The Conscience of a Liberal

8 THE POLITICS OF INEQUALITY

For six years, from 1994 to the end of the Clinton administration, a Republican Congress and a Democratic president waged a bitter power struggle. The impeachment drama of 1998 is the event most people remember. But the government shutdown of 1995, which was about matters of state rather than personal behavior, was more revealing. It was openly a fight about different visions of government and society.

The shutdown occurred primarily because Newt Gingrich, the Speaker of the House, was trying to impose a plan that would sharply cut Medicare’s funding[1] and, equally important, give healthy seniors an incentive to drop out of Medicare, undermining both the program’s universality and its financial base. In effect Gingrich wanted to subject Medicare to slow death by strangulation. Gingrich had enough votes to get his plan through Congress, but he didn’t have the votes to override a presidential veto. So he tried to force Clinton’s hand by denying the federal government the funds it needed to keep operating.

Now, a federal shutdown doesn’t literally mean that all federal offices are locked up and closed. About half the federal workforce stayed on the job, and the most essential services were maintained. But the rawness of the event was still remarkable: Republicans were willing to play chicken with the government’s ability to function in their drive to take down one of the pillars of the U.S. welfare state.

As it turned out, Gingrich had misjudged both Clinton and the voters. Clinton held firm. The public blamed Gingrich, not the Clinton administration, for the standoff, and the Republicans eventually backed down. Clinton’s impeachment three years later, which seems otherwise a bizarre event, is best understood as Gingrich’s attempt to take revenge. The 1995 shutdown demonstrated just how partisan American politics had become—and unlike the impeachment the 1995 confrontation showed what the partisanship was really about.

Many figures in both politics and the press suffer from a malady some liberals have taken to calling “Broderism,”[2] which causes them to mourn the passing of bipartisanship but to speak as if the inability of today’s politicians to get along is the result of mysterious character flaws. There’s no question that some of our leading politicians have character flaws in abundance—Clinton had his problems, and Gingrich, who was carrying on his own affair with a subordinate even as he denounced Clinton’s immorality, displayed a combination of grandiosity and hypocrisy rare even among politicians. But policy, not personalities, is the reason politics has become so bitter and partisan.

The great age of bipartisanship wasn’t a reflection of the gentlemanly character of an earlier generation of politicians. Rather, it reflected the subdued nature of political conflict in an era when the parties weren’t that far apart on basic issues. After the 1948 election Republicans decided that the achievements of the New Deal couldn’t be reversed, and stopped trying, while Democrats, who had made a revolution in the thirties and forties, settled down to a program of incremental reform. The result was a generation-long era of muted partisanship. That era ended, and bitter partisanship reemerged, when the Republicans changed their minds a second time. The reason there’s so much hatred between the parties today is that beginning in the 1970s the GOP became, once again, a party defined by its opposition to taxes on the rich and benefits for the poor and middle class, and willing to do whatever it takes to promote that agenda.

Understanding the nature of the partisan divide is one thing; understanding its causes is another. In fact the rightward march of the Republican Party poses two great puzzles: First, why would one of America’s two great political parties launch a crusade to dismantle the welfare state in an era of rapidly rising inequality, an era in which taxing the rich to pay for middle-and lower-class benefits should have become more popular, not less? Second, why has the Republican Party been able to win so many elections, despite its antipopulist economic agenda?

In this chapter I’ll try to resolve the first of these puzzles, reserving the second question for the next chapter. Before I get there, however, let me deal with a common objection: the claim that whatever they may say, the parties aren’t very different in what they do.

During the 2000 campaign Ralph Nader mocked politicians from the two major parties as “Republicrats,” indistinguishable representatives of moneyed interests. Even in that election, when George W. Bush somehow got the press to describe him as a moderate, most Americans disagreed, and at this point the vast majority of Americans view the parties as being very different indeed. Still, how the parties are perceived may not be a good guide to what they actually do. Are they really all that different?

When Nader first became prominent in the sixties, the parties really were as similar as he says. Up to the mid-1970s the parties were hard to distinguish in many ways: John F. Kennedy cut taxes, Richard Nixon raised them, and the votes on major pieces of legislation often involved significant crossing of party lines in both directions. For example, an important part of the support for the 1965 legislation that created Medicare and Medicaid came from Republicans, while significant opposition came from Democrats. In the final House vote, seventy Republicans voted yea, while forty-seven Democrats voted nay. But that was another political era.

