tells me. “Today, there is little broad

DSG’s Children? Representatives Raul Grijalva (Arizona) and Keith Ellison (Minnesota) co-chair the Congressional Progressive Caucus. It has fighting spirit, but little of the clout of the DSG’s glory days.

inquiry into issues such as income inequality, workforce development, or other critical issues but, rather, there’s the ‘flavor of the day’ political idea designed to show concern without, all too often, an integrated approach. DSG sponsored political debate on a broader scale and its absence has been deeply felt by average, hardworking Americans.” In principle, a new DSG could provide something of a counterweight to Tea Party Republicans who have been extremely successful at shaping the legislative agenda and pushing their party rightward.

They could also work on a long-term strategy to provide assistance to the campaigns of new liberal Democratic candidates and mentor liberal Democratic incumbents, as the DSG did beginning in the 1950s.

Though skeptical that a new DSG would really solve the ideological and strategic challenges that House Democrats currently face, Roger Hickey, co-director of the Campaign for America’s Future, believes there is a role for an organization of liberal Democrats who can work with younger members to show them that “economic populism can work politically,”

as senators like Elizabeth Warren (Massachusetts) and Sherrod Brown (Ohio) have been proving in the upper chamber.

The history of the DSG demonstrates that their organizational prowess was hugely important in moving forward a liberal agenda and in making sure that liberal electoral gains were institutionalized in the operation of the House. Enthusiasts of the DSG believe Democrats, continuing in the minority after 2014, could use something like the DSG to gain momentum before the next elections. If they do recapture the majority in 2016 or afterward, they will need this kind of organizational voice outside the leadership structure to give ideological and organizational impetus to the forces that progressives need to rebuild a majority politics.

Julian E. Zelizer is a political historian at Princeton University and a fellow at New America. His new book, published by Penguin Press, is The Fierce Urgency of Now: Lyndon Johnson, Congress, and the Battle for the Great Society.

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A Needless Default

The administration’s foreclosure relief program was designed to help bankers, not homeowners. That disgrace will haunt Democrats.

By Dav id Daye n

b ackg r o u n d: i o f oto / foto li a ; d o n rya n / a p i m ag e s

After her stroke, Alice Emile of Freeport, New York, wanted to die at home. On April 24, 2009, she passed away quietly at the age of 74. Her son Darrell Emile, executor of the estate, had to close the reverse mortgage she took out in 2006, which had passed into the hands of Bank of America.

A Bank of America representative told Emile he would receive a payoff document within six months, and have six additional months to determine the best way to settle the account. This is considered standard for reverse mortgage closings. But in October 2009, a bank representative claimed that they had never received word that Emile’s mother had died (even though, by this time, the bank was addressing letters about the house to “the Estate of Alice Emile”). After Emile faxed Bank of America the death certificate, for what he says was the third time, the bank informed him that the account was in default.

Emile had the money to settle the mortgage, and would have had he simply received a payoff document. But Bank of America never delivered one, and they refused his offers to pay afterward, instead filing for foreclosure in May 2010. Since Emile cannot get a payoff document, he cannot sell the home, which is stuck in limbo awaiting completion of foreclosure. The estate did, however, benefit in April 2013 from the Independent Foreclosure Review, a Federal Reserve–led settlement designed to compensate homeowners for foreclosure errors. The check was for $300.

P

oliticians, economists, and commentators are debating the causes of the rise in inequality of income and wealth. But one primary cause is beyond debate: the housing collapse, and the government’s failure to remedy the aftermath. According to economists Emmanuel Saez and Gabriel Zucman, the bottom 90 percent of Americans saw one-third of their wealth wiped out between 2007 and 2009, and there has been no recovery since. This makes sense, as a great deal of the wealth held by the middle and working classes, particularly among African Americans and Hispanics, is in home equity, much of which evaporated after

the bubble popped. The effects have been most severe in poor and working-class neighborhoods, where waves of foreclosure drove down property values, even on sound, well-financed homes. Absent a change in policy, Saez and Zucman warn, “all the gains in wealth democratization achieved during the New Deal and the postwar decades could be lost.”

President Obama will carry several legacies into his final two years in office: a long-sought health care reform, a fiscal stimulus that limited the impact of the Great Recession, a rapid civil rights advance for gay and lesbian Americans. But if Obama owns those triumphs, he must also own this tragedy: the dispossession

of at least 5.2 million U.S. homeowner families, the explosion of inequality, and the largest ruination of middle-class wealth in nearly a century. Though some policy failures can be blamed on Republican obstruction, it was within Obama’s power to remedy this one— to ensure that a foreclosure crisis now in its eighth year would actually end, with relief for homeowners to rebuild wealth, and to preserve Americans’ faith that their government will aid them in times of economic struggle.

Faced with numerous options to limit the foreclosure damage, the administration settled on a policy called HAMP, the Home Affordable Modification Program, which was entirely voluntary. Under HAMP, mortgage companies were given financial inducements to modify loans for at-risk borrowers, but the companies alone, not the government, made the decisions on whom to aid and whom to cast off.

In the end, HAMP helped only about one million homeowners in five years, when ten million were at risk. The program arguably created more foreclosures than it stopped, as it put homeowners through a maze of deception designed mainly to maximize mortgage industry profits. More about how HAMP worked, or didn’t, in a moment.

HAMP cannot be justified by the usual Obama-era logic, that it represented the best possible outcome in a captured Washington with Republican obstruction and supermajor-

Winter 2015 The American Prospect 63

ity hurdles. Before Obama’s election, Congress specifically authorized the executive branch, through the $700 billion bank bailout known as TARP, to “prevent avoidable foreclosures.” And Congress pointedly left the details up to the next president. Swing senators like Olympia Snowe (Maine), Ben Nelson (Nebraska), and Susan Collins (Maine) played no role in HAMP’s design. It was entirely a product of the administration’s economic team, working with the financial industry, so it represents the purest indication of how they prioritized the health of financial institutions over the lives of homeowners.

Obama and his administration must live with the consequences of that original sin, which contrasts with so many of the goals they claim to hold dear. “It’s a terrible irony,” said Damon Silvers, policy director and special counsel for the AFL-CIO, who served as deputy chair of the Congressional Oversight Panel for TARP. “This man who represents so much to people of color has presided over more wealth destruction of people of color than anyone in American history.”

Andrew Delany, a licensed carpenter from Ashburnham, Massachusetts, was diagnosed with a spinal disorder a couple weeks before the financial crisis of September 2008. He immediately sought mortgage help, but his lender, Countrywide, told him to call back after the presidential election. By then, Delany had no savings left. “You do all the paperwork to get a HAMP or a HARP or a hope and some help,” Delany says, referring to the governmentsponsored programs for mortgage modifications. His letters to Countrywide, and then Bank of America after they purchased Countrywide, were often returned unopened.

Delany fought for three years, acting as his own lawyer because he could not afford one, before the bank was allowed to foreclose at the end of 2011. Bank of America then suddenly withdrew the foreclosure. The loan servicing got sold to a debt collector, who has refused to take Delany’s calls. They could restart foreclosure on Delany at any time, but he’s not leaving. “I have nothing to lose but my house,” Delany says.

The Obama administration legacy on hous-

ing policy began before he entered office. By the time of Lehman Brothers’ failure in September 2008, defaults on subprime loans had spiked

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significantly. A critical mass of Democrats in Congress refused to agree to TARP unless some portion got devoted to keeping people in their homes. (The Obama Treasury Department would eventually devote $50 billion of TARP funds to this purpose, of which only $12.8 billion has been spent, more than five years later).

The most direct and effective policy solution to stop foreclosures is to allow bankruptcy judges to modify the terms of primary-residence mortgages, just as they can modify other

One division of the bank began foreclosure proceedings while another appeared to be negotiating a loan modification. debt contracts. This is known in the trade as “cramdown,” because the judge has the ability to force down the value of the debt. The logic of bankruptcy law reduces debts that cannot be repaid in order to serve a broader economic interest, in this case enabling an underwater homeowner to keep the house.

Liberal lawmakers believed the threat of cramdown would force lenders to the table, giving homeowners real opportunities for debt relief.

Wall Street banks were so certain they would have to accept cramdown as a condition for the bailouts that they held meetings and conference calls to prepare for it.

But although then-Senator Obama endorsed cramdown on the campaign trail, he supported

a bailout package that deferred the provision until after the elections. Donna Edwards, then a freshman congresswoman, received a personal commitment from candidate Obama that he would pursue cramdown at a later date, and it swung her vote for the bailout. On January 15, 2009, Obama’s chief economic policy adviser, Larry Summers, wrote to convince Congress to release the second tranche of TARP funds, promising that the incoming administration would “commit $50-$100 billion to a sweeping effort to address the foreclosure crisis … while also reforming our bankruptcy laws.” But the February 2009 stimulus package, another opportunity to legislate mortgage relief, did not include the bankruptcy remedy either; at the time, the new administration wanted a strong bipartisan vote for a fiscal rescue, and decided to neglect potentially divisive issues. Having squandered the must-pass bills to which it could have been attached, a cramdown amendment to a housing bill failed in April 2009, receiving only 45 Senate votes.

Senate Majority Whip Dick Durbin, who had offered the amendment, condemned Congress, declaring that the banks “frankly own the place.” In fact, the administration had actively lobbied Congress against the best chances for cramdown’s passage, and was not particularly supportive when it came up for a vote, worrying about the impacts on bank balance sheets.

Former Treasury Secretary Timothy Geithner admitted in his recent book, “I didn’t think cramdown was a particularly wise or effective strategy.” In other words, to get the bailout money, the economic team effectively lied to Congress when it promised to support cramdown.

The administration’s eventual program, HAMP, grew out of the banking industry’s preferred alternative to cramdown, one where the industry, rather than bankruptcy judges, would control loan restructuring. Unfortunately, the program has been a success for bankers and a failure for most hard-pressed homeowners.

In 2005, Hurricane Wilma blew down the auto repair shop that James Elder and his brother had owned for 25 years. He had just refinanced into a new mortgage on his home in West Palm Beach, Florida, weeks earlier, through National City Bank. A subsequent business failed in the wake of the Great

Absentee Owned: In the crisis there are too many repossessions, not enough refinancings.

d av i d g o l d m a n / a p i m a g e s

Recession, and by January 2009, Elder had to default on his mortgage loan payments.

He tried to get a loan modification through HAMP when the program came out in March 2009, but National City (which would eventually be purchased by PNC Bank) “dual tracked” him. One division of the bank began foreclosure proceedings while another appeared to be negotiating the loan modification in good faith.

Elder sent in paperwork six times, and on two occasions got firm agreements for a modification, but both agreements fell through. He has almost never talked to a human being at his mortgage servicer during the last five years.

PNC voluntarily withdrew the case, and then re-filed it years later. Another hearing was pending as we went to press. “I don’t know what the outcome will be; we’re ready either way,” Elder says. “I don’t deny that I owed the money. All I wanted was a fair shake. Help never came for the homeowners.”

In appreciating how HAMP failed home-

owners, it’s important to understand the role of “servicers.” We’re no longer in the age of It’s a Wonderful Life; your lender does not hold onto your mortgage anymore. During the housing bubble, most loans were sold to intermediaries, packaged into securities, and passed off to bond investors, such as pension funds.

Servicers were hired to process monthly payments, handle day-to-day contact with homeowners, and distribute the proceeds along to the investors. Servicers also decide when to foreclose and when to modify loans, making them the key to HAMP ’s success.

Servicers, basically glorified accountsreceivable departments staffed by line-level workers making relatively low wages, can eke out a profit as long as they never need to perform any customer service. They had neither the expertise nor the resources to handle millions of individual requests, no matter how much money the Treasury offered them to modify loans. “There was no way HAMP could have worked on the scale that it would have needed to work,” says Max Gardner, a bankruptcy lawyer and an expert on foreclosures.

“You’re trying to turn servicers into underwriters.” From the first waves of the foreclosure crisis, it was clear that servicers had no capacity to fulfill this role.

The Treasury Department, which engineered HAMP, compounded the problem by making the program exceedingly complex, tweaking it on the f ly with new rules and guidelines. This sprung from their consuming obsession with ensuring that only “worthy” borrowers received modifications, perhaps spurred on by Rick Santelli’s proto–Tea Party

rant against undeserving homebuyers. The preoccupation with moral hazard was targeted at homeowners instead of banks, creating overlapping income and asset double-checks to weed out the unworthy and placing more burdens on overstretched servicers.

Worse yet, servicers have their own financial incentives that run counter to the modest incentive payments in HAMP. Servicers make their money based on a percentage of unpaid principal balance on a loan. Forgiving principal—the most successful type of loan modification—eats into servicer profits, so servicers shy away from principal reduction, preferring less effective interest rate cuts.

Plus, servicers collect structured fees—such as late fees—which make it profitable to keep a borrower delinquent. Even foreclosures don’t hurt a servicer, because they make back their portion of fees in a foreclosure sale before the investors for whom they service the loan. The old manner of mortgage lending gave everyone a stake in keeping homeowners in their homes; now, the incentives are all mismatched.

If HAMP’s goal was truly to prevent foreclosures, there is no good explanation for why the program operates the way it does. Servicers couldn’t handle a minimal caseload, let alone a byzantine program. The incentive problems between loan owners and loan servicers were well known. But if HAMP could give homeowners enough hope that they could save their home by making a few more payments, the Treasury could prevent outright defaults or deeper principal reductions from crashing the value of mortgage-backed bonds and derivatives, many of which were held by banks. So bank balance sheets, not homeowner fortunes, took priority.

HAMP defenders often cite the enormous complexity in the structure of mortgage ownership as a reason for the program’s failure to deliver more relief to homeowners. But bank bailouts were just as difficult to negotiate, says Amir Sufi, professor of finance at the University of Chicago’s Booth School of Business.

“Those programs got done,” Sufi says. “Programs to help homeowners never did.”

Other officials found ways to manage mortgage relief. Former FDIC chair Sheila Bair engineered a kind of dry run of HAMP in 2008, when her agency took over the failed subprime lender IndyMac. Needing to salvage a cascade

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Defending Lenders: HUD Secretary Shaun Donovan and Treasury Secretary Tim Geithner, with dissenter Sheila Bair of the FDIC

have already re-defaulted, a rate of about 30 percent. The oldest HAMP modifications have re-default rates as high as 46 percent. And HAMP modifications are temporary, with the interest rate reductions gradually rising after five years. The first rate resets began this year.

Kim Thorpe, whom everyone knows as KT, answered her door one day to find the sheriff of Harrison, Maine, handing her foreclosure papers. “This has to be wrong, I just made the payment,” Thorpe told him.

That was in March 2010. Citi Mortgage, which services the loan, has taken Thorpe to court on multiple occasions, but the servicer keeps voluntarily dismissing the cases before trial. Citi Mortgage continues to call Thorpe to collect a debt, which they claim has ballooned to $157,000. But Citi has never found the documents to prove standing to foreclose, which Thorpe never tires of telling them. “When they know that you don’t fear them, you’ve taken away their power,” she says.

Citi can still try to locate the proper documents and pursue foreclosure again. In the meantime, Thorpe is fighting stage three breast cancer. She and her husband have separated and their kids have moved out. “It’s a house now, not a home,” she says. But she continues to wait for the bank’s next move.

The cynical view is that HAMP worked exactly to the Treasury’s liking. Both Senator Elizabeth Warren and former Special Inspector General for TARP Neil Barofsky revealed that then-Secretary Geithner told them HAMP ’s purpose was to “foam the runway” for the banks. In other words, it allowed banks to spread out eventual foreclosures and absorb them more slowly. Homeowners are the foam being steamrolled by a jumbo jet in that analogy, squeezed for as many payments as they can manage before losing their homes.

HAMP facilitated such a scheme perfectly.

Giving discretion on modifications to mortgage servicers meant that they would make decisions in their own financial interest. No losses would be forced on the owners of the loans, and no principal forgiveness would be made mandatory. The system, by design, worked for financial institutions over homeowners.

The Obama administration “viewed foreclosures as an instrument of housing markets clearing,” Damon Silvers says. “And they thought foreclosures were unavoidable, in order to maintain the fiction that these loans were worth what banks said on the balance sheet.”

Silvers explains that only minimal taxpayer funds, far less than the total needed, were devoted to preventing foreclosures; banks never had to kick in their own share. “In order

ger ald herbert / ap images

of bad loans and prevent a foreclosure epidemic, Bair initiated a very different process.

“Basically, we sent you a letter saying based on our records, we’re giving you a new mortgage payment at 31 percent of your income,” Bair says. “What you need to do is sign this form, give the first month’s check, a W2, and the name of your employer. It’s like a couple pages.

Then you got your loan mod [modification].”

The Treasury’s HAMP design was infinitely more cumbersome, effectively sabotaging the program before it got started. “We would have helped unworthy borrowers, but did that matter at that point?” Bair asks. “We helped unworthy banks too.”

Servicers quickly discovered that they could game HAMP in their own interest, using it as a kind of predatory lending program. One tactic was to chronically lose borrowers’ income documents to extend the default period. “I’m doing a book now,” Bair says, “and [in] almost every family I interviewed, servicers had lost their paperwork at least once.” Prolonged “trial modifications” allowed servicers to rack up payments and late fees while advancing the foreclosure process behind the borrower’s back. They could then trap the borrower after denying the modification, demanding back payments, missed interest, and late fees, using the threat of foreclosure as a hammer. “They created a situation where the borrower would start making the payments, end up not getting the modification, and still go into foreclosure,” Bair says.

This pattern happened with disturbing regularity. According to a recent Government Accountability Office report, 64 percent of all applications for loan modifications were denied. Employees at Bank of America’s mortgage servicing unit offered perhaps the most damning revelations into servicer conduct. In a class-action lawsuit, these employees testified that they were told to lie to homeowners, deliberately misplace their documents, and deny loan modifications without explaining why. For their efforts, managers rewarded them with bonuses—in the form of Target gift cards—for pushing borrowers into foreclosure.

Because of all this, HAMP never came close to the 3–4 million modifications President Obama promised at its inception. As of August 2014, 1.4 million borrowers have obtained permanent loan modifications, but about 400,000 of them

for the economy to be revived, we needed to write down the principal on these loans,” he says. “The decision that was made amounted to debt peonage on U.S. families to the benefit of the banks.”

Indeed, the administration missed or delayed several opportunities to provide relief and prevent foreclosures while also boosting the economy. During the 2008 presidential debates, John McCain proposed a $300 billion plan to buy up mortgages and renegotiate their terms, similar to the Depression-era Home Owner’s Loan Corporation. There were also bipartisan calls for a mass refinancing program for underwater homeowners, which would save them billions in monthly payments.

Ultimately, the administration never tried to buy mortgages (though plenty of hedge funds did), and their refinancing program didn’t produce even its meager results until 2012, years after the crisis erupted.

Two critical moments perfectly illustrate the Treasury’s priorities on HAMP and housing. First, the department laid out precise program guidelines—in a thick handbook— that banned many of the practices in which servicers engaged. But the Treasury never sanctioned a servicer for contractual noncompliance, and never clawed back a HAMP incentive payment, despite documented abuse. In the summer of 2011, the Treasury temporarily withheld incentive payments, but they would eventually hand over all the money. If the program had actually put borrowers first, they could have used sanctions to force better outcomes.

Then, in October 2010, it was revealed that, in order to verify standing to foreclose, servicers forged and backdated assignments, and “robo-signed” affidavits attesting to their validity without any knowledge of the underlying loans. Almost immediately, the top five servicers paused their foreclosure operations.

Nobody knew how much legal liability servicers had, but with state and federal law enforcement investigating and potentially trillions of dollars in mortgages affected, the numbers were expected to be high.

At the FDIC, Sheila Bair immediately saw this as an opportunity. “When robo-signing raised its ugly head, I sent a proposal to Tim [Geithner],” Bair says. “I called it a super-mod.

Any loan that’s more than 60 days delinquent, take it down to face value—just take it down.

Write off that principal. And if they held onto the house and kept making their mortgage payment, any subsequent appreciation they would have had to share with the lenders. But just take it down.”

But the Treasury didn’t use this newfound leverage to force losses onto the banks. Instead, they were more concerned with a “global settlement” with bankers to defuse the issue, limit

The HAMP mortgage relief program never came close to the 3–4 million modifications that President Obama promised. bank losses, and make the situation manageable for the perpetrators.

After a perfunctory investigation, state and federal officials reached an agreement with the top five servicers, called the National Mortgage Settlement. Despite claims that a million homeowners would get principal reductions as a result, in the end only 83,000 received such help. Other settlements for fraudulent conduct delivered no jail time, the payment of penalties with other people’s money, empty promises to never misbehave again, and cash awards to victims that were so low some didn’t even bother to cash the checks. The administration refused to use the leverage from bank mistakes to the benefit of borrowers, because they didn’t

want to hurt banks. “We were just seeing the world through two different prisms,” Bair says.

Mike Malleo of Manasquan, New Jersey, refinanced into an infamous “Pick-a-Pay” loan from World Savings Bank in 2005, which offered a low teaser rate. Years later, his late wife contracted stage four pancreatic cancer, and the subsequent medical bills, loss of wages, and eventual reset of the interest rate made it impossible to afford the mortgage.

