Last Wednesday, millions of American workers (and voters) watched the first major Republican presidential candidate debate at the Reagan Library, and the next day thirty-one million watched President Obama's speech to the nation on jobs.
When it came to resuscitating the economy, the laissez faire Republicans all fell back on "free": (largely unregulated) free enterprise, (more) free trade and (nearly) free taxation of corporations and the extremely wealthy. In other words, they continued to offer major reforms of the tax and regulatory systems in order to ease the burdens on the already extremely wealthy and on big business, despite multinational corporations' long dismal histories of offshoring jobs and evading taxes.
The core principles of the major Republican candidates are pretty obviously:
• Each recovery proposal must be rooted in the conservative premise that government itself cannot create jobs, even in times of extreme real unemployment.
• Marginal income tax rates and capital gains tax rates must be kept low, for both corporations and wealthy individuals.
• Congress must immediately pass the pending free trade agreements (FTAs) with South Korea, Colombia and Panama.
• There must be a Constitutional amendment to balance the budget.
President Obama -- very obviously better intentioned -- offered a $447 billion smorgasbord comprised of payroll tax cuts (54%), unemployment benefits (11%), new-hiring tax credits (4%) and infrastructure rebuilding & modernization initiatives (31%). Of this combined $200 billion in new spending and $240 billion in tax cuts, however, it really is only the infrastructure proposals which will actually, as the President himself characterized, "put workers back on the job." As such, they are dramatically undersized, especially the infrastructure bank "seed grant" of just $10 billion. And inexplicably, like the Rs, the President also continues to call for passage of the three pending FTAs, despite the indisputable fact that they would be American job killers not creators.
The Republicans' proposals, which rely only on the private sector, would at best create, even over the medium term, only a few hundred thousand jobs, when we need more than 20 million new jobs in order to be at full employment in real terms. And their proposals, which always attempt to mask the enormous benefits that would mostly go to big corporations and the extremely wealthy, reveal an incomprehensible insensitivity to the needs of the middle class. Even the Wall Street Journal, which is certainly no friend of progressive economics, in its critique of Mr. Romney's 160 pages and 59 proposals described them "as surprisingly timid and tactical considering our economic predicament -- a technocrat's guide more than a reform manifesto" (9-07-11).
President Obama's latest proposals would, in contrast, create many more jobs, but still only a few million and nowhere close to 20 million.
On the private sector or business side of economic recovery, it's only sustained customer demand -- and confidence in the future -- that drive hiring, not short-term tax breaks and incentives. And when we have a genuine jobs crisis, then on the fiscal or government side the answer is found in the combination of trade reform, tax reform, large-scale infrastructure investing and jobs programs a la FDR.
The relatively meager job creation offerings that are now on the table bring to mind the failed political leadership in Great Britain, after the onset of World War II and just prior to the arrival of Winston Churchill. Consider two passages from the captivating book Troublesome Young Men by Lynn Olson (Farrar, Straus and Giroux, 2007) which chronicled those very few courageous Members of Parliament who in 1940 stood up against their own Party's Prime Minister and maneuvered Mr. Churchill first to become First Lord of the Admiralty and then P.M.
In the first of these passages, Ms. Olson introduces the radio broadcast by the legendary CBS correspondent Edward R. Murrow to his listeners in America in May 1940 -- eight months after war had been declared on Nazi Germany for its invasions first of Austria, then of Sudetenland and Czechoslovakia and finally of Poland -- which reported that the people of Britain felt that "the machine is out of control, that we are all passengers on an express train traveling at high speed through a dark tunnel toward an unknown destiny. The suspicion recurs that the train may have no engineer, no one who can handle it."
Imagine the hopelessness that the average Briton must have felt hearing his cherished and historically highly respected country described so critically by no less than Mr. Murrow.
Ms. Olson went on to write: "When war was declared, the British braced themselves to bear the shock, believing their cause was just. But when their leaders [also] turned their backs on Poland and nothing more happened, the sense of mission evaporated. More than a million city dwellers had been evacuated to the countryside; a blackout had been imposed, causing tremendous disruption and danger - and for what? Where were the bombs? What was the rationale for turning everyone's life upside down? Why were the wealthy still throwing lavish parties and drinking champagne at posh nightclubs while workers struggled with shortages and skyrocketing costs?"
The turnaround for the British of course came with the ascendancy of the indomitable Mr. Churchill. In short order, he made clear to the world that the strategy of appeasement which Britain's previous leaders -- first Stanley Baldwin and then Neville Chamberlain -- had embraced was finished. He immediately gave Britain a strong, principled stance to rally behind and refused to cave on principles in the face of existential adversity, which of course is the only counter to appeasement. Churchill's re-invigoration of the populace also restored the country's confidence in its government's ability to not only prevail but in the process to regain much of the UK's standing in the world.
"In Mr. Churchill, we have seen a man of action who sweeps [our faults] aside and reminds us that [as] British we must live or die." (The New Statesman, Ibid.)
But for America today, with similar uncertainty and fatalism being felt in every quarter, there is sadly no Winston Churchill in sight. An absence particularly noticeable just two days after the memorial services surrounding the 10th anniversary of 9/11, an anniversary which should remind all of us what true leadership should look like in challenging times.
Democrats, for whom the betterment of the whole is proudly their natural objective, are natural compromisers. This said, there are some people you just can't negotiate with, and from reflecting back on the dealings in Congress around economic stimulus, health care reform and financial industry reform, it should now be painfully obvious to President Obama that he can't productively negotiate with Congressional Republicans on job creation.
