TIME: Almanac 1995

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<text id=94TT1306> <title> Sep. 26, 1994: Book Excerpt:Fat City </title> <history> TIME--The Weekly Newsmagazine--1994 Sep. 26, 1994 Taking Over Haiti </history> <article> <source>Time Magazine</source> <hdr> BOOK EXCERPT, Page 48 Fat City </hdr> <body> Americans have good reason to hate Washington. It's bloated, arrogant and ruining the country, argues a noted political analyst, who contends that democracy needs an overhaul. By Kevin Phillips "When all government, domestic and foreign, in little as in great things, shall be drawn to Washington as the center of all power, it will...become as venal and oppressive as the government from which we separated." --Thomas Jefferson, 1821 Exactly three decades ago this year, workers poured the last square foot of concrete in the five-year project to build the Washington Beltway, officially known as Interstate 495. For its first two decades or so, it was simply a ribbon of concrete, a fast road from Bethesda to Alexandria or Falls Church. By the early 1980s, however, "inside the Beltway" started to become a piece of political sarcasm--a biting shorthand for the self-interest and parochialism of the national governing class. Aerospace engineers in Los Angeles and taxi drivers in New York City understood well enough. What flourished inside the Beltway, like orchids in a hothouse, was power, hubris and remoteness from the ordinary concerns of ordinary people. In the autumn of 1994, resentment of everything within the Beltway has reached a crisis point. The capital's near paralysis in dealing with the problems of crime and health care has sent the job-approval ratings of both the President and Congress to epic lows. In a TIME/CNN poll, only 19% of those surveyed think they can trust Washington to do what's right most of the time, down from 76% in a similar poll three decades ago. The Clinton revolution, in which the candidate promised to dislodge the "high-priced lobbyists and Washington influence peddlers," seems as cozy in the capital as any previous regime, if not more so. In this year's congressional elections, virtually everyone is running as an outsider, even if they're an incumbent. Many Democrats have almost rudely distanced themselves from the President. "Why be cute about it? Of course he's a liability," said Kathy Karpen, the Democratic candidate for Governor in Wyoming. Some candidates have looked forward to 1996 with even more sweeping condemnations. Lamar Alexander, the former U.S. Education Secretary, is running for the Republican presidential nomination in 1996 on a campaign promise to CUT THEIR PAY AND SEND THEM HOME. Alexander would slash congressional salaries by half and banish them from Washington for six months of the year. To most Americans, the capital now seems oblivious to their life. It has become like a fortress, more and more bloated and inefficient at a time when the rest of America has cut back and toiled to rebuild itself. The capital supports a growing, well-to-do elite of lobbyists, lawyers and other influence peddlers, while America's middle class has suffered from stagnant incomes and shrinking opportunity. In an ominous number of ways, in fact, Washington has come to resemble the parasitic capital of a declining empire, following the imperial path of cities like Rome and Madrid and London. If the past is any guide, the emergence of a rich and privileged capital city in America is part of a broader transition toward social and economic stratification, toward walled-in communities and hardening class structure. As Washington has entrenched, the old two-party system, revitalized by once-a-generation revolutions at the ballot box, no longer works. The American people, now painfully attuned to this loss, are grasping for a solution to what is clearly a larger, deeper problem. The Washington establishment, however, can't accept this. Most Washington opinion molders embrace a particularly delusionary and deceptive pretense--that the electorate is only temporarily disaffected; that no historical crisis is involved; that the disarray in Washington, the party system and the process of government is little more than a matter of "gridlock," in which the mechanisms of Washington can be unlocked with the right lubrication and the right leadership. But it is difficult for politicians to develop the needed debate over what no longer works and then look down historical pathways for the remedies. The clues are there. Thomas Jefferson warned us. Starting with the Declaration of Independence, he predicted that upheavals and housecleanings would be necessary every generation. But the massive, Permanent Washington now turns aside those electoral waves. The new Administration has only confirmed this trend, not reversed it. And yet, there is still reason for hope. Because Washington has gone wrong in an accelerated time frame, the rest of the U.S. still has its ability to generate grass-roots activism and reformist revolution. Renewing popular rule is the challenge of the 1990s. But how was it lost in the first place? And what can be done to turn back the tide? Here are some ideas: The Broom of the System "I never saw anything like it before. They really think the country is to be rescued from some dreadful danger." --Daniel Webster, describing the arriving Jacksonians in 1829 American politics has a star-spangled singularity. Bloodless revolutions have been the key. During the period from 1800 to 1932, the American people did something no other nation's population has ever done--they directed, roughly