News & Views from 465 California Street

The Gilded Age Implodes

Clint Reilly
Oct
14
2008

The Republican Party is a dying elephant. But can Democrats seal the deal with the American people and craft a 21st century coalition that rivals the power and durability of their 20th century New Deal coalition?

The 2006 midterm elections made Nancy Pelosi Speaker of the House with a sizable majority. Barack Obama is now poised to capture the White House. But it will take more than a simple rejection of George Bush to sustain a lasting Democratic majority.

The devastating collapse of seemingly impregnable financial institutions laid bare the rotting pillars of an unregulated Wall Street. Gone is the cloak of probity that allowed so many big players to reap undue rewards.

The biggest lesson of the $1 trillion bailout is that capitalism needs democratic government as much as democratic government needs capitalism. As President Theodore Roosevelt realized at the end of the 19th century’s Gilded Age, business must be overseen and regulated by government to assert and protect the common good.

In 1980, Ronald Reagan ignited a revolution by mobilizing taxpayers against the very “big government” that had rescued their parents from the Great Depression. But without checks and balances for the common good, free markets ultimately unhinge in binges of excess and greed. The gilded age implodes.

We are witnessing more than the death of our free-for-all financial system; the passing of a governing philosophy is also at hand. The question is whether we will use this moment of reflection to chart a new course.

In his book, The Conscience of a Liberal, economist Paul Krugman observed, “…by 2009 America will have a Democratic president and a solidly Democratic Congress…what should the new majority do? My answer is that, for the nation’s sake, it should pursue an unabashedly liberal program of expanding the social safety net and reducing inequality – a new New Deal. The starting point for that program, the 21st century equivalent of Social Security, should be universal health care, something every other advanced country already has.”

I would second Krugman’s agenda and add to it. Obama and his Democratic majority should offer more than a new “New Deal.”

Our ravaged economy and splintered social contract require a comprehensive effort to rebuild America’s foundation and restore the country to prosperity. Like Europe emerging from the wreckage of WWII, we need a domestic Marshall Plan.

First, our federal government must rebuild the backbone of our nation: a vast, vibrant middle class. This restoration begins with health care reform. Today, corporate executives reap outlandish salaries while a growing number of working families go without health insurance or struggle to maintain it.

If we, as a country, can afford to bail out Wall Street for its cupidity, it is unconscionable that we would refuse to provide for the health and vitality of our population. Universal health care is more than good public policy; it is a moral imperative in a country committed to equality.

Second, it is crucial that we redirect vital federal dollars away from irrational defense spending and quixotic war efforts, and back toward educating our youth and rebuilding our national infrastructure.

Third, we need to acknowledge that a Bill of Rights must include the right to a minimal standard of living for every American. We Democrats let Ronald Reagan Republicans railroad us into abandoning our moral commitment to serve the poor and fight unabashedly for those who lack economic power. It is time to correct this.

Fourth, we must pursue a program of protecting the earth and nurturing the planet. The global nature of this endeavor unites us with every nation on earth.

Fifth, Democrats should address national health comprehensively. That means not only ushering in universal health care, but also incubating ideas and innovative policies that prevent disease, teach and encourage people to make healthy choices, and extend life.

In 1992 Bill Clinton had a chance to initiate an enduring Democratic majority. 2009 will give Obama the chance to accomplish what Clinton could not.

Comments (14)

  • Spot on Clint! One small but important linguistic suggestion: we are a nation committed to equal OPPORTUNITY, not “equality” per se. Yes, every reasonable person with even just a modest education understands this, but it’s important to get the words right.

    Posted by: Todd Nyman | October 14th, 2008 at 12:37 am

  • A great, and inspiring, column Mr. Reilly. As for equality (to refer to Mr. Nyman above), I see you had in mind that all men are created equal (per that once revered document, the U.S. Constitution), and an equal (or “level”) playing field must be the goal. Agreed: a COMPLETE restructuring is in order. Equal opportunity is only possible if you are not enslaved by debt from health care costs, sub-living wages, and if you’re lucky, college loans.

    Posted by: Josie Van Warren | October 14th, 2008 at 2:03 am

  • I wish I could afford to have a article printed in the C C times they only print predominately liberals in their opinion pages. It is a nice dream you have but Liberalism is based on theories that only work in a class room. The problem what will always ruin your attempt is it will no be a free country under Democrats no free speech if you do not agree with them, Political correctness run wild, Multiculturalism above Americanism and Racism in all programs (affirmative action) it why our schools are failing. The government can not and will never be able to run a program only free markets with oversight can they succeed any thing else is socialism. The Democrats have proven to inept since they took over our country almost two years ago. Only Conservatism with a foundation to build on of Honor, Duty, Country and Freedom (Bush is no Conservative) we can save our country. All of the things are true and have happened to me or my family if you would ever like to talk call me any time. No response is required.

