Hillary's Economic Plan: Nothing Daring, But More Comprehensive Than Obama's
In the midst of a heated primary battle in which all of the minutia of a modern campaign is dissected and analyzed ad nauseum and substance is all-too-often treated as an afterthought, it's easy to lose sight of the candidates' positions. That's unfortunate; the country is facing severe problems, and ultimately this election is about who's best prepared to tackle them.
That's not to say that a candidate's style, perceived electability or approach to problem-solving aren't legitimate issues for voters to consider, it's just that an exclusive focus on those "intangibles" gives primary voters an incomplete picture.
The economy has so far been the most pressing issue in the minds of voters in both major parties, and this week Hillary Clinton unveiled a wide-ranging and thoughtful set of economic policies. You can read it in its entirety here (PDF).
Here are the highlights:
The lending crisis
Clinton would establish a $30 billion fund to aid states and municipalities in dealing with the effects of a sharp spike in foreclosures:
[The] fund will support initiatives by states, cities and community groups to reduce foreclosures and to help cities cope with the financial and social costs associated with an increase in vacant properties. States are already piloting programs to stem foreclosures. Many of the programs provide financial counseling to at-risk homeowners, help borrowers work out solutions with lenders, help homeowners become current in their payments, help families refinance unworkable mortgages and educate homeowners about predatory lending.Her plan would also aid millions of families with a subprime loan on the bubble, providing:
- A 90-day moratorium on subprime foreclosures (for owner-occupied homes), to give homeowners and lenders a chance to work out new loan schedules.
- A five-year freeze on upward mortgage rate adjustments. Most subprime mortgages have adjustable rates, and this measure would provide an incentive for lenders to offer homeowners a conversion to fixed-rate loans
Clinton's focus on subprime loans is important, especially as low-income, minority and single-parent households are disproportionately affected. But the reality is that we face a banking deregulation crisis, and subprime loans are simply a symptom of much larger problems. Prime "option ARM" mortgages -- adjustable rate loans -- are the next to go, and programs that only address subprime lending are going to pass over a lot of middle-class households with negative equity in their homes.
Her husband's administration, with its unquestioned fealty to neoliberalism, shares much of the blame for creating the conditions that led to the current crisis, and while Hillary's plan offers a few words about improving America's regulatory framework, she stops short of proposing significant reregulation of the financial industry.
She also hedges her bet in "calling on Wall Street" to do these things voluntarily -- no mention of forcing them to do so through hard-edged legislation. Wall Street, in general, does not do the right thing of its own volition, so the question becomes whether such a program can be sold to the financial community as a matter of their own self-interest.
Kick-starting the economy
Clinton endorses the economic stimulus package passed by the House, but agrees with most analysts who view it as incomplete and skewed towards helping investors rather than workers. She would improve the stimulus package by:
- "Extending and broadening" unemployment coverage for workers who are out of a job.
- Providing an average of $650 in emergency home-heating assistance to each of the 37 million families that she says are in need.
- "Making immediate investments to jump-start green-collar job growth, including a program to weatherize homes, retrofit public buildings and train green-collar workers."
The good and the bad:
This is an improvement over what we've seen so far, but an incremental one -- it's unlikely that it will have much of an effect on the ailing economy, given that we're paying a price for years of relying on housing growth as a major engine of overall economic performance, and the "adjustment" that's happening as a result is bringing an enormous amount of pain to the middle class. In other words, this isn't a slump in the "business cycle" that a bit more consumer spending can make up for.
It would also be nice if she specified how she'd pay for these programs, but in fairness, this is an economic plan put out in the heat of a campaign and is quite detailed for what it is.
Over the longer term, Hillary also offers a plan for creating "shared prosperity" for working people in the 21st century.
The plan would:
- Invest unspecified funds to create 5 million new "green collar jobs" over the next decade.
- Invest at least $10 billion in critical infrastructure, a move that would create jobs and make American firms more competitive.
- End tax breaks for companies that offshore jobs. She claims that this move would free up billions of dollars, which she'd put into a fund for "establishing a national broadband strategy; creating a $50 billion strategic energy fund; doubling the research budgets at the major "Restoring the American Dream" federal agencies; strengthening education from pre-K to postgraduate study; making the research and experimentation tax credit permanent; and restoring integrity to science by ending the Bush administration's war on science.
