Dealing prosperity

At Jacobin, Doug Henwood accuses Bryce Covert of New Deal-bashing in a piece she wrote in the New York Times connecting Donald Trump’s ethno-nationalist nostalgia movement to the racial exclusions carved into 1930s social programs.  “Large national programs that radically changed the country kept America great specifically for white men,” Covert points out, noting that Social Security, unemployment insurance, minimum wage, and union protections “transformed the country and created a booming middle class. But they all purposefully left out most women and minorities.”  Henwood objects to Covert’s “emphasiz[ing] only the exclusions [of the New Deal], and identif[yng] them as the source of the nostalgias that Donald Trump, not previously known as a friend of social programs, has been basing his campaign on.”

It’s true that the New Deal submitted to the bigotry of its time.  It particularly left African-Americans out of its post-Depression and post-war mass economic uplift.  But it’s also true that these very programs dramatically improved economic security for millions, creating a booming and predominantly white middle-class.  The lesson of the New Deal is that government has awe-inspiring power to define and create the middle-class.

Covert relies on Ira Katznelson’s history of the New Deal’s race exclusions, When Affirmative Action Was White.  Katznelson explains that in order to get Social Security passed through Congress, President Roosevelt and congressional liberals acceded the demands of powerful Southern Democrats, who wanted government benefits for whites while retaining Jim Crow’s racial hierarchy.  As such, Southern Democratic committee chairs insisted that Social Security be structured to exclude predominantly black occupations like agricultural workers and maids.  For the first generation of Social Security, most black workers were unable to participate in the nation’s groundbreaking retirement security program.

African-Americans drew little benefit from New Deal efforts to expand home ownership, as well.  The Roosevelt administration created the Federal Housing Authority to guarantee home loans and expand credit for Americans to buy property.  But in the 1930s and ‘40s, black neighborhoods were routinely redlined out of the zones eligible for FHA-backed loans.  They were also the victims of overt discrimination, real estate steering, violence, and intimidation if they even attempted to look into purchasing a home in a white neighborhood, with or without government-sponsored credit.

Even the G.I. Bill—seemingly universal to all who served—had race discrimination baked into its very structure.  Long hailed as a triumph in building the modern middle-class, the G.I. Bill was passed by Congress in 1944 to provide benefits to returning soldiers to buy a home or attend college.  But while it was facially race neutral, Katznelson argues that the G.I. Bill was nonetheless implemented in a predictably discriminatory fashion because its federalist structure disadvantaged blacks.  While early versions of the bill envisioned a single national benefits office, Southern Democrats in Congress insisted that G.I. Bill benefits be administered by decentralized state and local offices.  Because their votes and committee approval were necessary for the bill to pass, the G.I. Bill relied on implementation by state and local authorities.

The consequence was that black servicemen in the South had to seek benefits from segregationist local officials.  African-Americans returning from the war were thus routinely denied home loans from community banks, even though these loans were guaranteed by the Veterans Administration.  They were denied admission into the still segregated flagship universities in the South.  This led to an over-supply of applicants into the South’s all-black colleges, widely regarded as substandard schools with minimal resources in the era of supposed “separate but equal” education.

With black colleges at capacity, some African-Americans used their G.I. Bill benefits to attend vocational and training programs.  But many programs that sprouted up were of dubious quality, and amounted to little more than schemes of private profiteering off of a new government benefit while providing little in the way of real education.  (This legacy persists today, with for-profit universities targeting poor and minority non-traditional students while providing a subpar education at exorbitant cost and debt.)

The New Deal defined the vision of a broad middle-class American dream, founded on a college degree, home ownership, and secure retirement.  But its limitations and exclusions populated that dream only with white Americans.  It would be years before blacks could fully enjoy any of these benefits.  And the reverberations of both the New Deal’s discrimination and its mass economic uplift for whites remain with us.  Today, African-Americans possess only a fraction of the wealth that whites have in part because of the lost returns from this still-recent history of economic advancement denied.

But it’s worth recognizing the other implication of the moral ambiguities of the New Deal: that government has the power and ability to generate a new middle-class.  On the heels of the Great Depression and World War II, Roosevelt’s muscular liberalism set out the terms of a middle-class life and put the government to work to provide Americans with access to these key elements.  Because government steered benefits toward whites, they became the middle-class.  Because these same benefits were denied to African-Americans, they were largely left out of the middle-class.  The contours of a middle-class life were legislated by government.

The discrimination baked into the New Deal is a regrettable vestige of the political realities of its time.  But its demonstrated ability of exerting government might to expand prosperity is a tremendous power.  In an age where the middle-class dream is slipping further out of view because of rising inequality, stagnating wage growth, and the mounting cost of living, we can wield government power again to shore up the middle-class.  In fact, Katznelson’s prescription for restorative justice to compensate for the discriminatory New Deal and other social ills looks a lot like Roosevelt’s agenda itself, just without the color lines: subsidized mortgages, generous education and training grants, small business loans, subsidized childcare, guaranteed health insurance, and more.

Katznelson wants to re-do the post-war programs to bring African-Americans into the middle-class.  And indeed we should.  To renew the New Deal in the twenty-first century would expand access to American prosperity for all.  For the ultimate lesson of Katznelson’s New Deal history is that by and large, the modern American middle-class was created by government programs.

Bargaining up to a child allowance

Jeff Spross has a piece at The Week arguing that Hillary Clinton’s childcare reform proposal, while laudable, is still inferior to a straight universal child allowance.   Spross agrees that her plan to “make sure no American family spends more than 10 percent of their budget on child care[ . . .] would be a big deal,” but identifies a pair of problems with the proposal. First, subsidies to families will be offered through kludgy tax credits, making for a tedious application process and inefficient delivery system. Second, these tax credits will be paid directly to childcare providers, effectively steering children toward center-based care and away from other options like family-provided care. (Spross presumes that the fleshed out version of Clinton’s plan will look a lot like the Center for American Progress’s proposal. I do too.)

These are both valid criticisms of the Clinton/CAP childcare plan. Doling out subsidies through the tax code adds needless complexity to our social policy, and leaves out those without the awareness or resources to access these submerged benefits. Direct payment is undoubtedly a simpler option, both for the families eligible for benefits and the government agencies administering them.