A settlement with the New Jersey attorney general over Pick-a-Pay mortgages entitled Malleo to a loan modification. But Malleo never received relief, despite applying on four separate occasions. Instead, Wells Fargo told him to stop paying so as to qualify for HAMP, but then used that default to file for foreclosure, sell the property to the bank itself, and set an eviction date of August 21, 2014.

Weeks before eviction, Malleo received a letter from Home Start Housing Center promising they could get him out of foreclosure. After submitting his information, Home Start sent him an offer—on Wells Fargo stationery— approving him for a HAMP modification with a lower monthly payment.

Malleo sent in his payment, but that day, two sheriffs and a moving truck came to evict him from the house. Wells Fargo claims to have never heard of Home Start. After initially insisting that Wells Fargo must accept the terms of the approved modification, days later Home Start returned his check and rescinded the offer. Malleo moved out of the house October 1. “The web of deceit is overwhelming,” Malleo says. “The embarrassment, the disgrace that has occurred is amazing.”

We’re still in a foreclosure crisis, five

years after the technical end of the Great Recession. While leading indicators like delinquencies and foreclosure starts have fallen from their peak, they remain “at nearly three times the normal level,” says Sam Khater, deputy chief economist at housing specialist CoreLogic. More than 8.7 million homeowners remain underwater, with the borrower owing more than the home is worth, and more than half a million families will lose their homes this year under current trends. More troubling, delinquencies and foreclosure starts have inched back up in recent

Winter 2015 The American Prospect 67

months. In August, analyst RealtyTrac found that foreclosure auctions increased for the first time in 44 months, and foreclosure filings in the third quarter of 2014 also jumped, breaking a three-year string of declines.

This new foreclosure activity is not concentrated in new loans, which have very low default rates. The problem is practically all legacy loans from bubble-era mortgages sold on houses that had unsustainably high prices and appraisals to people struggling with stagnant wages and financial insecurity. In other words, the crisis was never solved; it was deferred. In the coming years, two million loan modifications, including HAMP loans, will face higher interest rate resets, and 800,000 of those loans are underwater. Another foreclosure spike is a distinct possibility.

Banks have also decided to finally cut through their foreclosure backlog, after modest increases in the value of real estate made it more attractive to them to seize the homes. In Florida, money from the National Mortgage Settlement that is supposed to help borrowers instead funds foreclosure courts, which have a stated directive to dispose of cases and get to evictions, regardless of the history of lender abuses.

“The courts have been corrupted and co-opted like we’d never imagine,” says Matt Weidner, a foreclosure defense attorney in Tampa.

Mortgage servicers remain beset with the same scarce resources, wrongheaded financial incentives, and unprepared staffs. The Consumer Financial Protection Bureau recently released evidence of servicers violating new rules that the CFPB put in place in January 2014, including failure to execute loan modification agreements, incorrect reports to credit agencies, and misrepresentation of borrower options. In October, New York banking regulator Ben Lawsky found that mortgage servicer Ocwen backdated thousands of loan modification denial letters to avoid a 30-day appeal process (an old Bank of America trick).

Foreclosures before courts now often feature robo-witnesses, entry-level employees with no knowledge of the underlying loans, who come to court reading a script attesting to the veracity of the servicer’s claims. “The biggest result of the robo-signing controversy has been to move it into the courtroom,” says Thomas Ice, a Florida defense lawyer who exposed robo-

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signing in several depositions in 2010. “They don’t give their signature, they just perjure themselves in court.”

The persistent crisis, and the lack of sanctions for anyone responsible for misconduct, continues to weigh down the economy. As Amir Sufi and Atif Mian’s groundbreaking research shows, consumer spending fell hardest in the areas where home prices dropped the most, particularly poor areas where people of color were preyed on by the subprime

Perhaps the worst legacy of the failure to stop the foreclosure crisis is the impact on trust in government itself. lending industry. More foreclosures fueled heavier price declines, creating a vicious cycle.

The consequent destruction of wealth led to reduced demand from over-indebted borrowers, contributing to a pervasively weaker economic recovery. And lower net worth means less consumption going forward, particularly in housing. “This permanent scar has been left on the middle class,” Sufi says.

The Obama administration’s most recent attempt at a solution is to loosen lending restrictions to jump-start the housing market. That trades financial instability for a short-term housing stimulus, and could put homeowners in significant peril. “Everyone’s on board with allowing debt to build up during a boom,” Sufi

says, “but we now know afterwards, policymakers will leave people out to dry. You’re going to suffer losses and not get any forgiveness.”

Americans implicitly understand this.

Household formation has been “disturbingly slow” since the Great Recession, says former Fannie Mae housing economist Tom Lawler.

Homeownership rates have descended to 1995 levels, according to the Census Bureau, with the losses concentrated most in Generation X, which bore the full impact of the foreclosure crisis. Housing ordinarily leads an economic recovery—but not this one. Part of this weakness is caused by low income growth and depressed housing prices that feed on themselves. But there are psychological as well as economic scars from millions of foreclosures.

Amid the carnage, people have naturally shied away from placing their wealth in a volatile asset like a home.

Perhaps the worst legacy of the failure to stop the crisis is the impact on trust in government itself. HAMP’s predatory lending schemes reinforced the old Ronald Reagan dictum that the most dangerous words in the English language are “I’m from the government and I’m here to help.” How do you tell families who signed up for an aid program that ended up actively harming them to ever believe in government again?

Particularly for a president like Obama, who entered office on a promise of activist government, with ardent backing from communities of color victimized by the crisis, the decision to protect banks over homeowners was debilitating. A tide of cynicism swept out Democrats in the last midterm elections, with voters more skeptical than ever that government can solve problems, or take the people’s side over the financiers. Two-thirds of voters in exit polls found the economy to be rigged for the wealthy.

“The consequence of these decisions was the disillusionment of his base in believing that political action is going to work,” says Damon Silvers. “They weakened the Obama presidency in ways he could never recover from.”

David Dayen is a contributing writer to Salon.com and a weekly columnist for The Fiscal Times. His forthcoming book about foreclosures will be published by the The New Press.

What the Free Market Can’t Do A Special Report

This report was made possible through the generous supportWWW.Prospect.org of Gordon Gamm.

Winter

70

2015

The Libertarian Delusion

The free-market fantasy stands discredited by events.

The challenge now: redeeming effective and democratic government

By Robert Kuttner

T

he stubborn appeal of the libertarian idea persists, despite mountains of evidence that the free market is neither efficient, nor fair, nor free from periodic catastrophe. In an Adam Smith world, the interplay of supply and demand yields a price that signals producers what to make and investors where to put their capital. The more that government interferes with this sublime discipline, the more bureaucrats deflect the market from its true path.

But in the world where we actually live, markets do not produce the “right” price. There are many small examples of this failure, but also three immense ones that should have discredited the libertarian premise by now. Global climate change is the most momentous. The price of carbon-based energy is “correct”—it reflects what consumers will pay and what producers can supply—if you leave out the fact that carbon is destroying a livable planet. Markets are not competent to price this problem. Only governments can do that. In formal economics, this anomaly is described by the bloodless word “externality”— meaning costs (or benefits) external to the immediate transaction. Libertarian economists treat externalities as minor exceptions.

The other great catastrophe of our time is the financial collapse. Supposedly self-regulating markets could not discern that the securities created by financial engineers were toxic. Markets were not competent to adjust prices accordingly. The details of the bonds were opaque; they were designed to enrich middlemen; the securities were subject to investor herd-instincts; and their prices were prone to crash once a wave of panic-selling hit. Only government could provide regulations against fraudulent or deceptive financial products, as it did to good effect until the regulatory process became corrupted

beginning in the 1970s. Deregulation arguably created small efficiencies by steering capital to suitable uses—but any such gains were obliterated many times over by the more than $10 trillion of GDP lost in the 2008 crash.

A third grotesque case of market failure is the income distribution. In the period between about 1935 and 1980, America became steadily more equal. This just happened to be the period of our most sustained economic growth. In that era, more than two-thirds of all the income gains were captured by the bottom 90 percent, and the bottom half actually gained income at a slightly higher rate than the top half. By contrast, in the period between 1997 and 2012, the top 10 percent captured more than 100 percent of all the income gains. The bottom 90 percent lost an average of nearly $3,000 per household.

The reason for this drastic disjuncture is that in the earlier period, public policy anchored in a solid popular politics kept the market in check.

Strong labor institutions made sure working families captured their share of productivity gains. Regulations limited monopolies. Government played a far more direct role in the economy via public investment, which in turn stimulated innovation. The financial part of the economy was well controlled. All of this meant more income for the middle and the bottom and less rapacity at the top.

Clearly, a more equal economy performed better than a more unequal one. Families with decent incomes could recycle that purchasing power back into the economy. Well-regulated financial institutions could do their job of supplying investment capital to the real economy rather than enriching their own executives with speculative schemes—ones that left the rest of the society to take the loss when the wise guys were long gone. In the case of labor, there was

not a single, “accurate,” market- ­determined wage for each job, but a wide range of possible wages and social bargains that would attract competent workers and steadily increase the economy’s productivity.

The free market doesn’t live up to its billing because of several contradictions between what libertarians contend and the way the real world actually works. Fundamentally, the free-market model assumes away inconvenient facts. Libertarians presume no disparities of information between buyer and seller, no serious externalities, no public goods that markets can’t properly price (Joan Fitzgerald’s piece in this report discusses one—water), and above all no disparities of power. But in today’s substantially deregulated economy, bankers have far more knowledge and power than bank customers (witness 75 Why Economists Cling the subprime decep to Discredited Ideas tion); corporations

By Jeff Madrick have far more power 79 The Perils of Privatization tha n employees;

By Ann Hagedorn insurers have more 81 Why Markets power than citizens Can’t Price the Priceless seeking health insur

By Joan Fitzgerald ance. Labor markets 83 Markets, States, can’t compensate for disparities of power. and the Green Transition

By Fred Block The health insurance “markets” created 85 Hating the Hand by the Affordable that Enriches You

By Roger Lowenstein Care Act can’t fully address the deeper problem of misplaced resources and excessive costs in our medical system.

The conditions of the idealized market model do describe ordinary retail markets, where there are plenty of restaurants, supermarkets, dry cleaners, and hardware stores,

Winter 2015 The American Prospect 71

The claim that free markets equal human freedom leaves out government’s role in promoting affirmative liberties that protect people from assaults of the private sector. and consumers are competent to shop around for price and quality. They don’t accurately characterize the markets in health, education, labor, finance, or technological innovation, to name just five. (What is efficient about a hedge fund mogul taking home $2 billion, or a lifesaving pill that retails for $5,000 a dose?)

To produce an economy that is more equitable as well as more efficient, government uses a variety of tools. It regulates to counteract market failure. It taxes to provide revenues to pay for public goods that markets under-provide at affordable prices—everything from education to health to research and development. Sometimes government passes laws to sustain other elements of a social contract, such as the laws protecting workers’ rights to form unions and to collectively bargain.

Government can invent things that markets never would have imagined. Apple has created wonders, but it has piggybacked on government investment in advanced semiconductors and the Internet. America’s biotech industry’s success was reliant on massive government investment in the Human Genome Project and other basic research. Later in this special report, Fred Block’s piece describes the indispensable government role in innovation. Commercial broadcasters were disinvesting in radio as a serious medium of news, public affairs, culture, and humor, when along came public radio, partly underwritten by government and partly by listener-subscribers. NPR demonstrated that ingenious and high-quality noncommercial programming could attract an audience that for-profit companies did not know was there.

There is another, more fundamental point ignored by libertarians. The market itself is a creature of government. As Karl Polanyi famously wrote in a seeming oxymoron,

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“laissez-­faire was planned.” Markets could not exist without states defining the terms of property ownership and commerce, creating money, enforcing contracts, protecting patents and trademarks, and providing basic public institutions. A Robinson Crusoe world never existed.

So the real issue is not whether government “intrudes” on the market—the capitalist system is impossible without government. The practical question is whose interests the state serves.

So the core libertarian claim that mar-

kets are efficient stands demolished by historical evidence. However, libertarians make a second claim: Free markets are the sublime expression of human liberty. This second contention gives libertarian ideology much of its persuasive power. In the resurrection of free-market theory after its first burial in the wake of the Great Depression, a remnant of libertarian economists led by Friedrich Hayek engaged in a technical duel with John Maynard Keynes about whether markets were self-correcting after all. Hayek won few converts. But in the 1940s, Hayek hit pay dirt with his argument that markets epitomized freedom. This claim was taken a step further by Milton Friedman a generation later.

In the idealized libertarian world, individuals are “free to choose”—never mind that some are born with far more resources with which to choose than others. In the Hayek-Friedman world, government, except for its minimal role of keeping the peace and protecting property values, is the enemy of freedom. Hayek went so far as to write a book in 1944, The Road to Serfdom, contending that democratic forms of planning were destined to lead down the same road to totalitarianism that ended with Stalin and Hitler. Hayek remained a revered figure to libertarians—he even won a Nobel Prize—despite

the fact that there is not a single case where democratic planning led to dictatorship, but countless instances where market turbulence led displaced citizens to turn to anti-democratic strongmen. Adding insult to injury, the HayekFriedman remedy for when markets don’t work is: We need even more market. We saw how well that worked in the financial collapse.

Beyond assuming away inherited disparities, the Hayek-Friedman equation of markets and freedom leaves out the role of government in promoting affirmative liberties. A young person from a poor family who does not need to incur crippling debt to attend university is a freer person. A low-income mother who cannot afford to pay the doctor attains a new degree of freedom when she and her children are covered by Medicaid. A worker who might be compelled to choose between his job and his physical safety becomes freer if government health and safety regulations are enforced. The employee of a big-box store who can take paid family leave when a child gets sick is freer than one whose entire life is at the whim of the boss; likewise a worker with a union contract that provides protection from arbitrary dismissal or theft of wages. An elderly person saved from destitution by a government-organized Social Security pension has a lot more liberty than one bagging groceries at age 80 to make ends meet, or one choosing between supper and filling a prescription. An aspiring homeowner who doesn’t need to spend countless hours making sure that the mortgage won’t explode is freer to spend leisure time on other activities if government is certifying which financial products are sound and is prohibiting other kinds.

I could go on, but you get the idea. These are not arcane examples, written in the algebraic idiom of formal economics. They are common-

The Libertarian Delusion

sense experiences familiar to us all—and fruits of government spending or regulation. Clearly, there will never be enough charity, benign employer paternalism, or self-correction on the part of markets to solve these problems. Lately, as markets have gained ground at the expense of social counterweights, more of us find ourselves at the mercy of market forces, as played by bosses, insurers, and financial engineers.

Why, then, does the libertarian appeal

persist? The free-market fantasy violates both the reality of big events like the financial collapse and the lived experience of most Americans. Jeff Madrick, in the piece that follows, explains why the free-market model persists among economists—it creates a nice pseudoscience, and society’s most powerful people tend to reward professional economists who solemnly advise that government should keep away. But why does the libertarian ideal seduce so many regular people?

Here, we need to introduce the other main protagonist in this drama—government. To Hayek, Friedman, and other libertarian theorists, government is a hopeless case because the state is a monopoly. Even in a democracy, periodic elections are a clumsier form of accountability than the instant discipline of adjustments in price—the market’s version of self-correction. Fellow libertarian theorists such as James Buchanan, another Nobel laureate, added the thought that governments might serve the general interest in theory but in practice bureaucrats were prone to feathering their own nests. Buchanan, missing the irony, termed this behavior “rent-seeking,” which is an old-fashioned economists’ term for pursuit of monopoly profits by market players.

Any fair assessment of who is the bigger rent-

seeker would point to bankers and corporate monopolies far more than public officials.

However, the story gets more complicated when there is a revolving door between government officials and industries. In that case, it isn’t “the state” or “the market” that is the inefficient culprit, but a corrupt symbiosis between the two. That reality tends to blur the argument. When Hayek and Friedman were first writing, their story was less plausible because government and the larger social contract that it sponsored were delivering for most regular people. That’s less the case today.

Ann Hagedorn, in her article for this special report, describes privatization as a case of corrupt government-market symbiosis. Chris Christie, governor of New Jersey, steers contracts to a crony to operate government-supported halfway-house prisons. The halfway houses are a disaster—conditions are deplorable; inmates are able to walk away; the vendor is reaping windfall profits. Who is to blame?

Voters conclude that the public officials and private contractors are all scoundrels. And such arrangements aren’t devised only by marketloving, government-hating Republicans like Christie. The public is just as cynical when the Obama administration bails out Wall Street.

One of Obama’s top White House economic officials, Michael Froman, in a previous career at Citigroup, ran a private equity group that tried to privatize the Pennsylvania Turnpike. In Chicago, parking meter costs have gone through the roof because of a privatization deal promoted

by Democrats with Wall Street connections.

As Michael Lipsky writes in a new paper for Dēmos, “Rulemaking as a Tool of Democracy,” regulation is more popular than many politicians think. It is unpopular in the abstract, but citizens count heavily on government regulation to

protect against everything from polluted air, to unsafe food and drugs, to dangerous conditions at work. Nonetheless, the anti-regulators are on the march. Republicans are promoting a general regulatory rollback. Lipsky quotes the libertarian Cato Institute website: “There is no greater impediment to American prosperity than the immense body of regulations chronicled in the Federal Register.” Of course, nearly all of these regulations are there because of some market failure or corporate abuse that resulted in citizen pressure on Congress for reform. Yet even some Democrats are seduced by the supposed inefficiency of regulation. Cass Sunstein, who served for nearly three years as President Obama’s regulatory czar, actually bragged in a recent book that the Obama administration in its first four years had issued fewer regulations than its three predecessors had done—this at a time when new corporate abuses were proliferating.

Unfortunately, the neat story of an inefficient, unjust, and calamity-prone market, contrasted with a public-minded government as democratic counterweight, is harder to tell in 2015 than it was, say, in 1965. Half a century ago, there were clearer bright lines between what was public and what was private. The state governed the market, producing economic security, opportunity, and rising living standards for most working families. But today’s reality of revolving doors and corrupt “public-private partnerships” blurs the argument, both as ideology and as politics.

For younger voters, it has been a long time since government provided the economic security and opportunity it offered their parents and grandparents. If government is providing little help, young adults are more inclined to bet on the free market and save some tax dollars. Market applications such as Airbnb,

Winter 2015 The American Prospect 73

Contrary to the libertarians, the cure for the failure of markets is not more market.

But the remedy for lost faith in democratic government has to be stronger democracy. which allows travelers to save money by booking rooms in private homes, seem modern and hip. Young people who grew up with iPhone apps like the coolness and convenience of the Uber ride-sharing service (never mind that most drivers can’t make a living).

A number of social scientists and journalists, such as Tom Frank (who is both) in his book What’s the Matter with Kansas?, keep wondering why working-class voters, especially whites, fail to vote their economic self-interest.

In surprisingly large numbers, they support Republicans, who would remove the weakened social protections that remain, cut back Social Security and Medicare, make the tax code even more regressive, and make American workers even more vulnerable to low-wage competition from overseas. Frank blames the cultural conservatism of much of the white working class.

But there is a more disconcerting explanation. It has been a long time since government effectively did its job of tempering the market in the interest of ordinary people. A further problem of this blurring between the public and the private is that it adds great complexity. That makes regulations and government programs harder to administer, and diffuses blame when citizens find themselves frustrated with the result. Ultimately, the government tends to take the fall more than the market.

Consider the Affordable Care Act. Because Democrats lacked the votes and political will to fight for a true public program, we were left with a mandate for citizens to buy private insurance, subject to complex regulations, subsidies, and enrollment procedures. The launch of the program was a mess. To many citizens, the fiasco confirmed everything they suspected about government and liked about markets. How come it’s so easy to order a book on Amazon and so hard

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to enroll for health insurance on Healthcare.gov?

You had to be a political scientist to appreciate the full explanation that Obamacare was the bastard child of market institutions (drug and insurance industries) that had become too powerful and a government settling for the best it could get. It was also a product of some moderate Democrats’ misplaced belief that a government-regulated “insurance market” could solve problems in a public good (health care) that markets haven’t solved and can’t solve. At this writing, some government officials are chiding frustrated citizens, who like the coverage but are exasperated by Healthcare.gov, for their failure to do enough shopping around for insurance. Most citizens would prefer the convenience, reliability, and simplicity of a trusted public program like Medicare to the ordeals of comparison shopping and detail-deciphering on their laptops.

Or take the case of the Dodd-Frank Act. More than four years after the act was passed, most of its key provisions have yet to be carried out.

That’s because the act requires several hundred separate “rule-makings” by beleaguered and often compromised government agencies.

Dodd-Frank is drowning in regulatory complexity because it failed to deal with the underlying complexity of the financial industry. It would have been far better had Congress passed a law setting a few hard-to-evade bright lines, such as bringing back the 1933 Glass-Steagall Act that separated government-insured commercial banking from stock brokerage and investment banking. The more complex the process of government regulation, the less citizens know whom to blame when the economy goes off the rails.