- To address a hollowed out economy in which manufacturing jobs continue to disappear in large numbers, Hillary says she'll "expand the Manufacturing Extension Partnership, which for a $100 million investment yields $910 million in new investments and trains or retrains 50,000 workers. And she will provide $20 billion in green vehicle bonds to help American auto companies retool the oldest auto plants to meet her strong efficiency standards, while addressing retiree health legacy costs with tax credits for qualifying private and public retiree health plans."
- Provide quality, affordable universal health coverage. Her plan mandates that adults buy coverage if they don't already have it, provides tax credits for small business to do so for their employees, provide additional credits for individuals to purchase insurance, prohibits insurers from declining people based on pre-existing conditions and allows Medicare to negotiate with drug companies for lower bulk prices.
- Clinton would provide a "generous matching (401K) plan for all Americans." The plan would provide up to $1,000 in tax credits to "match" what working families put away in savings. The accounts would be portable.
- Hillary would invest more in education programs, including, "a $3,500 college tax credit that will cover more than 50 percent of the typical cost of public colleges and universities, or the full cost of tuition and fees for community colleges. She would increase the size of Pell Grants, strengthen our community colleges and invest $500 million to support innovative, on-the-job training and apprenticeship programs for those who don't attend college."
The good and the bad:
These are all the kind of centrist, technocratic approaches favored by Washington Democrats. They are not bad -- and unlike Republicans' approach to just about everything, much of this would have a real and beneficial impact on ordinary American families. But the approach raises the question of how willing she may be to tackle the role that corporate power has played in creating a need for such programs in the first place.
A few specifics Ã¢â‚¬Â¦
Green jobs: This is a popular mantra among Democrats, and it is certainly politically appealing. Unfortunately, it doesn't address the underlying issue of high-paying manufacturing jobs disappearing from the American economy -- there's no way that those green jobs can be protected from offshoring to countries with lower labor costs other than by enacting "trade barriers" that would violate our commitments under various trade agreements. This is the dirty secret most Democrats don't talk about.
It's also a very modest proposal -- 500,000 "green jobs" per year in an economy that must add about 1.7 million jobs a year just to keep up with growth in the adult work force and break even.
Infrastructure: $10 billion invested in infrastructure is nice, but it doesn't address the scope of the problem. America is, literally, falling apart around us, and the American Society of Civil Engineers estimates that putting it back together would require about $1.6 trillion over the next 10 years -- that's 1,600 times the number that Clinton proposes.
Healthcare: Clinton and Obama's health plans have been analyzed extensively, so I won't belabor the point. The one thing I'll say is that Clinton's "mandate" -- the requirement for adults to purchase insurance -- has been controversial, but there's no way one can prohibit insurers from discriminating against people with pre-existing conditions without it. The issue is perfectly easy to understand: If insurers can't turn away people who have costly illnesses, and people aren't required to carry insurance, then younger, healthier people will simply go without until they get that $1 million cancer, and then sign up for coverage and stick insurance companies with the bill.
The reality, however, is that it's far more efficient, easier and perhaps better politically to simply finance a single-payer system through taxes than to garnish people's wages if they don't carry coverage. All of the Dems believe we're not "there yet," and maybe they're right. But leadership means leading, and we're in desperate need of real leadership on the healthcare front.
Clinton's universal 401K plan is a good idea for a country with a negative savings rate, but it's unfortunate that she dropped an earlier proposal to establish "USA accounts" that would give every child born in the United States a few dollars to start saving toward college, a first home, a new business or retirement. This is an old idea -- a progressive approach to an "ownership society" -- that Clinton abandoned early on in the campaign, when Rudy Giuliani accused her of being a "socialist." Read more about the concept here.
Trade and government contracting
Hillary says she'll end the no-bid contracting that's contributed so much to the problems with the reconstruction of Iraq, end subsidies to oil companies that don't invest in green energy and bring a "pro-American" trade agenda to the White House. She would also crack down on abusive lenders, and, although she doesn't define how, would "ensure a regulatory framework" to prevent the kind of excesses that led to Enron as well as the mortgage mess we now face.
On trade, she promises to appoint a "trade prosecutor" to enforce the trade agreements we're in already (and would increase the resources dedicated to enforcement), and she'd require a review of every trade agreement every five years. Finally, she calls for a "time out" -- a pause -- before entering into any new trade agreements ("read my lips: no new trade deals").
