The Republic of T.

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Triumph of the Willfully Ignorant

Sarah Palin, and the Sarah Palins of American politics, have won a significant victory. If you want to know who has the last word on policy, look no further than her and what she represents

Unless some significant shift occurs, the Senate Finance Committee’s decision to drop the end-of-life counseling provision from the health care reform bill stands as an omen.

The end-of-life counseling provision in the House bill is expected to cost a few billion dollars over the next decade. But health policy experts say it could lower medical spending by reducing end-of-life medical care that patients don’t want.

Opponents say the provision shows that architects of the health-care overhaul want to ration seniors’ care. Democratic lawmakers say no part of the House bill calls for rationing care. Physician counseling would be voluntary.

But growing complaints over the provision are leading key lawmakers to conclude that the health overhaul should leave out any end-of-life counseling provisions. A group in the Senate Finance Committee that is attempting to craft Congress’s only bipartisan health bill has decided to exclude such a measure, Senate aides said this week.

If this is true, and if this stands, it is a bad omen for reality-based policy that a proposal that would have helped people. It bodes ill for democracy that a proven lie yelled loudly enough and often enough can win the day. That is it enough to all but halt discourse on reform is a sign that any significant reform on something as complex and important as health care suggests that real reform can be picked apart until it dies as the result of a thousand cuts.

It is the lie that not only makes halfway around the world while the truth is still getting its shoes on, but it is the lie that crosses the finish line because it tied truth’s shoelaces together at the starting line.

It is why we can’t have good policy.

The point here isn’t that politicians play to public sentiment. It’s that in the judgment of these professionals, there’s no political upside to doing the responsible thing. You get more mileage from bowing to the base than from stepping out and defending a good policy that’s long been touted by respected conservatives. End-of-life counseling is, in the final analysis, a fairly small issue, but the speed with which its former defenders have agreed to polarize and abandon it is terribly depressing. And they wouldn’t be doing that if they didn’t think it the right move for their careers.

That it is the right move for their careers is why we are where we are.

It is the reason why, in the midst of an economic crisis in which health care and health care costs are no small factor, every legislative attempt to address the crisis and ameliorate its devastating impact on everyday people must be whittled down to help fewer people before it passes — and is eventually hailed as progress.

It is the reason we still haven’t reformed CEO compensation on Wall Street, and as a result Wall Street’s bonus culture has survived unscathed while the real economy is working harder for less — as productivity rose but hours have been cut, wages have imploded, and personal income experienced its biggest drop in four years.

It is why Wall Street firms that drove the economy into a ditch get bailed out to the tune of hundreds of billions, with no accountability and no strings attached (still don’t really know where the $700 billion we gave them went), while an industry that least employs everyday Americans in making goods that can not only be sold but that people can actually use actually must cut wages, must meet standards never considered for Wall Street. They had to cut benefits, close down U.S. factories and send jobs to Mexico — in order to receive aid from some of the very taxpayers it used to employ. Meanwhile, hunger is striking Detroit middle class.

It is why we decided it was fine to abrogate UAW contracts but not Wall Streets’.

It is how we ended up with so-called mortgage relief that protected lenders, and even created a financial incentive for lenders not to adjust loans, while helping less than 10% of those who need it. Meanwhile foreclosures are at record levels, 1.5 million homes were in foreclosure in the first half of 2009, and nearly half of U.S. mortgages will be underwater by 2011. And Washington is still “prodding” banks to do voluntarily what the fine print lets them get away with not doing.

It is why we ended up with bankruptcy “reform” crafted by credit card companies, that made it harder for most people to get some sort of debt relief. Meanwhile, personal bankruptcy filings have surged in the first have of 2009, and may reach 1.4 million by the end of the year.

It is why we got a credit card reform bill that gave lenders 18 months to raise existing fees and invent new ones, and why now credit card companies are piling on new fees, while they still have time. Meanwhile credit card debt is rising quickly for those 65 and over, and credit delinquencies are at a record high.

