Kamala Harris & the progressive healthcare message, take 2

In May, Democratic Senator Kamala Harris sat down with the Pod Save America guys for and laid out a somewhat jumbled four-part message on healthcare, vowing to: (1) protect Obamacare from then-active Republican repeal efforts, (2) empower government to combat prescription price gouging, (3) “look at the Cadillac Tax and deal with that,” and finally, (4) pursue a Medicare-for-All-type system.

observed at the time that Harris’s rough-draft answer showed that there was work to be done on honing the affirmative message communicating the progressive vision for healthcare.  Burying a tepid endorsement of Medicare-for-All behind Cadillac Tax repeal left much to be desired.

Harris has significantly tightened up her healthcare message.  On Wednesday, she announced that she would co-sponsor Sen. Bernie Sanders’s upcoming single-payer bill.  “I intend to cosponsor the Medicare for All bill,” Harris tweeted.  “Health care is a right, not a privilege.”

Harris is a probable 2020 contender for the presidential nomination.  While others have expressed support for single-payer, she is the first establishment Democratic to put her name on actual legislation.

This is yet another indicator that the center of gravity within the Democratic Party is swarming to the left.  Harris took some flack from the left for allegedly lacking progressive bonafides.  I argued that Harris and other prominent center-left Democrats are actually testaments to the left’s success in reshaping the party’s agenda.  Her unequivocal embrace of single-payer now adds to that success.

She endorsed the view that healthcare is a fundamental right.  This is a common rhetorical assertion among progressives.  But it has the benefit of uniting the party’s supposed rift between those prioritizing economic issues and others prioritizing social and identity issues.  “Healthcare is a right” presents universal coverage as an issue of both economic and social justice.

Still, there is reason to slow down the Democratic rush to sign on to single-payer healthcare.  Democrats may quickly find themselves on the wrong side of the public’s deep status quo bias toward healthcare–the same fear of change that stymied Republicans’ Obamacare repeal efforts this year.  The public may express support for a single-payer system as a way of voicing dissatisfaction with our current healthcare system.  But when the rubber hits the road, for many people, there’s just too much at stake in healthcare to venture too far away from the system they already know.

There are always painful tradeoffs in healthcare.  There are transitions that must be navigated, revenues that must be raised, and industries that must be displaced or accommodated.  By putting their names to legislation, Harris and other Democrats will be taking sides in those tradeoffs.  Medicare-for-All will no longer be an abstract wishful preference.  It will be real dollars and cents, legislative carve-outs and burdens.

The progressive healthcare vision is coming together in refreshingly bold terms.  But Harris and other Democrats need to make sure that they are prepared to stand by all that this entails.

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Hofstadter on FDR

I’ve been reading Richard Hofstadter’s classic The American Political Tradition and the Men Who Made It. His analysis of Franklin Roosevelt’s handling of the Great Depression is immensely valuable, both for its humanization of the modern progressive hero, and its lessons for progressives today.

Even though Roosevelt’s administration is remembered as a testament to countercyclical Keynesian spending, Roosevelt campaigned as a deficit scold even as the Depression worsened throughout 1932. According to Hofstadter, Roosevelt “called the Hoover administration ‘the greatest spending Administration in peace time in all our history.’” Roosevelt implored the country to “have the courage . . . to stop borrowing to meet continuing deficits.”

Roosevelt was also originally resistant to taking extraordinary measures to rehabilitate the country’s banking system. “In his first press conference,” Hofstadter writes, “he was asked if he favored federal insurance of bank deposits. He said that he did not.” Roosevelt did not want government on the hook for the losses of bad banks. Nonetheless, he soon signed into law the Federal Deposit Insurance Corporation for precisely this purpose—“a concession to a bloc of insistent Western Senators,” Hofstadter explains.

Roosevelt made a slew of conflicting promises to the country about how he would rescue the economy. As Hofstadter put it: “All Roosevelt’s promises—to restore purchasing power and mass employment and relieve the needy and aid the farmer and raise agricultural prices and balance the budget and lower the tariff and continue protection—added up to a very discouraging performance to those who hoped for a coherent liberal program.”

While admiring progressives look back in retrospect at Roosevelt’s economic rescue effort as a dedicated application of government ingenuity and Keynesian economics, his course was hardly deliberate. “The New Deal will never be understood by anyone who looks for a single thread of policy,” Hofstadter argues, calling Roosevelt’s eventual economic program a “series of improvisations.”

John Maynard Keynes himself met with Roosevelt in 1934. FDR was overwhelmed by what he called Keynes’ “rigmarole of figures.” And Keynes came away disheartened, remarking that he had “supposed the President was more literate, economically speaking.”

Hofstadter divides Roosevelt’s economic policy into two distinct ideological approaches. The first New Deal, enacted between 1933 and 1934, tried to spark a supply-side recovery by adopting “the retrogressive idea of recovery through scarcity,” Hofstadter writes. The key recovery efforts during these years were business-friendly initiatives to boost agricultural and business revenues. The Agricultural Adjustment Act, for instance, set farm quotas to withhold supply and boost agricultural prices. “[T]he policy seemed to have solved the paradox of hunger in the midst of plenty only by doing away with plenty,” Hofstadter laments.

The heart of Roosevelt’s initial economic program was the National Recovery Act, which allowed businesses to set price agreements and production quotas in exchange for wage increases and improved working conditions. This idea originated with the Chamber of Commerce. Still, Roosevelt called the NRA the “most important and far-reaching legislation ever enacted by the American Congress . . . a supreme effort to stabilize for all time the many factors which make for the prosperity of the nation.”

The NRA took a decidedly business-friendly approach to economic stimulus. “It is not unfair to say that in essence the NRA embodied the conception of many businessmen that recovery was to be sought through systematic monopolization, high prices, and low production,” Hofstadter writes. Yet it is far from clear that the NRA had a positive impact on the economic recovery—the economy’s best years came in the two years after the Supreme Court ruled the NRA unconstitutional.

