The “deep state” as a tool for redistribution of income in favor of the rich

Review of Mike Lofgren’s “The deep state”

The term “deep state” started to be used in the United States during the last electoral campaign, and to some extent overshadowed its older “twins”, “the elite” and “the establishment”. There are certain advantages to the use of each of these terms to describe the web of organizations and people that run US domestic and foreign policies, and the “deep state” definitely has its place there.  The term “deep state” itself originated in Turkey where it described the occult power of the Army as opposed to the political sphere that functioned in a seemingly democratic fashion. It was used as well in Italy in the 1960s and elsewhere.

Mike Lofgren in his “The deep state: The fall of the constitution and the rise of a shadow government”  makes a good case that such a “deep state” exists in the United States too. It is not composed, as some mainstream media recently ridiculed the term, of a “shadowy combination of government bureaucrats”. Obviously, it is not bureaucrats who matter. Whoever has spent any time in Washington DC (even just by being around) knows that the “deep state” is not composed of flannel-suited, thick-sole-shoe wearing, pen-in-the-shirt-pocket bureaucrats living on modest salaries and in 90% mortgaged houses. Mike Lofgren, not being a political scientist, does not provide an exact definition, but comes close to it: the deep state  is “a hybrid association of key elements of government and parts of top-level finance and industry that…effectively govern the United States with only limited reference to the concerns of the governed as…expressed through elections” (p. 5).

The deep state includes the old-fashioned military-industrial complex, top of Wall Street and Silicon valley, think tanks and foundations, and the mainstream media, most of them (with the obvious exceptions of Silicon valley and Hollywood) located in Washington, DC and New York. These are people who often seamlessly move between government, its legislative and executive branches, and then when not in power, populate think tanks, sit on the boards of large financial, IT or military-related companies or pen editorials for the mainstream media. They are linked by shared backgrounds, same ideology and even more strongly by shared economic interests. It could be almost said that they are all but one person, so at ease at seemingly very different tasks, Deputy Secretary of Defense, writer of an editorial in the Washington Post, analyst in a top Washington think tank.  As Tocqueville wrote of another deep state from two and half centuries ago: “The nobles held identical positions, had the same privileges, the same appearance; there was, in fact, a family likeness between them, and one might almost say they were not different men but essentially the same men everywhere" (The old regime and the French revolution).

There are two very strong points of Lofgren’s book. First, Lofgren is somebody who knows the system from the inside (he worked for almost thirty years in Congress, sat on the budget and armed services committees and knows personally a number of key political players). He thus brings to the book a knowledge that a political science professor just simply does not have. Second, Lofgren shows that there are strong links between domestic and foreign policy preferences of the deep state. The rising political power of the rich (documented by Larry Bartels and Martin Gilens) and increasing income inequality (documented by so many that it is superfluous to give citations) are, as Lofgren shows, intrinsically linked to domestic policy choices that reduce taxes on the rich, provide an increasing number of loopholes for the rich, curb social spending, but also (and only apparently contradictorily) increase military spending. Why the latter? Because the beneficiaries  from the military spending are precisely the members of the deep state. As Lofgren argues, TARP and military spending are just the two facets of the same coin: the use of government resources for the benefit of the rich.

We should, it seems, stop thinking of  government spending as the opposite of private spending. This is because government spending has two radically different constituencies and two very different objectives. One part of government spending (the one that we traditionally emphasize) serves the needs of the middle class and the poor: social security, Medicare, Medicaid, unemployment benefits. This is the part that, from the point of view of the deep state, should be cut. The second part of government spending is to support (when needed)  the financial sector and  to buy new military hardware. There, the beneficiaries are the people from the other end of the income distribution spectrum: the financiers, owners and managers of large military supplier companies, telecommunications, private security firms and the like. When we think of government in this way, the apparent paradox of Republicans (and many Democrats) being at the same time in favor of smaller government, and TARP and larger military spending vanishes. We are really witnessing a struggle over a quarter of GDP that is redistributed through the federal government: will most of that money go to the pockets of the rich, or to the pockets of the middle class and the poor?

What Lofgren argues is that the deep state has effectively kidnapped the government. Its objective is to use this enormous money-churning  machine to help its own members. But the deep state was able to kidnap the government because it was able to kidnap the Congress, that is to make sure that majority of the members of Congress vote the way that the deep state wants. They were able to do so thanks to an electoral system where winning is practically synonymous with having access to more money than your opponent. This is why Lofgren in the last chapter, where he discusses the changes that need to be done, puts the reform of electoral funding (“ Eliminate private money from public elections”) as the number 1 priority. It all starts there, and then logically unfolds further.  

As always, when you dig deeper, the origins of domestic and foreign policies are to be found in economic interests. An oft-used aphorism says that “all politics is local”. It would be more appropriate to say that “all politics is about money”.