This blurring of accountability was on display in the passage of the December 2014 budget resolution. As their price for not shutting down

the government, Republicans demanded and got a watering down of a key provision of DoddFrank prohibiting bankers from speculating with government-insured money. In principle, that ploy should have set up a clear, politically useful differentiation—Republicans are toadies of Wall Street and Democrats are for tough regulation to protect taxpayers and investors. Except that 57 House and 32 Senate Democrats, many with close ties to Wall Street, voted for the deal.

Based on the evidence, the case against

the libertarian market and for democratic government is stronger than ever. But when government gets into bed with private industry and finance at the expense of regular people, the citizenry loses confidence in government.

Republicans bet that if they could just hamstring government, more voters would either stay home or would conclude that they were better off voting for the party that wants to slash government. This cynical Republican view was rewarded with an increase in antigovernment attitudes in public opinion. The turnout in 2014 was the lowest since 1942, and much of the falloff was among groups that vote for Democrats when they vote at all—minorities, the poor, and the young.

So if we are to win the argument with the libertarians, we need to take back effective government. Friedman was wrong to argue that the cure for market failure is more market. However, the cure for weak or corrupted democracy has to be more democracy. The only way to redeem public confidence in government as a necessary check on the market is to repair faith in democracy itself. It is not difficult to prove that the claim of market efficiency is delusional. Reclaiming our democracy will be harder—but it must be done.

The Libertarian Delusion

Why Economists Cling to Discredited Ideas Free-market economics may be at odds with reality, but it fits the needs of the rich and the powerful.

By Jeff Madrick

D

espite the practical failures of freemarket economics, too many mainstream economists have continued to embrace simplistic ideas about how the economy works. Such ideas are often rooted more in ideology than in evidence. These beliefs and the policies that follow led directly to the 2008 financial crisis and the Great Recession. They also centrally contributed to the nation’s subpar performance beginning in the late 1970s, and to our widening inequality. They continue to endanger America’s economic health.

The mainstream of the profession claims to qualify oversimplified free-market ideas. But when it comes to key policy choices, the premise that markets are efficient usually trumps a more complex analysis. Thus, most mainstream economists are usually for less regulation even when more is required. They argue for reducing deficits even when expanded public outlay is indicated. They favor letting markets set wages without many safeguards for workers, even when the result proves neither equitable nor efficient. The consensus in the profession is that widening inequality must be the result of deficiencies in the skills of the workforce, rather than the result of structural disadvantages inadequately addressed by government.

To be sure, there are dissenting economists. A few even win Nobel prizes. But in the academy, free-market ideas are still the dominant ones.

The neoclassical insights at the core of standard economic thinking were once exciting intellectual breakthroughs. These ideas could still be useful, if adapted to the times, with their limitations understood, and tempered by other kinds of economic thinking. But the profession has largely turned its key ideas into faux-scientific rules of thumb that in fact

reflect (and reinforce) the conservative political attitudes of the time. Disguised in technical terms, these ideas have increasingly become mainstream justifications for a reduced role for government in the economy.

The central propositions of free-market

economics boil down to these: The Invisible Hand. The premise of Adam Smith’s invisible hand is that buyers and sellers, free of any government interference and merely following their self-interest, will arrive at an optimal distribution of goods and services at the “right” price, as if guided by an unseen hand.

Mainstream economists often say they don’t literally believe in the invisible hand. They concede that many assumptions must be made for free markets to produce optimal outcomes.

These include transparent access to information and product prices, no undue power for oligopolistic corporations to set prices or control distribution, highly rational buyers and sellers pursuing their self-interest, etc.

But in fact, for the economic mainstream, the invisible hand is the default principle whether or not these assumptions are met. Why, for example, do so many economists oppose increases in the minimum wage? Over the past ten to fifteen years, empirical evidence began to show that an increase in the minimum wage in many communities did not result in more than a trivial number of lost jobs and may have actually resulted in more jobs, as demand for goods and services increased with higher purchasing power. In the real world, a hike in the minimum wage did not perform according to the invisible hand, yet economists assumed it would.

People Get What They Deserve. If labor markets worked according to Adam Smith’s principles, you could explain inequality not

as a market failure, but as an efficient market mechanism. Some economists do worry about the social costs of unequal wages. But most economists believe a rise in inequality is a signal of the economy’s technological progress.

The claim that unequal education and skills explain unequal wages is an invisible-hand argument. If people with more education are better qualified, the market will justifiably pay them better. This premise allows mainstream economists to ignore the role of power shifts in labor market institutions and the fact that educational opportunity itself increasingly reflects hardened class lines—who your parents were, principally—more than the acquisition of skills.

In a nation of fewer opportunities, whom you know and what social skills you have become an entrée to a job, not learned skills. This is all beyond the grasp of the invisible hand.

Sure, investing in education matters. But recognizing that unequal opportunity begins at birth—or earlier—and devising compensatory policies is more important. Labor markets often compound these disadvantages; they don’t compensate for them.

Say’s Law and Austerity Economics. A close cousin of the invisible hand is Say’s Law, legacy of the 19th-century economist Jean-Baptiste Say. In shortened form, it argues that supply creates its own demand. In other words, if you make it, people will buy it. John Maynard Keynes devoted his classic General Theory to dismantling the idea. Say’s Law is the corollary to Smith’s premise that economies are self-adjusting as long as government steps out of the way.

Closely related to this proposition is another assumed accounting identity—the claim that savings equal investment. This is true only retrospectively, but too many still accept the proposition that more savings will generate

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Today, fears of big deficits undermine support for government spending.

But the economy won’t grow without adequate public investment. more investment. With more savings, the price of investment—the interest rate—will fall; due to the invisible hand, business will invest more.

Not so, said Keynes. If more savings come at the expense of more buying, investment will likely fall, especially in a weak economy.

Again, some economists will tell you they know better than to believe Say’s Law without qualification. There are diminishing returns to savings, for example, so the general gain from more saving peters out in the end. In an Adam Smith world of self-adjusting economies, people would reduce savings as the interest rate falls. But in a recession, worried people ignore these market signals. They often increase savings because they fear they will soon be out of a job. Individual behavior does not aggregate to general efficiency.

But read the literature, and few mainstream economists acknowledge that point.

More savings are always good. This thinking is behind austerity economics. Government deficits reduce national savings, so these deficits must be minimized, even if that means tax hikes and reduced social spending during a prolonged slump. Democratic economists, it is largely forgotten, loudly called for reduced deficits in the 1980s under Republican Ronald Reagan. A Say’s Law–type of argument was used by President Clinton’s economists to channel budget surpluses to reduction of the national debt rather than, say, increases in public investment. Advisers to President Obama in 2010 called for deficit reduction long before the economy was on the mend. Of course, not all economists believe this; and there are times (during full employment, for example) when even Keynesians favor deficit reduction. Yet simplistic ideas about deficit-reduction as cureall dominate the profession. They seep into

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the public consciousness and are not easy to reverse, especially when both Democratic and Republican economists and presidents have advocated them at one time or other. Keynes defeated Say’s Law only temporarily.

Financial Markets Are Efficient. One of the more extreme abuses of the invisible hand has been efficient markets theory. Economists like Eugene Fama of the University of Chicago claimed that markets for stocks, bonds, and other financial instruments were so rational that they accurately reflected the future value of the underlying company. In such a rational marketplace, there could be no lasting speculative bubbles.

Moreover, you could tie a CEO’s compensation to the stock price and get better managerial results.

Rational financial markets require minimal regulation. But financial deregulation, which began in the 1970s and was reinforced by Reagan and Clinton, led directly to the subprime bubble and the 2008 collapse. Many economists now know better. Robert Shiller of Yale has been arguing for decades that bubbles exist. But do most economists appreciate the overwhelming evidence for bubbles? As the Dodd-Frank Act is slowly eviscerated, there is no groundswell within the mainstream profession calling for more effective re-regulation of finance.

Inflation Targeting and Price Stability Are Holy. Ben Bernanke, the former Federal

Reserve chairman, was a leading theoretician in favor of targeting a low inflation rate as a primary government policy. Low and predictable inflation is said to remove uncertainties about the future, and thus allows the invisible hand to work its miracles. Market efficiency in turn will lead to prosperity.

Right up until the eve of the 2008 collapse, mainstream economists were convinced that inflation-targeting was the main justifiable

intervention; the free market would do the rest. They even created their own self-congratulatory measure of success, called The Great Moderation. From the early 1980s to 2007, the U.S. gross domestic product fluctuated less than it had in prior decades. The stability was taken as proof that economists knew what they were doing at last.

But consider what else happened during these supposedly ideal years. Income inequality rose to the heights of the 1920s; debt soared as consumers tried to maintain living standards by borrowing; men’s wages fell dramatically. Median income for the bottom 90 percent declined to levels of the 1960s; public investment was tragically neglected; and there was one financial crisis after another: 1982, 1987, 1990, 1994, 1997, 1998, 2000, and finally 2008.

What’s more, growth was on average slower in this period than it was in earlier decades.

If slower growth is the price paid for stability, what is the purpose of economics? If the conditions are created for a market crash, inflation targeting can’t be the summa of policy.

More Cross-Border Trade Is Always Good.

In the 1990s, Western nations developed a set of policies known as the Washington Consensus which involved not merely free trade but also the free flow of capital around the world.

It was a classic invisible-hand argument. Onesize-fits-all policies should be adopted everywhere, no matter the developmental stage, educational attainment, or culture of a nation.

But the Washington Consensus badly failed in the 1997 East Asian financial crisis. In fact, there is a great deal of doubt that free-trade agreements have created the jobs that economists claim for them. Moreover, widespread assertions that free-market reforms led to enor-

The Libertarian Delusion

mous reductions in global poverty foundered on a hard fact: Most of the reduction occurred in China, and to a lesser degree in India—countries that did not adopt the Washington Consensus.

Yet simple free-trade agreements are still backed aggressively by many economists. These agreements often favor rich nations, or the elite in poor nations. We don’t even know what is in the new 12-nation Trans-Pacific Partnership proposal, organized by the U.S. government and its corporate allies. The secrecy is apparently needed to reduce likely controversy. We do know that the intellectual property of big companies in rich nations is likely to be well protected; that “trade” norms are intended to be used to undermine domestic regulation; and there are doubts that workers in either poor or rich nations will be similarly protected.

We should learn a few non–invisible-hand lessons about trade. First, nations need space to develop their own industries and institutions.

This might require subsidies and other supports that violate trade agreements. Second, free trade should be adopted gradually—no shock therapies, please. Third, we should admit that there are losers in free trade, and the social safety net should always be expanded accordingly.

Markets Invariably Work Better than Governments. Mainstream economics has no

strong theory of government, except that it is a corrector of market failures (which are presumed to be rare). We might call this a negative theory. The Fed can intervene to save the economy from collapse. Or anti-trust authorities can make sure markets are competitive (which they don’t do much of these days). Governments are also supposed to fill the hole for social goods that markets don’t provide, like highways and schools and clean air and water. But in freemarket economics, failures like these are hard

to define; they make mainon the left, will say that the stream economists uncominvisible hand is much like fortable because they depart Galileo’s law of falling bodfrom core theory. The nation ies, which states that heavy and light objects will fall at needs a positive theory of govthe same rate of acceleration ernment, which recognizes to earth, air friction aside. how valuable social policies But the invisible hand, as and public investment have I observe in my book, Seven been, and how much more of Bad Ideas, is not in any way them we need. comparable to such verifiable Invisible-hand purists often physical phenomena. It is a love to oversimplify economic history, claiming, for example, compelling metaphor, but not that in the 19th century Amera scientific one. The authority it provides economics is ica lived by the invisible hand a false one because there are of laissez-faire. This is simply not true. Transportation, many immeasurable frictions education, health care, wage that keep the invisible hand protection—all these were the Godfathers of the libertarian resurgence: from producing the best outwork of government. Today, Friedrich Hayek and Milton Friedman come for all. We don’t even fears of a big federal deficit know how the magic price where the supply and demand curves allegblock adequate government investment. But the nation won’t grow without more government. edly meet is arrived at. Leon Walras, one of the The dominance of bad mainstream thinking, first theorists who postulated that there was which leads to resistance to public investment, a general equilibrium, argued the price was has been especially damaging because it under- found through an imaginary auction process, but there is no serious proof that a general mines the foundation of future prosperity. equilibrium exists.

From these assumptions, however, it logiWhat, then, is behind the strong hold these cally follows that an economy is almost always ideological principles have on mainstream economists? There are three main explana- self-adjusting—and the politically conservations: faux science, careerism, and political tive assumption that government interference is almost always bad becomes axiomatic. The acceptability.

Faux Science. The acceptance of the invis- extreme form is found in rational expectations ible hand is taken as a close approximation of theory, which argues government stimulus is reality not only for a single market but also almost always unnecessary or damaging. On for the whole economy. This is known as gen- these assumptions complex mathematical eral equilibrium. With that assumption taken models can be built, which divert attention almost as scientific fact, economists can build from the real world of work, investment, and highly complex models. Some economists, even wages, and allow economists a studied igno-

Winter 2015 The American Prospect 77

rance of economic history and real-world phenomena. As Robert Lucas, the father of rational expectations theory, put it: “Economic theory is mathematical analysis. Everything else is just pictures and talk.” The faux-scientific principles make a clean theory out of a dirty world.

Careerism. Another reason mainstream economics retains its magnetic hold is that it provides a safe basis for career advancement in academic institutions. Mathematical methodologies can be evaluated. These are often complex and sometimes brilliant, but they are based on foundations that may not relate to the real world. Contradictions in outcomes of economic research are ignored, because the evaluation is of methods, not outcomes. This is hardly science.

For example, Alberto Alesina of Harvard and his co-authors long argued that austerity economics could generate economic growth, even in a weakening economy. IMF economists, led by Olivier Blanchard, more recently showed persuasively that this was not true. But Alesina’s career continues to thrive. As Keynes famously wrote, it is better for reputation to fail conventionally than to succeed unconventionally. As noted earlier, Eugene Fama of the University of Chicago remains skeptical of speculative bubbles because markets are too rational. His prestige remains undiminished.

Robert Shiller argues that there clearly are such

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irrational bubbles. They simultaneously won the Nobel Prize in 2013. Can this be science?

The lack of a model-building methodology resulted in the reputational suppression of Hyman Minsky, now among the most cited of economists for his work predicting the inevitability of speculative bubbles and the damage they can do. He was more historian and psychologist than technical economist, but now mainstream economists are paying attention.

One wonders for how long. Similarly, John Kenneth Galbraith’s championing of public investment over tax cuts was neglected because of his lack of modern methodologies. On the other hand, Joseph Schumpeter, who was also an oldfashioned narrative economist, is still heralded because he was basically a conservative.

Political Reward. Finally, the movement toward simplified ideological economics has had great appeal to increasingly conservative policymakers, think tanks, and business organizations. By its very nature, a firm belief in the invisible hand means a faith in laissez-faire policies: reduced taxes and regulation. The less government, the better. Markets, as noted, will reach the right price on their own. If a stock is priced too high, a smart market participant will sell it. It just happens that these principles provide scientific grounding for the policies that business elites prefer. No wonder mainstream

The dominating policy ideas of the invisible

hand have failed. Combined with deregulation, the Great Moderation and inflation-targeting

j o n at h a n e r n s t / r e u t e r s / l a n d o v

Economists who promoted financial deregulation: Democrat Larry Summers and Republican Ben Bernanke

economists are showered with support, prestige, and well-lubricated career trajectories.

The turn in the nation’s attitudes against government began with the high inflation of the 1970s, which many economists, led by Milton Friedman, pinned on government deficits.

Ronald Reagan sealed the political argument in a debate with Jimmy Carter when he said: “We don’t have inflation because the people are living too well. We have inflation because the government is living too well.”

Arguments for free-market solutions, rather than social spending, followed as night follows day. Social programs were afterwards mostly tied to tax incentives, like the earned income tax credit, not to cash outlays. Industrial policies, where government invested in technologies and new business, were scoffed at. Invisible-hand thinking fit this new political environment perfectly. In an interview in 2001, Larry Summers, then Clinton’s former Treasury Secretary and Obama’s future chief economic adviser, told PBS, “There is something about this epoch in history that really puts an emphasis on incentives, on decentralization, on allowing small economic energy to bubble up.”

To win the ears of government officials and the public, economists not coincidentally fit their theories to the new elite attitudes in America. Believing that markets solved social problems and that expensive social programs did not was music to the ears of business and right-wing politicians. Research could be produced that big government and high taxes diminished economic growth. The research was flawed, but no matter.

The Libertarian Delusion

The Perils of Privatization

By Ann Hagedorn

O created a bubble economy. Neglect of public investment in infrastructure, clean energy, and education, a consequence of Say’s Law–type thinking, has undermined the nation’s foundation. All these ideas were compatible with the prevailing conservative economic ideology of the time, and earned economists the attention of Washington and the media, but they failed America. The media in particular fell hard for the putative scientific nature of economics and hardly picked up on the ideological foundation of the economic advice.

Science is universally true. The premise of economics as science was a great cover for conservative ideology. But one-size-fits-all economics, which best describes economic advice over the past 30 years, is a practical failure. Antigovernment economics failed, pure and simple.

Only a little seems to be changing. Targeting absurdly low inflation rates is still alive. One wonders whether regulation of finance will ever be adequate. The pressure for globalization is over-simplified, where one-size-fits-all policies are particularly damaging. We need economists who revise their theories based on evidence, but there is little room for reformers—few prestigious universities make space for heterodox thinking.

It is hard to be optimistic about economics.

Being an economist has become a career, though not an intellectual profession. Money talks loudly in their academic hallways, and a smallgovernment philosophy still rules the nation, despite the calamities that began in 2008.

Jeff Madrick is a contributor to The New York Review of Books, a former economics columnist for The New York Times, and editor of Challenge: The Magazine of Economic Affairs.

ne November morning in 2004, three U.S. military men boarded a small turboprop plane at Bagram Air Base near Kabul for a two-and-a-half-hour flight to Farah, a base in western Afghanistan. They were Lieutenant Colonel Michael McMahon, Chief Warrant Officer Travis Grogan, and Specialist Harley Miller, the only passengers on Flight 61.

The flight was operated by an affiliate of Blackwater, the private military company under U.S. contract for air transport of mail, supplies, and troops.

Forty minutes after takeoff, flying far north of the customary route from Bagram to Farah, the plane crashed into the side of a mountain.

McMahon, Grogan, the pilot, co-pilot, and the mechanic apparently died instantly. At the time, McMahon was the highest-ranking U.S. soldier to die in the war. Miller, though he suffered internal injuries, may have lived for as long as ten hours after the crash, but the route was so obscure that rescuers could not locate the wreckage in time to save him.

In the years afterward, investigators for a joint U.S. Army and Air Force task force and for the National Transportation Safety Board would reveal that the Flight 61 pilots had never flown the route between Bagram and Farah and, in fact, had been in Afghanistan for only 13 days. Also, they deviated from the standard course almost immediately after leaving the

ground. Further, according to investigators, Blackwater failed to follow standard precautions to track flights, failed to file a flight plan, and failed to maintain emergency communications in case of an accident.

The NTSB report included a cockpit voice recording of the plane’s crew, which Representative Henry Waxman read to members of Congress at an October 2007 hearing before the House Committee on Oversight and Government Reform. Parts of it depict the pilots’ unprofessional behavior and their jollity as they flew through narrow canyons on their wayward route: “You’re an X-wing fighter Star Wars man,” said one of the pilots.

“You are [expletive] right.

This is fun,” the co-pilot replied and later said, “I swear to God they wouldn’t pay me if they knew how much fun this was.”

Blackwater went into the annals of government contracting as one of the great disgraces of privatization. A staff report prepared for the Oversight Committee found that Blackwater billed the government $1,222 per day per guard, “equivalent to $445,000 per year; over six times more than the cost of an equivalent U.S. soldier.” Reeling from scandals, Blackwater later reorganized and changed its name to Xe, and then again to Academi, which is now part of a holding company called Constellis.

With this record, how could the company continue

to get government contracts for several more years? It had cozy relationships with military brass on the ground.

Its top officials and directors included Cofer Black, the former head of the CIA’s counterterrorist center; Bobby Ray Inman, former head of the NSA and deputy director of the CIA; former Attorney General John Ashcroft; and Jack Quinn, former White House counsel to President Clinton and chief of staff to Al Gore.

Blackwater, however, is hardly a one-off in the abuses of privatization, though it is a useful place to start. According to enthusiasts of freemarket discipline, privatizing a public service—in this case, military support operations— offers efficiency and cost savings. Private companies, presumably, are under market discipline and are free of cumbersome bureaucracies and stultifying government monopolies. They are thus free to innovate. But the reality is far messier.

