Who Stole the American Dream? (47 page)

Thanks to YouTube, Santelli’s burst of rage went viral on the Internet. It struck a nerve. Two months later, more than half a million people turned tax day, April 15, into a mass protest at eight hundred Tea Party rallies coast to coast. By midsummer, the new “anti” movement—anti-tax, anti-government, anti–safety net—was targeting members of Congress for purging in the 2010 elections.
Big-time right-wing political donors such as the energy magnates David and Charles Koch of Kansas, with a long record for underwriting right-wing causes, poured millions into the Tea Party’s “educational” organizing.

The Tea Party looked like a populist movement, but when its profile emerged, it was not a movement of average Americans. The 18 percent who identified themselves in polls as Tea Party followers were predominantly white, male, older, more college-educated, and better off economically than typical Americans, and 63 percent chose Fox News as their primary news source. They were
far to the right of average Americans, identifying themselves as “very conservative” and always or usually voting Republican. Some 92 percent wanted smaller government (vs. 50 percent of Americans overall); 73 percent said
they would favor cutting domestic programs, including Social Security, Medicare, education, and defense; and while most Americans (by 50 to 42 percent) favored government spending to create jobs, Tea Party supporters were 5 to 1 against that policy. They cared far less about jobs than cutting government and the deficit.

Contrary to most Americans, Tea Party followers were not angry about the Wall Street bailout (only 1 percent were). But they were furious at Obama’s health care program and at what they saw as his policy tilt in favor of the poor and blacks over whites. In all, 92 percent said Obama was leading America into socialism; 30 percent said, incorrectly, that Obama was not born in the United States; and, again wrongly, 64 percent said Obama had increased taxes, whereas Americans got a tax cut from Obama’s stimulus package in 2009.

In the Republican primaries, Tea Party candidates defeated Republican Senate incumbents or mainstream politicians in Delaware, Florida, Kentucky, and Utah, and they won a slew of upsets in House races. In the general elections, the Tea Party planted its flag firmly on Capitol Hill, helping to lift Republicans to control of the House and to important gains in the Senate. Tea Party–backed candidates won Senate seats in Florida, Kansas, Kentucky, Pennsylvania, Utah, and Wisconsin, plus forty-two of the eighty-seven new Republican seats in the House. After the election, the House Tea Party Caucus picked up more members.

In power, the Tea Party Right pursued an agenda out of Goldwater and Gingrich, with a sharper, more cutting edge than Reagan. Very quickly, Tea Party caucuses on Capitol Hill signaled their intention to challenge their own leaders, if need be, in order to slash the size of government and the national debt—without touching tax breaks for corporations and the wealthy. Like Gingrich’s Class of 1994 Republicans, the Class of 2010 was out to shut down government programs by the bushel, even those designed to help average voters.

With three thousand Americans dying and forty-eight million getting sick every year from tainted food,
House Republicans cut millions of dollars from the budget of the Food and Drug Administration for overseeing the safety of the nation’s food supply. They balked at renewing funds to retrain Americans thrown out of work by foreign competition. They opposed disaster relief after Hurricane Irene.

“
They are more rigid than the Class of ’94,” said Norman Ornstein. “These are people who say we can cut most of government and nobody would notice, and they believe it. They seem to view Washington and the whole process as a leper colony. The more time you spend with the lepers, the greater the likelihood that you are going to get infected yourself.”

The Tea Party’s uncompromising absolutism on taxes and on across-the-board cuts of government programs left older conservatives like Bill Kristol, once a young Republican firebrand in the 1980s and now editor of the conservative
Weekly Standard
, worrying that many American voters would shy away from the Republican Party if it appeared to be “in the grip of
an infantile form of conservatism.”

Taxes were the touchstone issue.

By rights, it fell to John Boehner as House Speaker to negotiate with President Obama on how to get the national debt under control. In early July 2011, Boehner shared his ambition with other House Republican leaders: He had not spent twenty years working his way up to the top job just for the title. He wanted to achieve something big, like a huge debt reduction package.

