Everyone agrees that there is only one question on voters' minds: who has a plausible plan to put this economy on the right track? Yet in the most expensive election in recorded history, candidates up and down the ticket aren't offering much of an answer.
The presidential campaigns are running through their first billion on attack ads. And both congressional delegations are fixated on how best to inflict austerity on an economy that is barely moving. (We've seen how well that works in Europe where austerity has produced both increasing misery and increasing debt burdens).
Democrats are tongue-tied because polls show Americans increasingly worried about deficits and skeptical about spending or anything labeled "stimulus." This is nuts, but it's an election year, and when polls speak, politicians listen. Democrats seem dangerously close to repeating the mistake of 2010 and going into the election without a jobs plan.
Republicans, of course, have a growth plan – the old brew of cuts in spending and taxes and rolling back regulation. But voters aren't rushing to buy the trickle-down remedies anymore; a vast majority want taxes raised, not cut on millionaires. They want bankers prosecuted, not unleashed. And Republican presidential candidate Mitt Romney, a multimillionaire paying a lower tax rates than the cops who guard his parade route, is the worst conceivable huckster for this elixir.
You Can't Go Home Again
Voters have every good reason to be skeptical. Trickle-down austerity and stimulus are opposite paths but they share one assumption – the belief that there is a sound economy to revive. One argues for cuts and freeing up Wall Street, the other for spending, but both assume that with a kick start, the old economy will be back on track.
But working families have suffered three decades of stagnant wages and rising insecurity. They've watched good jobs go abroad. They've worked longer hours and taken on more debt just to meet the soaring prices of necessities like health care, education, or housing. They've seen the middle class get ground under, while the wealthiest made out like bandits. They don't think we can cut or spend our way back to a healthy economy because the economy wasn't healthy even before Wall Street blew it up.
As Stan Greenberg and James Carville argue in their new book, "It's the Middle Class, Stupid!," voters are looking for a serious strategy that might turn things around. (Disclosure: My organization, the Campaign for America's Future, sponsored part of the opinion research that provides the basis for that conclusion.) They understand this might take years. They know it will require taking on the corporate lobbies that rig the rules in Washington and curbing the corruption. They are looking for bold and serious, not timid and temporary.
Voters tend to like President Obama, but they think the country is on the wrong track. And they don't have much of a clue of what Obama would do to turn things around. The president can't afford to run on the implicit assumption that his policies are already built into what we've got. On the other hand, voters haven't warmed up to Romney, and when they learn more about his policies – a tax plan that cuts taxes on millionaires like himself and raises them on everyone else; a spending plan that would cut Medicare, Medicaid and education while raising Pentagon budgets; a deregulation pledge to roll back the modest regulations placed on the Big Banks – they will like him even less.
What Would It Take
Needless to say, there's no consensus on a strategy. Core elements might include the following.
First, a serious commitment to reviving the U.S. as a center of innovation and manufacturing. That requires a manufacturing strategy that identifies strategic industries where the US will seek to gain global competitive advantage. This isn't choosing companies that are "winners or losers," but industries – like the new green industrial revolution – where the U.S. can and must compete. Renewable energy, where various regions of the country have different competitive advantages – the wind states of the Midwest, the solar states of the Southwest – is clearly a global growth industry. It is bizarre that Republicans have chosen to make it a partisan piñata, rather than forging a bipartisan agreement not to cede the cutting edge jobs and innovation to China.
Added to that must be steps to insure that the good jobs are created here. That requires a straight-up commitment to ending the unsustainable imbalances in our trade posture. We should stop negotiating NAFTA-like treaties and announce that, as a matter of national security, we are committed to moving to a balanced trade posture. That will put multinationals on notice that if they want to sell here, they better produce here. We should repeal the goofy tax provisions that reward companies for moving jobs abroad. And we should make it clear to China that the days of Uncle Sucker are over. We'll treat their exports the same way they treat ours – and that there are no more free passes on currency manipulation. Buy America procurement policies will insure that taxpayers' money favors domestic producers.
Add to that sustained investment in areas vital to the economy – in rebuilding our aged and inadequate infrastructure, in education and training, in research and development. This isn't a two year, half baked transportation bill that doesn't come close to meeting the needs we have. It is a multi-year investment that requires real money. With the U.S. able to borrow 20-year money at less than the rate of inflation (in other words, cheaper than free), we should fund an infrastructure bank that can provide guarantees to pension funds and thus mobilize $500 billion a year for five years to rebuild America.
