Source: Democracy Journal
When political commentators aren’t talking about Donald Trump, they are often talking about how the Democratic Party has “moved to the left.” This is often phrased as a lament, the notion being that the party has been hijacked by its progressive wing. But what if that is missing the point? What if, when it comes to economic policy at least, it’s the country’s political center of gravity that is actually shifting? That is, what if not just one party, but the American electorate as a whole is moving to embrace a more energized form of government—one that tackles the excesses of the free market and takes on big, serious challenges through big, serious legislation instead of the more restrained measures to which we’ve grown accustomed? What would that mean for Democrats?
Hold those thoughts. First, a historical anecdote:
In 1971, the United States came one Pat Buchanan away from universal child care.
A bipartisan bill would have funded a national network of child-care facilities and provided income-based subsidies to working families. It had passed the Senate by nearly a four-to-one margin. President Richard Nixon was initially expected to sign it, but late in the process he faced pressure from the right to strike it down. In stepped Buchanan, then a White House aide. He wrote a sweeping veto statement attacking the very idea of government-funded child care as an exercise in socialism. President Nixon ended up killing not just the bill but the entire concept. Nearly 50 years later, it’s never been revived.
This episode, reported in detail by Gail Collins and others, offers a useful device for locating the center of gravity in American political life in the early 1970s. It tells us a lot about the prevailing consensus at the time on the relationship between government and the free market—the role of regulation, of redistribution, of public investment, and of the social safety net in promoting fairness, opportunity, and growth.
A decisive bipartisan majority—Democrats and Republicans—supported a new entitlement program. And even though Nixon ultimately rejected the child-care law, it would not have been particularly surprising if he had approved it. After all, he had embraced a series of other sweeping measures that would most certainly qualify today as “big government.” He created the Environmental Protection Agency and the Occupation Safety and Health Administration. He signed into law the Clean Air Act, and the Equal Employment Opportunity Act. He proposed a “negative income tax” that resembled universal basic income, and dramatically expanded the federal food stamp program. He advocated for universal health-care coverage, including employer mandates and subsidies for low-income Americans.
Nixon was operating around a political center of gravity established by Franklin Roosevelt and reaffirmed by the presidents that followed him, especially Lyndon Johnson, whose “Great Society” agenda produced major new legislation on virtually every domestic policy front. There was a consensus among mainstream Democrats and Republicans alike that active, ambitious government could solve big national problems. But things changed fast. By 1980, a tide carrying Ronald Reagan rolled in, propelled by a combination of public frustration with a stagnating economy, the gathering strength of supply-side ideology, increasingly intense racial dog-whistling, and an industrial-scale corporate lobbying effort to reduce regulations and dismantle the social safety net. A smaller government that did fewer things became the unifying goal of the GOP. (Conveniently, this smaller vision of government fit very nicely with the economic interests of powerful Republican supporters.)
It turned out to be a 30-year tide, one that shifted the center of political gravity dramatically. From Ronald Reagan’s “[t]he most terrifying words in the English language are: I’m from the government and I’m here to help,” to Bill Clinton’s “[the] era of big government is over,” all the way through the 2012 election, a new consensus shaped by Reagan prevailed. Democratic presidents, Clinton and Barack Obama, surely advocated for and pursued progressive policies, but within limits defined for them, forced to trim their ambition compared with the Great Society and New Deal eras. Republican presidents, meanwhile, aggressively dismantled the progressive scaffolding of those earlier periods. Along the way, economic inequality skyrocketed—and America’s middle class kept losing ground.
This essay proceeds from the premise that we have reached another turning point. Just as the Great Depression discredited the ideas of the pre-New Deal conservatives who fought for total laissez-faire outcomes in both the political branches and the courts, so the Great Recession once again laid bare the failure of our government to protect its citizens from unchecked market excess. There has been a delayed reaction this time around, but people have begun to see more clearly not only the flaws of our public and private institutions that contributed to the financial crisis, but also the decades of rising inequality and income stagnation that came before—and the uneven recovery that followed. Our politics are in the process of adjusting to this new reality. The tide is running in the other direction, and, with history serving as our guide, it could easily be a decades-long tide.
Indeed, the role of government is up for debate in the Republican Party, too, notwithstanding their party leadership’s stubborn commitment to an agenda that would make Reagan himself blush. In the closing months of the 2016 campaign, when Donald Trump had the best measure of his own party’s base, he championed a slew of issues that went directly against Republican orthodoxy. Raising taxes on the rich. Investing in infrastructure on a massive scale. Protecting Social Security and Medicare from any cuts. His campaign even floated breaking up the biggest banks. Of course, once in office, Trump has not governed that way—quite the opposite. He has outsourced his domestic agenda to the Congressional Republican leadership and their corporate backers, and in exchange they’ve given Trump a free pass to say and do what he likes, no questions asked. Paul Ryan and Mitch McConnell’s actions echo those of the pre-New Deal conservatives, even after the Great Recession re-taught us the lessons of the Great Depression.