once a generation, revolutionary changes in the nation's political culture and economic development through a series of critical presidential elections. It only sounds commonplace; as a successfully executed politics, it was extraordinary among industrial countries. The U.S. took the most successful revolution of the modern world and continued its spirit, especially during the 19th century. In the early years, winning and losing presidential contenders openly described their confrontations as revolutions, claiming the prized mantle of 1776. Years after Jefferson was elected in 1800, he contended that "the Revolution of 1800 was as real a revolution in the principles of our government as 1776 was in its form." The new President's intention had certainly been bold enough--not just to beat the incumbent Federalists but to destroy their future political effectiveness and create a new party system. As Andrew Jackson's Inauguration approached in 1829, an observer likened the arrival of the Jacksonians to "the inundation of Northern barbarians into Rome...Strange faces filled every public place and every face seemed to bear defiance on its brow." The result of such regular upheaval, up until the mid-20th century, was that Americans could plausibly look to the watershed election to substitute for actual revolution, which became deplorable and un-American. The national impact of these electoral revolutions was increased by how long they lasted and how deep they went. Since 1800 the party that has won one of these watershed elections has gone on to hold the White House for most of the next generation. Setting in motion these eras of accomplishment has been a genius of U.S. politics. The watersheds had other achievements. Geographically, they usually established some new supremacy--of the coast, of the frontier, of the North or of the cities. Such watersheds rearranged the locus of power, shuffled regional elites and changed national directions. At least through the 1930s, watersheds meant the chance for the two-party system to reinvent itself and point Washington in new directions. No Washington infrastructure was big enough or sufficiently dug in to reject the electorate's pointing. By the end of the 1960s, however, one was big enough, and it deemed unacceptable a transfer of national power to the 57% of Americans who had voted for Richard Nixon and George Wallace in 1968 or to the combined 61% who supported Nixon in 1972. Part of the hesitation involved the unacceptability of Nixon the individual politician--and ultimately, of course, of Nixon the lawbreaker. By itself, this reluctance, even loathing, on the part of defeated capital insiders was nothing new. Losers' outrage was old stuff. The difference after 1969 involved two new circumstances: Factor No. 1 was the enormous enlargement and entrenchment of the capital from the 1930s to the 1960s, which had finally created a governing elite large enough to stymie an ambitious new President. Factor No. 2 was the vulnerability the new G.O.P. President brought on himself by turning to political espionage to overcome the intra-Washington opposition--and being caught. So the electoral revolution of 1968 succeeded at the polls, but it became the first of its kind to fail in Washington. A Republican presidential watershed, one ultimately producing G.O.P. control of the presidency for 20 of 24 years between 1968 and 1992, crippled itself in its early stages. Thus the Democrats held the House for 24 years out of 24, the Senate for 18 out of 24. As government divided, special interests multiplied. The Permanent Washington created during the quarter-century after World War II, far from being dislodged, grew faster than ever; the theory of Washington as a neutral parade ground for presidential-election victors collapsed. IMPERIAL WASHINGTON "Twelve days before the Inauguration, we may be able to predict the fate of Bill Clinton's promise to free American government from the grip of special interests: Broken by Day One." --The New York Times, January 1993 Franklin Roosevelt finally brought Washington to the big time. On one hand, the New Deal pushed government into new activities from securities regulation to agricultural supports, increasing the number of federal employees from about 75,000 in early 1933 to 166,000 in 1940. The federal presence was looming larger. But it was the Second World War that gave the city its global pre-eminence. When architects were designing the huge Pentagon in 1941, a cautious Roosevelt suggested modifying the design so part of the building could become a storage facility, if necessary, when the war was over. For 40 years, though, the war never really ended--and neither did Washington's expansion. Over in Foggy Bottom, the personnel roster of the State Department included 6,438 employees in 1940; 25,380 in 1950; and 39,603 in 1970. Global pre-eminence was one of the capital's prime jobs machines. Congressional staffs were growing even faster. In 1933 members of the House were allowed a staff of two persons and a total clerk-hire budget of only a few thousand dollars. By 1957 that had climbed to five aides for each member and $20,000; and by 1976, a total of fifteen assistants could be paid $255,000. Individual staffs expanded just as rapidly in the Senate, as did committee and subcommittee staffs in both houses. The combined overall staffs of the U.S. House and Senate soared from 1,425 persons in 1930 to 6,255 in 1960 and to more than 20,000 in 1990. As the Federal Government's agenda grew during the 1960s and 1970s, Washington drew power brokers and