The progressive movement is at a challenging but fascinating time in our country's history. Even when the Democrats had a newly elected President who ran on a platform of big change, 60 votes in the Senate, a big margin of control in the House and the most progressive Speaker in history, we still had trouble getting big changes passed. We accomplished some important things, but not nearly as much or as progressively as we had hoped. Now, with a Republican House, only 53 Democratic senators, and a President who has signaled he wants to move more to the center, progressives have even less power than before.
There's one other factor that even this old-school, lefty populist needs to acknowledge at this moment in our political history: While most voters remain very angry at Wall Street, health insurance companies, big businesses that keep outsourcing jobs, and other corporate special interests, they also are very angry with a government that seems pretty dysfunctional. Swing voters in particular are generally tired of traditional political arguments, and just want political leaders who are going to be very pragmatic about actually delivering jobs and other tangible economic benefits. In this environment, progressives should not shy away from making populist arguments, but need to temper that populism with a pragmatic message about helping small businesses and manufacturers create more jobs.
Things can change rapidly in politics (just ask Hosni Mubarak), but in the foreseeable future, if we want to make any progress in the legislative or regulatory arena, progressives will need to frame their ideas in new ways and look for alliances that go beyond the usual suspects. I have even given a name to this strategy: entrepreneurial populism. The idea is to continue to take on Wall Street and the other big corporate interests that have sweetheart deals with the government, but to do it on behalf of middle-class homeowners and entrepreneurial small businesses.
Barack Obama's 2011 State of the Union Address was a solid, steady performance. He clearly values this brand for himself as the Most Reasonable Man in Washington - a balanced, centrist leader who takes ideas from every side and will work with anyone. It's an image that clearly has some advantages for him; the early reports I've seen from overnight polling and post-SOTU dial tests are very positive. On a short-term basis, the speech is a solid plus for the President. There also was a lot I liked about the speech from the perspective of someone focused on the long-term health of the progressive cause. But there are some big worries I have over the longer term, both for the President and the country.
Here are the things I liked best about the speech:
The President's full-throated, completely unapologetic defense of the health care bill was great to see. His focus on being willing to look at improvements - but not back down one iota on the things in the bill that will help people - was pitch perfect, far better than most of the pretty lame messaging on the bill over the last year.
Even knowing he wouldn't be embracing benefit cuts in the speech, I was still nervous about what he would say about Social Security, fearing that a vague line about being happy to work with Republicans to "fix" or "strengthen" Social Security over the long term would leave the door wide open for a deal later on benefit cuts. But his actual line about strengthening Social Security for future generations "without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans' guaranteed retirement income to the whims of the stock market" was pretty darn definitive. I would have loved for him to go one step further and threaten a veto if Republicans passed such a bill, but this is a good start.
I love the idea of paying for investments in research and the jobs of the future by eliminating subsidies to oil companies. And the framing of it was just right: since oil companies are "doing just fine on their own... so instead of subsidizing yesterday's energy, let's invest in tomorrow's." That is entrepreneurial populism at its best.
The celebration of the Don't Ask Don't Tell repeal and the call for the DREAM Act and comprehensive immigration reform were great moments in the speech.
I know this isn't a stereotypically progressive position, but I am a big fan of the President's push to reorganize government agencies. I felt the same way about the Clinton/Gore Reinventing Government push in the '90s. I have always believed that as defenders of the role of government, it is up to progressives when they are running the government to make sure it operates efficiently and effectively, and that it serves the American people with a minimum of hassle and confusion and a maximum of genuinely useful service. Every time some small business person has to deal with excessive paperwork, and every time a consumer looking for help or information from a government agency runs into a wall of confusing bureaucracy, it lessens support for government - and that is a bad thing.
As I wrote after the President's Tucson speech, I very much appreciate his embrace of the metaphor of America as a family. I think it is a metaphor with deep roots in American progressivism, from Tom Paine to Martin Luther King, Jr: that sense that we are all bound together, that we share a common fate and sink or swim together, that we should look out for each other and help each other in times of trouble. That is a profoundly progressive idea, and I hope the President at some point makes a point of expanding on the idea and talking about it more.
While it was nuanced, and balanced by very centrist, pro-free enterprise kinds of language, I also very much appreciated Obama's defense throughout the speech of a strong role for government. His historical explanation of how government has helped innovation and long-term economic growth, his clear embrace of the critical importance of some government regulation, and his strong defense of Social Security were all moments in the speech that gave Americans a clear argument as to why government is not the problem, but part of the solution to our long-term national health and prosperity.
So there was a lot to appreciate about the speech. Certainly there also were some anti-progressive, irritating moments, too: screwing consumers on medical malpractice, screwing government workers with a wage freeze, screwing us all with the five-year freeze on domestic discretionary spending (which is actually at least a 7 percent cut if you factor inflation in). But more broadly, the speech leaves me concerned for Obama's - and the Democratic party's - political health over the next two years in a couple of different ways.