As Blackwater showed, many of the efficiencies are spurious, because contractors cut corners. The notion of market discipline can be short-circuited by political influence that steers contracts to favored companies despite their poor performance. Often, apparent savings are bogus because of costs that are passed along to the government. In some cases, privatizing something as necessarily public as

Winter 2015 The American Prospect 79

A firearms and tactics instructor at Blackwater Worldwide, the private security contractor

ter experience showed, hiring military contractors in war zones introduces significant risks—such as deficiencies in vetting, training, and oversight, especially at the level of subcontractors—that can potentially detract from overall military effectiveness. As one military analyst noted in his study of the risks of privatizing counterinsurgency operations, “Whenever efficiency outweighs accountability, the possibility exists

of efficiency undermining effectiveness of services and democratic values.”

Further, the cost savings so often proclaimed by privatization advocates as the measurement of success are the immediate and apparent ones, which are short-term. But costs are frequently hidden, especially considering that for every U.S. contract there can be as many as five layers of subcontracting. If the oversight is weak, there is always the potential for abuse, waste, and corruption, resulting in human costs as well as financial. For example, in Afghanistan in October 2009, when insurgents attacked a U.S. combat outpost purportedly protected

by Afghan security guards under U.S. contract, the guards fled, and were found “huddling in their beds.” Lost in the controversy over the death of Ambassador J. Christopher Stevens in the 2012 Benghazi attack was the role of private contractors.

When the attack began, the subcontractors hired by a U.S.-contracted private security firm to guard the perimeter and entrance to the diplomatic compound fled, leaving the guards on the inside vulnerable.

According to a report from the Senate Armed Services Committee, there were U.S.-contracted guards in Afghanistan working directly for the local Taliban. The committee’s report found that private security contractors were “funneling U.S.

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taxpayers dollars to Afghan warlords and strongmen linked to murder, kidnapping, bribery as well as Taliban and other anti-Coalition activities,” including more than $12,000 a month to the salary of a Taliban supporter. And more recently, a nasty legal feud between military auditors and the big defense contracting firm KBR exposed the striking fact that the company had continued to submit bills to the U.S. government for nine months after the 2012 end of its multimillion-dollar contract to provide training in detecting improvised explosive devices.

Equally unsettling

and revealing is the multibillion-dollar industry of prison privatization. The U.S. imprisons more people than any nation in the world, resulting in a potential bonanza for private prison companies whose business model depends on high incarceration rates.

According to the American Civil Liberties Union, “The private prison industry has been a key player over the past two decades in driving the explosion of mass incarceration in the U.S.” Between 1990 and 2009, the number of inmates in private prisons nationwide, including state and federal, has increased by more than 1,600 percent.

Studies and audits of privately held prisons in recent years show that the cost-cutting incentive threatens the quality of food, medical care, and sanitation and may even contribute to heightened

violence. In 2012, a federal judge in Mississippi described the abuse and beatings at a privately operated youth correctional facility as “a picture of such horror as should be unrealized anywhere in the civilized world.” In Texas, an auditor’s report at a privately held juvenile facility revealed that living conditions were abhorrent, depicting the cells as “filthy, smelled of feces and urine.”

In 2012, The New York Times, after a ten-month investigation of privately held halfway houses in New Jersey, exposed an array of horrors, ranging from sexual abuse of female inmates to lax security and a significant number of escapes, and from drug dealing and gang activity to fraudulent records of drug treatment with fabricated rehabilitation progress. And all such incidents could easily be bundled into one immense deceit: inadequate oversight, well concealed by a tangle of corporate influence and New Jersey politicians from both parties, including Governor Chris Christie. The governor, in fact, was once the lobbyist for a company operating several New Jersey halfway houses, such as one 900bed facility that was run by his close friend, former partner, and political adviser, and publicly endorsed and praised often by the governor himself. Workers at that facility told reporters that robbery, sexual assault, and violence drove inmates to “regularly ask to be returned to prison, where they feel safer.” And within

a day of escaping another of the company’s “houses,” one inmate had murdered a former girlfriend.

Privatization, in sum, is effectively a fraud. When a product is provided purely via the market, and there are no public purposes involved, market accountability can work. Consumers can compare price and quality, and give their business to the vendor offering the best product at the most attractive cost. Alternatively, when government performs a function directly, there are public forms of accountability, such as congressional hearings and GAO investigations. But when a public function is privatized, the result is a muddled middle ground, where neither market accountability nor public accountability works well because of all the layers of intermediaries. Enthusiasts of markets claim that government is the domain of political corruption, while markets are transparent. But the actual track record of privatization shows that there can be at least as much corruption and deception in privatizing a service as in providing it directly. For all the rhetoric about public-private partnerships, our society works better when we keep public functions public and private ones private.

Ann Hagedorn is an awardwinning author of five narrative nonfiction books, her most recent being The Invisible Soldiers: How America Outsourced Our Security.

She is a former staff writer for The Wall Street Journal.

gerry broome / ap images

national defense is convenient because the contractor, not the government, takes the fall when something goes wrong. This is precisely the opposite of accountability.

Moreover, efficiency in the sense of cost savings is not always the right goal in the public sector, nor does it define success. The most successful option in a military campaign may not be the quickest or the least expensive. As the Blackwa-

The Libertarian Delusion

Why Markets Can’t Price the Priceless It takes government planning to promote rational conservation and use of water.

By Joan Fitzgerald

W

ater sources for many Southwestern cities such as Las Vegas and Phoenix are drying up. Meanwhile, most Eastern cities have ample supplies but decaying infrastructure that can’t handle the more frequent and severe flooding brought on by climate change. The Cato Institute and Reason Foundation are part of a libertarian movement arguing that market pricing of water could solve both problems. But water, as a public good, can’t just be left to private markets, or we will have billionaires watering lush lawns while other citizens have dry taps.

Privatizers are also notorious for underinvesting in the infrastructure needed both to supply fresh water and to provide adequate sewers and protection from storm surges.

The price mechanism, nonetheless, is a very powerful influence on behavior. When prices rise, people consume less of a good. Pricing can and should be utilized as part of an overall strategy for conserving water, preventing its wasteful use, and funding necessary investments in infrastructure. Paradoxically, the pricing of water— the libertarian panacea—works only as part of a comprehensive public planning strategy.

Water has long been an underpriced asset in the United States. As a result, we overuse it.

Historically, cheap water has failed to price in the need to invest in infrastructure. However, that is changing under pressure from collapsing systems, EPA mandates, and threats of heavier rain and storm surges.

Annual local government spending on public water infrastructure has been increasing dramatically during the past decade, reaching a high of $111.4 billion in 2010, a 60 percent increase from 2001. But there is still a gap. The EPA estimates that $384 billion will be needed

through 2030 to maintain the nation’s drinking water infrastructure. Adding stormwater infrastructure takes the price up to $632 billion between 2007 and 2027. The American Water Works Association suggests that this amount doesn’t include pipe replacement and estimates the figure at closer to $1 trillion.

The U.S. Conference of Mayors adds capital, operations, and maintenance costs, arriving at an estimate of $2.8 trillion to $4.8 trillion.

To pay for infrastructure, water rates over the past two decades have been increasing yearly at 4 percent to 6 percent above the consumer price index. But water prices can rise only so far before real affordability limits are reached—and that’s one limitation of relying just on pricing. Water needs to be funded as a public good. Yet federal funding for water systems has declined dramatically. After enactment of the 1972 Clean Water Act, the federal government provided 75 percent of the funding for water systems through the 1970s and 1980s, but provides only about 10 percent today.

Given the pressure to provide clean

water, meet federal pollution standards, and maintain infrastructure while keeping rates affordable—all with less federal funding and limited ability to use debt financing—many strapped cities have handed systems over to the private sector. But, as noted, privatizers are notorious for underinvesting in assets that don’t yield a short-term return, and for cutting corners in other ways.

Atlanta is an emblematic failure of water privatization. Eighteen months after the city signed a contract with United Water (a subsidiary of French water giant Suez) in January 1999, problems emerged, including system breakdowns, five water boiling alerts, work

backorders, and uncollected bills. It turned out that United Water could only cut costs by half of what was expected and didn’t have funds to keep up with maintenance. Atlanta canceled its contract in 2003. Food and Water Watch reports that Milwaukee; Camden and New Brunswick, New Jersey; Gary, Indiana; Houston and other cities also canceled early or did not renew United Water contracts for various combinations of poor maintenance, waste dumping, and increased rates.

Because water provision is a monopoly and the quality of the product is defined by regulatory standards, there is limited opportunity for private entrepreneurs to improve efficiencies. There is thus not much of a windfall that can be redirected to infrastructure upgrades, especially since privatizers also expect profits.

But this experience should not lead us to conclude that water can’t be priced. Public authorities can use prices in the context of a planning process that sets goals the market is incompetent to set. Here, there is some good news: Because water has been so underpriced, there is plenty of room for smart public policies that combine pricing and regulatory measures to produce more sensible usage patterns.

In The Big Thirst, Charles Fishman tells the story of former Las Vegas water czar Patricia Mulroy’s multi-pronged strategy of pricing and regulating to dramatically reduce water usage in this desert city. She started by raising water rates and switching from a fixed charge to one that increases rates as volume used increases.

She convinced hotel developers to use wells on their properties or recycled wastewater to supply their water fountains rather than using drinking water. She persuaded Mission Industries, a laundry service that washed 3.5 million pounds of hotel sheets and towels a week,

Winter 2015 The American Prospect 81

using a million gallons of water a day, to install a water recycling system. The system reduced daily water usage to 760,000 gallons, saving $2,000 a day. An unanticipated benefit was that the heat of the rinse water also reduced drying time, resulting in savings on natural gas bills as well. Las Vegas golf courses have dramatically reduced water use by changing from grass to more climate-appropriate plantings, and one course has gone off the water grid completely.

The same transition is being made in residential yards through the “cash for grass” program that has been replicated in other water-strapped cities. New Las Vegas homes are no longer allowed to have grass front lawns. And more than 90 percent of water used indoors is recycled. Smart pricing, policy, and programs in the public sector work. Simply allowing markets to set prices would not have accomplished all this.

Pricing by public authorities can be used to address stormwater management problems, too. When big storms hit, runoff enters sewer systems, and in the worst cases, unsanitary and disgusting overflows combine raw sewage with rainwater. This happened to many East coast cities in the aftermath of Hurricane Sandy. The cure involves both upgrading sewer systems and transitioning to what is called green infrastructure, which increases the ability of land to absorb rainwater rather than relying on piping it away. One of several approaches to green infrastructure is creating

82 WWW.Prospect.org Winter 2015

more permeable surfaces that can absorb water and reduce runoff. Both regulatory and pricing disciplines can help achieve these goals.

Like many cities, Philadelphia is required by the Environmental Protection Agency under the Clean Water Act to reduce sewer overflows and sewage entering waterways. It must meet state requirements as well. In response, the Philadelphia Water Department is implementing a program called “Green City, Clean Waters,” a 25-year, $2 billion plan that aims to control runoff from 10,000 acres of land and reduce sewer overflows by 85 percent by replacing impervious surfaces with permeable pavement, expanding parks and green spaces, and using various green infrastructure techniques.

As part of the program, the water department instituted a property-based billing system that charges customers for stormwater based on amount of impervious cover and parcel size. The stormwater fee added nearly 48,000 new billing accounts. For example, under the old system, a parking lot wouldn’t be billed because it didn’t use water. Under the new system, the parking lot owner pays based on the impervious cover and the imputed runoff costs.

Nonresidential customers who used to pay for stormwater service based on the size of their water meter started paying a fee based on land characteristics and impervious surfaces. This re-allocation of charges caused some nonresidential customers’ bills to increase, while others saw a decrease or hardly any change at all.

Joan Fitzgerald is professor of urban and public policy at Northeastern University in Boston. She is the author of Emerald Cities: Urban Sustainability and Economic Development and is working on a new book, Greenovation.

t o r i n h a l s e y / w i c h i ta fa l l s t i m e s r e c o r d n e w s / a p i m a g e s

A public works wastewater reuse project accounts for approximately half of the water used daily by Wichita Falls, Texas.

The new system significantly raised many bills, but it wasn’t all “sticks.” The department created several carrots to motivate commercial and industrial property owners to undertake measures to manage stormwater on their properties. A new system of credits enabled some property owners to reduce their stormwater charges significantly (up to 80 percent). These credits reduce the future billing amount to the extent that property owners install green infrastructure. The credit is based on what percentage of the impervious area has infrastructure capable of absorbing the first inch of rainfall.

Further, the water department has created the Stormwater Management Incentives Program in partnership with the Philadelphia Industrial Development Corporation, providing grants and low-interest financing for the installation of systems that reduce a parcel’s stormwater runoff into the sewer system. Another program, the Greened Acre Retrofit Program, provides grants to companies or project aggregators capable of developing a stormwater management plan on properties exceeding 10 acres exclusively within Philadelphia’s combined sewer service area.

The remedy for both overuse of scarce potable water and for overwhelmed sewer systems combines planning, pricing, subsidies, regulations, public investment, and public leadership. In other words, an effective water policy requires government. Markets alone, despite the power of pricing, could never achieve efficient outcomes.

The Libertarian Delusion

Markets, States, and the Green Transition

To get renewable energy technologies into broad use, government needs to promote both supply and demand. Markets are too risk-averse.

By Fred Block

I

f you believe in the perfect efficiency of free markets, then any government intervention, by definition, has to make things worse. Evidence is of no consequence. I once participated in a debate on innovation with two panelists from two of Washington’s most market-oriented think tanks. When I pointed out that a government program—the Department of Defense’s Advanced Research Projects Agency (DARPA)—had created the Internet, my opponent was hardly fazed. He responded, in effect, by saying we don’t know whether the private sector might have done it faster and better had the government not been interfering. Of course, we cannot know, but the historical experience of many other technologies that were accelerated by spending on warfare suggests that there is a strong connection between government investments and big technological breakthroughs. World War II alone was responsible for jet airplanes, the mainframe computer, radar, atomic energy, and it laid the groundwork for much of the space program that followed.

War and preparation for war loom so large for many breakthroughs because war offers the rare occasion for major government intervention in a society that otherwise professes belief in free markets. Ideology is waived because of the presumed urgency of national defense, and surprising technical breakthroughs often follow. Government needs to play the same role in the transition to a green economy.

In wartime, government action is so potent because it intervenes simultaneously by increasing both the supply and the demand for new technologies. As with the Manhattan Project, the military convenes large groups of scientists and gives them substantial resources, to see if a concept can actually be turned

into something that adds to the military’s capacity. Then the military orders a lot of the new creation, so that the often slow and painful process of scaling up to mass production is done very quickly with no risk for private firms.

This double-sided process jumps over the huge hurdles that private businesses face in developing radical new technologies. Since uncertainty is invariably high, most firms are reluctant to pay for years of expensive development work on a new technology. Even once they get what engineers call “proof of concept,” entrepreneurs know that it might take another ten years to figure out how to mass-produce the good. Even the most enthusiastic entrepreneur has to worry about a firm’s survival through the very long and expensive development period when their new product is generating zero revenue. And these fears are intensified when it is also unclear whether anyone is going to buy their breakthrough product.

This is the reason that in virtually every country, including the United States, governments are now actively involved in helping private firms with the process of technological innovation. Mariana Mazzucato has drawn attention to this public sector role by titling her recent book The Entrepreneurial State. She shows that without the state taking a significant part of the risk, there would be much slower rates of technological innovation around the world.

This under-appreciated state involvement is true of many new technologies and sectors, but it emphatically describes the necessary transition to renewable energy. Private entrepreneurs contemplating investment in green energy face a chicken-and-egg problem. Technologies either do not yet exist, or they do not exist at a competitive price. Economies of scale, which cut costs and promote more investment

in technologies, are hard to achieve because of insufficient demand and the market power of entrenched, carbon-based technologies.

Unless government intervenes on the supply side—to promote the innovation that is too risky for private entrepreneurs—and on the demand side—to accelerate creation of mass markets for green sources of energy—private industry cannot get the job done.

Despite all of its free market rhetoric,

the U.S. government has developed a sophisticated entrepreneurial apparatus for moving new technologies from the laboratory to the commercial space. These government efforts began in World War II and the Cold War with technologies that had potential military use, but they have now extended across the entire civilian economy. Through the Small Business Innovation Research program, for example, the government gives $2 billion per year to thousands of small firms for the purpose of turning laboratory results into new commercial products. Moreover, as big corporations, under pressure to maximize shareholder value, have reduced their own research efforts, the government has come to the rescue. Thousands of corporate scientists now work to overcome technological barriers, side by side with publicly funded scientists at federal laboratories and at focused university research centers.

These initiatives have produced breakthroughs in industries ranging from biotech to semiconductors—and have also had a major impact in expanding the supply of clean energy technologies. Much of the progress over the last 35 years in bringing down the cost of solar photovoltaic cells can be traced to public-private partnerships sponsored by the Department of Energy as well as the research initiatives

Winter 2015 The American Prospect 83

The U.S. has the ingredients of a world-class system for promoting new green technologies.

But political hostility prevents us from using those tools well. pursued at the National Renewable Energy Laboratory. The government has also invested large sums in developing advanced batteries to power electric vehicles and to provide grid storage to balance intermittent energy from wind and solar power. As of this writing, in California alone, there are more than 100 companies that are working to develop more effective forms of energy storage.

While these efforts have been far more successful than most people think, the U.S. system rarely extends to helping firms solve the problems of mass production. The consequence is that the United States has pioneered a series of technologies only to see actual production take off in Asia. This happened with computers and flat panel displays and it might still happen with clean energy technologies. A second weakness of these government efforts is that outside of the military effort, they have focused almost entirely on the supply side and not on the demand side. This is a particular problem because pretty much every clean energy technology—solar power, wind power, new generation biofuels, electric cars, and advanced batteries—has to compete directly with the already installed energy system built on burning fossil fuels. Moreover, a combination of government subsidies and the efficiencies achieved by giant corporations mean that the price points for those incumbent technologies are relatively low. To be sure, if the market prices of coal and petroleum reflected the costs of climate change to the planet, their prices would not be competitive. But Congress has blocked any effort to force fossil fuel prices to reflect their huge environmental externalities.

After the economic collapse of 2008, the Obama administration in 2009 was able to direct billions of stimulus dollars to support

84 WWW.Prospect.org Winter 2015

clean energy firms. The administration was adamant that the supported firms would produce their products in the United States and reverse the trend of moving manufacturing offshore. But after the Republican victory in the 2010 midterms, the funds dried up and uncertainty rose for clean energy firms.

In wind energy, for example, a generous government subsidy led to a dramatic expansion in the number of wind farms. Wind accounted for 36 percent of all new generating capacity in the nation between 2009 and 2013. But Congress failed to renew the subsidy during most of 2014, so new installations have slowed dramatically. In the case of solar panels, more than 40 U.S. firms failed in 2012 because they could not compete with heavily subsidized Chinese firms. Some of the firms that survived, such as Evergreen Solar, chose to move production facilities to Asia, often because they received additional subsidies and financial support from the Chinese. This process—rational from the perspective of the companies—embarrassed proponents of government help for green energy firms because critics could ask: Why subsidize these firms if they only move to China?

In short, the U.S. has a world-class system for directing scientists and engineers to grapple with the technological challenges of developing clean energy technologies. But there are huge problems in getting those new technologies scaled up quickly enough to meet the challenge of a warming climate. First, we lack a coherent and consistent policy environment that would help these technologies compete against the established carbon energy firms. Subsidies and other forms of government support come and go, so there is no pre-

dictable path for clean energy firms. Above all, the government has not been intervening effectively on the demand side to assure firms that there will be strong demand for their products. Second, with this uncertainty, firms face great difficulty raising the patient, private capital that they need to expand their capacity—they generally operate on a tightrope where one mishap is enough to force them into bankruptcy. Finally, decades of neglect of the domestic manufacturing infrastructure and the loopholes in tax law mean that it is a risky gamble for firms to manufacture their products in the United States. But the problem is that when production moves offshore, so does the knowledge required to develop new and better products.

All of these problems could be solved, but the solutions involve more, not less, governmental involvement. Germany, for example, has made the most rapid progress in expanding the role of renewables in its electrical grid. It has done this by very deliberately intervening on the demand side of the energy equation. Germany implemented a system of so-called feed-in tariffs that require the big utility companies to buy renewable energy from households at a price point that made it very attractive for households to install solar panels. At the same time on the supply side, Germany’s state-run development bank has invested heavily in clean energy firms, so that they have the resources to expand their capacity. Germany also has a governmentorganized system of loan guarantees that facilitates investments in riskier firms that might produce big payoffs in advancing clean energy technologies. And while Chinese cities are still suffering from horrendous air quality,

The Libertarian Delusion

Hating the Hand that Enriches You

By Roger Lowenstein

j o h n m i n c h i l lo / a p i m a g e s

E the Chinese government has also made huge interventions on the demand side to accelerate the development of Chinese firms developing clean energy technologies. On the supply side, the Chinese have also used the state investment bank to tilt ever more financing to innovative clean energy firms.

Fortunately, there are examples in the U.S. at the state level of what demand-side policies can accomplish. California has been a leader in imposing “renewable portfolio standards” on electrical utilities. These standards mandate rapid growth in utilities’ use of renewable energy sources. The current rules require utilities to obtain 33 percent of their generating capacity from eligible renewables by 2020.