Roosevelt’s first New Deal was conceived as a “true concert of interests,” as he put it on the campaign trail—a consensus approach to benefit business, farmers, and workers alike. “Although he had adopted many novel, perhaps risky expedients,” Hofstadter observed, “he had avoided vital disturbances to the interests.” Roosevelt refused calls to resolve the banking crisis by nationalization the country’s banks, for example, and instead relied on government to prop up the private banking system.

Roosevelt’s eventual populist shift was driven by venom from the right and pressure from the left. Conservatives and wealthy interests wielded vehement political opposition against Roosevelt. “His political struggle with the ‘economic royalists’ soon became intensely personal,” Hofstadter writes.

From the left, influential populist Louisiana Senator Huey Long was clamoring for a more radical economic program and making noise about challenging Roosevelt’s reelection in 1936. Roosevelt’s political operatives thought Long had enough political support to swing the election. Long was also advocating for a “Share Our Wealth” platform that would have capped annual incomes at $1 million to fund a $2,500 annual basic income; provided for an old-age pension and free kindergarten through college; and government-provided automobiles and washing machines for every family.

Roosevelt wished to do something “to steal Long’s thunder” during the latter half of his first term in the White House. “The result,” Hofstadter writes, “was a sharp and sudden turn toward the left, the beginning of the second New Deal.” Roosevelt latched on to the Wagner Act, which had been floating around Congress for some time, to create the National Labor Relations Board. And he even sought a drastic Long-style “wealth tax.” And of course, Roosevelt piggybacked on Long’s old-age pension idea to enact Social Security.

After winning reelection, Roosevelt executed an ill-advised and harmful pivot toward austerity in 1937. Believing the economy to be on better ground, government spending was cut, and the Federal Reserve raised interest rates. This mistake, Hofstadter writes, produced “a sharp downward trend [in the economy], which reached alarming dimensions in early 1938.”

Roosevelt eventually realized his mistake, and sought new government spending that spring, which Congress quickly approved. It was not until 1940, Hofstadter writes, that Roosevelt “finally accepted in theory what he had long been doing in fact, admitted the responsibility of government retrenchment for the recession, credited the revival of spending for the revival in business, and in general discussed the problem of the federal budget in Keynesian terms.”

By 1944, Roosevelt was speaking of a new “economic bill of rights” and guaranteed full employment within the confines of “our democratic system of private enterprise.” “With the economy operating at fall speed under war time conditions,” Hofstadter writes, “it was easy for him to forget the incompleteness of recovery under the New Deal and to refer proudly to the manner in which ‘we . . . fought our way out of the economic crisis.’”

Reading Hofstadter’s then-fresh history (published in 1948) of the Roosevelt administration holds wisdom from our own recent history. Hofstadter’s warts-and-all account of Roosevelt’s handling of Great Depression doesn’t look all that dissimilar from Barack Obama’s economic recovery efforts eighty years later. Obama too gravitated toward consensus reforms, opting for a stimulus package tilted toward tax cuts and money for the states. Obama too resisted calls for bank nationalization, promoting financial liquidity and stress tests instead. Obama favored stabilizing industry rather than bailing out individual homeowners.

Unlike Roosevelt, Obama did not enjoy a pliant Congress willing to cede economic deference to the White House and rubberstamp new recovery legislation. Roosevelt was able to experiment with a wide variety of programs with quick congressional approval—and was even able to course correct after his premature pivot to austerity.

Obama, on the other hand, never got a second bite at the apple for more stimulus because of a polarized Congress exhausted after one round of new government spending in 2009. Obama’s administration was too quick to pronounce economic triumph, seeing “green shoots” around every corner in 2009, with Treasury Security Timothy Geithner declaring “Welcome to the Recovery” in August 2010—years before most Americans felt anything resembling a return to economic normalcy. Obama too spoke of the need for Washington “belt-tightening” as early as April 2009, in the depths of the recession. Obama acceded elite Washington deficit scare mongering and pivoted toward austerity too early in 2011. When he tried to counteract the continuing sluggish economy by proposing a jobs bill in September, Congress never even considered it.

Which is to say that Obama was a fallible and imperfect progressive president—just like Roosevelt. Progressives routinely chastised Obama for falling short of hopes that he’d be the second coming of FDR. But as Jonathan Chait notes in Audacity, liberals have a penchant for perpetual disappointment and despair. Even in Roosevelt’s time, there was a contingent of the political left that incessantly criticized him for enacting policy that was too conservative.

Where Roosevelt differed from Obama was in the external leftward pressure he faced. Roosevelt faced real and imminent electoral pressure to move in a more progressive direction. For all the dismay with Obama from some progressives, the left never mobilized to become a political counterforce.

Since Obama’s administration, the American left has begun mobilizing. Bernie Sanders mounted an insurgent candidacy against Hillary Clinton, and extracted policy concessions that shifted Democratic economic policy decidedly to the left. Sanders remains the country’s most popular politician and a major force in the Democratic Party. And the Democratic Socialists of America have seen an upsurge in enrollment and activism since Donald Trump’s victory.

Hofstadter’s honest contemporaneous appraisal of Roosevelt’s administration avoids the sanctification that so many progressives are prone to when lionizing the Democratic Party’s most towering figure of the twentieth century. Roosevelt was a great progressive, but was hardly without missteps and oversights in his economic management, and was made better by a mobilized left.

The lesson of Hofstadter’s take on FDR is that progressives should not be discredited for failing to meet a standard of purity and perfection—and that those same progressives might benefit immensely from being challenged in the policy sphere from an engaged left.

Social democracy as the answer to Trump

I’ve been reading Tony Judt’s Ill Fares The Land, his 2010 plea for social democracy in the last days of his life.  It turns out that Judt presciently anticipated the appeal of Trumpian authoritarianism in our insecure age — and offered social democracy as our best hope to withstand it.

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Tony Judt (New York Times)

Judt was a steadfast if begrudging admirer of social democracy–a political ideology that “does not represent an ideal future; it does not even represent the ideal past.  But among the options available to us today, it is better than anything else to hand.”