The first relates to Obama's description of, and attitude about, the economy. My fear is that the President and his economic team have convinced themselves that the economy is all coming up roses. I am not so sanguine, and I don't think the American middle class generally is either. The fact that corporate profits, the stock market, and our GDP are all going up has the President in a happy mood, because he believes it when folks like Geithner and Summers assure him that, as the White House team has been saying for the past two years, "jobs are a lagging indicator."
Look, I fully understand why the White House wants to trumpet any scrap of good news they can find about the economy. They have an urgent political need to try and convince people their economic plan is working. And if the economic team is right, and all these corporate profits and higher stock prices start to trickle down, and lots of new workers finally start to get hired, middle-class voters will be a lot happier with the President by the time November 2012 rolls around. My fear is that the damage to the economic fundamentals has been far more severe than the conventional wisdom macroeconomists at the White House realize, and that unemployment problems won't be going away very fast at all. My fear over the long term is that people are going to remember Obama bragging about increased corporate profits and stock prices even as they see unemployment stay high, wages still not rising, and housing prices continuing to be in the toilet - the same way voters in 2010 remembered his claim that bailing out bankers would lead to new investment and new jobs. That is a nightmare scenario for a President that the middle class still isn't sure is on their side.
Which brings me to my second worry: All this talk about American competitiveness in general is all well and good, but if middle-class folks don't feel the benefits of it any time soon, Obama has a big problem on his hands. There was a lot of talk in that speech about America doing better, America being more innovative and competitive, American business doing well. But it wasn't often in that speech that you got the sense that the President cared about the fate of the typical American working family; the family which might have a member unemployed or in a bad part-time job, the family worried about the fact that their mortgage is underwater because of home prices collapsing, the family whose income hasn't increased much in years as their gas, utilities, groceries, health care, and kids' tuition have all skyrocketed. If Obama has those folks at the front of his mind every day - if Obama is fighting his heart out for them every single day - you wouldn't have known it from his speech. And when people are going to vote, especially in economically stressful times, one of the main things on their mind is always: Which of these candidates is more on my side? Who understands my life and my concerns more? When push comes to shove, who will fight for me and my family more?
Especially if I am at least partly right about my first worry, and those middle-class swing voters are still under a ton of economic stress in November of next year, the who-is-on-their-side issue will weigh heavier than ever. I know such things are a little out of fashion to talk about right now, with corporate CEOs and Washington centrists being the President's main advisers. But unless the economy comes roaring back - and by that I mean jobs, not just corporate profits and stock prices - this question of who the President really cares about is going to weigh very heavily in the next election.
It was a pretty good speech overall, but it left some big questions hanging. If the jobs picture starts to really pick up, and the Republicans are too obvious about how much they are in bed with corporate lobbyists, this speech will set the stage for the upcoming election cycle very well. If not, the President may have set himself up for a tough road ahead.
In the State of the Union address tonight, Barack Obama can set the stage for a political comeback from 2010's "shellacking" that would, in fact, be even stronger than Bill Clinton's storied comeback in 1996 -- because Obama has a chance to sweep a Democratic House back into office with him if he does the right things politically and policywise. However, he has to resist the siren call of a D.C. political and media establishment, with their deeply flawed version of what "centrism" is, and instead focus on the real center of American politics: the hard pressed middle class. He has to focus like a laser beam on the policies that help the middle class by creating new jobs, rebuilding the American manufacturing base, helping small business to grow, and preserving the parts of government that directly help the folks in that middle class: Social Security, Medicare, education and student loans, and rebuilding our roads and bridges.
It is certainly unsurprising after all my years in politics -- in fact, it is the most predictable thing in the world -- to see the D.C. version of centrists argue in favor of things that would damage, and politically anger, the middle class. Nevertheless, it has been disturbing to see what groups like Third Way are calling for in their recent policy memoranda: cuts in Social Security and handing legal bailouts to the big banks so that it will be easier for them to foreclose on homeowners. Other D.C. establishment centrists like Alice Rivlin of the Brookings Institution are calling for Democrats to willingly accept big cuts and/or a private voucher program for Medicare. D.C. establishment folks think Democrats shouldn't press so hard to safeguard consumers from the banking industry.
Here's the thing that is stunningly obvious from all the available polling data, though: voters, most especially swing voters, hate the idea of policies that do even more damage to their already shaky economic standing. As pollster Guy Molyneux from Hart Research Associates so eloquently put it recently: "When it comes to Social Security, opinion elites are from Mars, voters are from Venus." In fact, pollsters like Molyneux, Stan Greenberg, and Celinda Lake argue that Obama's willingness to put Social Security cuts "on the table" has done as much to damage to him as any other issue. Thank goodness he has decided not to endorse cutting Social Security or raising the retirement age in the SOTU. Hopefully this will help him stop the bleeding with seniors and other Americans violently opposed to Social Security cuts (which is most of the population).
Change in share of total hours worked by lowest, middle and highest income occupations between 1993 and 2006
This all happened before the financial crisis that triggered the Great Recession.
We're not alone, and we're not the worst. It's a pervasive trend among the established Western industrial democracies. But since we have the weakest welfare state to help soften the blow, and the deepest ideological antipathy to doing anything about it.... Well, let's just say that this chart gives an indication of how badly screwed we are right now, since (a) the global oligarchs are in denial about the ongoing Great Recession & what needs to be done about it, and (b) this chart shows--from yet another perspective--that the problems began long before the Great Recession started.
