Kevin Phillips
Kevin Phillips; drawing by David Levine

Phillips’s three major threats to the nation are well chosen, and he presents much information about them; but he could usefully have considered other perils to the US as well. The rising cost of health care, for example, is as grave a concern as the three issues on which he concentrates. Unless that system is radically reformed the US will face a future in which growing numbers of people will not receive adequate treatment. The cost of education is on a similar trajectory, as the chances of getting even a minimal education in the poorer neighborhoods become smaller. Similarly urgent are the failures of the economy. Despite rapid increases in productivity, which is historically the source of a rising standard of living, family incomes are not growing. In fact, after the five recent years of economic expansion, median family income is roughly what it was in 1999, even though wages at last rose early this year.

In foreign affairs, one could argue that oil dependency and born-again religion have much influence over this administration’s unfortunate policies. But they cannot alone account for its advocacy of preemptive war and its concerted efforts to update, improve, and build new weapons, including nuclear weapons, for conventional warfare. Bush’s assertion of presidential authority to ignore Congress and authorize wiretapping, torture, and illegal detentions threatens the principles on which America’s republican democracy is based. Phillips does not give these threats the attention they deserve.

Still, the damage being done by the administration’s irresponsible energy policies, more evident by the day, is an appropriate place to begin a book on American ills. Despite its having reduced the use of oil over the past thirty years as a percentage of the nation’s income, America is still by far the world’s largest user of oil, consuming 25 percent of the world’s daily production. Most of this is for transportation. Of the 520 million cars in the world, 200 million are driven in America, while the US makes up only 5 percent of the world’s population. It also has only 3 percent of the world’s petroleum reserves, meaning growing imports are a certainty. Domestic production has been falling for decades.

Drawing on previous history, Phillips argues that the price of oil, now more than $70 a barrel, could go higher than $100 a barrel as worldwide reserves begin to decline. If his predictions come true, this could drive fuel and gasoline prices to levels that could seriously slow down the American economy. At more than $3.00 a gallon today, gasoline prices may soon start restraining economic growth. But long-term forecasting of oil prices has usually been unreliable and overly pessimistic. Of greater concern than dwindling reserves is the increasing demand for energy by newly expanding economies, notably China and India. Prices are now more than double what they were two years ago, and are likely to stay relatively high as long as the world economy grows. In addition, access to oil production is increasingly threatened by both political and natural events.

The biggest exporters of oil to the US are Canada and Mexico. But the fourth largest, Nigeria, may be on the brink of a civil war that could threaten production. Venezuela, another major oil exporter, is increasingly antagonistic to the US and American oil companies. Bolivia recently announced plans to nationalize foreign-owned natural gas companies. The US imports about 17 percent of its oil from the Middle East, a proportion that will rise. When Iran first threatened to cut off exports to the US during the current dispute over its nuclear program, oil prices jumped and have only risen further as tensions increase. Russia, a major producer, has been using its oil and natural gas reserves as a political weapon, threatening to shut down flows of oil and natural gas to the rest of Europe if it doesn’t get its way. Gasoline prices also rose to $3.00 a gallon, if only temporarily, after Hurricane Katrina devastated refining facilities in the Gulf last summer.

A serious energy policy providing for security, diversity of sources, and, most important, conservation is necessary. But as Phillips shows in detail, such a policy is stymied by a US administration that is highly sympathetic to the powerful oil companies that would rather promote further exploration than reduce oil use. It is also an administration that does not want to ask Americans to make sacrifices. This was a political lesson learned from the Reagan administration, which successfully portrayed President Carter as a weak and confused pessimist because he called attention to the limits of natural resources. “The glory of the twentieth century is now the burden,” writes Phillips somewhat rhetorically.

Oil has soaked deeply—in all likelihood indelibly—into the politics and power structure of the United States, partly because over two bountiful centuries it has also seeped, spouted, and oozed up from so many sections of so many states. More than a fuel, oil became a heritage and also the basis of a lifestyle.

