All Together Now
Joseph J. Thorndike is a contributing editor with Tax Analysts.
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These are heady days for Democrats. Their GOP opponents have been humbled by arrogance and circumstance. Recent polls suggest a chance for electoral redemption, with Americans preferring a Democratic to a Republican Congress by anywhere from 10 percent to 15 percent. November promises to be a little less dismal for Democrats this year.
In a recent article for The Washington Monthly, writer Amy Sullivan attributes the turnaround to Democratic discipline. Long ridiculed for their bumbling and ineffectual opposition, Democrats have learned how to fight back. Sullivan cites a series of GOP defeats and missteps, including the failure of Social Security reform, the debacle in Iraq, the pathetic response to Hurricane Katrina, and the notorious Dubai ports deal. Not all those wounds have been self-inflicted, Sullivan points out. "On virtually all of the major slips this White House has made in the past year, there have been unnoticed Democrats putting down the banana peels," she writes.
Opposition isn't noble, and it certainly isn't pretty. It involves sneaky tricks, puerile insults, and a lot of stony silence. It also involves some distasteful opportunism. It's hard to take much pride in the defeat of the Dubai ports deal, for example; xenophobic flag waving is never an attractive pose, especially for ostensibly inclusive parties of the left.
But opposition is a necessary skill, and Democrats seem to be getting the hang of it. As another analyst, Michael Tomasky of the American Prospect, has observed: "The party has discipline, a tactical strategy as the opposition, and a more than respectable roster of policy proposals waiting to be considered should Democrats become the majority again."
Traditions Found and Lost
What Democrats don't have is any sort of philosophy. As Tomasky says in his important article, "Party in Search of a Notion," progressive politicians need something to guide their struggle, "a big idea that unites their proposals and converts them from a hodgepodge of narrow and specific fixes into a vision for society."
Tomasky has a suggestion: civic republicanism. Like most new ideas, that one is rather old, rooted in 18th-century notions of virtue and corruption. At its core, civic republicanism asks voters to transcend self-interest, embracing notions of shared sacrifice and common endeavor. It offers a powerful -- and historically successful -- response to the "radical individualism" of the modern Republican party. Sacrifice, Tomasky insists, can help defeat the Bush administration and its agenda of "rapacious social Darwinism."
There's something to that idea. Civic republicanism is a vital element of the American political idiom, offering both a rhetoric and an ideology for progressive politics. And when it comes to taxes, it may be a useful tool for reversing regressive reform.
Since the 1960s, Democrats have embraced a definition of liberalism rooted in rights and social justice, Tomasky says. That's all well and good -- helping to right some of society's most pernicious and tenacious wrongs. But it has come at a price: When Democrats abandoned their commitment to the common good, instead focusing on the needs of disadvantaged groups and ever-narrower slices of the electorate, they destroyed their political coalition.
To turn their fortunes around, Democrats should return to the notion of shared sacrifice, Tomasky says. Indeed, sacrifice has long been a fixture of liberal ideology. Its roots are in the early republic, when political leaders harbored a deep and abiding fear of corruption. If the young nation were to avoid the fate of dissolute European governments, Americans would have to privilege public interest over private gain.
But civic republicanism has a modern history, too. The heyday of liberal politics, stretching from the 1930s to the 1960s, was infused with an ideology of common purpose. As Tomasky says:
The New Deal, despite what conservative critics have maintained since the 1930s, did not consist of the state (the government) merely handing out benefices to the nation (the people), turning citizens into dependent wards; it engaged and ennobled people: Social Security and all the jobs programs and rural electrification plans and federal mortgage-insurance programs were examples of the state giving people the tools to improve their own lives while improving the collective life of the country (to say nothing of the way Franklin Roosevelt rallied Americans to common purpose in fighting through the Depression and the war).
Similarly, Truman used civic republicanism to justify the Marshall Plan, and Kennedy used it (recall, for example, the soaring "ask not" rhetoric of his inaugural address) to advance ideas like the Peace Corps. Perhaps most important, Lyndon Johnson used it to advance his campaign for civil rights. "Should we defeat every enemy, and should we double our wealth and conquer the stars, and still be unequal to this issue, then we will have failed as a people and as a nation," he told Congress in 1965. "Their cause must be our cause, too. Because it is not just Negroes, but really it's all of us who must overcome the crippling legacy of bigotry and injustice."