A sweeping loss, and two years of angst and frustration after people felt so hopeful, generates a lot of interesting conversation (as well as quite a bit that isn't interesting at all- but I'm not here to talk about that). There is discussion of how to come back; discussion about shaking up leadership at the White House or Capitol Hill; there is all the positioning palaver I have written about (although that is mostly in that uninteresting category); there is talk of the need for a new economic strategy. And on the edgiest side of things, there is talk about a primary challenge for Obama, and even a 3rd party effort. A lot of this is just blowing smoke, of course, getting people's frustrations off their collective chests. But some currents are interesting and worth exploring.
On the 3rd party issue, the fascinating thing is that I am hearing very little of this discussion coming from my lefty friends, who the conventional wisdom would leap to assume would likely be talking about it. I think Nader actually getting enough votes in Florida to elect Bush was an experience that has definitively shut the door on 3rd party challenges for at least another generation, as it became real damn clear after that election that, yes, there would have been some differences between Bush and Gore on a few key issues. The 3rd party stuff is coming instead from a certain kind of centrist. Michael Bloomberg is the most likely candidate (and arguably the reason for a lot of the conversation). This kind of 3rd party centrist is far removed from the Ross Perot style of centrist, although like Perot, Bloomberg would be a big self-funder and would probably talk a lot about deficits. Perot was more of a populist, though, with his opposition to NAFTA and his appeal to working class white men. The chatter about 3rd party challenges now comes from what Matt Miller, one of its leading proponents, describes as "fiscally conservative, socially liberal" types. I'm not sure what exactly is meant by fiscally conservative. I consider myself one because I don't like wasting government money on stuff like no-bid contracts, subsidies to agribusiness, and loopholes for bankers, but I'm guessing my kind of fiscal conservatism is not what Matt has in mind.
This kind of 3rd party challenge is of the high-minded "politics-is-broken" school. I'm thinking of people like Bloomberg himself of course- a corporate CEO type who is a liberal on issues like gun control and abortion rights, but doesn't mind the anti-middle class stuff the deficit commission co-chairs are proposing. Come to think of it, Deficit Commission co-chairs Bowles and Simpson would be the kind of folks at home in this party. I'm also thinking of people from the past and present such as Paul Tsongas, Lowell Weicker, Bill Bradley, Bob Rubin, Lincoln Chafee (and his father John before him), Charlie Crist, Joe Lieberman, Olympia Snowe, Gray Davis and his successor Ahnold, Peter Orzag, Tim Geithner. I think such folks could all be very happy in a political party together.
A centrist party like that would be the ultimate test of Mark Penn's old theory that the most important demographic group in American politics, the premier swing voters who all politicians should try to appeal to, is the "office park dad"- upper middle income suburbanites who aren't very angry at corporations because they work in management positions at them, or are lawyers and sub-contractors for them, and whose biggest issue is caring deeply about balancing the budget. This has for at least a generation been the DC centrist version of the middle, precisely because the power brokers in DC fit with this demographic so well. Many of my friends argue that such a third party would hurt Democrats, but I'm a lot less sure about that simply because having such a party would clear the way for pretty much forcing the Democratic Party to become one that would once again unapologetically be for the middle class, which is where I think by far the biggest swing vote segment in American politics actually resides.
In my mind, being for the middle class is not exclusive of being for poor people - I am for helping everyone in the other 98%, as my friends at MoveOn would put it. But I am for having a party that is unapologetic about focusing on helping expand and build and promote the American middle class. I am for expanding poverty programs and raising the minimum wage and a strong public education system in poor neighborhoods and a path to citizenship for immigrants because I want them able to join the middle class. The greatest years in American history in terms of the living standards for most Americans were the three decades after the New Deal and World War II. In those years, the labor movement, the GI Bill, the financial stability caused by FDR's financial regulation, the minimum wage, Social Security and the rest of expanded safety net, the building of the interstate highway: all of these things promoted steadily rising prosperity and the biggest, most stable and secure middle class in the history of the world.
My party, the political party I happily associated myself with and worked to promote before I could even vote, the Democrats, were the party that promoted the idea of a strong and secure middle class, and a hand up to the poor so more of them could join in that American dream. But right now, there is no party whose clear and abiding mission is to promote and support and fight for that American middle class. The Republicans do their faux populist anti-intellectual schtick to get working and middle class votes, but all of their policies are unapologetically on behalf of the wealthy and powerful. The Democrats are split down the middle between the Rubin economics acolytes who believe that the best way to build a good economy is to make sure the big banks are healthy, and those of us progressive populists who fight on behalf of the middle class and the poor- that other 98%.
The nice thing about Bloomberg running, and spending 200 million or whatever to do it, is that it would force Democrats to make a choice, and with Bloomberg taking up the pro-corporate space, open things up for a full throated campaign on the side of middle class workers and families. But whether Bloomberg runs or not, the Democrats don't have much hope unless they choose the side of the middle class. The exit polls could not have been clearer that the voters we lost in 2010 were primarily those working and middle class voters who have been hammered by this recession, and they are going to keep voting against the party in power until they find someone who will start fighting heart and soul for a better life for them. This mushy sometimes-with-the-bankers, sometimes-with-the-middle-class thing isn't working, and the real swing voters, as opposed to whatever it is the DC centrists are talking about, are the populist working class folks.
