50 State Keynesianism – Part 2

Introduction:

In this post, I’m returning to a theme I initially explored in June, back when California was grappling with its budget crisis. Now, after nearly two months of additional struggle, we finally passed a bill that cut $26 billion and raised no new revenue, and now we learn that the governor has possibly illegally cut a further $500 million, taking the axe to children’s welfare ($80 million), health care ($400 million), Cal Grants (cut in half), HIV/AIDS Prevention and Treatment ($52 million), and domestic violence shelters (cut by 80%) . In addition to the moral insanity of attacking the most vulnerable of our citizens at a time when they are most in need of support one must add the economic insanity of believing that you can reduce government spending by $31 billion in the course of a single year (including both the February and July cuts)  and not effect the state’s economic recovery.

Lest this be seen as merely a California problem, a recent report by the National Governors Association notes that the collective budget shortfalls of the fifty states comes to a collective $200 billion shortfall. Given that the total Federal economic stimulus for this year only comes to about $400 billion, we are forced to recognize that our system of state government budgeting and finance is creating a massive economic undertow, weakening the impact of Keynesian stimulus by cutting spending and raising taxes (although they’ve been doing a lot more of the former than the latter).

After EFCA – Industrial Democracy in America

Let the workers organize. Let the toilers assemble. Let their crystallized voice proclaim their injustices and demand their privileges. Let all thoughtful citizens sustain them, for the future of Labor is the future of America.
John L. Lewis

Introduction:

The recent announcement of a compromise version of the Employee Free Choice Act (one that might get the Blue Dogs back in line and over the 60-vote cloture threshold) was predictably completely drowned out in the news media, where health care is the big political story of the day.  Even among the circle of progressive labor activists I know, reaction seems decidedly mixed, some are quite unhappy; I’m something of a cockeyed optimist, and others are somewhere in the middle.

Week 9 Roundup!

This week blew the doors off the place, which I was not expecting at all, but found entirely pleasing. I’m not entirely sure what happened, beyond an unusual spike in Reddit recommendations and getting prominently listed on what seems to be a very common Google search. So for any new readers, welcome to The Realignment Project!

• 786 views at posting time, largely driven by huge interest in FDR’s Second Bill of Rights and The “S” Word, and the fact that people really like High Speed Rail. This is more than we’ve had in previous months, let alone weeks. I don’t know if this will hold up, but I hope it will.
• 4 posts, which should be the new weekly standard until we can bring in more contributors; we are talking to a couple people, and hope to move towards 7 posts a week. The  acme of this blog is quality over quantity, but we still want to have something to bring people back every day to check things out and…comment.

So here are this week’s posts for you to catch up on:

• Designing the Future – High Speed Rail and Federal Aid to Mass Transit
• The “L” Word (No, The Other One)
• “The Balance Wheel of Social Machinery” – Universal Public Higher Education
• Industrial/Labor Policy – Think Swedish

Industrial/Labor Market Policy – Think Swedish

Introduction:

In my previous post on industrial policy, I talked about “how to re-think industrial policy for a new economic era in which the United States needs to not only achieve steady economic growth, but dramatically boost the rate of job growth.”  The dramatic urgency for emphasizing job growth in public policy is that, as Brad DeLong notes, our economic recoveries are increasingly becoming longer, and slower to reverse damage done to employment – the jobless recovery is becoming the norm, not the exception as you can see from his graph reproduced below:

“The Balance Wheel of Social Machinery” – Universal Public Higher Education

“Education, then, beyond all other devices of human origin, is the great equalizer of the conditions of men, — the balance-wheel of the social machinery. I do not here mean that it so elevates the moral nature as to make men disdain and abhor the oppression of their fellow-men. This idea pertains to another of its attributes. But I mean that it gives each man the independence and the means by which he can resist the selfishness of other men. It does better than to disarm the poor of their hostility towards the rich: it prevents being poor.”

