THE BLOG
11/09/2010 09:30 am ET Updated May 25, 2011

"Where Do Democrats Go Next?" It's Not Where Evan Bayh Would Have Us Go

On Wednesday morning, after shedding more than a few tears for the Members of this Congress who won't be going forward into the next, I started reading the pundits. However, after reading Senator Evan Bayh's op-ed in the New York Times entitled "Where Do Democrats Go Next?" I decided no more 'instant cures' for me.

Senator Bayh's comments follow -- along with my reactions. The Senator said that:

  • "Democrats can recover from the disappointment of this election and set the stage for success in 2012." Not very easily and not with the Senator's approach.
  • "An electorate that is 76 percent moderate to conservative was not crying out for a move to the left." It's way past time to get away from 'labels' and find common ground. And since when is trying to resuscitate a very sick economy, bring quality health care to almost all Americans, and eliminate finance industry abuses 'moving to the left'?
  • "We also overreached by focusing on health care rather than job creation during a severe recession." I agree with the conclusion of many that job creation should have preceded health care reform, but I will never agree that we should have ignored health care reform.
  • "During election season, Congress sought to placate those on the extreme left and motivate the base - but that meant that our final efforts before the election focused on trying to allow gays in the military, change our immigration system, and repeal the George W. Bush-era tax cuts." This comment is, in its way, insulting. LGBT rights and all civil rights, a responsible and sensitive immigration policy, and progressive individual income tax policies are the heart of the Democratic Party. If we have to compromise these and related principles just to win elections, then what hollow and shameful victories they will be. President Harry Truman was correct when he said that the ultimate test of any political decision is "not whether it's popular at the time, but whether it's right - if it's right, make it, and let the popular part take care of itself."
  • "In the near term, every policy must be viewed through a single prism: does it help the economy grow?" Not "every policy", Senator, just every economic policy.
  • "A good place to start would be tax reform. Get rates down to make American businesses globally competitive. Reward savings and investment. Simplify the code to reduce compliance costs and broaden the base." All well and good, but how about mentioning that under no condition can we afford - budget-wise or ethically - extending the Bush tax cuts for the wealthiest 2% of taxpayers, which would cost the Treasury a staggering680 billion over the next 10 years? With more income inequality now than ever before, the wages of 90% of America's workers stagnant for the past 20 years, and real unemployment of nearly 20%, the new Congress must abandon - not ignore - the 'trickle down' theory that since 1980 has perversely dominated U.S. individual income tax principles and policies.
  • "Democrats should also improve legislation already enacted. Health care reform, financial regulation and other initiatives were first attempts at solving complex problems, not holy writ." This sounds right - better is always better - but in case the Senator didn't notice, Democrats just lost the House and we now have only 53 Senators in our Senate Caucus.
It's beyond worth noting that a critical reason Democrats lost last week was the relatively low turnout of the Democratic "base", especially youth and African-Americans (in comparison to their turnout in 2008). Many of Senator Bayh's recommendations would only further depress the Party's supporters. Since 29 million voters who voted for Barack Obama in 2008 didn't vote for anyone last week, it would help more if Democratic leaders, pretty obviously including Evan Bayh, had a clearer sense of just who the Democratic base is and who it can be.

So, how about instead of the Bayh road map, Democrats become the impetus behind the three economy-related legislative areas where I remain convinced that Ds and Rs can find agreement, albeit with different policy specifics going in? These three are job creation, getting tough with China on trade (as evidenced by the House's recent bipartisan legislation regarding China currency, H.R. 2378, which passed 348 to 79), and a National Infrastructure Bank that would leverage some initial public investment in ways that would incent large private sector job-creating investment.

All of us - Republicans, Democrats (I'm one) and Independents alike - just saw up close the electorate's anxiety and often anger. Every American facing prolonged unemployment, stagnant wages or economic insecurity of course has a right to be angry, and now it's time to channel this disaffection into constructive, positive action of the sort we are equipped to provide before it becomes political gridlock.

Let's start with jobs. Near-term large-scale job creation and long-term deficit cutting are not mutually exclusive. In fact, well-conceived job efforts, because of their very large 'multiplier effects', are at least deficit neutral in the medium term and, most likely, they are substantially deficit reducing. And they are always a more responsible and effective way to reduce the long-term deficit than is slashing spending simply for slashing's sake. The new Congress does not have to choose between stimulus and austerity - it just has to get each challenge's priority and timing right.