Interestingly, Spross’s second critique—that childcare subsidies push families toward commercial care—is one more typically levied by conservative critics. “[I]f you want to get the tax credit,” Spross writes, “you have to want child care in the first place. The plan involves a certain failure of imagination that assumes all families want to have both spouses in the workforce.”

The National Review struck a similar note when President Obama proposed an expanded tax credit for childcare services. “Most mothers, especially of small children, prefer to work part-time or drop out of the labor force for a time,” it asserted. “Commercial child care is the least favored option for most parents. The president’s plan encourages families to do what they do not wish to do and penalizes them for refusing.” Instead, the National Review argued for an expanded Child Tax Credit so parents could do as they wish with the money.

This isn’t a new position for conservatives. In 2005, Ross Douthat and Reihan Salam wrote in the Weekly Standard to propose a similar solution to the childcare problem. “To address the concerns of women,” they wrote, “Democrats tend to focus on child care subsidies, parental leave, and other measures that are better understood as ‘market-friendly’ than as ‘family-friendly,’ in that the goal is to make it as easy as possible for parents to maximize their time in the paid labor force.” Under their preferred approach, “the government could offer subsidies to those who provide child care in the home, and pension credits that reflect the economic value of years spent in household labor.”

Whether raised by the right or the left, these strike me as valid concerns about the structure of a childcare subsidy. In its proposal, CAP makes an unapologetic case for nudging parents toward center-based care, which it sees as an “educational necessity” for the development of young children, whereas custodial care generally “does not prepare children for school.” Still, there are undoubtedly countless parents who would prefer to raise their children from home during their formative earliest years. Too many families are coerced into the dual-earner labor market by sheer economic necessity.

Where Douthat, Salam, and the National Review propose a bigger Child Tax Credit in place of childcare subsidies, Spross prefers a universal child allowance. As a general matter, a Child Tax Credit is essentially a child allowance with kludgy hurdles to applying for and receiving it added in. And if not made refundable, a bigger CTC cuts out the neediest families—a major problem for most progressives.

But suppose liberals and conservatives bridged their differences to: (a) make the new child benefit refundable, and (b) pay it directly to families instead of care providers. Liberals get protection for low-income families, while conservatives ensure benefits for stay-at-home parents. This would be something like an advance tax credit for families with children: a flat benefit for all who qualify. Essentially, it would approximate a universal child allowance.

This would still have some kludge baked into it, since it would ostensibly be a tax credit. But as I’ve argued, the second-best solution given our system’s exhausting preference for tax expenditures is to simply provide a periodic payment option for certain tax credits. Families could thus receive child subsidies in a series of regular payments like a child allowance, rather than in a springtime lump-sum tax refund.

Conservatives may recoil at this idea as thinly disguised welfare, particularly for families who would gain from the tax system while paying little into it. But perhaps they’d be willing to play ball in order to turn a subsidy for commercial childcare into one that rewards home-based care too.

Of course, this all assumes a functioning and good faith legislative process, something that is neither assured nor even likely at this point. But even if productive compromise legislation is farfetched, it’s interesting that the solution to valid conservative critiques of liberal childcare reform winds up being a more progressive solution.

A child allowance by another name would be an ever bolder and more ambitious program than a simple childcare subsidy. If Clinton’s significant childcare proposal wound up being bargained into an allowance-plus-kludge type of policy in Congress, we’d all be better off for it.

Obama’s middle-class pay raise

President Obama unilaterally raised the pay for millions of Americans this week.  With a proposed minimum wage increase stymied by Republicans in Congress, Obama once again looked to his executive toolkit for ways he could act singlehandedly without legislative action.  And act he did, guaranteeing more workers extra pay for overtime work.

The federal overtime threshold was part of the first minimum wage legislation in 1938.  Before this week, only workers who made up to $23,660 were owed overtime pay by their employees when they work more than forty hours a week.  The threshold has sat at that same level since 2004, slowly eroding from rising costs of living and inflation over the past decade.

Obama more than doubled it.  Beginning in December, salaried workers earning up to $47,476 must be paid time-and-a-half when they work more than 40 hours per week.  The Labor Department estimates that some 4.2 million additional workers will now be eligible for overtime pay, while other researchers predict it could help as many as 13.5 million workers.  The threshold will also now automatically increase every three years, meaning this worker protection will no longer be weakened by long periods of regulatory inaction.

Aside from extending overtime pay to more workers, those earning close to the $47,476 cutoff may also benefit from outright higher salaries.  Employers may give these workers raises in order to avoid the administrative and fiscal costs of recording hours and paying overtime.  In short, it’s a regulatory change that will boost the salaries for some workers while increasing the benefit of overtime work for many others.

It’s also a rule change that could spark economic growth.  One advocate called the change “a minimum wage increase for the middle class.”  And like the minimum wage, raising the overtime threshold could boost consumer demand by giving more workers more disposable income to spend.  As the Center for Equitable Growth explains:

“[I]n an economy that is not operating at full capacity, this policy is likely to put more money into workers’ pockets. A bigger paycheck boosts their ability to buy goods and services—a key economic engine for domestic growth. That is because workers that will benefit from these policies are more likely to spend the extra money they earn.”

This important rule change bolsters Obama’s legacy of turning back the tide of rising inequality.  It also further shifts the country away from the failed trickle-down economics that conservatives have pushed for generations.  In Obama’s view, the economy doesn’t gain from raising the incomes of the wealthy, but rather by making steady progress for the middle class.  When working Americans have more money to spend, everyone prospers.

This was true throughout the three decades of strong, sustained and equitable economic expansion during the mid-twentieth century.  From World War II through the early 1970s, the economy grew at an unprecedented clip and created a broad middle class where families enjoyed rapid and regular gains in their standards of living.

Since that time, broad economic growth in the United States has largely stalled.  Real median household income has stayed virtually flat for decades, as families are working harder for the same pay.  Inequality is growing and costs are mounting, leaving working families hard pressed to keep up.

