The American Bear


On the Origins of the Neoliberal Era

From Paul Street:

As political scientists Jacob Hacker and Paul Pierson have recently noted, the rightward shift of American social and economic policy that produced the United States’ unmatched inequality in the developed world began not under the Republican presidency of Richard Nixon (1969-1974) or Ronald Reagan (1981-1989) but during the Democratic administration of Jimmy Carter. Playing off the title of liberal historian Rick Perlstein’s popular book Nixonland, Hacker and Pierson argue that it would be more helpful for us to think of ourselves as still living in the reactionary world that the Carter period made:

“If one wanted a book titled to capture the great [rightward] turning point in modern American political history, it would be more accurate, if less catchy, to call it Carterland. 1977 and 1978 marked the rapid demise of the liberal era and the emergence of something different. Tax reform: defeated. A new consumer protection agency: defeated…Health-care reform: defeated. A proposal to tie the minimum wage to the average manufacturing wage: defeated. An overhaul of outdated labor relations laws: successfully filibustered in the Senate, despite the presence of sixty-one Democrats and a Republican minority containing some genuine supporters of organized labor, not to mention far, far more moderates than in the GOP we know today.”

“It wasn’t just the string of defeats for liberal policy initiatives, stunning as those were. By 1978, at a time of unified Democratic control of the House, Senate, and White House, the precursors of the Reagan revolution were already visible. Congress passed a tax bill whose signature provision was a deep cut in the capital gains tax – a change that would largely benefit the wealthy. This followed hard on the heels of a decision to sharply raise payroll taxes, the most regressive federal levy. These two initiatives – fully a decade removed from the supposed turning point of Nixon’s rise – marked the beginning point of [a] pronounced [regressive] reversal in [U.S.] tax policy…”

“At the same time, Congress and the president embarked on a major shift in economic policy, embracing the argument that excessive regulation had become a serious curb on growth.”