New Economic Strategy for America

Poll Watch - Hope for the Dems?

Both the Real Clear Politics Congressional Generic average and the new Gallup track show similar national trend lines - Dems gaining ground, GOP dropping.   Similarly, the Gallup track has Obama's approval rating improving by 10 net percentage points in the past month, from 42/51 to 47/46 (RCP has shown movement despite 2 clear outlier Rasmussen and AP polls).

If these trend lines are true, no one should be suprised.  The underlining favorability of the Republican Party is still far below that of the Dems and Obama.   This election has never been like 1994 where at this point there had been both a fall of the Dems and a rise in the GOP.  The memory of the disasterous GOP reign in the last decade is still too fresh, their leaders still to unreformed, their candidates far too wacky, and their ideas still to reckless for the current GOP to have fully taken advantage of the Democratic underpeformance this past cycle. This election, like all elections, is not like any other election.  It has its own contours, its own set of dynamics.  Like all elections it is sui generis.

As NDN has been arguing for most of 2010, the real questions in the election were 1) could the Democrats get their huge base to come home and vote 2) could the Dems do a better job at engaging on the main issue of the election, the economy, and better define the GOP as a reckless party? The late movement in this election, despite the truly silly "baked in the cake" arguments we've heard on TV of late, was always likely to be towards the Democrats.  This current Congress had done too much right for the summer perceptions of Democratic performance to continue to be as bad as it was.  And the underlying strength of the Democratic and Obama brands were just too great for their standing not to improve with some focused recalibration, which has happened now.  We dont really now exactly why these things have happened, but I for one believe its because the President has begun to make the choice on the economy much more clear.

Remember that in the last two elections, the Democrats garnered 52 and 53 percent of the national vote. The last time they received such numbers two elections in a row was in the 1930s, meaning that for those covering politics there had not been an environment so Democratic since prior to Reagan's rehabilitation of the GOP, and maybe even all the way back to the 1960s or 1930s.  The Democrats started this cycle in a position where if got those who already voted from them in the last two elections to vote for them again they could win a smashing 1934 like victory, bucking historical mid-term trends of parties in historically weaker shape than the 2010 Democrats.  

I hope given these polls that the comparisons to 1994 will come to an end.  For the GOP this polls should be very worrying.  They are now dropping as a national political party 6 weeks before an election.  They have no argument where they want to take the country.  They have unattractive leaders and far too many fringe candidates.  Led by a re-energized President, the Democrats have begun to find their voice, and their numbers are improving.

Underneath all the noise the political terrain of 2010 is changing, and so far this new terrain is far more favorable to the Dems than the Rs.  My sense is that Democrats have reclaimed ground they never should have lost in the first place.  The real question now is what happens next, how does this election close? If I were a Republican I would not like the charts on Gallup and RCP showing sharp downward movement this close to an election, as they have very few tools now to reverse what could be a significant drop in their standing.  For Democrats there is muted but renewed hope.

Update - A new poll by John Zogby released today shows similar movement in both Obama's approval and the Congressional generic.  More evidence that these trends are real.  

The Big Lie at the Core of the GOP's Economic Argument

This essay is cross-posted at the Huffington Post.

The foundation of the Republicans' "return to power" argument is a promise to reduce the federal budget deficit and rein in government spending. But in a major speech last week, the Republican House leader John Boehner made clear that this promise is at best a false one, and perhaps even qualifies as the "big lie" of campaign 2010.

In an updated new analysis, first reported by Sam Stein in the Huffington Post last week, NDN has shown that the plan Rep. Boehner outlined in his speech would increase the deficit by more than $4 trillion over ten years. Not only does his plan explode the deficit, but it only identifies $67 billion in cost savings over ten years, an amount less than the new interest on the debt his budget would generate. Billed as a major address by the man who would be Speaker, Rep. Boehner's speech, taken at face value, shows that the entire argument the Republicans are making this year is built upon a huge set of lies.