By contrast, the public seems to have taken those lessons to heart. A January NBC News-Wall Street Journal poll found that 58 percent of registered voters believe the government should do more for the American people, compared with 38 percent who said the government does too much. That is a record high since the question was first asked in 1995. (Back then, the results were inverted: 62 percent said the government was doing too much; only 32 percent said it should do more.) An NBC analysis accompanying the poll noted that the overall results reflected “a widespread desire for a government that’s more involved in addressing the nation’s problems.” Part of this is about Republicans feeling more comfortable with an active federal government because a Republican is in the White House. But it also appears to reflect a real change in underlying attitudes about government and government programs, which is further evidenced by polling on health care and other issues.
In assessing public views on the role of government, it is important to keep in mind that this has never been strictly a question of economic policy. The Reagan-era antipathy to “big government” was rooted in thinly veiled racist objections to programs seen as disproportionately helping “undeserving” minorities—“them” rather than “us.” Nixon and the Southern strategy planted the seeds for this narrative; Reagan harvested them. And there is no doubt that the resentment they produced is alive and well today among a segment of the public. Just ask Donald Trump.
What has changed, though—thanks to widening inequality, massive underinvestment in public services, and the lingering effects of the Great Recession—is that the siren song of supply-side economics is losing out to arguments rooted in economic fairness, even among elements of the Republican base. That’s why the failed Republican health-care bill was historically unpopular among independent and even Republican voters (registering support from only 42 percent of Republicans and 18 percent of independents in a June Quinnipiac poll last year)—because it sought to slash Medicaid at a time when more people than ever are dependent on it. It’s why Republican leaders haven’t been able to sell the public on the Trump tax cuts (which clocked in at 27 percent approval in an April NBC News-Wall Street Journal poll)—because people reject its disproportionate benefits for the wealthy. And it’s why we’ve seen such incredible teacher activism in traditional Republican bastions like West Virginia, Oklahoma, and Kentucky—because despite persistent differences on some education reform issues, people across the political spectrum are fed up with starving our public school system.
Admittedly, Trump has thus far faced little sustained resistance to his systematic campaign to roll back basic health, safety, and environmental rules (literally inviting corporate lobbyists into government to pick and choose the regulations they want to eliminate). But I suspect these actions would be more unpopular if they weren’t lost amidst his perpetual Twitter-fueled onslaught of ad hominem bullying, provocation, and general chaos. Polls have shown durable support across demographic groups for many of these rules, including the Obama-era regulation limiting carbon emissions from power plants.
So what does all of this mean for Democrats? In the face of Trump, some Democrats will be skittish about embracing big, bold economic policy solutions for fear of alienating independents and moderate Republicans who can help defend our national institutions, our core values, and our democracy. What these trends suggest is that Democrats do not have to choose between shoring up the “vital center” in American politics and supporting a more vigorous national response to our economic challenges. Both are possible. Indeed, both are necessary to defeating the long-term threat of Trumpism.
Most important, the bottom line is that Democrats should not blush too much, or pay too much heed, when political commentators arch their eyebrows about the party moving left. The center of gravity itself is moving, and this is a good thing. The government’s role in checking the excesses of the free market and supporting workers and families should and will be redefined in the years ahead. The question is how.
Looking to History for Principles—and the Future for Solutions
I am obviously not the first person to see these trends or make these points. Others have been advancing this case for a while now. In fact, I have to confess that I did not fully appreciate the need for a more dramatic rethink at the start of the 2016 campaign. I was Hillary Clinton’s senior policy adviser, responsible for developing and rolling out proposals on everything from tax policy to bank regulation. But before that, I was a child of the 1980s and 1990s, steeped in the centrist politics of the era. And I had spent the years leading up to the campaign working on foreign policy, traveling the world and learning what was happening “over there” instead of coming to terms with what was going on back here.
Once I signed up with Hillary in 2015, though, it did not take long before I started seeing things more clearly. Bernie Sanders’s campaign helped sharpen my diagnosis, even as I found some of his prescriptions wanting. Hillary herself—a student of history and much more of a progressive’s progressive than she’s ever been given credit for—proved instrumental in my education. Most of what she proposed—universal pre-K, paid family leave, lifelong learning—revolved around the notion of a government that would be responsive to the needs of twenty-first century families. And over the next two years, as I traveled across the United States on behalf of the campaign, I was reminded again and again how the broken aspects of the American economy were not the inevitable product of disembodied forces like “globalization”; they were very much the product of policy choices shaped by decades of conditioning. Reagan had set the center of gravity and both parties had been revolving around it.
