Why can't Democrats embrace Obama--and then take a step farther left?
by David Atkins
Bill Scher has an interesting piece in Politico that gets to the heart of the core economic policy debate within the Democratic Party, within the context of the Democrats' political dilemma about how closely to embrace President Obama. Here are the key paragraphs on the policy debate:
hite House economic aide Jeff Zients, at a POLITICO Morning Money Breakfast, defended last month’s “CRomnibus” — despite its provision that chipped away at a part of Wall Street reform — because avoiding government breakdowns over the past year boosted the economy with higher GDP, more jobs and, in the last monthly employment survey, “early signs of some wage growth.” He went on to predict the economy was “teed up … in 2015,” so long as Congress did not create “unnecessary distractions.”
From Obama’s perspective, the economy on his watch is poised to end strong, strong enough for the middle class to feel it. GDP growth can still raise middle-class wages; it’s just taken a long time because economies recover slowly from financial crises and because a Republican House, in addition to its past brinkmanship, didn’t allow for additional stimulus. Therefore, it’s worth trading away minor concessions to prevent any whiff of government shutdowns or debt defaults in his final two years. Future Democrats will then be able to hold up his economic record and argue that patiently sticking with his public investments, regulations and reforms paid off with a middle-class firmly on the road to prosperity.
Those Democrats who believe that there is something fundamentally broken with the economy, preventing GDP growth from sparking middle-class wage growth, don’t see the point in protecting the economy from short-term hiccups at any cost. They’d rather dig in their heels to fight concessions that smack of more rule-rigging. In their worldview, the economy won’t get better until that problem is solved.
Obama got what he wanted in December, but mostly thanks to Republican votes. Whether or not he can convince his Democratic critics to come around to his way of thinking will depend heavily on the forthcoming monthly jobs and wage data.
The Democratic scatter plot still largely points in the same direction. “Democrats must embrace government, not run away from it,” exhorted Schumer. None of the squabbling Democratic factions disagree. The intraparty debate is over how to diagnose our remaining economic problems, and how exactly government should be deployed to fix them.
And even the Democrats who want to help the middle class directly seem intent on policies that take too long to implement or that, like tax breaks, the public doesn't actually see as government assistance:
As the New York Times’ David Leonhardt wrote in November, the Democrats have lacked a clear “short-term” economic plan, because their inclination is toward reforms that lack immediate bang for the buck. “Some of the policies that Democrats favor, such as broader access to good education, take years to pay off. Others, like reducing medical costs or building new roads, have an indirect, unnoticed effect on middle-class incomes.” The same can be said of any unrigging of rules such as installing new bank regulations or eliminating corporate tax breaks. Leonhardt’s recommendation for a lightning strike is a middle-class tax cut. The Washington Post’s populist columnist Harold Meyerson proposes it be a payroll tax cut.
These are false choices, though. The Obama Administration and its more moderate allies are wrong about the economic argument that we're simply in a long-tail recovery and that simply keeping things on an even keel will bring middle-class prosperity back around. But they're right that allowing the GOP to create even more economic paralysis and derail what little recovery there is will certainly hurt what little recovery we are seeing, regardless of how brutally the system has been rigged in favor of the rich.
But much of the progressive wing is also somewhat mistaken that all we need to do is "unrig" the economy to benefit the middle class again and everything will be better. Certainly, placing more curbs on Wall Street, taxing the rich and assisting labor will begin to undo part of what has caused rampant income inequality. But it won't fix all of it. The neoliberals aren't wrong that globalization, flattening and mechanization are inevitable downward pressures. That is, after all, why inequality is increasing across the entire developed world regardless of economic and labor policies. It's not just that the rules are rigged. Reality is rigged against the 99%, too. Thomas Piketty realizes this, too, which is why his policy recommendations strike more mainstream progressive types who think we can return to the economic rules of the pre-Reagan era as unnecessarily ambitious. But we can't return to that era. It's gone forever, and not just as a result of political rigging.
As a matter of political realism, however, the argument between the neoliberals, the "unrig the game" progressives and the "reorient the entire system" progressives is almost a moot point. Republicans control Congress, and they've convinced the majority of the midterm electorate that even the mildest of corporate neoliberals are the Communist progeny of Stalin himself. At a national level, anything Democrats do beyond executive orders from the White House is ultimately a political show to win back control for 2016. And as a practical matter, the President will need all the support he can get not only to take bold executive moves, but to be reinforced in his courage to veto horrid Republican bills.
But even when the president inevitably signs off on some terrible conservative legislation attached to desperately needed bills, Democrats need only turn their fire on Republicans for forcing his hand. The ultimate short-term objective, after all, is to regain legislative footing in two years. Moreover, the Administration has in fact accomplished a number of progressive economic objectives in office--something that Paul Krugman has been at great pains recently to point out.
Finally, there's no political cost to advancing bold legislative proposals from free municipal wifi to anti-speculation taxes on Wall Street to student loan forgiveness to even basic universal income, funded in part by progressive taxation. The key is to create a vast contrast between the vision of what America could be, and what the Objectivist conservative cult is trying to turn it into.
So Democrats don't need to choose between shunning or embracing Obama. It's a no brainer: embrace him. And then take a step further left. Embrace the things he has done right, blame the conservative establishment and the financial sector for the areas in which his Administration has been inadequately aggressive, and suggest that we can move together far faster and farther in the future with the lessons learned over the past 6-8 years.
.