Boehner and the Republicans had staked out their position, calling for big cuts in government spending. Obama argued that taxes had to be part of the package, and taxes on the wealthy had to go up. “You can’t reduce the deficit to the levels that it needs to be reduced without having
some revenue in the mix,” Obama asserted.

During a round of golf at Andrews Air Force Base in mid-June 2011, Boehner turned to Obama in the golf cart and urged the president to join him in striking a grand bargain: “
Come on, you and I,” Boehner said, “let’s lock arms and we’ll jump out of the boat together.” For the next three weeks, the two leaders tried in private to craft a package to
reduce the national debt by $4 trillion over ten years through a combination of large spending cuts and $800 billion in tax increases.

It was a political gamble. If they could strike the bargain and get Congress to pass it, both men would rise in stature. The president would be stronger running for reelection in 2012, and Boehner would raise his stature by winning huge spending cuts from Obama yet showing voters that Republicans were not out to gut Social Security and Medicare.
The risk was that the hard-core Republican Right and/or militant liberal Democrats would revolt and block the deal.

As Obama and Boehner edged close to a deal, word about Boehner got out to House Republicans touching off rebellion. On Saturday night, July 9, Boehner phoned the president at Camp David and told him that it wouldn’t work. House majority leader Eric Cantor, who had maneuvered into becoming the point man for the Republican Right and/or who was irked at being cut out of the secret Obama-Boehner talks, had torpedoed the deal. He told Boehner that House Republicans would not accept any tax increases and that
Boehner had to back out of talks with Obama. Boehner bowed to that dictum and rejoined the Republican chorus against any tax increase.

Republican-friendly columnist David Brooks exploded in exasperation at the adamant refusal of the Tea Party–dominated Republicans to accept what he saw as Obama’s lopsided concessions. In a
New York Times
column headlined “
The Mother of All No-Brainers,” Brooks wrote: “A normal Republican Party would seize the opportunity to put a long-term limit on the growth of government,” but not a Republican Party in the grip of the Tea Party Right. “The members of this movement do not accept the logic of compromise, no matter how sweet the terms. If you ask them to raise taxes by an inch in order to cut government by a foot, they will say no. If you ask them to raise taxes by an inch to cut government by a yard, they will still say no.”

That unflattering image evidently gnawed at Boehner because he decided to reopen his secret talks with President Obama in mid-July.
In this final push, their grand bargain became even more ambitious. Boehner wanted an additional $450 billion in cuts from Medicare and Medicaid on top of $2.6 trillion in spending cuts previously agreed upon. Obama responded by demanding $360 billion more in tax revenue increases on top of $800 billion that Boehner had previously accepted. But on July 17, as Boehner talked with Cantor about making a counteroffer, Cantor flatly vetoed any tax increases. Boehner was stymied. He could not even go back and pick up the more modest deal that he and Obama had largely agreed upon a few days earlier. He had to call Obama once again and back out.

The Republican refusal to budge an inch on tax increases on the wealthy ignored the fact that the size of the deficit from 2009 through 2012 was heavily determined by the weak state of the U.S. economy and the fact that U.S. tax revenues, as a percent of the nation’s economy, were already at their
lowest level in sixty years
—since 1950. It ignored the fact that the United States has the
third lowest overall tax rates
of the twenty-eight most advanced economies in the world. Not only do Germany, France, Canada, the United Kingdom, Japan, and New Zealand all have higher tax rates than the United States, but so do Turkey, Korea, Israel, and Iceland. Among developed countries, only Mexico and Chile tax less than the United States.

A hidden factor was at work on the tax issue—the Tea Party millionaires club.

Among the eighty-seven new House Republicans elected in 2010, low taxes suited not only their politics but their pocketbooks. Thirty-three of the sixty members of the House Tea Party caucus were
millionaires when elected. Six were worth more than $20 million, according to the Center for Responsive Politics, which tracks money in politics. “What unites these freshmen,” said the center’s Dan Auble, “is that,
on balance,
they’re rich.” On average, Tea Party members were twice as rich ($1.8 million net worth) as other House members ($755,000).