This is not to rebuke the New Democrats of the 1990s. For one thing, the Clinton years, while imperfect, produced greater growth and fairness—with rising wages across the board and particularly strong gains for disadvantaged groups–than anything we’ve seen since. For another, the political constraints of the time were real. Bill Clinton came into office with a big, bold agenda, but the defeat of his health-care plan (remember Hillarycare?) and the walloping he took at the ballot box in the 1994 midterm elections forced him to dial back his ambition and seek more incremental progress where he could find openings. And then there is the undeniable fact that the economy looks different today than it did in the 1990s. David Leonhardt quotes Larry Summers as saying that it should not be surprising—indeed it should be expected—that even apolitical economists looking at the “widening inequality, financial crisis, zero interest rates, rising gaps in life expectancy and opportunity” over the past two decades would move to the left, because their analysis would inevitably lead them there. The point is, we are now in a different moment, with new opportunities.
Our 2016 campaign messaging did not always reflect that. In contending with Sanders, we often fell back on the argument that his proposed agenda simply wasn’t achievable. I cheered when Hillary styled herself as a “progressive who gets things done” during the first primary debate in Las Vegas, but while it was a great debate moment, it also created a trap that became apparent as the campaign unfolded. Instead of aspiration, we gave people arithmetic: His numbers didn’t add up! This was a mistake. There was a time and place for expressing caution on the sheer magnitude of spending in Bernie’s agenda, but it should not have been our core critique. We should have been more true to Hillary, by emphasizing not that Bernie’s plans were too ambitious, too pie-in-the-sky, but that they were the wrong kind of ambition. He was offering prescriptions for the world as it once was, not the world as it is and will be. His worldview was rooted in the 1970s; he had little to say on the changing nature of work, the changing character of American families, or the enduring realities of globalization. (For example, his agenda lacked clear plans for dealing with workers in irregular employment relationships, or those dislocated by technological change.)
We Democrats do need to embrace a big, bold policy agenda. We do need to heed the calls of Franklin Roosevelt, who asked us to save capitalism from its excesses, and Lyndon Johnson, who asked us to think ambitiously about how government—and yes, government programs—can help do that. But, crucially, we need to apply their principles to a new economic landscape.
What we need, ultimately, is to encourage the rise of New Old Democrats.
Here’s the old part: reclaiming a willingness to take energetic government action when the circumstances call for it, based on a respect for the free market but also a recognition that the free market alone will not serve the public interest without checks against abuse, corruption, and unacceptable levels of inequality. Roosevelt knew this as well as anyone. My hero Hubert Humphrey, another son of Minnesota, knew this too. They saw that public policy can solve these problems—that the rise of inequality and the loss of mobility is not chiefly a story of abstract “market failures,” but of self-serving actors intentionally distorting markets, and government failing to stop them.
Here are the new parts:
We need to marry the principles of Roosevelt and the ambition of Johnson with updated understandings of how the job market works, how families live, and how corporate and political power are exercised in the globalized, technology-driven landscape of the twenty-first century.
Instead of aspiration, we gave people arithmetic: His numbers didn’t add up! This was a mistake.
We also need a new mission. For Roosevelt, the fight was economic depression. For Johnson, it was a war on poverty. Today, it has to be rescuing and rebuilding the American middle class. Since 1971, the percentage of both upper-income and lower-income households in this country has increased, hollowing out the middle class from 61 percent to below 50 percent of all households. Meanwhile, the share of aggregate income going to middle-income households fell by roughly a third in that same period. To be clear: This does not mean giving up on the fight against poverty. We have made real progress since the Great Society, and we have to finish the job—especially ending child poverty. But the state of our country’s middle class itself has been distinctively and gravely hurt in recent years. And this hollowing out has sapped our national vitality and eaten away at our national unity. As my former boss Joe Biden often says, “Middle class is not a number. [I]t is a value set.” A vibrant middle class reflects our national values and makes them more secure. This is why it demands a special focus.
And finally, we need new policy solutions, not just more of the same. When Roosevelt launched the New Deal and Johnson the Great Society, they were not relying on old proposals to recreate an old world. They were writing a new policy playbook to respond to the startling realities of their time. They were engaged in what FDR called “bold, persistent experimentation.” We’re called to that work anew.
Four Core Pillars for a New Old Democratic Platform
So what might this work look like in practice? What does it really mean to take the principles and values of previous generations of Democrats and apply them to a new economy? Here are some of the core ideas:
One: Recognize that the “future of work” is actually the “present of work.” There is a cottage industry in policy circles today about how best to prepare for economic changes coming down the road, changes driven by powerful technologies like artificial intelligence. Every week, I get a new email notifying me of another conference or report on the “future of work.” The fact is, a large part of the future has arrived. And there is an urgent need to make work more dignified and humane today. This starts from the old Democratic premise that government must play an active role in ensuring that the free market delivers workers good wages and benefits, good workplace conditions, and a meaningful opportunity to bargain collectively (through traditional unions or other arrangements) for both of those things.