But the broad prosperity that the economy produced during much of the twentieth century wasn’t just some historical accident.  It was the product of deliberate policy choices utilizing smart economic philosophy.  The Center for Equitable Growth notes that in 1933, President Franklin Roosevelt said:

“I ask that managements give first consideration to the improvement of operating figures by greatly increased sales to be expected from the rising purchasing power of the public. That is good economics and good business. The aim of this whole effort is to restore our rich domestic market by raising its vast consuming capacity.”

FDR understood that the economy thrives off of the purchasing power of working Americans.  Eighty-three years later, President Obama is trying to put that proven method for success back in action.

Parasites Lost

At the American Prospect, venture capitalist and inequality foe Nick Hanauer argues that government inaction on the minimum wage has helped create a low-paying “parasite economy” that is holding back national growth. Hanauer’s parasite economy includes large multinational corporations like Wal-Mart and McDonald’s that pay their workers less than a living wage, counting on government safety net benefits to keep their employees afloat.

These firms are “parasites” in that they extract wealth from the consumer economy without giving their workers the means to truly participate in it. “[L]ow-wage workers at parasite companies,” Hanauer writes, “cannot afford to robustly consume our products, or most anybody else’s, in return. The parasite economy is simply bad for business.”

By paying employees meager wages, parasite companies depress overall growth by refusing to provide the kind of disposable income their workers need to stimulate the economy. But Hanauer doesn’t condemn the parasite companies; indeed, he owns up to being a parasite company owner, too. Hanauer and business owners like him fear that taking on added costs like higher employee wages will undercut their company’s ability to compete in the cutthroat marketplace and maintain market share.

The parasite economy—firms caught in a race to the bottom of the pay scale—is one big collective action problem. We’d all be better off if the parasite companies paid higher wages, including those companies themselves: their employees could take their higher wages to purchase more consumer goods and grow the economy. But it’s a dangerous business move for any one firm to raise wages unilaterally.

Hanauer’s solution to this collective action problem is centralized action by Congress to gradually raise the minimum wage. “[W]hen we lift wages through reasonable increases in the minimum wage,” Hanauer argues, “everyone prospers[.]” All firms take the same financial hit, so no one firm is disadvantaged. And importantly, more money in employees’ pockets produces greater economic growth, lifting the revenue of these very firms.

Hanauer’s argument hinges on this last point: that raising the wage provides a stimulus for economic growth. It’s an argument he has made before — that a higher minimum wage is good for business because “[r]aising the earnings of all American workers would provide all businesses with more customers with more to spend.”  It’s also the argument that some smaller, lower-cost cities and towns have been banking on in California in anticipation of a statewide $15 minimum wage: that the higher cost of employees would be offset by a boon in economic growth from new disposable income and, in turn, new business.

But is it true? This kind of idea has a long history as a theory, going back to Adam Smith’s Wealth of Nations. As Jeff Madrick has noted, Smith “asserted that a large market for goods and services was critical for growth,” meaning that growth depends on maintaining sufficient consumer demand. And Keynesian economics has long believed that higher rates of growth can be achieved by stimulating demand.

But what about a minimum wage increase in particular? A 2011 study by economists Daniel Aaronson and Eric French at the Chicago Bank of the Federal Reserve found that a rise in the minimum wage does have notable effects on consumer spending. “[A] $1 minimum wage hike,” the economists found, “increases household income by roughly $250 and spending by approximately $700 per quarter in the year following a minimum wage hike.” When workers have more money in their pockets, they become more comfortable investing in durable goods like automobiles.

True, minimum wage hikes can have other negative effects, like eliminating jobs. But economists are generally split on whether raising the pay of workers really causes companies to cut jobs and hiring. Even though there is little evidence that raising the minimum wage has a definitively negative effect on employment, the prospect of job loss still led Aaron and French to temper their prognosis for a minimum wage-fueled growth boon. “[W]e should be somewhat suspicious of claims that the minimum wage will significantly boost the economy,” they conclude, while nonetheless finding “compelling evidence that putting money into the hands of consumers, especially low-income consumers, leads to predictable increases in spending.”

It makes intuitive economic sense that a rise in income for minimum wage workers will boost aggregate demand and, thus, increase growth. This is especially plausible given that low-wage workers have the highest tendency to spend any additional pay they take home. This fits comfortably with the liberal emphasis on middle-out economics: that growth is generated by consumer spending from a strong, broad middle class.

A livable minimum wage has other clear advantages, too. Hanauer’s parasite firms are essentially public-private partnerships, counting on public benefits like SNAP and the EITC to top off employee’s sub-livable paychecks. (Indeed, Hanauer notes that McDonald’s even maintained an employee hotline called “McResources” to guide workers through social assistance options.) Research shows that raising the minimum wage produces safety net savings by shifting the cost of guaranteeing a living wage from the government to employers. Researchers at the Economic Policy Institute found that with a $10.10 minimum wage, 1.7 million fewer Americans would rely on public assistance programs, saving the government (conservatively) nearly $8 billion each year. A higher minimum wage would thus mandate corporate responsibility from employers while promoting fiscal responsibility from the government.

Even though Hanauer’s minimum-wage-as-stimulus theory may not be definitively established, it’s just as plausible as the ubiquitous minimum-wage-as-job-killer theory. One heralds the macroeconomic benefits of the additional income to workers; the other hones in on the macroeconomic harm of new costs to firms. In actuality, the truth may depend on which force is greater.

But a theory like Hanauer’s also has value by evening the playing field in our debate over what is a just and effective minimum wage. The disemployment critique of the minimum wage is a fuzzy and debatable economic theory too, but conservatives continue to trot it out because it’s a simple and elegant argument. So too is the stimulus argument. More income allows workers to spend more money. When workers spend more money, the economy grows. It’s a simple case to make, and it might just be the case that needs to be heard in order to break out of the parasitic low-wage trap.

The Scandinavian Dream


In The Almost Nearly Perfect People, British writer Michael Booth, while living in Denmark, sets out to explore the much-heralded success of the Nordic countries.  Denmark regularly tops indices of global happiness.  Sweden’s welfare state is the envy of progressives around the globe.  What is it that makes these countries so great?