Furthermore, California has also required that utilities expand their capacity for energy storage in recognition that with expanded use of renewables, a stable grid will require cheap storage of electricity. This, in turn, has helped feed the growth of dozens of new firms experimenting with different technologies to find efficient paths to creating grid-based electricity storage.

This means that we already know what policies Washington would pursue if climate policy were no longer held hostage by partisan gridlock, budget paralysis, ideological prejudice, and the power of fossil fuel interests. Since Congress has dithered for so long, it is way too late to imagine that simply raising the price of carbon fuels through taxation or an emission trading scheme will be enough to get the private sector to do the right thing. Certainly, forcing coal and petroleum firms to include environmental externalities in their pricing would help. But the key to an effective policy mix is a serious 20-year energy plan that includes the following key elements:

ver since the Federal Reserve embarked on its campaign to try to juice the recovery with very low interest rates and bond purchases, it’s been subject to withering criticism from a group of billionaires.

Criticism of the Fed is nothing new, of course, but this criticism comes from hedge fund chiefs, money managers, and other stewards of financial assets—a group that has seemingly benefited from everything the Fed has done.

Front and center among such professional critics is Paul Singer, head of the $25 billion Elliott Management, who recently claimed, in a letter to his investors, that central bankers around the world (including at the Fed) have created an “illusory” prosperity built on “wishful thinking” and “fake prices” that can only end in another bust.

Then there is David Einhorn, also a well-known billionaire manager, who has accused the Fed of succumbing to a “jelly donut” approach, the operative metaphor being that while jelly donuts and expansionary monetary policy both provide a pleasing sugar high at the moment, they can result in nasty aftereffects: either a Homer Simpson waistline or an episode of raging inflation. And I could go on—David Tepper has called the Fed “complacent”; Stanley Druckenmiller, formerly top gun for George Soros, has called the Fed’s policy totally outrageous and inappropriate. And so on.

The unifying theme of these criticisms is, of course, that the Fed’s policies to reinvigorate the economy will lead to inflation. Wall Street sages have been making this claim since 2010, when Ben Bernanke, the Federal Reserve chairman, announced a second stage of “quantitative easing” (bond purchases) to try to bring down long-term interest rates.

Quantitative easing probably had only a modest effect on the economy, and so far as these things are discernible, its effect on inflation was even less—call it zero.

Yet the voices of doom from well-heeled investment suites continue. Cumulatively, their blogs, letters, and public comments describe a range of opinion from prudent aversion to inflation to, in some cases, hysterical loathing for liberal fiscal and monetary policies.

Axel Merk, president of Merk Investments, has likened faith in the Fed to faith in the “central bankers in the Weimar Republic.” During the Weimar

era in pre-war Germany, inflation peaked at well more than 1,000 percent. During the Bernanke era, and continuing into Janet Yellen’s tenure, inflation has hovered in the neighborhood of 2 percent.

The point is not that some hedge fund managers made a (thus far) inaccurate call. Market forecasting is notoriously difficult, and no investor can be right all the time. Bernanke himself was famously wrong about the likelihood of a recession, and also wrong in asserting that central bankers had engineered a new era of stable output. Moreover, some risks are worth insuring against even if, in hindsight, they don’t materialize. Good investors are right to be cautious.

What interests me is why so many successful investors are so bitterly aligned against the agency that, arguably, singlehandedly revived the capitalist system. I know some of these managers and have investments with a couple of them.

They are super-smart and

Billionaire Paul Singer is one of a chorus of anti-Fed ideologues.

Winter 2015 The American Prospect 85

genuinely concerned. Many meet the acid test of sincerity, having backed their antiFed views by deploying a chunk of their portfolios into gold. As a political cause, gold has enjoyed a spirited revival, spearheaded by Fed-hating libertarians such as former Representative Ron Paul. The investment argument echoes the political one—it’s a bet that the

an IOU from your brotherin-law—is worth less in an environment of high inflation. No one holds more of these claims than Wall Street. And since the Fed has pretty much admitted it is trying to notch inflation a little higher to push up wages, you can understand why the creditor class would not be thrilled with it.

But inflation, as we

be higher when rates are low. Whether they are too high is an issue for traders.

And third, suppose the Fed is driving up asset prices—isn’t that what hedge fund managers want?

Not necessarily. A general rise in asset prices benefits almost everybody. Hedge funds are not for everybody.

One shouldn’t over-simplify (there are 10,000 hedge

If the Fed is doing its job and markets are rising smoothly, who needs hedge funds?

No wonder hedge fund managers hate the Federal Reserve.

Fed will fail. But the investment performance has been mediocre. Over the last 25 years, for instance, an investor in the Dow Jones Industrial Average would have multiplied his or her capital six times, in addition to dividends of a couple percent a year. The price of a brick of gold has risen three times, and it does not generate dividends.

Perhaps of more relevance, in the four years since Bernanke announced the bond purchase program known as QE2, the stock market has soared and gold has been dead money, its value right around where it was in late 2010. For highly reputed investors to forgo profit, you know they must be ideologically serious.

The first explanation is that investors have always been wary of inflation, because inflation diminishes the value of future claims. Every type of financial asset—a stock, a bond,

have seen, has remained quiescent. Wall Street naysayers, therefore, have increasingly been warning about something other than ordinary consumerprice inflation. Now they speak warily of asset price inflation. The idea here is that low interest rates, engineered by the Fed, are pushing up the price of financial assets such as stocks and bonds—maybe leading to another bubble.

It’s a mathematical truism that stocks and bonds are “worth” more when interest rates are low, and the Fed has kept the overnight lending rate at close to zero.

However, the interest rates that matter most are longterm interest rates, which the Fed doesn’t control. It may have influence (though even this is debatable), but it doesn’t control them.

Second, the fact that stocks are rising doesn’t mean that they are in a bubble. Stock prices should

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funds out there), but in general, hedge fund portfolios do not mimic the broader market, and are particularly tailored to withstand market slumps and profit from market anomalies.

In a smoothly rising market, the ordinary investor can do better than the average fund—which exactly describes what has occurred over the past five years. No wonder fund managers, who charge princely fees for their services, are unhappy. Claiming that the sky is about to fall is a way of saying they aren’t wrong—markets are wrong. The profits are “fake”; they will all come tumbling down.

“They hate the bull market the Fed has created,” says Charles Gradante, co-founder of Hennessee Group, which advises hedge fund clients. Many fund managers are highly moralistic—almost Victorian in their belief that

markets will (sooner or later) reflect a true state of affairs. Government will only upset the natural order. They oppose interfering with the Invisible Hand via, say, deficit spending or programs to redistribute income, with the fervor of a Calvinist preacher. Low interest rates must be a free lunch.

Whether the culprit is the Fed or Obamacare or stimulus spending, “it’s the same thread of conversation,” says an investor who is on close terms with several hedge fund inflation hawks. “It’s about morality.” Exhibit A might be Singer. In his recent letter, he went on a rant against central bankers, politicians, governments, and just about anyone in the public employ. He railed against “fake” stability courtesy of the Federal Reserve, “fake” inflation statistics, “fake” job numbers (from the Bureau of Labor Statistics, presumably), and “fake” most everything else.

When the Fed embarks, as it has, on a novel strategy to reflate the economy, it’s healthy for investors to be skeptical. But for some of these managers, there might be just a hint of resentment that the Fed’s policies have not led to disaster and, arguably, have promoted a stock market environment in which ordinary knaves are doing better than the experts. Merk, in a posted comment, was oozing sarcasm when he wrote, “If no one has noticed, central bankers are always the smart ones.” Hedge funds, of course, think they are

the smart ones. In 2013, the S&P 500 was up 30 percent and the average hedge fund was up only 13 percent. In the first ten months of 2014, the market advanced 9 percent while the average fund gained 2 percent, according to Gradante. Pessimism has paid off in the past; no one should snicker when smart investors are cautious. But to judge from their bitter tone, some of these managers are not merely critical of the Fed—they have gotten locked into an ideological war in which their brilliance can only be confirmed if the Fed fails.

Sometimes, it turns out, central bankers are better stewards than hedge fund managers. And if we grant that government bureaucrats are not well equipped to run investment portfolios, neither are private investors (even very good ones) suitable for managing the economy. The Fed has every wage earner, employer, bank, and investor in the country to worry about. As with other public institutions, it must balance competing interests, while hedge funds cater to only a tiny sliver of wealthy clients. And as was recently demonstrated by the collapse, private markets are hardly so perfect as to not require a healthy dose of public supervision.

Roger Lowenstein wrote for The Wall Street Journal and contributes frequently to The New York Times. He is author of five books, including a biography of Warren Buffett, and is working on a book on the Federal Reserve.

The Libertarian Delusion

u. s. army / ap images

This solar array at White Sands, N.M. is the largest of the U.S. Army’s solar photovoltaic systems. The $16.8 million project includes nearly 15,500 sun-tracking solar panels spread across 42 acres.

The Supply Side. We need to redouble the government’s efforts on the supply side by pursuing and supporting the technological breakthroughs that can lead to big cost reductions for renewables and advanced batteries.

The creation of ARPA-E in the Department of Energy, which has a mandate to support radical new technologies, is an important step, but such programs need even greater and more secure long-term funding.

The Demand Side. There also has to be a much more significant federal effort on the demand side to assure that companies that are developing these new technologies have a market for their products. Part of this can be done through such policies as renewable portfolio standards and feed-in tariffs, but we also need to make much greater use of the government’s procurement power. The Pentagon has begun to do clean energy retrofits on military bases, but such efforts could be quickly scaled up to strengthen demand both for materials and for firms with the needed expertise. Similarly, a significant chunk of the electrical power grid is managed by federal power authorities and they should be investing heavily in clean energy and smart grid technologies. Every new car and truck purchased by a government agency

should be a zero-emission vehicle. Moreover, the federal government could pay a share of the cost for state and local governments to replace their fleets with non-polluting vehicles. It is this kind of assured demand that will encourage existing and new vehicle firms to ramp up production and drive down the cost of clean energy vehicles.

Patient Capital. There need to be new financing mechanisms in place to fund this green energy transition. President Obama has proposed a national infrastructure bank that could mobilize private capital to fund some of the infrastructure improvements that we desperately need. It would make sense to focus such an institution on the clean energy challenge. We know that there are all kinds of energy retrofits, such as trading older light bulbs for energy-efficient ones or adding layers of insulation to drafty buildings, that can pay for themselves in a few years. The national infrastructure bank could fund both these and more ambitious clean energy projects for business firms, nonprofits, and local governments.

But an equally important financial task is to create new mechanisms to finance the expansion of the business firms that are scaling up to meet the clean energy challenge. Some of

this need could be met by reviving the federal loan guarantee program that the Obama administration used in 2009 and 2010. But we also need to copy what the CIA has done for the last 15 years: The agency has its own venture capital arm—In-Q-Tel—that has made money by supporting firms developing technologies that the agency finds useful. A similar public venture capital initiative to meet the clean energy challenge would not replace private sector efforts, but it could help drive private sector finance in the right direction.

We cannot meet the challenge of zero emissions with our current set of technologies, but if we start right now scaling up our deployment of clean energy while continuing to invest in cutting-edge science, we should be able to generate a series of both incremental and transformative innovations that get us to that goal.

What is holding us back is not the technical challenge; it is the misplaced ideological faith in free markets—and the lack of political will.

Fred Block teaches political economy at the University of California, Davis. He is author or co-author of several books, most recently The Power of Market Fundamentalism: Karl Polanyi’s Critique.

Winter 2015 The American Prospect 87

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Ronald Reagan made the Republican Party more conservative and more Southern; Newt Gingrich (still in the background at this 1984 rally) took it from there.

The Great Party Switch From 1968 through 1992, Republicans tended to control the White House.

Since then, they’ve more frequently controlled Congress, which has moved them even more to the right. By Alan I. Abramowitz b

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ecent national election results have followed a clear pattern. Since 1992, Democratic candidates have won four of six presidential elections and the popular vote for president five times out of six. Only George W. Bush’s narrow re-election victory in 2004 has interrupted the recent string of Democratic popular-vote successes. Over the same period, however, Republicans have won a majority of seats in the House of Representatives in nine of twelve elections and a majority of seats in the Senate in six of twelve

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elections, with one election, in 2000, resulting in a 50-50 tie.

Democrats have controlled both chambers of Congress for only six of the past twenty-two years.

This pattern of Democratic domination of presidential elections, along with Republican domination of congressional and especially House elections, represents a complete reversal of the pattern that prevailed during the previous four decades. Between 1952 and 1988, Republican candidates won seven of ten presidential elections. Five of those

victories produced double-digit popular vote margins.

Of the three Democratic presidential victories in that time, only one—Lyndon Johnson’s triumph over Barry Goldwater in 1964— resulted in a double-digit margin.

During this era of Republican domination of the presidency, however, Democrats won a majority of seats in the House in 17 of 18 elections and a majority of seats in the Senate in 14 of 18 elections.

Democrats controlled both chambers of Congress for 34 of the 40 years from 1954 through 1994.

Two new books, Tom Schaller’s The Stronghold: How Republicans Captured Congress but Surrendered the White House, and Matt Barreto and Gary Segura’s Latino America: How America’s Most Dynamic Population is Poised to Transform the Politics of the Nation, each tell part of the story of recent trends in American electoral politics. Schaller, a professor of political science at the University of Maryland, Baltimore County, and a political columnist for The Baltimore Sun, attempts to explain the dramatic shift in party fortunes since the 1980s, arguing that growing domination of the GOP by its congressional wing, and especially its increasingly conservative House caucus, has damaged the Republican image among younger voters, women, and minorities and thereby undermined its ability to

Winter 2015 The American Prospect 89

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compete in presidential elections.

Barreto and Segura—professors of political science at the University of Washington and Stanford University, respectively, and the principals of Latino Decisions, widely considered the nation’s leading Latino-oriented polling firm—focus on the rise of the Latino electorate since the 1980s. Their work also sheds considerable light on the broader electoral trends described

by Schaller, especially Democratic successes in recent presidential elections.

The Transformation of the Republican Party

In his 2006 book, Whistling Past Dixie, Tom Schaller argued that Democrats could win back the White House only by writing off the South and nominating a progressive candidate who could unite a new coalition of white liberals, African Americans, Hispanics, and union members. Such a candidate, Schaller argued, could win a majority of electoral votes without any states south of the Mason– Dixon Line. It was a provocative thesis that appealed to many liberal Democrats unhappy about the influence of the centrist Democratic Leadership Council during the Clinton years.

Only two years later, Schaller’s thesis was seemingly confirmed by Barack Obama’s election. In 2008, Obama actually carried three of the eleven states of the old Confederacy—Florida, Virginia, and North Carolina—but he would have won without their electoral votes. Of course, an economy in free fall and Bush’s unpopularity aided Obama’s election. It is far from clear whether a liberal northern Democrat, especially an African American, could have won the presidency under less favorable circumstances. Nevertheless, Obama’s re-election in 2012 by a reduced but still decisive margin in the popular vote seemed to confirm Schaller’s thesis that Democrats no longer needed to nominate moderate southerners like Jimmy Carter and Bill Clinton to win the presidency.

With The Stronghold, Schaller has produced another book about recent trends in American electoral politics that will undoubtedly provoke considerable debate among both scholars and political practitioners. Schaller’s

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thesis is that in Republican politics, the congressional tail has been wagging the presidential dog for the past two decades. During the late 1980s, Republican congressional leaders, most notably former House Speaker Newt Gingrich, developed a strategy for winning over conservative white voters in the South and elsewhere who had been voting for Republican presidential candidates like Richard Nixon and Ronald Reagan but had continued to vote for moderate-to-conservative Democrats for Congress. That strategy involved waging all-out partisan war against Democratic leaders and eventually getting almost all Republican House candidates to sign on to the “Contract with America” to clarify party differences and thereby nationalize the 1994 congressional elections.

Gingrich’s strategy paid big dividends for the Republicans that year, when they captured control of both chambers of Congress for the first time in more than 40 years. For the next 12 years, Republicans kept control, winning House and Senate majorities in six consecutive elections. It was quite a turnaround for a party that had been widely viewed by scholars and pundits, and by many of its own officeholders, as condemned to minority status for the foreseeable future. So dramatic was this reversal that Schaller sees Gingrich as more important to the modern Republican Party than the man usually credited with its revival, Ronald Reagan.

In truth, Gingrich’s and Reagan’s contributions to the modern Republican Party are hard to separate. By repositioning the GOP on cultural issues such as abortion so as to appeal to white evangelicals, Reagan started the ideological realignment that Gingrich and his allies reinforced. Without Reagan, it is doubtful that Gingrich could have achieved as much as he did.

Schaller’s argument is that by helping to shift the Republican Party even more sharply to the right, Gingrich succeeded in making the GOP once and for all the dominant party in the South.

What the Gingrichites did not foresee, however, was that the growing conservatism of their party would alienate large numbers of moderate-to-liberal Republicans and independents in the

Northeast, the industrial Midwest, and the Pacific Coast, contributing to a gradual realignment of many states in those regions. As a result of this realignment, every state in the Northeast and every state on the Pacific Coast except Alaska voted for Obama in 2008 and 2012, and today the large majority of House members and senators from those states are Democrats.

Demographic Shift

The Stronghold: How Republicans Captured Congress but Surrendered the White House

by Thomas F. Schaller

Yale University Press

Latino America: How America’s Most Dynamic Population is Poised to Transform the Politics of the Nation

by Matt Barreto and Gary M. Segura

PublicAffairs

There was something else that the Gingrich Republicans did not anticipate—the demographic transformation of the American electorate.

Between the election of Clinton in 1992 and of Obama in 2008, the nonwhite share of the electorate doubled, going from 13 percent to 26 percent.

It rose again, to 28 percent in 2012, and is expected to continue growing by about two percentage points every four years for the foreseeable future.

Without this demographic transformation, Obama could never have won the presidency: His performance among whites and nonwhites in 2008 would have made him a decisive popular-vote loser if the demographic makeup of the electorate had been the same in 2008 as it had been in 1992.

By far the most important factor contributing to this demographic transformation has been the growing voting power of Latinos. This is the remarkable story that Matt Barreto and Gary Segura document in Latino America. Many of the book’s individual chapters were co-authored with graduate students or research associates at Latino Decisions; some were published earlier as stand-alone articles in political science journals. But this book is clearly intended for nonacademic readers as well as scholars.

It provides readers with a clear road map to understanding America’s rising Latino electorate—its size and composition, social and political beliefs, and electoral participation.

Barreto and Segura, along with their co-authors, take pains to knock down some common stereotypes about Latino voters—especially the belief that Latinos’ partisan orientations and voting behavior are strongly influenced by their religiosity and social conservatism. The authors clearly demonstrate

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that Latinos’ party attachments and voting choices are based overwhelmingly on their economic concerns and views of the role of government. They also demonstrate that Latinos are keenly aware of the positions of presidential candidates and other party leaders on the issue of immigration reform, especially the treatment of the 11 million–plus undocumented immigrants, mostly of Latino origin, currently in the United States.

Based on their socioeconomic characteristics and liberal views of government, the large majority of Latinos have traditionally supported the Democratic Party and its candidates.

But that support has varied considerably from election to election. According to Barreto and Segura, a majority of Latinos have voted for a Republican candidate at least once, and as recently as 2004, George W. Bush won about 40 percent of Latino votes. Since then, however, Republicans have seen their share of the Latino vote fall steadily; in 2012, only 23 percent of Latinos voted for Mitt Romney.

A number of factors contributed to Romney’s poor showing among Latinos. His positions on economic issues, which became markedly more conservative during the Republican primaries, were out of step with the preferences of the large majority of Latinos. Romney’s call for “self-­ deportation,” that is, making life for undocumented immigrants so miserable that they would go back to their home countries on their own, undoubtedly also cost him Latino support. Barreto and Segura estimate that Obama’s popular-vote margin among Latinos in 2012 was greater than his overall popular-vote margin in the nation—the first time Latinos have ever provided the margin of victory to a presidential candidate.

Romney’s weak showing among Latinos was a clear warning sign to Republican leaders and strategists.

Immediately following the election, Republican National Committee Chair Reince Priebus created a task force to examine the causes of the GOP defeat and recommend changes in the party’s approach. One of the group’s key recommendations was that the GOP adopt a more moderate position

on the issue of immigration reform, moving away from an emphasis on deportation to an acceptance of some form of legalization and perhaps eventual citizenship for a large portion of the undocumented population.

For the past two years, the Republican Party has not taken that advice, and it is not going to take it anytime soon. Although 14 Senate Republicans voted for a comprehensive immigration reform bill in 2013 that would have provided legal status and a path to citizenship for millions of undocumented immigrants, Republican leaders in the House have refused to allow that bill to come to a vote on the floor and have failed to produce any immigration legislation of their own. GOP leaders were also uniformly hostile to Obama’s announcement in November that in the absence of legislative action he would use his executive authority to delay deporting as many as four million undocumented immigrants for three years and allow many of them to obtain work permits.

