Is PAYGO The Messaging Pelosi Thinks The Democrats Can Win On?

Sometimes a political tent can get so big that it stops having any meaning at all. The messaging coming out of the GOP pup tent is at least clear: they're white nationalists with a fascist bent who want to cut taxes on the rich and end social spending on things they consider wasteful-- Social Security, Medicare, food stamps, environmental protection... you know the old story. These are a few of the things conservatives have vehemently opposed over the years:

• the American Revolution
• the Bill of Rights
• public education
• the emancipation of the slaves
• women's suffrage
• the breakup of monopolies
• the abolition of child labor
• food safety
• rural electrification
• land grant colleges
• national parks
• the weekend
• unions
• the minimum wage
• Social Security
• civil rights and voting rights for minorities
• clean air and water and consumer safety
• Medicare and Medicaid

That's who they are-- and they still think they're right for opposing most of these things. Progressives backed the same list. So where's the business-friendly, careerist-oriented DC Democrats? Somewhere in between and struggling to find an identity-- or not. Messaging this cycle is abysmal. People wonder what the Democrats stand for. Pelosi said PAYGO, an old discarded Republican idea that basically means no real progress can ever get done that involved money. A friend called the other day and asked me to define PAYGO, since it is likely to be on Pelosi's political headstone one day. Here's how wikipedia did:

The PAYGO compels new spending or tax changes not to add to the federal debt. Not to be confused with pay-as-you-go financing, which is when a government saves up money to fund a specific project. Under the PAYGO rules, a new proposal must either be "budget neutral" or offset with savings derived from existing funds. The goal of this is to require those in control of the budget to engage in the diligence of prioritizing expenses and exercising fiscal restraint.

There are far better messages to take to the electorate. Medicare-For-All-- or even just adding dental and vision to Medicare-- Job Guarantee, free state colleges, $15 minimum wage...

Back in March, American Prospect writers Mark Paul, William Darity Jr., and Darrick Hamilton, handed Pelosi and her tent-mates a cohesive platform they should have used for the campaign. Obviously, they didn't. Pelosi was only 4 years old when then-President Franklin Roosevelt "proposed constitutional amendments to guarantee Americans’ fundamental economic rights. It was never adopted-- and today, is more necessary than ever." It's going to take someone-- a big thinker (which she has never been and will never be)-- far more radical than Nancy Pelosi to ever try achieving it but here's what today's version would look like:

In his groundbreaking 1944 State of the Union address, President Franklin Roosevelt called for an expansion of the Bill of Rights to recognize economic rights as well. “Necessitous men,” Roosevelt observed, “are not free men.” Those “who are hungry and out of a job are the stuff of which dictatorships are made.” Moreover, real freedom, freedom to “pursue happiness,” he said, required a “second Bill of Rights under which a new basis of security and prosperity can be established for all.” For Roosevelt, full citizenship demanded more than the political rights designated in the nation’s original Bill of Rights: It required economic rights. Roosevelt outlined those rights-- which sounds very much like the Bernie Sanders platform-- as follows:

1.     The right to a useful and remunerative job in the industries or shops or farms or mines of the nation.
2.     The right to earn enough to provide adequate food and clothing and recreation.
3.     The right of every family to a decent home.
4.     The right to adequate medical care and the opportunity to achieve and enjoy good health.
5.     The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment.
6.     The right to a good education.

We need to rethink public policies, breaking out of the straightjacket that overemphasizes market-based solutions. We have thought big before—but have compromised big as well. During the Great Depression, FDR and liberals made a Faustian bargain with southern segregationists to provide a New Deal and beyond, rewriting the rules of our economy. But only for some of our citizens. Ira Katznelson’s excellent book When Affirmative Action Was White: An Untold History of Racial Inequality in Twentieth-Century America documents how U.S. public policy implicitly and sometimes explicitly excluded black people from opportunity during the so called ‘golden age’ that followed. The racial apartheid that existed under slavery was renewed under another name-- Jim Crow-- for decades. The exclusions from the guarantees of the New Deal contributed to the highly unequal outcomes we observe today.

Today, we must transcend the racial, ethnic, and regional divisions exacerbated by post-Depression and post-World War II-era policies by building universal policies that are cognizant of identities and intersectionality, and inclusive of race, gender, nationality, sexuality, and ability.