The high school I went to in Lincoln, NE, was 3 blocks from the biggest factory in town, and we were known as the gearhead school- the kids who loved cars and knew how to repair them, kids who went hunting with their dads on the weekend, kids who were going to work at a factory or construction job, or maybe join the armed forces, when they got out of school. They are now in their early 50s, most of them having worked hard their whole lives, with little saved up for retirement and a house that has droped in value. Their most fervent hope is to be able to keep working until they are 65 so they won't be a burden on their kids, because their kids are struggling to fine economic security as well. I want a political party that unapologetically fights for those kinds of folks, that puts their economic needs at the core of their party's agenda, and that will prioritize what they need over what the big money lobbyists in DC want. And here's the deal: that kind of party, the party the Democrats were in their heyday in the years after the New Deal when their mission was building the middle class, would actually win a lot of elections. Is becoming that party again, unequivocally and passionately, too much to ask the Democrats for?
The politics on the deficit commission are predictable, but they are another sign of how far removed DC style centrism is from where the American public actually is. The DC establishment loves this plan, is demanding that politicians embrace it, but it is the worst kind of policy and politics, and should be rejected out of hand. Deficit commissioners should instruct the chairs and staff to come back with a plan that cuts the deficit without attacking the middle class.
You could write a deficit reduction plan, as well as a plan to shore up Social Security (the two are very different things) that would garner pretty broad support from the American people. On Social Security, a very minor adjustment- raising the cap on payroll taxes- would keep Social Security solvent through the end of this century. On the deficit itself, there are a whole set of options to dramatically reduce the deficit that garner clear majority support in the public polling on economic issues, including:
1. Increasing taxes on millionaires and billionaires.
2. Imposing a financial transactions tax on Wall Street speculation.
3. Ending a wide array of corporate tax loopholes for things like overseas investment.
4. Ending corporate agribusiness subsidies larded into the farm bill.
5. Ending loopholes and subsidies of various kinds to the big energy companies.
6. Reforming the government contracting process to end no-bid contracting, impose penalties on cost over-runs, and cut down on excessive bonuses.
7. Allowing Medicare to negotiate drug prices with the big pharmaceutical companies.
8. Having a vigorous public option to provide competition for health insurers.
Depending on the level you did them at, all of these items would bring in or save tens of billions of dollars a year, some of them hundreds of billions. There are plenty of ways to lower the deficit without screwing the middle class: people who are better budget experts than I could find plenty more if you gave them this simple and singular mission: find all the ways you can to lower the deficit without hurting the poor and middle class people who have been the ones most hurt by the economy in the last ten years. But that is clearly not what this deficit commission was looking to do. DC centrism in fact demands that you look first and foremost to targeting the middle class. The political assumption is that if you nick the defense budget a little here and there, include a few revenue increases along with the cuts, and don't do the most obvious egregious slashes to programs for poor people, that it will be okay with lefties because, hey, they only care about the poor and won't mind if the middle class gets hurt.
So let me clear, because goodness knows I don't want to be seen as ungrateful: thank you, honorable co-chairs, for the defense cuts you put in- they are a good start. Thank you as well for not slashing the heart out of food stamps and Head Start and certain other poverty programs. I also am delighted that you guys listed the public option on health care as something to consider. I really am sincerely happy about all that. But in spite of those good things, I think you will find the progressive movement will fight you every step of the way on this proposal, because we do actually believe in fighting for the middle class. My friends at Third Way think progressives will happily go along: "The recommendations on Social Security fall well within the mainstream of what most progressive organizations that care about Social Security solvency think should be done to save it," said Jim Kessler, vice president for policy at Third Way, a centrist Democratic think tank. "Everyone believes there should be increases in the retirement age, some adjustment to the cost-of-living-adjustments and some increase in revenues." Jim and his colleagues don't get it: this stuff about shared sacrifice that the DC centrists keep talking about is a nice theory. But the document Bowles and Simpson produced doesn't have shared sacrifice: it takes dead aim at the things that matter the most to the working and middle class. It asks them to work longer before they retire at the demanding and sometimes physically hard jobs many people in the working class have, if they can find work at all. It asks them to pay dramatically more in health care through the elimination of the deduction for insurance. It asks of them that they make the dream of home ownership far less affordable by eliminating the mortgage deduction. It asks them to pay higher fees, on whatever brief vacations they might be able to afford, to our national heritage of the park system.
It is this same middle class who have had no net increase in their household incomes over the last decade. It is them who keep having to pay higher regressive sales and property taxes at the state and local level while having less teachers, cops, and firefighters because of budget cuts. It is them who have seen higher gas and utility and grocery prices over the last few years, and who have seen their kids' college tuition and their health care costs soar through the roof. Since very few upper income kids go into the armed services, it is the sons and daughters of the working middle class who have gone to fight our wars over the last seven years. It is their homes that have lost their value and in far too many cases are underwater in terms of their mortgages. And it is far too many of them who have lost their job or are now being forced to work in lower wage, part time, or temp jobs.