courtiers in numbers that began to constitute another of history's danger signals. Some of the parasites were government employees, but the notable expansion in the Washington parasite structure during the 1970s and 1980s came from outside the Federal Government--from an explosion in the ranks of lawyers and interest-group representatives out to influence Uncle Sam, interpret his actions or pick his pockets for themselves or their clients. Other major cities, too, were adding white-collar professionals during the 1970s and 1980s as the U.S. shifted economic gears, enlarging its service sector and polarizing. But elite growth in Washington was leading a national trend, not bucking one. By the 1990 census, the growth of Washington's new private and nonprofit jobs--centered in what academicians were starting to lump together as the lobbying or transfer-seeking sector--had raised its metropolitan area to the highest per capita income of any in the county. Seven of its jurisdictions were now on the list of the 20 U.S. counties with the highest median family incomes. Now it was no longer just Bloomingdale's moving in; Tiffany's came, too, and its new store in Virgina's rich Fairfax County set opening-year records. Lawyers were an especially prominent growth sector. Statistics show what can only be called a megaleap: in 1950 not quite a thousand lawyers were members of the District of Columbia bar; by 1975 there were 21,000; and by 1993 the number reached 62,000. No other major U.S. city matched the capital's per capita concentration of attorneys. Meanwhile, the percentage of U.S. trade and professional associations choosing to make their headquarters in metropolitan Washington increased from 19% in 1971 to 32% in 1990. This centralization at the seat of federal power was no coincidence. Each of the great postwar public policy waves--urban, environmental, health, and so on--forced more associations to pack their bags for Washington to locate where the legislative and rule-making action was. In 1979 the National Health Council found 117 health groups represented in Washington; by 1991 they listed 741. The nature of representative government in the U.S. was starting to change, so that more and more of the weight of influence in the capital came from interest groups, not voters. At some point, probably in the 1970s, the buildup of interest groups in Washington reached what we could call negative critical mass. So many had come to Washington or been forced to come that the city started turning into a special-interest battlefield, a competitive microcosm of interest-group America. When policy decisions were made, attendance would be taken, checks would be totaled, lobbyists would be judged, mail would be tabulated--and if a group wasn't on hand to drive its vehicle through the Capitol Hill weighing station, that organization was out of luck. Trade associations, congressional staffers and lawyers are only part of the Washington influence and opinion-molding complex. ``Interest group" is a broad description. Any comprehensive list must also include representatives of domestic and foreign corporations, government relations and lobbying firms, think tanks, coalitions, public interest and nonprofit groups, and representatives of other governments and governmental bodies anxious to keep in touch with Washington. No census is taken of these functions--any accurate official count would make voters boil. However, one 1991 estimate of 80,000 lobbyists by James Thurber, a professor of government at American University, touched off a storm, especially when he admitted, "((It was)) off the top of my head." Lobbyists scoffed, saying the figure was more like 10,000. Thurber, responding to the challenge, undertook a more systematic sampling and came up with a still higher figure: 91,000 people associated with lobbying. Part of what has made Washington so hard to change is the bipartisan awareness, involving perhaps 100,000 people, that the city on the Potomac has become a golden honeypot for the politically involved, offering financial and career opportunities unavailable anywhere else. Washington is no longer simply a concentration of vested interests; in a sense, the nation's richest city has itself become a vested interest--a vocational entitlement--of the American political class. Although public-sector dollars and decisions are the focus of Washington activity, probably three quarters of the jobs paying $100,000 or $150,000 or $250,000 are in the private or nonprofit sector, and there is no other city where so many of the nation's political activists and brokers could make so much money doing what they do. Washington is Water Hole No. 1 for political Americans. This, in turn, is piddling next to a larger problem: that many Washington politicians--in particular Senators, Congressmen, top Executive Branch officials and party chairmen--know that when they hang up their elective hats, the best job prospects are right there in Potomac City selling their connections, lobbying and expertise. Most don't want to go home; and more than a few start thinking about lobbying and representational opportunities while they are still casting votes for or against potential future employers. All too often, public service has become a private opportunity. Researchers for Ralph Nader's Public Citizen found that of 300 former House members, congressional staffers and Executive Branch officials, 177 of them--fully 59%--had taken lobbying jobs or positions at law firms with Washington lobbying arms. Of the 108 House members who retired or were defeated in 1992, over half