It’s not only on trade that President Obama seems to be losing his party. With inequality rising and wages flat, Democrats are pushing Hillary Clinton to move beyond Obamanomics and offer something more dramatic and more radical.
But before repudiating Obama’s entire program, it’s worth recalling this: Obamanomics has not failed. It just has not been tried.
True, Congress approved a major stimulus bill along the lines Obama wanted in the early days of his presidency. That, along with actions by the Federal Reserve, probably saved the nation from total financial meltdown. He also pried Obamacare out of the legislature before losing his Democratic majorities.
Since then, Obama and congressional Republicans have played to a draw, and the president’s economic proposals have languished. Because those proposals are rooted in a very different vision of the economy than is emerging from his party’s left, it’s worth reviewing them — and remembering that they have yet to be fully tested.
The emerging view, stated simply, is that inequality is rooted in the malign behavior of corporations and their overpaid executives. Government’s job is to redistribute wealth by taxing those executives and demanding they double the wages of their lowest-earning employees. Meanwhile the state should expand its role, not just for the poor but for the middle class as well, with more Social Security, free tuition regardless of income and so forth.
The Obama view, again simplified, would be that executives and hedge fund managers are indeed overpaid, but cutting their salaries won’t solve the country’s problems. Globalization and technological change are pressing on the middle class, and the only hope is to encourage economic growth — in part by keeping the government from squelching such growth — and positioning working people to share in it.
How to do this? By spending more on education, research and infrastructure. Obama has made this point so many times that we tend not to hear it. But that doesn’t make it wrong.
You can argue about the president’s specifics. Why make community college free, for example, while seeking to destroy for-profit colleges, the best of which are serving the same underserved, undereducated working adults? Infrastructure with no rational basis — high-speed rail in regions where no one wants to ride trains, say — will not spur economic growth.
But all three areas of investment would create jobs in the short-term and encourage economic growth in the long run. Improving education would allow more people to participate in that growth.
Why, more than six years into the Obama presidency, have we not implemented this oft-touted economic plan?
First, because entitlement payments are gobbling up more and more of the budget, leaving less for all other spending. That’s a challenge Obama and Republicans both promised to tackle and both gave up on.
Second, because Republicans will not agree to raise sufficient revenue to sustain the kinds of investment the nation needs.
Nor is investment the only element of Obamanomics sitting on the shelf. The president has his own, smarter version of taxing the rich: a cap on deductions that would not only reduce inequality but also redirect economic activity from overpriced vacation homes and gold-plated health insurance plans into more productive endeavors. He has a targeted version of the left’s beloved financial transactions tax, too: a levy on the largest banks proportional to the riskiness of their liabilities. And, of course, he hopes — or hoped — to negotiate wide-ranging trade agreements in Asia and Europe that would open export opportunities for U.S. businesses.
At her opening rally Saturday on Roosevelt Island in New York City, Clinton did not dare restate her support for the trade policy she championed as Obama’s secretary of state, and she peppered her address with some stunning statistics on executive overpay. But in a key line, she signaled her support for the moderate essence of Obamanomics: “Growth and fairness go together,” she said. “For lasting prosperity, you can’t have one without the other.”
Just as Obama has lost his party on trade, Clinton may have difficulty keeping Democrats on board for an inclusive, pro-growth platform. She understands, though, that a campaign based on grievance and anti-corporate anger could be a liability in the general election.
In fact, swing voters may have a different question: How will Clinton have any more success than Obama in persuading a (likely) Republican House of Representatives to put her plan into action?