That the Republicans have no real plan to deal with the most difficult economic circumstances the US has faced in 70 years should come as no surprise. When the GOP was last in power, wages and incomes for everyday people dropped, surpluses became historic deficits, global support for economic liberalization weakened, the world experienced a true global financial collapse, US automakers failed and the US entered into its worst recession since the Great Depression. By any measure the Republican's stewardship of the US economy in this past decade was among the worst performances by a party in power in all of US history.

The new Boehner plan is a direct challenge to those who care about the future of the United States. It makes clear that those who did so much damage to the US economy and the US national interest have not learned from their mistakes, and are approaching our difficult economic challenges with an appalling lack of seriousness and the same reckless approach which did so much to contribute to our current economic troubles. In an essay published earlier this week, the renowned economist Jeff Sachs wrote:

The Republican strategy, if it can be dignified by that word, offers us a complete collapse of the federal government (and state governments supported by federal taxes) and of course even more explosive deficits.

Friends, the Boehner plan is a call to action. But what can an average American do? I have a simple idea. In September, work with allied groups and other friends to get every Republican candidate running for federal office to answer a simple question:

"If the federal budget deficit is such a threat to our economy and our future, can you produce an economic plan which reduces the federal budget deficit at all, even by a penny, over the next ten years?"

The answer, remarkably, is no. Despite their very public commitment to fiscal prudence, not a single GOP candidate running for federal office in 2010 can produce such a plan. By campaigning to extend the Bush tax cuts as Rep. Boehner proposed last week, they are guaranteeing to explode the federal deficit in the coming decade, not shrink it. These very same Republicans have warned that doing so would slow economic growth and lessen the life prospects of Americans to come.

There is little doubt that the GOP will gain additional power this fall. But before they do, the nation needs to know more about their plans, and the big lie that is at the very heart of their irresponsible pitch. You can do your part today by sending this post on to others, and doing all that you can to confront our potential representatives, and get them to answer this simple question. The American people deserve to hear every Republican's effort to explain away this little inconsistency, for it does so much to expose the ideological and moral rot at the very foundation of their 2010 election argument.

Good luck. A lot is at stake here.

Boehner Plan Raises All Sorts of Questions About GOP's Economic Arguments

In a new study released by NDN today, we calculate that the plan released by John Boehner yesterday would add more than $3 trillion to the deficit over the next ten years.

That the new economic plan from the House Republican Leader explodes the deficit and does nothing meaningful to cut government spending raises very real questions about the Washington Republican Party's commitment to the promise of a new age of austerity and fiscal rectitutde Republican victories will bring.

I would also add that the utter lack of fiscal seriousness of this proposal - despite the very public positioning of the Republican Party today - recalls the economic recklessness of the recent conservative era in Washington which brought a decline in wages and benefits for the average American, an exploding structural deficit, the Great Recession/massive job loss and a global financial meltdown.  Boehner's new plan makes no effort to break from this horrendous legacy, and raises very real questions about the economic strategy of the GOP which must be answered by the GOP leader and all his candidates seeking the House. 

Of the many questions to be asked, there is a simple one all Republicans should answer now: "how exactly are you going to reduce the deficit over the next ten years?"

My guess is that not a single Republican running for major office could actually lay out a plan that would reduce the deficit over this time frame.  If anyone finds such a plan - rather than a rhetorical commitment to do so - please send it along.

PM Update - Sam Stein of the Huffington Post, and Jonathan Cohn of TNR have each written pieces today based on our study.  If you see any more let us know.  And feel free of course to spread this important study through your networks too.

Friday Update - Keith Olbermann talked about our study on the air last night, and a smart new Newsweek piece by Andrew Romano also references it.

Friday PM Update - CBO reports this week that if the health care bill passed this year is repealed, as Boehner proposed in his economic plan, it would add another $455 billion to the deficit over the next ten years, pushing Boehner's plan over the $4 trillion mark.

Really Valuable Op-Ed By Jeff Sachs in the FT Today

In the latest in a series of thoughtful FT pieces on what Amerca needs to do get its economy back on track, Jeff Sachs offers up a valuable contribution today, arguing: 

A proper US investment recovery plan has five parts. The first is a significant boost in investments in clean energy and an upgraded national power grid. These should be promoted through guaranteed price subsidies to clean energy to be financed by gradually rising carbon taxes, as the clean energy capacity comes on line during the coming decade. The alternative cap and trade system is cumbersome, unnecessary and politically dead.