Social democracy is the true center of modern political thought.  Where socialism outright rejects capitalism, social democracy accepts it.  Social democracy aims to harness the engines of capitalism while tempering its rough edges, crafting the institutions and guardrails necessary to balance capitalism’s chaotic dynamism with a measure of ordered security.

That sense of security is dangerously amiss today, roiling much of the West with anxiety.  “We have entered an age of fear,” Judt wrote.  “Insecurity is once again an active ingredient of political life in Western democracies.”  This is the insecurity of terrorism, of technological change, of globalization, of economic inequality, of the prospect of job loss.  “And, perhaps above all,” Judt wrote, “fear that it is not just we who can no longer shape our lives but that those in authority have also lost control, to forces beyond their reach.”

This combination — an electorate both gripped by fear and inflicted with skepticism of their leaders’ ability to do anything about it — produces anti-democratic movements that offer stability by turning aggressively inward.  “If we can have democracy, we will,” Judt observed.  “But above all, we want to be safe.  As global threats mount, so the attractions of order will only grow. [. . .]  Outsiders, however defined, will be seen as threats, foes and challenges.  As in the past the promise of stability risks merging with the comforts of protection.”  That’s the lure of Trumpism that Judt saw coming.

The fearful society craves stability.  This stability can be provided one of two ways: First, it can be anti-democratic stability.  This is the order promised by a strong man — one who exploits this insecurity by vilifying the weak and the “other.”  One who looks at blighted communities cast to the margins of the American story and declares “I alone can fix it.”  One who assures those forgotten communities that he will “give you everything. I will give you what you’ve been looking for for 50 years.”

“Unless the Left has something better to offer,” Judt warned, “we should not be surprised to find voters responding to those holding out such promises.”

Fortunately, the Left does have something to offer — Trumpism isn’t the only answer to insecurity.  Stability can also be provided through democracy by crafting institutions to truly protect people from the risks of modern life.  “Social democracy in Europe, the New Deal and the Great Society here in the US, were explicit responses” to challenges and threats wrought by previous eras of insecurity, Judt wrote.  Where Trumpism offers recriminations in response to insecurity, the Left must offer reassurance.

What does that reassurance look like?  By and large, it means insuring individuals against commonly-shared risks in the twenty-first century.  Political scientist Lane Kenworthy laid out a full agenda for a Social Democratic America, including wage insurance to protect workers from cuts in pay, sick leave to insure workers in case of illness, a child benefit to insure parents against the costs of child rearing, and other social insurance programs.  It might also include an aggressive program of targeted government investment to stimulate stagnant communities, coupled with a federal works program, to function as a form of insurance against creative destruction discarding whole regions of the country.

Of course, a program of that scale and ambition will directly confront a public with ever-diminishing expectations in the capacity of its civic institutions and their leaders.  As Chris Hayes wrote in The Twilight of the Elites, we face a crisis of authority in the United States after a generation of catastrophic elite failure at every turn across virtually every pillar of society. This makes for a receptive audience for the authoritarians promising anti-democratic stability that bludgeons these very institutions, and a much more doubtful audience for those looking to achieve democratic stability through better and more comprehensive institutions.

Which means the Left’s message and messenger matter.  A compromised center-left version of social democracy in the hands of a leader closely tied to decades of institutional failure won’t be compelling.  While Hillary Clinton pushed an agenda packed with progressive technocratic reforms and programs, her institutional ties were too unshakable and her ambition to restructure the American economy too trimmed to compete with the vociferous anti-democratic stability offered by Trump.

The Left will need an outsider insurgent that can credibly lay claim to moving the country in the direction of social democracy.  Barack Obama pushed a centrist progressive agenda, but did so as an outsider reformer offering hope and relief from the failures and disappointments of the previous generation.  Bernie Sanders positioned himself as an outsider to the political class vowing social democratic revolution of the country’s institutions, but lacked the inspirational and heroic appeal of Obama that cut across all core Democratic constituencies.  Some combination of the two is what’s called for.

Moreover, a social democratic response to Trump isn’t necessarily about specific policies.  Rather, it requires making an unabashed positive case for the role of government to better citizens’ lives; for the capacity of a democracy to craft institutions to guard against threats new and old; for the ability of elected leaders to chart a course that enlivens struggling communities and ensures that prosperity is broadly shared.

Even if Trump’s presidency crumbles under the weight of chaos, incompetence, and scandal, the resonance of his dark message won’t necessarily follow suit in four years.  As the closest approximation of the Left in mainstream American politics, Democrats will only defeat Trump by offering voters their own vision of how to achieve security in the twenty-first century.  In an age of fear, the hostile illusion of security of the Right can only be matched by a hopeful communal security of the Left.

The missing Democratic narrative

In the fall of 2015, the economists Anne Case and Angus Deaton discovered something disturbing: the mortality rate for middle-aged white Americans—and only them—had sharply increased over the previous 15 years.  Most of this increase was from an alarming explosion in the number of suicides and “poisonings” from drug overdoses among this population.

Meanwhile, Donald Trump was on his warpath toward the Republican nomination.  And he was winning heavily in the distressed communities that Case and Deaton studied, cleaning up in the counties with the highest middle-aged white mortality rates.  These places were littered with the skeletons of abandoned factories, but were ghost towns when it came to jobs and degrees.  The misery and desperation was ripe for Trumpism.

Case and Deaton had landed upon the most troubling and violent indication of what is a larger existential unease within much of the country.  Deaton speculated that these Americans had “lost the narrative of their lives — meaning something like a loss of hope, a loss of expectations of progress.”

Donald Trump became president-elect last week in part because he filled in that narrative with what had gone wrong.  For “the forgotten men and women of our country,” as he called them, who feel that they have been forcibly displaced from the American economy and society, Trump provided a story grounded in resentment and named culprits.  They’d been shafted by Washington elites cutting bad trade deals that ship jobs overseas, he told them.  They’d been cast aside for immigrants pouring over the border with drugs and crime, he warned.

