Shouldn't The Domestic Debates All Be About Prosperity Economics As An Alternative To The Bleak Austerity Agenda?
It would be useful to see a national discussion of Prosperity Economics as the alternative to the Austerity agenda Wall Street has prescribed for America before the November elections-- and before Obama and Boehner can foist their Grand Bargain on us. There are 16 congressional candidates who have been making an effort to do that in their districts and today Progressive Caucus co-chairs Raúl Grijalva (D-AZ) and Keith Ellison (D-MN) are holding a hearing on year-end Congressional budget and fiscal issues, focussing on job creation, the impending budget sequestration process, realistic ways to increase revenue and reduce the national debt, and how to preserve Medicare, Medicaid and Social Security-- basically... Prosperity Economics. As much as I'd love to see Hacker's work being discussed on TV and on the front pages of the NY Times and even USAToday, I was happy to see a thorough examination by Paul Rosenberg at Al Jazeera this week. He also notices that the media is pretty much ignoring the stampede towards Austerity and that questions that go against the grain are the questions the media should be looking at.
They're also at the core of a new proposal laid out in a recent report, "Prosperity Economics: Building an Economy for All," which is supported by leading labour, civil rights and community organisations, and is being adopted by a growing list of progressive Democratic candidates. "Prosperity economics is built on three pillars: growth, security and democracy," the report explains. "These pillars reinforce one another and are intertwined politically and economically."
In a recent teleconference, the reports' lead author, Yale political science professor Jacob Hacker, explained, "Instead of the austerity agenda that we have now, focused on debt, this growth agenda is focused, really, on restoring broad-based economic growth and our democracy."
"The current debate is focused on how severely to cut, not whether to cut" government spending, Hacker added, "That's diametrically at odds with dealing with the two great challenges we face today, which are not the deficit, but rather the jobs crises, and the long-term stagnation and decline of the middle class."
Once again, the same pattern holds: Even if you want to know about controlling the federal deficit-- the wrong question to be obsessing over at this time-- you have to ask about these other questions about restoring broad-based prosperity in order to make sense of the big-picture situation. As I pointed out in a recent column, even Paul Ryan understood the need for deficit spending when he was defending Bush's third stimulus package back in 2002:"We've got to get the engine of economic growth growing again, because we now know, because of the recession, we don't have the revenues we wanted to, we don't have the revenues we need to fix Medicare, to fix Social Security, to fix these issues, we've got to get America back to work."
There are a lot more people out of work now than there were in 2002, so Ryan's logic then applies even more forcefully than it did back then. But Hacker and his co-author, Nate Lowentheil, have a much deeper understanding of what this requires. It's not just a matter of knowing the economic history of how mass middle classes were created via modern welfare states in Europe and North America after the devastation of the Great Depression and World War II, though that certainly helps. In the report itself, the authors restate the accumulated wisdom borne of that experience:"Prosperity doesn't just 'trickle down' from the top. It depends on the common investments and sources of security we agree on as members of a democracy, on institutions-- especially unions-- that ensure that gains are broadly shared, and on a healthy democracy that can sustain sound economic policies and prevent today's economic winners from undermining the openness and dynamism of the economy."
...With the debate still framed by asking the wrong question-- about debt, rather than growth-- Hacker warned, "there is a real risk that even if President Obama wins, we could end up with a kinder, gentler version of austerity economics-- tax cuts that are slightly less skewed, cuts in public investment, cuts in economic security that are only slightly less draconian than those in the leading budget blueprints on the right."
...Toward this end, a stand-alone summary of policy recommendations at the Prosperity For All website briefly describes the three inter-locking pillars of the approach and how specific policies exemplify their synergy for America as a whole, as well as their direct value to individual Americans. The proposals aren't new, particularly. What is new is their presentation as part of an integrated vision of what shared prosperity looks like, and what it takes to achieve.