    Hunter

    Posted by: Hunter | October 14th, 2008 at 9:12 am

  • So, Republicans have caused the Wall St. debacle and only Pelosi and Obama can save us? Your entire argument falls apart when you find out most of the problems were caused by gov’t interference forcing banks to make more subprime loans causing a housing bubble no longer tied to inflation which finally burst. Of course the gov’t needs to intervene now, I mean, if they were never involved at all, things would be find. It’s only when the Democrats think that things need fixing to make them “fair” that we run into problems.

    I fully blame the Dems for this debacle and hope these economic social engineering theories will be thrown away, we’ve seen they don’t work.

    Posted by: Chadwick | October 14th, 2008 at 9:51 am

  • Usually I glance at your column when I need to move my bowels… often I USE your column to wipe my @$$%#. Paul Krugman is a Bush-bashing retard who deserves a Nobel Prize as much as you do. People like you will not only destroy this country, but find a way to blame it on a republican when you do. You make me #$%@#ing sick, Reilly. You deserve to live in S.F… America’s cesspool.

    Mitchell S.

    Posted by: Mitchell S. | October 14th, 2008 at 10:14 am

  • Clint,
    Sixth: Democrats should have another big war like the 6 previous ones. Charlie Wrangle has called for the draft. Let’s take him at his word.
    Seventh: The Democrat universal health plan should cover all elected officials, reporters, etc. everyone without exception—including the President of the US—-including you Clint. Would you surrender your current health coverage plan for Obama’s plan?
    I wrote to Obama’s web site asking if he would be covered by his plan—–no answer.
    What’s your answer? I don’t expect one.

    Posted by: Hank | October 14th, 2008 at 10:40 am

  • Dear Clint:

    Here are some facts that make your agenda look less promising and more scary.

    1. FDR’s New Deal ushered in a prolonged period of mediocrity that was ultimately “rescued” by WWII (not something I would like to see repeated). One of the cornerstones, Social Security and Medicare, are now threatening to drown us financially.

    2. Clinton’s presidency was bound for the cellar in 1994 until he wisely corrected toward governing from the center due to the voter revolution.

    3. Obama, with Pelosi, Reid, Dodd, Frank et al, will have the chance to try but may face a similar voter uprising if he does.

    4. Our Democracy works best as intended by our Founding Fathers when there is true checks and balance between the branches of power. For proof of failures just look to Carter, Clinton’s first two years, and Bush’s six and further analyze why the Congress of the last two years has an even lower approval than Bush or the Republicans.

    Take healthcare, for example: The only way to reduce the cost of health care is to reduce unnecessary tests and procedures ordered purely to fend off lawyers and to make all doctor’s government employees at much reduced salaries. Insurance is not the cause of health care costs, it is just the means to pay for it. The way Democrats promote universal healthcare is shameful by implying it is free.

    The Contra Costa Times endorsed Obama for President by expressing hope he would follow the centrist model of Clinton, but forget item 2. above. The best way to assure a centrist model is to elect McCain as the bulwark checking a run-away-Congress as well as being checked by them. That is true democracy.

    Posted by: Erich | October 14th, 2008 at 11:34 am

  • If you have an e-mail public service message, I would like to subscribe. Your PSM in the Marin IJ is always a must read for me.

    Too bad you didn’t start it years ago when your name was always in the Chron but I could never figure out what the heck your politics and analysis were.
    Best

    Posted by: S.A.L. | October 14th, 2008 at 12:53 pm

  • Dear Clint;

    I read your column in the Tr-Valley Herald here in Dublin, Ca and I always enjoy what you have to say. Today I would like to add one more thing to your list.

    Do you remember that in the mid 1980′s there were a couple of deductions no longer allowed on our itimized income tax returns? I’ve been an income tax preparer for many years, not doing it any more, but in the 1980′s I was pretty busy. All of a sudden we no longer could deduct the interest from our automobile loans, our credit cards or other type of interest costing accounts. We also use to deduct our sales taxes from our auto purchase, any large purchase, such as furniture, or what ever. People looked forward to being able to take these deductions, therefore they purched this items. Also, as a tax preparer, when someone was getting a good size refund, I could say, hay,isn’t it time to turn in that car, remember you can deduct this and that and people would go out and do that.