This narrative aligned with what many people want to believe and what they see around them.  They see shuttered manufacturing sites that once employed thousands.  They see superstores where nothing is made in America or by Americans.  They see neighbors and family members consumed by opioids.  They see the lives of minorities and immigrants who “cut in line” ascending, while theirs languish.

Liberals can and should object to the honesty and intolerance embedded in Trump’s tale.  Yes, we’ve done too little to cushion workers from the dislocations of trade.  But neither Trump nor any other politician is bringing wide-scale manufacturing employment.  And while immigrants are an easy scapegoat, they have little impact on the wages or employment of native-born Americans.

Trump’s story is a manipulative con.  But it’s the only one that Americans were offered in this election.  Hillary Clinton did little to offer a competing narrative that spoke to the continuing anxieties and inequalities of millions of Americans.  For all the progressive policy ideas Clinton developed, she never synthesized them beyond the contentless message “Stronger Together.”  The reach of her campaign left her unable to develop a message with any specificity.  Hoping to rout Trump by a historic margin, she crafted a tent so big that it collapsed in on itself.

This has revealed a fundamental problem for Democrats.  For six years, the party has gotten walloped in virtually every national and state election  where Barack Obama’s name has not been on the ballot.  As he exits the national stage, the Democrats can no longer depend on his coattails.  They need to win by standing for something that connects with voters.

There is one clear narrative percolating within the Democratic Party.  And it’s coming from the party’s left flank.  Elizabeth Warren and Bernie Sanders are interpreting the election results as reflecting widespread frustration with an economy rigged by and for the wealthy and powerful.  In their version, there has been a thirty-five year project of deliberate government policy and tax cuts that redistributed money to the most well-off.  This hollowed out the programs, investments, and institutions that once upon a time created a thriving and secure American middle class.  The wealthy reached the highest rung of the social ladder and then pulled the ladder up behind them.

This too makes for a compelling story.  And there’s a good deal of truth to it.  The growth in inequality in the United States closely corresponds with the onset of the Reagan revolution and the shift toward supply-side economics.  At the same time Reagan was slashing taxes on the rich, deregulating industry, and implementing free market reforms in the early 1980s, inequality began rising.  Economists on the left argue that these kinds of unbalanced tax cuts and reductions in public programs increase inequality.  As inequality boomed, incomes for the middle stagnated.  And for those becoming displaced and rendered obsolete by the economy, the bottom fell out.

This would be an exceptionally opportune time for liberals to start loudly making this case to the public.  With unified conservative control of Washington, Republican leaders are gearing up to pass a round of massive tax cuts tilted heavily toward the wealthy.  Both Trump and Paul Ryan have proposed trillions of dollars in tax cuts.  They’ll just need to sort out whether half of all the benefits will go to the top 1 percent (Trump’s plan) or if 99.6 percent will (Ryan’s).

These tax cuts will inevitably rob from important social spending on education, healthcare, food assistance, and poverty programs.  They will suck more money out of the very communities that need it the most.  This will exacerbate inequality, not reverse it.

By offering up this kind of narrative, Democrats can accomplish two things in one fell swoop.  First, they can counter the fraudulent story that Trump has successfully sold so far.  Second, they can show that Trump never had the back of working people—that he’s looking out for his interests and those of his class by passing yet another typical Republican supply-side tax cut.

To build a party that isn’t dependent on one man, the Democrats need to contextualize and offer solutions for the discontent afflicting many Americans.  Trump did that, even if his pitch was a working-class sham.  To mount an effective opposition and win back power, Democrats need to offer voters a narrative of their own.

Hillary Clinton’s bold defense of government

Government is in deep disrepute in the United States.  Dismayed by gridlock and scandal, and prodded by endless right-wing anti-Washington invective, public faith in government reaches perpetual new lows.  Which is why it’s so remarkable and refreshing to see Hillary Clinton sticking up for the old-fashioned notion that acting through government, we can achieve great things by working together.

Clinton’s defense of government is in part a reaction to Donald Trump.  Political scientists Norm Ornstein and Thomas Mann have argued that Trump’s rise is the logical conclusion of the Republican Party’s three-decade war on government.  “[T]he dysfunction of the Republican Party, [. . .] its obstructionism, anti-intellectualism, and attacks on American institutions were making responsible governance impossible,” Ornstein and Mann write.  “The rise of Trump completes the script[.]”

In resisting the mean-spirited nihilism of the Trump campaign, Clinton has emphasized the benefits of unity over the pitfalls of Trumpian divisiveness.  And by arguing that we are greater than the sum of our parts, Clinton has implicitly pushed back against thirty years of GOP anti-institutionalism and made a positive case for robust government.

Clinton’s acceptance speech at the Democratic National Convention was laden with tributes to the virtues of collective action.  Arguing that when we must “work together so we all can rise together[,]” Clinton reminded us that “[o]ur country’s motto is e pluribus unum: out of many, we are one.”  The message of her 1996 book “It Takes a Village,” Clinton explained, was that “[n]one of us can raise a family, build a business, heal a community or lift a country totally alone.”

It’s a message Democrats have been honing for years.  In 2012, video of then-Senate candidate Elizabeth Warren’s living room meet-and-greet went viral, where she argued that we all rise together.  “There is nobody in this country who got rich on his own,” Warren argued.  Success is built on the back of communal goods like public roads, protections of property, and publicly educated workers.

That same summer, President Obama tried to echo Warren.  “If you were successful, somebody along the line gave you some help,” Obama argued.  “If you’ve got a business — you didn’t build that. Somebody else made that happen.”  Republicans treated Obama’s somewhat clumsy case for communal success as an epic gaffe, spending an entire day of their 2012 convention insisting that “We Built It.”

But Clinton hasn’t shied away from making the case for an interconnected American destiny.  Faced with Trump’s “I alone” strongman act, Clinton has lifted “stronger together” beyond a mere slogan, proclaiming it to be “a guiding principle for the country we’ve always been and the future we’re going to build.”

