As David Sirota observed earlier, there are right-leaning forces within the Democratic Party looking to throw cold water on bold progressive ideas. And I also noted the possibility of averting such debilitating intra-party strife by building on a growing consensus around a robust $300 billion stimulus package.
Today, the forces for unity struck a big blow. The corporate-friendly former Clinton administration Treasury Secretary Robert Rubin and progressive economist Jared Bernstein, co-authored a New York Times op-ed piece announcing their common ground on economic stimulus, and embracing the view (advanced here in my own blog post) that the right kind of public investment is fiscally responsible in the long-term.
Though one of us (Mr. Rubin) is often invoked as an advocate of fiscal discipline, we both agree that there are times for fiscal discipline and times for fiscal largess. With the current financial crisis, our joint view is that for the short term, our economy needs a large fiscal stimulus that generates substantial economic demand.
We also jointly believe that fiscal stimulus must be married to a commitment to re-establishing sound fiscal conditions with a multi-year program that includes room for critical public investment, once the economy is back on a healthy track.
One of us (Mr. Rubin) views long-term fiscal deficits — in combination with a low national savings rate, large current account deficits and foreign portfolios that are heavily over-weighted in dollar-dominated assets — as a serious threat to long-term interest rates and our currency and, therefore, to our economic future. The other views these economic relationships as much weaker.
At the same time, we both agree that our economic future also requires public investment in critical areas like education, health care, energy, worker training and much else. In our view, then, the next president needs to proceed on multiple tracks, with both the restoration of a sound fiscal regime and critical public investment…
…, certain public investment can help us meet our fiscal challenges. Most powerfully, the single largest factor in our projected fiscal imbalances are the health care entitlements Medicare and Medicaid, underscoring the fundamental importance of health care reform that expands coverage to more Americans yet constrains costs. While plans that would accomplish these goals have some cost, by pooling risk and stressing cost effectiveness, they could more than pay for themselves by reducing the growth trajectory of our health care spending, in both the private and public spheres.
The two also swung their weight behind strengthening labor unions, implicitly endorsing the Employee Free Choice Act to make it easier for workers to unionize without interference from management.
Though productivity grew by around 20 percent from 2000 to 2007, the real income of middle-class, working-age households has actually fallen $2,000, down 3 percent.
One factor behind this outcome is the severely diminished bargaining power of many workers, and here the decline in union membership has played a key role. A true market economy should have true labor markets in which labor and business negotiate as peers. Many years ago, the economist John Kenneth Galbraith argued that collective bargaining was necessary so workers had the countervailing force they needed to bargain for their fair share of the growth they’re helping produce. To re-establish that force, workers should be allowed to choose to be unionized or not.
With both Rubin and Bernstein are respected figures, Rubin is far more the household name and the one with more sway among the right-leaning punditocracy. While the grassroots mandate for public investment and healthy unions is strong, the punditocracy has used its disproportionate influence on Beltway opinion to push back on those progressive principles. The co-byline serves to both strengthen the argument for these specific ideas in the short-run, and makes the overarching progressive economic vision — as articulated by Bernstein — harder for pundits to knee-jerk dismiss as irresponsible in the long-run.
Having said that, the oped also previews the tensions that remain. While both had some common ground to offer on global trade, they acknowledged big differences remain on the importance of worker protections in trade agreements.
That’s a reminder that there will be an ongoing need to make the progressive case, to win arguments on the merits.
But the oped provides hope that in the next chapter of our political history, we can have fair arguments based on the merits, and not have progressive ideas ignored and steamrolled with bushels of money from corporate outfits and their enablers in the Beltway establishment.