These are the people that out of touch Washington elites who are embracing these deficit recommendations, who mostly don't have these problems, want to make sacrifices. They aren't asking sacrifice of higher income folks- in fact, the income tax rates are being flattened so the tax system is less progressive. They aren't asking it of corporate execs, whose corporate tax rates will go down. They aren't asking it of the Wall Street bankers, who once again escape a financial transactions tax. But boy are they sharing that sacrifice all the way around that American middle class.
This kind of DC centrism is a political nightmare of the first magnitude. It hurts the people who have borne the brunt of the excesses of the upper class in the last decade, and it hurts the people who are angriest at both parties- who swung against Republicans in 2006 and 2008, and swung against Democrats in 2010. When the full commission votes on this, they should send it down in flames. And if they do vote yes on it, Obama and Congressional Democrats should vigorously stand against it.
I wrote my initial post in such a hot rage over the proposal the cut Social Security and Medicare benefits that I didn't take the time to edit my blog post (sorry about those strange sentence structures), or take the time to look at the details of the proposal. So now that I have calmly taken some time to do that, I have to admit that I was wrong: this thing is even worse than I originally thought, and I way understated the problems with it. The co-chairs and staff found every conceivable way to screw the middle class in ways big (very big) and small, but barely nicked the bankers who caused the meltdown of the economy, or the wealthy whose massive tax cuts ended the big budget surpluses as far as the eye could see coming out of the Clinton years. Look at some of the different ways middle class and poor people will be gauged by this proposal (and I am probably missing some):
1. Raises the retirement age for Social Security and Medicare to 69.
2. Cuts Social Security benefits.
3. Ends the mortgage tax deduction.
4. Ends the tax deduction for workers' health benefits.
5. Freezes salaries for federal workers for 3 years.
6. Establishes co-pays for veterans at VA health services.
7. Raises fees to visit the national parks and the Smithsonian.
8. Merges the Small Business Administration into an agency (Commerce) that has always prioritized helping bigger businesses, and cuts their budget.
9. Eliminates the Office of Safe and Drug Free Schools.
Bowles and Simpson claim that they are being progressive by raising the Capital Gains Tax, but they make up for that by cutting corporate taxes and flattening the tax rates, so there is actually less progressivity in the tax code. They do claim some savings in defense spending and contracting, but a bare fraction of what could be saved if you got serious at all about reforming government contracting. And what they don't do is stunning: they don't go back to the Clinton era's tax rates on the wealthy that actually helped balance the budget. They don't impose a financial transactions tax on the speculative trading that did so much to crash this economy. They do nothing to create the jobs of the future that would actually spur the economic growth of the 1990s that were key in creating the budget surpluses of that era.
You know what is most bizarre: all this pain for the economically stressed working and middle class, and they still don't actually balance the budget until 2037. This is one of the worst policy documents I have ever seen- and I lived through the George W. Bush era! The President that Erskine Bowles, Bruce Reed, and I worked for dug our way out of the big budget deficits of the Reagan/GHW Bush era and created a balanced budget and long term surpluses by doing modest budget cuts, taxes on the wealthy, and strong economic growth. Clinton did it without gouging the middle class in all the terrible ways listed above. We have a bigger hole to dig out of now because of the economic crisis of the George W. Bush era, but we can create a long term balanced budget with the same kind of formula, plus adding a financial transactions tax that would help curb dangerous financial speculation. There is absolutely no call for punishing the very people who have taken all the pain of the economic policies of the last decade. My old friends Erskine and Bruce should know better.
Another old friend of mine, Jon Cowan, writes today in Politico that this proposal is "the only game in town" for reducing the deficit. Not to put too fine a point on it, but what a crock. All we have to do is revisit the policies of the 1990s, minus the financial deregulation. The middle class has been burdened enough to pay for the excesses of Wall St and government contractors. Let's reduce the deficit the right way: by finally asking the people who caused it- the wealthy who got huge tax increases, the big banks who caused the economic collapse, and the government contractors who rip off taxpayers- to make things right.
I have that Han-Solo-encased-in-carbonite feeling this morning. The powers that be in modern America- the insurance industry, big oil and coal companies, most of all the big Wall Street banks that control 60% of our country's wealth- had gotten used to having everything go exactly their way in Washington. They had come to expect that they would write the laws, and then get to rewrite them if something happened to make the original law inoperative. They were used to politicians say "yes, sir" and "what hoop do you want me to jump through now, sir." And when a new group of politicians came to town that wouldn't say yes to every single demand, that stood up to them some of the time, they hit back hard- very hard. And they won this round.