Her policy priorities back this up.  Clinton aims to create an “economy that works for everyone, not just those at the top.”  To Clinton, public infrastructure investment has the awesome capability to “not only create jobs today, but lay the foundation for the jobs of the future.”  By pursuing debt-free college, a livable minimum wage, a full-employment economy, and tax hikes on millionaires, Clinton expresses a profound faith in the ability of government to shape economic life.

And rightfully so.  The mixed economy is the key to American prosperity, with government and the private sector working in tandem to create broad-based and sustained growth.  Government produces public goods like health, roads, infrastructure, education, and research, laying the groundwork for dynamic markets to monetize and innovate off of public investment.

And contrary to conservative revisionism, an active government has always been part and parcel of American history.  From Hamilton’s national bank and absolution of state debts, to Jefferson’s advocacy for government land grants to all citizens, to FDR’s New Deal adoption of modern social insurance, government has been a force in structuring the economy throughout our history.  Government has also been an ever more diligent steward of freedom, liberating minorities from discrimination and protecting workers from the tyranny of excess employer power.  Government has thus created a richer and more meaningful American freedom.

In the United States, we too often fall into the false belief that a free and productive economy is a natural occurrence.  This takes for granted the role of government in setting the ground rules for the economy: the antitrust regulations that preserve competition, the property rights that promote innovation, and the government investments that produce a healthy, knowledgeable labor force, among many others.

Clinton and the Democrats are reminding us of this.  Contemporary problems like rising inequality aren’t hopeless laws of nature, but can be tamed by smart, determined government action.

The specter of Trumpism has made Democrats bolder.  If Trump is the end result of the conservative campaign against government, Democrats have responded by doubling down on the virtues of community and the common good.  When confronted with a candidate manifestly unfit to serve, Democrats have increasingly embraced their role as proud, effective managers of government to meet the needs of the twenty-first century.

 

A tale of two think tanks

Hillary Clinton declared her long-known intention to run for president in April 2015.  In the months before and after her announcement, the think tanks in the orbit of Democratic policy jockeyed for position to influence the agendas of the party and its presumed nominee going into the 2016 election.

In January 2015, the Center for American Progress released a comprehensive white-paper authored chiefly by former Obama economic adviser Larry Summers.  The white-paper prescribed a broad series of policy proposals to promote “Inclusive Prosperity” in the United States.  Since its founding, CAP has served as the Democrats’ primary bank for policy ideas, and has strong ties to the Clinton campaign.  (CAP is run by Neera Tanden, a former Clinton aide.)  The white paper ticked off the gamut of mainstream center-left policy goals: paid family leave, infrastructure investment, universal pre-K, and the works.

Many rightly expected that the CAP report would be strongly indicative of Clinton’s eventual platform.  For instance, Matthew Yglesias at Vox wrote that it was “the best guide to what Hillarynomics is likely to look like.”  And indeed, when Clinton launched her campaign from Roosevelt Island in New York, the policy ideas she endorsed closely tracked CAP’s report, even mimicking its theme of inclusive prosperity by arguing for “fair growth,” as John Cassidy of the New Yorker noted at the time.

Meanwhile, a month after Clinton announced her candidacy, the left-leaning Roosevelt Institute released a comprehensive white-paper of its own.  Authored by one-time Bill Clinton economics adviser Joseph Stiglitz (a rival of Summers’s in the Clinton White House), the Roosevelt report aimed to “rewrite the rules” of the American economy, proposing to fundamentally restructure the laws, regulations, and institutions comprising economic life to even out the balance of power and rewards between employers and workers.

The Roosevelt paper was widely seen as trying to provide a modicum of leftward pressure as a counterweight to the more conventional center-left CAP agenda.  And as the New York Times Magazine reported this week, Roosevelt has been in frequent communication with Clinton officials, and has achieved a striking deal of success in pitching its policy ideas to the campaign and the national Democratic Party.

In a primary campaign that saw token left-wing opposition from Bernie Sanders bloom into a bona fide movement, it’s interesting to see how these two dueling think tank reports wielded their influence now that the dust has settled.  There’s a good deal of overlap between the CAP and Roosevelt reports—both want to strengthen collective bargaining; both want to better regulate the shadow banking system; both want to negotiate fair trade deals that protect labor and the environment, among other points of agreement.  But they diverge in interesting ways—and at times, both wound up getting outflanked by the historically progressive platforms that ultimately came to be embraced by both Clinton and the Democratic Party.

Take the issue of housing.  CAP wanted to promote homeownership and affordable housing by tinkering with existing institutions like the Fair Housing Act and the Federal Housing Finance Agency to make home loans affordable to more buyers.  Roosevelt, on the other hand, took a more interventionist approach: proposing a public option for the mortgage industry.  “Rather than trying to nudge the private mortgage system with federal backstops, subsidies, and implicit bailout guarantees,” Roosevelt wrote, “lawmakers should create an explicitly public mechanism in the housing market.”  (Neither Clinton nor the DNC have taken specific stances on housing policy.)

That’s fairly typical of a side-by-side reading of the two reports: CAP tends to prefer tweaking existing programs and institutions to create a fairer economy, while Roosevelt will often propose a more wholesale overhaul to create new institutions.  Indeed, the Roosevelt report is heavy on public options, endorsing new government-run offerings in healthcare (Medicare for All), banking (financial services offered at the post office), and retirement (a supplemental Social Security program for IRA-style investment).

On tax reform, CAP proposes to make the tax code more equitable by taking homeownership tax deductions—which disproportionately benefit the wealthy—and converting them into tax credits.  Roosevelt, however, would go even further, converting all tax reductions to credits, and capping the number of credits that can be claimed by the wealthy.  Again, neither Clinton or the national party have broached the idea of reforming popular tax deductions.

Similarly, on early childhood, both CAP and Roosevelt support popular programs like universal pre-K, subsidized daycare, and expanded nurse home visiting, all of which have been embraced by Clinton and the Democrats.  But Roosevelt would also kick in a child benefit—“a monthly tax-free stipend paid to families with children under 18 to help offset part of the cost of raising kids.”  This would draw on the success of countries like Britain in slashing child poverty through direct financial investment in kids.  CAP didn’t endorse a similar program in its report—the closest it has come otherwise is proposing a new refundable young child tax credit.

