American Theocracy (2006)
Allen Dwight Callahan states the book's theme is that the GOP, Radical Religion, Oil, And Borrowed Money are an "Unholy Alliance." The last chapter, in a nod to his first major work, is titled "The Erring Republican Majority." American Theocracy "presents a nightmarish vision of ideological extremism, catastrophic fiscal irresponsibility, rampant greed and dangerous shortsightedness."
The New York Times wrote:
He identifies three broad and related trends ... none of them new to the Bush years but all of them, he believes, exacerbated by this administration's policies ... that together threaten the future of the United States and the world. One is the role of oil in defining and, as Phillips sees it, distorting American foreign and domestic policy. The second is the ominous intrusion of radical Christianity into politics and government. And the third is the astonishing levels of debt ... current and prospective ... that both the government and the American people have been heedlessly accumulating. If there is a single, if implicit, theme running through the three linked essays that form this book, it is the failure of leaders to look beyond their own and the country's immediate ambitions and desires so as to plan prudently for a darkening future.
Phillips uses the term “financialization” to describe how the U.S. economy has been radically restructured from a focus on production, manufacturing and wages, to a focus on speculation, debt, and profits. Since the 1980s, Phillips argues in
American Theocracy,
the underlying Washington strategy was less to give ordinary Americans direct sums than to create a low-interest-rate boom in real estate, thereby raising the percentage of American home ownership, ballooning the prices of homes, and allowing householders to take out some of that increase through low-cost refinancing. This triple play created new wealth to take the place of that destroyed in the 2000-2002 stock-market crash and simultaneously raised consumer confidence.
Nothing similar had ever been engineered before. Instead of a recovery orchestrated by Congress and the White House and aimed at the middle- and bottom-income segments, this one was directed by an appointed central banker, a man whose principal responsibility was to the bankingsystem. His relief, targeted on financial assets and real estate, was principally achieved by monetary stimulus. This in itself confirmed the massive realignment of preferences and priorities within the American system.
Likewise huge and indisputable but almost never discussed were the powerful political economics lurking behind the stimulus: the massive rate-cut-driven post-2000 bailout of the FIRE (finance, insurance, and real estate) sector, with its ever-climbing share of GDP and proximity to power. No longer would Washington concentrate stimulus on wages or public-works employment. The Fed's policies, however shrewd, were not rooted in an abstraction of the national interest but in pursuit of its statutory mandate to protect the U.S. banking and payments system, now inseparable from the broadly defined financial-services sector.
Critical reception
American Theocracy was reviewed widely.
The New York Times Book Review wrote "It is not without polemic, but unlike many of the more glib and strident political commentaries of recent years, it is extensively researched and frighteningly persuasive..."
The Chicago Sun-Times wrote "Overall, Phillips’ book is a thoughtful and somber jeremiad, written throughout with a graceful wryness... a capstone to his life’s work."
Bad Money (2008)
Kevin Phillips examines America's great shift from manufacturing to financial services. He also discuses America’s petroleum policies and the tying of the dollar to the price of oil. Phillips suggests that the Euro and the Chinese Yuan/Renminbi are favorites to take the dollar's place in countries hostile towards America, like Iran. He then tackles the lack of regulatory oversight employed in the housing market and how the housing boom was allowed to run free under Alan Greenspan. The book concludes with the proposal that America is employing bad capitalism and extends Gresham’s Law of currency to suggest that our good capitalism will be driven out by the bad. The book is dedicated to Phillips' grandson, William Russell Phillips.