The Scandinavian countries are famed for their high-tax, high-benefit social welfare regimes.  Booth meets with numerous local experts, revealing some of the thinking behind these countries’ choices for such robust social insurance.  For instance, Henrik Herggren, a leading Swedish historian and social commentator, explained that the aim of the Swedish welfare state is to eliminate dependency and provide people with the foundation to lead a secure, fulfilled life:

  • Berggren: “The main objective is not to be dependent on your family, the wife shouldn’t be dependent on her husband, the children should be autonomous when they are eighteen, old people should not be dependent on their children taking care of them, and therefore to a large extent the state steps in and provides these things.”
  • Booth: “But doesn’t this just replace one dependency with another—the state . . ?”
  • Berggren: “We are not arguing that people are totally independent, because they are dependent on the state. [. . .] [But] [y]ou can get an awful lot of autonomy by accepting a democratic state is actually furnishing you with the means to be autonomous in this way, and reach a certain self-realization.”

    “For Americans and Brits the state is such a bogeyman, such a horrible menacing thing . . . .  But the point here is not that the state is saying this is how you should live your life, but it is providing you with the support structure.  Society is unequal and people don’t have the same opportunities, but we are trying to lift everybody to the same level so they can achieve the same kind of freedom and self-realization, which only a small group could do previously.”

That is, Swedes believe a generous social welfare state is a perquisite to true individual freedom.  In order for individuals to pursue self-realization, the government provides extensive public supports.  Sixteen months of family leave per child, to be taken by parents any time during the child’s first eight years.  Guaranteed healthcare.  Publicly-funded daycare and eldercare.

In Booth’s telling, Sweden’s welfare state is a deliberate choice to facilitate a sort of radical individualism.  Swedes agree to pay high taxes in order to obtain public goods that facilitate freedom.  By paying into the welfare state, Swedes purchase a freedom that ensures they will not be otherwise obligated to others, nor resigned to rely on anyone else in turn.

This may be a jarring sentiment to American ears.  In the United States, conservatives are too often allowed to claim the mantle of freedom as the absence of government intervention.  Big government is cast as an oppressor, the free market as a liberator.

This argument hasn’t always reigned supreme in the United States though.  In his famed 1944 State of the Union address, President Franklin Roosevelt declared that “necessitous men are not free men,” recognizing that the American ideal of freedom requires basic security and standards of living.  Without proactive government intervention, the distribution of real freedom in America is wildly unequal: the rich and financially secure enjoy far more freedom than those barely making it.

The Swedish case for the welfare state is echoed in some of the arguments made in favor of a basic income today.  A guaranteed income for all would free people to pursue higher-order ideals than mere survival.  With basic needs met, more of our lives could be focused on passions and intellectual pursuits than simply grinding away at work in order to pay for food, shelter, and healthcare.

The radical autonomy of the Swedish welfare state is in some tension with the communitarian strain of liberalism in the United States associated with Michael Sandel and other political philosophers.  Communitarians emphasize not just individual rights and freedom, but obligations and duties individuals owe to their local communities, ranging from families to neighborhoods to nations.  For communitarians, freedom is not the ultimate goal so much as a richer and more interdependent fabric of community life and collective good.

Swedes, on the other hand, aim to free individuals of the trappings of obligation.  If the government fails to provide childcare, this condemns parents to step in to fill the void.  Same for eldercare—without government-sponsored nursing homes, children may be forced to care for aging parents.  That curbs freedom, it’s thought.

Booth spends much of his tour across the Nordics poking holes in the myth of Scandinavian utopia.  He finds the Norwegians to be anti-social loners; the Finns hooked on anti-psychotics; the Icelanders to be reckless finance Vikings weirdly obsessed with elves; the Swedes lulled into conformity by their welfare states.  All of the Nordics are struggling to reconcile their traditional heterogeneity with an influx of multicultural immigration, and grappling with the effect on public support for the welfare state.  He finds curiosities and disturbances in each distinct culture, but also finds much to admire.

But ultimately, Booth endorses the Scandinavian reliance on government institutions to improve individual autonomy: “To achieve authentic, sustained happiness, above all else you need to be in charge of your life, to be in control of who you want to be, and be able to make the appropriate changes if you are not.  This cannot be a perception, a slogan like the American Dream . . . .  In Scandinavia it is a reality.  These are the real lands of opportunity.  There is far greater social mobility in the Nordic countries than in the United States or Britain and, for all the collectivism and state interference in the lives of the people who live here, there is far greater freedom to be the person you want to be, and do the things you want to do, up here in the north.”  Indeed, Booth has outright backed Bernie Sanders and his bid to bring elements of Scandinavian social democracy to the United States.

As Booth demonstrates, the Scandinavians are by no means super-humans, nor are their societies perfect utopias.  But they do happen to be humans who have done exceptionally fine jobs of crafting fair and just societies to a degree that exceeds most everyone else.  When societies band together to take care of basic needs and pool collective risks, people are left with more room to explore their humanity, and greater ability to actuate their freedom.

Those of us in the United States would be wise to realize that big government is not the inherent enemy of freedom.  Indeed, it may often be its enabler.

Trump and the cult of the job creators

Donald Trump’s back and forth over taxing the rich continues. Shifting by the day, Trump has vacillated between promising to raise taxes on the rich and proposing to cut their taxes. However, his latest pronouncement on the issue (if it sticks) suggests that he’s coming around to the ill-conceived conservative dogma glorifying the rich as the engines of our economy — even though the evidence points toward the middle-class as the real source of growth in the United States.

Trump began his insurgent primary campaign by arguing that taxes on the rich should rise. He bemoaned the under-taxation of financiers, saying, “The hedge fund people make a lot of money and they pay very little tax.” He even claimed to agree that he himself ought to pay more in taxes, saying, “You’ve seen my statements. I do very well. I don’t mind paying a little more in taxes. The middle class is getting clobbered in this country.”

In a reversal, however, he proceeded to roll out a tax plan that offered massive tax cuts to the highest earners. Under his plan, the top tax rate would fall from 39.6 percent to 25 percent. Over the next decade, this would redistribute some $4.4 trillion in lost federal revenue to the top 1 percent of earners, who would reap more than a third of the tax benefits in his plan.