She also calls for "modernizing" and strengthening Trade Adjustment Assistance so that workers displaced by trade can receive job training, transitional assistance, healthcare credits, etc.
The good and the bad:
Banning no-bid contracts and ending corporate subsidies for companies that aren't responsible is a good idea, and, as president, Clinton would have a mighty bully-pulpit with which to make that case.
The reality, however, is that those subsidies exist because of the influence that corporate money has on the process, and Congress is the only body that can eliminate them. Would she veto a spending bill that included those subsidies? She doesn't say, but the fact that she offers little in the way of addressing the structural issues that have damned the legislative process in recent years is not encouraging.
As far as trade goes, neither of the remaining candidates has a coherent position, which is unfortunate, but also true of most of the Democratic establishment. Hillary gets all the talking points right, but doesn't come close to challenging the bipartisan trade consensus.
Trade adjustment assistance, for example, helps only workers directly displaced by foreign trade, which is a small portion of the estimated 70 percent of wage earners whose paychecks are less as an indirect result of these trade deals. It's also well understood that people who receive trade adjustment assistance hate it; research shows that many feel like losers -- that they failed to thrive in the global economy due to some personal fault.
At some point in the future, a candidate will say something like: "You can't have corporate lobbyists set the agenda of the U.S. Trade Rep, and then have that rep negotiate with other countries' economic elites behind closed doors, with no transparency, and expect anything that's good for ordinary working people to come of it." We already have enforceable, rules-based trade deals covering 99 percent of the planet, and the candidate that points that out, and notes that those existing agreements are in dire need of deep reform, will be the first to make any sense on the issue. As far as it goes, a moratorium on new trade deals is probably as good as we can get right now. For more on this issue, see here.
This is probably the area in which the kind of "Third Way" fixes that the Clintons are known for could have the greatest positive impact on ordinary working families. For background, see my article, Womenomics 101 -- the short version is that while the American economy has seen enormous benefits from large numbers of women entering the work force, our corporate culture has done little to adapt to an economy in which most families require two breadwinners to get by:
According to Harvard's Project on Global Working Families (PDF), the United States is one of only five countries out of 168 studied that doesn't mandate some form of paid maternal leave. The only other advanced economy among those five was Australia's, where women are guaranteed an entire year of unpaid leave. That puts the United States -- the wealthiest nation on the planet -- in the company of Lesotho, Papua New Guinea, and Swaziland.Clinton, who helped fight for the Family and Medical Leave Act (FMLA) over staunch GOP opposition in the 1990s, has a number of worthwhile proposals to create more workplace flexibility:
- "Hillary Clinton's national family leave initiative will set a goal of having all states adopt family leave programs by 2016. To help states reach this goal, Hillary will commit $1 billion annually in a Family Leave Innovation Fund and ramp up as states develop initiatives. The Family Leave Innovation Fund will support state-level parental leave programs across the country. The Innovation Fund will also work in partnership with states that create family leave programs by offering competitive matching grants to cover state start-up costs and a meaningful portion of program expenditures. The fund will not dictate from Washington what approach states should take. Instead, the fund would support all approaches to providing more leave to employees, including through temporary disability insurance or unemployment insurance programs, expansion of direct support programs like At Home Infant Care, or through individual and business tax credits."
- Expanding FMLA: The act now requires unpaid leave be offered by businesses with more than 50 employees. The problem is that a disproportionate number of low-income workers have jobs in smaller firms, so Clinton would expand the program to firms with 25 or more workers.
- Sick days: about half of all workers in the private sector don't have access to paid sick days. Clinton would make seven sick days per year a standard in American companies.
- Expanded child healthcare programs. This is short on specifics; Hillary says she'll "increase childcare funding through child care and development block grants" but doesn't offer numbers or say how she'll pay for it.
The good and the bad here is quite simple: These proposals are a good start but lack the specifics needed to judge whether they go far enough toward creating an economy in which balancing work and family is not a near-impossible task.