Oil was first produced in volume in Ohio, Pennsylvania, and West Virginia, and later Louisiana, Texas, Oklahoma, and California. Oil companies and auto companies were among America’s largest throughout much of the twentieth century, and Rockefellers, Fords, and Dodges were among the nation’s richest people. As late as 1982, as Phillips observes, the fortunes of half of the top thirty of those on the Forbesmagazine list of the 400 richest Americans originated in petroleum. It is also to be expected that a huge nation with tens of millions of drivers will demand low gas prices. As Phillips shows, the high excise taxes of the kind levied in Europe to conserve oil have always been resisted in America, particularly by the auto industry and its powerful allies.


The willingness of much of the public to use less oil in the 1970s under President Carter suggests, however, that solutions to difficult problems are not beyond the nation’s capacity. When Arab oil countries, along with some others, formed their cartel in the early 1970s, oil prices rose fourfold by 1974 and doubled again at the end of the decade. But higher prices reduced demand in the late 1970s and early 1980s and promoted the use of more efficient cars and other products, as did new government regulations requiring better performance. The average car was built to drive twenty-five miles per gallon by 1985, compared to fifteen miles per gallon ten years earlier. Home heating units and a great many appliances became much more efficient in conserving energy. The Reagan administration, however, turned away from regulation and conservation, and promoted domestic exploration, although Phillips is not clear why we cannot adopt policies similar to those of the Seventies again.

In the years that followed—under both George Bush Senior and Bill Clinton—a great opportunity to maintain conservation efforts was tragically missed. The crude oil price fell sharply in the 1990s to one third of its high, and American oil consumption soared again. By 1999, almost half of all new cars were gas-guzzling minivans, SUVs, and light trucks. Between 1990 and 2002 oil interests gave $159 million in campaign contributions to American politicians of both parties, but particularly to Republicans. The transportation industries gave $256 million. They made huge contributions to the Bush presidential campaign of 2004. For many years, as Phillips writes, these industries avoided regulations intended to produce both cleaner air and higher mileage for cars. The Bush administration maintained special tax treatment benefiting the energy industry and discouraged public investment in alternative fuels. SUVs in particular enjoyed a government-mandated privilege: because they were classified as light trucks, they were not subject to the gas mileage requirements for passenger cars.

By 2004, Phillips writes, “an oil, automobile, and national-security coalition had taken the driver’s seat.” Of all the major oil- and gas-producing states, only California voted for John Kerry. According to one survey cited by Phillips, Americans who drove the most, especially those who drove large SUVs and full-sized pickup trucks, supported Bush by a wide margin.

Phillips also argues that oil dependency had an important part in the American decision to go to war. Access to Iraqi oil, he believes, has long been on the minds of the Bushes, father and son. Both made personal fortunes thanks to the family’s oil interests, and Vice President Cheney, the former CEO of Halliburton, also got rich on oil. Before the first Gulf War, George H.W. Bush said, we “would all suffer if control of the world’s oil reserves fell into the hands of Saddam Hussein.” According to one source cited by Phillips, Cheney closely studied maps of Iraqi oil reserves before the 2003 Iraq invasion to determine how much could be sold on the market to depress prices.

No doubt, the Iraqi oil fields were a tempting target of the US. Iraqi oil is plentiful and under Saddam Hussein was cheap to produce. Falling prices would have been a help to the US economy, while a friendly source of oil reserves would have made the US less beholden to Saudi Arabia, from which, as many in the government observed, most of the September 11 terrorists originally came. The oil companies who stood to benefit were strong political supporters of both the President and Vice President. David Frum, Bush’s former speechwriter, wrote in his book The Right Man that the war was designed to bring new stability “to the most vicious and violent quadrant of the Earth—and new prosperity to us all, by securing the world’s largest pool of oil.”

Frum was referring here particularly to Saudi Arabia and other Gulf nations that seemed in danger of revolution. But Phillips does not make a convincing case that the central purpose of the war was to gain access to Iraqi oil. It seems more likely that the control of Iraqi wells was seen as an added benefit of the war. But the reader does not have to accept all of Phillips’s claims to be disturbed by the obvious threats to national security posed by dependency on oil. Fear of Soviet influence in the Mideast oil region has long encouraged the US to cultivate dictatorial regimes there. If the Bush administration was counting on cheap oil from Iraq to reduce prices and American energy dependency, this was yet another example of its gross incompetence. Iraqi oil production is still well below pre-war levels.