On the subject of economic growth, defined as "dynamic, innovation-led growth, grounded in job creation, public investment and broad opportunity," the authors write, "We must take immediate action to jump-start our sagging economy. Going forward, we need to invest in people and productivity that will lead to good jobs and rising wages." Examples of specific policy recommendations include:
• Invest $250 billion per year for the next six years to rebuild our nation's crumbling roads, bridges, ports, airports and public transportation systems.
• Restore America's manufacturing base by ending the trade deficit and tax incentives for offshoring.
• Provide help to states and localities to hire back teachers, first responders and other public servants.
• Ensure decent wages and job quality by guaranteeing that workers have the right to form unions and to collectively bargain.
On the subject of economic security, defined as "security for workers and their families, the environment and government finances," they write, "Markets work better when working families feel a basic security for their futures. Only when families can be sure they will not be deprived of necessities like health care and retirement security can we create a dynamic and competitive economy." Specific policy recommendations include:
• Build on the Affordable Care Act by adding a public option with the clout to push back against insurance companies so everyone has access to affordable, quality health care.
• End the Bush tax cuts for the wealthiest 2 per cent of Americans. The Bush tax cuts are the largest single contributor to our current revenue shortfall.
• Increase public investment in research and development for clean energy technologies by $15 billion per year.
• Implement a financial transaction tax to discourage short-term speculation and reduce the chance of financial crises. The tax would be invested publicly and fund job creation.
On the subject of democracy, defined as "democratic voice, inclusivity and accountability-- in Washington and the workplace," they write: "Democracy means we have a strong system of checks and balances both in our government and in the private sector that empowers citizens, guarantees more inclusive decision making and creates strong mechanisms of accountability." Specific policy recommendations include:
Protect the right to vote to ensure every voice is heard in the political process. Repeal disenfranchisement and voter ID laws and adopt same day voter registration, provisional voting and other measures to maximize voter participation and access.
Guarantee every worker has a voice in the workplace, including a quick, fair process for workers to choose union representation and have the power to bargain collectively. Enforce stronger penalties on companies that violate labor laws.
Free government from corporate interests by reinstating the firewalls between investment and banking.
Improve consumer protections against unfair credit card fees and practices, predatory lending and bankruptcy rules biased in favour of creditors.
The comprehensive framework of prosperity economics-- and the research it draws on-- provides the vital context for understanding these policies not as a laundry-list of disparate ideas, but as interlocking aspects of a single, unified vision.
The just-completed Democratic National Convention sounded many notes in harmony with the prosperity agenda. That's hardly surprising, given the Democratic Party's long history of building American prosperity during the 20th century. But will Democrats actually stand firm for policies and programs that will make shared prosperity a reality, or will they return to President Obama's mindless mad scramble for an unattainable and disastrous "grand bargain" that will slash prosperity-promoting government programs in return for Republicans finally agreeing to some modest restoration of tax levels from the past? That is the real question that Americans should be worried about.
Some Democrats clearly understand the underlying synergistic logic of Hacker and Lowentheil's proposal. Liberal bloggers Howie Klein at Down With Tyranny and Digby at Hullabaloo have repeatedly called attention and urged support for a list of progressive Democratic challengers who've signed on to support the prosperity agenda, and Digby herself was partnered with Hacker on the teleconference I mentioned earlier.
But the logic of Obama's infatuation with a "grand bargain" is antithetical to the logic of prosperity economics. Prosperity economics and austerity economics have diametrically opposed purposes-- sharing prosperity among the many vs hoarding it for the few-- and each has its own self-reinforcing dynamic. There is no middle way that captures "the best of both", because each has a radically different idea of what "best" is.
As Digby noted in response to Obama's convention speech, Obama has promised not to cut programs to give tax cuts for millionaires. (That's certainly much better than Romney-Ryan, who plan to do exactly that.) But he did not promise not to cut programs in return for tax hikes for millionaires-- and that's the very essence of the "grand bargain" strategy, a strategy that only makes sense if you're forever focused on asking the wrong questions.