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Economics 2004

The Democratic Party has come a long way from the "lockbox" economics of 2000.

William Greider

January 8, 2004

The Democratic Party has come a long way from the “lockbox” economics of 2000. Four years ago, Al Gore campaigned on a promise to maintain federal budget surpluses as far as the eye could see–and to use the money to pay off the national debt. This year, every candidate has evidently figured out that fiscal rectitude does not alone win elections. So they are all promising to spend public money on more positive objectives–big spending, in some cases. Four years ago, Gore attacked from the right, denouncing Bill Bradley’s modest healthcare proposal as fiscally irresponsible. This year, every Democrat has a substantial plan to reform healthcare, and some of them want to go all the way: universal coverage. Gore himself now blesses the concept.

Collectively, the Dems share a far more aggressive posture on economic issues than the one inherited from the Clinton era. The party is not exactly turning left, but its would-be leaders are definitely sidestepping toward a more ambitious liberal agenda. The shift is probably accompanied by belated regrets. If Gore had run on a stronger agenda in 2000, he would likely be President today. If Congressional Democrats had not lost their voices during the 2002 elections, they might not be a virtually impotent minority in the House and Senate.

In any case, the Democrats hardly have much choice for 2004, given that Bush has governed so brutishly and nearly obliterated the landscape left behind by Bill Clinton. Who can accuse the Dems of liberal profligacy when Bush has shifted fiscal policy from $200 billion surpluses to $500 billion deficits? How can the right attack Democrats for expanding the welfare state when the Republicans have just done so themselves, with their expensive new drug benefit?

If one sifts through the candidates’ policy papers and speeches, a rough consensus is visible on three large propositions–all important goals. Healthcare reform, including insurance coverage for all children and maybe for all adults too. Confronting the global trading system with major reforms, that is, “fair trade” rules on labor rights and environmental protection, and less freewheeling power for multinational corporations. A major restoration of public investment for long-term objectives–renewable energy production and public infrastructure, everything from high-speed rail to hydrogen fuel cells to rebuilding inner-city neighborhoods. One way or another, these three proposals are also designed to stimulate jobs and raise incomes.

The most imaginative and forward-looking item is the public-works vision called the new Apollo Project–a $300 billion, ten-year plan to jump-start the transition to the postpetroleum era. Every Democratic candidate has endorsed the concept in generalized terms. It would reduce US oil dependence by financing alternative energy sources like wind and solar power but also guarantee a market for cleaner technologies like hybrid cars and other energy-efficient products. The agenda was fashioned by a blue-green alliance of organized labor and environmentalists, joined by some businesses and civil rights and community groups. Dick Gephardt bought the whole package, which he dubbed “Apollo 21.” Dennis Kucinich goes further and calls for $500 billion in spending. The public investments under the original program will leverage $1 trillion in private activities, generating some 3.3 million new jobs (about what Bush has lost in the past three years).

Kucinich is definitely holding up the left wing of the spectrum. He has the most ambitious ideas for challenging corporate power–re-regulation, reinvigorated antitrust enforcement, federal chartering of corporations and ending market dominance of family farmers by large-scale agribusiness. Kucinich likewise embraces a single-payer healthcare system anchored in the federal government (as do Al Sharpton and Carol Moseley Braun), though Gephardt has a more detailed proposal for federal financing that would relieve companies of the health-insurance costs and guarantee coverage for all (paid for by repealing the Bush tax cuts). On trade, Gephardt calls for establishing a global minimum wage.

Joe Lieberman holds up the right flank. He alone among Democrats continues to sing from the free-trade hymnal (though John Kerry hums along under his breath, making tepid challenges to the multinationals). Lieberman has put together his own public-works program, composed of generous industry tax cuts and subsidies mostly aimed at reviving high tech in Silicon Valley. This is the Democratic Leadership Council’s view of the economic problem, and Lieberman is sticking with it.

John Edwards has perhaps the most detailed set of prescriptions–a sixty-four-page booklet called Real Solutions for America (not to be confused with Kerry’s “Real Deal”)–and Edwards endorses some long-neglected progressive measures for helping young people and new families with their economic struggles. Edwards wants a tax credit for family leave for newborns, free first-year college tuition for students who work ten hours a week and a $5,000 matching tax credit for families purchasing their first home.

Wesley Clark proposes a Corporate Subsidy Reform Commission that would force up-or-down Congressional votes on hoggish subsidies, much as the base-closing commission did for unneeded military posts (Kerry wants a line-item veto for the same purpose). The former general’s agenda is surprisingly wonkish, with all sorts of ideas for merging government programs to save money.

Howard Dean, the front-runner attacked by the others as an outsider, is ironically closer to Clinton/Gore economics in his emphatic promise to balance the federal budget (Kerry wants to cut the deficit in half). Given the fiscal mess Bush has created, this sounds like a highly perishable promise (FDR campaigned on the same promise in 1932, but subsequently launched the New Deal). But Dean does not sound like a centrist when he takes a strong line against corporate concentration of power and for reforming the global trading system. In addition to liberal policy positions, he promises to help people gain greater voice and influence in the economic system–suggesting that corporations should regularly disclose not just their financial condition but their performance on environmental protection, antisocial practices and labor relations. This would empower investors, consumers and employees to pressure for change. The Bush Administration’s cozy dealings with business interests are Washington’s equivalent of “Enron economics,” Dean observes.

What’s missing so far from the Democratic dialogue is a coherent response to Bush’s troubled economy. Most candidates point out that the present recovery is bogus unless robust job creation revives, but they don’t have much interesting to say beyond that. Nor do they describe a plausible economic strategy for reversing the ominous growth in US trade deficits.

The opposition party, of course, always gets the luxury of focusing blame on the incumbent, with no great need to explain the solutions. That may be the smart politics of this season, but the Democratic Party would sound more convincing if it took greater risks–telling fundamental truths about the country’s economic condition that challenge Bush’s fake triumphalism.

That may be too much to ask. Just as with Iraq, the Dems are probably hostage to economic events, regardless of what they say or who gets nominated. If things still stink in six months, Bush is in deep trouble. If prosperity is restored, Dems will likely remain the minority party.

William GreiderWilliam Greider is The Nation’s national-affairs correspondent.


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