Sadly, Democrats have lost this tradition of shared sacrifice and common purpose, Tomasky says. Disillusioned by the failures of liberal politics -- including the persistent inequality of minority citizens and the imperialistic elements of Cold War foreign policy -- Democrats turned to a version of liberalism that emphasizes individual rights and social justice. That in turn gave rise to our modern political regime dominated by special interests of every political stripe. And despite a few modest efforts to reclaim the rhetorical and ideological terrain of civic republicanism, Democrats have remained the party of special pleading. The goals of modern liberalism may be laudable, Tomasky says, but they no longer command a political majority.
Taxation and Shared Sacrifice
The notion of civic republicanism should be central to tax politics and policy, especially for liberals. And again, history provides an object lesson. The liberal creation myth almost always begins in 1932 with Franklin Roosevelt's first run for the White House. And, in fact, New Deal tax policy included a healthy dose of liberalism-cum-civic republicanism.
On one hand, New Deal taxation involved a certain amount of old- fashioned demonization. FDR attacked wealth and privilege relentlessly, naming names and looking for villains. His tax reforms, including steep new levies on income and wealth, were designed to stem the concentration of economic power. Predictably, they also outraged the nation's economic elite. "They are unanimous in their hate for me," Roosevelt declared, "and I welcome their hatred."
Such brazen class antagonism is not a good model for modern tax politics. But there was a subtler frame for FDR's tax policy. He did not counsel soak-the-rich taxation as a punitive measure, but as a means to fairness, insisting that no one should be allowed to shirk his moral responsibilities to the fisc. Steep taxes on wealth were designed to ensure that rich citizens were shouldering a reasonable burden amid the greatest economic crisis in American history.
Indeed, Roosevelt reserved his most passionate tax rhetoric for his campaigns against tax evasion and avoidance. He deplored loopholes, especially those benefiting businesses and rich individuals. He sponsored base-broadening reforms in 1934 and 1937. And even some of his most controversial and ambitious tax measures, like the undistributed profits tax of 1936, were driven by a desire to stem tax avoidance (in the case of that tax, by forcing corporations to distribute profits in the form of taxable dividends).
In 1943 Roosevelt vetoed a tax bill, the first veto of a revenue bill in American history. The measure, he insisted, was "not a tax bill, but a tax relief bill," granting favors to a host of well-connected special interests. Tax preferences in the midst of global war were unconscionable, he declared; as the nation stood firm in the battle against fascism, no one American should be allowed to escape his fair share of the fiscal burden. (Congress disagreed, overriding the veto.)
In the face of national crisis, Roosevelt had demanded fiscal sacrifice from every American. He even accepted the necessity of a mass income tax, abandoning his long-standing conviction that the income tax should remain a rich man's burden. In return, he expected wealthy taxpayers to forswear tax avoidance, even when it came with a legislative blessing.
Sharing the Wealth
Today, Republican tax policy is all about enriching the few at the expense of the many. Arguments over the estate tax throw the issue into sharp relief -- or should. But in fact, Democrats have bungled the argument for this crucial tool of fiscal fairness. First they resisted reasonable compromise, including higher exemptions. Later they framed their opposition in relentlessly negative terms, emphasizing the windfall that a few rich families would enjoy if the estate tax were to be repealed.
There's a place for that sort of argument; vilification has a certain appeal, especially when its targets are unsympathetic. There's a reason that so many liberals are calling the estate tax the Paris Hilton tax these days. But the argument works less well when applied to productive members of society like Bill Gates and other modern economic titans. Americans respect earned wealth.
And notably, earned wealth -- including that of the Gates family -- has helped lead the fight for retaining the estate tax. Liberals have tried to make the most of that fact, and they seem to be making a little progress. But they must ensure that negative elements of the pro-estate-tax campaign are situated within a larger, affirmative case for the levy -- a case that emphasizes shared sacrifice and common interests, much as Tomasky suggests.
Unchecked inequality is dangerous for American society. If one of the shared projects of American society is the creation of a fair, prosperous, and sustainable economy, then wealth taxes should be part of the mix. The estate tax should be framed not as a punitive tax on the rich, but as a guarantee of American democracy.
Democrats might take a page from FDR when trying to make that case. "Our revenue laws have operated in many ways to the unfair advantage of the few," he told Congress in 1935. "They have done little to prevent an unjust concentration of wealth and economic power." Americans had a right -- indeed, a responsibility -- to tax large fortunes as part of the nation's larger social project.
"Wealth in the modern world does not come merely from individual effort; it results from a combination of individual effort and of the manifold uses to which the community puts that effort," he contended.