President Abraham Lincoln said that government's "leading object is to elevate the condition of man - to lift artificial weights from all shoulders; to clear the paths of laudable pursuit for all; to afford all an unfettered start and a fair chance in the race of life." This is why "jobs" are the right starting point, to best include, in order to heat up the stove, infrastructure investing in 'shovel ready' projects (I know that a lot of Rs hate this phrase, but there really are a lot of such projects) and youth employment programs, for which we have many successful examples.

China's abusive and unfair trade practices should be the next easy bipartisan legislative target. When China wins in trade, as it now does every day, it's really only the U.S. which loses, a loss each year which is now so great that our country's annual GDP is reduced by more than three percent or so, or nearly $400 billion. Imports from China are now responsible for about 75% of America's deficit in manufactured goods and 55% of our overall trade deficit, which should come as no surprise since there is now clear evidence that 90% of China's domination in high-tech manufactured goods vis-à-vis the U.S. is due not to its relatively low labor costs but rather to its subsidies related to plant sitings, financing, taxes and currency and to its extremely low environmental standards. Going forward, it is imperative - for federal budget, trade deficit, employment, global competitiveness and national security reasons - that the new Congress:

  1. Demand that the administration go after all of China's illegal subsidies, not just its currency manipulation, while also putting a quick halt to China's persistent theft of America's hard-gained, valuable intellectual property or IP. Many of China's practices provide its companies with a clear-cut "countervailable subsidy" and they need to be treated as such, including China's abysmal environmental practices.
  2. Establish buy-domestic and other domestic investment requirements for federal procurement and for grants to states and local governments to the fullest extent allowed under our various trade agreements and the WTO. The U.S. is almost alone among the developed nations and China in not having a significant buy-domestic government procurement program.
  3. Demand that the administration bring what's called a Section 301 case at USTR against China's "Indigenous Innovation Production Accreditation Program" that was promulgated on November 15, 2009. This Program limits all Chinese central and provincial government procurement to companies that have "indigenous" - or Chinese - "innovation", and embedded in it are China's two so-called 'trade advantages', namely, (i) regulations to block non-Chinese firms from selling their products to Chinese government agencies and (ii) rules that force Western companies to give up technological secrets in exchange for access to China's markets.

Finally, there is the National Infrastructure Bank, which has been kicking around (and sometimes 'kicked around') the halls of Congress since 1994. One pundit I did listen to last Wednesday was Tom Friedman who wrote that, "If we were a serious country, this is what the midterms would [have been] about: How do we generate the jobs needed to sustain our middle class and pay for new infrastructure?" Friedman went on to say that the answer, if we were all willing to accept it, "would require a different kind of politics, one that doesn't conform to either party's platform."

Long before this Great Recession began, we knew that thoughtful investments in all types of infrastructure, including things green, were one of the top two ways to create lots of jobs and help restore America's global competitiveness, provided the spending was coupled with buy-domestic requirements. And today, for the first time since 1994, everyone who matters supports the idea of a National Infrastructure Bank as the best vehicle to advance this spending, including the Democratic and Republican leaders in Congress, the U.S. Chamber of Commerce and the National Association of Manufacturers (NAM), and Labor.

The specifics of this are simple: each $1 billion spent on infrastructure creates on average 25,000 new jobs, and when the investments are for high-tech, energy efficient green things, the new-jobs figure is on the order of 45,000 per $1 billion spent. And an NIB would immediately increase many-fold, and at much lower costs, the infrastructure investment capacities of our federal, state and local governments. It would move most such investments away from the annual budget process, and give these needed investments beneficial access to the private capital markets, large fiduciary investors, and foreign central banks.

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So, where should Democrats go next? How about right now across the aisles of Congress to help enact the three economic initiatives where bipartisan support is achievable and which would go a long way to putting some real juice in our now jobless recovery? Good policy is always good politics, and Democrats and the Republicans should worry about the specifics of the 2012 elections later.

Leo Hindery, Jr. is Chairman of the US Economy/Smart Globalization Initiative at the New America Foundation and a member of the Council on Foreign Relations. Currently an investor in media companies, he is the former CEO of Tele-Communications, Inc. (TCI), Liberty Media and their successor AT&T Broadband. He also serves on the Board of the Huffington Post Investigative Fund.