Reihan Salam

This coming Monday, Sept. 17, is the first anniversary of the day when protesters gathered in Lower Manhattan’s Zuccotti Park under the banner of Occupy Wall Street. The occupation was first dreamed up by Kalle Lasn and Micah White, the close collaborators behind Adbusters, a slickly produced, high-art magazine that uses the tools of commercial culture to make the case against capitalism. Having decided that America needed an uprising akin to those that had shattered authoritarian governments across North Africa, Lasn and White chose a date, created an arresting image emblazoned with the Occupy Wall Street slogan, reached out to potential collaborators and then watched as their creation seized the imagination of millions of Americans.

One year on, the encampments that had sprung up in Lower Manhattan and in cities, college campuses and foreclosed homes across the country have for the most part been abandoned. And so at least some observers are inclined to think, or to hope, that the Occupy movement has been of little consequence. That would be a mistake. Occupy’s enduring significance lies not in the fact that some small number of direct actions continue under its banner, or that activists have made plans to commemorate “S17” in a series of new protests. Rather, Occupy succeeded in expanding the boundaries of our political conversation, creating new possibilities for the American left.

As our slow-motion economic crisis grinds on, it is worth asking: How might these possibilities be realized? For some, Occupy was a liberating experience of collective effervescence and of being one with a crowd. As one friend put it, it was “the unspeakable joy of taking to the streets, taking spaces, exploring new relations and environments” that resonated most. For others, it created a new sense of cross-class solidarity. Jeremy Kessler, a legal historian who covered the Occupy movement for the leftist literary journal N + 1 and the New Republic, senses that it has already shaped the political consciousness of younger left-liberals. “There is more skepticism towards the elite liberal consensus,” and so, “for instance, there is more support for the Chicago teachers union and more wariness towards anti-union reformers.” Ideological battle lines have in this sense grown sharper. Yet it is still not clear where Occupy, and the left, will go next.

Perhaps the most politically fruitful path for the American left would be to go back to the future – to draw on the lessons of the Populists of the William Jennings Bryan era, who sought to unite farmers and industrial workers against the stranglehold of Eastern capital. Back then, the Populists failed, as the interests of industrial workers were more closely tied to their bosses than to those of highly indebted smallholders living in the prairies. Now, however, millions of middle-income households struggle under the burden of underwater mortgages.

In the latest issue of the Nation, David Graeber, the anarchist anthropologist considered an intellectual leading light of the Occupy movement, argues that the “financialization” of the economy should be understood as “an enormous engine of debt extraction,” through which the 1 percent extracts wealth from the 99 percent. Rather than champion specific policies designed to reduce the burden of debt, Graeber calls for a campaign of mass resistance devoted to delegitimizing what he calls “Mafia capitalism.” While Graeber’s language is bracing, and it will undoubtedly appeal to at least some radicals who hope to keep the spirit of Occupy alive, it is not obvious that his idea of mass resistance can build a mass movement.

But might a softer version of Graeberism succeed? As the Georgetown University historian Michael Kazin argues in The Populist Persuasion, American populist movements have traditionally pitted the producing majority against a parasitic elite. That is one reason why “We Are the 99 Percent,” the slogan coined by Graeber and his allies, has proved so resonant: It invokes older American political traditions.

And the case for placing debt at the heart of our politics is stronger than you might think. As the heterodox economic thinkers J.W. Mason and Arjun Jayadev recently observed, household debt has climbed from 50 percent of GDP in 1980 to 100 percent just before the financial crisis. Yet according to Mason and Jayadev, this sharp increase does not primarily reflect an increase in borrowing. Had interest rates, growth and inflation remained the same in the three decades following 1980 as they had in the three decades preceding 1980, household debt levels would have actually decreased. One of the central problems, Mason and Jayadev argue, is that inflation levels decreased faster than households could decrease their borrowing levels. Back in 2009, Christopher Hayes, author of The Twilight of the Elites and host of MSNBC’s Up with Chris Hayes, argued that  “a period of moderate, sustained inflation” was essential to addressing America’s economic woes. While this argument seems very technocratic, it has the virtue of speaking directly to the challenge of household debt.