But Phillips sees no way out. America’s aging system for supplying energy, he writes, which is “guarded by a globally aggressive, entrenched-interest political coalition, is a harbinger of costly confrontations and military embroilment likely to lead to national decline.” Yet according to recent public opinion surveys, a large majority of Americans are now demanding new energy policies as prices rise and the damage from carbon emissions is more widely acknowledged. The Apollo Alliance, a Washington-based group involving many businesses, labor unions, and environmentalists, for example, is proposing a series of investments in alternative energy sources, more efficiently heated buildings, better transportation planning in cities and suburbs, and new regulations on energy use.3 If these measures could be carried out, the nation would be far less dependent on energy, and the economy would produce more domestic jobs as well. Such a strategy would require large-scale funding and national planning, and a willingness by politicians to take on the powerful interests. But it is not inconceivable that a new Congress could take steps in this direction and even ask Americans to accept new taxes to pay for it. Phillips does not discuss such a possibility.


The spread of fundamentalist religion in America is Phillips’s second concern, and his analysis of its growing influence is sobering. As he shows, the rise in fundamentalist Protestantism has come at the expense of the more moderate churches. “For the nearly four-decade period between 1960 and 1997,” he writes,

…the Presbyterian Church, the Episcopal Church, the United Church of Christ (including the Congregationalists), and the Methodists lost between 500,000 and 2 million members each—the last being the Methodist slippage. In the meantime, the Southern Baptist Convention added 6 million, the Mormons 3.3 million, the Pentecostal Assemblies of God 2 million, and the Church of God (Tennessee) some 600,000.

Phillips says that one in four Americans is now affiliated with self-described evangelical or similar churches, an estimate that does not include the rising numbers of Mormons and members of other sects. The calculation also does not include a similar evolution among Catholics.

The growth of such religions accounts for widespread belief in the literal truth of much of the Bible, he argues. According to surveys, Phillips writes, many Americans believe that Noah’s Ark and the parting of the Red Sea happened just as the Old Testament describes. He cites polls indicating that 70 percent of evangelicals believe the world will end in Armageddon in a battle between Christ and the Antichrist while 30 percent of other Protestants do. Phillips finds that the so-called red states that vote Republican almost all have high levels of evangelical residents. Religious preferences, he argues, tell us as much as any other factor about the current political alignment.

It is true that President Bush’s support has been strongest among evangelicals, and among practicing Christians generally. Of those Americans who attended church more than once a week, nearly 70 percent said they would vote for Bush before the 2004 election. Only 40 percent of those who went to church a few times a year reported they would vote for Bush. To Phillips, the Republican Party has become America’s first religious party, and it leans toward policies that reflect the predilections of these religions, including “zealotry, exaltation of faith over reason, too much church-state collaboration, or a contagion of crusader mentality.” In this new religious atmosphere, Phillips finds a ready willingness to go to war and the foundation for what he calls an “American Disenlightenment.” Among the examples of what Phillips describes as a war against reason are the call for teaching creationism, the castigation of stem cell research, the refusal to accept the scientific findings confirming global warming, and the pandering by President Bush and his brother Jeb to those who asserted a right to life on behalf of Terri Schiavo.

But religion by itself is not necessarily a cause of right-wing zealotry. After all, Jimmy Carter is a born-again Christian who has recently written a book emphasizing humanistic Christian beliefs. Evangelism among black Americans typically favors progressive political programs such as universal health care. More than a few liberal evangelist churches have rapidly increased their numbers, among them the followers of the Call to Renewal movement in California, led by Jim Wallis, which has taken strong positions in favor of abolishing poverty and providing health care for all.

Phillips could have said more about the sources of right-wing religious fundamentalism. He believes the rise of a powerful religious right has partly been the response to the efforts of liberals in the 1970s to “remove religion from the public square,” whether by barring school prayer, for example, or ignoring religious objections to abortion. It was stimulated further, he argues, by Bill Clinton’s marital infidelities in the 1990s. But evangelical religion, often with an anti-intellectual bias, has had a strong presence in America for many years. During the 1950s there were clearly religious underpinnings to McCarthyism, to irrational fears of communism, and to the cold war in general. When the cold war effectively ended in the late 1980s, an enemy had been lost, and Americans turned their religiously directed moral outrage to other outlets.