Within days of clinching the GOP nomination, Trump appeared to revert back to his initial tax-the-rich position, saying he is “not necessarily a huge fan” of his own proposal to shower the rich with tax relief. This left some believing that Trump was abandoning his supply-side tax plan to pivot back toward populism in the general election campaign.

Now, Trump seems to have changed course again. When the New York Times asked Trump about taxing the rich at higher rates, Trump responded, “I really want to keep taxes for everybody as low as possible. When you start making them too high, you are going to lose people from the country, and oftentimes these are the people who create the jobs.”

Let’s set aside the extremely dubious notion that rich people are fleeing the United States in droves over a 15 percentage point difference in the top marginal tax rate. What’s more interesting is that Trump is regurgitating the conservative myth of the rich as job creators.

Last week, I sifted through the delusional provocations of Trump’s campaign statements and found that on policy matters, he appeared to be repudiating much of the accepted GOP policy platform. This schism accounts for much of the distance between Trump and establishmentarians like Paul Ryan. “The philosophy underlying the Ryan budget is supply-side faith in the wealthy as job-creating economic generators,” I wrote. “The only job creator that Trump glorifies is himself.”

Now Trump is buying into the job creator myth. The idea that the rich are job creators is a sloganeering summation of conservative supply-side economic philosophy: make life good for the rich, and the gains will reverberate down from their beefed-up wallets to the rest of the country. Treat the ownership class well, the thinking goes, and they will expand the economy and grow new jobs.

To sell this philosophy to the public, conservatives leaned on the job creator framing quite extensively following the Great Recession. With millions unemployed and the financial elite widely reviled, conservatives tied their preexisting economic beliefs to the public’s worry about jobs. In 2011, Paul Ryan blasted President Obama’s proposal to increase the capital gains tax as “class warfare” that “will attack job creators, divide people, and it doesn’t grow the economy.” Before being felled by the Tea Party, then-House Majority Leader Eric Cantor took to Twitter on Labor Day in 2012 not to praise working Americans, but to thank the supposed job creators, saying: “Today, we celebrate those who have taken a risk, worked hard, built a business and earned their own success.”

Meanwhile, liberals were pushing back against the conservative trickle-down prescription for the economy. They called their theory of the economy “middle-out economics,” arguing that the engine for economic prosperity was not the wealthy, but rather the purchasing strength of a broad middle-class.

The liberal theory held that “a prosperous economy revolves not around a tiny number of the very rich but around a great and growing number of middle-class consumers and small businesspeople,” as Nick Hanauer and Eric Liu put it. “Rich businesspeople are not the primary job creators; middle-class customers are. The more the middle class can buy, the more jobs we’ll create.”

Similarly, David Matland of the Center for American Progress argued, “it isn’t the rich that lead the way to growth and prosperity. Instead, it is a thriving and vibrant middle class that shows us the path.” CAP backed up this theory with a compelling review of the research demonstrating that the middle-class is at the heart of American economic growth.

President Obama began espousing this theory, too. “We believe that America’s prosperity must rest upon the broad shoulders of a rising middle class,” he asserted. He explained that “growing inequality isn’t just morally wrong; it’s bad economics. When middle-class families have less to spend, businesses have fewer customers.”

That’s the guts of the theory in a nutshell: that when middle-class families have more disposable income, they will spend that money and grow the economy. When consumers spend more, business does well and employs more workers. This sparks a virtuous cycle of economic growth throughout the income distribution.

As I’ve written, middle-out economics is both good economics and a tried and true prescription for growth in recent American history. Policies that raise the disposable incomes for the poor and middle-class—higher minimum wages; targeted tax cuts; subsidies for health insurance, childcare, and college tuition; greater social insurance protections—are more likely to generate economic growth because average Americans are simply more likely to spend this freed up money than the rich are. Indeed, during the era of prosperity following World War II through the 1970s, the American economy grew on the back of an ascendant middle class.

Middle-out economics has always been a safe bet for American prosperity. The ahistorical alternative offered by conservatives for the past four decades has simply stuffed the pockets of the rich without ever yielding the promised glories of raining growth upon the rest of the country. In fact, the decades of ascendant trickle-down thinking since 1980 correspond with a marked period of sluggish growth and economic stagnation in the United States.

As Trump waffles between tax positions, he’s debating (whether he knows it or not) about whether the source of growth in the United States is the middle-class or the fortunate elite. Trump seems to believe that the key to growth is using public funds to reward the supposed business savvy of himself and those like him. But the evidence suggests that real prosperity grows from the people buying his ties, eating his steaks, and visiting his hotels.

Hillary Clinton’s plans to reform childcare

Hillary Clinton teased out her plans to improve childcare in the United States this week.  With a pair of important proposals, she hopes to win bipartisan support to provide more help to families relying on childcare services and to expand a proven effective intervention for young children.

More and more, American family budgets are being consumed by the cost of childcare.  On average, childcare costs nearly $8,000 each year.  Low-income families pay a whopping 39 percent of their monthly income for childcare.  In 23 states, childcare for a 4-year old costs more than paying public college tuition.

At the same time, wages have stagnated and the pressure for both parents to work has grown.  Few families can afford to sacrifice the income of a second earner, and single parent families have no choice but to juggle work and childrearing.  Indeed, all parents work in more than 60 percent of households with children under the age of six.  These families are left to stomach the huge cost of daycare for often dubious quality.

Clinton’s plan aims to get the cost of care under control.  Under her plan, no family would pay more than 10 percent of its income for childcare.  Campaign aides said that she would accomplish this by a combination of direct subsidies to childcare centers and tax credits to families paying for care, with more details to follow.

The framework for Clinton’s plan to protect parents from escalating childcare costs resembles a 2015 proposal from the Center for American Progress.  Under CAP’s plan, families would be eligible for a tax credit subsidy tied to their income to be used on childcare at any of a number of state-identified high-quality care facilities.  Low-income families could receive as much as $13,000 in annual subsidies, and families earning four times the poverty level ($97,000 for a family of four) would receive about $2,400.