The second is a decade-long programme of infrastructure renovation, with projects such as high-speed inter-city rail, water and waste treatment facilities and highway upgrading, co-financed by the federal government, local governments and private capital. Such projects are complex, requiring government leadership in land management, project design, public-private co-operation and partial subsidy or credit guarantees. New tools can help, such as a national infrastructure bank – championed last year before plans were strangely downplayed.

The third component is more education spending at secondary, vocation and bachelor-degree levels, to recognise the reality that tens of millions of American workers lack the advanced skills needed to achieve full employment at the salaries that the workers expect. The unemployment crisis is largely a structural crisis of job skills. It is hitting young workers – many of whom should still be learning – and older workers who lack a degree.

The penultimate part of the plan is boosting infrastructure exports to Africa and other low-income countries. China is running circles around the US and Europe in promoting such exports of infrastructure. The costs are modest – essentially just credit guarantees – but the benefits are huge, in increased exports, support for African development and a boost in geopolitical goodwill and stability.

The fifth and final element should be a medium-term fiscal framework that will credibly reduce the federal budget deficit to sustainable levels within five years. This can be achieved partly by cutting defence spending by two percentage points of gross domestic product, meaning ending the Iraq and Afghanistan occupations and cutting wasteful weapons systems. Other measures should include gradually phasing out the tax subsidy on high-end health insurance, taxing Wall Street bank profits and bonuses, raising high-end marginal tax rates and, if necessary, introducing a small value added tax. Public investment costs could be financed mainly by public tolls, gradually rising carbon taxes and by repayments of international loans to finance the export of infrastructure.

The Obama administration and Republican opposition are both guilty of irresponsible short-termism and lack of forward-thinking. Both would dangerously prolong the budget deficit, the first through a combination of increased fiscal transfers and tax cuts, and the latter through even larger and more unsustainable tax cuts. Neither would do what America needs and China is doing better: investing for the future through serious attention to sustainable energy, cutting-edge infrastructure, enhanced labour-force skills and the promotion of international development through the export of infrastructure.

President Obama, Senators Advance Payroll Tax Cut to Spur Job Creation

This week, President Obama and Senators Schumer and Hatch proposed important job creation ideas similar to those advocated by NDN and Dr. Robert Shapiro over the past several months. At the core of these proposals sit payroll tax cuts or tax credits that reduce the employer’s cost of hiring, which NDN has advocated as the most effective way to spur employment in the near-term. 

Dr. Robert Shapiro, Chair of NDN's Globalization Initiative and former Under Secretary of Commerce for Economic Affairs, said this about the White House and Schumer-Hatch proposals:

Reducing the cost to hire at a time when the economy is encountering special problems creating jobs simply makes good economic sense, and reducing the employer's payroll taxes on new hires, when the employer is also expanding its overall workforce, is the most effective way to do it.  The proposals advanced by the White House and Senators Schumer and Hatch do just that. NDN has long promoted versions of this approach, and while there are no silver bullets for unemployment, understanding the dynamics responsible for weak job creation now and throughout the 2002-2007 recovery is a necessary first step to restoring real prosperity. Taking targeted action now by reducing the payroll tax for new hires a vital next step.

NDN congratulates the Obama Administration and Senators Schumer and Hatch for offering this important proposal and will work for the rapid passage of this measure. For Shapiro's advocacy of such an approach, which dates back to October, please see:

  • January 20, 2010, The Path to More Jobs and Growth – "It’s virtually the only proposal that’s actually targeted directly at job creation, and it’s effective because it directly reduces a company’s cost to create new jobs. Its’ projected power to boost GDP follows directly from its success in creating jobs, since the new workers would spend virtually everything they earn, boosting output in the goods and services they choose and the jobs required to provide those goods and services." 
  • December 4, 2009, Video of the White House Forum on Jobs and Economic Growth: Encouraging Business Investment, Competitiveness and Job Creation working group in which Dr. Shapiro discusses this proposal. 
  • December 2, 2009, How to Create Jobs in a Troubled Economy"Exempt from payroll taxes the first $3,000 to $5,000 of wages paid in each of the first two years to new hires by firms that expand their work forces."
  • November 2, 2009, The Storms on the Economy’s Horizon"An even better idea would be to jumpstart new job creation by exempting the first few thousand dollars of wages from payroll taxes."

