The Limits of Hope: Getting Real about the American Economy

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There won’t be a squeaky clean ending to the Democratic battle for the 2008 presidential nomination. The knife fight has begun already — and I only hope that maturity in the end prevails so that the side that edges out victory has the magnanimity to deal well with the almost-winners from the other side.
There is simply no chance that one side will completely vanquish the other. A negotiated outcome needs to be achieved — and that means give and take on both sides. The stridency and overconfidence of the Clinton camp needs to be softened. And the pretense of moral high ground that the Obama camp thinks it can sport in this race needs to be shelved. Both sides have to figure out how to accommodate the other as much as possible.
Clinton and Obama are both mixed bags. She has the health care plan I prefer. Obama has the tone in foreign policy I like. They both are carving out economic positions skeptical of the “Washington Consensus” — but the depth of their opposition to neoliberal economics is unclear as the recent debate about an Obama policy adviser’s trade views make clear.


My own disappointment in both the Clinton and Obama campaigns has been heightened in recent weeks. John McCain — because of his views on the Iraq war and his unsound approach to fixing the hemorrhage in America’s national security portfolio — makes it very tough to support his broader message and package — as much as I do admire some of his previous policy stands.
Right now, the collapsing condition of the American and global economies has my attention. Hale “BondDad” Stewart in a number of posts titled “An Empire of Debt — Collapsing Under Its Own Weight” in the blogosphere noted something that I wrote the other day and a linked article written by Harvard economist Kenneth Rogoff that is impressivley prescient with what has happened on both the strategic and economic sides of America’s global position.
Leo Hindery, a progressive CEO who has written persuasively about the need to redraw the American social contract between firms, capital, labor, and government, was John Edwards’ senior economic policy adviser in Edwards’ run for the presidency.
Recently, Hindery decided to endorse Obama — and this raises some fundamental questions of what exactly Obama’s economic policy profile is going to be. Obama campaign senior economic adviser and University of Chicago economist Austan Goolsbee, a very good guy, is nonetheless from the part of the economic policy spectrum of debate where one would not expect to find a Leo Hindery. And my guess is that the Hindery take on the economy is politically ascendant — while the back room economic policy elites in Washington are still stacking the deck for Goolsbee-oriented policies.
Which will a Barack Obama be true to?
I’m a Hindery advocate and think that America needs to develop economic strategies that produce on-shoring, not off-shoring and that there is a “smart globalization” path that is better and healthier for the US and the world than that dictated by manic neo-liberalism of the sort that Robert Rubin promoted during his Treasury Department tenure.
When Hindery endosed Obama, he wrote this:

Barack Obama believes in vigorously enforcing our existing domestic labor laws and standards. He believes in all workers having an easy and unrestricted ability to join a union, including part-time and contract workers. And he believes in affording low-wage workers the “mobility” they need in order to earn something more than low wages.
Barack Obama believes in fairer and more progressive individual income taxation, taxation which will see every American once again paying his or her fair share. How can anyone but the wealthiest of Americans be satisfied with an economy which has seen forty percent of all economic growth over the past 20 years go to only the top one percent of American families? Where half of the nation’s individual income now goes to just 2% of the taxpayers?
Barack Obama believes in incentivizing American companies to create and retain high-quality jobs here in America, instead of unnecessarily and often unfairly shipping millions of them overseas.
And Barack Obama believes that U.S. trade agreements must provide clear and measurable benefits for American workers. He believes that in order for free trade to also be fair trade, trade agreements must incorporate reasonable labor and environmental standards and prohibit illegal subsidies and currency manipulation. He believes that in negotiating trade agreements, “one size does not fit all” – it never has – and that trade agreements which are not vigorously enforced are not agreements at all, they are just so much paper.

