archived: 13 - 19 Mar, 2005 Back Next
UPDATED: March 17, 2004
DEMOCRATIC ECONOMIC AGENDA
Simon Rosenberg at New Democrat Network has fashioned an economic policy strategy for Democrats in conjunction with Robert Shapiro. There is much merit in the NDN proposal.
The highlights:
Simply put, we must successfully make the case that the 21st century Republican fiscal program of reduce, borrow, and spend – tax reductions for the rich, unrestrained spending, and escalating borrowing – is leading to America’s economic decline. That, in turn, threatens our nation’s security as well as current and future prosperity.
We must make the case that a new and more responsible economic and fiscal strategy is needed now. . . . For the good of the country, progressives must reject out-of-hand any Administration fiscal proposal which embraces their radical fiscal strategy of unwarranted tax reductions, reckless spending, and more borrowing.
How We Got Here: The Fiscal Crisis Facing America
Let’s review how we got to where we are today. President Bush took historic budget surpluses and turned them into record deficits. He significantly increased spending in most areas – entitlements, defense, and some parts of the domestic discretionary budget – while sharply reducing revenues to pay for it. He shifted the tax burden from wealthy Americans to the middle class and from financial assets and capital to the wages of average people. Even his support of open trade, a key component of global and American prosperity, has been dangerously tepid.
The short-term results have been dismal. For the first time since the Hoover Administration, we have seen a net loss of private sector jobs over an entire presidential term. Under this Administration’s policies, poverty, unemployment, health-care costs, the number of Americans without health insurance, personal and business bankruptcies, family energy costs, the trade deficit, and the budget deficit are all way up – and median family incomes, the stock market, and the dollar are all way down.
This year, their policies will force the United States to borrow as much as $700 billion from abroad – more than 80 percent of all global surplus savings – much of it from the governments of China and Japan. This makes America’s economic fate increasingly vulnerable to the good will of foreign governments, giving them leverage against us as they pursue their own economic and security interests. Make no mistake: this dependence on the capital of other countries places our economy at their mercy and can tie our hands as we pursue American objectives abroad.
The long-term impact of the Republican fiscal mismanagement is equally troubling. The GAO projects that if the Bush fiscal path remains unaltered, by 2040 – two years before Bush’s alleged doomsday date for Social Security – the government of the United States will have enough annual revenues to pay for just Social Security, Medicare, Medicaid, and interest on the debt. To fund everything else the government does – our national defense, homeland security, education, law enforcement, and so much more – we would have to borrow from ourselves and foreigners.
No matter what side of the aisle one comes down on, everyone must agree that the current fiscal path is unsustainable and must be altered.
America’s Options
Consider the options we have to address the nation’s long-term solvency. We have two major choices: cut entitlement programs or raise revenues. That’s it. Anything else of consequence is either unacceptable (deep cuts in defense or domestic discretionary spending) or untenable (borrowing even more foreign funds). These are the choices left to us by the Bush fiscal program.
Now let’s look at how the Administration’s current proposals stack up. Bush claims he wants to restore the solvency of Social Security. And what’s his plan? Borrow $2 trillion more to finance a transition to private accounts, which will only accelerate and worsen the day of fiscal reckoning. And what has the Republican Congress proposed this week to tackle the budget issues? Cut taxes more, again accelerating and worsening our day of fiscal judgment.
By any measure, the Republicans have been grossly irresponsible, fiscal and economic stewards of the United States. Driven by special-interest politics and narrow ideology, their current proposals to deal with our growing insolvency are undermining the most powerful nation in the world.
This is not simply the view of Democrats. Listen to the global capital markets. For two years, foreign private investors have been pulling back from the United States; and in the last two weeks, the governments of Japan and South Korea, two of our four largest foreign creditors, have made it clear that they will no longer continue to invest in America in the same way they have been in the last few years. Implicit in their announcements is the judgment that the current Administration is not taking steps to ensure the success of their investments – which in this case is the United States of America.
We should take the actions of Japan and Korea as clear warnings that any attempt by Republicans in Washington to continue their current reckless economic strategy could cause an economic crisis not in 2040, but tomorrow. If these nations lose faith in America’s economic prospects and reduce their investments here, the value of the dollar will plunge, interest rates will rise, the stock market will stumble, and the economy will stall out.
In essence, foreign governments and global markets are applying a new litmus test to the American government: end your current fiscal strategy or face the consequences. Democrats should apply the same litmus test to all future Administration proposals.
Any budget proposal that does not improve the long-term structural deficits created by Republican policies must be rejected out of hand, as dangerous to the prosperity and security of our nation. We must force the nation and the Republican Party to understand the gravity of our fiscal situation. Continuing on the same path is not a realistic option. We must be firm that that those who created this mess must propose a responsible way out of it. It is not the responsibility of the opposition party to bail out the Bush Administration. But it is our obligation as patriotic Americans to ensure that the government does the right thing, and when doing the wrong thing, to stop it.