As a result of Obama’s actions, it’s likely that immigration reform will be front and center in the 2016 Republican primaries and that GOP candidates will compete to see who can take the toughest stand against any policy that can be labeled “amnesty” for undocumented immigrants. This is the position of most Republicans in the Senate and the vast majority of Republicans in the House, almost none of whom need to worry about appealing to Latinos to hold their seats. It seems likely to be the position that will appeal to the majority of Republican primary voters.

But it is a position that, according to Barreto and Segura, will make it difficult if not impossible for Republicans to improve on Romney’s showing among Latino voters in 2012. With Latinos and other nonwhites comprising a growing share of the American electorate, GOP candidates will need to win an increasingly large share of the vote among non-Hispanic whites to remain competitive in presidential elections— a very challenging assignment. All of this fits Schaller’s analysis of the growing domination of the national Republican Party by its increasingly conservative congressional wing.

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The Outlook for 2016 and Beyond

Since 1992, Democrats have averaged 231 House members and 52 senators under Republican presidents and just 202 and 49 under Democrats.

The political trends described by Schaller and the demographic trends described by Barreto and Segura leave us with a puzzle. How have Republicans managed to hold on to control of Congress, and especially the House, for so long if their focus on appealing to conservative whites in the South and elsewhere has produced a negative reaction among the growing number of nonwhites and among moderate-to-liberal whites outside the South? In fact, not only have Republicans held on to Congress; in 2014 they also elected the largest number of Republicans to the House since the late 1920s, while also gaining nine seats in the Senate.

In The Stronghold, Schaller provides a few clues as to how Republicans have done so well in congressional and especially House elections despite their weak performance in presidential elections. Republicans, Schaller argues, have recently pursued a strategy of retrenchment rather than one of recovery. Retrenchment, according to Schaller, involves finding ways to maximize the return that GOP candidates receive from their current base of support in the electorate rather than trying to expand that base of support.

Perhaps the most effective way that Republicans have carried out this strategy has been through control of redistricting after the 2010 Census.

Because the 2010 midterm elections gave Republicans complete control of state governments in large swing states such as Ohio, Michigan, Pennsylvania, and Florida, Republican legislatures were able to draw House and state legislative districts that packed Democratic voters into as few districts as possible—a strategy sometimes aided

by African American and Latino Democratic incumbents who received safe districts in return for their support of GOP redistricting plans. As a result, in 2012, Republicans were able to minimize their losses in the House of Representatives. Even though Democratic House candidates across the nation received more than 1.5 million more votes than Republican House candidates, the GOP suffered a net loss of only eight seats in the House and easily maintained its control of the chamber.

Winter 2015 The American Prospect 91

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Gerrymandering, however, is not a complete explanation for Republicans’ success in the House, and it clearly cannot explain their success in the 2014 Senate elections. In House elections, the concentration of Democratic voters in densely populated urban areas results in large numbers of wasted votes in districts that Democrats win by huge landslides. This pattern existed even before the post-2010 round of redistricting. In the 2000 election, for example, even though Al Gore narrowly won the national popular vote, George W. Bush carried 228 House districts to only 207 for Gore.

GOP gerrymandering has reinforced the Republican advantage in House elections. In 2012, Obama won the national popular vote by almost four percentage points but carried only 208 House districts to Mitt Romney’s 227.

An additional factor has made this advantage more significant than in the past—the increasing partisanship of the American electorate. Compared with elections from the 1960s through the 1980s, there is now a much stronger relationship between the presidential vote and the House vote as well as between the presidential vote and the Senate vote. There is greater party loyalty in voting and less ticket splitting than at any time since the 1950s.

Consequently, congressional candidates find it more difficult to win and hold seats in states or districts that normally favor the opposing party’s presidential candidate. Gary Jacobson, a political scientist at the University of California at San Diego, has shown that the personal advantage of incumbency has been shrinking for some time now and, as he points out, this is bad news for Democrats in House elections because a majority of House districts lean toward the GOP. With Republicans now holding 247 seats, Democrats will need to gain at least 30 seats in 2016 to regain control of the House. That would require a major Democratic wave in 2016, one even larger than the wave that accompanied Obama’s election in 2008.

In Senate elections, Republicans benefit from the equal representation of states in the upper chamber. Even though the 20 least populous states have a smaller combined population

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than California, those 20 states elect 40 U.S. senators to California’s two.

And the extreme small-state bias in Senate representation has important partisan consequences. Eleven of the 20 least populous states lean strongly toward the Republican Party, while only five lean strongly toward the Democratic Party.

Obama, however, did carry 28 states in 2008 and 26 in 2012, so the smallstate bias in Senate representation does not guarantee Republicans a decisive advantage. And with the exception of 2014, Democrats have generally done better in recent elections for the Senate than for the House. In any given election, the particular set of states with Senate contests may determine which party has an edge. The states with Senate contests in 2014 were a particularly GOP-friendly group. In 2016, however, the states with Senate contests are friendlier to Democrats; Republicans will be defending seats they won in 2010. As a result, Democrats should have an opportunity to pick up the seats they will need to take back control of the Senate.

Democrats should also enjoy greater success in the 2016 congressional elections than in 2014 because voter turnout will be much higher in a presidential year. Lower turnout in midterms especially affects the groups that Democrats now rely on—younger voters, racial and ethnic minorities, and unmarried women. Compared to 2014, the 2016 electorate will be younger, less white, and almost certainly more Democratic. In fact, based on the evidence presented by Barreto and Segura, the 2016 electorate will probably have a smaller proportion of non-­Hispanic whites and a larger proportion of Latinos and other nonwhites than the 2012 electorate. Even without Obama at the top of the Democratic ticket, demographic trends almost guarantee that the nonwhite share of the electorate will continue to grow over the next several election cycles at about the same rate that it has been growing since the early 1990s. A reasonable guess would be that nonwhites will make up about 30 percent of the electorate, with Latinos

Between the 1992 and 2008 elections, the non-white share of the electorate doubled from 13 percent to 26 percent.

amounting to around 11 percent.

Despite these trends, Republicans may still take back the White House in 2016. In presidential politics, demography is not destiny—the outcome of the next presidential election will depend on a variety of factors besides the racial and ethnic composition of the electorate, including the state of the American economy and voters’ evaluations of Obama’s job performance in 2016. Growing dependence of Democrats on the votes of African Americans, Latinos, and other nonwhites could also lead to further erosion of Democratic support among white working-class voters. Moreover, it is always difficult for a party to hold the White House for more than two consecutive elections. That has only happened once in the past 60 years, when George H.W. Bush succeeded Ronald Reagan in 1988, although Al Gore likely would have repeated the feat in 2000 if not for the problems with vote counting in Florida.

Even at this early stage, what we can predict with a high degree of confidence is that individual voting patterns in 2016 will closely resemble those in 2012; the electoral map in 2016 will closely resemble the electoral map in 2012; and party loyalty and straight-ticket voting will be the rule in 2016 just as in 2012. With the country closely divided between supporters of the two parties, the outcome in 2016 is likely to be very close unless one party or the other chooses a candidate so extreme as to alienate large numbers of moderate partisans and independents. Right now, that risk appears to be greater on the Republican than on the Democratic side because of the apparently wideopen nature of the GOP contest and the tendency of Republican primaries to magnify Tea Party influence.

If the 2016 election is to produce a break in the recent pattern of Democratic domination of presidential elections and Republican domination of congressional and especially House elections, it could well be through the election of a Republican president along with a GOP House and perhaps a GOP Senate, thereby restoring oneparty control of American government but definitely not in the form

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desired by progressives. Such a result is far from certain. Should it come to pass, however, Democrats will be able to take some consolation from the fact that having a Republican in the White House is the most likely scenario that could eventually restore Democratic control of Congress.

While Schaller sees Republican control of Congress contributing to Democratic control of the White House, it is also likely that Democratic control of the White House in recent years has contributed to Republican control of Congress. There is considerable evidence of a presidential penalty in American politics: The party that controls the presidency almost inevitably sees its power erode in Congress, especially in the House of Representatives. Since 1992, Democrats have won a majority of seats in both chambers in three of five elections under Republican presidents but in none of the seven elections under Democratic presidents. Democrats have won an average of 231 House seats and 52 Senate seats in elections under Republican presidents compared with only 202 House seats and 49 Senate seats in elections under Democratic presidents.

It is not entirely clear why the party controlling the presidency generally sees its power diminish in Congress, although the prevalence of negative voting in midterm elections is part of the explanation. But whatever the cause of this phenomenon, the implication is that as long as the overall balance of support between the two parties in the electorate remains very close, periods of one-party control of government are likely to be brief. Regardless of which party captures the White House in 2016, divided government is likely to prevail for most of the foreseeable future. And given the deep ideological divide that exists between Democrats and Republicans, we can probably expect to see a continuation of the politics of confrontation and gridlock in Washington for a long time to come.

Alan I. Abramowitz is the Alben W. Barkley Professor of Political Science at Emory University. His most recent book is The Polarized Public: Why American Government Is So Dysfunctional.

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Looking Forward to the Sequel If we don’t alter the power distribution that led to the financial collapse, it will happen again. By Sheila Bair b

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artin Wolf is one of the few people on the planet who can mingle with financial elites without being co-opted by them. Fans of his regular column in the Financial Times—and I am one—are familiar with the power of his writing, the clarity of his logic, and the independence and delightful unpredictability of his views.

But Wolf fans beware: While his columns can be devoured as easily as a Thanksgiving pumpkin pie, his new book, The Shifts and the Shocks, tastes more like the side of Brussels sprouts that Aunt Millie brought to the holiday dinner—obligatory to consume and good for you, but requiring a lot of chewing. This is dense and at times highly technical reading, laden with jargon only an Oxford economist could love. But it is, nonetheless, must-read fodder for any serious student of financial markets. Though Wolf’s description of the causes of the crisis and weaknesses in the response are not novel, what is new is his ambitious effort to tie it all together. He puts the greed, mismanagement, and regulatory lapses that preceded the crisis into a larger context of the global “savings glut” where a financial system, largely unfettered by regulation or capital controls, transformed the excess savings in surplus countries such as China and Germany into loose credit and asset bubbles in the debtor nations to which those savings flowed.

Wolf is mostly laudatory of the post-crisis measures undertaken in the United States and the United Kingdom, whose economies are growing, albeit tepidly, and observes that their ability to control their own monetary destiny has been key in engineering their recoveries. Not so for other debtor nations in the Eurozone, which are trapped in a monetary union that precludes currency devaluation and which are still struggling under austerity dictates of the region’s primary creditor, Germany. Wolf

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wags his finger at Germany’s harsh treatment of those nations, quoting Walter Bagehot: “Excess borrowing by fools would have been impossible without excess lending by fools.” Wolf clearly views Germany as the primary culprit in the Eurozone’s struggles and believes the Continent will never recover until Deutschland is willing to embrace greater fiscal integration, stimulus spending, and more debt forgiveness for overextended nations.

Yet, Bagehot’s observation seems to have greater applicability to the profligate bankers whose financial innovations were the transmission mechanism whereby creditor countries’ surplus savings became weapons of mass economic destruction. Exploding Pick-A-Pay mortgages, collateralized debt obligations, and credit default swaps—surely, wiser men (and they were mainly men) could have come up with better uses for the money. But Wolf gives them a pass, citing former Citigroup head Chuck Prince’s famous quote about having to dance so long as the music was playing. Wolf calls the crisis the “failure of system, not of individuals.” But in point of fact, many in the banking system did stop dancing, or never went to the prom to begin with. In the United States, community banks and regional commercial banks for the most part did not participate in the subprime craze, and remained healthy and profitable throughout the crisis and its aftermath. Larger, traditional lenders such as Wells Fargo also sat it out, even if most Wall Street leaders, like Prince, couldn’t stop their dancing feet. Wolf’s exculpation of bankers is even harder to understand given continuing evidence of the kind of shortsightedness and greed so prevalent in the run-up to the crisis. Surely, a savings glut cannot explain away the conflicts of interest, money laundering abuses, and attempted manipulation of everything from interest and foreign exchange rates to commodity prices that still dominate the financial news.

Winter 2015 The American Prospect 93

(c) Bob Magee, 2012

Call to reason

Which future do we choose?

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Which future do we choose?

he time is soon coming when men will realize that the most important problem facing this generation is the ecological imbalance which threatens vast areas of Earth. As you know, men are divided as to the extent of this problem but unless their attention is squarely fixed on this ecological dilemma, the future for many is under question.

Soon many groups will realize the extent of this danger and that, year by year, little separates them from disaster. The forces unleashed by global warming are now well beyond the control devices available to men.

Hearken, therefore, while there is still a little time. For the waters rise inexorably, and men gamble, blithely, with their future.

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If commercial and investment bankers get off easy in Wolf’s retelling, not so the central bankers, many of whom call him friend (or at least used to). He chastises them for missing the dangerous excesses that were building pre-crisis, and for naively thinking that financial engineering had successfully dispersed risk safely throughout the system. At the same time, he excuses them for keeping interest rates low, pinning the entire fiasco on the savings glut. He fairly points out there would have been tradeoffs with tighter monetary conditions—slower economic growth, and political resistance. Yet “taking away the punch bowl” is what central bankers are supposed to do when circumstances require it—that is why our system takes such care to insulate them from political pressure, giving them job protection through fixed terms and the ability to fund themselves independently of Congressional appropriations.

True, it is easy to second-guess, but retroactive clarity of vision could help find the right course for the future.

And in retrospect, it seems clear that slower growth would have been more sustainable than the housing bubble mania that did such damage to the economy and, importantly, higher interest rates would have curbed the “hunt for yield” that made investors such eager buyers of Wall Street’s toxic mortgage-backed securities. With sensible financial regulation, it is possible to have growth without asset bubbles, as we experienced from the late 1930s to 1973. Wolf does acknowledge that stronger regulation, while not preventing the crisis, could have tempered it, and he embraces an aggressive regulatory agenda centered on significantly higher capital requirements. In particular (be still my heart), he advocates a strong leverage ratio—increasing the percentage of a bank’s total assets that are funded with common equity. He rightly criticizes the “risk-based measures,” currently used by regulators for large banks, as overly complex and subject to manipulation.

As an early advocate for a tougher leverage ratio, I welcome his strong, public embrace of this standard. I hope that he is also whispering it in the ears of the central bankers with

whom he has such great influence.

They have been all too reluctant to support dramatic increases in bank capital requirements, notwithstanding strong, bipartisan support among both progressives and conservatives.

What other financial issue finds common ground among the likes of Alan Greenspan and Elizabeth Warren, or The Wall Street Journal and The New York Times? Alas, though European regulators agreed to a modest leverage ratio in 2010, they have yet to implement it. In the United States, rules have been finalized, but they still allow large banking conglomerates to borrow about $20 for every $1 of common equity. Wolf pointedly calls out the ineffectiveness of this and other regulatory reforms, saying that “the thrust of it all has been to preserve the system that existed prior to the crisis.”

Wolf also lends his considerable prestige to support other policies embraced by many in the financial reform movement. He is staunchly anti-bailout, asserting that “shareholders should never be rescued” and that there should be a clear “order of conversion of debt into equity in a welldefined resolution regime,” and concludes, “Only in extreme circumstances should a government rescue be contemplated.” He supports capital controls— surely the most direct way to constrain the destabilizing flow of surplus savings—and goes after government debt subsidies full throttle by calling for the elimination of the tax-deductibility of interest. He believes the corporate income tax should be abolished, with all corporate income attributable (and taxed) to shareholders. He wants more innovation in financial contracts, suggesting “equity sharing” arrangements for mortgages, in which lender and homeowner share in gains from home price appreciation but also share in losses when home prices fall. He wants a shift away from taxation on work (a “good”) to taxes on “bads” such as pollution. In a nod to Thomas Piketty, Wolf also suggests taxes on wealth.

All of these ideas are tantalizing in their promise, but not well developed.

(One hopes they will be fleshed out in Wolf’s next book.) By far his most dramatic proposal for reform is to abolish fractional reserve banking—the

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traditional system of banks accepting short-term deposits to fund long-term liabilities (loans), while keeping a fraction of those deposits with the central bank to meet withdrawal demands. He is enamored of the “Chicago Plan” of the 1930s, which proposed to replace fractional reserve banking with a system in which deposits are 100 percent invested in government bonds or central bank deposits. Depositors would thus have utmost faith in the safety of their deposits, ending the risk of destabilizing bank runs.

In support of the Chicago Plan, Wolf quotes Mervyn King, the former head of the Bank of England, who calls “pretense” and “alchemy” the idea that “risk-free deposits can be supported by risky assets.” The question, of course, is that if deposittaking banks cannot use deposits to make loans, where would the credit come from to support mortgages, credit cards, small business loans, trade finance, and all the other uses to which deposits are put? The Chicago Plan has two possible answers: One is that the capital markets would provide equity investments in funds that in turn would provide loans to the real economy; the other is that the government itself would lend money to banks, which they would then lend to households and businesses.

Wolf seems to favor the former option, but both approaches seem to have fundamental problems. Capitalmarket funding proved to be inherently unstable during the crisis. Indeed, the majority of subprime mortgages in the United States were funded through securitizations, not bank deposits.

Once the housing market started to turn and mortgage losses mounted, non-bank mortgage lenders collapsed, leaving banks as the primary source of mortgage credit. Money market funds and commercial paper markets proved to be just as unreliable as the securitization market. These sources of funding quickly vanished at the first sign of trouble. If it had not been for the traditional banking system—funded by stable deposits, the vast majority of which were insured by the government—credit availability would have completely collapsed. The Chicago Plan was developed in response to the

massive bank runs of the early 1930s, a problem that has been largely solved through deposit insurance. The 2008 financial crisis was precipitated by a run on the so-called “shadow sector”—securitizations, money funds, commercial paper, repos—all of which is more the purview of investment banking. Wolf does not explain how or

whether he would extend the Chicago Plan to cover Wall Street investment banks. But if they were left to their own devices, it is hard to see how this would make the system safer.

The second option—governmentprovided funding for loans—would certainly be more stable than capital market funding, yet it is far from clear whether the government would be a better allocator of credit than the private sector. The tradeoff for financial stability could be loans to political cronies or bridges to nowhere in the districts of powerful committee chairs, while deserving but politically impotent small businesses and households could be left starving for credit. As a former public servant, I want to believe the government could rise above such temptations, but I am dubious. In any event, both approaches are so far removed from the politically possible that their mere suggestion seems to be a harmful diversion of effort from obtainable reforms that could make a real difference, such as much higher

The Shifts and the Shocks: What We’ve Learned—and have Still to Learn—from the Financial Crisis

By Martin Wolf

Penguin Press

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capital requirements for banks.

Wolf is at his best when he speaks to the powerlessness and disenfranchisement of the general population, which has suffered so greatly from the increasingly severe cycles of financial instability that have characterized the last half-century. He urges greater use of debt restructuring for both troubled European countries and overextended households. He quotes Robert Kuttner, who has observed the injustice of a system in which financial elites can utilize bankruptcy to “rearrange assets and shed debts” while families are denied the ability to escape mortgage debt without losing their homes. But Wolf gives too much credence to low interest rates as the catalyst for the deleveraging of American households.

To be sure, wealthy, credit-worthy households have been able to refinance and lower debt burdens with zero interest rates (to say nothing of their flourishing stock portfolios). But de-leveraging for millions of Americans has been accomplished only through hard-fought negotiations with insensitive loan servicers, and often at the cost of losing their homes or entering bankruptcy to achieve forgiveness of other debts.

In the concluding paragraphs of his book, Wolf bemoans the bankfriendly rescues as “undermining the sense of fairness that underpins the political economy of capitalism: There has to remain a belief that success is earned, not stolen or handed over on a platter.” He says, “People feel even more than before that the country is not being governed for them, but for a narrow segment of well-connected insiders who reap most of the gains and, when things go wrong, are not just shielded from loss but impose massive costs on everybody else.”

This imbalance of power—between decision-makers and those whose lives are impacted by their decisions—is the crux of the problem. I hope Mr. Wolf will apply more of his formidable intellect to correcting it in his next book.

Sheila Bair is a senior adviser to the Pew Charitable Trusts and chairs the Systemic Risk Council. She chaired the Federal Deposit Insurance Corporation from 2006 to 2011.

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Truth in Politics Now Demanding that we seek out the truth is a start— but it is only a start. By David Greenberg b

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o one has ever doubted,” wrote Hannah Arendt, “that truth and politics are on rather bad terms with each other, and no one, as far as I know, has ever counted truthfulness among the political virtues.” In her essay “Truth and Politics” Arendt probed a series of questions that are every bit as relevant today as they were when she raised them in 1967. How much honesty should we expect from politicians? Can we trust that clear-cut facts will be believed in an age of mass media and ubiquitous public relations? How should we understand the differences between closed and open societies?