I hope Leo Hindery is right — but I do think that those who believe in pragmatic policy choices for the country can’t just expect a Barack Obama (or a Hilliary Clinton) to know in his (or her) gut what the right policy choices are when tough decisions are before him or her. His (and her) advisers are very diverse and often in intellectual conflict internally. And thus, those who believe in a new and different course for the nation’s economy and foreign policy are going to have to fight for those views — even if the hopeful Barack Obama does become the next President of the United States.
— Steve Clemons

Comments

32 comments on “The Limits of Hope: Getting Real about the American Economy

  1. Mr.Murder says:

    No, by all means. Helping not for profits deny health care to turn a profit, that’s pure sophistry on MO’s part.
    Maybe one day I can play Lee Greenwood and say I’m finally proud to be Merkin?
    Teaching law, or lecturing on it. Instructors have higher credentials, no?
    Community work, with a religious initiatives effort, while the pastor goes into warp factor hyperbole. Hillary’s never done that.

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  2. Joe Klein's conscience says:

    Activist? What do you mean by that? So I suppose teaching Constitutional Law and doing community organizing doesn’t count? Effective members of the Senate doing what? And it sounds to me as if you are belittling Michelle Obama’s “experience”.

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  3. erichwwk says:

    GREAT post Steve.
    Just a few comments.
    Let’s not throw the baby out with the bathwater. It is division of labor and the extent of the market that fundamentally creates wealth. It is not absolute, but relative, advantage that matters. In regards to NAFTA, this article by Robert Reich might be helpful:
    http://tinyurl.com/3adpu6
    In regards to the high rate of consumption re investment, one might keep two things in mind:
    1. The extent to which the Reagan administration was successful in implementing voodoo economics, ie gutting impartiality and equity with its supply side, trickle down nonsense. As should now be obvious, this was merely a successful effort to advantage the top class of Americans, and transfer wealth from the bottom to the top. The lower 40% of Americans have recently actually LOST over 75% of their post WWII/ pre Reagan accumulated wealth. So yes, dissaving has been the response from the bottom.
    see Robert Frank’s, Ben Bernanke’s good friends work in these graphs: http://tinyurl.com/yo3832
    2. Much of the demand for US dollars was a result of its once superior money. One might want to read Milton Friedman’s essay/book “On the Optimum Quantity of Money”, or the old Masters such as the Austrians, or even Keynes, whose views on money supply generally ignore the fact that he was essentially a monetarist (his pre General Equilibrium writings were ALL generally on this).
    Thus much of the “dropping like a stone” value of the dollar is due to it’s fall as an international medium of exchange, as well as the limits to which US assets can be sold off to settle claims. One way of reneging on debts is to inflate one’s currency, a policy that is not sustaining.

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  4. Sue says:

    “Joe Klein’s Conscience” asks what is Hillary’s experience? “If you think Hillary is experienced, does that mean Laura Bush can run as McCain’s VP?” Your snarky comment proves my point and represents why millions of women working at home or elsewhere will never vote for Obama. The Senator and his supporters frequently demean Hillary’s experience and when they do so, they demean all women, especially women who choose to be stay at home moms. I expect to hear this type of demeaning comment from republicans, but I suppose I shouldn’t be suprised to hear the same comments from the type of chardonnay drinking democrats who are supporting Senator Obama.
    Forget Clinton’s experience as a lawyer. Forget her credentials as an “activist” (which put Obama’s experiences to shame in that category)and forget her experiences as a Senator (she is universally acknowledged by friend and foe alike to be one of the most effective members of the Senate.) Focus on her experiences as Bill Clinton’s wife. She was wife to the Attorney General of Arkansas (twice); first lady of Arkansas (twice) and first lady of the United States (twice). While that experience may not impress you, Mr. Conscience, millions of women understand from their own personal lives how involved a wife can be in her husband’s professional activities. Trust me, when you demean that experience, we know exactly where you’re coming from. When Senator Obama demeans that experience, we know exactly where he’s coming from. Why? Because we’re used to it. Our experience is demeaned all the time.
    Mrs. Clinton was at Bill Clinton’s side for 24 years as he held increasingly important positions culminating in the Presidency.
    Trust me, I get it. That doesn’t impress you. That’s the problem.

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  5. liz says:

    There is not a dime’s worth of difference in a Democrat and a Republican. Republicans tear up the world, Dems tear up home…..

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  6. Steambomb says:

    Economies require resources. We have only one. Total gas bag politicians and pundits. I dont think it will pull us out of recessions.

