As Ever, The Oligarchs Are Winning
The congressional sausage-making process that produces actual legislation is never a pretty sight and, right now, it’s anyone’s guess as to what the final Build Back Better (BBB) package will look like. It seems likely that Democrats will pass something simply because failure to do so would be admitting their complete ineptitude and ineffectiveness, with catastrophic consequences for the party and the country. Whatever does get passed with BBB will surely be called “historic” and a “generational investment”, and it absolutely will be. But it also won’t probably be enough to truly offset the massive under-investment in both the physical and human infrastructure of this country over the last half century.
Although the press talks about the 1%, a more apt description would be American oligarchs. As a result of decades of lax anti-trust enforcement, a handful of companies control over 80% of the business in many areas of our economy. As Elizabeth Warren documented in 2016, four airlines controlled 80% of passenger air travel; five health care insurers controlled over 80% of that market; three prescription drug wholesalers dominated the market and fed the opioid crisis; three chains controlled virtually 100% of drug stores; four companies controlled 80% of the beef and 65% of the pork slaughtered; five banks controlled nearly half the assets of the financial industry; Comcast alone had over half of the country’s cable subscribers; Google, Microsoft, Apple, and Amazon dominate the tech space. And some of these industries have become even more consolidated since then.
The people who run these oligopolies are joined by the even more elite billionaire class that has enormous political clout. Today, just 745 billionaires control $5 trillion in wealth, which is more than $2 trillion greater than the entire wealth of bottom 50% of households in this country. These billionaires can literally fund presidential candidates and campaigns on their own. Sheldon Adelson kept Newt Gingrich’s dismal campaign alive for months in 2012. Foster Friess did the same for Rick Santorum. The Koch brothers have funneled money into the entire range of conservative causes over the decades. In 2016, the Mercers supported Ted Cruz and then rescued Trump’s flailing campaign after his nomination. In 2020, Bloomberg and Steyer basically funded their own vanity campaigns. Today, Peter Thiel is funding J.D. Vance’s run for Senate. Over the last decade, just twelve donors accounted for 7.5% of all donations made for federal political causes. These elites fund astroturf organizations that can drive our politics. For example, the Kochs were the money behind the Tea Party and are largely behind today’s ridiculous attacks on Critical Race Theory. Jane Meyer has documented how the Bradleys, Wisconsin billionaires, are the money behind the Big Lie of the stolen 2020 election and the mythical claims of election fraud. If ever we get a full accounting of the 1/6 coup attempt, we can be sure that billionaires will have bankrolled it. The combination of the business elite who run their oligopolies and the billionaire class comprises our own American oligarchs. These oligarchs not only control candidates and office-holders but also shape the nation’s agenda, and they are doing a pretty good job of bending Biden’s agenda to their advantage.
Already the original $6.5 trillion Build Back Better bill was pared down once to $3.5 trillion and will now be lucky to even come to a $2 trillion package over 10 years. Despite the performative whingeing of what Greg Sargent describes as “arbitrary centrists”, that seemingly still large number is less than a third of what we are projected to spend on defense and the associated military-industrial complex subsidies over the same ten year period, spending that those same performative “moderates” support wholeheartedly. The reductions in the bill’s size and its accompanying abandonment of certain proposals has been orchestrated by our American oligarchs and their bought and paid for representatives in Congress. And what apparently does remain in the BBB is often skewed in their favor.
Take, for example, the promise to let Medicare negotiate prescription drug prices. This incredibly popular proposal was originated in 1989, meaning we are in our fifth decade of waiting for its implementation. This time, the effort was publicly killed by Kyrsten Sinema who, unsurprisingly received $750,000 in donations from Big Pharma since her election to the Senate in 2018. In that election, Sinema promised to “make health care more affordable, lower prescription drug prices”. Sinema just had, for her, a record fundraising quarter, primarily driven by donations from Big Pharma PACs and senior executives at Gilead, Merck, and Eli Lilly.
Sinema may be the one deservedly taking the heat on this failure but there are clearly other Democrats in her camp. New Jersey’s Bob Menendez, whose state is the home to pharmaceutical giants Merck and Johnson & Johnson, has described allowing private plans to have access to Medicare-negotiated prices as “no longer now price negotiation — that’s price control”. In the House, three Democrats, Scott Peters of California, Kurt Schrader of Oregon, and Kathleen Rice of New York, are all opposed to allowing Medicare to negotiate drug prices. The former two of those Representatives both have Pfizer and AbbVie as top contributors. Both also highlighted the increasing cost of drugs as a problem they would address if they were elected to Congress in 2020. As David Edward Burke documents, “So why haven’t widely popular proposals [like Medicare negotiating drug prices] that would save lives and money succeeded…Follow the money. Pharmaceutical and health care companies have spent more on lobbying since 1998—a total of $4.8 billion—than any other industry. On top of that, they have made large, timely contributions to the legislators who have become H.R. 3’s biggest hurdle”.