An easy answer is that democracies need truthful information for self-government to work. But Arendt’s essay made clear that there’s more to it. Truth isn’t found as easily as we suppose. Though by no means a relativist, Arendt pointed out that the detached “truth telling” that we seek from philosophers and scientists, scholars and judges, isn’t something we should expect or want from politicians. On the contrary, she notes, politics inherently entails a form of lying—or, to phrase it less provocatively than she does, politics requires denying or negating existing realities in order to envision and articulate alternative ones. Thus the simple incantations such as “speak truth to power” or “information wants to be free” that we often invoke in discussing free speech issues don’t really get us very far.

A trio of new books grapple with the relationship of truth and politics in different ways. How are we to understand the contests going on today over the control of information, the freedom to report and argue, and the truthfulness of political rhetoric? Demanding that we seek out the truth is a start—but it is nothing more than a start.

Journalists at Mortal Risk

Among those Arendt classified as “truth tellers” are reporters. Since

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ancient times, the figure who made it his mission to dispel falsehoods faced mortal danger, she noted, quoting Plato to the effect that if the wider community “could lay hands on [such a] man … they would kill him.” The need to protect the lives of journalists, who face danger when seeking to report on repressive governments or bloodthirsty militants, has never been more pressing. Last fall we saw ISIS’s brutal beheadings of Western war correspondents; as I write, we are learning of the death of photojournalist Luke Somers, who had been kidnapped by al-Qaeda jihadists in Yemen, and The Washington Post’s Jason Rezaian, who languishes in an Iranian cell.

Looking out for such truth-seekers is the mission of the Committee to Protect Journalists, whose executive director, Joel Simon, has just written The New Censorship: Inside the Global Battle for Media Freedom, a thoughtful, if dry, tour d’horizon of the threats to free expression in the so-called digital age. Simon’s book is at some level a publicity brief for his association, and a trace of self-promotion clings to his project. But The New Censorship isn’t a memoir, and it’s much more than organizational shilling. It’s a case for why the goal of upholding “press freedom” needs to expand, in the digital age, to defending “freedom of information.”

Some of Simon’s arguments are straightforward. He details the strategies of al-Qaeda and other terrorist groups, which have taken to killing journalists to enhance their mystique of ruthlessness and deter journalistic exposure. He also looks at China’s nakedly totalitarian regime, which remorselessly regulates what its billionplus citizens can see online. And he calls our attention, too, to lesser-known danger spots, such as the Philippines, where the weakness of the criminal justice system allows the murder of journalists to go unpunished.

The New Censorship: Inside the Global Battle for Media Freedom

by Joel Simon

Columbia Journalism Review

Censors at Work: How States Shaped Literature

by Robert Darnton

W. W. Norton & Company

935 Lies: The Future of Truth and the Decline of America’s Moral Integrity

by Charles Lewis

PublicAffairs

But Simon realizes that infringements on journalistic freedom aren’t always a straightforward business.

He is most penetrating on the regimes that he calls “democratators”—quasidictators who gain and retain power through semi-free popular elections while clamping down on individual freedoms. Vladimir Putin of Russia, Recep Tayyip Erdogan of Turkey, and the late Hugo Chavez of Venezuela have all enjoyed widespread support in their countries. But in each case, the façade of democracy has concealed ruthless domination, including the control of news. Putin notoriously cracked down on two hostile television networks, prosecuting their owners on ginned-up charges, while also rounding up and harassing smalltime bloggers and independent writers. Erdogan has set records for jailing reporters and last year shut down Twitter when mass protests destabilized his rule. In Venezuela, Chavez turned the airwaves into his personal megaphone and gutted critical television outlets like Venevision.

Simon does not spare the United States. He chides the Obama administration for seeking to prosecute Julian Assange of WikiLeaks under the Espionage Act because Assange published hundreds of thousands of classified State Department cables. But Simon has seen too much of the world to lapse into moral equivalency, and his take on the Assange affair is appropriately nuanced. He criticizes Assange for blowing the cover of human rights activists working in repressive societies, including an Ethiopian journalist who was driven into exile. Simon also notes the deep ambivalence among journalists toward Assange, who, despite calling himself a journalist, is more properly understood as the head of “an anti-secrecy advocacy group that uses journalistic strategies.” But even though groups like the Committee to Protect Journalists hesitated to support Assange, Simon ultimately insists that in this new era, even morally dubious activists deserve protection from prosecution when they breach classified information. After all, the very arguments used against Assange, he argues, would also undermine the ability of “real” journalists

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to carry out their work. For these and other reasons, Simon argues that “journalists have to recognize that their rights are best protected not by the special realm of ‘press freedom,’” but by embracing the fight for a more capacious freedom of expression the world over.

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The Censor’s Subtle Hand

Simon’s insight that censorship is often achieved through methods subtler than brute force is given historical and theoretical grounding by Robert Darnton’s Censors at Work: How States Shaped Literature. Darnton is one of America’s most influential historians of European thought and culture, probably best known for his 1984 book The Great Cat Massacre, which helped launch a “cultural turn” among historians who drew upon anthropological methods to understand other societies. Most of his books have themselves been about books, as he has teased out the ways that writing, reading, and publishing have shaped cultures and subcultures, mainly in Enlightenment France. His new study compares three far-flung

East German border guards on the Berlin wall, circa 1978: representatives of an ironfisted Communist regime that nominally guaranteed a free press

societies—pre-revolutionary France, British colonial India, and communist East Germany—and looks at the rules, norms, and practices that governed what was published and suppressed.

Though probably too recondite for most non-expert readers, Censors at Work ought to be of interest to anyone who studies today’s battles for the control of information. Darnton opens his book by gesturing at the difficult questions citizens and policymakers face in setting the rules that govern the flow of information in cyberspace—efforts to balance, for example, freedom of expression against security from cyberattacks; or access to information with refuge from pornography. But history offers no clear lessons for the present, and Darnton comments on contemporary problems in information regulation only indirectly. That is precisely what makes his book interesting.

Darnton provides a different picture of censorship from the one most of us have. We typically imagine a top-down process of commissars who green-light or red-light individual publications. But when seen up close, Darnton argues, it’s a lot more intricate. In all societies, censorship amounts to a cultural practice in which different players—writers, editors, lawyers, bureaucrats, political officials—interact to shape the decisions about what the public gets to read. In Bourbon France, he finds that censorship frequently approached a kind of literary collaboration. Far from humorless philistines, censors were men of letters, concerned with maintaining a high caliber of published literature, and their reports on books resembled reviews, addressing not just their subjects’ fidelity to church or state doctrine but also the merits of their arguments and the charms of their prose style. Authors, moreover, strove to address censors’ concerns, engaging in an almost stylized dance in order to get their books to pass muster. The vetting of books, in short, turned on questions far more complex than just whether ideas traduced official orthodoxy.

A different set of rituals and relationships shaped Britain’s regime in colonial India. Fancying themselves

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civilizing forces, the British encouraged native literature in a spirit of paternalistic tutelage. But after the so-called Sepoy Rebellion of 1857, when Indian soldiers revolted against their British officers, the colonial rulers came to fear nationalist stirrings and used the courts to clamp down on seditious writings. Again Darnton finds not outright redaction but an elaborate set of laws and practices employed to justify the repression of books.

Most revelatory is Darnton’s mapping of the labyrinthine world of East German censorship, which he examined at the time the Berlin Wall fell.

Officially, the Communist regime guaranteed a free press, though everyone knew this was a lie. But even under the iron-fisted East German government, censorship was hardly straightforward, with writers sometimes challenging censors’ decisions and haggling over passages, and at other times acquiescing in their own repression by internalizing the state’s demands.

Darnton’s purpose with these closely analyzed case studies is to show how censorship works in practice and is bound up in the particularities of culture and politics. Censors at Work may suggest thinking about censorship as merely the ritual that any regime’s cultural authorities use to maintain their power, yet Darnton stops short of endorsing such radical claims. “Although I would agree that power is exerted in many ways,” he writes toward the end, “I think it crucial to distinguish between the kind of power that is monopolized by the state … and power that exists everywhere in society.” Under the Raj, military force stood ready to enforce court rulings if necessary; in East Germany, the Stasi loomed everywhere in the background, maintaining constant surveillance of journalists. Like Joel Simon, then, Darnton ultimately appreciates that the use of state power to silence or chill belongs in a special category of threats to freedom.

Truth or Lies and Nothing In Between?

Where Simon has given us a work of advocacy, and Darnton a work of history, Charles Lewis has written a polemic. As a longtime reporter and

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TV producer and the founder of the Center for Public Integrity, Lewis has made valuable contributions. In 935 Lies: The Future of Truth and the Decline of America’s Moral Integrity, he laments that the federal government routinely lies to take us into war; that private corporations lie to sell us even toxic products; and that journalists have been largely feckless or complicit in the face of these deceptions.

Looping back and forth across the last 50 years, mingling personal accounts of his own segments for 60 Minutes and ABC with capsule summaries of familiar moments in journalism history, Lewis wants to show how journalism, which in the era of Vietnam and Watergate produced a second age of muckraking, has degenerated. Some of the many examples Lewis cites do represent failures of journalism. But in many other cases, he fails to observe, include, or elaborate upon the details that might render his account less clear-cut—but also more interesting. For example, Lewis rehearses several famous cases of TV networks shamefully capitulating to the tobacco companies’ pressure to kill or mute critical stories.

But he never addresses the irony that journalistic crusading against the cigarette firms continued apace, and that the dramatic reduction in smoking in the last half-century owes a lot to the high quality of American investigative journalism (including by the major news networks that could fund it thanks to their lucrative commercials). Even Vietnam is a more complicated story than he suggests: Early on, journalists bought into official deceptions, but by the late 1960s the war had helped spawn an invigorated adversarial journalism.

The story that Lewis tells both about his own life and the nation’s history follows familiar lines. He describes John F. Kennedy’s assassination as the fall from innocence—for himself and for the nation—and then Vietnam and Watergate, and it was all downhill from there. Classic episodes in journalism history receive the usual treatment. Moments like Edward R. Murrow’s tough pieces about Senator Joe McCarthy or The Washington Post’s publication of the

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Pentagon Papers are recounted with the customary heroic gloss; Lewis doesn’t so much as mention the wellknown revisionist arguments that hold that Murrow was a laggard in targeting McCarthy, waiting until the erratic senator was past the peak of his popularity.

In the epigraphs to some of his chapters, Lewis quotes Arendt’s 1967 essay “Truth and Politics.” But Lewis seems not to have grasped Arendt’s key point that politics is not the natural home of the truth-teller. In democratic politics, it’s necessary to live with competing claims to truth, since different interpretations of reality are often what give rise to political disagreement in the first place.

To hold oneself out as a truth-teller can lead us to equate our opponents’ arguments with lies. Politicians do lie, making statements they know to be false, and sometimes brazenly deny clearly established scientific facts—in recent years, most infamously on the subject of climate change. None of us would accept the sort of relativism that treats any set of claims as being as valid as any other. But often what we’re tempted to call lies turn out on closer inspection to be something more like rhetoric or spin—the opposition’s best persuasive case for its position. Thus throughout his book, Lewis categorizes as “lies” statements that do not really fit the category; they’re just advocacy for positions Lewis doesn’t like.

Let’s take a difficult case. Lewis says—and many liberals would agree—that the Bush administration’s claims about weapons of mass destruction in Iraq in 2002 were “official lies.” In advocating an invasion of Iraq, Bush and his aides did mislead the public, using the slippery term “weapons of mass destruction” to include chemical weapons (which they knew Iraq had) and nuclear weapons (which they only suspected it had). It turns out Iraq did literally have WMDs in the loose sense that Bush used. As The New York Times reported this past year, between 2004 and 2011, American troops discovered thousands of chemical weapons around Iraq—not recently manufactured, but left from the wars of the 1980s—in

Often what we’re tempted to call lies turn out on closer inspection to be something more like

rhetoric or spin.

many cases causing medical harm to the soldiers who found them. Does this make Lewis a liar for saying that numerous reports had “definitively shown that no such weapons existed”?

Of course not. Like Bush, Lewis was laboring under a mistaken belief, and in trying to make his case as persuasively as possible, he used language that was shorn of nuance. This isn’t to equate Bush’s misleading rhetoric about the Iraqi threat, which led to a disastrous war, with Lewis’s imprecision in using the term “lie.” It serves, rather, to underscore that most of the journalistic lapses or official deceptions chronicled in 935 Lies, however deplorable, cannot be dismissed simply as outright, knowing falsehoods.

Joel Simon’s and Robert Darnton’s books are intellectually stimulating because the authors approach their subjects with humility. In trying to understand how rulers and regimes control information, they are sensitive to complexities and (without extending a moral pardon) strive to understand the opposing view, even if it belongs to an East German commissar or a Venezuelan caudillo.

In the emerging world of globalized information, in which societies will have once-unimagined access to the news, opinions, ideas, and viewpoints of other societies a half a world away, the monolithic “truth” that Lewis believes to be under assault will be even harder to uphold. The reason isn’t that American journalists are falling down on the job, or that strongmen (the Putins, Chavezes and Erdogans notwithstanding) are better at keeping their publics in the dark.

Just the opposite. The reason is that on more subjects than we sometimes care to admit, “truth” is shaped by cultural assumptions, ancient traditions, political predilections, national interests, and personal views, and the more we are brought into contact with one another, the more we’re going to have to argue it out.

David Greenberg is a professor of history and of journalism and media studies at Rutgers University, a frequent contributor to popular magazines, and the author of a forthcoming history of political spin.

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When the Student Movement Was a CIA Front The CIA’s manipulation of the National Student Association foreshadowed other forms of Cold War blowback that compromised democracy at home. By Aryeh Neier b

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n its March 1967 issue, Ramparts, a glossy West Coast muckraking periodical that expired in 1975, and that strongly opposed American involvement in the war in Vietnam, published an exposé of the close relationship between the Central Intelligence Agency and the National Student Association. This other NSA—not to be confused with the National Security Agency—was then the leading American organization representing college students, with branches on about 400 campuses. Its ties with the CIA were formed in the early years of both institutions following World War II, as the Cold War was getting under way.

According to Ramparts, the CIA had been providing much of the funding for the NSA through various “conduits.” NSA officers, many of them wittingly, had served the interests of the CIA by participating actively in international youth and student movements. The NSA’s activities were financed by the Agency both to counter communist influence and also to provide information on people from other countries with whom they came in contact. The disclosures about the CIA’s ties to the NSA were the most sensational of a number of revelations in that era that exposed the Agency’s involvement in such institutions as the Congress for Cultural Freedom; the International Commission of Jurists; the AFL-CIO; Radio Free Europe; and various leading philanthropic foundations. Karen Paget’s new book, Patriotic Betrayal, is the most detailed account yet of the CIA’s use of the National Student Association as a vehicle for intelligence gathering and covert action. (See author’s endnote.)

With the passage of half a century, it may be difficult to understand why so many political and cultural organizations, led by individuals with a

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generally liberal or leftist outlook, covertly collaborated with the CIA in the 1950s and first half of the 1960s, before exposés in Ramparts and other publications put an end to most such arrangements. After all, many of the activities of the Agency in that era are among those that we now regard as particularly discreditable. These include the CIA’s cooperation with the British intelligence services in overthrowing the democratically elected government of Iranian Prime Minister Mohammed Mossadegh in 1953; its cooperation with the United Fruit Company in overthrowing the democratically elected government of Guatemalan President Jacobo Arbenz in 1954; and its cooperation with the Republic of the Congo’s former colonial rulers, the Belgians, in overthrowing the country’s newly elected prime minister, Patrice Lumumba, in 1960.

Several factors seem to me to have played a part. Press reporting on these events in that era tended not to focus on the role of the CIA . It was only years later, after the Senate’s 1975-1976 Church Committee investigations, after long-after-thefact investigations by journalists and scholars, and after the mid-1980s development of the National Security Archive and its extensive and effective use of the Freedom of Information Act, that many otherwise well-informed Americans grasped the role of the CIA in these events.

Also during the 1950s and the 1960s, the CIA , paradoxically, was the federal agency that seemed most ready to enlist liberals and leftists

The March 1967 issue of Ramparts gave prominence to the CIA story on its contents page.

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in its activities. In contrast, the State Department, which had been the main target of Senator Joseph McCarthy’s attacks on those he accused of being communist sympathizers, probably would not have risked involvement with many of the young people who collaborated with the CIA . Above all, there was the atmosphere created by the Cold War. It was a struggle that had to be won, not only on the military battlefield, but also in intellectual and ideological combat with the communists.

Finally, it may be that covert activities had their own appeal. Those who were in on the secret were an elite, deriving satisfaction comparable to that provided by membership in an exclusive club.

This was also a period in which many other Americans with similar views collaborated with the Federal Bureau of Investigation, the CIA’s counterpart in the domestic intelligence field. In this era, the Bureau relied extensively on informers to accumulate its vast dossiers on the political associations and personal lives of millions of Americans.

When I was executive director of the American Civil Liberties Union in the 1970s, we discovered through documents we obtained under the Freedom of Information Act that three officials of the ACLU in the 1950s had given the FBI information on others within the ACLU they suspected of being communists.

They seem to have rationalized their conduct, at least in part, on the basis that cooperation with the FBI would help protect the ACLU against irresponsible congressional investigative bodies such as the House Un-American Activities Committee. The FBI’s COINTELPRO, a program the Bureau established secretly in 1956 to foster jealousies and feuds in organizations whose activities the Bureau wished to disrupt, depended in part on its ability to collect personal data from informers within those organizations.

The atmosphere created by the Cold War, in which the FBI and its allies in Congress and the media portrayed domestic subversives allied with

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foreign enemies as being the greatest threat to the United States, probably played a large part in persuading so many Americans to act as informers.

A number of young CIA collabora-

tors who figure in Paget’s story later achieved prominence. One of the book’s virtues is that we get a clear picture of how well-educated and successful young Americans got involved in clandestine activities, and how they conducted themselves. But a frustrating aspect of the book is that, in most cases, Paget does not mention their subsequent careers. At least one leading academic figure’s undisclosed youthful relationship with the CIA could be considered relevant to his later published work.

One of those collaborators Paget discusses is Allard Lowenstein, president of the NSA from 1950 to 1951, who became a leading civil rights and anti-war activist, a one-term member of Congress, and the organizer of the “Dump Johnson” movement that helped deter President Lyndon Johnson from running for re-election in 1968. A charismatic figure, he inspired many others to become activists in the causes that mattered to him. In 1980, Lowenstein was assassinated in his office by a deranged gunman who had become obsessed with him.

Though some have previously speculated that Lowenstein initiated the

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NSA relationship with the CIA , Paget’s

research does not support this view.

She finds that he may have obstructed such a relationship, and, if it took place when he was a leader of the NSA , he was probably not aware. Following the Ramparts disclosures, when 12 former presidents of the NSA issued a press release defending the covert relationship with the Agency, Lowenstein did not sign. Among those rumored or confirmed to have covertly collaborated with the CIA , Lowenstein stands out in Paget’s book as the principal figure whom she clears of suspicion.

In discussing Robert Kiley, who was vice president of the NSA from 1957 to 1958, Paget never mentions that he eventually became a leading figure in urban transit, heading New York City’s Metropolitan Transportation Authority and then, on the other side of the Atlantic, heading London Regional Transport. Paget discusses only how Kiley as a student leader cooperated closely with the CIA and subsequently went to work directly for the Agency, playing a leading role in identifying Africans who might collaborate with it. During his tenure on the CIA staff, in which he rose to become an aide to Director Richard Helms, Kiley helped manage the relationship with the student organization of which he had previously been an officer, sometimes in what seems a heavy-handed way.

Allard Lowenstein (left) refused to collaborate, and became a civil rights and antiwar activist and one-term congressman.

Robert Kiley (center, pictured with New York Mayor Ed Koch and Senator Alfonse D’Amato aboard the subway) went from the NSA into the CIA and then became a mass transit executive. Gloria Steinem (right) went from willing CIA accomplice to feminist icon.

Of those mentioned by Paget as knowing participants in the relationship between the NSA and the CIA , the most lustrous name is that of Gloria Steinem. Her connection has long been known. She acknowledged it following the disclosures by Ramparts.

Steinem then told Newsweek: “In the CIA , I finally found a group of people who understood how important it was to represent the diversity of our government’s ideas at Communist festivals. If I had the choice, I would do it again.” Operating through a CIA front organization, established in cooperation with former NSA officers, Steinem recruited young Americans to participate in the 1959 communistorganized World Youth Festival in Vienna, and did the same a couple of years later when another such festival was held in Helsinki. Apparently, she did her job well, choosing American participants who were very effective in countering the communists. To her credit, Steinem, unlike several others, was candid; and this history hardly implicates the CIA in the rise of feminism.

Paul Sigmund, a longtime professor of politics at Princeton, died last April at the age of 85. He was particularly known for his many books and articles on Latin America, especially Chile.

Sigmund wrote extensively about the overthrow of the Salvador Allende regime in Chile, which brought

lo w e n s t e i n : u n c r e d i t i e d ; k i l e y : d av i d p i c ko f f ; s t e i n e m : b o b wa n d s / a p i m a g e s

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General Augusto Pinochet to power.

