“There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.” — Warren Buffett, currently the world’s third richest person

Most Americans have the sense that something’s wrong in our country, and most realize that it’s intimately tied up with money and politics.   Those who have not studied the issues deeply could be forgiven for thinking we have a foreclosure problem, or an unemployment problem, or a Democrat problem, or a Republican problem, or a problem with Congress as a whole, but the truth is more important than those symptomatic issues.  The truth is that we are now living in a nakedly plutocratic state– that is, a state which is run by, and for, the wealthy.  Or perhaps a corporatocracy (a state run by, and for, corporations), but they are functionally the same thing.

Every so often, a whistleblower emerges from within the ranks of these wealthy lawmakers to give us plebians a look at the way the system really works, as opposed to the way we all thought it worked.  Ted Kaufman was appointed to be a placeholder for the seat vacated by now-Vice President Joe Biden.  Ted Kaufman is not running for re-election, and therefore has no reason to dance around the issues.  During his two-year term, he has fought against the worst of Wall Street’s excesses, unencumbered by a need to raise funds for a re-election campaign.  He led an effort to break up the “too-big-to-fail” banks– an effort that ultimately ran out of gas due to lack of support from the White House.  In a new interview with the Huffington Post (h/t Erich) he explains the conundrum facing even well-meaning Senators in our modern America:

“It is a perfect catch-22,” said Kaufman, explaining that his campaign against the banks “wouldn’t have existed, no, because I’m not on the banking committee. I would have stuck to my bidding on judiciary and foreign relations.”

And without the campaign against the banks, he wouldn’t have the supporters he now does. “I wouldn’t have this rabid” following, he said. “That’s the whole thing. It was a Catch-22. There’s no way I could have — my race, if I ran, would be totally, you know, standard, cookie-cutter campaign. I wouldn’t have had anything to show. I never would have been able to do any of the things that would really be the major things in my campaign, because the whole stuff I’d done on financial reform–we never would have been part of the debate.”

Kaufman said he would have watched the debate from afar. “I would have said, ‘Jeez, you know, I’m really upset about this and that,’ but I wouldn’t have had the time. I would not have not done it because I didn’t think it was politically” the smart move, he said.

Were he running in 2010, he added, he’d be facing a massively well-funded opponent, thanks to his opposition to Wall Street. “If I was a senator from a big state, New York, California, Illinois, the money–you couldn’t win against the intensity of something like that. I would have been totally overwhelmed by the money. I guarantee,” he said. “If I was in Illinois, whoever my opponent was would be the best-funded person.”

Essentially, the effort to reform the banking industry to eliminate ongoing systemic problems is doomed to fail by the need for insane levels of campaign cash.  Take a look at the scale of the entrenched problem:

A full 90 members of Congress who voted to bailout Wall Street in 2008 failed to support financial reform reining in the banks who drove our economy off a cliff. But when you examine campaign contribution data, it’s really no surprise that these particular lawmakers voted to mortgage our economic future to Big Finance: This election cycle, they’ve raked in over $48.8 million from the financial establishment. Over the course of their Congressional careers, the figure swells to a massive $176.9 million.

…

But if you follow the money, it’s obvious why so much work remains to be done on financial reform. This year alone, Wall Street spent a staggering $251 million fighting financial reform. According to a separate analysis of campaign contributions performed by Public Citizen, lawmakers who voted with Wall Street on both the bailout and reform received nearly triple the campaign cash of those who opposed Wall Street ….

Despite the popularity of Wall Street reform, 90 members of Congress didn’t even want to publicly pretend to support reining in almost universally reviled banks.

The recent Citizens United ruling from the Supreme Court allowed unlimited spending by corporations on electioneering. Unsurprisingly, they are spending in record amounts:

Based on the latest financial reports, House and Senate candidates in this election cycle raised nearly $1.2 billion, well ahead of the pace for contests in 2008, 2006 and 2004.

Races for governor in 37 states – more than half of those for open seats – are also setting fundraising records. Billionaire Republican Meg Whitman leads the way, pumping $104 million of her own money into her campaign for California governor.

“We may be on track for the most expensive cycle ever, even more than ’08, which is really hard to believe,” said Michael Toner, a campaign finance lawyer at Bryan Cave and a former Federal Election Commission chairman.

Did you catch that?  Billionaire Meg Whitman leads the way.  Of course she does, the system is set up to reward those with money, and silence those without it. Your vote doesn’t matter when you are choosing from a pre-selected list of choices, none of which are relevant to you.  For example, take the national debate over tax cuts for the wealthy.  Does it matter personally to you what the top marginal tax rate is for those making hundreds of thousands of dollars a year? The outcome of that debate will not directly affect me at all, but it’s a keenly important issue to the wealthy– and the lawmakers are the wealthy.  Again, the very definition of plutocracy.

