02/17/2011 05:44 pm ET Updated May 25, 2011

The Issue of the Decade

Mary Landrieu said a few days back that dealing with the deficit is the "issue of the decade." And this is from a Democrat.

The inside-the-Beltway mentality creates its own Bizarro World, brain-dead obsessions that are so distorted compared to the real world, that it completely takes one's breath away. The fact that both parties are focused on the same obsessions is a tribute to the power of the framing machine the Wall Street-backed conservative media has created.

I write this even though I do actually think getting a handle on the long-term structural deficit is very important both economically and politically. Being the Midwestern Methodist I am, the kind of debt we are running up makes me very unsettled, and paying hundreds of billions of dollars in interest does the economy no good. I also think that, politically, Democrats and progressives always will have trouble making the case for doing the kinds of things we want government to do unless we make progress on bringing the federal deficit under control. I think progressives should do what Congresswoman Jan Schakowsky and organizations like Demos (a client), the Campaign for America's Future and others have done, and put out their own plans for reducing the deficit. But having said all that, to mindlessly parrot Republican, panic-inducing talking points about the deficit being the issue of the decade is as wrong as can be.

I believe this for two very simple reasons. The first is that I was a member of an administration that, not all that long ago, figured out how to turn a yawning, long-term, "structural" deficit into a strong surplus situation in a few short years. It really wasn't that hard to figure out, and it didn't take slashing Social Security or Medicare benefits, or decimating every program for low- and middle-income families. All we had to do was raise taxes on the wealthy, produce a bunch of new jobs (quite a few of which had some decent wages attached to them), and make some modest cuts here and there to duplicative programs. It took some political courage, but the policies added up.

After all the reckless Bush tax cuts, two interminable wars, and the deepest, most damaging recession since the Great Depression, our deficit hole is quite a bit deeper today, but the formula still isn't particularly complicated. Raising taxes on the folks who have been rewarding themselves and hoarding all the money is a big part of the answer. Breaking the back of health care inflation by negotiating drug prices with the pharmaceutical companies and giving us a public option to drive down the cost of health insurance would help out quite a bit as well. Reforming government contracting would squeeze a $100 billion-plus out of federal spending every year. Taking a much harder look at the waste in the military budget -- which no one has done for a long time because of the power of the Pentagon and defense contractors -- would easily save another $100 billion a year on top of the tiny savings (less than $10 billion dollars a year) Gates agreed to in Obama's budget for the next 10 years. But by far, the most important way to end our deficit problem is the real issue of the decade: turn this economy around by creating tens of millions of new jobs that pay a decent wage.

We will never solve the deficit issue without a growing economy that is at, or damn close to, full employment, and if wages and middle-class family incomes stay as flat as they have been over the last decade, that will make it very tough as well. The 22 million new jobs and rising pay during the Clinton years, which was easily the best period of economic growth since the 1960s, was the biggest reason by far we turned the big deficits into big surpluses.

The issue of the decade is how to create more jobs, and how to help middle-class families have real income growth in the next 10 years so their spending can produce a strong, sustainable economy. According to independent estimates, the House Republicans' budget cuts will cost more than a million jobs without creating any new ones, while the Obama budget will create more than 15 million new jobs in infrastructure, energy, research, and education, so we at least know which budget is going in the right direction. But we need to do far more to increase jobs and middle-class incomes: unions need to be strengthened, not weakened, so that wages will start moving upward again; we need to help emerging industries like clean energy to flourish; Wall Street banks need to be stripped of their ability to hoard so much money and distort the financial markets toward speculation and away from investment in the Main Street economy, and their incentives need to be altered so they make productive investments rather than engage in destructive market manipulation; we need to promote basic manufacturing in this country again, rather than incentivizing outsourcing with our tax-and-trade and currency policies.

Rebuilding, expanding, and strengthening the hard-pressed American middle class is the issue of the decade by far. Democratic politicians should understand that and focus on it above all other things instead of blindly accepting the right-wing's deficit framing.

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