The Road to a Third Party

by Jack Beatty


by Thomas Ferguson.

University of Chicago, 432 pages, $55.00/$17.95.

AMERICAN politics stinks. Such has been the message of book after book about the money-driven politics of the 1980s and 1990s. Elizabeth Drew’s Politics and Money, Larry Sabato’s PAC Power. Thomas Edsall’s The New Politics of Inequality and Chain Reaction, Brooks Jackson’s Honest Graft, William Greider’s Who Will Tell the People, E. J. Dionne’s Why Americans Hate Politics, Donald L. Barlett and James B. Steele’s America: What Went Wrong? and America: Who Really Pays the Taxes?, James K. Coyne and John H. Fund’s Cleaning House, Jeffrey H. Birnbaum’s The Lobbyists: How Influence Peddlers Get Their Way in Washington, and Kevin Phillips’s Arrogant Capital—this random harvest from my bookshelves documents the discouraging truth about American politics (it stinks) in overwhelming detail. Add to this multivolume chronicle of sellout, corruption. and civic dereliction the daily reporting of The Wall Street Journal’s Washington bureau on who is buying which lawmakers on which issue and for how much. Add the scalding reports published regularly by Common Cause and the wistfully named Center for Public Integrity. Add magazine pieces beyond counting, including a classic on the new money politics, Gregg Easterbrook’s October, 1986, Atlantic article “The Business of Politics.”Easterbrook, citing a Wall Street Journal interview, quoted Tony Coelho, then the chairman of the Democratic Congressional Campaign Committee, as summing up the politics of an era with a single desolating line: “The process buys you out.”
Add up all this evidence and you begin to see why individual income taxes, which contributed 44 percent of government revenues fifty years ago, contribute 73 percent today, while the share of total federal taxes paid by corporations has fallen from 33 to 15 percent. As Barlett and Steele pointed out, if corporations today paid taxes at the same rate as they did in the 1950s, the Treasury would collect an extra $250 billion annually—enough almost to erase the deficit, or to cut individual income taxes by 60 percent for those with incomes below $200,000.
Like single-issue lobbies from trial lawyers to gun owners (the National Rifle Association gave $4 million to congressional candidates last year; 225 representatives now have its A rating), the corporations have been getting what they pay for. The system is working deliriously well—for them. So long as we accept money politics as a given ($83 million in “soft money” went to both parties in 1991-1992), the middle class cannot wrest control of the state from the organized interests for whom it is largely run. Absent a sustained exercise of governmental power to modernize infrastructure and develop human capital, the erosion of real wages and the American standard of living will continue unabated, and in time the paradox will wear off observations like this one, from a “Market Watch” column in The New York Times: “America is not doing very well, but its corporations are doing just fine.”
Golden Rule elevates the discussion of money politics from journalism to political science, from anecdote to axiom. Subtitled “The Investment Theory of Party Competition and the Logic of MoneyDriven Political Systems,” Golden Rule is no day at the beach. The author, Thomas Ferguson, a political scientist at the University of Massachusetts at Boston, displays a churlish arrogance toward “the armies of people who live by words [journalists like the ones listed above] who . . . had virtually nothing of substance to say before, during, or after the 1992 election.”He is no more genial toward his fellow academics. “For most scholars,” he writes, “Rockefeller is a foundation; Lamont, Seth Low, and Widener are libraries, and Brookings is an institute, to which they aspire to be duly grateful.” Nor are the essays collected here written with the general reader in mind. Golden Rule is viscous with Tinker-to-Evers-to-Chance sentences like “As the proliferating literature on managers, owners, and corporate control suggests, identifying the locus of working control in certain organizations can be difficult and time-consuming (Herman, 1981; Burch, 1972; Zeitlin and Norwich, 1979).”
Ferguson may know his Zeitlin and Norwich, but his economics, to this mere journalist’s eye, is dubious in the way that defines left-wing economics; it assumes away the real choices Presidents have to make about taxes and spending and interest rates, positing an economy pliant to political will but unresponsive to the tides of the bond market, that irritating old pooh. One example of this dubious economics: Ferguson speaks of the “austerity policies the United States has pursued since the late seventies.” Deficits of $200 billion and a $4 trillion national debt amount to “austerity”?
Yet for all its stylistic thorniness and wishful economics, Golden Rule is an important book. For one thing, it shows the reader how history is created. “The past retains its vitality,” the critic Philip Rahv once said, “in so far as it impersonates the present.” In his first chapter Ferguson projects our rueful nineties awareness of the role of money in politics back onto American history, finding a new past that imitates some of the worst features of the present. From this perspective Ferguson sees small facts that might have escaped notice if they were not ballast for a big theory. “In a subtle touch insufficiently appreciated by later analysts,” he writes with his customary gallantry, “members of Congress received no regular salaries until 1856.”
For another, Ferguson’s investment theory of politics is argued with such sweep and rigor that future serious writing about money and politics cannot fail to acknowledge it—whether in order to praise or to criticize. Ferguson states his theory variously. Here is one formulation:
The fundamental market for political parties usually is not voters. As a number of recent analysts have documented . . . most of these possess desperately limited resources and—especially in the United States—exiguous information and interest in politics. The real market for political parties is defined by major investors, who generally have good and clear reasons for investing to control the state.
Here is a demotic version: The golden rule of political analysis is that in order “to discover who rules” you must “follow the gold (i.e., trace the origins and financing of the campaign...).”Though half the people may vote in presidential elections, and perhaps because only half vote, the investors rule. “The private sector’s Gross Influence-Peddling Product,” Kevin Phillips, no left-winger, wrote in Arrogant Capital, “is probably $20 billion a year or so.”