stayed in the Washington area, and nearly half were with law firms, doing lobbying work or working "with corporate interests." Last year, however, pushed Washington interest-groupism to a new plane. Not only did the new President bargain with key lobbies almost from the start, but two Congressmen actually resigned their offices--without waiting to serve out their terms--in order to take up well-paid and influential lobbying posts. Representative Willis Gradison, Republican of Ohio, resigned to head up the Health Insurance Association of America, while Representative Glenn English, Democrat of Oklahoma, left Congress to run the National Rural Electric Cooperative Association. Nobody could remember anything like it. But senior White House officials were doing the same thing. The White House legislative director left to become the chairman of Hill and Knowlton Worldwide, while the deputy chief of staff left to take over the U.S. Telephone Association. Neither had served a full year in his job, and their departures mocked the President's earlier campaign promises. The exodus from both the Legislative and Executive branches was unprecedented and doubly revealing of where Washington's real power had migrated. Support for the status quo is intensely bipartisan in the truest sense; real access to the honeypot in most cases comes only from service, appointments and connections within the Republican-Democratic Party system. A cynic could even say the corruption of Washington--because, bluntly, that is what we are talking about--is closely bound up with two-party politics. Influence-peddling access is one of the most important components and privileges of the party-spoils system. The most successful Washington lobbying and law firms mix Democratic and Republican partners in flexible ratios so as to reassure clients that they can knock on any and all doors. This would be difficult in Europe, where real ideological and class differences between the parties would at least complicate any such collaboration. It is all too easy in the U.S. The principal difference between the Republicans and the Democrats is that the former parade their check-writing lobbyists at their fund-raising dinners, while the Democrats are more secretive. Almost before it started, Clinton's Administration got in trouble for being too close to lobbyists, insiders and power brokers. But attention has focused not only on these relations, but on the President's willingness to make deals with business and financial lobbies even more quickly than with labor, environmental and minority groups. Changes like these tell the real story of the transition from "Old Democrat" to "New Democrat." What Clinton has done is to shift his party from so-called interest-group liberalism to "interest-group centrism"--away from the prospending, liberal-type lobbies that represented people (labor, seniors, minorities and urban) to a more upscale centrist (or center right) group that represents money (multinational business, banks, investment firms, trial lawyers, trade interests, superlobbyists, investors, the bond market and so on). This is the ultimate triumph of Washington's interest-group ascendancy: the party of the people can no longer be the party of the people. IMPERIAL WALL STREET "I used to think if there was reincarnation, I wanted to come back as the President or the Pope or a .400 baseball hitter, but now I want to come back as the bond market. You can intimidate everybody." --James Carville, political adviser to the President, 1993 The perception that James Carville reveals would have been implausible back in 1969 or 1972 or even 1985. But by the mid-1990s the bond market--and the overall financial sector--had become a powerful usurper of control over economic policy previously exercised by Washington. Reckless government indebtedness is the conventional explanation. Yes, but there is also another reason: since the early 1970s, the clout of the financial sector has exploded into today's trillion-dollar, computer-based megaforce. Through a 24-hour-a-day cascade of electronic hedging and speculating, the financial sector has swollen to an annual volume of trading 30 or 40 times greater than the dollar turnover of the "real economy," although the latter is where ordinary Americans still earn their livelihood. In institutional terms, the new role of "spectronic" finance ranks with Washington interest-group power in helping to explain why politics cannot respond to the people and why the nation's government and policies are so often ineffective. If America's elected officeholders face shrinking control over the real economy, it is partly because they have so little hold over the financial economy--and because the latter is slowly gobbling the former. Speculation, in short, has often displaced investment. And financiers more often control politicians than vice versa. Rescuing overextended financial institutions and speculators from their own folly was a national "first" of the 1980s and 1990s--and an ill omen. In previous crashes, they had been allowed to collapse. No one bailed out the flattened banks and traumatized investors. For over a century this had been the genius of American political finance. The legacy of these cycles, of the buoyant capitalist expansion that comes first, followed by a speculative excess, a crash of some degree, and then a populist-progressive countertide, is simply this: they have managed to give America the world's most successful example of self-correcting capitalism. Or at least that has been true until now. National leaders do not rush to say