But on some issues, both CAP and Roosevelt underestimated the ambition of Democrats in 2016.  On higher education, both think tanks proposed a relatively modest reform based on Australia’s system for financing college.  Students would have 25 years to repay their student loans, and would make payments based on their income level.  Interest rates would be lower, and under CAP’s plan, students would receive a voucher equal to the cost of public college tuition to cover some of the cost, to be repaid to the government.  But driven by the Sanders campaign, both Clinton and the Democratic Party have gone further.  Both now want to make public college completely tuition free for most low-income and middle-class families.

The Democrats also went beyond both think tanks’ recommendations for raising the minimum wage.  CAP proposed increasing the federal minimum wage to just $10.10.  Roosevelt didn’t endorse a specific federal increase, but did suggest that “States and cities should look at raising the minimum wage to reflect local conditions; many cities and metro areas can easily justify a minimum wage of $15 an hour.”  That the Democratic Party has embraced a national $15 minimum wage is a sign of just how far this debate has come in only a few years.

Both think tanks had other key wins too.  Both Clinton and the DNC have endorsed CAP’s plan to incentivize corporate profit sharing with employees.  And both think tanks’ push to raise the salary threshold for overtime pay was already enacted by the Obama administration.

Moreover, Roosevelt’s proposal to assess a capital surcharge to “too big to fail” financial institutions, while breaking up banks that are too massive to orderly unwind in a potential bankruptcy, has been adopted virtually wholesale by the Clinton campaign.  The Democratic platform picked up Roosevelt’s proposals to prohibit the appointment of any Federal Reserve members with conflicts of interest with regulated banks.  The platform endorsed Roosevelt’s plea to strengthen antitrust rules to promote market competition.  Roosevelt also wants to assess new taxes on carbon, short-term financial trading, and the ultra-wealthy—those are all in the Democrats’ platform, too.  The platform committed itself to a “full-employment economy,” echoing Roosevelt’s call to refocus Federal Reserve policy toward full employment rather than low inflation (a stimulative change that can be instituted without congressional action).  And the Democrats even adopted Roosevelt’s plans for postal banking options and to let more student debtors discharge their loans via bankruptcy.

This is all a testament to the bold ambition of liberals in the twilight of the Obama administration.  And much credit must go to the leftward push from the Bernie Sanders campaign.

But while their policy prescriptions may differ, both CAP and Roosevelt are speaking degrees of the same language.  In Why Nations Fail, economists Daron Acemoglu and James Robinson argue that the most successful economies are those whose political, social, and cultural institutions promote inclusive growth, which creates a virtuous cycle of widely-shared and robust economic activity.  When economies become extractive, benefiting only the elite, growth slows and the virtuous cycle turns vicious.

CAP and Roosevelt are in broad agreement on this basic understanding of economic success and failure.  Roosevelt takes on the notion that inequality is inevitable, arguing that it’s in fact a political choice brought about by deliberate institutional arrangements to shift the bargaining power in our economy.  We don’t need to sacrifice growth and efficiency in order to reduce inequality.  Similarly, CAP embraces middle-out economics that believes that our economy thrives when a thriving middle-class is its central engine.  The platforms espoused by the Democratic Party and the Clinton campaign merge the two dueling policy agendas in the best way possible: rewriting our economic rules to promote broadly shared inclusive prosperity.

The meaning of freedom

In the debate over national health reform in 2009-2010, the law’s conservative Tea Party opponents regularly claimed the mantle of freedom.  Where reform supporters relied on moral and technocratic arguments to make the case that health care must be affordable for all, the Don’t-Tread-On-Me backlash to reform was largely allowed to monopolize the powerful American virtue of freedom.

It was a curious sort of freedom that conservatives endorsed.  At its extreme, opposition to the Affordable Care Act stood for the freedom to succumb to the consequences of un-insurance.  This conception of freedom defended the “choice” to go without health insurance as a calculated, rational personal decision that ought to be respected.  Compelling individuals to carry insurance amounted to a tyrannical invasion on this autonomous decision.

Falling shortly after the maligned bank bailout during the 2008 financial crisis, the fury over moral hazard spilled into the health reform debate.  The economic term “moral hazard” holds that individuals and firms must be allowed to feel the consequences of their choices, or else shielding them from risk will perpetuate irresponsible behavior.  Just as bailing out the banks was thought to reward reckless financial conduct, bailing out those who opted to go without insurance let reckless decision-making off the hook, too.  Call it a “You Reap What You Sow” brand of freedom.

Though muted, pro-reform policymakers could stake a claim to enhancing freedom as well.  The entire point of health reform was to expand freedom from risk.  It would insure people who had the misfortune of falling ill so that they could access health services without bankrupting their future.  And it moved us closer to the day when health insurance is wholly separate from our jobs, freeing us from dependency on our employers for our healthcare.  This is an important kind of freedom, too.

In his 1941 State of the Union address, President Franklin Roosevelt four fundamental freedoms thought to be inherent to all people.  Among these was “freedom from want.”  To Roosevelt, basic protections from scarcity, risk, and poverty were necessary to truly effectuate individual freedom.  Without basic necessities, freedom was wholly illusory.  As he put it three years later, “We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence.  Necessitous men are not free men.”

Roosevelt helped solidify the modern liberal conception of freedom—a freedom to economic security.  This freedom puts affirmative obligations on government to provide a degree of protection from the risks and hazards of markets and modern life.

On the other side, the conservative (or perhaps more aptly, libertarian) conception of freedom emphasizes freedom from government.  This kind of freedom aims to protect the unbounded autonomy of the individual from government interference.  Markets are thought to be sacrosanct aggregations of autonomous individual choices, preferences, and desires.  Government intercedes on this laissez-faire freedom only by imposing its will and disrupting individual choice.