For more of NDN's work on the economy, please see our backgrounder on "A New Economic Strategy for America."

FCIC Chairman Phil Angelides to Address NDN on February 2

Phil Angelides

On Tuesday, February 2, NDN will host an address from Phil Angelides, Chairman of the Financial Crisis Inquiry Commission. Formerly the Treasurer of the State of California, Mr. Angelides has been charged by Congress to lead the effort examining the causes of the worst financial crisis since the Great Depression.He will discuss the commission's work, which began in earnest this month with much anticipated hearings. NDN Globalization Initiative Chair Dr. Robert Shapiro will introduce Mr. Angelides and open with the event with contextual remarks.

The event will begin at 12pm and lunch will be served. A live webcast of the event will begin at 12:15pm. Seating is limited and is reserved on a first come, first served basis, so please RSVP soon.

Financial Crisis Inquiry Commission Chairman Phil Angelides:
"Examining Our Financial Past to Secure Our Economic Future"
Tuesday, Febraury 2, 12 p.m.
NDN: 729 15th St. NW, 1st Floor
A live webcast will begin at 12:15 p.m. ET
RSVP  :  Watch Webcast

About the Financial Crisis Inquiry Commission (FCIC)
The bi-partisan 10-member Financial Crisis Inquiry Commission was created by Congress and is charged with examining the causes of the financial meltdown.  It is also examining causes of the collapse of major financial institutions that failed or would likely have failed had they not received exceptional government assistance.  The Commission is comprised of Chairman Phil Angelides, Vice Chairman Bill Thomas, and Commissioners Brooksley Born, Byron Georgiou, Robert Graham, Keith Hennessey, Doug Holtz-Eakin, Heather Murren, John W. Thompson, and Peter Wallison.  Findings and conclusions are to be presented in a formal report to Congress and the President by December 15, 2010.

Staring Down the High Tax, Big Government Bogeyman

In prepping for my Fox News appearance this morning, I thought a lot about that old conservative bogeyman of "tax and spend liberal,"  and the current attacks on Obama for being for high taxes and big government.  I've always thought that one of the greatest accomplishments of the 20th century conservative movement was to reduce the conversation about our economic future into a purely fiscal discussion, about tax cuts and size of government talk - as if there was no difference between the two.  For in ideological terms, the right has believed that tax cuts and smaller government create growth, high taxes and big government stifle it.  But is this true?


The Clinton Presidency - Raised taxes, size of government shrunk, deficits became surpluses, growth exploded, incomes went up. 

The George W Bush Presidency - Cut taxes, size of government exploded, debt and deficits went to historic levels, most challenging recession in 70 years, incomes dropped. 

Oops.  Guess the conservative bromide of big taxes and big government is just that, a terrible and inaccurate bromide.  The economy is a little more complicated than it first appears, I guess.

Of the many things all this means is that Democrats should not give into arguments and statements which however attractive they may sound are untrue.  My own read of the polls is that people don't want the economic conversation to be reduced to a fiscal one.  They want their government to have a strategy that ensures broad based prosperity first and foremost.  They understand, perhaps unlike Washington, that such a strategy must have many parts, of which taxes and spending are only a part.  The message goal here this week is for the President to stay focused on his "strategy," and explain that his strategy is big enough to actually solve the problem most feel - which is ten years of no income games.

People are willing to give the Democrats time to get the economy going, tackle the deficit, create jobs because they understand more than wealthy folks how long the economy has been bad for them, and reasonably, don't expect it to be fixed overnight.  But the American people are only going to give Democrats time if they feel that the government has a plan big enough to actually fix the economy in the years ahead.  Small bore ideas - like small tax cuts for middle class families as we saw in 2009 - aren't going to cut it.  This is not the 1990s.  The troubles with the middle class and the economy are not small - they are big, perhaps the biggest in all of American history.  Small bore initiatives - the "school uniforming" of the economy - aren't going to cut it this year.  In fact there is a strong argument that doing a series of small things may in fact be the very opposite of what is needed, and reinforce that the President and his party really don't get how tough it is out there.  

