Neoliberalism vs. New Deal: Bernie, Hillary and what's really at stake in this primary

Democrats aren't just picking a candidate. They're choosing their party's economic course for a generation to come

Published April 10, 2016 3:00PM (EDT)

Hillary Clinton, Bernie Sanders   (Reuters/Brian Snyder/Jonathan Ernst/Photo montage by Salon)
Hillary Clinton, Bernie Sanders (Reuters/Brian Snyder/Jonathan Ernst/Photo montage by Salon)

This article originally appeared on The Globalist.

TheGlobalist Thirty years of accumulated anger with neoliberalism — which has downsized many Americans’ incomes and hopes — has had a profound effect on the 2016 U.S. Presidential election. The insiders are either out or on the ropes.

Though the Republican rebellion has been more clear-cut in its dismissal of insider candidates, it is Bernie Sanders’ Democratic rebellion that is of potentially far greater historic significance.

Republican rebellion: Much less significant

The Republican uprising has undoubtedly exhibited greater anger. If Donald Trump or Ted Cruz triumph in the November general election, they threaten an uglier more intolerant politics that could even become tinged with American black-shirtism (or “white nationalism”).

However, absent the darkest of outcomes, the Republican rebellion is of less lasting political significance for two reasons.

First, it does not fundamentally challenge the neoliberal economic model that is the root cause of popular anger on all sides. Whether this anger manifests itself in nationalism, racism, evangelism and/or cultural atavism, these are ultimately all expressions of the scapegoat itch.

They do not challenge Corporate America’s and Wall Street’s domination which sustains neoliberalism.

Second, and more importantly, the Republican rebellion does not change the party’s pre-existing political trajectory and relies on electoral forces that are peaking out.

That contrasts with Sanders’ Democratic rebellion which explicitly challenges the neoliberal economic model. His campaign is also about defining the political character of the coming Democratic electoral majority.

Viewed in this light, the Republican rebellion is an eruption from an angry electoral base whose political power is actually waning, which makes them all the more frustrated and mad. In contrast, the Democratic rebellion is an eruption from a rising base whose political agenda awaits definition.

A logical extension of Republican politics

The Republican elite has been profoundly taken aback by the dismissal of Crown Prince Jeb Bush and the Boy Scout Senator Marco Rubio. Even so, both Trump and Cruz represent a logical extension of Republican politics — rather than a break.

Long ago, Richard Nixon unleashed the politics of hate with his “southern strategy”, aimed at exploiting animosity toward President Johnson’s civil rights legislation to convert the South (i.e., the Confederacy) from Democrat to Republican.

In their respective campaigns, Trump and Cruz have articulated a level of racism and xenophobia which the Republican establishment is strategically uncomfortable with. The two have towed the line on tax cuts for the rich, and Cruz stayed in line on trade until Trump started making hay with the issue.

Despite Cruz’s odious personality, the Republican establishment prefers him as he has been more orthodox on trade and Social Security, while Trump is also loathed for humiliating Jeb Bush with his taunt of “low energy.”

That said, if Trump wins the nomination, a rapprochement is likely. For the Republican establishment, tax cuts and preserving neoliberal globalization are preeminent. Trump is an opportunistic businessman who trumpets deal-making.

Accelerating Republicans’ demographic destiny

The rise of Trump and Cruz has merely accelerated Republicans’ date with demographic destiny. The party of dog whistle racism and immigrant bashing long faced a difficult future because of demographic trends making minorities an increasing share of the electorate.

Republicans hoped to postpone that difficult future by a combination of voter suppression policies (e.g., making voter registration difficult; reducing polling booth access; and excluding minority voters via “new Jim Crow” laws denying voting rights to convicted felons) and gerrymandering congressional districts in states like Texas, Wisconsin and Michigan.

That has already given Republicans control of the House of Representatives, despite receiving far fewer total votes at a national level.

The undemocratic construction of the U.S. constitution, which gives two Senate seats to both small states like Wyoming (population 580,000) and large states like California (population 38.5 million), also means Republicans have remained competitive in the Senate.

That is because of their relative strength in the comparatively under-populated interior states.

These features could delay electoral developments, but the prognosis was always an outlook in which Republicans were going to be increasingly uncompetitive nationally. Trump’s and Cruz’s hate politics has simply accelerated and cemented that prognosis.

Wall Street: Democrats for sale?

That electoral prospect implies Republicans can no longer reliably deliver for Corporate America and Wall Street, which means Corporate America and Wall Street need to find another sure political partner. Therein lies the greater significance of the Sanders/Clinton contest.

Over the last 30 years, Wall Street has had little difficulty working with and funding Democrats, and the Clintons have been especially cooperative.

For many years, Goldman Sachs has been happy to split its political contributions, sending 55% to the Republicans and 45% to the Democrats. Now, Goldman can make a small recalibration and send a little bit more to the Democrats.

If Hillary Clinton wins, the Democratic Party will remain squarely within the orbit of Wall Street and Corporate America.

The Democrats will become the ruling party, but their rule will substantially continue what we have had, perhaps supplemented by an extra spoonful of compassionate economic policy.

If Sanders wins, there is a chance the Democratic Party can rediscover its modern roots of New Deal social democracy via expanded Social Security, single payer health insurance, debt-free college, the end of neoliberal trade policies and reining in of corporate power.

The Democrats face a real choice

The 2016 primary elections will significantly influence the Democrats’ political course for the next generation. Demographics imply Democrats will be the majority of the future, but the party’s political identity and agenda is up for grabs.

If the Clinton vision prevails, the Democratic Party stands to become a party of neoliberal economics, wrapped in socially liberal identity politics. A Clinton-led Democratic Party will also continue President Obama’s tactical appeals to “bi-partisanship”.

The goal would be to enlist moderate upper-middle class Republican-leaning professionals into a corporate controlled Democratic Party franchise.

If the Sanders vision prevails, the Democrats will pivot toward their New Deal social democratic roots. In that case, economic solidarity and inclusion become the headline.

Under those circumstances, the Democratic Party would once again aspire to be a mass movement — rather than continue what it currently is: an awkward stitching together of corporate money, social liberals and minority voters.

The curse of money

However, as long as unlimited money is allowed in politics, there is a perennial danger of a backdoor Wall Street takeover. That is because a New Deal Democratic Party would still need money to compete in elections. That leaves an opening for Corporate America and Wall Street to take back control.

That is why limits on money contributions and repealing the Citizens United court decision are so important. It also explains why Sanders has made that the central focus of his political revolution, while Clinton has persistently sought to diminish the issue.

By Thomas l. Palley

MORE FROM Thomas l. Palley

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Bernie Sanders Corporate America Hillary Clinton Marco Rubio The Globalist