Is the U.S. the democracy it claims to be? A study finds that monied interests and big business call most of the shots in U.S. public policy and the average citizen has very little say.
WASHINGTON — U.S. public policy is almost exclusively dominated by monied interests and big business, according to new research, while most of the rest of the country, including advocacy groups working on behalf of a broad spectrum of populist issues, have remarkably little sway over the policymaking process.
Professors at Princeton and Northwestern have sifted through two decades’ worth of data to offer perhaps the most detailed analysis to date of the United States’ modern claim to being a democracy. The results, they say, are stark.
“Americans do enjoy many features central to democratic governance, such as regular elections, freedom of speech and association and a widespread (if still contested) franchise,” according to the research paper by Princeton University Professor Martin Gilens and Northwestern University Professor Benjamin I. Page.
“But we believe that if policymaking is dominated by powerful business organizations and a small number of affluent Americans, then America’s claims to being a democratic society are seriously threatened.”
The paper is slated for publication in an upcoming issue of Perspectives on Politics, a peer-reviewed journal.
Gilens and Page reviewed nearly 2,000 national surveys conducted between 1981 and 2002 that touched on hundreds of public policy changes concerning “matters of relatively high salience, about which it is plausible that average citizens may have real opinions and may exert some political influence.” The researchers correlated the responses in terms of respondents’ income, then figured out how often different groups’ preferred policies were implemented.
They found, first, that the rich and poor see many policy proposals from roughly the same perspective.
However, the data is more interesting when their views diverge. Gilens and Page report that policies lacking broad support among the rich are only implemented around 18 percent of the time. On the other hand, proposals supported by the elite are adopted more than twice as often, some 45 percent of the time.
“Not only do ordinary citizens not have uniquely substantial power over policy decisions; they have little or no independent influence on policy at all,” the paper states.
“By contrast, economic elites are estimated to have a quite substantial, highly significant, independent impact on policy … In the United States, our findings indicate, the majority does not rule – at least not in the causal sense of actually determining policy outcomes.”
774 times the minimum wage
Although the paper does not offer specific recommendations for policymakers, Benjamin Page told MintPress News that the data indicate a clear need to weaken the impact of money in politics and to strengthen the mechanisms of direct citizen control over the gears of government.
“Reduce the power of money in politics!” he wrote in an e-mail, noting that new rules are needed to mandate “full disclosure of donations and limits on lobbying.” He also urged a reversal of recent Supreme Court decisions that have lifted longstanding limits on political contributions by both individuals and corporations.
“Also, make politicians compete for votes,” Page continued. “End the partisan gerrymandering of one-party districts, and mix all districts so that party balance is close. End one-party primaries and hold all elections, including primaries, on visible dates, with easy voting – for instance, through election holidays.”
When looking at policy issues involving starkly divergent views between average U.S. citizens and economic or business elites, it is hard to find more poignant current debates than those involving CEO compensation and the minimum wage.
Last week, the AFL-CIO, a major union umbrella, released new findings showing that CEOs at the largest U.S. corporations were paid 331 times more than average workers last year. Those corporate heads were also paid some 774 times what minimum-wage workers received. These comparisons represent historically high levels of economic inequality.
While President Barack Obama has recently started trying to make the question of raising the federal minimum wage into a defining issue of his second term, the fact is that such action is long overdue by any standard. During the 1963 March on Washington for Jobs and Freedom, for instance, protesters demanded a minimum wage that would translate to more than $13 an hour today.
Indeed, even if the federal government had continued to update the minimum wage over the past half-century merely to keep up with inflation, this rate would today be $10 an hour. Instead, the current federal minimum wage stands at $7.25 an hour, one of the lowest in any developed country. And while President Obama has formally supported a modest rise to $9 an hour, all such proposals currently remain non-starters in Congress, evidently due to strong pushback from business groups.
Still, public support for an increase in the minimum wage is strong. According to polling carried out last year for the National Employment Law Project, 80 percent of adults in the U.S. support a $10.10 minimum wage — a figure that received strong backing from all demographic and ideological categories.
80 percent vs. restaurant lobby
Yet even President Obama’s proposals do not include a wage increase in one notoriously unequal sector: the restaurant industry. In most states, servers — nearly 75 percent of whom are women — earn just a couple of dollars per hour as salary, with the rest to be supplemented by tips. While restaurant owners are supposed to ensure that hourly wages remain at the federal minimum in case tips don’t fill this gap, anecdotal evidence suggests this rarely happens.
The National Restaurant Association, a key lobby group, has been an outspoken opponent of any minimum wage hike, warning that legislation that affects the industry would force many operators to close down or cut back on jobs. The group is planning a major lobbying push on this and other issues here in Washington at the end of this month.
As alluded to by Gilens and Page’s findings, the situation highlights the clear discrepancy in elite versus populist ability to influence policy.
That gap is explored in detail in a new report from the Institute for Policy Studies, a think tank here, which looks at the largest members of the National Restaurant Association. The results “dramatize the unfairness of the living wage debate,” the report’s author, Sarah Anderson, told MintPress.
The study, released Tuesday, focuses on a legal loophole that continues to spur many corporations, including members of the National Restaurant Association, to inflate CEO salaries.
“The way things stand now, the more corporations pay their CEO, the less they pay in taxes,” Anderson, director of the Global Economy Project at the Institute for Policy Studies, said. “This creates a perverse incentive.”
The issue goes back to tax reforms in 1993 that came about in response to public anger over the ability of corporations to deduct CEO salaries from their taxes. The new legislation allowed corporations to deduct a maximum of $1 million per executive.
“But this created a huge loophole, exempting what’s known as performance-based pay, stock options and other pay that’s tied to particular performance benchmarks,” Anderson said. “That has led to an explosion in performance-based pay that, in turn, led to the rapid increase in executive pay levels we’re seeing now.”
Over the past two years, Anderson noted, the heads of the 20 largest members of the National Restaurant Association took home more than $662 million in “performance pay.” In so doing, they lowered their companies’ tax burdens by around $232 million. This savings would have been enough to pay for an increase in the minimum wage for a huge number of restaurant employees, and the Institute for Policy Studies’ report suggests it could cover the cost of food stamps for more than 145,000 households.
Additionally, such a setup means that the American public is essentially subsidizing outlandish salary levels for CEOs, even while employees at the bottom remain chronically underpaid. The report suggests this imposes a “double burden” on taxpayers.
“Most top restaurant chains pay their low-level restaurant workers so little that many of them must rely on Medicaid and other taxpayer-funded anti-poverty programs,” the study warns, later adding, “In effect, these companies are exploiting the U.S. tax code to send taxpayers the bill for the huge rewards they’re doling out to their top executives.”