Attributing the war in Iraq and Bush’s right-wing policies chiefly to religious fundamentalism in America is in some ways similar to attributing much of today’s terrorism to Islamist fundamentalism. In both, religious doctrine can be a strong direct cause, but it is equally true that poverty and falling wages, national humiliation, high levels of unemployment, and lack of economic development contribute to a rise in dangerous extremism. Phillips cites two scholars, Martin E. Marty and R. Scott Appleby, who write:

Fundamentalisms arise in times of crisis, real or perceived. The sense of change may be keyed to oppressive and threatening social, economic or political conditions, but the ensuing crisis is perceived as a crisis of identity by those who fear extinction as a people.

Phillips argues that the events of September 11 stimulated just such irrational fear of extinction, a conclusion that seems supported by some of the panicky reactions that could be observed throughout the country after September 11. But there were other confusing and threatening changes in American circumstances long before 2001, and, clearly, the rise of fundamentalism started well before 2001. In the 1970s, inflation and slow growth badly hurt most Americans, and the economic expansion of the 1980s, on balance, did not help middle- or low-income male workers. A large proportion of men saw their incomes fall or at best stagnate over twenty and thirty years. At the same time many men felt they were faced with threats to their dominance such as the rise of feminism and growing opportunities for women to work, not to mention the loss of jobs and entire industries to foreign economies. Such factors may help to explain why many working men have turned to religion in search of a confident sense of identity, and a reassertion of aggressive patriotic convictions favoring militarist foreign policy.

By not considering in more detail the historical causes for the rise of evangelical fundamentalists, Phillips misses opportunities to see how their effects on public life might be mitigated. Similarly, he finds the turn of the American South to the Republican Party a permanent change in American life. But there are other causes of political extremism beyond religious fervor. For most of American history the South has been underdeveloped economically. A government that could constructively respond to people’s deepest fears, whether economic, social, or indeed physical, might also soften the harshest and most destructive tendencies of religious evangelism.

There are encouraging signs that Americans are turning against right-wing religious priorities. Two thirds of the people surveyed disagreed with the view of the President, his brother Jeb, and Senate Majority Leader Bill Frist that the government should intervene in the Schiavo case. There has been a backlash against pressures to teach intelligent design in the schools. A majority of Americans still favor providing individuals with choice with regard to abortion, notwithstanding the views of the evangelical churches. A Pew Research Center survey shows that in March, only 54 percent of white evangelicals approved of President Bush’s performance compared to 72 percent in early 2005. In modifying some of the conclusions about religious influence that once seemed clear, such tendencies suggest that deep trends in political opinion often are not adequately reflected in surveys.

Phillips’s third concern, the rise of personal and public debt, has become more urgent during the last two decades. The rapid increase in personal and public borrowing began with the Reagan presidency, when the federal government, consumers, home owners, and businesses borrowed at a faster pace than their incomes grew. In the late 1990s, the federal government under Bill Clinton at last produced budget surpluses, but private debt rose to still greater levels. Today, the federal government is again running deeply in the red, and consumers and home owners keep borrowing at high rates as well. America’s level of debt is at its highest during the last onehundred years, some three times as large as the annual Gross Domestic Product.

Phillips makes several strong points about the debt. First, the nation’s finances are spread thin. Consumers owe so much that a downturn in home prices or a mild recession could make it difficult to repay debt, ultimately endangering the financial institutions that made the loans. Meanwhile, the federal government is increasingly beholden to foreign governments such as China to buy its bonds because the US does not save enough to buy up its own debt. But nations like China are willing to buy American debt principally because the dollar remains the world’s major reserve currency. If faith in the dollar falters, these nations may start to sell US debt and other assets. This could occur if, say, oil exporters demand payment in euros or yen, or the Chinese decide to diversify their vast reserves into other currencies. It could also occur if investors generally lose faith in the ability of the US economy to keep growing. If US bonds begin to be sold in large quantities, that would drive up interest rates and send the dollar down further, which would in turn create further inflation as import prices rise. A downward spiral could be difficult to stop.

This is no doubt a threat to American prosperity. It could bring on an economic cataclysm, but there are safety measures built into the system, including government programs such as unemployment insurance, Social Security, and health care, that strongly support the economy even when private markets are faltering. What should be clear is that adding to the federal deficit in order to provide tax cuts, as the President has done, is precisely the wrong policy in these circumstances. Such deficits can be defensible; they support spending for needed education, transportation, and daycare that might promote growth in the future, but otherwise they add danger to an already precarious situation.