Because of the American origin story—casting off the yoke of tyrannical British authority—many seem to assume that the conservative brand of freedom has a stronger claim to our history.  The liberal alternative, it’s thought, is just a socialistic perversion concocted by pro-centralization New Dealers.  But that’s just not the case.

In his magnificent book The Story of American Freedom, historian Eric Foner chronicles the different ways that the American ideal of freedom has been deployed in political rhetoric throughout our history.  As political and social contexts have shifted, so too has the rhetoric around freedom, liberty, and independence.  As Foner shows, the dueling claims of what it means to be truly free have been with us for centuries.

The earliest seeds of the modern debate begin to appear during the Jacksonian era.  Whig leaders like John Quincy Adams and Henry Clay argued that government action could enhance freedom.  They argued that the capacity to wield one’s freedom depended on one’s power, and that freedom was dependent on prosperity.

Jacksonian Democrats, on the other hand, began railing against the faraway federal government as the preeminent threat to American liberty.  “Building upon laissez-faire economics,” Foner explains, “Democrats identified government-granted privilege as the root cause of social injustice.”

In the antebellum period, freedom was often employed in relation to its looming antithesis: slavery.  Latching on to the abolitionist cause, populists and reformers condemned the industrial economy for crafting a system of wage slavery that restricted individual freedom at the hands of business.  The idea underlying wage slavery was that the market posed a threat to freedom.  But this idea fell out of mainstream circulation for a time, as abolitionists resisted the characterization and sought free labor as the goal of the antislavery movement.

During the post-war period, the Gilded Age ushered in a period of laissez faire freedom dominance in the end of the nineteenth century into the early twentieth.  Freedom was defined as the liberty of contract—that the ability of individuals to freely enter into economic and financial arrangements ought to be unimpeded.  It was a period that grounded a sense of freedom in meritocracy and Social Darwinism.

But some resisted.  The American Economic Association was established in 1885 to combat “laissez-faire orthodoxy,” declaring, “We regard the state . . . as an educational and ethical agency  whose positive assistance is one of the indispensable conditions of human progress.”  Similarly, the sociologist Lester Ward determined that “individual freedom can only come through social regulation.”

Ultimately, the association of “freedom” and Gilded Age Social Darwinism temporarily made freedom a dirty word in American politics.  The Progressive movement situated its policy goals in the language of democracy rather than freedom.

Still, the central concern of progressivism, according to New Republic editor Herbert Croly, was how Americans could be free in a modern industrial economy.  Croly explained that “Hamiltonian means” of government intervention into the economy were necessary to achieve the “Jeffersonian ends” of democratic self-determination and individual freedom.  The Progressives thought that robust, energetic government was necessary to create the social conditions for meaningful freedom.

In 1912, former president Theodore Roosevelt campaigned for president under the Progressive Party mantle.  The party’s platform, Foner writes, “laid out a blueprint for a modern, democratic welfare state,” replete with plans for health and labor regulation, an eight-hour work day, a living wage, union protections, and a national system of social insurance for unemployment, healthcare, and old age.  Roosevelt’s freedom meant liberty from corporations effectuated through government power and regulation.

Theodore Roosevelt’s progressive version of freedom gained wider acceptance and circulation two decades later under FDR.  On the heels of the Great Depression, the nation saw how economic devastation can render theoretical freedoms meaningless.  Accordingly, FDR sought to guarantee freedom from want, establishing welfare state programs to protect Americans from the vicissitudes of modern economic life.

Left-wing pressure in the United States helped contribute to Roosevelt’s bold social democratic platform.  But after World War II, hostility between the Soviet Union and the United States made Americans define freedom in contrast to the Soviet Union, veering once more back toward laissez faire freedom.  Moreover, the economic abundance during this time produced great faith in capitalist institutions.  “Cold War affluence,” Foner writes, “greatly expanded the constituency that identified freedom with free enterprise.”

In the 1960s, President Johnson launched a War on Poverty, but implicitly deviated from the New Deal’s diagnosis of economic struggle.  “In a departure from the New Deal, when poverty had been seen as arising from an imbalance of economic power and flawed economic institutions,” Foner writes, “in the 1960s it was attributed to an absence of skills and opportunity and a lack of proper attitudes and habits.”  Therefore, many of Johnson’s antipoverty initiatives eschewed direct interventions—like a guaranteed minimum income for the non-elderly or government-created jobs—in favor of skills training and education.  Johnson’s programming aimed to enable individual self-liberation from the “enslaving forces of his environment.”

Nonetheless, Foner marks the 1960s as the era when “freedom” began to be co-opted by conservatism and relinquished by the left.  “As the social movements spawned by the sixties adopted first ‘power’ and then ‘rights’ as their favored idiom,” he writes, “they ceded the vocabulary of ‘freedom’ to a resurgent conservatism.”  This left conservatism with free rein to equate freedom with unfettered capitalism, as Milton Friedman (and later, Ronald Reagan) did, or to proclaim resistance to government economic and anti-discrimination regulation under the guise of freedom, as Barry Goldwater did.

This inexorably led to a resurgence of 1900s-style Social Darwinism.  This brand of conservatism, ostensibly grounded in principles of freedom, warned against government intervention into the “natural” workings of the economy; held that the distribution of wealth reflects individual merit; and deemed the plight of the unfortunate, too, a product of their own failings.

Left unchecked, this conception of “freedom” grew to dominate political discourse in the United States.  Liberals argued for their policies in technocratic terms, promising to provide economic help to a struggling middle class.  But conservatives relentlessly assailed any intervention as Big Government stepping on the throat of individual freedom.

Liberals seemingly forgot that they too have a claim to the virtues of freedom—a claim that their intellectual predecessors invoked countless times from the nation’s founding onward.  The free market has no mind for any individual’s particular well-being, autonomy, or bodily security.  In a time of ever expanding economic volatility, “freedom from want” still resonates as an audacious ideal.  So does the social insurance platform that flows out of it.