To see how much things have changed, consider one easily measurable indicator of partisan differences: tax policy, especially tax policy toward the wealthy. Reagan, Clinton, and George W. Bush each started his administration with a major change in tax policy. Reagan and Bush reduced taxes on the rich; Clinton raised them.

Specifically, Reagan began his term with a sharp reduction in personal income tax rates, and a sharp cut in the effective tax rate on corporate profits. Both of these measures delivered disproportionately large benefits to upper-income households, which paid a much higher income tax rate to start with, and also owned most of the stocks that benefited from lower corporate taxes. By contrast Clinton raised the income tax rate on the highest bracket, while eliminating the upper limit on the Medicare payroll tax—mainly hitting the same elite group that was the prime beneficiary of the Reagan tax cuts. Bush cut taxes twice, in 2001 and 2003, exploiting the brief illusion of success in Iraq to push through the second round of cuts. The first cut sharply reduced the top income tax rate and phased out the estate tax, which falls only on the wealthy, while the second reduced taxes on dividends and capital gains, again mainly benefiting the highest-income Americans.

Table 6 shows the actual effective tax rate paid by the top 1 percent of the population—that is, the percentage of income people in that group (which currently corresponds to incomes of approximately $425,000 a year or more) actually paid in taxes—for selected years. Sure enough, the rich gained a lot under Reagan and Bush II, while losing a lot under Clinton. (In both the Reagan and Clinton years the initial changes in tax policy were eroded over time, as each president had to deal with a Congress controlled by the opposition party, but the point stands.)

Source: Congressional Budget Office, “Historical Federal Effective Tax Rates,” http://www.cbo.gov/ftpdoc.cfm?index=7718&type=1.

For the most part these tax changes passed on near-party-line votes. The Clinton-Gore tax increase of 1993 passed the House without a single Republican vote; the Bush tax cut of 2003 passed the House with only one Republican voting against, and only seven Democrats voting in favor. The 2005 Gasoline for America’s Security Act—basically a set of tax breaks for oil companies—passed by a one-vote margin, with only thirteen Republicans voting no and not a single Democrat in favor.

The record on spending can seem less clear-cut, but that’s only because the parties have been less able to implement their agendas.

Reagan initially tried to make deep cuts in Social Security, only to abandon the attempt in the face of overwhelming congressional and public reaction. Reagan did, however, manage to push through new rules that reduced benefits under the food stamp program, Aid to Families with Dependent Children, and unemployment insurance. Clinton famously tried to introduce a form of universal health care—and completely failed. He did, however, preside over a substantial increase in the Earned Income Tax Credit, which raises the incomes of low-wage workers.

After the 1994 election gave Republicans control of Congress, they tried—as we have seen—to undermine the financing of Medicare. They failed, and Bush the younger actually pushed through a significant expansion in Medicare, to cover prescription drugs. But this was clearly intended to provide political cover, and the new program was designed in a way that favored drug company interests. Moreover, by introducing a large subsidy for Medicare Advantage plans, in which tax money is funneled through private-sector middlemen, Bush’s Medicare bill took a major step toward Gingrich’s goal of privatizing the program. In 2005 Bush sought to partially privatize Social Security, while cutting promised future benefits; if implemented, Bush’s plan would have eliminated traditional Social Security within a few decades. Like Reagan’s attempt to scale back Social Security, however, this attempt quickly failed.

So the difference between the parties is not an illusion. Republicans cut taxes on the rich and try to shrink government benefits and undermine the welfare state. Democrats raise taxes on the rich while trying to expand government benefits and strengthen the welfare state.

And the public has picked up on the change. In the sixties and seventies, voters tended to be more or less evenly divided on the question of whether there was a significant difference between the parties. By 2004, however, 76 percent of Americans saw significant differences between the parties, up from 46 percent in 1972.[3]

“Comprehensive health insurance,” declared the president, “is an idea whose time has come in America. Let us act now to assure all Americans financial access to high quality medical care.” Was that Bill Clinton speaking? No, it was Richard Nixon, whose Comprehensive Health Insurance Plan, proposed in 1974, broadly resembled plans being offered by liberal Democrats like John Edwards today. The legislation never got very far, however, because Nixon was soon enveloped in the Watergate affair.[4]

Modern movement conservatives sometimes say, contemptuously, that Nixon governed as a liberal. And in terms of economic and environmental policy, it’s true, at least by today’s standards. In addition to proposing universal health care, Nixon pushed for a guaranteed minimum income. On the revenue side, Nixon pushed through a tax increase in 1969, including creation of the alternative minimum tax, which was intended to crack down on wealthy Americans who managed to use tax shelters to avoid taxes. On another front he passed the Clean Air Act, and sent dozens of environmental measures to Congress. Veterans of the Environmental Protection Agency have told me that the Nixon years were a golden age.