Our elections were awash in big business money this year, and it went overwhelmingly to the Republicans. We don't even know for sure which industries gave the most to the Republican slush fund that the Chamber of Commerce has become, or to the new ones set up by folks like Karl Rove, because they don't have to disclose their donors. But we do that these corporate front groups played almost exclusively for the Republicans, and that the direct contributions to candidates and party committees shifted dramatically toward them as well. Given the Democratic control of both Houses and the White House, this kind of giving shift is unheard of, since usually corporations give to the party in power. But because Obama, Speaker Pelosi, and Congressional Democrats had stood up to insurers on pre-existing conditions, had stood up to the energy giants on pushing for climate change, and had stood up to Wall Street on the new Consumer Financial Protection Bureau and some other new regulations, these corporate leaders were pissed and looking for blood. The fact that the Democrats had unfortunately made major concessions to these corporate interests on things like the public option and breaking up the big banks didn't mollify them at all: they were still loaded for bear and ready to pull the trigger.
So they funded the tea party uprising, and they funded Republican candidates, and they funded secretive groups to run attack ads. It worked, for two simple reasons. The first is that middle-class swing voters are mad at everyone in Washington. They think both parties have failed them, that neither party cares about them, and they are happy to send a message to whichever party is in power- as they have three elections in a row- that they will keep voting out those in charge until something changes to make them think that government works again. The second is that the voters most hurt by this terrible economic crisis the Bush presidency handed to us are precisely the voters most open to voting for Democrats: young people, working class women, blacks, Hispanics. Getting hammered as hard as they have been economically put them in no mood to come out to vote.
Democrats' fate was probably sealed when the same Wall Street bankers who wrecked the economy and who we had to bail out were still giving themselves hundreds of millions in bonuses while the rest of the economy continued to tank. It was the ultimate insult, and it fed the idea that our system is only working for the fat cats but has stopped working for ordinary folks. As long as the economy stayed as bad it did, voters were not going to be convinced that Obama had brought the change he had promised.
What now? Democrats have a choice. They can cower in fear at all the corporate money that will be thrown against them, and backpedal on everything that would actually help working families get out of the bind that they are in. Or they can be determined fighters for jobs, a stronger economy, and cleaning up special interest corruption in Washington. Having rejected both parties so thoroughly in the last 3 elections, Americans will be looking in 2012 to figure out who will be truly fighting for them in the years to come.
This progressive populist message that I have been writing about in recent weeks that seriously moves the dial for Democrats in Stan Greenberg's polling is being used by more and more candidates. Here's three exciting examples:
1. A growing group of members of Congress are going to be on the Hill tomorrow afternoon at 1:00 PM EST doing a press conference to push a strong reform agenda on behalf of the middle class. They will be endorsing the 3-point platform- strong lobbying reform, public financing of elections, and overturning Citizens United- that MoveOn members overwhelmingly supported in their voting, that 506,832 have already endorsed with their signatures, that 14 groups have signed on to, and that 201 members of Congress and candidates have already signed up for. Confirmed speakers at the press conference include the head of the Congressional Progressive Caucus Raul Grijalva, the head of the Populist Caucus Bruce Braley, Rep. Chris Murphy, Rep. Paul Hodes, Rep. Paul Tonko, and Rep. Keith Ellison, and more are adding their names as we get closer to the event.
2. Check out this ad from Joe Sestak, attacking all the big corporate money being dumped in his race, and the motives of those spending the money.
3. Finally, check out this great new ad from Tommy Sowers. This is my favorite ad in the campaign so far. It definitely smells of country populism.
The great thing about these ads is that they go directly to the heart of what is going on this campaign cycle: because of the Citizens United decision, and because they don't like being challenged in any way by even modest reform measures like the Wall Street reform bill, Wall Street, Big Oil, the big health insurers, and the Chamber of Commerce have been on the rampage, dumping tens of millions of dollars like it was going out of style into these campaigns, trying to buy the elections. The only way Democrats have a chance is to stand tall and call them out, to fight directly against them and the economic sins that have destroyed this country's economy.
For those of us who can still even stomach it, the first Friday of the month—the usual day for the release of the previous month’s federal Employment Situation Summary, known informally as the jobs report—has become a fairly pathetic ritual, particularly for optimists. We hope for some proof, any proof, that a real recovery is underway. If jobs were shed across the board, but the unemployment rate trended lightly downward, we try to pretend that it wasn’t because still more people have pulled themselves out of the formal count by giving up looking for work entirely. If private sector job growth and public sector job loss cancel each other out, we put on our market fundamentalist wishful thinking caps and talk about how private sector jobs are somehow more sustainable than their public sector equivalents. And when modest job growth does occur, even when it’s below even the basic replacement rate needed to accommodate a growing workforce, well, that’s when we bring out the champagne.
We are spending $2 Billion a week in Afghanistan. If you want to see zeros, that's $2,000,000,000.00 a week. It also means $104 Billion a year.
Meanwhile, we can't afford to keep our education budgets in functional condition. We can't reduce our National Debt. We can't bring down our operating deficit. And we are spending a fortune on foreign servicing (read China) of our debt.
With the health care fight finally resolved (you notice I didn't use the word "over"- the passage of this bill is only the first step in a long-term battle for a better health care system in America, so nothing is really over), everyone is turning their attention to the economy. As well they should.