All of these proposals reflect the competent, centrist technocratic tinkering for which the Clintons are well-known. A Democratic presidency in 2009, regardless of whether it's headed by Clinton or Obama, will be a great disappointment to liberals and progressives hoping for ambitious and substantive change, but it will also be a dramatic improvement over what has passed for "governance" in the current administration. Both would fill jobs with competent professionals who are qualified for their jobs, as opposed to ideological hacks who have the right position on Roe v. Wade. Both would appoint reasonable judges as opposed to right-wing judicial activists in the Roberts/Alito mold. Neither candidate, if elected, would have an easy time digging America out from the mess the Bushies have created, yet both would be a marked improvement, and both will advance an agenda that at least considers the needs of ordinary working families.
There's quite a bit of overlap, in broad strokes, between Hillary's economic proposals and those offered by Obama (which you can view in its entirety here (PDF)). But Clinton's plan offers more specifics and, on almost every economic issue, is more progressive than the senator from Illinois. She has shown herself, however, to be more hawkish in her foreign policy positions than Obama, although there's not that much light between their positions in that area.
Sins of the Bubba
Liberals and progressives have rightly slammed the last Clinton administration for causing a lot of economic pain. By pushing NAFTA, ending "welfare as we know it," privatizing large swaths of the public sector and deregulating everything in sight, Bill Clinton's economic legacy is a painful one for many working families. It's a mixed bag, however. One can't forget that he presided over an eight-year respite from the assault on working families' wages. Between 1979 and 1993, the top 20 percent of earners saw their incomes increase by 28.4 percent, while the bottom fifth of the income spread saw theirs drop by 13 percent. But under Clinton, those in the bottom fifth saw the largest income growth in the country -- 22.5 percent. African-Americans enjoyed income growth of 33 percent; by the late 1990s, poverty among blacks and Hispanics was at its lowest point in the history of the republic.
That was due in no small part to smart centrist policies like the refundable Earned Income Tax Credit, a program that's pumped $100 billion in wage benefits to working families since its passage and keeps an estimated 5 million Americans above the poverty line.
But I think there's a larger point: It's fundamentally unsound to assume that a Hillary Clinton presidency would be a clone of her husband's. The problem with the assumption is that it vests too much power in the Oval Office. The president can articulate an agenda, issue executive orders, make appointments and veto bills, but the reality is that he or she must govern according to the political climate of the time. Bill Clinton's presidency came at the apex of the New Conservative movement, and he was limited by a political culture, a media environment and a Congress that was uninterested in progressive solutions to the nation's problems. That is not the case today, and if either Democrat should win this November, he or she will govern in a very different climate and most certainly well to the left of William Jefferson.
During the 1990s, the Republican Revolution led by Gingrich was the story in D.C. Now, those "movement" conservatives have shown themselves to be utterly corrupt, have blown off all those promises of term limits and ending pork-barrel politics and are struggling to maintain influence in the Republican Party. It was a time when the corporate whores of the DLC had enormous influence on Democratic politics, but now the DLC is relevant only in the eyes of the rapidly shrinking ranks of the DLC. During the 1990s, a Clinton-obsessed media was all too happy to spout any and every bit of right-wing spin about the White House, and we were treated to endless faux scandals. Today, the emergence of the progressive blogosphere and dozens of alternative media outlets offers the potential to push back against those narratives and keep the commercial media honest. And during the 1990s, all the talk was of prosperity; today even people like Alan Greenspan are saying that inequality is a huge issue in the American political economy. There's nothing fresh or new coming out of right-wing policy circles these days -- cutting taxes on investors seems to be all they talk about -- and people are weary of the damage the Right has done and are hungry for change.
We have no idea how Bill Clinton would have governed today, and we can only divine what kind of president Hillary would be based on her proposals and record. It is inherently faulty to assume that she will be a clone of Bubba if she wins in 2008. A lot has changed since the go-go 1990s.
Vote or die
None of this is to say one can't lean toward Obama because of his electability -- Hillary's high negatives among independents and Republicans may bring out a number of anti-Hillary voters who might otherwise stay home if the contest were between Obama and a decidedly flawed McCain. Obama currently does better against McCain in head-to-head polls (although this far out, they should be taken with a healthy grain of salt).
For progressive voters, the choice is not an easy one. Those whose primary concern is beating McCain and providing coattails for pickups in the House and Senate may not care about the strength of Clinton's policy proposals. Others will see policy differences as a more important factor or may view Hillary the more electable candidate because of her perceived toughness.
Whatever the case, it would be nice, for a change, to discuss these issues somberly, and without all the silly distractions about Hillary's "emasculating nature" or Obama's "cult of personality."