A Way Forward
Therefore, going forward on Social Security and other budget matters, it is essential that Democrats agree only to proposals which deal substantively with the long-term structural problems created by recent Republican policies. That means rejecting efforts to make permanent the Bush tax cuts, rejecting any borrowing to fund a transition to private Social Security accounts, and rejecting any Social Security “reform” plan that will increase our debt.
It is the Democratic Party’s obligation to the American people to block proposals that will ultimately weaken the nation. The President’s Social Security plan is one of those. The current Republican budget plan is one of those. We can and must say no. They are unacceptable, and further demonstrate the Republicans’ remarkable and reckless lack of understanding of modern global capitalism.
And what should Democrats be for? We should support proposals that will restore the fiscal and economic integrity of the nation, limit the tax burden of the middle class, fix the health care crisis, invest in the basic factors that drive long-term growth, and ensure that globalization works for average people and not just for large corporations and those with capital. In the past several years, Democrats have proposed innumerable items to tackle these challenges, and each time the Republican majority has beat them down.
The current Democratic strategy on Social Security is, so far, the right one. With strong leadership and the right arguments, Democrats can turn the Administration’s misguided proposal into a broad and much-needed indictment of the larger Republican fiscal and economic strategy. If we do that, it will strengthen America – and help defeat the reckless Republican agenda that is endangering America’s success and security in the 21st century.
The NDN almost qualifies as policy platform. A policy platform usually consists of three elements; an expose of the perceived problem, a statement of what should be the policy and some specific polices that should be adopted to contract with the errant policies attacked. The NDN position paper exposes Bush’s policies and contains a statement of what the policy should be.
TPJ has taken the liberty of highlighting the attack on Bush’s economic policy in blue and highlighting what the policy of the Democratic Party should be in red. Reread the highlighted sections, considering the statements as a plank in a Democratic Party platform. Reads well.
NDN has not identified three or four positive specific policies. What should they be? TPJ invites enterprising readers to complete the platform plank. Write a sentence or two on four positive policies that the Democratic Party supports and sent them to TPJ.
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UPDATED: March 15, 2005
RAHMBO
Democrats in Congress are making some of the changes necessary to retake the US House of Representatives. Rep. Rahm Emanuel is taking the helm of the Democratic Congressional Campaign Committee. It is a welcome change.
Rep. Emanuel is a unique individual; a former aide to President Clinton, a millionaire investment banker, a professional ballet dancer, and a volunteer at an Israeli supply base during the Gulf War. In addition, he has earned a reputation as “Rahmbo.”
The Christian Science Monitor recently featured Rep. Emanuel. These are the highlights:
He's also the guy who, while working at the Democratic Party's congressional recruitment committee in the 1980s, once famously sent a rotting fish to a pollster who he felt had given him bad numbers. . . .
[T]he feisty Emanuel [stated]: "There are no districts that are absolutely off the table." . . .
Emanuel . . . talk[s] about the members on the Democratic side he is working hardest to protect, those representing Republican districts, such as Stephanie Herseth in South Dakota and Dennis Moore in Kansas. In the 2006 election cycle, the DCCC has cut in half, to 10, the number of vulnerable incumbents it will help with fundraising in its "Frontline" program. . . .
"I don't think anyone can tell you, 18 to 19 months out, what is going to happen," says Emanuel. But, he continues, "I am telling you what I told the caucus the day that they asked me to do this: 'Minimize our defensive posture, maximize our offensive posture.' "
It has become his mantra. Open seats - those where a member has retired or been defeated in the primary - are "priority A," he says. "B is where you have a member who not only performed below 55 percent but [has] other issues that are going on in that district."
When Emanuel was named to chair the DCCC, political Washington stood up and took notice. "Rahm's a good selection and can only improve things," says Stuart Rothenberg, editor of a nonpartisan political newsletter, noting that Emanuel not only was a top policy adviser to Clinton but also his finance chair during the 1992 election. "He understands politics and elections, he knows fundraising, he has national contacts. And I think people feel he can do well and so he probably will." . . .
Unlike most members of Congress, who focus largely on their own districts, Emanuel is used to looking at the political map nationally. Having just won reelection with 76 percent of the vote, he can afford to range far from home. He is also rare in the political world: someone who has labored long behind the political scenes, starting as a press person for the Illinois group Public Action, and successfully made the leap into elective politics.
Emanuel comes into the DCCC job with no expectation that he can pull off a miracle anytime soon - that is, engineer an early Democratic takeover of the House. Still, expectations for him are high. For one thing, says Rothenberg, there's hope that he'll stick around in the job for a few cycles, to build the kind of operation needed to succeed.