- Horace Mann, 12th Annual Report to the Massachusetts State Board of Education (1848)

In my previous post about education, I mentioned that the education reform debate has largely skirted the problem of affordability of higher education, preferring to direct their attention more towards college preparation and the K-12 system. As I said at the time, one of the things that unsettles me about the “Educational Equality Project” type of education “reformer” is the extreme economistic trend of their thought – education is about getting jobs and making the workforce more production, hence the extreme emphasis on reading, writing, math, and science, as opposed to anything about art and music, or history. I may be overly broad here in my description, and if I am, I apologize, but it’s to a point. The purpose of public education is not to meet the needs of the labor market – it is to meet the needs of democracy.

The “L” Word (No, The Other One)

Everyone knows that the moment in which George H.W. Bush made the word “liberal” a political epithet was an important one. It was the crowning moment of the political project laid out by Bush’s former rival Ronald Reagan. The broad left, even in the guise of mild-mannered and intelligent Michael Dukakis, was effectively marginalized. Being a liberal meant being out of touch with the cultural habits of the average American, and, moreover, it meant being weak, if not subversive, in regards to national security.

Designing the Future – High-Speed Rail and Federal Aid to Mass Transit

Introduction:

If there is any area of American life that puts paid to the fiction that America’s economic growth was a miracle of the free market, it must be transportation. From the very beginning, with the Federal construction of the Cumberland Road over the Allegheny Mountains in 1811 and the state of New York’s construction of the Erie Canal connecting the Hudson to the Great Lakes in 1817, it has been the state that has directed and channeled the flows of American economic development, putting its stamp on the very land.

Week 8/Month 2 Roundup!

Ok, a second full month has come and gone. Often, I’ve found that pushing something past the second period (week, month, etc.) is often a good sign of successfully establishing it as a habit. It’s easy to try something for a week when everything’s new and fresh and exciting, but keeping it going is harder. So I see this as a hopeful sign – this is still fun.

So where does the Realignment Project stand in its second month?

• 15 substantive posts, 3.75 a week
  • Clearly, the pace has improved a bit, with some weeks ticking along at three posts a week, and others at four or five. My ultimate goal is to move towards seven posts a week, so that there’s always something new each day to keep people coming back to visit The Realignment Project.
  • To that end, the arrival of my co-editor and contributor Daraka Larimore-Hall has made a big difference in increasing the volume and pace of content while simultaneously reducing pressure on us individually. I would also like individually to move towards a steady group of three or four people contributing regularly, so that each of us can concentrating on writing one really good piece as opposed to three ok pieces per week – qualilty over quantity being the watchword of this blog.

• 773 hits, including 211 in the last week (the second-highest week so far)
  • the increasing growth rate, largely driven by improving use of social network sites to spread the word about new posts, is very heartening. We’ve more than doubled in the last month – let’s see if we can keep this up.
  • To that end, I did want to thank people who came across this blog and passed it on via the little share buttons at the bottom of each post – it’s always interesting to see incoming links come in from people’s Twitter accounts and the like who I’ve never heard of before.

• 17 comments (not including pingbacks)
  • getting better, slowly, many thanks to Marko for being the most frequent commenter.
  • however, it would still be nice to get more of a conversation going on the blog, so feel free to comment.

The next step in the process of building up the Realignment Project is to establish institutional links with other groups, blogs, institutions, etc. so that The Realignment Project can first build up more of a steady readership (less reliant on individual posts causing a spike in views), and so that we can make progress towards the ultimate goal of making this a real conversation about big ideas, about the political future, about political realignment in our lifetimes. We’re currently working on a couple projects, and will keep you updated.

So, the last month’s posts, arranged by topic:

Politics/Political Ideology:

• In Defense of Partisanship, Part 1
  
• FDR’s Second Bill of Rights
• The “S” Word and Strange American Career

Social Welfare State/Taxes:

• “In Proportion To Their Respective Abilities” – Making the Payroll Tax Progressive
  
• Social Security 2.0
• “The Front Line of Defense” – Unemployment Insurance Reform
• After Health Care – How Policy Makes Politics

Economic Policy/Regulation:

• Minimum Wage as Class Politics
• The Apollo Initiative as Democratic Planning
• The People’s Bank
• Salus Populi and the Market – Automatic Regulation

Jobs/Housing/Other:

• Reason Not the Need – Housing Policy and Jobs
• Resurrecting Henry George – the Case for National Housing Assistance
• Green Transit and Hybrids: Planes, Trains, and Automobiles
• Beyond EEP vs. Broader, Bolder: The Problem With Education “Reform”

And if you’re a newcomer to The Realignment Project, here’s our first month’s roundup to help you catch up.