More important to Phillips, it seems, is that the high profits of banks and brokerage companies—together they now earn more than all manufacturers in America—have enabled the financial industry to exercise a heavy influence on politicians and on the press and television. Over the past few decades, government regulations and safeguards against conflicts of interest and excessive speculation have been badly weakened, giving these institutions still greater power to promote debt and spread their influence. The wave of fraud uncovered at companies like Enron, WorldCom, and at many mutual funds and abetted by some of the nation’s most prestigious lawyers, investment banks, and accountants, is partly the consequence of deregulation encouraged under Democrats, Republicans, and indeed the former chairman of the Federal Reserve, Alan Greenspan.

Is decline inevitable as a result? Phillips’s weakest arguments take the form of historical analogies. He observes that overreliance on debt in seventeenth-century Spain, eighteenth-century Holland, and nineteenth-century England preceded the declines of these nations. He makes similar analogies to dependence on energy resources, such as wind and water in Holland before its decline, or to the rise of evangelical churches in England, which he sees as having weakened central power. Such analogies contain informative bits of history but they are oversimplified. Phillips points out that Americans have taken on debt before to finance their economy; but he warns that the American economy was then young and full of vitality. Now, he argues, the economy is mature and has taken on excessive debt that will lead to decline. But the American economy must have seemed mature in the late nineteenth century, when the US overtook Britain in size and power. In the 1930s, many of the most respected economists believed that American technologies had been fully exploited. The same claims were made in the 1970s. It might be argued that after more than two hundred years of prosperity the American economy will now have difficulty growing in a globalized world, despite the advent of the so-called information age. But Phillips’s predictions that the US economy is destined to decline need more supporting argument than he supplies.

Debt in itself is not likely to bring down a strong economy. The greater danger, I think, is that the financial industry will steer capital away from manufacturing, research, and new ideas and toward the easy profits to be made by investing in the financial markets. This is already eroding the nation’s economic base. Still, the undue power and influence of the banks, investment houses, hedge funds, and other financial institutions could be remedied by laws against market manipulation, requirements that businesses be more transparent, and rules against excessive speculation. Today such laws may be beyond the American political system, but the nation has reversed course in the past under equally unlikely circumstances.

What Phillips sees as new problems have confronted America in different forms for two centuries. The very sources of its success have periodically come back to haunt it. Had Phillips not been so determined to conclude that decline is inevitable, he might have considered how in the past the US has overcome historical rigidities and the influence of powerful interests. The history of the US can in fact be seen as the growth—often in opposition to the entrenched legal protections—of markets, business competition, and wages; and central to that growth have been the successful demands to expand civil rights, including the right to vote, as well as to increase public investment in schools, transportation, and defense.

Particularly troubling are the challenges to the US that Phillips does not address. The potential bankruptcy of General Motors suggests one of the nation’s greatest concerns. America’s systems of health care and private pensions have long been deliberately linked to jobs through tax benefits for corporations. But now, as these companies fail, they reduce their coverage and they do not pay off their pensions. The system of private social protections is unraveling.

Phillips did not foresee fully the damage done by the Republican majority as a counterforce to what he once saw as the tendencies of liberal Democrats to promote social engineering and anti-religious sentiment during the 1960s and 1970s. The Republicans succeeded by portraying government social programs and market regulations as obstacles to the nation’s progress. In doing so, the new Republican majority crippled the most important instruments with which to deal with a rapidly changing world. The neoliberal system of largely unregulated markets has had its share of spectacular economic developments, information technology high among them. But it never alone could solve the nation’s major problems, and now, increasingly unregulated, the oil and finance industries, among others, are doing much damage. The Republican majority has been taken over by extremists who promise their own version of social engineering, from teaching intelligent design in public schools to the promotion of various “pro-life” causes.

The test of an industrialized nation is whether it can maintain a balance between community and private interests. To what extent is America doomed to decline as a result of the policies imposed by the Bush administration and its allies that favor the rich and powerful? This is the unspoken issue that hovers over Phillips’s book. For all its dramatic and useful emphasis on oil, evangelism, and debt, it remains too narrow in its approach to fully engage the large threats we face.

This Issue

June 8, 2006