so, but the bailout of financial institutions in the early 1990s was the biggest in America's history. Abuses were protected. Shareholders did not lose their shirts, and big depositors generally got paid off by federal authorities. Other important components of the bailout were less overt. The Federal Reserve, which had rescued the postcrash stock market with liquidity in 1987-88, came through again in 1990-91. Overleveraged firms that headed everyone's list of the living dead--from Citicorp, America's largest bank, to RJR Nabisco, the leveraged buyout made infamous in the late 1980s--survived after a year or two of grave watching. Then profitability mushroomed. The linchpin was unprecedented Washington-Wall Street collaboration. Through a combination of monetary-policy favors from the Federal Reserve, help from the first White House in history headed by a President (George Bush) whose family members were mostly in the investment business, and collaboration by a Congress full of Senators and Representatives who knew the warm, tingly feeling of being able to count on top executives of Bear Stearns, Merrill Lynch or Goldman, Sachs, for an emergency fund-raising dinner, the capital city extended the kind of help never seen in any prior downturn. The financial markets were riding on a new set of shock absorbers: unprecedented federal favoritism. Clinton had won the White House in 1992 as an outsider running on a relatively populist platform, including campaign speeches that used Wall Street and the Wharton School as backdrops for criticism of the financial elites for the greed and speculation of the 1980s. But even before he was inaugurated, it was clear that strategists from the financial sector, more than most other Washington lobbyists, had managed the Bush-to-Clinton transition without missing a stroke. Well-connected Democratic financiers stepped easily into the alligator loafers of departing Republicans. The accusatory rhetoric of the campaign dried up. The head of Clinton's new National Economic Council, Robert Rubin, had spent the 1980s as an arbitrager for Goldman, Sachs. Stephen Moore, fiscal-studies director at the conservative Cato Foundation, called the appointment the "climax" of Washington hypocrisy. "If any Republican had ever tried to get anyone like Robert Rubin near the White House," Moore claimed, "he would have been savaged." Rubin's appointment in a Democratic Administration underscores how financial-sector power has eroded old distinctions between the parties. The deepening influence of finance along the Potomac is utterly and completely bipartisan. It is particularly revealing how many Washington politicians have begun to aim their careers where the electronic money is. Small rewards may be possible while still in office, but the big payoff comes with subsequent affiliation and proinvestment influence peddling. So much so, in fact, that more and more Washington politicians are retiring to the financial sector rather than to the prestige law partnerships that were the principal destinations of earlier eras. THE EXHAUSTED TWO-PARTY SYSTEM "The growing complexity and speed of change make it difficult to govern in the old way. It's like a computer blowing fuses. Our existing political decision-making structures are now recognized to be obsolete." --Futurist Alvin Toffler, author of Powershift, 1993 Is the Republican-Democratic system still vital and worth reinforcing, or is the legal and financial favoritism it enjoys the political equivalent of hospital life support? History itself is not reassuring. No other Western party system is so aged and weary. There are several good reasons to doubt the future effectiveness of the Republican-Democratic system. What keeps these doubts from serious national discussion is an almost biblical faith and vested interest: America has to have the Republicans and Democrats because we have to nurture the two-party system, which we have used for more than 150 years and therefore must cherish. But the 21st century will make mincemeat of such thinking. Part of why the party system is decrepit involves not just its age but where it came from. The two parties grew out of the economic combat of a now distant era: the mid-19th century conflict between manufacturing (Northern Republicans) and agriculture (Southern Democrats). The British party system that came out of that same economic battleground was the one torn apart three generations ago. And exhausted parties are the easiest prey for special interests, because there is little heartfelt belief to get in the way. Voter turnout in today's media age is a ghost of these former enthusiasms. Parties are less necessary and less liked. Much of what they and their interest groups now mobilize is voter contempt, not voter participation, and there is good reason to assume that party functions will be at least partly replaced by some new communications forms or institutions. Meanwhile, in a perverse way, the failure of the system is also its support base. For good reasons, America's influentials favor the system under which they have flourished, as do most established interest groups, and for most of the past two decades, bipartisan commissions, Congress and state legislatures have been trying to reinforce the limited choice between Republicans and Democrats as the political equivalent of the Rock of Ages. The entrenchment tools of the status quo range from state laws that give the Republican and Democratic parties automatic ballot position (while curbing access by potential rivals) to a whole range of federal campaign subsidies, assistance