Congress as a whole
has a large crop of millionaires, which puts them among the richest 1 percent in America. In net worth, 261 out of the 535 senators and House members are millionaires—49 percent of the total, compared with 1 percent of the U.S. public. The wealthy have long been well represented in Congress, from prosperous landowners in the early 1800s, railroad barons and industrialists in the 1900s, to the new Wall Street and dot.com millionaires of today. What is striking is that the average
wealth in Congress has shot up by 250 percent from 1984 to 2009, while average Americans were going backward.

Politically, the most powerful millionaire in Congress is House majority leader Eric Cantor, a handsome workaholic who recruited many of the new Tea Party House Republicans as candidates and who epitomizes their views and their financial profile.

First elected in 2000,
Cantor is a multimillionaire real estate businessman from Richmond whose wife is an attorney serving bank clients. According to his financial disclosure statement, Cantor’s personal portfolio in 2010 was
worth about $5 million.

Not only do his investments and family real estate and banking connections give Cantor a vested interest in low tax rates for millionaires and in deregulating the financial industry, but the financial industry showered Cantor in 2010 with
more than $2 million in campaign donations, double what they gave to Speaker Boehner. As
The Washington Post
commented, Cantor is their voice at the bargaining table.

Republican intransigence on tax increases also owes much to what Massachusetts governor Deval Patrick called the “
hypnotizing” influence of an unlikely-looking Pied Piper—a stocky, bearded, owl-eyed anti-tax lobbyist named Grover Norquist.

In the 1980s, Norquist worked with Karl Rove at the national headquarters of the College Republicans. At President Reagan’s urging,
he formed Americans for Tax Reform to carry out Reagan’s “Starve the Beast” strategy. He built a nationwide anti-tax movement and became what columnist Arianna Huffington called “the dark wizard of the Right’s anti-tax cult”—an epithet that pleases Norquist. He posted it on his webpage.

Norquist, whom Senate majority leader Harry Reid called
the de facto leader of congressional Republicans on tax issues, presses relentlessly for ever lower taxes, using that strategy to push constantly for
across-the-board reductions in all discretionary programs and an across-the-board freeze in pay levels at such diverse agencies as the Pentagon, Medicare, FBI, Centers for Disease Control, and the National Park Service. Norquist, who seems to
oppose virtually all government, led other budget deficit hawks after the Republican sweep in the 2010 elections in calling for a Congressional “crusade” against government spending that accepts “
no sacred cows.” More broadly, Norquist has laid out a strategy of cutting government in half by privatizing Social Security, eliminating welfare, cutting defense, education, and farm subsidies, as well as aid to the disabled, at-risk youth, and early child development, and selling off government facilities like airports; and then cutting government in half again.

As an anti-tax missionary, Norquist has no peer. He has set up anti-tax coalitions in every state. In Congress, as his website advertises, he has cajoled, persuaded, and threatened 238 House members and 41 senators—mostly Republicans—into
signing a pledge never to raise taxes (as well as 13 governors and 1,249 state legislators). Since 1990, Norquist boasts,
no congressional Republican has voted for any tax increase, and if anyone breaks his pledge, he will mount a mass effort to purge the offender.

Norquist is so confident of disciplining his anti-tax army that he once boasted: “
We will make it so that a Democrat [in the White House] cannot govern as a Democrat.”

That’s exactly the political bind in which Barack Obama found himself in 2011—cornered by a radicalized Republican House majority and blocking-sized Senate minority, both dug in against raising taxes.

Just as Grover Norquist had predicted, Obama was unable to govern as a Democrat. In the battle over the federal debt ceiling, the Republican hard Right forced both GOP leaders in Congress and President Obama to accept their no-tax agenda along with nearly $1 trillion in immediate spending cuts, plus another $1.2 trillion to $1.5 trillion to come later. Even as American politics moved toward the 2012 election, the Republican Right in Congress adamantly refused to accept any tax increase on the rich to pay for extending middle-class payroll tax cuts, even though opinion polls indicated that’s what the public favored. And as Yale professor David Bromwich observed, “
It is an unhappy fact of politics that victory goes to the pressure that will not let up.”