But in advancing this premise, New Old Democrats need to fashion policies that respond to three new realities.
First, the traditional employer-employee relationship is increasingly being converted into more irregular forms. By 2030, more than 40 percent of jobs will be filled by contractors and freelancers; that is, people who don’t fill out W2s because they aren’t full-time, salary-earning employees. As the economists remind us, the so-called “gig” economy only accounts for a fraction of this trend. It is happening to large numbers of workers in traditional sectors, including janitors and other support staff who a generation ago were full employees of the companies they worked for, yet today are outsourced contractors.
The principles of Johnson and Roosevelt need to be put to work in a world where people will change jobs frequently, hold multiple jobs at once, and receive few benefits from their employers. In this changing economy, the social safety net has to become a “social trampoline,” which enables people to absorb setbacks and rebound quickly. A larger government role would not simply protect people who fall down, but enable them to be resilient and get back in the game.
The Affordable Care Act was a good start to addressing this new landscape, offering portable health insurance that people can rely on as they shift from job to job, or leave a job to start a new business. But it was only a start: Every American should be able to buy into Medicare or a similar public insurance program. Beyond health care, government has a role to play in making sure all Americans—no matter whether they are full-time or part-time, hold one job for a decade and switch jobs five times—can count on a foundation of basic labor protections and social insurance. Merely expanding Social Security, a favorite of some on the left, is not a sufficient response. That will help when you retire, but not today. We need new answers—including new rules, new tools like wage insurance, and new benefit structures for non-traditional workers.
This journal has been on the forefront of showcasing some of the emerging ideas in this space. The answers may vary from industry to industry, or jurisdiction to jurisdiction, but they have to start from the simple proposition that a worker is a worker. In other words, regardless of what you do, or how you do it, you should be entitled to the protections of employment: the right to a fair wage, to worker’s compensation, to anti-discrimination protections, to some form of organizing. We can debate how these rights are delivered to someone working on a mobile platform rather than in a factory, but what is delivered should not be different. If we start with this basic premise, we can figure out the details so that we both promote innovation and protect workers. Such an effort will require a prominent voice for organized labor, including, as David Rolf has argued, through new collective bargaining “mechanisms to exercise power and to do so at a scale that improves the lives of millions of workers.”
Second, the roles and responsibilities of families have changed. Now the norm is for both parents to work. Sixty-six percent of two-parent households with children under 18 are dual-income. The number of single parents, and especially single mothers, in the workforce has grown as well. At the same time, more and more working adults are also taking care of their parents. All of this throws the balance between family and work out of whack—and calls for more ambitious policy solutions. The need for affordable child care—a priority in the Nixon era even when far more households were two-parent, single-income—has become so much greater. And families also need new rules on paid leave and help with the costs of elder care, in order to stay stable, healthy, and solvent. Thousands of people came up to Hillary Clinton on the campaign trail with stories of their struggles; I can’t tell you how often it had to do with managing this juggling act. People aren’t looking for handouts. These are working adults looking for a fair deal for their participation in the workforce. Hillary raised these challenges incessantly in her speeches, but they didn’t count as part of an “economic message,” because they were seen as soft “family” issues. They’re not. They are core economic issues.
Third, most adult working Americans—125 million of them, in fact—now work in the services sector, not in manufacturing or agriculture. Yet when Democrats think or talk about, say, Ohio, they almost always go straight to a message geared toward manufacturing and steel workers; they forget the fact that two-thirds of Ohio’s economy is in services. I remember being at a campaign rally and talking to a woman who worked as a home health aide. She asked me why the “workers” in political commercials and campaign rhetoric always look the same and come from a small set of industries. What about the childcare workers, the receptionists, the back office employees, the Amazon or Walmart warehouse workers who are the future of retail? The fact is, many services jobs don’t pay as much as manufacturing jobs do, and they don’t provide the same benefits either. But they are also vital to our communities and our economy—and they should provide a viable path to a middle-class lifestyle. Even manufacturing jobs will look and feel different tomorrow than they did yesterday, given the spread of new technologies like 3D printing. So Democrats need to develop a story and a strategy for ensuring that workers in the caring economy, the services economy, and the value-added manufacturing economy receive not just a decent income and stronger benefits, but also dignity and respect along the way. I confess I don’t have the answers for how exactly to make this happen, but I do know that we should elevate these questions in the national policy dialogue.