    Well, you need to make that your number Sixth on your list. Get these tax deductions back, then people will buy, then the factories will build, etc, etc.

    I think these tax write off’s were taken away from the American citizens in order to send the building of these items out of the country. Your number Sixth needs to be getting factories and manufacturing back into our country where it belongs, because we cannot have a vast, vibrant middle class, without jobs. We can’t do what DFR did and call up a WPA – Well, we could, because our roads and our bridges really need much up grading because they haven’t been taken care of. I think we need to look at our country as a whole, put up the map, on a wall, look at the getto’s, mark them, send teams of workers, goverment paid, like the wpa, clean them up and make them whole. Until we do these type of things, we cannot come back from this. Because these getto’s are like scabs on a knee, they need to heal but they need help. I’m very lucky to live where I do, where I’m safe every day and I don’t have lots of worries.

    Thanks, Clint, you’re a true American and me to,vote for Obama – Yes, Yes

    Mary

    Posted by: Mary | October 14th, 2008 at 2:01 pm

  • Thanks, Mr. Reilly, for your excellent column, “The Gilded Age Implodes.” I hope Obama is reading it.

    The icing on the cake would have been if you had gone on to say that the only way we can achieve decent health care for everyone and contain costs is through a single-payer system. I assume you believe this; people need to hear it because it’s going to take a mass movement to demand the overthrow of our present no-system. It’s not going to come from the people in Washington unless there’s a vast clean-up of the lobbyists, which doesn’t seem likely.

    Sincerely,

    Esther W.

    Posted by: Esther | October 14th, 2008 at 6:28 pm

  • Yes, I do believe we are witnessing the last gasp of the Republican right strangle hold on our country.

    I am currently reading Thomas Friedman’s new book Hot, Flat, and Crowded. He points to the disturbing trend “that has been building slowly since the 1980′s. It is a ‘dumb as we wanna be’ mood that has overtaken our political elite, a mood that says we can indulge in petty red state-blue state cat fights for as long as we want and can postpone shoring up our health care system and our crumbling infrastructure, postpone addressing immigration reform, postpone fixing Social Security and Medicare, and postpone dealing comprehensively with our energy excesses and insecurity-indefinitely. The prevailing attitude on so many key issues in Washington today is ‘We’ll get to when we feel like getting to it and it will never catch up to, because we’re America ‘ ”

    Friedman is calling for “Code Green” and explains that while it is our great challenge is also our greatest opportunity. Friedman makes the case that American leadership must begin healing our earth and in so doing will be our best bet for an American renewal.

    This should be on everyone’s must read list.

    Melinda Maginn

    Posted by: Melinda Maginn | October 14th, 2008 at 9:15 pm

  • Comments like those from Hunter and Mitchell S. are proof that we need to invest more in better education for our citizenry.

    Posted by: TSB | October 15th, 2008 at 9:35 am

  • Dear Mr. Reilly,

    I have one request. Could you please send to me an electronic version
    of your article, “The Gilded Edge Implodes”, which appeared in the
    October 14 issue of the Oakland Tribune?.

    Others, including the investment and banking industry, which asked the
    Government for a 700,000,000,000 dollar Bail-out, now recognize that the
    Government is the Solution!

    Those others include –

    ONE: Sam Smith of the Progresssive Review [October 12, 2008], who
    wrote:

    “…even Democrats – from CLINTON to OBAMA – paid regular homage to
    economic principles whose only true beneficiaries were the very few at
    the very top. [Think also of Milton Friedman and the Boys of the Chicago
    School of Economics.]

    “It became the core ideology of an American establishment that would
    turn out to be the worst and the dumbest.…

    “…a [recent] Rasmussen poll taken after the start of the Bush
    financial crash [of October 2008] found that 59% of voters STILL AGREED
    with Reagan’s inaugural declaration that ‘Government is NOT the
    Solution to our Problem; Government is the PROBLEM’.

    “Even 49% of Democrats agreed with only 34% demurring.”

    TWO: In an interview this month Governor “Schwarzenegger stated that
    Government was the ROOT CAUSE of the problem and it would be Government
    that should SOLVE the problem.”

    Here I feel Schwarzenegger is correct. It is the Government’s LACK of
    Regulations for the financial industry that has caused the Problem.

    Banks, lending agencies, investment bankers, should be strongly
    regulated by Government.

    L. Rockwell

    Posted by: Rockwell | October 15th, 2008 at 9:43 am

  • ONE OF YOUR BEST ARTICLES EVER, JUST GREAT

    Ted

    Posted by: Ted | October 15th, 2008 at 10:56 am

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