It is how we got a stimulus that was smaller than we needed and that was whittled down to create fewer jobs. Now strapped states are depleting their unemployment benefit funds, and are forced to cut crucial services at a time when joblessness and foreclosures have raised demand. And it is why, even though stimulus funds helped states avoid some drastic budget cuts, we are questioning whether another stimulus is in order.

It’s how we ended up with a trade policy that has made jobs our biggest export, and overlooks the practices of our so-called trade partners. Meanwhile more than 2 million jobs disappeared in past 18 months. We’re looking at a job loss recovery that may take years, at these levels, because the only “growth” we’re seeing is the result of cutting jobs.

Friday’s monthly jobs report — showing a slower pace of layoffs in July — adds to growing optimism about signs of life in the economy. But this recovery, when it comes, won’t feel like any in memory.

The reason is that consumers — the mainspring of the economy — remain hunkered down. Growth is still coming from cost-cutting and federal spending, not from a pickup in real demand. And with 7 million workers sidelined by this recession — bringing the total number of jobless to nearly 15 million — that headwind likely will be blowing for several years.

(Ironically, the South — where the GOP’s ultra-conservative base is strongest, and home to both religous- and free-market fundamentalism — is ground zero for job losses.)

It’s why we wring our hands over why consumers aren’t rescuing the economy despite losing their jobs and homes at an alarming rate, having to work harder for less, and watching their credit card rates and fees go up (as they use credit cards more often for necessities, like food, medicine, and even tuition), just to name a few things. We wonder why they aren’t spending again, while not allowing ourselves to know what most of them know: things are worse than we’ve been told.

Some 247,000 jobs were lost in July, a number that under ordinary circumstances would send a shudder through the country. It was the smallest monthly loss of jobs since last summer. And for that reason, it was seen as a hopeful sign. The official monthly unemployment rate ticked down from 9.5 percent to 9.4 percent.

But behind the official numbers is a scary story that illustrates the single biggest challenge facing the United States today. The American economy does not seem able to provide enough jobs — and nowhere near enough good jobs — to maintain the standard of living that most Americans have come to expect.

The country has lost a crippling 6.7 million jobs since the Great Recession began in December 2007. No one is predicting a recovery in the foreseeable future powerful enough to replace the millions of jobs that have vanished in this historic downturn.

And though it seems obvious that we can’t have an economic recovery without (a) getting people back to work and (b) keeping people working, who will be more likely to (c) put money back into the economy as opposed to investing it in Wall Street’s latest as-yet-unregulated exotic financial instrument, we still have to fight the notion that somehow recovery will magically result from making less.

The long-term decline of American manufacturing has depleted our high-tech, cutting-edge industries as much as it has our more venerable sectors. Our furniture makers have lost 60 percent of their productive capacity since 2000, Richard McCormack, the editor of Manufacturing & Technology News, points out in an essay in a new book he has edited, “Manufacturing a Better Future for America.” But at the high end, only one of the world’s top 10 photovoltaic cell manufacturers is American. The United States fell behind China in the value of our high-tech exports in 2004, and we’ve fallen further behind every year since.

What makes the decline of American manufacturing particularly galling is that we’re not falling behind because we’re inefficient: American factories are among the most productive on the planet, as McCormack notes. But alone among the world’s industrial powers, we have left the task of enticing manufacturers not to the federal government but to state and local governments, which try to attract factories and research facilities with tax abatements and public investments that are dwarfed by the efforts of national governments in other lands. China not only throws money at companies looking for a deal for their factories, it also manipulates its currency so that its exports are too cheap for any American manufacturer, no matter how productive or innovative, to match. According to a 2008 report by the global accounting firm KPMG, within five years, China “should become the most influential country in IT and telecom,” while we have done effectively nothing to promote and protect these 21st-century industries.

It’s not just that the United States uniquely lacks an industrial policy. It’s that the United States uniquely has an anti-industrial policy.

