Centrist or progressive: What kind of change do Dems want?
By Thomas I, Palley
Des Moines Register, Wednesday December 26, 2007
Many people now believe the United States cannot afford to continue
with the policies of the Bush-Cheney administration. Those policies
have undermined global support for America - a key part of national
security - and have produced an economic expansion that has bypassed
working families and looks as if it will bequeath years of house-price
pain.
However, if there is agreement that the heavy-fisted Bush-Cheney agenda
is no longer acceptable, the question remains what will follow. Among
Democratic presidential candidates, although there is much talk of
change, its meaning remains unclear.
Beginning some 30 years ago, Ronald Reagan initiated a fundamental
repositioning of American politics that was later completed by Newt
Gingrich, Dick Armey and Tom Delay. That repositioning shifted the
entire political spectrum to the right. [read more]
This raises the question: Does change mean sticking with the political
playing field we now have and just giving control of the football to
new Democrats such as Sen. Hillary Clinton? Or does it mean
repositioning the playing field and shifting the political spectrum as
proposed by progressive Democrats such as Sen. John Edwards?
Behind this difference lies vital real-world consequences that will
profoundly impact America's working families. For Clinton-style
centrists, today's economy works reasonably well. Globalization
delivers prosperity by providing cheap imports that lower prices; a
financial boom on Wall Street benefits all by raising stock prices; and
higher corporate profits drive investment that increases growth and
incomes. However, growth also creates losers, which means the market's
"invisible hand" must be accompanied by a "helping hand." Consequently,
policies are needed to supplement the incomes of the working poor and
to assist workers who lose their jobs because of trade.
For Edwards-style progressives, the picture is very different.
Globalization has created a divide between country and corporations, as
companies abandon the United States by shifting jobs and investment
offshore. That maximizes profits but undermines wages and future
prosperity. Higher profits have not raised growth, but have instead
come at the expense of wages and increased income inequality. And Wall
Street has spearheaded these changes by demanding that companies raise
rates of return, ripping up the old social contract with workers and
their communities.
From a progressive standpoint, the problem with new Democrats is they
tackle symptoms, not causes. Though helping-hand social policies are
welcome, progressives believe such policies are not up to the challenge
confronting America's working families. Meeting that challenge requires
deeper change, which is what the 2008 election is all about.
Yet, surfacing this difference has proved difficult. That is because
the Clinton campaign has used the political tactic of "bunching" to
obscure differences. The tactic holds for every major issue from health
care, to trade policy, to taxing Wall Street hedge-fund incomes. On
each issue, the Clinton campaign has bunched up and signed on, but
always reluctantly and late.
This tactical success of bunching requires progressives to raise directly the question of change and its meaning.
For Sen. Barack Obama, change is a matter of political style. For
Clinton, it means restoring the economic policies of the 1990s.
However, with the exception of tax cuts, those policies are the
policies of today. Thus, the 1990s ushered in the North American Free
Trade Agreement and free trade with China, and cemented trends from the
1980s regarding trade deficits, the separation of wages from
productivity growth and the dominance of Wall Street. What really saved
the 1990s were the Internet and stock-market bubbles, which are not a
sustainable foundation for prosperity.
Social Security exemplifies what is at stake. New Democrats downplay
the problems of globalization and the power of corporations and Wall
Street and instead identify the budget deficit as the nation's No. 1
problem. That perspective establishes the predicate for cutting Social
Security benefits, something Clinton has openly left on the table.
Whereas Republicans have long been able to create much mischief around
Social Security, they can change and cut benefits only with the help of
Democrats.
The 21st century has gotten off to a rocky start as America has
squandered much political and economic capital. Now, Americans want
change. The Democratic caucuses and primaries offer two visions of
change. One changes possession of the political football; the other
changes the football field. That's the debate the country needs, but it
is still missing.
THOMAS PALLEY is founder of the Economics for Democratic & Open
Societies Project, Washington, D.C. He blogs regularly on economic
policy at www.thomaspalley.com
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