The first six rights outlined by FDR above are still all too germane today, but to update these economic rights to facilitate an inclusive economy for the 21st century, we add:

7.     The right to sound banking and financial services.
8.     The right to a safe and clean environment.
9.     The right to a meaningful endowment of resources as a birthright.

The Prospect article goes on to define all 9 planks of what should be the Democratic platform. They're all very much worth reading-- and each would be vehemently opposed by the Republican Party and by the Republican wing of the Democratic Party-- the New Dems and Blue Dogs-- but I'm going to just publish the final three that they added to FDR's list:

The Right to Sound Banking and Financial Services

Wall Street profit incentives are often not aligned with Main Street economic development, and nor are the more conservative Federal Reserve’s financial policies, such as the Fed’s staunch opposition to full employment. We must offer an alternative to the predatory nature of the current system of finance. The financial system has continued to redline opportunity in this country, particularly for financially vulnerable groups who have been deprived from asset-development by the banks’ policies of housing discrimination, limited or high cost basic banking services, last resort exploitive lending practices (such as payday lending), and the pushing of subprime loans even on creditworthy Latino and black borrowers.

Recent estimates indicate that 20 to 40 percent of the U.S. population relies on some form of non-traditional financial services, such as payday lending, which disproportionately preys on vulnerable and low-income Americans. Moreover, 53.6 percent of black households and 46.4 percent of Latino households are unbanked or underbanked, which is likely related to the high costs of banking for low-income individuals and the scarcity of banks operating in black and Latino neighborhoods.

A recent US Postal Service report found that the average underserved household spends almost 10 percent of its income on alternative financial services and interest. Converting one’s paycheck into cash should not bear a penalty, particularly for those with limited resources.

There are currently 53 million “credit invisible” households in the United States-- households that do not frequently participate in forms of financial services that the major private credit bureaus incorporate in credit scores. This “credit invisibility” results in the further marginalization of this group, limiting access to credit and employment, and increasing costs associated with financial services. According to the think tank Demos, while most low-and middle-income white households with credit card debt report good or excellent credit, the opposite is true for African Americans. Further, evidence from the Federal Reserve indicates that less than one quarter of blacks reported prime scores, compared with roughly 65 percent of whites. As a result, blacks are more likely to receive sub-prime mortgages and pay more for accessing other financial products such as car loans. This need not be the case.

A public option for banking and basic financial services could provide all Americans with the right to a minimum, non-exploitative standard of banking and financial services. Like the job guarantee, public banking would generate a floor in the financial sector-- if private banks don’t provide services at least as good as those provided by the public option, we expect consumers to close their accounts at private banks and choose the public banks.

Public banks are not a new idea. In 1910, Republican President William Howard Taft introduced the U.S. Postal Savings System to fight against the predatory-lending practices of the finance industry at the time, providing Americans an alternative that they could trust. This system functioned till 1966, when the banking lobby helped convince lawmakers to end the public option for banking and financial services. One state, North Dakota, still operates its own public bank. The state uses tax revenues to fund the bank, providing high-quality loans to farmers, students, and local businesses. Other countries, including Japan and Germany, currently have more extensive public banking options, and Germany’s municipal banks are a chief source of funding for that nation’s thriving small-and-medium-sized manufacturers.

One approach for public banking is to revive the postal banking option. The US Postal Service already provides alternative financial services via money orders (to the tune of $21 billion in 2014). In a recent white paper, the office of the USPS Inspector General noted that “while banks are closing branches all over the country, mostly in low-income areas in both rural communities and inner cities, the physical postal network is ubiquitous.” A postal bank in the U.S., including workers from the FJG program, can bring banking services to the unbanked while providing an important revenue stream for the USPS.

To provide Americans with access to reasonable financial services, another reform would be to federalize the credit score industry. Credit reports and scores have a direct and growing impact on Americans’ economic security and opportunity. Credit scores, which in theory represent the “credit worthiness” of consumers, are used to govern access for a range of basic economic needs—ranging from a car loan, to a lease on an apartment, to a job. These scores function in part as a gatekeeper to credit, which is central in today’s economy to build wealth and fully participate in the economic system. However, the credit scoring system has long been opaque and deeply flawed. Something as influential as a credit score in determining life outcomes should not be left in the hands of the for-profit, unaccountable private sector.