Enjoy!

“The Front Line of Defense” – Unemployment Insurance Reform

“Unemployment compensation, as we conceive it, is a front line of defense, especially valuable for those who are ordinarily steadily employed, but very beneficial also in maintaining purchasing power. While it will not directly benefit those now unemployed until they are reabsorbed in industry, it should be instituted at the earliest possible date to increase the security of all who are employed…”
- Report to the President, Committee on Economic Security (1935)

In a previous post, I discussed the need to improve the payroll tax, and noted that one of the reasons we need to do this is to fix the unemployment insurance (UI). Our current UI system is fundamentally broken. As I wrote on the 12th, “at a time when nearly one in ten American workers are unemployed, only half of them qualify for Unemployment Insurance, to the extent that the program no longer adequately functions either as a safety net or an “automatic stabilizer.””

If I didn’t have the time and the space to say it at the time, let me say it now. The fact that a majority of workers are no longer protected, nearly seventy-five years after the passage of an act that was meant to protect every worker from” one of many misfortunes” of economic life, is a moral failure of the highest order. The idea that governors in America would reject stimulus funds in the middle of a recession because those funds would make it easier for temporary or part time workers to gain access to UI suggests the total moral bankruptcy of the American conservative movement. Not for nothing did FDR say:

“Governments can err, presidents do make mistakes, but the immortal Dante tells us that divine justice weighs the sins of the cold-blooded and the sins of the warm-hearted on different scales. Better the occasional faults of a government that lives in a spirit of charity than the consistent omissions of a government frozen in the ice of its own indifference.”

After Health Care – How Policy Makes Politics

Introduction:

One of the characteristic blind spots of political activists, a professional hazard as it were, is a failure to think about what comes after. So much of one’s physical and mental labors are devoted to the slow push of that boulder up the mountain, the discipline of belief in the cause throughout the empty years, the attunement of instinct and senses to the shifting tectonics of the moment, always looking for that sudden rush of possibility, that it’s hard to think about what happens once the revolution is won, the legislation passes, and the regimes changes.

The “S” Word And Its Strange American Career

“Christ, do I hate socialism and socialists. Scum like Daraka – esp. his spiritual brethren running the Legislature – are why I left CA in the first place.”
- Joseph Turner, comment on Flashreport.com

Socialism. Is there a more dreaded word in American politics? Judging from the talking points of Republicans and their cheerleaders, there just couldn’t be. Granted, the histrionics over at Fox News does remind one of a hundred Chicken Littles with a hundred little doomsday messages. When everything is a sign of the sky falling, it’s hard to be taken too seriously. Nonetheless, the argument that the Obama Administration is leading the country on a long march to socialism is pretty unavoidable nowadays.

Social Security 2.0

Previously, I talked about the need to progressivize the payroll tax, as part of a larger goal of realizing the right to economic and social security for all. Today, I’m going to talk about about that most complicated and fraught of public policies: Social Security reform. Lest this cause a sudden shiver of apprehension, let me first issue a declaimer. By “reform,” I do not mean the false “reform” (meaning cuts in benefits and increasing the age of eligibility) proffered by Paul Samuelson, Fred Hiatt, and the rest of the affluent High Broderite sect. They have enough political clout, enough dominance of the newspapers and airwaves.

Rather, I mean Social Security reform as envisioned by the creators of Social Security themselves.

Week 7 Roundup!

This week was a bit slow; posting was down to just three posts, largely because I went on vacation.

This coming week will hopefully be more active, as we build up to our second full month.

The scoreboard for week 7:

• 132 hits this week, down from last week, but continuing a solid trend of triple-digit weeks.
• 3 posts, also down from last week, but we’ll try to get some more contributors’ pieces.