Nixon, in short, was a transitional figure. Although he used many of the political tactics associated with movement conservatism, he was a pragmatist rather than an ideologue, as were many Republicans. The character of the Republican Party changed rapidly in the post-Nixon years. In 1984 Thomas Edsall of the Washington Post published The New Politics of Inequality, a remarkably insightful and prescient analysis of the changes already taking place in American politics. At the core of his analysis was the renewal and radicalization of the Republican Party that, in his view, took place in the mid-to-late 1970s:

In other words, movement conservatism had taken over the GOP.

Ronald Reagan was the first movement conservative president. Within Ronald Reagan’s inner circle, views that had once been confined to what Eisenhower described as a “tiny splinter group” reigned: David Stockman, Reagan’s budget director, considered Social Security an example of “closet socialism,” while fervent supply-siders, who believed that cutting taxes would increase revenue, were given key positions in the Treasury Department and elsewhere in the government. Reagan also did his best to reverse Nixon’s environmental achievements, slashing the budget of the Environmental Protection Agency and gutting its enforcement activities. His first secretary of the interior, James Watt, was a fervent antienvironmentalist with strong ties to the religious right who quintupled the amount of public land open to coal mining. Watt was famously forced to resign after boasting that his staff included “a black, a woman, two Jews, and a cripple.”[6]

Reagan’s ability to impose a movement conservative agenda was, however, limited by political realities. Democrats controlled the House of Representatives throughout his administration. Republicans held a majority in the Senate until his last two years in office, but many Senate Republicans were still Eisenhower-style moderates. These political realities forced Reagan to moderate his policies. For example, although his inner circle wanted to slash Social Security benefits, he was eventually forced to secure Social Security’s finances with a tax increase instead.

After Reagan, however, the GOP became thoroughly radicalized. Consider the 2004 platform of the Texas Republican Party, which gives an idea of what the party faithful really think: national platforms have to present at least an appearance of moderation, but in Texas Republicans can be Republicans. It calls for the elimination of federal agencies “including, but not limited to, the Bureau of Alcohol, Tobacco, and Firearms; the position of Surgeon General; the Environmental Protection Agency; the Departments of Energy, Housing and Urban Development, Health and Human Services, Education, Commerce, and Labor.” The platform also calls for the privatization of Social Security and the abolition of the minimum wage. In effect Texas Republicans want to repeal the New Deal completely.

In fact movement conservatives want to go even further, as illustrated by the campaign to end taxes on inherited wealth. The estate tax is an ancient institution, introduced in its modern form in 1916. It is the most progressive of federal taxes—that is, it falls more disproportionately on the wealthy than any other tax. In the late 1990s, before the Bush tax cuts, a mere 2 percent of decedents had estates large enough to face any tax at all. In terms of income, the richest 1 percent of the population paid almost two-thirds of the estate tax, and the richest 10 percent paid 96 percent of the taxes.[7]

Since only a handful of voters pay estate taxes, while many voters benefit from government programs the estate tax helps pay for, any party seeking to cater to median or typical voters would, you might think, be inclined to leave the estate tax alone. In fact, that’s what the Republican Party did for seventy years: Its last serious attempt to repeal the estate tax until recent years took place in 1925–26—and this attempt failed in large part because even some Republicans opposed repeal.[8] But in the 1990s the Republican Party once again began making estate tax repeal a priority. And the 2001 Bush tax cuts included a phaseout of the estate tax, with rates going down and exemptions going up, concluding with total elimination of the tax in 2010. In other words today’s Republican party is willing to go further than the Republican Party of the 1920s, the last, golden years of the Long Gilded Age, in cutting taxes on the wealthy.

Some movement conservatives are open about their desire to turn back the clock. Grover Norquist, the antitax advocate who has been described as the “field marshal” of the tax-cut drive, is best known for saying, “My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub.”[9] Even more revealing, however, is his statement that he wants to bring America back to “the McKinley era, absent the protectionism,” to the way America was “up until Teddy Roosevelt, when the socialists took over. The income tax, the death tax, regulation, all that.”[10]

The modern Republican Party, then, has been taken over by radicals, people who want to undo the twentieth century. There hasn’t been any corresponding radicalization of the Democratic Party, so the right-wing takeover of the GOP is the underlying cause of today’s bitter partisanship. There remains, however, the question of how movement conservatives managed to seize and keep control of one of America’s two major political parties.