Turning that around could help the economy as well as convey some political rewards to an administration that could use some rewards just now. Brown, for instance, is a liberal from a not-famously liberal state, and it’s his support for manufacturing that has won him the votes of the very same white working-class voters who are souring on Obama. At some point, the White House might realize that championing manufacturing is not only necessary economics but smart Democratic politics.

The same thing that’s playing out in the health care debate is what’s played out in the economic debate: willful ignorance of what the reality all around us is clearly spelling out.

We are in the middle of an economic crisis driven by income inequality.

Income inequality in the United States is at an all-time high, surpassing even levels seen during the Great Depression, according to a recently updated paper by University of California, Berkeley Professor Emmanuel Saez. The paper, which covers data through 2007, points to a staggering, unprecedented disparity in American incomes. On his blog, Nobel prize-winning economist and New York Times columnist Paul Krugman called the numbers “truly amazing.”

Though income inequality has been growing for some time, the paper paints a stark, disturbing portrait of wealth distribution in America. Saez calculates that in 2007 the top .01 percent of American earners took home 6 percent of total U.S. wages, a figure that has nearly doubled since 2000.

As of 2007, the top decile of American earners, Saez writes, pulled in 49.7 percent of total wages, a level that’s “higher than any other year since 1917 and even surpasses 1928, the peak of stock market bubble in the ‘roaring” 1920s.'”

Beginning in the economic expansion of the early 1990s, Saez argues, the economy began to favor the top tiers American earners, but much of the country missed was left behind. “The top 1 percent incomes captured half of the overall economic growth over the period 1993-2007,” Saes writes.

Despite a rising stock market, largely growing employment and a historic housing boom things were not nearly so rosy for the rest of U.S. workers. This trend, according to Saez, only accelerated during the George W. Bush’s tenure as President:

We are in the middle of a health care crisis driven by that same inequality.

The debate about bank bailouts and health care is missing a critical piece of context: The American economy hasn’t been working for the working- and middle class for decades. It is impossible to determine who should pay for what or whether it is “fair” to ask the wealthy to contribute more to the health care of those who are uninsured, without better understanding the winners and losers in the U.S. economy over the past several decades.

…The larger arc of this economic narrative must play a larger role in our discussion of the current economic climate. The outcry over Wall Street salaries and bonuses is more understandable when you realize that, over the last 40 years, there has been an inexorable shift of wealth and income toward the upper end of the income spectrum. With the return to profitability of many of the institutions that needed bailouts, taxpayers are wondering why we have socialized the risk of failure but allowed the rewards of success to remain private. Where is the public’s fair payback for playing banker to the bankers?

But the significance of this 40-year cycle of income distribution may be playing out most clearly in the context of health care. One of the current debates is how to pay for the costs of expanded access to health insurance. A restructuring of the system will save some money, but more will be needed, and one proposal is to get it from a higher tax on the upper strata of income earners. Given income distribution trends over the past four decades, it is difficult not to support asking wealthier Americans for some help in closing the gap in our effort to give all Americans health insurance.

We know on some level that the current system is broken, otherwise there would be little talk of or support for reform. Yet in both cases, we are utterly unwilling to acknowledge that we can’t go back to the way it used to be.

We can’t go back to the old economy. That economy — marked by booms and busts, Gilded Age inequality, declining wages, growing household debts, and unsustainable trade deficits — didn’t work very well for most Americans. President Obama is faced with the difficult task of creating the structure for the new economy even as he works to lift us out of the collapse of the old.

That’s why his stunning budget calls for health care reform, ending our addiction to oil and investing in education as both a way out of the mess and a down payment on the future. His pace is as unrelenting as the crisis.

So, we choose stomp and scream and yell — or we choose give in to those who do — and fail to find our way forward, using all of our energy to stand up against a tide of change that will carry us forward whether we decide where we want to go or not.

It’s a triumph of willful ignorance that we will have to live with until the next crisis, and the next opportunity we have to chose where we will go, instead of going where it carries us.

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