The latest Census data indicates that real median household income in the United States has fallen to levels last seen in 1995. Income inequality, meanwhile, has increased. It is easy to imagine that healthy gains in median household income would mitigate concerns about income inequality as such. But instead, sluggish wage and household income growth have fueled a great deal of anxiety and resentment. Millions of households that had hoped and expected to be climbing the ladder to middle-class prosperity instead find themselves burdened by debt. If the political right and center can’t find a way to revive economic growth and to create shared prosperity, the future might very well belong to Occupy.

PHOTO: Occupy Wall Street protesters relax on a tree at Marshall Park prior to the start of the Democratic National Convention in Charlotte, North Carolina September 3, 2012. REUTERS/John Adkisson

When Barack Obama accepts the Democratic presidential nomination in Charlotte, he will no doubt channel party heroes of the past like Bill Clinton and JFK and FDR, all of whom are celebrated still for their charisma and raw political skills. But he would do well to heed the wisdom of Walter Mondale.

Yes, that’s right. Most Democrats see Mondale as a faintly embarrassing relic from an era in which Democrats had lost their way, and of course there is something to that. He was also one of the last Democrats to make the case that government was worth paying for, not just by the rich but also by the middle-income households that rely on expensive social programs.

By the summer of 1984, Mondale, the former Minnesota senator who had served as vice-president under Jimmy Carter, knew that he was facing an uphill battle for the White House. The brutal Reagan recession had given way to a V-shaped Reagan recovery, and Reagan Democrats were thick on the ground. So Mondale decided to do something very strange at that year’s Democratic National Convention. Rather than make the most anodyne, ultra-cautious, poll-tested argument he and his team could conjure up, he told the truth as he understood it. “Mr. Reagan will raise your taxes,” he told the assembled delegates. “And so will I.”

Mondale lambasted Reagan for his secret tax plan that would “sock it to average-income families” and “leave his rich friends alone,” just as critics of the Romney-Ryan ticket have alleged that the GOP’s conspicuously vague tax reform ideas would almost certainly mean shifting the tax burden downward.

Yet the really interesting part of Mondale’s tax plan that year is that it didn’t just raise taxes on America’s highest-earning households. In an era of relatively high inflation, during which “bracket creep” was a big concern for middle-income families, he called for limiting the indexing of tax brackets for roughly half of all households, a step that raised most of the revenue he hoped to generate from individual taxpayers. There were, to be sure, steeper tax increases for high-income households, but Mondale maintained that all non-poor families should chip in to tackle yawning deficits and to make the investments he believed were necessary to foster “the best-educated, best-trained generation in American history.”

That fall, of course, Mondale suffered a crushing defeat at the hands of a sunny, upbeat Ronald Reagan, who, as it turned out, really did raise taxes in his second term. Reagan’s grand ideas for containing the growth of spending – which included an ambitious swap of responsibilities between the federal and state governments and building on President Carter’s tough reforms of Social Security Disability Insurance in the middle of an economic downturn, to name only two politically explosive money-savers – had been bitterly opposed by Congress and largely abandoned by the mid-1980s. Accepting tax increases was a price Reagan was willing to pay to continue waging his war on Soviet Communism.

In 1985, coming off his huge electoral triumph, President Reagan actually campaigned for tax reform by blasting “unproductive tax loopholes that allow some of the truly wealthy to avoid paying their fair share,” as Tim Dickinson recounted in an anti-GOP jeremiad published last year in Rolling Stone. In classic fashion, the Teflon president embraced the popular part of the Mondale message and discarded the rest.

The lesson battle-hardened Democrats of that era learned was that they could never again openly call for tax increases on middle-income households. Bill Clinton, at the time the conspicuously young governor of Arkansas, took the lesson to heart when he pledged during his 1992 presidential run to cut taxes on middle-income households and to raise them on households earning over $250,000. The Clinton administration did succeed in persuading a Democratic Congress to raise the two top marginal tax rates on ordinary income as part of its 1993 budget deal. In his second term, however, President Clinton agreed to a deep cut in capital gains taxes backed by a Republican Congress in 1997, a move that helped fuel the investment boom of that era. Clinton had successfully reinvented the Democrats, GOP protestations notwithstanding, as a low-tax party.