The nature of the hold movement conservatism has on the Republican Party may be summed up very simply: Yes, Virginia, there is a vast right-wing conspiracy. That is, there is an interlocking set of institutions ultimately answering to a small group of people that collectively reward loyalists and punish dissenters. These institutions provide obedient politicians with the resources to win elections, safe havens in the event of defeat, and lucrative career opportunities after they leave office. They guarantee favorable news coverage to politicians who follow the party line, while harassing and undermining opponents. And they support a large standing army of party intellectuals and activists.

The world of right-wing think tanks, although it’s far from being the most important component of the “vast conspiracy,” offers a useful window into how the conspiracy works. Here are a few scenes from modern think tank life:

Item: Bruce Bartlett, a conservative economist and veteran of the Reagan administration, works at the National Center for Planning Analysis, a think tank that specializes in advocating privatization. NCPA’s financial support includes funding from twelve foundations, including Castle Rock, Earhart, JM, Koch, Bradley, Scaife, and Olin.[11] Disillusioned with George W. Bush’s policies, Bartlett writes Impostor, a book that accuses Bush of not being a true conservative. He is promptly fired from his think tank position.

Item: Sen. Rick Santorum, a hard-line conservative representing the relatively moderate state of Pennsylvania, is swept away in the 2006 midterm election. He promptly takes a job as director of the “America’s Enemies” program at the Ethics and Public Policy Center, an organization whose self-proclaimed mission is “to clarify and reinforce the bond between the Judeo-Christian moral tradition and the public debate over domestic and foreign policy issues.” EPPC is supported by grants from eight foundations: Castle Rock, Earhart, Koch, Bradley, Smith Richardson, Olin, and two of the Scaife foundations.[12]

Item: The National Center for Public Policy Research is a think tank devoted to “providing free market solutions to today’s public policy problems”—an activity that in recent years has mainly involved casting doubt on global warming. It made the news in 2004 when it was learned that NCPPR was helping Jack Abramoff, the Republican lobbyist, launder funds: The think tank funneled $1 million to a fake direct-mail firm that shared Abramoff’s address. Why NCPPR? Since its founding in 1982, the organization has been headed by Amy Moritz Ridenour, an associate of Abramoff’s when he became president of the College Republicans in 1981. Ridenour’s husband is also on the payroll, with both being paid six-figure salaries. NCPPR receives funding from Castle Rock, Earhart, Scaife, Bradley, and Olin.[13]

There’s nothing on the left comparable to the right-wing think tank universe. The Washington Post has a regular feature called “Think Tank Town,” which “publishes columns submitted by 11 prominent think tanks.” Of the eleven institutions so honored, five are movement conservative organizations: the American Enterprise Institute, the Cato Institute, the Heritage Foundation, the Manhattan Institute, and the Hudson Institute. Only one, the Center for American Progress, can really be considered an arm of the progressive movement—and it wasn’t founded until 2003. Other think tanks, like the Brookings Institution, although often described as “liberal,” are in reality vaguely centrist organizations without a fixed policy line. There are a few progressive think tanks other than CAP that play a significant role in policy debate, such as the Center on Budget and Policy Priorities and the Economic Policy Institute. In terms of funding and manpower, however, these organizations are minnows compared with the movement conservative whales.

The proliferation of movement conservative think tanks since the 1970s means that it’s possible for a movement intellectual to make quite a good living by espousing certain positions. There’s a price to be paid—as Bruce Bartlett discovered, you’re expected to be an apparatchik, not an independent thinker—but many consider it a good deal.

To a very large extent these think tanks were conjured into existence by a handful of foundations created by wealthy families. The bigger think tanks, Heritage and AEI in particular, also receive large amounts of corporate money.

The network of conservative think tanks has its counterpart in the world of journalism. Publications such as the National Journal, the Public Interest, and the American Spectator were, like the movement conservative think tanks, created with a lot of help from right-wing foundations—more or less the same foundations that helped create the think tanks. There are also a number of movement conservative newspapers: The editorial page of the Wall Street Journal has long played a key role, while the Washington Times, controlled by Sun Myung Moon’s Unification Church, has become the de facto house organ of the Bush administration. And there is, of course, Fox News, with its Orwellian slogan, Fair and Balanced.