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  7. Chicagoan says:

    I think this campaign has proved that neither Clinton nor McCain deserve to anywhere near the White House, and that Obama isn’t (yet) ready. It’s a tragedy that Al Gore has been kept out of politics by, well, politics. Our empire is imploding, and without someone with his tools and experience in the White House to manage the decline, it’s going to get very ugly.
    Clinton and Obama partisans should really, by the way, realize that regurgitating talking points on one another in blog comments fields does nothing but suck the air out of any conversation that might be had on issues like, you know, the world-historical evaporation of power that’s taking place literally right now.

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  8. Mr.Murder says:

    Think I’ll take one who isn’t running on the exclusionary sales point then.
    Aside from the points I mentioned being bellweather disqualifiers for competency.

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  9. Joe Klein's conscience says:

    Mr. Murder:
    I never said Obama was different. He is a fence sitting politician, just like Hillary. That’s the problem with the Democratic nominees, they are so much alike(policy and accomplishment wise).

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  10. Mr.Murder says:

    Governor*

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  11. Mr.Murder says:

    You are disingenuous, JKC.
    Yes, that Obama phrase applies to you. You ignore Hillary’s previous efforts at education reform while he husband was Governon of Arkansas. She still gets teachers union endorsements for that effort.
    Granted, Hillary didn’t “hit the wrong button” voting at least five times on items Obama wanted to use for his own political expediency in her days of office. So I guess he does have more experience than her in that regard.
    Does admitting that you’re a poor note taker qualify as POTUS material, because Obama seems to lead in that category also.
    Do you think Obama would perhaps call out Sen.Daschle’s vote on the war, since he has used much of that man’s advisory and staff help for setting up a campaign?
    Just how different is Obama?

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  12. jim says:

    Sue –
    I agree with all you say with one exception. Please do not compare the Junior Senator from Illinois with John Kerry. I agree that Kerry should be supporting Clinton and let us hope that as a superdelegate he votes the way that the citizens of his state did. But I believe that Senator Obama could never walk in Kerry’s footsteps. IMHO, Senator Obama would not make even a good-sized pimple on Senator Kerry’s backside.

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  13. Joe Klein's conscience says:

    Sue:
    And you think Hillary is a straight talker? And what exactly is Hillary’s experience? She’s only been in the Senate a few years longer than Obama. What major policy has she stood up for in the Senate? The Iraq War? If you think Hillary is experienced, does that mean Laura Bush can run as McCain’s VP?

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  14. Joe Klein's conscience says:

    WigWag:
    Thanks for the info. I didn’t follow politics then as I do now. In fact the first election I ever voted in was Clinton/Bush Sr. While you have a point, Clinton also did some harmful things(repealing Glass-Steagall & NAFTA among them). And it is part of the problem having to chose between two Senators. We all have no clue how they’ll govern. Why do you think JFK was the last sitting Senator to be elected?

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  15. Mr.Murder says:

    Maytag. Nuff said.

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  16. Sue says:

    The post from “Joe Klein’s Conscience” represents everything wrong with the elitist attitude of Senator Obama’s supporters. One reason we like Hillary Clinton is that when her husband was President, many of us “white working class people” did better than at any time in our lives. When George H.W. was President, we struggled to get by. When Clinton became President, his policies helped us become financially comfortable. We weren’t rich, but we got by better than ever before. Then Dubya took over and we’re right back where we started.
    I, for one, would love a Hillary Clinton presidency that followed as closely as possible the economic policies that her husband followed. Maybe then I could afford my mortgage payment and just maybe even be able to send my high school aged son to college.
    And by the way, Hillary Clinton was the first person I remember to actually try to get health care for all Americans. She failed, but she tried. Lot’s of us give her alot of credit for that. And why did she fail at health care? Because she was inexperienced. Just like the other democratic candidate now running for President.
    And why doesn’t Senator Obama just admit that Reverand Wright is a bum and find a new church. All my friends go to church. If the minister (or priest or rabbi)in one says bad things, there’s always another place to worship around the corner. Why is it so hard for Senator Obama and his supporters to figure that out.
    Senator Obama reminds me more and more of John Kerry every day. At first he sounds good, but then you realize he’s not a straight talker and at heart he just loves his chardonnay a little too much. That type of Democrat is just not for me. I think many people will agree with me on that.
    Senator Obama may not realize that he has a choice in churches, but lot’s of us realize that we have a choice in candidates. If Clinton doesn’t get the nomination, we have plenty of other choices: McCain, Nader (now that he’s in) or we could even sit this one out.