Of course, a strong middle class needs not just a foundation of security but a launchpad for opportunity. New Old Democrats need to reclaim the old progressive commitment to universal access to high-quality education that gives everyone the chance for a better life. But they have to apply that principle to a radically different landscape—one for which our current education system is woefully ill-equipped. A recent McKinsey analysis found that as many as one third of American jobs that exist today will not exist in 2030, thanks largely to automation and the advent of artificial intelligence. The emphasis should therefore shift away from degrees and diplomas and toward skills and credentials. Instead of prioritizing “free college,” we should prioritize debt-free lifelong learning: Every American willing to meet basic requirements should be able to find a training opportunity, at any stage of their lives, that provides them with job-relevant skills at a cost they can (truly) afford, and a job on the other end. This approach will both assure the ongoing vitality of middle class families and their children, and also provide new pathways for children of poverty to enter the middle class.
Talk of “training” and “apprenticeships” has usually meant a half-hearted, half-funded effort that doesn’t supply skills or jobs. But these programs are not destined to fail. Much can be learned from our friends in Europe. After adjusting for population size, the United States has just 7 percent as many apprentices as England does. In Germany, a robust apprenticeship program sends about half a million people into the workforce each year. Several states have already mimicked the German model, and, according to one survey, 98 percent of U.S. employers with apprenticeship programs recommend them. Exciting pilot projects are also emerging. The Markle Foundation, Microsoft ,and LinkedIn, for example, are pioneering a unique partnership in Colorado among government, community colleges, and the private sector to ensure that this training provides applicable skills—and that actual jobs are made available for those who participate. Today’s Democrats need to take these approaches to scale.
The hottest new idea in progressive economic circles is the “job guarantee,” which shows how dynamic the economic policy conversation has become—just two years ago, this idea was completely absent from the debate between Hillary Clinton and Bernie Sanders. I am still trying to figure out exactly what it means and what to make of it. At the moment, my view is that advocates of the jobs guarantee have more work to do to articulate and demonstrate how this would play out in practice. But there’s no question that the core components of many proposals that have been put forward—major public investment, aggressive monetary policy, new wage subsidies, like an expanded Earned Income Tax Credit—need to be pillars of our economic platform going forward.
Thematically, one of the appeals of the jobs guarantee is that it lifts up work as a central organizing principle. Americans appreciate that income from work enhances not just financial security but basic human dignity. In advancing a more robust role of government, Democrats should not reduce their emphasis on hard work and earned benefits—and nothing in this agenda does.
Two: Through taxation and monopoly policy, tackle the new concentration of wealth and power to promote a healthier middle class and a healthier democracy. The original Progressives, and New Deal Democrats after them, fought for unprecedented tax and anti-monopoly policies to address unprecedented concentrations of wealth and economic power during their times, recognizing the urgency of those efforts to strengthen not only our economy but also our democracy. New Old Democrats should apply the same principles to a new landscape.
Let’s start with taxes. Progressivism was born amidst the extraordinary inequality and wealth accumulation of the Gilded Age. Teddy Roosevelt and other Progressives fought for a new national system of income taxation, efforts that ultimately resulted in the 16th Amendment to the Constitution and the Revenue Act of 1913. Today, as others have powerfully chronicled, we are living in a second Gilded Age. After declining substantially in the middle of the century, income inequality in the United States—as measured by the share of national income going to the top 1 percent—has returned to levels not seen since before the Great Depression. The top 0.1 percent of American households held 22 percent of the country’s wealth as of 2012—up from around 7 percent in 1979.
Our tax system is ill-equipped to address these trends. We’re reasonably effective in generating revenue from wages and other sources of labor income—that is, when people make money by working. But we’re much less effective when it comes to addressing capital gains and accumulation of wealth—that is, when people make money through investment. And yet, in our century, the wealthiest Americans are increasingly making their money by investing their money. In 2013, less than $1 out of every $10 earned by those in the top 1 percent was classified as purely labor income.
What does this mean for policy? As Democrats look to tackle inequality, address the issue of concentrated power, and raise the revenue needed for a transformative economic agenda, we need to follow the money. And that means finding more effective ways to tax concentrated wealth.
The effort starts, of course, by reversing the Republicans’ 2017 tax law, which moves in exactly the wrong direction by slashing taxes for large corporations and creating glaring new loopholes for the wealthiest taxpayers. But we also need new solutions. It can’t just be jacking up the top marginal income tax rate. During the campaign, when I sized up the traditional grab bag of tax policy ideas for Democrats, I was unsatisfied. And when I listened to Bernie, I was unsatisfied still. Neither campaign was really following the money. I pressed our tax experts to offer up new ideas—what’s a good policy approach that isn’t part of the current conversation? The tax crowd, not surprisingly, had been giving this a lot of thought.