In spite of certain establishment economists and pundits (and unfortunately a few administration officials who are politically tone deaf), saying that the recession is over and everything is back on track economically, the simple fact is that while we are no longer dangling over the precipice of another Great Depression, the economy is still broken in major ways. The official unemployment rate still hovers around 10%, and when you add in those who have given up looking for work, those who are underemployed and marginally employed but want fulltime work, the number of people needing full-time jobs is closer to 20%. Wages are still not going up, as even many of those who have jobs have had to take lower wage jobs to get by. Foreclosures are still happening at dangerously high rates, home values are not coming back anywhere near fast enough (or at all in some neighborhoods), and way too many homeowners are still dangerously close to being underwater. Business and personal bankruptcies are still way too high.
Now I know that the economy is officially "growing" again. The GDP is up, the Dow Jones is up, corporate profits are up. If you are an establishment economist, a trust fund baby, or a Wall Street financier, the economy feels like it's just humming along. For the vast majority of Americans, the noise they are hearing is less that of a hum and more of a car wreck. That's why voters react so poorly to Democratic politicians when they say things about how the economy is looking up.
The twin pillars to building a healthy economy are producing good jobs in big numbers, and fixing the badly broken financial system. These are not separate spheres, by the way- the two things are joined at the hip. Washington legislative policy wonks tend to divide everything into different bills they are working on, and DC coalitions follow that approach as well. But if we don't start creating decent-paying jobs, the foreclosure problems will keep getting bigger and housing prices won't recover. If we don't fix the financial sector, an economy where the finance sector is focused on gambling and bubbles rather than in actual investments that will create jobs will continue dragging us down, and endangering us in the future. With so much of America's wealth concentrated in six mega-banks, and those banks investing in little that's creating jobs, we are not going to create real private sector job growth.
Let me point you to three fascinating things worth reading that have come out over the last few days, because I think they all point to central economic issues as we go forward. The first is an important, news-breaking piece in Politico that Elizabeth Warren came out with yesterday morning. Citing a memo from the American Bankers Association from a 2006 fight against more oversight that makes the exact opposite arguments they are making now, Warren makes the absolutely central point that special interests like the American Bankers Association are hypocrites to the core. The special interests that are making out like bandits at the expense of the rest of us don't have any consistent philosophy except me first and only, and members of Congress and the administration should thus given their arguments the respect they deserve: which is to say virtually none.
The second is Sen. Ted Kaufman's brilliant speech on Chris Dodd's weak and disappointing financial reform bill. Sen. Kaufman's essential point is that Dodd is just moving the regulatory fixes around rather than doing what really needs to be done: break up the big banks. If these financial behemoths are not cut down in size, and walls are not built between the gambling financiers and the boring old bankers who loan money to invest in small businesses, the financial system will remain in danger and jobs will be far less likely to be created. Kaufman makes the argument that if you don't make real structural changes in the size, powers, and roles of the mega-banks, that you haven't changed anything important re how the banking system works. He is 100% on target. If having regulators was all that was needed to clean up the banking system, we never would have landed in the mess we did in the financial collapse. You have to change the power relationships as well- banks need to be smaller, and the trading side of the banking industry should not infect the more traditional loan and investment side of the banking industry.
Finally, I want to point you to a really thoughtful new commentary in Huffington Post by Leo Hindery. His frame on the political dynamic right now is intriguing: that Republicans are in fact the disloyal opposition, so violently opposed to Obama that they have gotten into bed with the fomenters of open and potentially violent revolution; in their place as the loyal opposition are those of us progressive populists who want Obama to take on the banks and far more aggressively create more jobs. Leo's point is that there is a growing group of people who are loyal to Obama in the sense that we very much want him to succeed, we want to help him, and certainly support him in opposition to a tea party/Glenn Beck-aligned Republican Party; but that we are in a sense in opposition as well, believing we need dramatically more progressive economic policies.
We live in a remarkable moment. We just passed a universal health care bill, something the progressive movement has been fighting for about a century or so. But we are still faced with a broken economy- a badly warped and dangerous financial sector, and a massive lack of good jobs- and we need for bolder thinking that we are getting on how to fix it. Whether or not you call us the loyal opposition, it is time for progressives to demand more- on creating jobs and fixing the banking system- in terms of fixing the economy.
Given the nature of the terrible problems George W. Bush has left us, I remain thankful every day that someone rational and intelligent like Barack Obama is our President (can you imagine McCain or Bush trying to manage all this? Oh, wait, we just had eight years of that). Thanks to Obama's leadership and strong action, there is actually some good news to report on the economy: we've gone from triple red alert, every day in a panic crisis to some measure of day to day stability. That is a good thing, and Obama should get an enormous amount of credit for it. The fact that there is any good economic news at all is a huge relief after all the horrible news of the last nine months.
The question now is whether we can go from stabilizing the economy to actually improving it, and whether the improvement that does happen translates into real benefits in the economic conditions for most Americans. A Washington Post story with a very positive spin about how the economy is getting better quoted Anil Kashyap, an economist at the University of Chicago, saying this: "The feeling is that for now we've avoided the Great Depression. But the real economy is still in pretty bad shape."
