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politics and foreign policy. Big Oil teamed up with the automobile industry to steer America away from mass transit and toward gas-guzzling vehicles driving on a nationally financed highway system. Big Oil has consistently and successfully fought the intrusion of competition from non-oil energy sources, including nuclear, wind, and solar power. Big Oil has been at the side of the Pentagon in making sure that America defends the sea-lanes to the Persian Gulf, in effect ensuring a $100 billion–plus annual subsidy for a fuel that is otherwise dangerous for national security. And Big Oil has played a notorious role in the fight to keep climate change off the U.S. agenda. ExxonMobil, Koch Industries, and others in the sector have underwritten a generation of antiscientific propaganda to confuse the American people.

The fourth of the great industry-government tie-ups has been the health care industry, America’s single largest industry today, absorbing no less than 17 percent of GDP. The key to understanding this sector is to note that the government partners with industry to reimburse costs with little systematic oversight and control. Pharmaceutical firms set sky-high prices protected by patent rights; Medicare, Medicaid, and private insurers reimburse doctors and hospitals on a cost-plus basis; and the American Medical Association restricts the supply of new doctors through the control of placements at American medical schools. The result of this pseudo–market system is sky-high costs, large profits for the private health care sector, and no political will to reform.

Recent Case Studies of Corporatocracy

Now it’s time to see the corporatocracy at work, to understand how the lobbies dominate policy making at the expense of the nation and contrary to the expressed opinions of the American people. I will explore these workings in four recent case studies.

Case 1: The Extension of Tax Cuts for the Rich

During the 2008 campaign, President Obama said he would support a rollback of the Bush-era tax cuts on the richest 5 percent of taxpayers but sustain the Bush tax cuts for the remaining 95 percent of the population. His campaign pledge to tax the rich involved little more than a rise in the marginal tax rate from 35 percent to 39.6 percent on households with incomes above $250,000. Despite all the sound and fury on tax policy, there was in fact little difference between John McCain and Obama, a difference in essence of 4.6 percentage points on the highest incomes.

Even more tellingly, when push finally came to shove in 2010 on whether to extend the Bush tax cuts even for the rich, Obama rather quickly sided with the Republicans in favoring an across-the-board extension of the Bush-era tax cuts, including for the richest households. The two-party duopoly held firm, despite the crying need for more revenues to stanch the hemorrhaging of red ink.

It might be supposed that public opinion had forced Obama’s hand, but this is patently not the case. In the months leading up to the Obama-Republican agreement to extend tax breaks for the rich, the broad public supported a rollback of the tax breaks at the top. According to the Pew Research Center, a consistent majority of Americans from September 2004 to December 2010 called for repealing the Bush tax cuts on the wealthy or repealing the tax cuts altogether (see Table 7.2).

At the moment of truth during the lame-duck session of Congress in December 2010, only one-third of the public actually supported the extension of the tax cuts for the richest Americans, and nearly 60 percent opposed it. The minority viewpoint prevailed. The political system paid no heed to the public.

Obama and his top advisers have known from the start of the administration about the deep contradictions between Obama’s tax policies and his activist objectives on education, science, and infrastructure. They promised low taxes to get elected and have held to the line. In private the top advisers routinely acknowledge the need for higher tax revenues but declare that they are politically infeasible. Rather than