The Blog

Both Parties Are Owned by Wall Street

The result of the political system being hijacked by the economic elite has been near unanimous support for pro-wealthy, pro-business policies, like TPP. As the rich use these policies to become richer and more politically powerful, our democracy is being replaced by plutocracy.
This post was published on the now-closed HuffPost Contributor platform. Contributors control their own work and posted freely to our site. If you need to flag this entry as abusive, send us an email.

President Obama is pushing hard for the Trans-Pacific Partnership (TPP)--a 12 country trade agreement--despite fierce opposition by members of his own party who claim it is biased in favor of multinational corporations and against the interests of American workers. The last major trade agreement--the North American Free Trade Agreement (NAFTA) with Mexico and Canada--resulted in a loss of 600,000 jobs and depressed wage growth in the United States. Most research reveals that the rise in global trade over the past four decades has severely hurt American workers and contributed to the explosion in inequality.

NAFTA was negotiated by President Clinton, a Democrat, who like President Obama, actively courted and relied on business support to get the deal passed. Why have Democrats advocated policies that eliminate jobs, reduce wages, and increase inequality? Does the Democratic Party no longer represent the interests of American workers? Has it been purchased by the same interests that have long owned the Republican Party? This seems to be the case. The leaders of both parties advocate policies that force American workers into direct competition with foreign workers who are paid a fraction of what American workers earn and work in dangerous and environmentally polluting firms where they possess far fewer rights.

In fact, whether Democrats or Republicans have controlled the White House or Congress has made little difference in who reaps the gains from economic growth. Since Nixon, income, wealth, and privilege have continued to shift toward the elite no matter which party has been in power. The magnitude of this shift has few parallels in American history. Since 1980, net worth for the bottom 60 percent of households has fallen by nearly $10 trillion, while the richest 10 percent have seen their wealth increase by almost $30 trillion.

Republicans, of course, have not been so disturbed by this redistribution. Their self-serving position has always been what is called trickle-down or supply-side economics, which claims that by letting more wealth flow to the wealthy, who save and invest, the economy will grow more vigorously, creating jobs and higher incomes for those below. However, trickle-down polices have done just the opposite. Wealth gains have surged for the richest households without producing any substantial gains in economic growth or reductions in unemployment.

Democrats, by contrast, claim to support measures that benefit the middle class. But since the mid-1970s, this claim has been hollow as Democrats advocate for policies that benefit the wealthy at the expense of everyone else. Jimmy Carter began the corporate deregulation wave, which caused profits to grow significantly faster than wages. Bill Clinton slashed welfare benefits, and President Obama now cows to business interests, bailing out Wall Street and failing to prosecute its crimes, and now with TPP. In conjunction with the Republican-backed anti-union policies and tax cuts for the wealthy under Reagan and George W. Bush, which many Democrats supported, the income share taken by the very rich has skyrocketed. Inequality increased during every presidential administration since Nixon, but the Gini coefficient reveals that it skyrocketed nearly as much under Clinton as it did under Reagan. And it increased more under Obama than George W. Bush. Democratic rhetoric is mere perturbation, hot air agitating the surface water, with little effect on the less visible currents below carrying more wealth and privilege to those at the top.

The truth is that both parties have been captured by an economic elite. For example, in the 2014 elections about 32,000 individuals--0.01 percent of the population--accounted for 30 percent of all political contributions. With few exceptions, contributions from individual firms are given equally to Republicans and Democrats. The rich hedge their bets, investing in politicians of all stripes to ensure that, no matter who is elected, they will be well represented. Politicians almost always respond to the will of their contributors, not constituents, making campaigns little more than showy circuses, drawing away attention from the purchasing of political power.

It's not possible to get elected without the support of corporate America. In the 2012 presidential election, $2.6 billion was spent, and the 2016 election promises even greater sums. The average inflation-adjusted cost of winning a House seat has increased four-fold, from $360,000 in 1986 to $1.6 million today. For the Senate, the cost has risen 62 percent, from $6.4 million to $10.4 million. Only by cozying up to those with money does a candidate have the slightest chance of winning office.

American corporations--now armed with most of the rights of citizens, thanks to the Supreme Court's 2010 decision Citizens United v. Federal Election Commission--are overwhelmingly owned by the rich such that this decision handed them enormous additional political power. In 2007, the wealthiest 1 percent owned 49.3 percent of stocks and mutual funds, the richest 10 percent, 89.4 percent, leaving the bottom 90 percent with only 10.6 percent. Of financial securities, 60.6 percent is owned by the richest 1 percent, 98.5 percent by the top 10 percent, leaving only 1.5 percent for the bottom 90 percent.

Most CEOs count themselves among the very wealthy, and have become far more so since 1980. Whereas in 1980, CEOs heading S&P 500 corporations earned 42 times more than the average worker, by 2013 it had risen to 331 times more. The interests of the wealthy and corporate America are indistinguishable, such that the unparalleled expansion of corporate lobbyists and campaign contributions are extensions of the rich's political power. Since the 1970s, the number of lobbyists increased from 175 to over 15,000, and the number of political action committees increased from 89 to nearly 1,600. This increase comes from groups representing corporate and financial interests, not labor or environmental concerns.

The result of the political system being hijacked by the economic elite has been near unanimous support for pro-wealthy, pro-business policies, like TPP. As the rich use these policies to become richer and more politically powerful, our democracy is being replaced by plutocracy.