Grasp that and you understand why President after President can ignore what voters want when it conflicts with what campaign investors want. You understand why after President Clinton’s election on an economic platform of “Putting People First,” which called for a law requiring all employers with fifty or more employees not already investing in worker retraining to pay a 1.5 percent payroll tax to be earmarked for the continual retraining of American workers, the Presidentelect decided to put corporations first and abandoned the one pledge that showed he meant to address the crisis of falling wages. You understand why Clinton’s only two substantial domestic achievements are not a multibillion-dollar workerretraining program and “health care that’s always there” but NAFTA and GATT. “What Clinton has done,” Phillips wrote,
is to shift his party from so-called interest group liberalism to “interest group centrism”—away from the prospending liberal-type lobbies that represented people (labor, seniors, minorities, and urban) to a more upscale centrist (or center-right) group that represents money (multinational business, banks, investment firms, trial lawyers, trade interests, superlobbyists, investors, the bond market, and so on).
According to Ferguson, the large sums reported officially in every campaign he has studied back to Teddy Roosevelt’s time are only a small fraction of the total that investors “lend” or otherwise direct to campaigns. Investors not only fund extortionately priced TV campaigns, which drive the money politics of this era to its wretched excess, but also confer legitimacy and an aura of soundness. Felix Rohatyn’s solemn approbation, delivered in a New York Times op-ed column, is worth millions of votes. But to get it and like benedictions from the totems of the financial economy, Democratic candidates must forfeit populist appeals to millions of potential voters—the lower-income, less-well-educated Americans who belong to our abiding third party, the party of non voters.
IF the “fundamental market” in which the two parties compete is not the electorate but the upscale world of investors, then how to account for dramatic episodes of political change, such as the 1994 Republican capture of the House and Senate, in which the voters seemingly throw the bums out and reclaim democracy for themselves? “Most election analysts in the United States,” Ferguson writes, “habitually confuse the sound of money talking with the voice of the people.” The charm of that utterance should not blind one to its truth. Ferguson explains political realignments like 1994 by ascribing them to splits within hitherto monolithic ranks of investors. Such splits often occur between capital-intensive and labor-intensive industries: the former want free trade, the latter protection. He applies this theory to the New Deal, in an extensively footnoted chapter based on research for a new book.
I leave Ferguson’s New Deal to the experts, though I’d say a theory explaining the Wagner Act, which guaranteed the right to collective bargaining, and Social Security, which lifted the curse of penury from old age, by referring to splits between investor blocs is breathing mighty heavily.
Ferguson is more persuasive on the 1994 election. Using data from the Federal Election Commission and reports from the Associated Press, he documents a “shift within the business community” from lopsided giving to Democratic candidates to lopsided giving to Republicans. This shift came late in the campaign, as PACS and soft-money contributors reacted to Newt Gingrich’s threat to remember who gave and who didn’t when his party took power, and it made the difference in enough races to break the forty-year Democratic grip on the House. The Republicans have since taken money politics to brazen heights— by, for example, inviting business lobbyists into their committee rooms to help draw up sweeping anti-environment legislation. After decades of buying access to Democratic congressmen, corporate America at last has a Congress it can finance out of ideological affinity.
Writing in The Atlantic four years ago, Thomas and Mary Edsall prophesied that one of the few hopes for the Democrats to break free of money politics might be if they lost Congress, cast off the crutch of their hocked incumbency, and appealed to the electorate anew as the “party of the people” that Democratic orators have been invoking through decades of $l,000-aplate dinners. Will this happen? Will the Democrats in opposition dare to call for campaign-finance reform? When they were in power, in the first two years of the Clinton Administration, they did nothing. They had sent President George Bush a campaign-finance-reform bill, because they knew he would veto it, but did not send the same bill to President Clinton, because they knew he would sign it. In the manner of Saint Augustine in the brothel, they said, “Save us, Lord—but not yet.” They wanted one more election under their belts. It has come, and they’re gone.
Ferguson has some advice for the Democrats. “Apply the ‘Golden Rule’ for the benefit of the public as a whole,” he writes. “Provide sufficient public financing to allow ordinary people to run for office with a reasonable chance of getting their message out and getting elected.” He suggests a number of sensible funding mechanisms, including allowing tax credits for political contributions, which would “give candidates an incentive to appeal to the poor.” Alas, this is all too familiar. The first bill for public funding of congressional campaigns was introduced in 1904, around the time that investigations revealed that large insurance companies had secretly funded the Republican presidential campaigns of 1896, 1900, and 1904. Subsequent reforms have either been vitiated by unintended consequences (post-Watergate) or have failed to catch fire with the public. Public tolerance for the intolerable is a puzzle; instead of demanding that the stables be swept clean, more and more Americans, it seems, reject politics as an irremediably dirty business by not voting. Thus there is scant incentive for either party to change. Private financing of public campaigns is so paradigmatically Republican an idea that reform is unlikely to come from that party. My guess is that the Democrats will not rise to the challenge either, and that the new century will bring further decay in the size of the electorate—making politics even more of an elite taste than it is today—or else it will see the rise of a new party and a new reform politics.