The Right to a Safe and Clean Environment

The environment is perhaps our greatest inherited collective resource. Yet like income and wealth, this resource—our planet and its environment-- are not shared equally. The link between environmental quality and economic inequality is clear. This was elucidated in a memo by Lawrence Summers, then the chief economist of the World Bank, which stated “the economic logic of dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.” The same logic has been applied to the lowest income counties in the United States. We do not accept this logic.

Our environmental policy should protect Americans against this logic, as well as assaults on the environment such as those waged by the Trump administration. As the Federal Water and Pollution Control Act makes clear, water quality should “protect the public health.” Clean water and clean air should not be something Americans need to purchase-- rather they should be rights, provided to all.

 In 1994, President Bill Clinton signed Executive Order 12898, which ordered federal agencies to identify and rectify “disproportionately high and adverse human health or environmental effects of its programs, policies, and activities on minority populations and low-income populations.” Despite this landmark victory, the racial and income-based pollution patterns and health disparities associated with exposure to environmental hazards remain prevalent. Researchers at the Political Economy Research Institute released a report identifying the Toxic 100-- the top corporate air and water polluters across the country. The verdict? The “logic” of dumping on the poor and vulnerable racial/ethnic groups persists.

The ongoing Flint water crisis is only one tragic example. In Flint, decisions made by local and state authorities demonstrated that money and power matter more than public safety and human lives. A right to a clean environment for current and future generations is needed. That requires a rapid transition away from fossil fuels in the face of climate change-- the greatest threat we have faced collectively as a species. The #KeepItInTheGround campaign is just beginning. A clean and safe environment should not be commodified, something we put up for sale to the highest bidder or the one with the most connections. Instead, we need to enshrine a mechanism that provides a clean and safe environment as a basic human right.

The Right to Seed Capital to Build a Lifetime of Asset Economic Security

The reports keep stacking up-- income inequality has been growing rapidly since the late 1970s. The degree to which income is unequally distributed is shocking—yet income is less unequally distributed than wealth. Wealth is a paramount indicator of social well-being. Wealth-- what you own minus what you owe-- is critical to the economic security of Americans. With almost half of all Americans unable to afford an emergency expense amounting to $400, the average household is not resilient to economic shocks.

Recent research by Emmanuel Saez and Gabriel Zucman at Berkeley found that the top one percent of Americans held 42 percent of all wealth in 2012, with the top 0.1 percent holding 22 percent. Disparities are especially pronounced between races. The legacy of chattel slavery, where black people were literally a form of wealth for whites, and the discrimination encouraged and perpetuated through public policies, have left black families with minimal wealth. A report by the Center for Global Policy Solutions, entitled “Beyond Broke: Why Closing the Racial Wealth Gap Is a Priority for National Economic Security,” concludes that “[f]or every dollar in wealth held by whites, African Americans and Latinos held only 5 and 6 cents respectively.” In our in-depth study of The Color of Wealth in the Nation's Capital, we find that white families have 81 times more wealth than black families in Washington, D.C. A new collaborative study from the Samuel DuBois Cook Center on Social Equity and Insight: the Center for Community and Economic Development finds that single older black women with a college degree hold a mere $11,000 in wealth to deal with their retirement, in comparison with similarly educated older white women, who have a median wealth of $394,400.

Conventional explanations of wealth disparities, relying on rhetoric around the dysfunctional behavior of blacks and their lack of education or financial literacy, simply do not hold up. Given the importance of wealth in determining life outcomes, public intervention is needed to address unjustly created distributions. One such solution, “baby bonds” would seed every American at birth with an initial endowment to be held in trust until adulthood. The program would be universal, through which every newborn would receive an account, starting at around $500 for those born into the most affluent families and progressively rising to $50,000 for children born into families with minimal wealth. The accounts would be accessible when the recipient reaches adulthood and used for some asset enhancing endeavor-- a down payment for a home, say, or capital to start a new business. Estimates show that the cost of the program would amount to about 2 percent of federal spending. If the average account is established at around $20,000, the cost to the government would not exceed $90 billion a year inclusive of administration costs. While that may give some sticker shock, keep in mind the relative size of other asset development programs cost much more. Capping the mortgage interest deduction would be much more than sufficient to cover the cost of the new program.

Hey Nancy! Hey Chuck!