The Broken Contract: Inequality and American Decline

Among the non-disinterested spending that corporations began to engage in, none was more interested than lobbying. Lobbying has existed since the beginning of the republic, but it was a sleepy, bourbon-and-cigars practice until the mid- to late 1970s. In 1971, there were only 145 businesses represented by registered lobbyists in Washington; by 1982, there were 2,445. In 1974, there were just over 600 registered political action committees, which raised $12.5 million that year; in 1982, there were 3,371, which raised $83 million. In 1974, a total of $77 million was spent on the midterm elections; in 1982, it was $343 million. Not all this lobbying and campaign spending was done by corporations, but they did more and did it better than anyone else. And they got results.

These changes were wrought not only by conservative thinkers and their allies in the business class. Among those responsible were the high-minded liberals, the McGovernites and Watergate reformers, who created the open primary, clean election laws, and “outsider” political campaigns that relied heavily on television advertising. In theory, those reforms opened up the political system to previously disenfranchised voters by getting rid of the smoke-filled room, the party caucus, and the urban boss-exchanging Richard Daley for Jesse Jackson. In practice, what replaced the old politics was not a more egalitarian new politics. Instead, as the parties lost their coherence and authority, they were overtaken by grass-roots politics of a new type, driven by direct mail, beholden to special interest groups, and funded by lobbyists. The electorate was transformed from coalitions of different blocs-labor, small business, the farm vote-to an atomized nation of television watchers. Politicians began to focus their energies on big dollars for big ad buys. As things turned out, this did not set them free to do the people’s work: as Senator Tom Harkin, the Iowa Democrat, once told me, he and his colleagues spend half their free time raising money.

This is a story about the perverse effects of democratization. Getting rid of elites, or watching them surrender their moral authority, did not necessarily empower ordinary people. Once Walter Reuther of the United Auto Workers and Walter Wriston of Citicorp stopped sitting together on Commissions to Make the World a Better Place and started paying lobbyists to fight for their separate interests in Congress, the balance of power tilted heavily toward business. Thirty years later, who has done better by the government-the United Auto Workers or Citicorp?

In 1978, all these trends came to a head. That year, three reform bills were brought up for a vote in Congress. One of the bills was to establish a new office of consumer representation, giving the public a consumer advocate in the federal bureaucracy. A second bill proposed modestly increasing the capital gains tax and getting rid of the three- Martini-lunch deduction. A third sought to make it harder for employers to circumvent labor laws and block union organizing. These bills had bipartisan backing in Congress; they were introduced at the very end of the era when bipartisanship was routine, when necessary and important legislation had support from both parties. The Demo – crats controlled the White House and both houses of Congress, and the bills were popular with the public. And yet, one by one, each bill went down in defeat. (Eventually, the tax bill passed, but only after it was changed; instead of raising the capital gains tax rate, the final bill cut it nearly in half.)

How and why this happened are explored in Jacob Hacker and Paul Pierson’s recent book, Winner-Take-All Politics. Their explanation, in two words, is organized money. Business groups launched a lobbying assault the likes of which Washington had never seen, and when it was all over, the next era in American life had begun. At the end of the year, the midterm elections saw the Republicans gain 15 seats in the House and three in the Senate. The numbers were less impressive than the character of the new members who came to Washington. They were not politicians looking to get along with colleagues and solve problems by passing legislation. Rather, they were movement conservatives who were hostile to the very idea of government. Among them was a history professor from Georgia named Newt Gingrich. The Reagan revolution began in 1978.

Organized money did not foist these far-reaching changes on an unsuspecting public. In the late 1970s, popular anger at government was running high, and President Jimmy Carter was a perfect target. This was not a case of false consciousness; it was a case of a fed-up public. Two years later, Reagan came to power in a landslide. The public wanted him.

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