If you missed any of this week’s posts, here they are:

• The People’s Bank
• Salus Populi and the Market – Automatic Regulation
• “In Proportion to Their Respective Abilities” – Making the Payroll Tax Progressive

“In Proportion To Their Respective Abilities” – Making the Payroll Tax Progressive

The expense of defending the society, and that of supporting the dignity of the chief magistrate, are both laid out for the general benefit of the whole society. It is reasonable, therefore, that they should be defrayed by the general contribution of the whole society, all the different members contributing, as nearly as possible, in proportion to their respective abilities.

(Adam Smith, Wealth of Nations, Book 5, Chapter 1, Part 4)

One of the peculiar glories of American public policy is that, of the nations of the world, our tax system is generally progressive (or at least used to be). In comparison to other countries, we rely more on the income tax, less on VAT taxes, and our corporate tax rate is actually (on paper) more progressive than most countries.

The legacy of more than a century of political combat, the progressive income tax, capital gains tax, and estate tax are proud legacies of the Democratic Party, from the earliest days when then-Congressman William Jennings Bryan and other Populist Democrats were pushing the income tax through Congress (it would be nullified by the Supreme Court), to the passage of the 16th Amendment in 1913 as part of Wilson’s New Freedom, to FDR’s soak-the-rich tax program, to the WWII era when American taxation reached its most progressive level. It is hard to comprehend, as someone who grew of age in a political era in which tax cuts were the only policy option, that once, the top income tax bracket was once 90%.

Salus Populi and the Market – Automatic Regulation

In my last post (and the post before that), I mentioned the importance and difficulty of talking about financial regulation, a task which has been made all the more difficult by an arcane financial products industry that isn’t really understood even by its experts.

So in trying to get to grips with this topic, I’m trying to triangulate in on it from different angles – one of which, the idea of a public bank as a yardstick I discussed last week. Today, I’d like to bring up an important point about financial regulation, that the problem we face is three-fold: deregulation, un-regulation, and regulatory capture (and potential incapacity). Pretty much all that needs to be said about the impact of deregulation has already been said. And quite a bit has been written about the government’s refusal to regulate the new “shadow financial sector.” And if that were all there was to the story, it would be fairly easy to fix the financial sector. The problem is regulatory capture and potential incapacity – regulatory capture seems to be nearly inevitable, as long as financial institutions can offer jobs to former regulators, contributions to electeds and party organizations, and financial experts to the regulatory agencies themselves; even if that weren’t already a massive conflict of interest that allows financial institutions to game the system, you have the problem that even a completely honest regulatory watchdog might not have have the financial, personnel, legal, and expertise resources needed to actually regulate – and Congress certainly hasn’t shown itself particularly interested in keeping the FDA up to scratch, let alone the SEC.

The People’s Bank

From Whence We Came:

As much as some people cling to the idea that the United States has always been a land of anti-government, laissez-faire bustling capitalists, the fact is that the specters of democratic statism haunt the chronicles of American history, all the way from the beginning. One of the oldest and most powerful phantoms is the Bank of the United States that died and was reborn, again and again through the history of American politics like the immortal monsters of slasher horror films.

Because the Bank was there from the beginning – Hamilton drafted it, Washington signed it, and Adams maintained it. Even when the anti-central government Democrats took possession of the Presidency in 1800, Jefferson maintained the Bank and Madison actively promoted it (due to the support of Albert Gallatin (the Secretary of the Treasury and a Democratic-Republican who had begun to learn the virtues of Federal activism in such matters as the Bank and Federally-funded public works). The Second Bank of the United States was established in an era of Democratic-Republican dominance, suggesting that the Bank of the United States had a rough political consensus between 1800-1832. Now, two caveats should be made – first, that the original bank was a public/private venture, and second, that the Bank was highly politically controversial, leading to thirty years of Jacksonian decentralized state banks – but the larger point remains that the Federal government of the Revolutionary Generation was not some libertarian paradise of limited government that left the economy to laissez faire.

Week 6 Roundup!

Week 6 has been the most successful week to date, and several important milestones were reached:

• first post by a new contributor, Daraka Larimore-Hall.
• 242 hits in one week, a new record.
• 5 posts, also a new record.