Recognizing the success of Clinton’s tax pledge, then-candidate Barack Obama made the same promise, even using the same $250,000 threshold, despite the fact that $250,000 in 1992 would have been worth roughly $380,000 in 2008. The bigger difference between 1992 and 2008 was that the Bush-era tax cuts meant that there was far less scope for cutting the taxes paid by middle-income households.

The tax overhauls of the Clinton and Bush years had made the federal income tax highly progressive. To be sure, factoring in payroll taxes and state and local taxes makes the overall U.S. tax burden considerably less progressive. But the tax systems in most affluent democracies are actually slightly regressive, as they rely more heavily on national consumption taxes to fund universal social programs. The central virtue of these tax systems is that they undermine work incentives less than progressive tax systems that rely heavily on high marginal tax rates.

So now, as President Obama runs for a second term, he faces a serious dilemma. Despite having inveighed against the Bush-era tax cuts, he has committed himself to preserving the four-fifths of them that apply to income that falls below the all-important $250,000 threshold. At the same time, he has pledged to protect Medicare, expand Medicaid, and create a new health entitlement for young and middle-aged Americans who aren’t covered by either program, commitments that will grow more expensive as the U.S. population ages and as the voting public demands expensive new medical treatments and who knows what else.

Republicans are in a similarly tight spot. In his epic Wednesday night speech, Bill Clinton came roaring out of retirement to warn swing voters that Mitt Romney has backed extremely deep cuts to the Medicaid program. Political genius that he is, Clinton realized that while Medicare has attracted all of the attention, it is Medicaid, which covers almost 50 million beneficiaries, many of them elderly voters in need of nursing home care, that is the real sleeper issue of this election. In the very likely event that a President Romney refused to follow through on politically toxic Medicaid cuts that would leave voters and Republican governors howling, he would either have to preside over a significant tax increase or allow debt levels to keep spiraling out of control.

Other affluent democracies pay for social programs through value-added taxes that are embedded in the cost of virtually all goods and services, a measure that Paul Ryan has seriously considered as a replacement for America’s jerry-built corporate income tax. It is safe to say that the president is not going to go down this road, at least not before November.

Obama has thus left himself with only one option for raising revenue. He will have to raise taxes on high earners to levels far higher than those that prevailed during the Clinton boom. The Obama White House has, for example, championed the idea of curbing tax deductions and credits for over-$250,000 households. Soaking the rich might be a cherished tradition in Democratic politics, but as effective marginal tax rates approach 50 percent, the impact on incentives would be brutal.

The irony is that President Obama might have been better off taking a page from Walter Mondale and forthrightly arguing that universal health coverage and high levels of public investment and a fairer society and a greener environment and everything else Democrats want from government are actually worth paying for – not just by the top 2 percent of the top 1 percent, but by the top 50 percent. The only real alternatives are rolling back the growth of government, Ryan-style, or accepting sluggish growth for years to come.

PHOTO: Minnesota Democratic senatorial candidate and former Democratic presidential nominee Walter Mondale smiles at a student’s question at a town meeting at Macalaster College in St. Paul, Minnesota, October 31, 2002. REUTERS/Stringer

TAMPA, Florida – If you’ve been watching the Republican National Convention at home, you probably missed the speech former Representative Artur Davis of Alabama gave on Tuesday night. Sandwiched between Ted Cruz, the Tea Party darling who won an impressive come-from-behind victory in Texas’s GOP Senate primary, and Nikki Haley, the strikingly youthful Indian-American governor of South Carolina, Davis was overshadowed in most of the media coverage. MSNBC decided not to air Davis’s speech at all, which was a noteworthy omission given that Davis had cut his political teeth as a Democrat and indeed as an enthusiastic early backer of President Obama.

