Kevin Phillips’s latest book about the calamity in the American economy is a new and depressing elaboration on a theme he first identified in the 1980s. That was when Ronald Reagan and the Congresses he intimidated turned government over to lobbyists and PR firms. Reagan and the new Washington elite brought an unprecedentedly pro-capital, anti-labor, pro-oil, anti-environment, and pro-deficit policy mix to Washington. In Bad Money, Phillips shows how the George W. Bush formula of governing with huge deficits, tax relief for the highest-income and wealthiest Americans and an anti-regulatory environment—all features of Reaganism—have probably doomed the United States to becoming a second-class power.

The bad news, as the case of Mark Penn shows, is that Democrats are part of the problem, too.

Penn, the former Clinton strategist who left the campaign because he couldn’t serve her and his clients as well, is a creature of the Washington culture created during the Reagan years.

Penn’s conflict illustrates how Washington works—how the people who advise, make ads for, write speeches for, take polls for, and devise messages for the candidates for the White House and for Congress are hired by anybody with a bank account big enough to pay.

Penn’s firm works for Countrywide Financial, the lender that many in Congress criticize for having allegedly lured thousands of financial neophytes into mortgages they couldn’t handle, thus helping to create the credit crisis. Penn’s firm also represents Blackwater, the outfit to which George W. Bush has outsourced so many functions in Iraq.

No surprise—Countrywide and Blackwater and hundreds of other major corporations are major political campaign funders. They give money to influence government officials, who in turn either give these companies public money or shape law and regulation to give them special treatment.

Just as Alexander Hamilton, Thomas Jefferson, John Adams, George Mason, and the rest of the founding fathers intended, right?

Blame it on the Bill of Rights

If you’re inflamed about Mark Penn and the Colombia caper, blame the First Amendment of the United States Constitution.

The First Amendment guarantees us the right of free speech. The Constitution established your right to seek “redress” and to “petition” the government. That’s what Mark Penn and his Washington PR firm were preparing to do, in the pay of and on behalf of the government of Colombia’s quest for a free-trade deal with the United States.

It’s all legal—and despite the complaints of anti-corruption advocates like Common Cause, Citizens Against Government Waste, and the many advocacy groups spawned by Ralph Nader—it’s probably not going to change, no matter who is elected president.

Meanwhile, over at Clinton for President headquarters in suburban Arlington, Virginia, another aspect of the First Amendment is in full force—within limits.

Lots of money, lots of donors

Hundreds of thousands of individuals have given unprecedented amounts of money to the presidential campaigns of Hillary Clinton, Barack Obama, and John McCain. In March, the Clinton campaign collected more than $20 million in donations. Obama’s campaign collected more than $40 million.

Individuals can give no more than $2,300 apiece to a federal candidate. No matter how rich you are, you can’t give more than that to the candidate of your choice.

Of course, loopholes exist. You can spend unlimited amounts of cash if you set up an “independent expenditure committee,” a so-called Section 527 group, like the one that ran the Swift Boat attack ad against Senator John Kerry in 2004. If you choose to do so—as many business interests and wealthy individuals have done—you can buy TV ads and send direct mail or post Internet messages to your heart’s content, just so long as you don’t have any connection to a presidential candidate.

But at the actual campaigns, money tends to look like democracy.

That so much money comes from so many donors indicates that rather than a narrow, self-interested base of support from the lobbyists, corporations, and special interests who own Washington, each of the candidates has successfully generated genuine support. Clinton, Obama, and McCain have each convinced many hundreds of thousands of Americans to take after-tax, non-deductible, legally limited dollars and invest them in a candidate with whose views they agree or in whose judgment they trust.

If the other money is bad, this is pretty much as close as political money gets to being good.

But what should we think about personal money?

Congressional seats

for aristocrats?

In the campaign about to begin in the Buffalo area, a couple of potential candidates are weighing whether to bring a couple of million dollars apiece in private funds to a public process.

Jeffrey Lewis, a Republican, has reportedly committed $3 million of his personal wealth to his candidacy for the 26th District seat being vacated by the retiring Congressman Tom Reynolds.

Jack Davis, the Democrat who twice lost against Reynolds, has reportedly committed $2 million of his personal wealth to running again.

Meanwhile, 28-year-old Jon Powers, an Iraq combat veteran with no personal wealth available to invest, has doggedly gathered support from the Democratic party committees of Niagara, Orleans, Genesee, Wyoming, and Livingston counties, plus a bunch of towns and unions—and has raised a quarter of a million dollars from a couple of thousand individual donors.

Money itself is no guarantee of success. If it were, then Jack Davis would have bought himself a congressional seat by now.

While it would be naïve to think that private money is inherently clean or inherently dirty, there is something fundamentally un-democratic about one big donor writing one big check to purchase the instrumentalities of candidacy—research, speeches, TV ads, message-development, signage, and campaign strategy.

Yet it has happened a lot recently. Jon Corzine, the seat-belt-wearing progressive Democrat who is governor of New Jersey, relied on his $100 million Wall Street fortune to drown out his Republican opponent. Hillary Clinton loaned herself $5 million to get through a cash-flow crunch.

There is a better way, and it’s called public financing of campaigns.

But because Congress is peopled by folks who come out of the Washington machine of which Mark Penn is that rare visible component, there is unlikely to dawn a day when campaigns will be funded exclusively by public dollars. Until campaigns are publically financed, we won’t have a politics of competing ideas, but of competing interests—each of which pays for the best messaging money can buy.

Click Here to read Bruce Fisher’s review of Kevin Phillips’ new book, Bad Money on AV Daily.