If you missed any of this week’s posts, here they are:

• In Defense of Partisanship: Part One, All Politics is Political
• Resurrecting Henry George: The Case for National Housing Assistance
• Green Transit and Hybrids: Planes, Trains, and Automobiles
• The Apollo Initiative As Democratic Planning
• FDR’s Second Bill of Rights and the Progressive Mission

FDR’s Second Bill of Rights and the Progressive Mission

Introduction:

In the spirit of the best 4th of July speeches, which like Frederick Douglass’ peerless effort seek not to satiate with platitudes but rather to challenge and provoke, today I offer a reflection on America’s past and its future.

At the end of “Resurrecting Henry George,” I argued that a national housing assistance program would “help to make one more of FDR’s Second Bill of Rights, “the right of every family to a decent home,” a legal reality. I would argue, and I will argue in future posts, that the longer-term mission of the progressive movement in America is (and has unconsciously been) the realization of the Second Bill of Rights.” So today I intend to explain what I meant.

The Apollo Initiative As Democratic Planning

Introduction:

Policy wonks and other people who follow public policy issues are probably familiar with the Apollo Alliance, a blue-green alliance of environmentalists and labor unions that’s become a stock part of the Democratic Party’s platform on environmental and economic policy. Back in 2004, Kerry signed onto it; Obama basically did the same.

For those of you who aren’t familiar with it, the basic idea is to fuse environmental policy – alternative energy, “green tech,” energy-efficient building, mass transit – with labor and economic policy – creating new jobs that are well-paid, have good benefits, and are union-friendly, as a way to create new domestic industry and manufacturing. The Apollo Initiative, which they were promoting back in 2004, envisioned $30 billion a year for ten years as a public investment into ” promoting new technology, improving manufacturing processes, and expanding markets [of "green tech"]…improving the performance of our existing energy system… construction of high performance, energy efficient buildings…[new sources of] renewable energy…new transit system starts, maintenance of the nation’s passenger train system, development of regional high speed rail networks, and improvements in the nation’s roads and highways.” Their current Apollo Program calls for a $50 billion a year for ten year investment in energy-efficient buildings, renewable fuels, a new power grid, increasing efficiency of existing power plants, building mass transit, building fuel-efficient cars…the list goes on and on.

In and of itself, it looks like nothing special – basic, Democratic Party boilerplate, the kind of buzzword-driven wonkery that gets tossed around in primaries and never amounts to nothing. I’m going to argue that it’s actually a way to recover a missing part of progressive politics and policy that was lost to us during the Cold War.

Green Transit and Hybrids: Planes, Trains, and Automobiles

Background:

In the wake of the historic passage of the Waxman -Markey climate change bill through the House,  it’s important to think critically about where we stand, where we need to go, and how we can get there.

To start with: the bill itself.  While it’s a miracle that the bill got passed through the House, and while passage through the Senate remains highly uncertain to say the least, the truth is that the bill suffered significantly to get it to where it is now:

1. Overall emissions targets were watered down from 20% by 2020 to 17%, although the target still reaches 80% by 2050.
2. Emissions permits were watered down from 85% auctioned off to 85% given away for free.
3. Renewal energy requirements were watered down from 25% to 12% (by allowing efficiency offsets and gubernatorial waivers).
4. and a number of other give-aways in terms of carbon offsets, agency oversight, and exemptions.

All of this was of course, sadly, necessary to get the bill past coal-state Congressmen (although there were some surprises here) who want to protect their district’s mines, farm-state Congressmen who wanted to keep the impact on agrobusiness light, and moderate to conservative Congressmen out to keep industry comfortable. While the instincts of some (namely, Greenpeace) were to jettison the bill, I think it serves as an excellent reminder that “the perfect isn’t the enemy of the good,” and a good lesson of how policy change actually works. Policy advances always start of small, incomplete, and disappointing; the trick to real change is mastering the process of yearly, gradual improvement through the amendment process, building up coalitions who can link up with congressional committees and bureaucracies and build some institutional muscle, and gradually turn the policy into something that can’t be eliminated or watered down.