to party-affiliated institutions and preferred postal rates. Stacked alongside the financial support that the Republican and Democratic parties enjoy from their particular interest groups, these favoritisms add up to what economists call a "duopoly"--the two-party version of a monopoly. Independent political movements can surge and become powerful, but they cannot institutionalize; they cannot win the White House or take more than a few seats in Congress. America's political duopoly has another unique characteristic that makes little sense to politicians elsewhere--frequent bipartisanship. Hallowed in the U.S., the practice is observed in few other countries, except in wartime, because those party structures pivot on deep philosophic and interest-group differences. Current-day bipartisanship in the U.S., however, has its own logic--since the 1980s frequently involving a suspension of electoral combat to orchestrate some outcome with no great public support but a high priority among key elites. In foreign policy these issues have included the Panama Canal treaties and NAFTA. On the domestic front, bipartisan commissions or summit meetings have been used to increase Social Security taxes on average Americans while the income-tax rates of the rich were coming down, to negotiate deficit-reduction agreements lacking popular appeal and to raise the salaries of members of Congress. Sometimes the collaboration can be blatant. The pay-raise deal involved walking on so many political eggshells that both sides negotiated an extraordinary side bargain: that the Democratic and Republican National Committees would refuse to fund any congressional candidate who broke the bipartisan agreement and made the pay raise an issue! In the House of Representatives' NAFTA debate, in which Democratic President Clinton was supported by nearly as many Republicans as Democrats, he produced--on G.O.P. demand--a letter that Republican Congressmen's pro-NAFTA votes shouldn't be used against them by Democratic foes. A conclusion is tempting: bipartisanship is too often a failure of the party system--a failure of both political responsibility and of representative government--and not a triumph. Yet there is another important trend of the 1990s, seemingly at odds. That is the extent to which the two parties have been polarizing ideologically, especially in the House of Representatives. It is still true, of course, that the Democratic and Republican congressional memberships meet in the middle of the spectrum, frequently with individual legislators' hands stretched out to the same contributors and political-action committees. At the same time, however, changing demography has been pulling the two parties' respective ideological centers of gravity leftward and rightward, in ways that make the existing leadership uncomfortable. The Democrats have relatively few conservative Southerners left, while the Republicans include only a handful of Northern moderates or liberals. Further ideological polarization would be significant. In many ways, that would pull both parties away from public opinion. Yet much of what passes for centrism in Washington is mimicry of Establishment viewpoints and fealty to lobbyists in $1,100 suits, so that more ideology on both sides would create the best opening in 150 years for a new reform party or political movement with designs on a more vital interpretation of centrism. The American people may already be reaching that conclusion. There was an element of spontaneous combustion in public sentiment in spring 1992's sudden surge to Ross Perot, when the polls put him ahead of both the incumbent Republican President and the Democratic front runner. Also, two independent Governors were elected in 1990, a 20th century record, and in several states, including California, splinter-party candidates drew substantial votes for Congress in 1990 and 1992. If a party breakdown is under way, however, U.S. history as well as current poll data suggest that the dominant pressure would be more populist: outsider politics and themes of fighting Washington and dismantling its elites. From George Wallace to Perot, the past quarter-century of presidential politics has been characterized by such attitudes, and the pressures of long-term disillusionment seem to be mounting rather than fading. Along with the tentative institutionalization of the Perot vote, this political sociology could be a pivot of the 1990s: if we do see a major new political force emerge, will it be in the genteel, white-collar professional mode, or will it march to the angry cadences of a "radical middle"? Precedents suggest the latter. What history doesn't tell us, though, is the odds on a success--on the prospects for another revitalization through a bloodless revolution. RENEWING POPULAR RULE "Each generation has a right to choose for itself the form of government it believes most promotive of its own happiness...A solemn opportunity of doing this every 19 or 20 years should be provided by the constitution." --Thomas Jefferson, 1816 The 1990s should be a revolutionary decade, perhaps the most notable in 200 years. Serious national revolutions are usually about politics, government, privilege, unresponsiveness and anger. This is exactly what is simmering--and periodically boiling--in the U.S. of the 1990s. Debates over education, welfare and other public policies are subordinate. Revolutions can be renewing without being violent. But for any revolution to take place at the ballot box during the 1990s will require a new premise. The frustration among Americans that has built up