The Betrayal of the American Dream covers a panoply of ills, many reprised from America: What Went Wrong?: mounting student debt, tax inequities (from “carried interest” to the stashing of wealth overseas), disappearing private pension plans, and the chaos unleashed by deregulation of transportation and banks. Barlett and Steele write that “the foreclosure crisis was in part a result of runaway greed by an out-of-control, unregulated industry,” a common enough view. But they fail to apportion any responsibility to careless home-buyers who signed contracts providing for adjustable-rate mortgages without reading or understanding them. Or, for that matter, to the power of the American Dream itself, which so exalts home ownership.
In their final chapter, Barlett and Steele offer what they describe as “the bare minimum of steps…to restore the vibrancy of middle America.” They want, first of all, higher taxation of the rich, and point out that “tax simplification” has little to do with simplifying the rate structure. “The tax code is complex,” they write, “but not because of the rates.” Amen to that.
But their solution is too simple: for individuals, a single-page tax form listing all income and allowing for no deductions, credits, or exemptions. That means the loss of charitable deductions (a big hit for the nonprofit sector); the housing-mortgage deduction (tough on those who counted on it when opting to buy rather than rent); and the deduction for retirement savings (another blow to those who have already lost pensions). It’s unclear whether Barlett and Steele really intend for businesses to lose deductions for supplies, equipment, and other essentials.
When it comes to trade, they want tougher enforcement of existing laws, plus, if necessary, tariffs on imports. They support government investment in infrastructure, better job-retraining programs, and the prosecution of white-collar criminals who contributed to the financial and housing meltdowns.
“For all this to change, the people will have to prevail,” Barlett and Steele write. “Middle-class Americans, still the largest group of voters, must put their own economic survival above partisan loyalties.” But campaigns are still expensive, politicians will be hard-put to ignore lobbyists, and democracy is at best a crude cudgel. Given the ease with which Americans have been hoodwinked before, it is a stretch to imagine that Barlett and Steele’s populist miracle will transpire anytime soon.