But that isn't enough. As Joseph Stiglitz notes, extreme inequality now saps our economy. Working families have struggled with declining wages for three decades, while the share of national income pocketed by the wealthiest 1 percent has tripled. These extremes aren't simply unconscionable, they are also economically destructive. When the middle class is sinking, consumer demand is sapped. When workers don't share in the rewards of rising productivity, their demoralization makes them less reliable and productive. The extremely wealthy live in gated communities with private guards, send their kids to private schools, vacation on private beaches. Unequal societies thus tend to starve vital social services – parks, schools, mass transit. Moreover, the wealthy use their power to consolidate privilege: tax dodges that let multimillionaires like Romney pay a 15% tax rate or GE pay no taxes at all, multimillion-dollar giveaways that enrich barons like the Koch brothers, financial deregulation that lets Wall Street to go wild. These all exact huge economic costs.
So any long-term strategy must insure that the rewards of growth are widely shared. Raise the minimum wage, empower workers to gain a fair share of increased productivity, curb CEO compensation schemes that give them million-dollar incentives to pillage their own companies, and pass steeply progressive tax rates while shutting down dodges and havens. Progressive tax reform (particularly ending the lower tax rates for income from wealth like capital gains) will help raise the revenue to help raise the costs of the investment needed to rebuild America.
We also have to be serious about getting our books in order. The first and most important step is to put people to work so that they start working and paying taxes rather than looking for work and collecting unemployment insurance and food stamps. Forwarding the investment agenda outlined above, aid to cities and states to keep teachers and cops employed, and adding bold steps to allow underwater homeowners to reset and refinance their mortgages would go a long way.
After that, we should focus on the things that have destabilized our finances – particularly unfunded wars and the financial wildings that blew up the economy. Fiscal balance also requires fixing our broken health care system, the source of the terrifying long-term deficit projections. Obamacare has made some serious first steps in that regard, but much more needs to be done. This is not about putting a lid on Medicare and Medicaid expenditures and expecting the most vulnerable to pay rising costs. It is about taking on the drug companies and hospital and insurance industries that drive the costs so they don't bankrupt families, companies and government at all levels.
None of this can get far without curbing big money in politics, ending the revolving door between the legislatures and the lobbies, and directly taking on the special interests that feed off taxpayers' money.
Romney, of course, won't go there. He wants the election to be about Obama's failure to fix the bad economy, not his policies. And that makes sense since he seems perversely committed to more of what got us where we are.
But Obama has every reason to champion a bold strategy. He can build off his own initiatives. He set the stage in his 2009 "Economic Sermon on the Mount" at Georgetown University, when he stated we couldn't rebuild our economy on the old shifting sands of debt and speculation. He's framed this election as a make-or-break moment for the middle class. He has proposed elements of this agenda, but generally not at the scale needed to deal with the scope of the challenge.
Congressional Democrats, led by Ohio Sen. Sherrod Brown, have espoused a sensible Making it in America agenda. In 2009, at the Pittsburgh G-20 meeting, the president helped forge a consensus on the need to end destabilizing global imbalances. With China clearly spurning that agreement, it is far past time for the U.S. to act on its own. The president has repeatedly made the case for vital investments at home. He's championed more progressive taxes and called for a minimum tax on profits reported abroad to crack down on corporate tax havens. He's sought to reduce obscene subsidies to Big Oil and Big Agra. He can build on his health care plan to push for further steps to get costs under control. He could use his Democratic convention speech not only to indict Romney's failed agenda, but to seek a mandate for a bold strategy to make this economy work for working people once more.
This is a risk, of course. Why step on the successful efforts to define Mitt Romney? The next logical step is to connect Romney's Bainful history with his baneful policy prescriptions. Nate Silver's FiveThirtyEight blog suggests the president is already a 70-30 favorite to win the electoral college. And any positive agenda will rev up the right-wing noise machine's charges of neo-Kenyan, Keynesian socialistic Marxism.
But an overwhelmingly negative campaign implies that the president's policies are already in place, which will give people little hope he'd change things around. And worse, negative campaigns gain no mandate for moving forward. It's time to answer the question voters are asking. And the convention speech provides the occasion.