One idea, for example, would be to change the way we address the capital gains of high-income taxpayers, so that we’re capturing those gains in real time and taxing them accordingly. Currently, the wealthiest taxpayers can avoid taxation on their gains until they sell their assets, or even escape taxation altogether by holding onto their assets until they pass away. Adopting a “mark-to-market” approach, where we measure and tax gains annually, would prevent this from happening and generate in excess of $1 trillion in revenue over the next ten years. Another idea is taxing large accumulations of wealth. Donald Trump, of all people, proposed in 1999 that the United States enact a one-time 14.25 percent tax on the wealth of particularly rich Americans to generate nearly $6 trillion in revenue. That’s not a serious proposal, but serious models are out there for how you would apply a very limited tax on the assets of, say, the top 0.1 percent of Americans—and raise considerable revenue. There has been a long-running and intense debate on this kind of tax in the nerdy quarters of the progressive tax community, on both its efficacy and its constitutionality. It’s time for that debate to enter the mainstream.
Some progressives argue that even with an effective strategy to get the wealthiest Americans to pay their fair share, “courageous” Democrats should be telling middle class families that their taxes have to go up, too. I don’t see a reason to go there now. Proposals like raising the gas tax to shore up the badly depleted Highway Trust Fund should remain on the table, but let’s put the middle class on a firmer footing — and actually deliver on a fairer tax system — before we start talking seriously about something like that.
Roosevelt invested in rural electrification. Bobby Kennedy and LBJ fought urban and rural poverty. Today, the geography of opportunity should be a central focus once again.
On monopolies, we can again look to trust-busting Progressives and New Deal Democrats for inspiration. Today, decades of laissez-faire antitrust policies have rendered concentration of corporate power as urgent a problem as ever. Report after report has shown an acceleration of consolidation in almost every significant sector, from finance to technology to health care. This has distorting effects on our economy—in the form of higher consumer prices, rising monopoly rents, and downward pressure on wages—and on our democracy, in the form of growing corporate clout in Washington, as evidenced by the armies of lobbyists shaping legislation on Capitol Hill.
evidenced by the armies of lobbyists shaping legislation on Capitol Hill.
It is essential for Democrats to dust off the anti-monopoly playbook and apply it to new and renewed forms of monopoly power. In some cases, we’re seeing the familiar story of big, dominant corporations tightening the screws on consumers and workers. But as the structure of markets has changed, the metrics for what constitutes undue concentration need to change, too, along with the tools we need to combat it. Instead of a national railroad or oil network, today we have national and international platforms that exist across industries and in cyberspace. The “network effects” created by these platforms affect not only prices, but also innovation, business creation, workers’ wages, and corporate power—and enforcement and regulatory strategies need to be adjusted accordingly. This calls for a new playbook, one that is attuned to the negative consequences of new forms of concentration—consequences that are not captured by the traditional “consumer welfare” standard—but also sensitive to the need to avoid disrupting innovation and dynamism.
On the Clinton campaign, we struggled with how to translate the anti-monopoly argument into a political message. In our campaign policy office, we had a white board with the giant word “Rents!” (as in monopoly rents) scrawled across half of it—a daily reminder of my obsession with figuring out how to make this issue resonate. It never really did break through, but since then a number of Democrats—including younger leaders like Tom Perriello and Ro Khanna—have been more effective in making antimonopoly policy a potent centerpiece of an economic message.
It also bears repeating what the Progressives and New Deal Democrats understood: that tackling wealth inequality and concentrated corporate power does more than make our economy fairer and stronger. It makes our democracy stronger—that is, more likely to serve the many rather than the few. The acclaimed historian Tony Judt noted that a democracy is most likely to fail when it is “a corrupted version of itself.” We have to safeguard our economic and political system against that danger.
Three: Tackle the geography of opportunity so that all regions experience a middle-class revival. As Democrats implement strategies to address inequality, increase upward mobility, and create a modern social safety net, they need a special focus on the issue of place. The Old Democrats thought a lot about communities that had been left behind in the face of social and technological change. Roosevelt invested in rural electrification. Bobby Kennedy and Lyndon Johnson fought urban and rural poverty. Today, the geography of opportunity should be a central focus once again—specifically, the disparity in growth and dynamism between cities and rural communities, the urban core and wealthier neighborhoods, the suburbs and the exurbs, the coastal metropolises and mid-sized cities in the middle of America. Paul Krugman observes that regional disparities were narrowing between the end of the Second World War until the 1970s, but since then that trend has stalled or reversed. Meanwhile, Raj Chetty, a Stanford economist, offers compelling evidence that a person’s chances of climbing the socio-economic ladder are deeply connected to where they live—down to the county, city, and even neighborhood level.
Think about this stunning statistic from Steve Case: 75 percent of venture capital goes to three states, leaving the other 47 to compete for just a quarter of the pie. But lack of private investment in neglected areas—as alarming as it is—does not tell the full story. Government policy matters, too. Public investment and ambitious public programs helped drive the decline in regional disparities in earlier decades, and Democrats need to target their efforts to do the same today. Benjamin Austin, Edward Glaeser, and Lawrence Summers have written a persuasive paper this year making the case for “place-based policies”— that is, initiatives designed to break the cycle of economic decline and social unraveling in cities and regions that have fallen behind. (It would also help for Democrats to speak out forcefully against NIMBY-ism in progressive coastal bastions.)