And along the way the President and his party will have to do everything they can to stare down the high tax, big government bogeyman who will be very present in the national debate this year.  People don't like taxes, but they will like governments who are unwilling or unable to do what is required for them and their families to succeed even less. 

Last week I penned a piece for Salon on the economic way forward, Crafting A Response to the Rise of the Rest.  You can find it here.

The SCOTUS Campaign Finance Decision - Problematic for the GOP, Big Opportunity for the Dems

Some initial thoughts:

1) A Tragedy.  Just as both parties were beginning to successfully adopt the bottom-up, people-centered, democracy-strenghtening model of politics of the new internet age, the Supreme Court blows the system to pieces.  The decision will no doubt tilt a system that was evolving into a more people based model back towards one where privilege and money will have more sway. 

2) A Lot of Companies Are Not Going to Join In. Yet.  Running ads with their name on it in contested races is not something a lot of companies are going to want to do.  Publically traded companies are by nature risk adverse, and I think given how late in the cycle it is, how controversal the decision was even inside the Court itself, how directly they will be able to be attacked by a candidate or Party for running an ad that you just won't see a ton of these ads this initial cycle.

In fact I would encourage companies to take a position right now that they aren't going to do these kind of ads this cycle to avoid the pressure that is sure to come from both parties and individual candidates.  Just say no.

3) This Could Become A Big Problem for Republicans.  The Republicans have picked themselves off the floor in recent months by running as champions of the middle class.  Having big corporate America come in on behalf of a candidate will almost certainly guarentee that a candidate becomes tarred as taking the side of big corporations against the average guy, something this cycle that could be deadly.  The GOP better think twice about their newly populist brand before celebrating this decision too much.

4) The Democrats Should Try to Pass A Bill Tilting the System Back Towards People.  There are a lot of ways to do this but the Democrats should stand on principle here and demonstrate they want the system to be biased towards broad, people-based participation not towards aggregrated privilege, power and wealth.  Will fit nicely into their emerging people-based economic message.

Debated all this with Republican strategist Chip Saltsman today on Fox News.  Thought his arguments were ridiculous.  Will have the video up soon.

Spoke to the House Democratic Caucus Last Night About the Economy

Last night I joined Richard Trumka, President of the AFL-CIO, and Robert Kuttner, the co-editor of the American Prospect, on a panel in front of the House Democratic Caucus.  Each of us offered our thoughts about what a new economic strategy for America could look like.  After our presentations, a passionate and intense discssion broke out about the struggle of every day people in America today.  Several members spoke eloquently, and with great feeling, about the pain and suffering they are seeing in the eyes of their constituents, and the simple desire Americans have for their government to act definitively on their behalf in a time of national struggle.

You can feel the sensibility of Washington transitioning now from the many issues discussed this year to a single central focus - doing something about the increasingly difficult struggle of every day people in this more competitive global economy and in the midst of the Great Recession.  As readers of this blog know, developing a new economic strategy for America in this new economic era has been the central obsession of NDN these past few years, and we have offered more than a few essays, events and posts addressing it all.  We welcome this turn and stand ready to work with policymakers here in Washington to develop this new strategy, and then see it through in the years to come.

Over the weekend I wrote this essay about the rise of China and other developing nations and what it means for the US.  Jake Berliner, deputy policy director for our Globalization Initiative, just put together this comprehensive summary of our major work over the past few years.

And, as always, interested in hearing from you with your thoughts about the economy and what just might go into this new economic strategy for America.  It is long past time we had this debate about economic future in the face of fast changing domestic and global economies in earnest.

Thanks to Rep. John Larson and his very able team for putting together the excellent conversation.  A debate began last night that I think will be echoing through the halls of Congress for months to come.