Last but certainly not least, there’s the nexus among lobbyists and politicians. The apparent diversity of corporate lobbying groups, like the apparent diversity of conservative think tanks, conceals the movement’s true centralization. Until his defeat in 2006 forced him to take a new job confronting America’s enemies, Sen. Rick Santorum held a meeting every Tuesday with about two dozen top lobbyists. Here’s how Nicholas Confessore described those meetings in 2003:

Santorum’s weekly meetings and similar meetings run by Roy Blunt, the House majority whip, were the culmination of the “K Street Strategy,” the name Grover Norquist and former House majority leader Tom DeLay gave to their plan to drive Democrats out of lobbying organizations, and give the jobs to loyal Republicans. Part of the purpose of this strategy was to ensure that Republicans received the lion’s share of corporate contributions, while Democratic finances were starved—a goal also served by direct pressure. In 1995 DeLay compiled a list of the four-hundred largest political action committees along with the amounts and percentages of money they gave to each party, then called “unfriendly” lobbyists into his office to lay down the law. “If you want to play in our revolution, you have to live by our rules,” he told the Washington Post.[15] Equally important, however, the takeover of the lobbies helped enforce loyalty within the Republican Party, by providing a huge pool of patronage jobs—very, very well-paid patronage jobs—that could be used to reward those who toe the party line.

The various institutions of movement conservatism create strong incentives for Republican politicians to take positions well to the right of center. It’s not just a matter of getting campaign contributions, it’s a matter of personal financial prospects. The public strongly believes that Medicare should use its bargaining power to extract lower drug prices—but Rep. Billy Tauzin, a Democrat-turned-Republican who was the chairman of the House Energy and Commerce Committee from 2001 to 2004, pushed through a Medicare bill that specifically prohibited negotiations over prices, then moved on to a reported seven-figure salary as head of the pharmaceutical industry’s main lobbying group. Rick Santorum was clearly too far right for Pennsylvania, but he had no trouble finding a nice think tank job after his defeat—whereas Lincoln Chafee, the moderate Rhode Island Republican who lost his Senate seat the same year, had to make do with a one-year teaching appointment at Brown.

Lincoln Chafee’s defeat brings me to another aspect of how the institutions of movement conservatism control the GOP: they don’t just support Republican politicians who toe the line, they punish those who don’t. Chafee faced a nasty primary challenge from his right. His opponent, Steve Laffey, received more than a million dollars in support from the Club for Growth, which specializes in disciplining Republicans who aren’t sufficiently in favor of cutting taxes. “We want to be seen as the tax-cut enforcer,” declared Stephen Moore, the club’s president at the time, in 2001.

The club had high hopes of taking out Chafee: Two years earlier a candidate sponsored by the Club for Growth almost defeated Sen. Arlen Specter, another relatively moderate Republican, in the Pennsylvania primary. And these challenges are effective. As one Republican congressman said in 2001, “When you have 100 percent of Republicans voting for the Bush tax cut, you know that they’re looking over their shoulder and not wanting to have Steve Moore recruiting candidates in their district.”

Specter was first elected to the Senate in 1980, which makes him a holdover from the days when the GOP still had room for moderates.

Younger Republican politicians have, by and large, grown up inside a party defined by movement conservatism. The hard right had already taken over the College Republicans by 1972, when none other than Karl Rove was elected the organization’s chairman. Other notable College Republican alumni include Rick Santorum, Grover Norquist, Ralph Reed, and Jack Abramoff. Movement conservatives run the Republican National Committee, which means that they are responsible for recruiting congressional candidates; inevitably they choose men and women in their own image. The few remaining Republican moderates in Congress were, with rare exceptions, first elected pre-Reagan or, at the latest, before the 1994 election that sealed the dominance of the Gingrich wing of the party.

One last point: The institutions of movement conservatism ensure a continuity of goals that has no counterpart on the other side. Jimmy Carter tried to establish a national energy policy that would reduce dependence on imported oil, and that was that; nobody expected Bill Clinton to pick things up where Carter left off. Ronald Reagan tried and failed to slash Social Security benefits; movement conservatives took that as merely a tactical setback. In a now-famous 1983 article, analysts from the Cato Institute and the Heritage Foundation called for a “Leninist strategy” of undermining support for Social Security, to “prepare the political ground so that the fiasco of the last 18 months is not repeated.”[16] That strategy underlay George W. Bush’s attempt to privatize the system—and until or unless movement conservatism is defeated as thoroughly as pre–New Deal conservatism was, there will be more attempts in future.