One shortcoming of CAP’s plan (and thus, the skeleton of Clinton’s plan) is that it does little to expand the supply of care or improve its quality.  Childcare in the United States has long been negligently under-regulated, often with tragic consequences.  While Congress has recently tightened up quality regulations, the United States still lacks an established network or infrastructure of high-caliber professional care facilities.

Moreover, CAP’s report notes that there is a severe shortage of decent care options across much of the country.  To that end, CAP banks on an influx of subsidies for only high-quality care to spur the creation of more and better facilities.  But given the current supply constraints in childcare, more ambitious action, like government-created care centers (a public option for childcare), may be necessary in at least some communities.

Clinton’s second plan is to expand the Maternal, Infant and Early Childhood Home Visiting Initiative.  The program provides home visiting services to low-income families with young children.  Professional nurses, social workers, and parent educators visit parents and help them hone their child care and development skills.

MIECHV began as a small pilot program authorized under President George W. Bush and then was significantly expanded under President Obama in 2010.  Today, the program provides assistance to 115,000 parents each year, and is thought to be one of our most promising and effective anti-poverty initiatives, boosting child health and brain development in the crucial early years of life.  Clinton would substantially increase the program’s funding, doubling the number of families it could help.

The prospects for these plans hinge of course on Clinton winning the presidency, but also depend on the political makeup of Congress.  Assuming Clinton takes office with Republicans retaining control of at least one house of Congress, passing any program requiring new funding won’t be easy.

However, there is some reason to be hopeful, particularly for an expanded MIECHV.  The program has enjoyed broad bipartisan support since its genesis as a demonstrated evidence-based way to aid families and fight poverty.  Last year, Congress reauthorized MIECHV at current funding levels on a bipartisan vote.  Moreover, MIECHV was endorsed last year as part of a suite of consensus anti-poverty proposals from a collaboration of scholars from the center-left Brookings Institute and the conservative American Enterprise Institute.  Clinton is counting on this bipartisan good-feeling around MIECHV to carry into 2017 efforts to boost funding for the popular program.

The prospects for a robust initiative to make childcare affordable seem more doubtful.  Representatives from both sides did band together to reauthorize the Child Care and Development Block Grant in 2014, increasing funding and finally imposing common-sense quality regulations on the program helping low-income families obtain childcare.  This provides some recent bipartisan precedent for making childcare better and more accessible.  But the CCDBG is a small program, costing only $5 billion each year.  Clinton’s plan for generous tax credit support for families relying on daycare could cost upwards of $40 billion annually—the estimate attached to CAP’s 2015 proposal.

One might expect conservatives to readily embrace tax relief for working Americans, but recent experience suggests otherwise.  In 2015, President Obama and House Democrats proposed doubling or tripling the value of the Child and Dependent Care Tax Credit, which currently subsidizes $1,000 of childcare for American families.  In response, conservatives accused Obama and company of waging war on traditional stay-at-home motherhood by pushing children into commercial care and penalizing parents who want to leave the labor force to raise their children.

Meanwhile, Republican nominee Donald Trump is counting on more companies to provide on-site child care for their employees.  “It’s not expensive for a company to do it,” Trump said. “You need one person or two people, and you need some blocks and you need some swings and some toys.”  Trump’s non-plan, it seems, would simply leave childcare up to the generosity of individual employers and the whims of the market.  This reinforces the stark inequality plaguing much of our public-private social insurance scheme, where the best-paid employees working at the biggest companies enjoy far more comprehensive benefits than most other workers.

In contrast to Trump’s complete lack of policy imagination, Clinton’s proposals are modest but important incremental reforms to alleviate the financial stress on young working families and to help low-income children in their formative years.  As she pivots toward the general election, these proposals show that she is attuned to the day-to-day problems weighing on millions of Americans.

How Trump upends Paul Ryan’s conservative vision

Speaker Paul Ryan made headlines Thursday when he refused to endorse Donald Trump for president.  While Trump has now (remarkably) become the clear presumptive nominee, Ryan is “not there yet.”

Before backing Trump, Ryan wants to be sure that “we have a standard bearer that bears our standards”; someone who embraces the party’s agreed-upon “common platform of conservative principles” and will “take[ ] these conservative principles, appl[y] them to the problems and offers solutions to the country . . . .”  Trump quickly slapped away Ryan’s attempt to flex establishment muscle.  In a three-sentence statement, he countered that he is “not ready to support Speaker Ryan’s agenda.”

The alpha-dog positioning between the GOP’s nominee and its highest-ranking elected official is undoubtedly in part a dispute over Trump’s incendiary rhetoric.  But it’s also about whether Trump can be trusted to stick to accepted conservative policy stances.

Throughout the Obama years, the governing blueprint for conservatism has been the series of budget proposals Ryan crafted as House Ways and Means Chairman.  The details varied slightly from year to year, but the core instincts remained the same: hack away at social programs while slashing taxes for the rich.  He planned to replace Medicare with vouchers to purchase private insurance, and scrap Medicaid for an under-funded block grant to the states.  At one time, his budgets planned to partially privatize Social Security, a long-time conservative aspiration.   While 69 percent of Ryan’s proposed budget cuts would come from low-income programs like food stamps and Pell Grants, he would nonetheless slash tax rates for wealthy from 39 percent to 25 percent, costing nearly $6 trillion over a decade.

For Republican leaders, Ryan’s budget was the path forward.  It would shrink the size of government by converting the key liberal twentieth century social insurance achievements from defined-benefit plans to defined-contribution plans, shifting the costs and risks from government to individual Americans.  And it would unburden the so-called “job creators” of trillions of dollars in pesky taxes.

They just needed a president to turn Ryan’s vision into a reality.  In a 2012 speech at the Conservative Political Action Conference, anti-tax activist Grover Norquist explained, “All we have to do is replace Obama. [. . .] We don’t need a president to tell us in what direction to go. We know what direction to go. We want the Ryan budget. … We just need a president to sign this stuff.”

All that conservatives needed was the signature from a President Jeb Bush or Marco Rubio—candidates who had pledged fealty to Ryan’s budget.  Instead, their only hope for the next four years is Donald J. Trump.