Foner shows that in the political debates that have raged throughout our history, the side that lays a stake to the rhetoric of freedom tends to seize the upper hand.  Freedom goes to the core of the nation’s identity, self-conception, and perceived purpose of its founding.  Reformers and policy advocates would be wise to listen to Richard Armey, former House Republican leader, who said, “No matter what cause you advocate, you must sell it in the language of freedom.”

The American tradition of big government

The myth that the American economy’s traditional and natural state is laissez-faire and government-free predominates over the conventional understanding of American history.  To some, a free market unencumbered by government meddling has forever been sacrosanct to the American project.  A lightly regulated economy is part and parcel of American freedom, it’s thought.

It turns out that this view deeply misunderstands our history, both far and recent.  Academics are challenging the conventional wisdom, showing that government action has been an integral part of the American economy throughout our history.  Jacob Hacker and Paul Pierson recently demonstrated in their book American Amnesia how government made the crucial public investments necessary to lay the foundation for broad-based rapid economic growth in the twentieth century.  The economy works best when the government works in tandem.

But the history of federal intervention into the market economy stretches back far earlier, dating from the earliest days of the republic.  In The Case for Big Government, Jeff Madrick lays out exactly that: a case for robust programmatic regulation and government action in the twenty-first century.  Like Hacker and Pierson, Madrick sees government action as an essential ingredient to a healthy and fair modern economy.

One particularly valuable section of Madrick’s case traces the history of federal intervention into the economy from the nation’s founding to the 1950s.  As Washington’s secretary of treasury, Alexander Hamilton favored a strong and active federal government that imposed excise taxes and tariffs on imports.  He endorsed public investments in infrastructure; fought for the establishment of a central bank; and promoted subsidies to get new industry off the ground.  He also injected the federal government into state economies to assume the war-time debts of the states.

Thomas Jefferson too came to promote an active government in the economy.  As a Virginia legislator, he proposed giving land grants to all citizens without property.  As president, he set aside federal land for schools and embraced federal financing of roads.  And of course, he greatly expanded the geographic sphere of the United States by stretching the bounds of his perceived constitutional authority to sign off on the Louisiana Purchase.

James Madison adjusted government’s role as the United States began to shift from an agricultural economy.  He believed wage labor would displace land ownership as the core of the economy, so he enacted a new tariff to protect domestic manufacturing.  He also supported a second national bank.

Notably, Madison would not support federally-funded internal improvements and transportation.  Both he and Jefferson thought that this required a constitutional amendment.  John Quincy Adams abandoned this reticence and made massive investments in roads and canals, setting the precedent for a federal role in developing the nation’s physical infrastructure.

Following this long early period of consistent federal intervention to provide the foundation and investment to develop a growing economy, the presidency of Andrew Jackson momentarily halted the pro-federal intervention consensus.  Under Jackson’s rugged individualist ethos, the federal government pivoted back toward laissez faire, devolving economic intervention to state and local government.  In the meantime, states took on important public transportation projects, like the Erie Canal in New York.  States financed more than two-thirds of the cost of new canals, and also provided generous land grants and subsidies to railroads.  These public investments were essential in developing the nation’s transportation network.

During the Reconstruction era after the Civil War, the federal government provided generous federal land grants to subsidize the development of transnational railroads.  These were expenditures akin to tax exemptions or tax credits today: revenue uncollected or resources un-monetized by the government to encourage certain private activity.  Even earlier, the government made generous land grants to colleges under the Morrill Act, and expanded the postal system.

Beginning in the late 1890s, the Progressive era saw government intervention into the economy accelerate.  At the federal level, government sought to break up industrial consolidation through anti-trust actions.  State and local governments increasingly invested in health programs, city services, education, and public goods like parks.

These investments saw huge gains, including a five-fold increase in the number of Americans completing high school between 1910 and 1930.  It also ushered in a shining new “age of sanitation” from public health investments to fight disease and invest in sewage systems.

During this time, states also began regulating the workplace to protect employees, imposing minimum wages, maximum hours for women, child labor laws, and widows’ pensions.  They undertook important regulations to protect retirees and consumers.  And they helped spread the reach of energy by establishing and regulating electric and gas utilities.

And of course, activist government came to a crescendo under Franklin Roosevelt’s New Deal.  On the heels of the Great Depression, Roosevelt created a flurry of new government programs to spark the economy and protect Americans’ livelihoods.  The FDIC came into being to insure bank deposits.  The SEC was created to patrol Wall Street.  Glass-Steagall was enacted to separate investment banks from plain vanilla commercial banks.  A national minimum wage guaranteed basic pay for all working Americans for the first time.  Robust public works and infrastructure investment put people back to work during the Depression while improving the nation’s physical stock.  The G.I. Bill made it easier for a generation of returning soldiers to pay for school and housing, and facilitated the modern middle-class life.  Social Security eliminated the elder poverty produced by laissez-faire capitalism and promised retirees a decent living.  And income taxes were cranked up to pay for the war effort and welfare state expansion.  Top marginal rates crept above 90 percent, creating a de facto maximum wage.

After the Roosevelt and Truman generation of welfare state dominance, President Eisenhower too took up moderate efforts to keep government involved in the economy.  He expanded Social Security to reach an additional ten million workers.  And he created the national highway system—yet another mass transportation project to facilitate economic activity and travel.

And so on.  The story of American economic triumph is one featuring a large and active role for government throughout.  As Madrick explains, government interventions in the economy have several benefits.  First, government can step in to provide public goods that would be under-provided by the market’s profit motive.  Second, government can be the focal point for necessary and useful coordination to create economies of scale, such as railroads, water systems, and highways.  Third, government can stimulate the economy by boosting the economic standing of workers, whether through a minimum wage, labor protections, or union rights.  And fourth, government intervention can provide macroeconomic stability through Keynesian demand management when the private sector turns sluggish.

All of which adds up to an economy that’s stronger, fairer, and more resilient.  As Madrick and others have shown, whether judged through the lens of historical experience or economic empirics, there has long been a compelling case for big government in the United States.

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.

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.