Ed Lopez recently reminded us of the pivotal role that Ted Kennedy played in the US neoliberal revolution. (I define neoliberalism as deregulation of market access and pricing, privatization, freer trade, and lower MTRs.)
By the mid-1970s, criticism of airline regulation had moved from academics to economists in think tanks (Brookings, AEI) and in government. At an economic conference on inflation convened by the Ford Administration, the delegates focused unexpectedly on a different idea: existing regulations were producing high prices. Yet as every economist in Washington knows, many reform ideas never become policy. Then came the political entrepreneurs.
First, Senator Ted Kennedy. An ambitious member of the Senate Judiciary Committee and chairman of the subcommittee on administrative procedure, Kennedy saw an opportunity to attack the over-regulated and under-competitive airline industry by critically examining the rules it played by.
Most judiciary subcommittee hearings were mind-numbingly boring, but airlines were sexy, and Kennedy turned the CAB hearings into high theatre, trotting out real but outrageous examples. A flight from Los Angeles to San Francisco (intrastate and thus not CAB-regulated) cost half as much as a flight from Washington to Boston (interstate and CAB-regulated). Even the dimmest reporter could connect the dots. The CAB looked bad. Kennedy looked good, as did the odds for reform.
Then the Carter Administration tapped Kahn to run the CAB. . . .
Kahn built on Kennedy, who built on the work of intellectuals in Washington’s think tanks and policy circles, who in turn built on good academic research. Importantly, he found allies across the political spectrum, from the American Conservative Union to Common Cause, from business interests to consumer groups. This odd mix prevented easy dismissal of reform as the pet project of the left, the right, or any special interest.
With passage of the Airline Deregulation Act of 1978, Congress closed the CAB and left behind an unprecedented example of radical reform.
This success was followed by the deregulation of many other industries, including banking and trucking, all with bipartisan support.
Then in 1986 there was a push for tax reform. The Packwood plan would slash top income tax rates down to 28% (from 70% when Reagan first took office.) A significant number of GOP senators were opposed, but fortunately the highly influential Ted Kennedy stepped up to the plate, and top income rates were slashed.
In the early 1990s both Bush and Clinton fought for NAFTA. But the very popular Ross Perot was opposed, and it was a difficult battle in Congress. Al Gore debated Perot, and swung American public opinion behind the plan.
[Which, BTW, shows the utter meaningless of so-called “public opinion” on issues where the public hasn’t actually studied the issue. It’s not just the framing problem with polls, when the public actually focuses on an important issue, they give very different answers. Were the public to actually study the budget situation, you can be sure that they’d understand the need for something more than taxes on the rich and cuts in foreign aid.]
In the Senate vote Ted Kennedy stood with Clinton, and NAFTA became law.
So next time you progressives bemoan the loss of the glorious 1950s and 60s, with our unionized factory workers protected from foreign competition, and our highly regulated industries, and our 70% to 90% top MTRs, remember the man without who’s support the neoliberal revolution in America might not have been possible.