since the late 1980s is real and valid, and apparent revivals of national confidence will be only temporary without changes in the political, governmental and interest-group systems. The emphasis of any bloodless political revolution must be on ways of displacing the outdated party system with the emerging technology of direct democracy. But only in part--and carefully. Here is what we should try to do: 1) Disperse Power Away from Washington. Alas, the time is long gone when Americans could change federal and state capitals with the anti-establishment enthusiasm of the late 18th century and early 19th century. Too many people have put down roots; too many interests have vested. Washington cannot be dumped like Bonn, which is small enough to revert back to a quieter status, or like Rio, which was too big and too much Brazil's cultural heart to be hurt by the exit of bureaucrats to the new capital of Brasilia. The last serious debate on leaving Washington behind and transferring the government west to St. Louis came in 1870. Removal is now out of the question. The possible answer lies in lesser, partial solutions to disperse the city's power and pressure groups. One approach would be to relocate enough functions to force power and interest groups to migrate along with the portion of the federal establishment detached. The Interior Department could be moved to Denver or Salt Lake City, Agriculture to Des Moines or Kansas City, Housing and Urban Development to Philadelphia or Chicago. Uprooted lobbies would mean broken lines of influence. Even greater benefit would come from splitting or rotating the capital between Washington and some other city, most plausibly in the West--Denver, say. Two or three federal departments could be substantially relocated, and Congress could sit in the shadow of the Rocky Mountains from late May until the August recess, enjoying a better climate in more ways than temperature and humidity. 2) Shift U.S. Representative Government More Toward Direct Democracy. New electronic technology now gives governments an unprecedented wherewithal to empower the ordinary voter directly. We should use it. Foremost, the U.S. should propose and ratify an amendment to the Constitution setting up a mechanism for holding nationwide referendums to permit the citizenry to supplant Congress and the President in making certain categories of national decisions. Arguably, the procedure set up by the amendment should be less sweeping than the Swiss system, in which the public votes on just about everything. Some kind of prior national advisory commission, citizens' group or both should consider specific details: for example, whether the public should be given the chance to decide on major national-election reforms (of course) and also to rule on major federal-tax changes (arguably), as well as whether Congress should be given a veto over any such voter decision. 3) Curb the Role of Lobbies, Interest Groups and Influence Peddlers. The real interest-group problem in the capital doesn't come from the largest organizations--the trade associations, corporate offices and think tanks funded by special pleaders. The greater danger is the emergence over the last two decades of a mercenary or hired-gun culture among former legislators and government officials who quickly gravitate to Washington's well-paid lobbying niches. In particular, lobbying for foreign governments and interests has reached a magnitude never before seen in a capital city. Corrective measures must strike at this culture. In 1991 I was asked by the chairman of the Senate Finance Committee to testify at committee hearings on legislation to deal with foreign lobbying in the United States. I suggested that senior lawmakers could accomplish a lot without legislation. The Washington lobbying community would receive a powerful message if most Senators and presidential candidates were to refuse contributions from foreign interests, and then further refuse to let lobbyists for foreign interests raise money for their campaigns or serve on their election committees. This, however, was not an idea anyone ever wanted to discuss. But a year later, George Bush's willingness to have foreign lobbyists play prominent roles in his re-election campaign mushroomed into a major debate. And grass-roots politicking is an important way in which serious reform must be pursued. 4) Regulate Speculative Finance and Reduce the Political Influence of Wall Street. Much closer federal scrutiny is necessary, and regulators should use existing securities and banking laws to force greater disclosure of derivatives trading. Representative Jim Leach's proposed law, which would create a Federal Derivatives Commission, makes sense as a start. The political-historical rule of thumb is that any such speculative buildup usually produces a major shakeout, reinforcing the case for serious regulation. There is also merit--and not a little potential Treasury revenue--in a federal tax on financial transactions that would simultaneously reduce the profitability and volume of speculative trading. During the 1980s and early 1990s, the largely independent Federal Reserve Board was a reliable ally of the banks, the financial markets and speculative finance at the expense of consumers, farmers, small businesses and homeowners. The Fed has also given money in so-called overnight loans to rescue some shaky banks but not others, based on its own yardsticks and favoritism. This is unacceptable. The Fed should be required to open its deliberations to public view and its finances to regular public audit. 