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  17. JohnH says:

    As far as I’m concerned, Hillary is already 0-3 and should be ruled out. She and Bill have proven themselves failures on all three of the biggest issues of this campaign: Iraq, the economy, and healthcare.
    Strike One-Enabling the Iraq Occupation (and maybe one on Iran, too). To make matters worse, Hillary adamantly refuses to broach the subject of an exit strategy.
    Strike Two-Bill’s enabling the sub-prime crisis (see above) by doing away with Depression era protections, possibly for the benefit of Hillary’s career.
    Strike Three-Totally mismanaging her shot at healthcare reform in 1993.
    In all cases, Hillary’s answer is, “if I knew now…” We simply cannot afford this kind of experience and expect to continue as a prosperous nation.
    Strike Four (extra credit)-Bill signed not only NAFTA but also gave Most Favored Nation (MFN) status to China. This was of immense benefit to Walmart, where Hillary sat on the board. Walmart shifted purchasing from American companies to Chinese ones. Other companies joined in, sending American jobs to China in droves and the trade deficit skyward. Hillary has expressed no regret, no remorse, not even an “if I knew now…”

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  18. Bill R. says:

    Okay, Steve, what are the terms of the negotiation?
    Hillary has no shot at the nomination with numbers. She can bring her clout in her supporters to the table. Now is the time for her to make her deal and put the concession demands on the table to the party, VP, Majority Leader, whatever? What concerns me is the inability to perceive reality and her moving towards a doomsday scenario. A gracious concession at this point would give her much more influence in the party, and another shot if Obama can’t win the GE.

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  19. Doug Carmichel says:

    It is typical right now to blame the American consumer, “The central problem is the US is addicted to consumption that our pocketbooks cannot pay for. So we borrow.”
    Wrong. the american consumer is pressed on all sides and used incrasing home equity to mainain existing levels of consumption, not increase them. The problem was that increasing home prices first of all benefitted the brokers, from real estate aents to middle men in the borrowing infrastructure, because they got their percentage off the top.
    Second, the real victim of price increases were people bying homes for more than they could afford and more than they would have cost if there had not been the bubble. Flat incomes plus increasing home costs created richer rich and poorer poor.
    Watch now the struggle in many forms to get the poorer taxpayes to pay the costs of keeping the system afloat. The $150 million tax rebate is one obvious example, since the money will go for the most part to paying delinquent mortgages and credit card debt. Who benefis? Its obvious.
    Bmaling the middle class and lower middle class for over consumption is just wrong.

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  20. leo says:

    I for one find no hope in Hillary Clinton’s campaign for President, so the choice is easy for me.
    DC is full of wonks, Hillary is one of many (with maybe one of the weakest resumes) who will mass at the White House gates, waiting to be heard, once the Obamas take residence.

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  21. ... says:

    Speaking of humility …
    http://www.huffingtonpost.com/barbara-ehrenreich/hillarys-nasty-pastorate_b_92361.html
    The Family avoids the word Christian but worship Jesus, though not the Jesus who promised the earth to the “meek.” They believe that, in mass societies, it’s only the elites who matter, the political leaders who can build God’s “dominion” on earth. Insofar as the Family has a consistent philosophy, it’s all about power — cultivating it, building it, and networking it together into ever-stronger units, or “cells.”

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  22. Tony c. says:

    Steve,
    If you think that article was prescient, you really should read this one from The Onion, published just after GWB was first elected president in January of 2001:
    http://www.theonion.com/content/node/28784
    It really underscores just how surreal the past eight years have been when a scathing parody turns out to be virtually dead-on accurate.

    Reply

  23. ploeg says:

    It is not necessarily a bad thing that the democratic contenders have advisers who “are very diverse and often in intellectual conflict internally”. It represents an intellectual curiousity and maturity that will be most welcome in a president at this time. I am certain that whoever wins will rip off the good ideas of the other camp wantonly, and we will all reap the benefits.

