The Key to the Fall Debate: Staying Focused on the Economy

The last few months have not been particularly good ones for Democrats.  That's the bad news.  The good news is there a clear roadmap for how they can use the coming months to get back on track, and it revolves around staying relentlessly focused on the economy and the struggle of every day people.

1) The Lack of Income Growth for Average Families is the Greatest Domestic Challenge Facing America Today. Depending on how you cut the data, American families have not seen their incomes rise in at least eight, and perhaps, ten years.  Even in the Bush recovery, which was by many measures robust, median incomes declined, poverty levels increased, debt loads exploded. The typical American family ended the Bush era making $1,000 less than at the beginning.

Basic economics tells us when productivity increases wages and incomes rise.  When GDP expands, jobs are created at a certain rate.  Neither of these events took place in the Bush era, leading us here at NDN to argue that there is a large structural change being brought about by globalization that is making it harder for the American economy to create jobs and raise the standard of living of every day people.

That median incomes dropped during a robust economic recovery made the Bush recovery different from any other recovery in American history, and has made the current Great Recession different from other recessions.  The American consumer was already in a very weakened state before the current recession, which is why the recession has been more virulent than many predicted, and why the coming "recovery" might be so anemic.  The economy seems to be going through profound, structural change, making old models anachronistic.  We are literally in a "new economy" now, one that is not well understood, and one that is confusing even the President's top advisers.

Simply put, getting people's incomes up is the most important domestic challenge facing those in power today.  It is not surprising that other issues like health care, energy policy and climate change are being seen through a prism of "will this make my life, my economic struggle better today?" because so many families have been down so long, and things have gotten an awful lot worse this year.   Regardless of what they hope to be graded on by the public, the basket of issues that will do more to determine the success of the President and his Party is both the belief that things are getting better, and the reality that they are for most people.

2) The Public Believes the Economy Is By Far and Away the Most Important Issue Facing the Nation Today. In poll after poll this year, the public has made it clear that the economy is their most important issue, with really nothing coming in a strong number two.  The new Pew poll out this week maintains the basic ratio we have seen for months: mid 50s say the economy is number one; 20 percent of the American people say health care is their number one concern; and literally "zero" pick energy.

While one could mount an argument that one should not govern by polls, one can also ignore them at their own peril.  The country wants their leaders focusing on what is their number one concern - their ability to make a living and provide for their families in a time of economic transformation - which also happens to be, in this case, the most important domestic issue facing the country.

My own belief is that one of the reasons the President and the Democrats have seen their poll numbers drop is that they have spent too much time talking about issues of lesser concern to people while the economy has gotten worse.   There is a strong argument to be made that the President and the Democrats have taken their eye of the economic ball, and are paying a price for it.  This doesn't mean the President shouldn't be talking about health care, climate change, education, immigration reform, but they must be addressed in ways that reflects both their perceived and actual importance; and as much as possible discussed in the context of long term and short term benefit for every day people and not abstract concepts like "recovery," "growth," "prosperity," which in this decade are things that have happened to other people.

We have long believed that the lack of a sufficient governmental response to the increasing struggle of every day people has been the central driver of the volitility in the American electorate in recent years (see here and here).  Given the poll and economic data of recent months it is possible that the conditions which have created this volatility remains, and simply cannot be ignored for too long.

3) The Way Forward - Make The Struggle of Every Day People The Central Focus Of the National Debate.    The great domestic challenge facing President Obama is to ensure that, in this new age of globalization and the "rise of the rest," the country sees not "growth" or "recovery" but prosperity that is broadly shared.  Until incomes and wages are rising again, fostering broad-based prosperity has to be the central organizing principle of center-left politics.  It is a job we should be anxious to take on given our philosophical heritage, and one that we simply must admit is a little harder and more complex than many have led us to believe.  

Luckily, the President has been given three significant events in September to begin to make this rhetorical and governing turn - Labor Day next week, and the G20 and UN General Assembly meetings in late September.  He can use this events to re-knit together his argument, weaving in health reform and energy/climate change (and we believe immigration reform too) along the way.  For there is no broad-based prosperity in 21st century America without health care costs coming down (which has to happen to allow us to cover more people), and a successful transition to a low-carbon economy.  Even though the Congressional committee and legislative process requires these to be separate conversations, in fact they are one conversation, one strategy for 21st century American success, one path forward for this mighty and great nation.

Vice President Biden's speech about the economy today is a very good start in this needed repositioning.  But much more must be done.  In a recent essay I wrote:

There have been calls from some quarters for a 2nd stimulus plan, an acknowledgment that what the first stimulus has not done enough to stop the current economic deterioration.  This may be necessary, but I think what will need to be done is much more comprehensive than just a new stimulus plan.  Future action could include a much more aggressive action against foreclosures, a more honest assessment of the health of our financial sector, an immediate capping of credit card rates and a rollback of actions taken by credit card issuers in the last few months, a speeding up of the 2010 stimulus spending, a completion of the Doha trade round and a much more aggressive G20 effort to produce a more successful global approach to the global recession, the quick passage of the President's community college proposal, enacting comprehensive immigration reform which will bring new revenues into the federal and state governments while removing some of the downward pressure on wages at the low end of the workforce, and recasting both the President's climate and health care initiatives as efforts which will help stop our downward slide and create future growth.