Update - The briefing book the Members of Congress received last night included this recent NDN essay, "The Key to the Fall Debate: Staying Focused on the Economy."

Update 2 - The Hill reports on the meeting last night, and the new "jobs" strategy emerging from the House.

NDN Backgrounder: A New Economic Strategy for America

As national attention pivots toward the economy and employment, I'd like to present some some key analysis and narrative from NDN on the breakdown in job and wage creation in America:

  • Health Care's Raw Deal for Middle-Class Families by Dr. Robert J. Shapiro, 11/11/2009 - Shapiro argues that if the American middle class knew how adversely incomes were being impacted by health care costs, a political upheaval on the level of the 1970’s tax revolt might take place in America. This dynamic makes containing health care costs one of the great political and economic challenges of the day. 
  • Sifting Through the Economic Messages From the Elections Last Night by Simon Rosenberg, 11/4/2009 - Exit polls show that the most important factor to voters is the economy, as the old, 20th century economy is not working for everyday Americans anymore. To have electoral and governing success, policymakers must make a the creation of a new, 21st century economy their central focus. 
  • What Washington Should Understand and Do to Create Jobs by Dr. Robert J. Shapiro, 10/8/2009 - Even the term "jobless recovery" understates how dire America's economic situation is, as the economy now faces structural problems to create jobs and wage growth. With no silver bullet in sight, policymakers must set their sites on creating an agenda and conversation around long-term, broad based prosperity. 
  • The Key to the Fall Debate: Staying Focused on the Economy by Simon Rosenberg, 9/3/2009 - The summer months were not good ones for Democrats, but Rosenberg argues that there is a roadmap for how they can get back on track: staying relentlessly focused on the economy and the struggle of every day people.  
  • Noticing and Solving the Problem with Jobs and Wages by Dr. Robert Shapiro, 7/23/2009 - The ability of the American economy to create jobs and wage growth, even in times of productivity and GDP growth, has broken down. Policymakers must adjust to this new economic reality.
  • Not Taking the Presidential Eye Off the Economic Ball by Simon Rosenberg, 7/2/2009 - The economy is the singular dominant issue in American politics today, and the administration must craft a response to that, understanding that few want a recovery that takes America back to the Bush economy.
  • A Stimulus for the Long Run by Simon Rosenberg and Dr. Robert Shapiro, 11/14/2008 – This important essay lays out the now widely agreed-upon argument that the upcoming economic stimulus package must include investments in the basic elements of growth for the next decade, including elements that create a low-carbon, energy-efficient economy.
  • Back to Basics: The Treasury Plan Won't Work by Dr. Robert Shapiro, 9/24/2008 - As the financial crisis unfolded and the Bush Administration offered its response, Shapiro argued that, while major action was needed, the Treasury's plan would be ineffective.
  • Keep People in Their Homes by Simon Rosenberg and Dr. Robert Shapiro, 9/23/2008 – At the beginning of the financial collapse, NDN offered this narrative-shaping essay on the economic need to stabilize the housing market.
  • Poll: Economic Strategies and Globalization conducted by Pete Brodnitz, Benenson Strategy Group, 11/8/2007 - This poll of attitudes toward the economy and globalization found that Americans understand the modern nature of globalization, want government to give them the opportunity to succeed through investment, and believe innovation is a key strength of the American economy. Americans also saw the economy getting much worse, and they were right, as the recession officially began just a month later.
  • Voters Deliver a Mandate for a New Economic Strategy by Simon Rosenberg, 11/10/2006 - In analysis of exit polls from the 2006 elections, which chased Republicans from power, NDN argued that the most important factor, even in an election most thought was decided on the war in Iraq, was the economy. 
  • Meeting the Challenges of the 21st Century: Crafting a Better CAFTA by Simon Rosenberg, Dr. Robert Shapiro, and Joe Garcia, 6/9/2005 - NDN calls on policymakers to face squarely a vision of how globalization can and should work, and how rapid economic liberalization, generally a positive for America and the world, must be accompanied by a commensurate investment in the economic well-being of everyday Americans, who have not seen the expected wage gains despite strong productivity and GDP growth. 
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