5) Reverse the Trend Toward Greater Concentration of Wealth. Taxes on the really rich--as opposed to taxes on the not-quite-rich--must rise to a more equitable level. Leading economic powers at their zenith or past it have been notorious for concentrated wealth, just like the U.S. of the 1990s. Gaps between the rich and the middle class invariably widen, as do gaps between the rich and the poor. Worse still, the monied classes include a high ratio of rentiers and speculators, and their taxes are usually relatively low. The Clinton tax increases of 1993 did not concentrate on the high-income, high-influence rich--the people making $4 million or $17 million a year. Instead, self-employed $300,000-a-year doctors and $400,000-a-year executive vice presidents of midsize manufacturing companies not only got burdened with the 39.6% top rate, but the phasing out of their exemptions and deductions often pushed their marginal federal rates to 45% or 46%. The multimillionaire speculators, by contrast, had a nominal 39.6% top rate, but paid only 28% on their capital gains. The richest 100,000 American families--those earning $1 million a year or close to it--are the group that, by historical yardsticks, has too much money and influence in a declining great economic power. Their tax rate should be higher than that of the $300,000-a-year doctor or manufacturing executive. Fairness will be mocked and revenue potential neglected until it is. Besides raising needed billions in annual revenue for the U.S. Treasury, the symbolism of once again demanding more from the truly rich, pursued in moderation, could have a surprise element of national renewal. The sooner the debate begins, the better. Because the U.S. is not a second Britain or Holland but rather a continental power with much greater resources and historical staying power, reforms aimed at cleaning out the nation's clogged arteries have genuine potential. A present and future great power is waiting for renewal. Letting the people rule is the political genius and governmental raison d'etre of the United States of America, and if it no longer works--if that capacity for renewal is no longer there--then, as Thomas Jefferson asked two centuries ago, what else could we expect to work better? And for that question there is no answer. QUESTION: How much of the time can you trust the government to do what's right? <table> <tblhdr><cell><cell>1964<cell>1984<cell>1994 <row><cell type=a>Always or most of the time<cell type=i>76%<cell type=i>44%<cell type=i>19% <row><cell>Only sometime<cell>22%<cell>53%<cell>72% <row><cell>Never*<cell><cell>1%<cell>9% </table> <list> <item>* Volunteered response <item>1964 & 1984 figures from University of Michigan tracking </list> Which of these groups do you think have too much influence in government? <table> <row><cell type=a>The wealthy<cell type=a>86% <row><cell>Large corportions<cell>84% <row><cell>The Media<cell>83% <row><cell>Wall Street bankers and financiers<cell>79% <row><cell>Lawyers<cell>79% <row><cell>Foreign governments<cell>67% <row><cell>Special-interest groups<cell>64% <row><cell>The gun lobby<cell>59% <row><cell>Labor unions<cell>48% <row><cell>Environmental groups<cell>41% <row><cell>Consumer advocates<cell>36% <row><cell>Middle-class Americans<cell>6% <row><cell>People like you<cell>3% </table> Which of the following phrases do you think describes officials in Washington? <table> <row><cell type=a>Mainly concerned about getting re-elected<cell type=i>88% <row><cell>Heavily influenced by special interests<cell>84% <row><cell>Out of touch with the average person<cell>84% <row><cell>Not worthy of respect<cell>49% <row><cell>Govern wisely<cell>20% <row><cell>Honest<cell>19% </table> Do you think things are becoming better for the middle class? <table> <row><cell type=a>Yes<cell type=i>8% <row><cell>No<cell>57% <row><cell>Staying the same<cell>34% </table> Compared with 10 or 20 years ago, do you think there are more opportunities for the average American to get ahead today? <table> <row><cell type=a>More<cell type=i>25% <row><cell>Less<cell>49% <row><cell>Not much difference<cell>24% </table> The U.S. of the 1990's displays economic and cultural features similar to those of previous world powers in decline, including Rome, Spain the Netherlands and Britain. Some symptoms are economic, some cultural, some mixed. <table> <tblhdr><cell>Economic<cell>Mixed Cultural & Economic<cell>Cultural <row><cell type=a>Economic polarization<cell type=a>Increasingly burdensome national capital<cell type=a>Increased sophistication in culture and art <row><cell>Concentration of wealth<cell>Declining middle class<cell>Luxury and permissiveness <row><cell>Rising Debt<cell>Deteriorating cities<cell>Complaints about foreign influence and loss of old patriotism <row><cell>Higher taxes<cell>Declining quality of education<cell>Complaints about moral decay <row><cell>Relative decine in manufacturing<cell>Increasing internationalism of elites<cell> <row><cell>Increasing speculation and the rise of finance<cell><cell> </table> Would you favor having a national referendum system in which all citizens vote on all proposals that deal with major national issues? <table> <row><cell type=a>Favor<cell type=i>76% <row><cell>Oppose<cell>19% </table> From a telephone poll of 800 adult Americans taken for TIME/CNN on Aug. 31-Sept. 1 by Yankelovich Partners Inc. Sampling error is plus or minus 3%. Not Sures omitted. (c)1994 by Kevin Phillips, from Arrogant Capital: Washington, Wall Street, and the Frustration of American Politics, to be published by Little, Brown and Co. </body> </article> </text>