These are some thoughts on how to re-engage the economic conversation but many other people also have great ideas on what to do now that the specter of a true global depression has been averted, and we have the luxury of talking about what to do next.  Which is why NDN is launching a new series of discussions on the global and American economies.  We begin next week with Dr Jagdish Bhagwati and Dr. Rob Shapiro.  Keep checking back on our site for the next events in this important new series based in Washington, DC but also webcast for anyone to watch no matter where they are.

The bottom line - the recent decline in the President's poll numbers are reversible.  The key is for he and his Party to make the struggle of every day people their number one rhetorical and governing concern.  A "new economy" is emerging in America, and it is not has been kind to most Americans.  Getting incomes and wages up in this new economy of the 21st century is in fact the most important challenge facing the country, and one the American people are demanding a new national strategy for.  This fall is the time for the President to make it clear to the American people that he understands their concerns, has a strategy to ensure their success in this new economy, and will make their success the central organizing principle of his Administration until prosperity is once again broadly shared.

Cross-posted at ndn.org

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Comments

[SonofLiberty1]

BRING BACK THE OUTSOURCED JOBS AND MAKE THE PUBLIC HEALTH OPTION LAW.

[noneIn2008]

#1, get us out of the wars. That will provide big savings to spend on Americans.

[mcmchugh99]

We need more public investment in new industries and green technologies, high speed rail and so on. This is why they should create some type of national investment bank or green bank, tied to the Federal Reserve, to finance all this. And why can't the Federal Reserve send aid directly to state and local governments facing bankruptcy?

On the international level, major reform of the IMF/World bank system is long overdue, since it has become a real hindrance to development on teh global level, and is not at all user-friendly to most countries.

[Overtone]

WE CAN GENERATE MANY MORE JOBS!

An ignored Human Investment Tax Credit program can create up to 6 million new jobs and launch up to 4 million new entrepreneurs.

Download it free at: www.aesopinstitute.org

The 1977 job tax credit program included only very few of these incentives and generated almost one million jobs - 20% of all the jobs created that year!

Urge your representative to seriously consider this extremely powerful potential legislation.

Another path to millions of jobs is described in the article: 4 Steps to Revive the Auto Industry and the Economy - on the same Aesop Institute website.

It outlines revolutionary new technology that opens surprising paths to cars that need no fossil fuel or recharge. Advanced versions can later turn parked cars into power plants, able to wirelessly sell power to the local utility. Imagine the impact! Greater support will accelerate this work.

The science is not yet in the textbooks. Skepticism is to be anticipated. However, independent laboratory validation and mass production of these new systems is now on the horizon.

One of these scientific breakthroughs, fractional Hydrogen, was recently validated by experiments at Rowan University. Readers can encourage national laboratories and other universities to rapidly reproduce the experiments and publish their results.

Once they prove their potential, these radically new technologies will change most of what is presently believed concerning energy. Learn more at: www.chavaenergy.com Under the Heading HOW?, see the entries for fractional Hydrogen and SPICE.

[blueken]

So if I get you right here, we should do nothing about health care and give out a tax break in the middle of this huge deficit and wait for miracle technology? You must be in the deficits don't count, trickle down, just say no, don't take my gun, gay marriage will destroy the American family, life begins with the first kiss crowd. Not that there's anything wrong with that.

[Overtone]

You are jumping to conclusions, which someone once pointed out is our favorite form of exercise!

I happen to be in favor of most of what you assume I'm against.

However, this article is about the economy. I was an author of the original Human Investment Tax Credit Program - a very small part of which became the Jobs Tax Credit of 1977.

I have worked full-time since 1973 to find a path beyond oil that would prove practical.

We now can see that the breakthroughs in our laboratories open a path to helping to restore the auto industry and the economy - as well as generating many millions of jobs involving the application of these new energy systems to homes, and industry.

They also make possible inexpensive power that can economically undercut any need to build coal or nuclear power plants.

[BLBass]

Consider that for many entrepreneurs the problem of job creation is not one of "barriers to entry" but "barriers to hiring". Even if you have a viable business model, the rising cost of providing health benefits (and others, but health care is a primary driver) makes it impossible to offer attractive employment to qualified people -- especially in a start-up situation, where low salaries (offset by equity) tend to be the rule and not the exception. This drives down wages for the whole economy and keeps us near the current unsuccessful equilibrium. Solving the health insurance mess is a far more important step to generate jobs than any tax credit, but they can be taken at the same time and the fact is that solutions like this one are always offered as alternatives and not companions to meaningful reform of the structural problems our economy faces.

[Overtone]

I happen to be strongly in favor of structural reform as well.

Jobs continue to be a major concern. My own work might contribute to generating many more.

It also can contribute to a more rapid recovery. That remains my focus.

I suggest you might find reading the 2009 Report on the Human Investment Tax Credit Program a surprise. It is very much concerned with barriers to hiring.

[blueken]

There is only one thing that could give all of American business a shot in the arm. That, my friends is to free them from the burden of thier employees health care costs. My employer pays 16K a year for health insurance for me and my wife. That's $300 a WEEK! At the same time I have a long list of co-pays. I'm sure that he considers the cost of health insurance before he hires anyone, and I'm sure all American business doe the same thing. We are competing in a world where no other modern country burdens thier business sector with such a burden. The drug and insurance industry has grown like a weed at the expense of the rest of the economy, and it can't go on. While premiums and co-pays go up, compensation for doctors and nurses goes down, and hospitals CLOSE. Meahwhile the drug and insurance industry experience double digit growth. It has to stop. It will stop. I just don't know when, or how much damage will be down.

[mismicma]

Exactly

[SonofLiberty1]

I don't give damn about doctors...how about the rest of us?