In a lengthy article in the January 1974 Foreign Affairs, he attributed the September 1973 coup to Allende’s misdeeds. He argued: “What [the Allende government] cannot do is blame all its problems on foreign imperialists and their domestic allies, and ignore elementary principles of economic rationality and effective political legitimacy in its internal policies. No amount of foreign assistance can be a substitute for these, and no amount of foreign subversion or economic pressure can destroy them if they exist.”

According to Paget, Sigmund collaborated with the CIA over a period of several years. His role included drafting a plan for a six-week summer seminar conducted by a front group through which the Agency could screen other students who might be enlisted in its activities. (Sigmund’s relationship to the CIA had come to light in the wake of the Ramparts exposé, but he did not cite it years later when he wrote about these events in which the CIA played a leading role.)

Paget, though, does not mention Sigmund’s subsequent career. She interviewed him and says, “He explained his willingness to cooperate with the CIA in pragmatic terms: ‘It kept me out of Korea.’” Whatever his motivations, the question arises whether Sigmund’s relationship to the Agency in the 1950s affected his subsequent scholarly

Countering communism was the right thing to do—but not by covertly manipulating domestic organizations.

work. We learned a long time ago that the Nixon administration primarily relied on the CIA to promote the overthrow of Allende. Should the professor of politics at Princeton have acknowledged his own past relationship with the CIA in an essay rebutting allegations of a central U.S. role in what happened in Chile? How would such a disclosure have affected reader assessment of his Foreign Affairs essay and his other writing on the subject?

Among the other NSA leaders named by Paget who subsequently became prominent are James P. Grant, the longtime and widely admired executive director of UNICEF who died in 1995; James Scott, professor of political science and anthropology at Yale who is highly regarded for his writing on Southeast Asia; Crawford Young, professor of political science at the University of Wisconsin and well-known scholar of African studies; Luigi Einaudi, an American diplomat who served as acting secretary general of the Organization of American States; and Duncan Kennedy, professor of law at Harvard, whose emergence as a leading critical theorist is mentioned by Paget and who has been open about his onetime association with the CIA .

Should disclosure of such relationships be considered obligatory for those who present themselves as independent scholars? Certainly, it should be incumbent on someone like Sigmund to disclose his covert connection to the CIA . Even if that relationship was long past, writing an essay exculpating that agency from a charge of subversion without such disclosure raises ethical issues.

Aside from whether such persons

Patriotic Betrayal: The Inside Story of the CIA’s Secret Campaign to Enroll American Students in the Crusade Against Communism

by Karen M. Paget

Yale University Press

should subsequently disclose that they once had a covert connection to the CIA , there is the question of whether it was appropriate to enter into such a relationship in the first place. Certainly, there was an idealistic component. Countering communism, I believed at the time and still do today, was the right thing to do. Yet doing so by covertly manipulating domestic organizations compromised American freedom of association. This contradiction, as more and more students

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came to oppose the Vietnam War, led to the eventual rupture of the NSA and its CIA patrons.

We don’t know how the constituents of the NSA would have felt about their officers’ secret relationship with the CIA . What we can surmise, however, is that some would have been strongly opposed. The NSA’s members could not debate whether to enter into the relationship, and those opposed could not express their views because they were not in on the secret. Disclosure would have killed the program.

Whatever one thinks about the importance of having had such means to wage the battles of the Cold War, it seems difficult to justify the deception that was central to its operation.

Author’s Note: I was not shocked by the disclosures in Ramparts. Though I lacked definite information, I had been generally aware that there was a relationship between the CIA and the NSA. In 1957, as a student at Cornell, I became national president of the Student League for Industrial Democracy, a small organization with a social democratic bent that had chapters on several college campuses. Paget describes SLID as “fiercely anticommunist.” Yes, but we were also civil libertarians and vigorously opposed the college bans on communist speakers prevalent in that era. In 1959, I took the lead in relaunching SLID as Students for a Democratic Society, but I soon lost influence in SDS to Tom Hayden and others, who took it in a more radical direction. These activities put me in contact with some leaders of the NSA named by Paget. Though I did not know who wittingly collaborated with the Agency, I recall being quite sure that the Foundation for Youth and Student Affairs, the main source of funding for the NSA, was a CIA front.

As Karen Paget notes in her “Acknowledgments,” her early work on this book was supported by a fellowship from the Open Society Institute when I was its president.

Aryeh Neier is president emeritus of the Open Society Foundations. He was formerly executive director of Human Rights Watch, and executive director of the ACLU.

Winter 2015 The American Prospect 101

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Sharing the Wealth Why can’t we broadly distribute the wealth produced from America’s common resource pool? Conservative Alaska manages to do it. By Sasha Abramsky b

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n the mid-17th century, Gerrard Winstanley led a series of protests in England against “enclosure,” the practice of landlords privatizing public lands. Nonviolent, with a utopian communist agenda, Winstanley’s followers, the Diggers, published pamphlets and, more quixotically, sang their hopes and fears.

A stanza from one of their songs: “Your houses they pull down, stand up now, stand up now Your houses they pull down, stand up now.

Your houses they pull down to fright poor men in town, But the gentry must come down and the poor shall wear the crown.

Stand up now, Diggers all.”

Peter Barnes’s new book, With Liberty and Dividends for All: How to Save Our Middle Class When Jobs Don’t Pay Enough, isn’t as poetic as a Digger tract; yet at its core, it is a book about power relationships as relevant to the 21st century as Digger pamphlets and songs were to the 17th.

What do we do, Barnes asks, when increasing numbers of Americans no longer have jobs that pay enough to generate a modicum of economic security, or when the federal political system seems too paralyzed to do much more than tinker on the margins? What do we do when median wages are unlikely to rebound to pre-2008 levels, while exploitation of common goods by private companies continues to enrich those already perched atop the economic ladder?

The answer: Use the riches of the commons to provide decent living standards for all. Barnes’s inspirations include Thomas Paine’s social insurance schemes of the 18th century, British economist Arthur Pigou’s pioneering work on taxing pollution in the early 20th century, and Francis

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Townsend’s idea in the 1920s for a universal pension. His modern inspiration is Alaska’s Permanent Fund, which pays residents an annual dividend out of the proceeds from taxes on oil companies that operate in the state. Out of these ideas, he carefully develops a framework for change with the core idea that profits extracted from the commons should be broadly shared.

Barnes doesn’t explicitly mention Henry George, but the concept of taxing the unearned increase in the value of land, and then plowing that money back into the common good, is also tacitly present in Barnes’s thinking.

Barnes, the co-founder of Working Assets, a socially responsible financial services group, and the author of five previous books, asks readers to visualize a series of “pipes,” which would generate new revenue streams. These pipes, he calculates, would allow for up to $1.5 trillion per year, generated by developing “rent” mechanisms for private companies’ usage of common assets, to be recycled into the economy via dividends paid to all citizens and legal residents of the United States.

Barnes estimates that upwards of $300 billion could be generated through carbon taxes. More than $350 billion could be brought to the table by taxing financial transactions.

Another $300 billion-plus could be made available by charging companies for the use of intellectual property and technological infrastructure seeded with public investments, which they currently use for free.

Additional moneys could be raised by charging for use of the electromagnetic spectrum.

Barnes also suggests that the Federal Reserve could create more money—a function it has long utilized during economic contractions. The last few years of quantitative easing have been a partial success, but a lot of that money has sat unused in banks.

With Liberty and Dividends for All: How to Save our Middle Class When Jobs Don’t Pay Enough

by Peter Barnes

Berrett-Koehler Publishers

Barnes thinks the Fed could inject it directly into the economy.

The proposed $1.5 trillion is roughly the amount that Social Security, Medicare, unemployment, and disability insurance already pay out annually. It’s a huge sum, but Barnes aims to show that the idea is not just fiscally possible but politically feasible. Last year, The Wall Street Journal reported that the 60 largest companies alone had parked more than $166 billion offshore to avoid paying taxes on that income. Large gas and coal companies weren’t paying the costs of their contribution to carbon pollution, but were passing them along to the public as invisible social expenses.

Create the mechanisms to raise funds on this scale, Barnes writes, and the funds will be generated along with the political support. Even if $1.5 trillion proves an impossible goal to attain anytime soon, plans that raised several hundred billion dollars to cycle back into the broader economy would have transformative implications.

On one level, it’s a fairly conservative idea. Barnes is not proposing to raise taxes to fund more government.

On the contrary, he is proposing new revenue streams to give everyone a social dividend that will offset dwindling wage and salary income. In conservative Alaska, where the Permanent Fund gives an equal share of oil revenue to every man, woman, and child, this highly redistributive idea is phenomenally popular. In some native Alaskan communities, the Permanent Fund provides a significant portion of all cash income. Like the fund, Barnes’s proposed revenue stream, once experienced, would be politically untouchable. Even former Governor Sarah Palin is a strong supporter, and Alaska voters beat back a recent industry-backed campaign to dilute the annual dividend.

Consider every American to own one “share” in America, Barnes asks his readers. And then work out a way to give each shareholder an annual dividend in the profits generated for the country from the usage of the environment and the broader public sphere: Develop cap-and-trade systems so that carbon polluters pay their

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way; charge for groundwater withdrawals; create financial transaction taxes paid by large financial companies who currently utilize America’s trading and legal infrastructures for free; create profit taxes on oil and mineral extraction; charge large Internet companies rent (or royalties or licensing fees—the terminology is less important than the outcome) for use of the Internet infrastructure and charge phone, television, and radio companies for use of the electromagnetic spectrum.

It’s in these details that this plan morphs from conservative to radical. If Barnes has his way, companies long used to freeloading off of the public—and having that freeloading purchased by well-paid lobbyists and protected by a captive political class— will be faced with far higher bills than they are used to. The more those companies pollute and otherwise wreck the natural environment, the more those bills will increase. Corporations that have effectively engaged in a modern-day Enclosure Movement, privatizing the benefits of large parts of the environment and the economy, will be made to financially compensate the public for the lost access.

On the flip side, individuals long used to working for wages that can’t

cover all of their needs will find that their families qualify for many thousands of dollars a year in “dividend” income to supplement paychecks of dwindling reliability. Barnes projects that each resident would receive roughly $5,000 per year in dividends— or $20,000 for a family of four—thus locking into place a viable subsidy that would catapult low-income families into something approximating economic security. Don’t think of it as a government giveaway, he argues, in a Digger-like turn; think of it as an empowered citizenry reclaiming essentially looted public property.

A similar system is being developed in Vermont, via a Common Assets Trust, which would raise money from taxes on pollution and other socially harmful practices and pay dividends to each resident while bulking up social investments such as education and public libraries. Several tribal communities across the country have also embraced a form of collective ownership and wealth-sharing. The principle has been institutionalized in California, via utility bill credits, as a part of the state’s effort to encourage utility companies to reduce greenhouse gas pollution. Barnes reports on local government initiatives, such as in Sherman County, Oregon, where a

New income streams from common assets can compensate for unreliable wages.

Governor Sean Parnell announces the 2010 dividend check amount that all Alaskans receive through the state’s popular Permanent Fund.

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booming wind energy project has generated large tax windfalls that have allowed the county to pay $590 annually to local households.

Overseas, a mixed analogy is sovereign wealth funds. While some of these are run by corrupt regimes and benefit only a privileged few, elsewhere they have been used to shore up vital public services. Norway has taxed oil production and other usages of public resources in order to sock away huge amounts of money for public investments, cash distributions, and the protection of expansive social safety net systems.

According to Barnes, Norway’s fund has assets of roughly $1 million per Norwegian. It’s such a large amount that the state has shied away from cash handouts, instead investing heavily in education, job training, health-care services, and the like.

The social dividend becomes, in Barnes’s telling, both a stunningly effective redistributive tool and a way of reining in some of the most antienvironmental business practices.

“Linking nature’s well-being to that of our middle class is the key to harmonizing capitalism with nature,” he writes. “If that connection isn’t made, nature’s rent can’t rise very much, and markets will continue to overuse her.”

With Liberty and Dividends for All does a lot in relatively little space.

Over the next few years, the Social Dividend concept will enter into the broader conversation about how to craft a new economy—based on environmental and equity ideas too often absent from current growth-model conversations. If the Occupy Movement put the spotlight on economic inequality, Barnes has now defined a particularly creative solution. By itself, Barnes’s proposed Social Dividend won’t change the underlying power dynamics that generate such wealth extremes in the first place. But it does have the potential to transform our comprehension and politics.

Such an idea for reform deserves to be taken very seriously.

Sasha Abramsky is a senior fellow at Demos and a writer on social justice issues. His latest book is The American Way of Poverty: How the Other Half Still Lives.

Winter 2015 The American Prospect 103

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The Crash of The New Republic

by Paul Starr

T

he tension between money and left-of-center politics has its correlate in the world of the media. Like liberal political candidates, liberal political magazines depend on wealthy donors in what is often an uneasy relationship.

That tension was evident in the implosion of The New Republic in early December, when nearly all the magazine’s well-known editors and writers quit after its owner, Facebook millionaire Chris Hughes, replaced the top leadership and announced he was turning the magazine into a “digital media company.”

Ever since its founding 100 years ago, The New Republic has occupied a singular place in liberal politics and intellectual life.

A complete history of American liberalism would need an entire chapter on The New Republic— and a second chapter on unhappiness about The New Republic in its various incarnations.

It was during one of those episodes of unhappiness in the late 1980s that The American Prospect was born. The three of us who founded the Prospect—Robert Kuttner, Robert Reich, and I—had long written for The New Republic but were increasingly uncomfortable with its direction. Though ostensibly aiming to strengthen liberalism, it was often echoing and legitimating right-wing views. We had our own ideas about what it would take to revive liberalism in the Reagan era and wanted to create a platform for the

kind of discussion about politics and policy that the older liberal publications no longer provided.

The ties between the Prospect and The New Republic were never totally cut. Several of our writers, including Jonathan Cohn, Jonathan Chait, and Richard Just, went to work there; I continued to write for it, especially for Leon Wieseltier’s extraordinary backof-the-book. In recent years, the old differences also seemed less significant as The New Republic moved back toward a more consistently liberal position. After Hughes bought it in 2012, he provided an infusion of resources that seemed likely to restore the magazine to the central place it had once enjoyed. Throughout its history, The New Republic had depended on public-spirited owners willing to cover the losses of an enterprise devoted to serious political and cultural discussion. Once again it appeared to have such an owner, and I thought, “If only the Prospect had a Chris Hughes!” But evidently we were lucky that we didn’t.

The mass exodus from The New Republic in December was not the result, as some reports suggested, of disagreements about the value of new technology or the need to cut losses. As John Judis, one of the editors who left, recounts the conflict in the Columbia Journalism Review, the central issue was whether The New Republic would remain a political magazine.

Hughes killed the editorials that spoke for the magazine; editorial meetings ceased to be occasions

for engaging the central issues of the day. The new CEO installed by Hughes, Guy Vidra, had no experience in political journalism, except as a consultant to The Daily Caller, a right-wing site. The new editor hired by Vidra, Gabriel Snyder, had previously been an editor of Gawker. In defining its new role as a digital media company—with a new investment arm for start-ups— Hughes never mentioned politics.

none. Even the business logic doesn’t, ahem, stack up: Why try to build a digital media company on the basis of a small-circulation political magazine—ruining its brand in the process? As the Maine farmer supposedly said to a tourist asking how to get to Boston: “If I was trying to go there, I wouldn’t start from here.”

It will be interesting to see how Hughes’s new New Republic

Like liberal candidates, liberal political magazines depend on an often uneasy relationship with wealthy donors.

One episode described by Judis is particularly telling. Even before the December implosion, Hughes had made a presentation to the staff in which he stacked rivals to The New Republic: “At the bottom were political magazines like The American Prospect, The Nation, and National Review. At top were The Atlantic Monthly, The New Yorker, and New York.” Hughes said he wanted to go from the bottom to the top. The three magazines he held out as models are aimed at a general, non-political audience. Although they often publish articles from a liberal viewpoint, they aren’t primarily venues for defining liberal politics.

In discussing their plans, Hughes and Vidra often refer to The New Republic as a “brand.”

But the brand that it had was a brand of liberalism. Now it has

deals with conflicts between its business interests and editorial position. Unlike journalism, the tech industry has no tradition of a wall of separation between editorial and business departments. In two separate episodes described

by Judis and other former staff— one involving Amazon, the other Apple—Hughes’s reactions suggest he won’t be alienating big advertisers. Just when economic inequality and corporate power have become defining issues in liberal politics, The New Republic seems least likely to play a leading role.

That’s where the rest of us—the liberal political magazines at the bottom of Hughes’s stack—come in. At the Prospect, we know what we’re about, and we believe in it.

We hope you do too, and if you happen to have a fortune weighing you down, please give us a call.

volume 26, number 1. The American Prospect (ISSN 1049-7285) is published quarterly by The American Prospect, Inc., 1333 H Street NW, Suite 300 East Tower, Washington, DC 20005. Periodicals-class postage paid at Washington, DC, and additional mailing offices. Copyright © 2014 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.

104 WWW.Prospect.org winter 2015

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The Promise of Career and Technical Education

By Randi Weingarten, President AMERICAN FEDERATION OF TEACHERS

n the surface, the latest jobs report from the Department of Labor is good news—an estimated 320,000 jobs were added in November, which translates into the longest streak of uninterrupted private sector job growth in our nation’s history.

However, a deeper look at those numbers shows that while more Americans may be finding jobs, wages are standing still. As the Economic Policy Institute reports, earnings for the wealthy few have surged upward while paychecks for the vast majority of Americans have been falling behind.

And people are feeling it deeply. According to exit polls after the recent election, 70 percent of voters said their family’s financial situation has stayed the same or gotten worse over the last two years.

What this means is our nation’s ever-widening income gap is growing, and the promise of America—that idea that when you work hard, you get a decent shot—is slipping further out of reach for too many.

In those exit polls, voters also expressed frustration about the future for their families. Nearly half said they expect life for “future generations to be worse than life today,” and 78 percent said they’re worried about the future direction of the economy.

We know that Americans are hungry for good middle-class jobs that will move us toward a shared prosperity. We know that when the labor movement was strong, so was the middle class. And we know that we need to rebuild both—because Americans want to work, but in return they want a decent wage that will allow them to support themselves and their families.

The AFL-CIO and our union recently teamed up to convene a summit on how to help accomplish this through career and technical education. The summit attracted everyone from Vice President Joe Biden and Labor Secretary Thomas Perez to business and union leaders, as well as educators and students from high-quality career and technical education programs.

The aim of the summit was to help current workers, dislocated workers and young people get the skills they need to be prepared for the good jobs of today and tomorrow. The standing-room-only

crowd discussed how to scale up and sustain CTE programs that provide multiple pathways to high school graduation, higher education, advanced training and certification, and careers in everything from healthcare and robotics to aircraft maintenance and clean energy. And everyone concluded that such programs represent the promise of highquality CTE. As Vice President Biden said: “Unions have helped to build the middle class. Now we’ve got the job of rebuilding it. This is not about conflict, this is not about pitting business against labor. This is about getting the best-educated workforce in the world.”

Nicholas Pinchuk, chairman and CEO of Snap-on Tools, agreed, noting: “We are in a global competition for jobs; the single best weapon is CTE. We need to out-skill the competition.”

The overwhelming interest in this summit, just days after the election, shows that CTE is an approach that appeals to both Republicans and Democrats.

However, fulfilling the promise of CTE requires resources, partnerships, funding and real input from teachers. As we heard from 570 CTE educators in a recent AFT survey, teachers are excited about the success of CTE, and this success shows in statistics like these: For those with a CTE concentration, 9 in every 10 graduate on time and 7 in every 10 go on to enroll in postsecondary education. However, these educators also stressed that they need 21stcentury technology and equipment in order to match what’s in today’s business settings.

And business leaders at the summit, such as Lorilyn Owens with the Oracle Academy, stressed the importance of listening to teachers. These business leaders believe in CTE because they are true partners in programs that work to give them the skilled workforce they need. At the same time, the businesses provide vital opportunities through internships, mentoring and a pipeline to employment.

Lily Mohamed, who graduated from Platt Technical High School in Connecticut and now works in avionics for Sikorsky Aircraft Corp., was mentored by a Teamsters union member who helped her learn not just the technical skills she needed, but how to excel in a professional environment. “I had the upper hand because I learned the skills I needed for my job in high school,” she said.

CTE programs around the country are giving students like Lily a viable path to the future. To scale and sustain these successes, Congress must act to reauthorize the Carl D. Perkins Career and Technical Education Act with full funding. The AFT is committed to ensuring that CTE educators and students get the resources they need; the time to connect with employers and the community; class sizes small enough to facilitate learning; and diverse program offerings to meet the needs of students and the labor market.

But we can’t do it alone. As we saw at this summit, policymakers, business, labor and community can come together to make CTE a thriving component of our 21st-century education system—and with it, an engine that helps more young people have access to good jobs and the American dream.

Career and technical education gives students viable pathways to the future.

Photo by Michael Campbell

Weingarten, with Alexis Smith, graduate of Toledo (Ohio) Technology Academy, and Vice President Joe Biden, at the CTE summit in Washington, D.C. Follow AFT President Randi Weingarten: www.twitter.com/RWeingarten

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