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.
So Reagan killed this lady's husband and drove his employer into bankruptcy with tax reform 26 years ago!
It wasn't $4.50 a gallon diesel fuel. Or federal regs that make it impossible to hire enough drivers. Or the highest corporate income tax rate in the known Universe. Nah... It wasn't any of that. It was Reagan, alright!
Oh, and the Tea Party helped.
Of course, we have the standard "people are too stupid to vote - we know what's good for them, why don't they vote the way we tell them to?" liberal schtick.
And, above all, it's not Obama's fault.
Gotcha!
I'm sure we'll get a book report on a conservative take from one of our CJR "watchdogs" any day now, right?
#1 Posted by padikiller, CJR on Mon 6 Aug 2012 at 12:18 PM
Someone should send these robo-Left guys on a travelling fellowship to countries that do not have a political system that stands up only for 'the rich' - places such as Spain, Greece, Italy, France, etc. They will be shocked to discover that people in those places have hard times, too, especially the young and immigrants. Gee, who will they blame?
Actually, you don't have to go overseas. How about a compare/contrast from Bartlett & Steele on Democratic California vs. Republican Texas, let's say. I have always had the impression that these guys (writing for Vanity Fair - there's something for those with a sense of irony to discuss in and of itself) know the story that they are going to write, and then go out and cherry-pick factoids to support that frozen narrative. The idea that regulation and taxes and the rest of the leftist laundry list could (as in the European crisis) end up having negative effects on people who are always, no matter what set of 'policies' they live under, going to be vulnerable is too complex for the followers of the conventional political/media echo chamber's narrative to comprehend. There is no policy 'magic bullet'. You could put Bartlett and Steele themselves in as dicators and they still wouldn't have the answers (and throw in Krugman) - only scapegoat-seeking explanations of their failures.
#2 Posted by Mark Richard, CJR on Tue 7 Aug 2012 at 12:40 PM
Barlett & Steele continue to be among the few who write about the one big story of our time. They do get it right, too. No way to deny that, unless you think that, suddenly, right around 1978, American workers all got lazy en mass & stopped deserving any share of the productivity gains that have occurred ever since.
But in regard to the Big Bubble, the review says "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."
The missing piece of analysis on the housing boom has always been this: lack of decent-paying, secure jobs pushed millions of ordinary idiots into the "real estate investment" world--and into the arms of predatory lenders and other sharks. Millions of otherwise poor and working-class people saw themselves, however briefly, as budding moguls, free from the timeclock tether, living on their wits and creativity.
Many of these "investors" (maybe a majority) started committing mortgage fraud, since the originate-to-securitize mortgage model encouraged that up and down the chain.
They were emulating their financial betters.
They mostly got away with it.
As there are still no "middle class" jobs for such folks, most are still living by their wits. It's a huge bubble of desperate hucksters running little scams on everyone who surrounds them--multi-level nutritional supplements, "we buy houses," Amway, debt consolidation and bankruptcy consulting . . . a wild bloom of new "entrepreneurs" for the "new economy." The implications for both the economy and the polity are yet unexamined.
#3 Posted by Edward Ericson Jr., CJR on Tue 7 Aug 2012 at 02:10 PM