Another popular part of the initial BBB program that appears to be radically trimmed is the family and medical leave program that originally allowed up to 12 weeks of paid leave for new parents or those who need to care for a sick member of the family. Such a program would finally allow the United States to join virtually every major industrialized country in offering such leave. But, from the beginning, the way the program was structured was just another big payoff to the insurance company oligarchs. Rather than make paid leave part of Social Security, the bill that came out of the House Ways and Means Committee allowed companies to set up their own paid leave programs and then receive grants from the government to offset those costs. The formula for determining those grants differs depending on whether the company manages its own leave program or contracts that out to insurers.
Since most large employers contract out their leave programs to insurance companies, it not only enhances the bottom lines of those insurance companies but also, because of the way the grant formula is structured, creates the opportunity for employers to engage in tactics to keep their leave costs low and then essentially skim money off the top of the grants they receive. In addition, the multiple options for deploying family leave will force workers to navigate a myriad of bureaucracies just to see whether they are eligible and what they could receive. As Matt Bruenig notes, “By including private insurance in this way, the bill ensures that we will waste some of our paid leave money on private insurer overhead and profits. It also invites employers and insurers to profit off of benefit denials and cream-skimming of various sorts. An employer who has a workforce that takes a below-average amount of paid leave could conceivably get an insurance contract that charges less than the grant the Treasury pays them and then pocket the difference…Individuals seeking leave have to figure out firstly whether they are covered by an employer plan, secondly whether they are covered by a state plan, and then, if not, apply to the federal government for benefits and, in that process, prove they aren’t covered by an employer or state”.
So, again, the question becomes how did a straightforward bill to provide family and medical leave to be run as a simple Social Security program, which had 205 House Democrats and 38 Senate Democrats as actual co-sponsors, turn into a bureaucratic morass and a gift to private insurers. Well, the House Ways and Means Committee is probably the most powerful committee in Congress. And the chair of the House Ways and Means Committee is Richard Neal. It would not be surprising to know that Neal is in his 32nd year in Congress and for decades his largest donors have been insurance companies. As Donald Shaw reports, “Five of Neal’s top ten career donors are insurance companies or insurance industry trade associations, according to OpenSecrets…All told, the insurance industry has given Neal’s campaigns more than $2.8 million during his congressional career, more than any other industry has given, according to OpenSecrets’ calculations, and more than any other member of the House has received”.
Now, because of the arbitrary centrism of Manchin and Sinema who are demanding the size of BBB to be reduced, the family and medical leave component is being cut back to just covering four weeks of leave, in addition to already being a bureaucratic morass and a gift to insurance companies.
A similar process has unfolded with the climate change piece of BBB. Remarkably, Manchin is chairman of the Senate Committee on Energy and Natural Resources which was tasked with crafting the details of the centerpiece of BBB’s climate agenda, namely the Clean Electricity Performance Program (CEPP). CEPP is a $150 billion program that would reward utilities who move to renewable energy sources and penalize those that continue to use fossil fuels. It would require utilities to increase their share of clean energy use by 4% per year, vastly accelerating a transition to 100% clean energy by 2035. But, after initially seeming to support the initiative, Manchin has now declared it a non-starter, falsely claiming that he has concerns about “using taxpayer dollars to pay private companies to do things they’re already doing”, adding “I’m not going to sit back and let anyone accelerate whatever the market’s changes are doing”.
Manchin himself makes around $500,000 per year from investments in his family-run coal brokerage firm. As Carol Davenport reported, “In the current election cycle, Mr. Manchin has received more campaign donations from the oil, coal and gas industries than any other senator”. Exxon alone gave $330,000 to the campaigns of Democratic Senators Coons, Hassan, Kelly, Manchin, Sinema, and Tester. Recently Exxon lobbyists revealed just how deep their influence on climate policy goes, saying, “Joe Manchin, I talk to his office every week. He is the kingmaker on this because he’s a Democrat from West Virginia, which is [a] very conservative state… and he’s not shy about sort of staking his claim early and completely changing the debate. On the Democrat side we look for the moderates on these issues. So, it’s the Manchins. It’s the Sinemas. It’s the Testers…Sen. Coons…has a very close relationship with Biden, so we’ve been working with his office—as a matter of fact our CEO is talking to him next Tuesday and having those conversations and just teeing it up, and then that way I can start working with his staff to let them know where we are on some of these issues”.