Between his police-state deportation and border plans, unthinking conspiracy mongering, and unrelentingly racist and misogynistic diarrhea of the mouth, it’s easy to lose sight of the shreds of policy ideas lurking in Trump’s campaign.  Some of this is because Trump’s policy positions seem subject to revision and all-out abandonment at any given moment.   But on a few key issues, he has stuck to his guns in a way that is in direct tension with the agenda championed by Ryan and others.

For instance, in 2013, Trump went to CPAC and told conservatives that they could not make any changes to Social Security, Medicare, and Medicaid and still expect to win elections.  In a book two years earlier, he chastised conservatives for dismissing the social contract embedded in these programs, saying, “that’s not an ‘entitlement,’ that’s honoring a deal. We as a society must also make an ironclad commitment to providing a safety net for those who can’t make one for themselves.”

Trump stood by these positions during the primary.  In a debate in Miami, he pledged to “do everything within my power not to touch Social Security, to leave it the way it is.”  He boasted that he was the “first & only potential GOP candidate to state there will be no cuts to Social Security, Medicare & Medicaid.”  He even supported strengthening Medicare by letting it negotiate drug prices.

Because these are all broadly popular programs, there’s little incentive for Trump to change course now.  But each of these positions bucks longstanding conservative goals.  In fact, Trump is already backtracking from his own proposal for a massive tax cut for the wealthy—his one policy plank in line with the Ryan budget.  “I am not necessarily a huge fan of that,” he explains.

Which makes sense.  The philosophy underlying the Ryan budget is supply-side faith in the wealthy as job-creating economic generators.  The only job creator that Trump glorifies is himself.

In a Fox News interview Thursday night, Trump reiterated that he isn’t at all interested in signing on to Ryan’s conception of conservative principles. So for Washington conservatives, Trump’s nomination jeopardizes their carefully crafted vision for reform.  Ryan’s theory of what ails the country is big government stifling and coddling away growth.  Trump’s theory is stupid government getting ripped off at home and abroad.  Only one of these theories seems to have struck a chord with voters.


How progress happens

The Democratic primary race has pitted two different visions of progressivism against one another. Hillary Clinton represents the center-left tradition of late twentieth-century liberalism in American politics. Bernie Sanders, on the other hand, offers an unapologetic social democratic vision, a throwback akin to Franklin Roosevelt’s muscular New Deal liberalism.

These policy differences are real, but they are ultimately matters of degree. Sanders demands nothing short of single-payer healthcare; Clinton is willing to build upon ObamaCare’s market-based approach. Sanders wants free college for all; Clinton prefers to guarantee a debt-free education for the poor and middle-class. Sanders wants a $15 minimum wage; Clinton is more comfortable with a gradual increase from $12. Clinton’s progressivism is a cautious one, whereas Sanders’s is unflinchingly bold, but they both share a progressive vision for the direction of the country.

The real disagreement is over how much progressivism we can expect in the near term. And at the core of this disagreement are two very different understandings among the candidates and their supporters about how policy change happens.

Clinton believes systemic change happens incrementally—a belief grounded in cold-blooded political realism. In 2008, Clinton was the candidate tossing buckets of cold water on Obama’s audacity-of-hope campaign. “Maybe I’ve just lived a little long, but I have no illusions about how hard this is going to be,” she said. “You are not going to wave a magic wand and have the special interests disappear.”

Clinton more readily accepts the political status quo and looks for openings and opportunities to advance progressive priorities. The GOP-controlled House with safe, gerrymandered districts; the filibuster-plagued Senate; the message and money of special interests in the legislative process—these are all structural impediments that are unlikely to change. Recognizing these constraints, Clinton intends to grind away at a Republican Congress and private sector stakeholders to extract just as much progressive reform as the system will bear.

Clinton largely accepts the political structure as it is and aims to buckle down for hard-fought battles for partial but significant gains. Sanders, on the other hand, wants to upend the political structure entirely. He sees change happening through bursts of progressive legislation on the heels of active and popular mobilizations that rock the system. According to Sanders, D.C.-led political change is hopeless because “it’s too late to do anything inside the Beltway. You gotta take your case to the American people, mobilize them, and organize them at the grassroots level in a way that we have never done before.”

With the people mobilized, all progressive change is possible. The structural impediments—Republican obstruction in Congress, special interests buying up the seats at the table, big money in politics—would be swept away by a populist electoral wave. When the people hold the politicos’ feet to the fire while demanding real reform, there is suddenly far less resistance to progressive change in the political system, producing policy outcomes that are more purely progressive. Single-payer instead of ObamaCare. Free college instead of tax credit subsidies. Ashes of big banks instead of tighter regulations.

Sanders draws inspiration for this type of transformative change from Roosevelt’s New Deal. In a speech last fall laying out his conception of social democracy, Sanders harkened back to the 1930s when “Roosevelt implemented a series of programs that put millions of people back to work, took them out of poverty and restored their faith in government. He redefined the relationship of the federal government to the people of our country. He combatted cynicism, fear and despair. He reinvigorated democracy. He transformed the country.”

Clinton, on the other hand, positions herself as an inside-the-game technocratic do-er in the vein of Lyndon Johnson. In the 2008 race, she stirred up a mini-controversy by negatively comparing Obama’s hope-and-change campaign to what it took to pass the Civil Rights Act, casting herself as LBJ and Obama as Martin Luther King. “Dr. King’s dream began to be realized when President Johnson passed the Civil Rights Act,” she said. “It took a president to get it done.”

This time around, Clinton again made it clear that she has little interest in fundamentally changing hopes and dreams. When she met with a group of Black Lives Matter activists, she opened up to them with her beliefs about how policy change happens. “I don’t believe you change hearts,” she said. “I believe you change laws, you change allocation of resources, you change the way systems operate. You’re not going to change every heart. You’re not.”

