If there was ever any doubt, the rowdy passage of the health care bill indicated we have begun the mid-term elections campaign. Building on the momentum from their health care victory, Democrats need to challenge Republicans with a series of bold initiatives to create jobs.
No Republican voted for health care reform and many 2010 GOP candidates immediately pledged that if elected they would voted to repeal the act. The GOP mid-term election strategy will be to oppose everything the Democrats propose.
In response, Democrats must paint themselves as the Party of accomplishment, the Party with solutions for America's problems. The public's biggest concern is the economy, specifically unemployment, and Democrats must address this through big actions. On March 18th, President Obama signed an $18 Billion Jobs Bill that was a good first step. But much more needs to be done to address the loss of eight million jobs.
In his state-of-the-union address President Obama outlined an initial three-step job creation process. The first step is financial reform.
Noting America must "guard against the same recklessness that nearly brought down our entire economy," Obama demanded that the Senate act on legislation passed by the House and levy a tax on the big banks benefiting from the TARP bailout. The Senate's response, the Dodd bill is about to be debated. Although this is not directly related to job creation, Democrats need to pass this minimal legislation to convince voters that the Administration is serious about reform. It would be an important first step in convincing Independent voters that the Obama Administration supports the interests of Main Street over those of Wall Street.
The second job-creation step is encouraging innovation, particularly in the energy sector. Obama observed, "to create more of these clean energy jobs, we need more production, more efficiency, more incentives." As one part of this process, Obama called upon the Senate to pass the House Energy and Climate Bill.
Obama's third job-creation step is "a National Export Initiative that will help farmers and small businesses increase their exports" and create jobs. On March 24th, the House passed a $14 billion bill providing tax relief to small businesses plus infrastructure funding. The Senate needs to approve this.
An obvious fourth step is for the US to pressure China to float its currency. China currently underwrites its exports by manipulating the Renminbi. On March 16th, a bipartisan bill was introduced in the Senate that would force the Obama Administration to act against this unfair competition. President Obama should embrace this and take a tougher stance with China.
While these four steps are important, there is an important fifth step: supporting small businesses by attacking monopoly capitalism.
Writing in the WASHINGTON MONTHLY, researchers Barry Lynn and Phillip Longman argue that the Reagan administration "radically altered how our government enforces our anti-monopoly laws" and this paved the way for mega-corporations such as Walmart. The authors present persuasive evidence that the growth of corporate behemoths killed thousands of small businesses and thus stifled job growth.
Lynn and Longman observe that the same economic theories that produced the 2008 financial crisis - the so-called Chicago School -- also promoted monopoly capitalism under the euphemism of "facilitating the free market." This conservative ideology touted "efficiency" and "productivity" as the inevitable byproducts of laissez-faire capitalism. The Chicago School economic theories - the prevailing wisdom in Washington for 20 years - produced the great recession and the loss of eight million jobs.
Lynn and Longman argue that what is needed now is a new populist economic theory - a rejuvenation of the New Deal - and tougher enforcement of our anti-monopoly laws. "The new and better jobs of tomorrow will be created...[by Americans] working in big corporations made subject to competition and working in small ventures launched specifically to compete."
The history of the Wall Street bailouts indicates the need to break up America's biggest banks - which, at the time, were judged to be too big to fail, thereby enhancing their monopoly status. These banks must be divided into separate companies, as should behemoths in other industries such as energy, health care, and pharmaceuticals, as well as retail giants like Walmart. The absence of a level playing field discourages innovation, disadvantages entrepreneurs, inflates prices, and penalizes workers and consumers.
In tandem with the enforcement of anti-monopoly laws, Democrats need to encourage innovation by actions such as strengthening tax breaks for companies that invest in research and development.
The seven months before the November 2nd mid-term election provides plenty of time for Democrats to act on these five job-creation steps and prove that they are the Party that supports Main Street.
The passage of health care reform indicated that Democrats could pass important legislation without Republican votes. Now they need to address the loss of eight million US jobs, with or without the support of the Party of No.