Manchin’s protection of the fossil fuel industry makes even less sense when you consider that coal and gas now provide so little to the West Virginia economy. Even by the late 1990s, coal was contributing only about 7% of the state’s GDP and it is substantially below that today. Although the state remains a gas producer, that still results in little local employment and most of the money from the exploitation of its gas reserves actually flows out of state. On the other hand, ensuring the existence of coal-fired power plants provides revenue for the family coal brokerage business, something Manchin was accused of abetting when he was the West Virginia Governor back in the mid 2000s. Finally, while climate change may not initially seem like it would have a great effect on the state, the fact is West Virginia is highly susceptible to flooding and the severity of those floods has been increasing.
One research firm estimates the loss of CEPP from the BBB will cost more than a third of the emissions reduction in the original bill and endangering the goal of around a 50% reduction from the 2005 carbon levels by 2030. It’s possible that a carbon tax or a combination of regulatory actions by the EPA and similar executive orders could offset the loss of CEPP and get us back on target, but Manchin has kiboshed the carbon tax as well.
Bizarrely, the media and the performative centrists have been totally fixated on the amount of spending in BBB, rather than its actual cost. In fact, the cost of the original $3.5 trillion BBB would have been next to nothing because it was virtually all paid for by increasing taxes on the wealthy. According to a recent analysis, “America’s billionaires have grown $2.1 trillion richer during the pandemic, their collective fortune skyrocketing by 70%” and asking them to pay their fair share should be a no-brainer. But once again, the oligarchs have used their influence to ensure they won’t.
Again, it is Kyrsten Sinema who is blocking BBB’s plan to raise the corporate and top-end individual tax rate, as well as increasing the carried interest tax. Instead, she is proposing a carbon tax, which is, of course, unacceptable to Joe Manchin (see above). Sinema voted against the Trump tax cuts which dramatically cut corporate taxes so her decision not to raise those rates is, as usual for her, inexplicable. In addition, reforming the inheritance tax has fallen by the wayside.
But, in this case, it appears the business oligarchs may be throwing their billionaire friends overboard. The reported compromise that satisfies Manchin, Sinema, and probably other unnamed Democrats is to have individuals with over $100 billion in assets or $100 million in annual income pay a tax on their unrealized asset gains. Incredibly, this means that the oligarchs ability to kill any new taxes on simply the super-rich may actually result in the billionaires have to endure a version of Elizabeth Warren’s wealth tax. In addition, corporations may end up paying more due to the global minimum tax deal Biden has worked out with other major economies. Finally, additional revenue may come from beefed up IRS enforcement. At this point, though, it’s unclear whether even these pieces of BBB will survive. But, as Paul Waldman and Greg Sargent write, “the super-rich have to be feeling pretty psyched right now about their chances of emerging from this process largely untouched”.
The oligarch’s neutering of the Biden agenda creates yet another problem for Democrats, what Matt Stoller describes as “deliverism”. By failing to deliver on its key promises, or even just delivering programs that are difficult to take advantage of because of burdensome restrictions and nightmarish bureaucracy, or delivering programs that sunset in a year or two, Democrats just breed cynicism among even their own voters that anything can actually really change. As David Dayen writes, “You cannot talk about the same popular items, fail to deliver on them, and expect the voting public to keep listening to you…Every time Democrats make this promise and fail to deliver, cynicism finds a breeding ground. People tune out the Democratic message as pretty words in a speech…the far greater backlash is to advance the same popular ideas in campaigns consecutively without ever solving the problems. That just kills the party brand”. And that cynicism just provides even more fertile ground for the oligarchs to maintain control.
Just to be clear, while this piece is largely focused on Democrats who appear to be captured by wealthy and corporate interests, that is only because the Democratic party is the only party interested in actually legislating these days. The Republican party is almost completely bought and paid for at this point, with an agenda that is only designed to fuel culture wars as a cover for shifting even more money to its oligarch donors. In the post-Citizens United world, the American political system has basically become legalized bribery and the levels of corruption at all levels of government is now staggering. Yes, there has always been political corruption in this country but you have to go back a long time to see it at the levels we see today.
But perhaps the most disturbing part of the enormous access the oligarchs get with members of Congress is their frightening silence about the erosion of our democracy. Yes, some business leaders made vocal their concern for democracy and even took action in the wake of January 6th and the continued Republican attempts at voter suppression. But those superficial efforts have largely faded. The ban on funding all those Republicans who voted to overturn a free and fair election even after a failed insurrection attempt has largely ended. There has been no real business pressure to fully investigate 1/6 or even create a filibuster carve-out for democracy reform, despite the seemingly unlimited access the oligarchs have to our elected leaders.
At some point you have to wonder whether the oligarchs are really interested in democracy at all. They themselves are largely autocrats within their own organizations and many of them who have international businesses have probably found it far easier to deal with autocrats than fighting through democratic government regulation. And, after all, who needs that pesky democracy here at home when you are always winning anyway.