This argument over how change happens—Clinton’s theory of steadfast incrementalism, Sanders’s case for a populist surge—was nicely distilled recently by a debate among the commentariat centered on health reform. Kevin Drum of Mother Jones wrote a provocative piece accusing Sanders of conning his supporters with his theory of change. “[I]f you want to make a difference in this country,” Drum wrote, “you need to be prepared for a very long, very frustrating slog. You have to buy off interest groups, compromise your ideals, and settle for half loaves — all the things that Bernie disdains as part of the corrupt mainstream establishment.” To Drum, progressive change in the United States is the product of “work[ing] your fingers to the bone for 30 years and you might get one or two significant pieces of legislation passed.” Sanders’s assurances to the otherwise were fanciful deceits from a pol who should know better.

At The Week, Ryan Cooper rose up in defense of Sanders by blasting Drum’s “Abandon Hope, All Ye You Enter Here” (Cooper’s terms) style of center-left politics and the policies it has produced. He pointed to ObamaCare as the epitome of half-loaf liberalism failing to fully capitalize on political opportunity: “ObamaCare — a basically mediocre program that is still a big improvement on the status quo — reflects its political origins. It’s what milquetoast liberals had settled on as a reasonable compromise, so when George Bush handed them a great big majority on a silver platter, that’s what we got. It was Bush’s failed presidency, not 30 years of preemptively selling out to the medical industry, that got the job done.” To Cooper, under the true arc of change, “[t]he left half of the political spectrum decides on a compelling set of ideas, and through a combination of luck (read: conservative failure), strategy, and popular mobilization, wins a brief mobilized majority that passes lots of good stuff very fast.”

Drum replied to correct Cooper’s truncated history of health reform in the United States, detailing a half-century slog beginning with JFK’s proposal (and failure) to provide guaranteed care of the elderly, through plans from Nixon, Carter, and Clinton, to Obama finally enacting the best version of health reform that he could muster through Congress. (Though Drum could have reached all the way back to Theodore Roosevelt’s calls for universal healthcare in 1912.) “[T]housands of Democrats—politicians, activists, think tankers, and more—have literally spent decades working their fingers to the bone creating plan after plan; selling these plans to the public; and trying dozens of different ways to somehow push health care reform through Congress. [. . .] [I]n the end, all of these hacks and wonks have made a difference and helped tens of millions of people.”

Drum’s account best fits with the actual history of health reform. Liberal presidents from FDR through Johnson pushed for universal healthcare, but only ended up achieving coverage for the poor and elderly. Medicaid and Medicare may have been half-loaves of universal coverage, but were still two of our great progressive achievements.

Senator Ted Kennedy spent his career fighting for universal healthcare, but when comprehensive reform proved politically untenable, he settled for positive, incremental reforms like coverage for the unemployed and guaranteed treatment for those with emergency illnesses. When President Clinton’s push for universal care collapsed, Kennedy picked up the pieces to at least extend coverage for children.

As I’ve written, these half-loaves and incremental reforms ingrained little by little the principle in American life that health care is a right and not a privilege. After Kennedy’s wins on behalf of the ill, the unemployed, and the young, “the ethos behind [his] slew of small-scale healthcare achievements made it much harder to deny granting the right to healthcare to the rest of the country.”

In 2009, the Obama administration and congressional liberals were determined to finally extend this right to Americans writ large. With a filibuster-proof Democratic majority in the Senate and a large majority in the House, liberals enjoyed the most favorable political conditions imaginable in our political environment. Admittedly, these conditions were brief and tenuous, hanging in the balance by Al Franken’s razor-thin and contested victory to a sixtieth Senate seat and Kennedy’s deteriorating health. But even with control of both chambers of Congress, the best health reform liberals could heave over the finish line was ObamaCare’s market-driven, three-legged stool, no-public-option approach.

To Clinton and Drum, this is what policy change looks like: a century-long fight for reform; piecemeal progress arising out of large-scale defeats, culminating in a compromised version of the liberal ideal limping to the president’s desk.

In his defense of Sanders’s political revolution theory, Cooper draws on the work of Princeton historian Matt Karp. Karp argues that progressive reform arises from short fits and bursts. “The simple truth is that virtually every significant and lasting progressive achievement of the past hundred years was achieved not by patient, responsible gradualism, but through brief flurries of bold action,” he writes. “The Second New Deal in 1935–36 and Civil Rights and the Great Society in 1964–65 are the outstanding examples, but the more ambiguous victories of the Obama era fit the pattern, too.”

This is undoubtedly true—the political stars must align for any progressive change to happen in Congress. Even so, the bygone eras of progressive triumph had their ambiguities, too. As Karp acknowledges, the great social insurance programs of the New Deal only saw the light of day because liberals made a devil’s bargain with Southern Democrats to cut predominantly black professions out of the benefits. After universal care was stymied under FDR and Truman, Medicare and Medicaid were strategically pushed by LBJ because they provided the greatest degree of universal coverage that could survive medical industry opposition. The “ambiguous victories of the Obama era”— financial reform that leaves big banks intact, health reform that doubles down on private insurance, stimulus that’s too small—fit comfortably in this tradition of liberal pragmatism.

Sen. Kennedy began pushing for universal health insurance in the 1960s, advocating for a single-payer scheme that would cover everyone. In 1971, President Nixon countered with a plan not all that dissimilar from what ultimately became ObamaCare: a mandate on employers to provide private health insurance to their workers, coupled with subsidies to individuals who could not afford insurance.

Kennedy turned down Nixon’s deal, insisting on single-payer. He came to regret this decision as one of the biggest mistakes of his life. “That was the best deal we were going to get,” Kennedy said. “Nothing since has ever come close.”

Kennedy ultimately realized that single-payer care just wasn’t going to happen in the United States. Insurance industry opposition, systemic path dependency, and widespread individual satisfaction with private health insurance all meant that single-payer was a nonstarter. It was then that he turned toward his incremental accomplishments—CHIP, COBRA, EMTALA—that made up some of the ground lost in the missed opportunity in 1971.

For those who wish for a more progressive—even social democratic—America, the perfect shouldn’t be the enemy of the good. The reform on the table might not be perfect, but quite often it’s one worth taking. When Kennedy passed up positive compromise health reform, millions remained without healthcare for another forty years, waiting for a political revolution that never came.

It’s a lesson worth keeping in mind in 2016 when sorting out whether progressive change Feels the Bern or Trudges Up the Hill in America.