As part of this effort, Democrats should be more aggressively addressing the contemporary social crises playing out in distressed and underserved communities, which have huge economic implications. The spread of opioid addiction, for example, is an economic crisis in addition to a social and public health one. It significantly reduces prime-age labor force participation, which in turn reduces economic growth and mobility. According to the White House Council of Economic Advisors, the opioid crisis cost the U.S. economy more than $500 billion in 2015 alone. This creates a vicious cycle—the loss of economic opportunity contributing to social ills, and those social ills reinforcing economic decline and a hollowed-out middle class. On her very first trip to New Hampshire as a presidential candidate in 2015, Hillary Clinton heard from the victims of this vicious cycle. The opioid issue had not been on the campaign’s radar screen before then. Hillary called me from the car after the event and said, in so many words, “Get on it.” Democrats have to respond to opioid addiction with the urgency and resources to match the magnitude of this historic national crisis. The Trump Administration has been admirably forward-leaning on this issue, but they’ve let ideology limit their ambition. Democrats should be calling for a major investment in all efforts to combat this crisis: from prevention to recovery to outpatient treatment.
Creating pathways back to work for ex-felons, like the handling of the opioid crisis, is about economic policy and not just social policy. One study found that nearly two million ex-felons remain unemployed because of the barriers they face in trying to reenter the workforce. These individuals, mostly men, end up in a cycle of despair and dashed hopes for rehabilitation. It’s true across the country, but particularly so in communities hollowed out by mass incarceration. Democrats should champion the employment of ex-felons as an issue not just of fairness, justice, and dignity, but also of untapped economic opportunity. This calls for a considerably different approach to criminal justice policy than the party has pursued in the previous generation. We should take that challenge on eagerly.
And while old Democrats were big on federal programs, today’s Democrats need to think beyond Washington. Some of the most progressive, innovative, and results-oriented approaches to modern social and economic problems are emerging at the local level. This is true on early childhood education, new benefit structures for alternative work arrangements, clean energy, and a host of other issues. New Old Democrats should find ways to provide incentives and encouragement to nurture such innovations (while doing all they can to block retrograde policies in other states), rather than focusing too heavily on one-size-fits all strategies.
Four: Forge a new partnership with the business community built for twenty-first century realities. America has always been a nation of entrepreneurial dynamism and commercial innovation. New Old Democrats would champion and cherish these national assets. They would proactively reach out to the business community to underscore that higher taxes on the wealthy and stronger regulatory enforcement are not meant to be punitive. They are simply responses to the undeniable fact that our country has gotten the balance of policy wrong in ways that have warped our economy (making it more concentrated, less dynamic, and more unequal) and our political system (making it more susceptible to special interest capture). So a course correction is in order, which won’t just help the middle class, but will also provide a more solid foundation for businesses to flourish and create good-paying jobs over the long term.
At the same time, we should not shrink from telling hard truths. In the post-Second World War era, there were groups like the Committee for Economic Development that represented a responsible set of business leaders who were devoted to the project of broadly shared economic growth. Today, some of the Washington-based business lobbying groups have given up on that postwar compact. And let’s be honest: While there have certainly been prominent private-sector voices advocating for fairer and more sensible policies, a lot of business leaders haven’t stepped up in recent months. Many advocated for tax cuts at the expense of the country as a whole. Many cheered on Trump despite their misgivings, because he delivered deregulation.
Still, simply calling out bad corporate behavior is not enough. Business leadership is a necessary part of restoring our depleted middle class. Democrats need to find creative ways to nurture positive change in corporate culture—especially by creating policies that reward companies that invest in their workers and communities and hold accountable those that don’t. “High road” firms should be at a competitive advantage, not the disadvantage they currently face against “low road” firms who treat their workers as costs rather than assets. More broadly, New Old Democrats can offer businesses a better long-term deal than deficit-financed tax cuts that do next to nothing for the private sector’s customer base. For example, major investments in infrastructure and scientific research—and yes, these are genuine investments, not spending by another name, because the returns are so massive—will spur sustained growth and boost business’ bottom lines. (Indeed, these policies are all-important to a vibrant middle class. They are part of the broader “infrastructure” of our economy and society that make middle-class life sustainable. The reason I have not elevated them more in this article is because the case has been so well made by others.)
The message to business should be: Instead of handouts or rents, let’s work together on these kinds of far-reaching investments that will make everyone better off. And as part of this conversation, Washington should work with the American private sector to develop an international economic strategy that tackles the competitive abuses of the twenty-first century, like state-owned enterprises and currency manipulation, creating a more level playing field for American companies who have stepped up to do the right thing by their workers and communities. (I have laid out my views elsewhere on how Democrats should approach trade issues more broadly.)