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  24. deeply confused says:

    “the pretense of moral high ground that the Obama camp thinks it can sport in this race”
    care to share some examples?

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  25. JohnH says:

    Why put the onus just on Obama to prove his economic bona fides?
    Lets not forget that Bill Clinton signed the legislation that enabled the sub-prime crisis. The Financial Modernization Bill wiped away Depression-era protections contained in the Glass-Steagall Act of 1933. As in Iraq, “knowing what we know today,” does Hillary still think this was a good idea? Particularly, since Bill’s signing may have been the gift Wall Street needed to stomach Hillary’s run for Senate in 2000?
    Hillary has a lot to answer for, and the questions are not being asked by the corporate media.

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  26. Kathleen says:

    Well, I’m all in favor of returning to FDR’s graduated income tax… maybe not as high on the top bracket, but definitely lower on the bottom bracket… and raising the standard deduction from $5,500 for an individaul to an actual livable income, indexed to the actual cost of living…. Demz are stoooopid to let the Repugs own the tax cut issue and should strongly propose cutting taxes from the bottom up… that would stimulate the economy and more importantly, help those struggling to keep their head above water.
    I’m sure this hope has its limits.

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  27. WigWag says:

    Dear Joe Klein’s Conscience. You can’t figure out why a guy like Clinton is so loved by the democratic base. Are you kidding me? Where were you in the 1990’s? Nafta was about Bill Clinton’s only policy mistake. Remember the family medical leave act? That was Clinton; we liked it; Remember 100 thousand new cops on the beat and 100 thousand new teachers in the class room? That was Clinton and we liked it. Remember a balanced budget and the lowest interest rates in a generaion? That was Clinton and we liked it. Remember the lowest unemployment rate in 30 years coming so soon after the Bush recession? That was Clinton and we liked it. Remember doubling the federal government’s funding of medical research by doubling the budget of NIH? That was Clinton and we liked it. Remember dramatically improved access to student loans for college at lower interest rates? That was Clinton and we liked it. Remember millions of new families purchasing homes through access to credit from Freddie Mac and Sallie Mae (with none of the shenanigans going on today? That was Clinton and we liked it.
    I come from a family of pipe fitters. I know that to most of Senator Obama’s elite, college educated supporters, these programs mean nothing. But they meant alot to millions of people. That’s why so many of “white working class people” as you put it are so loyal to the Clintons. Is that so hard to figure out?
    Any other questions?

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  28. RonK, Seattle says:

    Is Goolsbee’s star already in decline within the Obamaverse?
    It might have been a mere availability constraint, but Tarullo (who’d figure to be Obama’s non-spokesperson “trade guy”) emerged at spokesperson level opposite Sperling (for HRC) on Bear, Stearns and related subject matter.

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  29. Joe Klein's conscience says:

    Steve:
    I was hoping you could address this. Why is a guy like Clinton so loved by the Democratic base(I mean that over used term “White working class”)? Any idea? He passed NAFTA for goodness sake. One could argue the merits of globalization but NAFTA didn’t help the American working man keep his job. I don’t get the whole neo-liberal thing. When did liberals not care about economic growth? I bet FDR did. What exactly makes someone like Goolsbee a neo-liberal? And where did this notion ever come from that Democrats were against economic growth? As we have seen, there is good economic growth and bad.

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  30. pt says:

    Steve,
    It is depressing to hear you say that neither side can vanquish the other because it plays into the myth that it is tied. If Obama finishes the primaries and caucuses with approximately 160 pledged delegate lead and a lead in the popular vote numbering in the hundreds of thousands and if the super delegates put him over the top he will have vanquished hillary. He should be smart in his effort to bring over her voters but why should he have to negotiate with her as if he didn’t actually win.

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  31. Spunkmeyer says:

    you know, bubba, that would be worth it for the confirmation
    hearings alone.

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  32. bubba says:

    I too sure hope Clinton and Obama (and their more vocal supporters) mature a bit and work out their differences. Personally, I would prefer an Obama President who appoints a HRClinton to replace Justice Stevens on SCOTUS. Instead of getting HRC for 4-8 years, the far right nutjobs would get her for life!

    Reply

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