In a piece that he wrote for the New York Times on July 30, Stanley B. Greenberg, CEO of the national polling company Greenberg Quinlan Rosner, sought to identify the reasons "Why Voters Tune Out Democrats". It's as if Mr. Greenberg was endeavoring to write the 2011 American version of Troublesome Young Men.
Let me quote Mr. Greenberg, and then offer my own comments from the vantage points of having been in 2008 first Senior Economic Policy Advisor for candidate John Edwards and later a senior advisor to candidate Barack Obama on jobs, labor and trade issues. First, per Mr. Greenberg:
• "I see clearly that voters feel ever more estranged from government -- and that they associate Democrats with government.
• "Just a quarter of the country is optimistic about our system of government -- the lowest since polls by ABC and others began asking this question in 1974. But a crisis of government legitimacy is a crisis of liberalism. It doesn't hurt Republicans. If government is seen as useless, what is the point of electing Democrats who aim to use government to advance some public end?
• "Government operates by the wrong values and rules, for the wrong people and purposes, the Americans I've surveyed believe. Government rushes to help the irresponsible and does little for the responsible. Wall Street lobbyists govern, not Main Street voters."
Mr. Greenberg has specific ideas for President Obama and the Democrats in Congress to pursue, as do I and my nineteen colleagues on the "Task Force on Job Creation," which I co-chaired with Leo W. Gerard, International President of the United Steelworkers. But before exploring the more timely and likely-effective of our recommendations, let me expand a bit on Mr. Greenberg's observations and my own from the 2008 Campaign.
We knew as far back as 2006, when the economy was already starting to wheeze in a way and to a degree unlike any of the nine prior recessions that followed WW II, that, as Mr. Greenberg has again confirmed, voters respond strongly to Democratic messages on the economy only when a Party leader declares, "We have to start by changing Washington."
In 2007-2008, I remember saying and writing to our candidates that before they ever spoke of government's indispensable role in helping turn around the economy, they had to promise the electorate that under Democratic leadership, government would be at once efficient and accessible and not wasteful. To this point, Mr. Greenberg later wrote, "progressives have to be serious about making government accountable to the ordinary citizen." Mr. Greenberg's analysis was precisely the perspective that I believed the Obama administration would embrace after the Inauguration, given candidate Obama's continuing emphasis that this was precisely where his head was.
Unfortunately, not long after the Inauguration, we watched as the stimulus package came out undersized and misdirected. We watched as Larry Summers, the President's chief economic advisor, declared the Recession "over", even though in real terms nearly 30 million workers were unemployed. And then it soon became clear that Mr. Obama's three overriding promises to create millions of new jobs, appropriately punish the banks and Wall Street for their near sinful misbehavior, and make government accountable were going to be largely gutted in a series of accommodations to the Republicans in Congress. Mr. Churchill would have cringed.
These latter-day appeasements have left our country with greater income inequality than at any time since 1928, the extremely wealthy now even wealthier, many of the major banks irresponsibly back acting as if they're again 'too big to fail' and, most concerning of all right now, unprecedented real unemployment.
No matter how obstructionist the Republicans in Congress remain, there are, however, still a handful of extremely meaningful actions which the administration could demand and probably get enacted. Mr. Greenberg says that if "Democrats want to win the trust of the public, they should propose taxing lobbyist expenses and excessive chief executive bonuses and put a small fee on the sale of stocks, bonds and other financial instruments." We on the Jobs Task Force agree, and would add, in brief, four other key initiatives:
1. With a new leveraged National Infrastructure Bank as the funding source and with Buy American requirements enacted, commit to at least $2 trillion of infrastructure spending over the next decade. Over and above the de minimus $10 billion in seed capital proposed by the President to get the investments rolling, reach out to the states' public pension funds for the leverage needed to help meet the overall medium-term spending needed (in rail, ports, airports and bridges & roads) to again make our country globally competitive.
2. Adopt incentives to accelerate commercial bank lending to small and medium sized businesses. New hiring incentives pale in effect compared to the ability of this category of borrowers to again borrow on fair and readily available terms. Right now, lending to this group is down by 25% compared to pre-Recession 2007.
3. Enact the pending "Currency Reform for Fair Trade Act of 2011". Stop the U.S. government from entering into a bilateral investment treaty with China until China makes WTO-compliant its Indigenous Innovation Production Accreditation Program (and, in the interim, demand that the USTR bring a Section 301 case against the Program). Go after all of China's illegal subsidies, not just its currency manipulation. And put a halt to China's persistent theft of America's valuable intellectual property.
4. Enact large-scale jobs programs targeted at returning military veterans and the five million out-of-school unemployed youth. As in general, but here especially, we need actual jobs created for veterans and youth, not -- all good intentions notwithstanding -- just hiring 'credits' with the misguided hope that they induce hiring. And a perfect place to start would be helping rebuild communities so ravaged this year by natural disasters.
But first, Mr. President, help the American people see that their train -- their government -- has an 'engineer in place who can handle it' and who never wavers from his commitment to a vibrant -- and fully employed -- middle class. And as long as the Republicans in Congress keep saying "nay' to everything, then rather than appeasing them, lay out your case for and the specifics of a fully responsive populist government, even if it means going down swinging. Voters will at least again know who we are and what we stand for.
Leo Hindery Jr. is chair of the Smart Globalization Initiative at the New America Foundation and an investor in media companies. He is the former CEO of AT&T Broadband and its predecessors, Tele-Communications, Inc. and Liberty Media.
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