The good news is that President Obama's steady leadership and aggressive intervention seems to have stabilizing the economy and returned confidence to our economic institutions. He deserves credit for that, and is getting it for the American public. But the bad news is still extremely bad; if unemployment stays incredibly high or even climbs higher, if home prices don't start coming back, if wages don't start climbing again, if health care costs and grocery prices stay high, if start-up businesses still are having trouble getting loans- if all of this continues for a long time to come, we are all in very deep trouble.
The American people know how deep our problems are, and will be patient for awhile. They clearly appreciate how Obama has handled things so far. But the Obama team needs to understand how important it is to deliver on tangible things that create jobs and make the economic condition of middle-class people better. Given how awful things were on January 20, the President deserves a great deal of credit for keeping our entire economic system from sliding into another Great Depression. That achievement won't be enough to sustain him, though, if the real economy doesn't start to get better. The President needs to be focused like a laser beam long-term economic issues that will ultimately decide the fate of his Presidency: creating jobs, increasing middle-class incomes, solving the health care crisis. If the country sees him fighting for these things, and making real progress, he will be re-elected in a landslide and set the stage for a long-term progressive majority.
The same pattern emerges every year on TheMiddleClass.org. Throughout the year, DMI uses the site to share analysis about the impact of Congressional legislation on Americans' ability to gain - and hold onto - a middle-class standard of living. Once a year, we take a step back and look at the big picture. It often looks depressingly familiar: fiscal conservatives notwithstanding, Congress does fairly well when it comes to measures that simply involve spending more, but falls short - often far short - when powerful corporate interests clash with the wellbeing of the nation's current and aspiring middle class.
In 2008, for example, Congress stood up for the middle-class on issues like providing more funds to higher education and passing a consumer safety bill that's even been endorsed by the industry its regulating. Virtually all Democrats voted for these bills, and most Republicans as well. Similarly in 2007, college aid did well and majorities from both parties in the House voted for common sense contracting reforms.
But Congressional support for middle-class Americans falls off precipitously as soon as major corporate interests are at stake.
In 2007, the Peru trade bill was the skunk at the garden party, provoking 64 percent of Senate Democrats and 48 percent of House Democrats (along with nearly every Republican) to vote for multinational corporations and large investors at the expense of their middle-class constituents. Last year, it was a willingness to put banks before struggling homeowners, telecommunications companies before consumers, and those @%$& banks again before taxpayers. These weren't the only policy disappointments of the year for middle-class Americans, but they were the main cases where significant numbers of Democrats joined nearly all Republicans in selling out the middle class.
This year, I fear Thomas Frank is right when he predicts the same fate for EFCA. Sure, Congress will approve health coverage for low-income kids (an important boost for aspiring middle-class families in its own right) but when it comes to standing up for middle-class Americans against a full-scale corporate lobbying campaign, Congress may not have the guts. That's terrible news for the middle class.
No wonder we're all drowning in debt. Over the past 30 years, a college degree has become increasingly necessary for anyone who hopes to earn a middle-class standard of living. Yet over the same period of time, the cost of tuition and fees at public four-year universities has increased ten times faster than the median family income for families with children. That's a crisis of stagnating wages as well as a problem of soaring college costs. Either way, something's got to give.
At the Drum Major Institute, we've been making that point for years (see, for example, former DMI Fellow Maureen Lane's substantial body of work on higher education as a route out of poverty), but the statistics never cease to amaze me. The effort to afford higher education is the essence of the middle-class squeeze. So it makes an excellent subject for Vice President Joe Biden's Middle-Class Task Force.
When the task force convened for its third meeting in St. Louis last week, they followed the now-familiar format. They issued a staff report that defines the problem as the administration sees it; highlights what the administration is already doing to address it; and lays out a potential future path without committing to any new policy initiatives.
The staff report captures the problem beautifully and sets precisely the right goals for the Administration. "The ability to afford a college education without being buried in debt is an important aspiration and a legitimate expectation... for any family in America...The President is committed to making sure that every student has the opportunity to earn a postsecondary credential or degree." So far so good.
The round up of existing accomplishments includes an array of impressive first steps. The value of the maximum Pell Grant is up, and the President wants to shield funding from the vicissitudes of the annual appropriations process; the stimulus includes an expanded tax credit for college tuition; finally, the President's budget proposes to shift student lending away from the pork-laden program to subsidize private lenders and back toward the more efficient Federal Direct Loan program.
The task force is less inspiring when it comes time to suggest next steps. Since the report states that "the Obama administration does not officially endorse all of these ideas, but the task force views them as worth of further analysis" we might expect some expansive thinking. And there are some good - if hazy - ideas in there: bolster community colleges, improve "529" college savings plans, help states cope with economic downturns without cutting college funding. The most intriguing idea involves enabling graduates to pay back their loans at a fixed percentage of their income, so people who pursue less lucrative careers aren't crushed by debt. Still, none of this quite matches the magnitude of the problem.
The reality is, the nation's public colleges and universities have raised tuition and shifted costs from the states onto students and their families in good economic times as well as bad. A critical part of the story about rising public college costs is tremendous public disinvestment from higher education. The policy not only undermines the middle class but harms the nation's economic competitiveness. To reverse course, the federal government should consider how to help states renew their commitment to public colleges and universities. The middle class depends on it.
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