It’s not just campaign finance, it’s everything.  Take jobs, for example.  The U.S. used to have a vibrant and powerful manufacturing sector, but outsourcing has decimated our manufacturing base. The recession has provided another hit, and record unemployment is no small part of the problem facing us.  A bill this week that would have offered tax incentives for corporations to hire American workers and put an end to subsidies for corporations who outsource jobs was defeated narrowly. I’m less interested in the particulars of the bill, and more interested in the rhetoric.  Critics of the bill say that it would have hurt the competitiveness of American companies abroad.  Of course it would!  That’s ought to be the whole point of an anti-outsourcing bill.  But when the only standard you apply to a bill is whether it is good for business or not, actual living and breathing people tend to lose out.  Wages are lower in developing nations than they are in the U.S.   As things stand now, the government provides subsidies for companies to relocate manufacturing to third world countries, as well as providing them tax breaks to keep the money they earn in overseas subsidiaries rather than bringing it back to the U.S. These subsidies and tax breaks add an extra layer of profit on top of the wage savings, so the predictable result is that American workers lose out as jobs travel overseas.

Or, consider the issue of poverty.  In the midst of the Great Recession, nearly 1 in 7 Americans is in poverty according to the latest figures.  But are the plutocrats worried?  Not in the least:

The reluctance of political leaders on both sides of the aisle to directly confront the fact that growing numbers of Americans are slipping into poverty reflects a stubborn reality about the poor: They are not much of a political constituency.

“We talk to many people on Capitol Hill who do believe poverty is important and is a blight on our nation,” said Weinstein, executive director of the Coalition on Human Needs, an alliance of national organizations that advocates for the poor. “But we are also up against a general recognition that poor people don’t vote in great numbers. And they certainly aren’t going to be making campaign contributions. That definitely puts them behind many other people and interests when decisions are being made around here.”

Simple, isn’t it?  Those with money have a voice, those without money do not.  I’m not sure that’s entirely what was intended by the Supreme Court ruling which enshrined the “money = speech” concept into case law, but that has been the practical effect.  Now, the Court is hearing a case about whether corporations should also have privacy rights similar those offered to real people.   If the case goes the way corporations hope it does, they will be able to block public access to information on corporate malfeasance.   Predictably, Wall Street’s fingers are crossed that a ruling goes their way, especially since there are more than 120 active investigations into criminal activity as a part of the TARP program alone, better known as “the bailout”.   Additionally, FBI Director Robert Muller says they are investigating more than 3,000 cases of mortgage fraud.  Sadly, the FBI started warning about mortgage fraud as early as 2004, but the regulatory apparatus has been subverted by plutocrats and the warning went unheeded.

What’s the upshot?  As always, the rich get richer, the middle-class is disappearing, and the poor get nothing.  But that’s to be expected when the lawmakers are part of the group getting richer (again– plutocracy in action).

As a result, Americans are losing faith in their bedrock political institutions.  An August Rasmussen poll found that Congress had a 23% favorable/ 72% unfavorable rating.  A Gallup poll had similar findings— Congress ranked last in a list of institutions enjoying America’s confidence, and the institution of the Presidency has seen a 15 point drop this year, although it’s still higher than in the last year of W’s presidency.  Overall, only 23% of Americans say the government has the consent of the governed, which is truly a terrifying statistic.  Revolutions have been started with similar levels of mistrust.  Significantly, the gap between the political class and mainstream Americans is about as wide as it can be:

A Rasmussen Reports national telephone survey shows that 67% of Political Class voters believe the United States is generally heading in the right direction. However, things look a lot different to Mainstream Americans. Among these voters, 84% say the country has gotten off on the wrong track.

In another recent poll only half of those polled said the American dream was still alive, while 43% said that the American dream used to exist but does not anymore.  The pollsters defined the “American dream” as “if you work hard, you’ll get ahead.”   What does it say about our country that nearly half of the country no longer believes that hard work is the key to getting ahead?  It says that people are increasingly aware that the system is dysfunctional.  The truth is that the American dream has died–  those who are the furthest ahead do the least hard work of all.  Those who have traditionally been the  workers in this country have been stuck with stagnant wages for at least a decade, even for college graduates.  The productivity of American workers has been steadily rising since at least the 1940’s, but wages have not kept pace.  Where does the difference go?  To the richest of the rich, of course.  Consider CEO pay for an example:

Corporate executives, in reality, are not suffering at all. Their pay, to be sure, dipped on average in 2009 from 2008 levels, just as their pay in 2008, the first Great Recession year, dipped somewhat from 2007. But executive pay overall remains far above inflationadjusted levels of years past. In fact, after adjusting for inflation, CEO pay in 2009 more than doubled the CEO pay average for the decade of the 1990s, more than quadrupled the CEO pay average for the 1980s, and ran approximately eight times the CEO average for all the decades of the mid-20th century.

American workers, by contrast, are taking home less in real weekly wages than they took home in the 1970s. Back in those years, precious few top executives made over 30 times what their workers made. In 2009, we calculate in the 17th annual Executive Excess, CEOs of major U.S. corporations averaged 263 times the average compensation of American workers. CEOs are clearly not hurting.

It’s clear that trickle-down economics does not work– nothing is trickling down.  We need to be working to create a genuine, grass-roots, progressive movement to change the very foundations of way our political and economic systems work, before it’s too late.