The mechanics of the widening partisan divide are clear. Bitter partisanship has become the rule because the Republicans have moved right, and the GOP has moved right because it was taken over by movement conservatives. But there’s still the question of ultimate cause. Wealthy families who hate taxes, corporate interests that hate regulation, and intellectuals who believe that the welfare state is illegitimate have always been with us. In the fifties and sixties, however, these groups were marginal, treated by both parties as cranks. What turned them into a force powerful enough to transform American politics?

Movement conservatives themselves, to the extent that they think about the reasons for their rise at all, see it as a tale of good ideas triumphing over bad. The story goes something like this: The Great Depression, combined with leftist propaganda, misled people into believing that they needed a big government to protect them. The institutions of big government, in turn, became self-perpetuating. But brave men, from Milton Friedman to Ronald Reagan, gradually taught Republicans that government is the problem, not the solution. And the partisan divide is there only because some people still haven’t seen the light.

At the opposite extreme from this heroic account of political change is the almost mechanistic view that growing economic inequality is the root cause of movement conservativism’s rise. As I explained in chapter 1, I began working on this book with that view, which goes something like this: Money buys influence, and as the richest few percent of Americans have grown richer thanks to unequalizing forces like technical change, they have become rich enough to buy themselves a party. In this view, the rise of movement conservatism is a by-product of rising inequality.

It’s certainly more plausible to think that the drastic rise in income inequality since the 1970s transformed American politics than to attribute it all to the brilliance of a few intellectuals. But the hypothesis that the rising concentration of income empowered the economic elite, driving the rightward shift of the GOP, runs up against a problem of timing. The sharp rightward shift of the Republican Party began before there was any visible increase in income inequality. Ronald Reagan was nominated in 1980, a year in which the rich were no richer, relative to the average American, than they had been during the Eisenhower years. In Congress the political shift began with the 1976 and 1978 elections. As Edsall points out, “the hard core of junior, ideologically committed Republican senators” grew from four in 1975 to eleven in 1979, with a corresponding shift also taking place in the House.[17] The takeover of the College Republicans by movement conservatives took place even earlier: Karl Rove was elected chairman in 1972. And the key institutions of movement conservatism were created at about the same time. For example, the Heritage Foundation was created in 1971. The Business Roundtable, which merged several loosely organized groups into a powerful lobby on behalf of procorporate politics—eventually forming the basis of Santorum’s K Street meetings—was formed in 1972, and the U.S. Chamber of Commerce was reborn as a significant lobbying force shortly after.

Add to this the evidence I laid out in chapter 7, that changes in institutions and norms lay behind much of the rise in inequality and that political change is what led to those changes in institutions and norms, and the mechanistic view that inequality moved the Republicans to the right loses most of its plausibility. It’s likely that rising income concentration reinforced the rightward trend of the GOP, as the number and wealth of donors able to lavish funds on suitably hard-line politicians grew. But something else must have gotten the process going.

That something, I believe, is the constellation of forces described in chapters 6 and 7. To recapitulate the story: In the late 1950s and early 1960s, the “new conservatives,” the narrow, elitist group centered around the National Review, grew into a serious movement by merging with other factions unhappy with the moderate, middle-class America of the postwar years. Fervent anticommunists found in movement conservatism kindred spirits who shared their fears. People outraged by the idea of other people receiving welfare found a movement that could make their resentment politically respectable. Businessmen furious at having to deal with unions found a movement that could turn their anger into effective political action.

This convergence of forces was strong enough to nominate Barry Goldwater, but only because the Republican establishment was caught by surprise. And Goldwater lost the election by a landslide. Nonetheless the movement went on, and learned. Reagan taught the movement how to clothe elitist economic ideas in populist rhetoric. Nixon, though not a movement conservative, showed how the dark side of America—cultural and social resentments, anxieties over security at home and abroad, and, above all, race—could be exploited to win elections.

That last part was crucial. The ability to turn hard-right positions into a winning strategy, not a futile protest, brought in the large-scale funding that created the movement conservative institutions—the “vast right-wing conspiracy” we know today.

That, however, brings us to the second puzzle I identified early in this chapter: Why have advocates of a smaller welfare state and regressive tax policies been able to win elections, even as growing income inequality should have made the welfare state more popular? That’s the subject of the next chapter.