But on a star-studded night, before hotly anticipated speeches by Ann Romney and conservative action hero Chris Christie, it was Davis who gave the most effective performance. It was so effective, in fact, that I heard many of the assembled participants speculate about which office he’d run for next.

Party switchers are a staple at these quadrennial affairs. They dramatize the case against the opposition by offering dispatches from within the belly of the beast and signal that it’s safe for voters to forswear their old allegiances. And so they serve the double function of rallying the base and wooing the center.

Perhaps the most notable party switcher in recent memory was Zell Miller, the then-U.S. senator and former governor of Georgia, who gave a spellbindingly zealous speech at the 2004 Republican National Convention. Having once been the centrist Democrat par excellence, practically inventing Bill Clinton’s Third Way playbook, Miller let loose a torrent of rage at Democratic nominee Senator John Kerry that delighted rock-ribbed conservatives everywhere — and may well have frightened small children.

Miller’s fiery address foreshadowed the results of the 2004 election. White southerners, many of whom had retained some vestigial loyalty to the Democratic party of their forefathers, flocked to George W. Bush and the GOP, which helped the party make significant gains in the U.S. Senate. This consolidation of the South has had a deep and profound impact on our politics, in part by sparking an equal and opposite reaction that has driven much of coastal urban America into the arms of the Democrats.

Which is why Democrats have had their own bumper crop of party switchers. This year they’ve pulled off a coup by including Charlie Crist, the ex-Republican former Florida governor once known as “Chain Gang Charlie” for his draconian law-and-order enthusiasms, on their roster of speakers for the Democratic National Convention in Charlotte. It’s almost as though the Democrats took a look at Artur Davis and said, we’ll see you your congressman and raise you a governor.

Among the cynical journos whose tweets I had the distinct displeasure of reading that night, there was a derisive, sneering tone toward Davis, with many observing that the former Alabama congressman, an African American raised by a single mother, was unlikely to sway black voters.

What the critics failed to understand is that Davis’s address, unlike Zell Miller’s, was not about making an ethnic or regional appeal. Rather, he served as a stand-in for a kind of upwardly mobile, aspirational voter you’ll find in many American communities. Davis was raised in humble circumstances in West Montgomery, Alabama. But he also attended Harvard College and Harvard Law School, where he proved an academic success. He later returned to Alabama to serve as a prosecutor. In those years, he embraced the moderate wing of the Democratic Party, and in particular the pragmatic centrism of Bill Clinton. Unlike most elite-educated professionals of his vintage, he didn’t embrace a hard-edged social liberalism. He tried to find ways to reconcile left and right and white and black, and he saw Clinton’s message of hope, growth and opportunity as the right way to do it.

Now, however, having served as a Democrat in Congress under President Obama, and having lost a bruising, ideologically charged Democratic gubernatorial primary in his home state, Davis has changed teams. Not surprisingly, his erstwhile allies have been notably unkind. Once feted as the new face of black Democratic politics and as the “Alabama Obama,” various fair-weather friends have condemned him as an opportunist.

The simple truth is that as the Obama years wore on, Davis found himself agreeing more and more with right-of-center figures like Indiana Governor Mitch Daniels, New Jersey Governor Chris Christie and former Florida Governor Jeb Bush. Their tough-minded, whatever-works pragmatism resonated with his experiences, while the Obama administration’s highly ideological approach did not. Davis anticipates, in his words, “the rise of a reform-oriented center-right that is bent on restoring accountability and market principles to public systems” over the next decade.

The really interesting question about Davis’s political future is whether the GOP will become the party of Daniels and Christie and Jeb Bush or, as its critics allege, something narrower, angrier and more ideological. Davis has made it clear that he believes conservatives should seek to reform and improve government as well as contain its growth. This is a conviction widely shared among real-world Republicans. Yet apart from the aforementioned governors, all of whom have their idiosyncrasies, it has few convincing champions in the Republican political class, least of all in Congress.

If Mitt Romney is elected president, he will have a brief window of opportunity to seize this ground and to make the GOP the party of reform, aspiration and inclusiveness. If he pulls that off, Artur Davis will be the harbinger of a much bigger, more consequential shift.