"He has a reputation that precedes him, and it's larger than life - this guy whose nickname is Rahmbo, and the whole fish story," says Ms. Walter. "He does come from a background of being a real political animal. There's a segment of the party that feels [the Democrats] need to start punching back. The party has been taking it on the chin since 2000. And then Tom DeLay beats them on redistricting and the Democrats lose seats in the last two elections."
Now, with Emanuel in place, she concludes, the message is "no more Mr. Nice Guy."
Emanuel has also become a lead spokesman for the party on issues, including Social Security, and with his background in finance, has strong views on the issue of saving for retirement.
He believes that for the Democrats to retake the House, they have to become a party of reform - both on ethics and on policy. "I think we should be the party of tax reform, massive tax reform, because the code is skewed to those who have lawyers, accountants, and people who can think of schemes," he says. "I know of no middle-class family that sets up a shelter in Bermuda to pay for college education for the kids." -- Christian Science Monitor (emphasis added)
House Democrats may have found the right person to start leading the Party back to power. TPJ will have more on Rep. Emanuel in the very near future.
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OPPOSE, NOT PROPOSE
The US House Democratic Party leadership has issued instructions to Democratic Congressmen to “oppose, not propose.” Gov. Dean recently met with Minority Leader Pelosi and Senate Democrats. Minority Leader Pelosi’s position on Bush’s Social Security reform:
For now, Pelosi has ordered House Democrats to “oppose, not propose,” changes to Social Security, according to a well-placed Democrat. – The Hill
Gov. Dean is reported as stating that US House Democrats did not even discuss recent Democracy Corps polling strongly suggesting that Democrats should be advocating a position on Social Security.
If Minority Leader Pelosi’s position leaves rank and file Democrats pondering this strategy, Democrats should consider that Bush as yet to articulate a specific “privatization” plan. TPJ’s Washington sources suggest that Democrats are developing a plan for Social Security’s future as soon as privatization is off the table.
If TPJ’s sources are correct, Congressional Democrats will advance a plan that truly preserves Social Security as a safety net and a universal retirement program in which initial benefits are calculated according to a formula that utilizes wage indexing rather than price indexing. Democrats are drawing “a line in the sand” over privatization. If Democrats put out a plan too early, Democrats could be in the unenviable position of negotiating against themselves later in the debate.
As a part of any Democratic plan, one could reasonably to expect that Democrats will try to promote savings for retirement by offering incentives to save IN ADDITION to traditional Social Security benefits. Democrats might expect to see a plan that raises the earnings cap (so that FICA taxes would phase out at a level higher than the current 90K) and of investing some portion of the SS trust fund, in the aggregate, in an index fund so that growth or losses would be shared among all beneficiaries.
The Congressional Democratic strategy may sound vaguely familiar. It is comparable to the strategy that Republicans employed in attacking the national health care program formulated by Hillary Clinton’s committee in the early 1990’s. Republicans then opposed the Clinton plan loudly and with millions of dollars in advertising but offered no plan of their own for national, affordable health care. The strategy worked and is considered part of the reason for their success in capturing Congress in 1994.
Rank and file Democrats need to keep hammering these points to every citizen:
Republicans want to abolish Social Security.
Privatization still means Social Security cuts. The major Social Security recommendation of the President’s commission “would reduce expected retirement benefits relative to scheduled benefits, even when the benefits paid from IAs [individual accounts] … are included. For example, benefits for the 1980s birth cohort would be 30 percent lower, and benefits for the 2000s cohort would be 45 percent lower.”
Bush is using “fuzzy math to promise a free lunch. He rhapsodizes about private accounts -- but doesn't mention that the trade-off is a cut of 40 or 50 percent in Social Security's guaranteed benefit. … Bush would put a big hole in the Social Security safety net at the very time that corporations are doing the same with pensions.”
“If you pile on another $1 trillion to $2 trillion to the national debt we've already got, it could trigger an economic crisis.'' -- In Their Own Words (Junkie: This resource, put on the internet by Rep. Hoyer has wonderful quotes that work as excellent talking points.)
These noteworthy items from Chairman Dean’s meeting surfaced:
Dean . . . promised that he would put at least four political operatives in all 50 states and not just the so-called “battleground” states.
[T]he DNC is touting its message to save Social Security in advertisements on African-American, Spanish-language and rural radio stations. . . .
The amount of U.S. debt held by the Chinese and Saudi governments would be part of any foreign-policy message. “We’re going to have a much broader discussion about that,” he said, alluding to record U.S. deficits over the past several years. . . .
On abortion, Dean told the caucus that the party needs to change the language of the debate, which he said is now conducted on Republican terms. The language, he said, needs to be changed from “pro-life, pro-choice,” to “rare, safe and legal.” And he promised to discuss those changes with groups favoring abortion rights. – The Hill
Last Update: 03/23/2006