No doubt, there are places where the party and business are going to have some fights. But there are more places where they can build a healthy, long-term relationship. Franklin Roosevelt put it well in 1934: “This Government intends no injury to honest business. The processes we follow in seeking social justice do not, in adding to general prosperity, take from one and give to another. … In other words, we are concerned with more than mere subtraction and addition. We are concerned with multiplication also—multiplication of wealth through cooperative action, wealth in which all can share.”
Resisting the False Choice
This brings us to the donkey in the room. Debates about the future of the Democratic Party almost always end up in the same box canyon, walled in by arguments over whether to emphasize bread-and-butter economic issues or what skeptics derisively call “identity politics.” There is no way to address one without the other. New Old Democrats should heed FDR: “We are trying to construct a more inclusive society. We are going to make a country in which no one is left out.” FDR, of course, had a narrower concept of inclusion. We need to put his words to work in the twenty-first century. Finding ways to lift up all Americans, regardless of gender, race, sexual orientation, or national origin has to be a cornerstone of Democratic policy discussions.
Commentators like James Traub have asked whether this is really politically feasible; whether in championing civil rights for marginalized groups the Democrats have written off large swathes of the white working class. He even traced the 2016 election result back to the civil rights agenda of my hero, Hubert Humphrey. I confess I initially wondered the same thing myself as I pored over election data in the wake of Hillary Clinton’s defeat, which showed how much race and identity issues powered Trump’s win. And one can’t ignore Donald Trump’s ongoing campaign to stoke white resentment and supercharge the activation of white identity.
But the only way out is through. Hillary Clinton was fundamentally right when she said that we need to deal with all of the barriers holding people back—not just the economic and political barriers, but obstacles of racism, sexism, and other forms of discrimination. We should not be apologetic about that, or tiptoe around it. The task—and where we fell short—is to figure out how to speak honestly about these barriers in a way that allows everyone to see themselves as part of a common effort, a shared effort, an effort that benefits the whole country. While I disagree with those who argue that Democrats should de-emphasize or outright avoid what some see as “inconvenient” issues touching on race or identity or immigration, I take their point that an explicit list of groups in a candidate’s stump speech can end up dividing more than uniting. Which brings me back to Hubert Humphrey. We need “happy warriors”—strongly crusading against injustice and disadvantages and doing so in a way that is hopeful and summons us to shared purpose.
This also means making sure that growth, dynamism, and entrepreneurship are as central to the narrative as fairness. The project cannot just be about cutting the current pie into different-sized pieces. It also must be about baking a bigger pie, inviting more people to the table, and giving everyone a slice.
Now, none of this is cheap. In fact, that’s the point: New Old Democrats should embrace the fact that transforming our economy will require substantial public investments. And it’s doable and won’t even require piling on debt. For nearly four decades, Democratic presidents have been forced to clean up the fiscal mess left by their Republican predecessors, and—as the Congressional Budget Office’s latest projection of the Republican tax legislation makes abundantly clear —the next Democratic President will need to do the same. But if we reverse the Republican tax law, pursue the kinds of progressive tax policies I’ve described, adopt technology-enabled solutions to increase efficiency and cut waste, and implement achievable reforms to reduce system-wide health-care costs, we can enact a transformative economic agenda in a fiscally sustainable way.
This essay is not a blueprint for a campaign messaging strategy. It is an initial offering of options for the core themes and substance of an economic policy agenda for the years ahead. Any final product will have to be sharper and slimmer, leaving some of these ideas on the cutting room floor, and wringing some of the wonkiness out. Indeed, one of the key takeaways from the 2016 election is that a few, simple, canonical policy ideas—“build the wall”; “break up the banks”—are much more powerful than a long list of elaborately explained proposals and programs. Political leaders will also have to decide how much to lean into naming enemies and highlighting villains in advancing this policy agenda; it’s not my style, but 2016 showed there was a receptive audience for a harder populist edge. Perhaps the most important lesson is that the agenda has to be big. The old Democrats elevated a sense of national mission and summoned Americans to a higher purpose. More recently, the party took a turn to more restrained approaches. It’s time for the next generation of Democratic candidates—the New Old Democrats—to unify around a renewed sense of national mission: that is, the revival of America’s middle class.
There’s something profound happening in American politics right now. A tide is moving. The center of gravity is shifting. Democrats have a rare opportunity to set bold goals and meet them. By offering new ideas based on tried and true principles—taking the big, ambitious governing style that used to define our party and our politics, and putting it to work to meet the challenges of our time—we can achieve growth and fairness, innovation and equality. Moments like this don’t come around that often in history. Democrats must seize this one.
This article was originally published in Democracy Journal.